SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 3, 1999
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CIGNA Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-8323 06-1059331
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Liberty Place, 1650 Market Street
Philadelphia, Pennsylvania 19192-1550
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(215) 761-1000
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
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A. On May 3, 1999, the registrant issued a news release, a copy of
which is filed as Exhibit 20 hereto and is incorporated herein by reference.
CAUTIONARY STATEMENT FOR PURPOSES OF THE 'SAFE HARBOR' PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Oral statements made by individuals authorized to speak on behalf of
CIGNA Corporation ("CIGNA") that do not deal with historical results are
forward-looking and are based on estimates, assumptions and projections. CIGNA
cautions that actual results could differ materially from those expected by
CIGNA, depending on the outcome of certain factors including: 1) adverse
catastrophe experience in CIGNA's property and casualty businesses; 2) adverse
property and casualty loss development for events that CIGNA insured in prior
years; 3) an increase in medical costs in CIGNA's health care operations,
including increases in utilization and costs of medical services; 4) heightened
competition, particularly price competition, reducing product margins and
constraining growth in CIGNA's businesses; 5) significant changes in interest
rates; 6) significant stock market declines resulting in payments contingent on
certain variable annuity account values; 7) the effect on CIGNA's international
operations and investments from further significant deterioration in Latin
American and Asian economies; and 8) proposals to change federal corporate
income taxes.
Item 7. Financial Statements and Exhibits.
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(c) The exhibit accompanying this report is listed in the Index to
Exhibits.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CIGNA CORPORATION
Date: May 4, 1999 By: /s/ James A. Sears
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James A. Sears
Vice President and
Chief Accounting Officer
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Index to Exhibits
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Number Description Method of Filing
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20 CIGNA Corporation Filed herewith
news release dated
May 3, 1999
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<TABLE>
<CAPTION>
CIGNA CORPORATION
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
[CIGNA LOGO]
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Three Months Ended
March 31,
1999 1998
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REVENUES
<S> <C> <C>
Premiums and fees $ 4,263 $ 3,901
Net investment income 858 937
Other revenues 237 198
Gain on sale of business (1) 0 316
Realized investment gains 42 59
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Total $ 5,400 $ 5,411
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OPERATING INCOME (LOSS) BY SEGMENT (1)(2)
Employee Health Care, Life and Disability Benefits:
Indemnity operations $ 63 $ 69
HMO operations 94 62
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Total Employee Health Care, Life and Disability Benefits 157 131
Employee Retirement Benefits and Investment Services 63 61
International Life, Health and Employee Benefits 3 9
Other Operations 30 233
Corporate (20) (18)
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Employee Benefits Businesses and Other 233 416
Property and Casualty:
International 3 22
Domestic 15 19
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Ongoing operations 18 41
Run-off operations 0 0
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Total Property and Casualty 18 41
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Total $ 251 $ 457
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INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE
Employee Health Care, Life and Disability Benefits:
Indemnity operations $ 69 $ 87
HMO operations 94 62
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Total Employee Health Care, Life and Disability Benefits 163 149
Employee Retirement Benefits and Investment Services 64 67
International Life, Health and Employee Benefits 3 9
Other Operations 30 235
Corporate (19) (18)
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Employee Benefits Businesses and Other 241 442
Property and Casualty:
International 17 27
Domestic 17 19
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Ongoing operations 34 46
Run-off operations 4 7
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Total Property and Casualty 38 53
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Total $ 279 $ 495
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DILUTED EARNINGS PER SHARE:
Operating income $ 1.21 $ 2.10
After-tax realized investment gains 0.13 0.17
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Income before cumulative effect of accounting change 1.34 2.27
Cumulative effect of accounting change, net of tax (0.43) (0.00)
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Net income $ 0.91 $ 2.27
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Weighted average shares (in thousands) 207,708 217,755
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SHAREHOLDERS' EQUITY at March 31: $ 7,869 $ 8,325
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SHAREHOLDERS' EQUITY PER SHARE at March 31: $ 38.68 $ 38.58
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<FN>
(1) Reflects the pre-tax gain of $316 million ($202 million after-tax)
recognized as of January 1, 1998 in connection with the sale of the
individual life insurance and annuity business.
(2) Operating income (loss) is defined as net income (loss) excluding
after-tax realized investment results. Operating income in 1999 also
excludes the cumulative effect of adopting a new accounting pronouncement
for insurance-related assessments.
</FN>
</TABLE>
NEWS RELEASE EXHIBIT 20 [CIGNA LOGO]
For Release: Immediate
Contact: Edwin J. Detrick, Investor Relations - (215) 761-6130
Michael J. Monroe, Media Relations - (215) 761-6133
CIGNA REPORTS FIRST QUARTER RESULTS
EARNINGS UP 20% FOR HEALTH CARE SEGMENT
PHILADELPHIA, May 3, 1999 -- CIGNA Corporation (NYSE:CI) today reported first
quarter 1999 operating income* of $251 million, or $1.21 per share. This
compares with operating income of $255 million, or $1.17 per share for the first
quarter of 1998, adjusted to exclude an after-tax gain of $202 million
associated with the sale of CIGNA's individual life insurance and annuity
business.
These results include the property and casualty operations that are to be sold
to ACE Limited**, which is expected to be finalized by mid-1999. Excluding the
operations to be sold, CIGNA's operating income for the first quarter of 1999
was $233 million, compared with operating income of $214 million for the same
period in 1998 or $1.12 per share vs. $0.98 per share, a 14% increase.
"Our employee benefits businesses continued to perform well in the quarter and
we are particularly pleased with the underlying strength of the health
businesses," said Wilson H. Taylor, CIGNA's chief executive. "The sale of the
property and casualty businesses to ACE Limited remains on schedule for a
mid-year closing," Taylor added.
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* Operating income (loss) is defined as net income (loss) excluding after-tax
realized investment results and the cumulative effect of an accounting
change. All earnings per share amounts are on a diluted basis.
** Sale is subject to regulatory approvals and other closing conditions.
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SEGMENT RESULTS:
Employee Health Care, Life and Disability Benefits
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This segment includes CIGNA's HMO and indemnity operations. The segment had
operating income of $157 million in the first quarter of 1999, up 20% compared
with $131 million for the same period last year. The increase in operating
income over the first quarter of 1998 is attributable to significant improvement
in HMO results.
Revenues for the first quarter were $3.3 billion, compared with $3.0 billion for
the same period last year.
Total covered lives were approximately 13 million at March 31, 1999. HMO medical
membership was 6.7 million members, up 6% from March 31, 1998. Medical indemnity
lives were 6.4 million, up 8% from March 31, 1998.
Employee Retirement Benefits and Investment Services
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This segment, which operates in the defined contribution, defined benefit and
corporate life insurance markets, had operating income of $63 million in the
first quarter of 1999. This compares with operating income of $61 million for
the same period last year.
Assets under management at March 31, 1999 were $53 billion, an increase of 4%
from $51 billion as of March 31, 1998.
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International Life, Health and Employee Benefits
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This segment, which includes CIGNA's life insurance and employee benefits
businesses operating in international markets, had operating income of $3
million in the first quarter of 1999. This compares with operating income of $9
million for the same period last year.
Other Operations
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Other Operations includes gain recognition related to the sale of the individual
life insurance and annuity business, the leveraged corporate life insurance
operation, the life and health reinsurance business and certain new business
initiatives, as well as the results of the settlement annuity business and
investment and real estate subsidiaries. Other Operations had operating income
of $30 million in the first quarter of 1999, compared with operating income of
$31 million for the same period last year, excluding the $202 million after-tax
gain from the sale of the individual life insurance and annuity business.
Corporate
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Corporate includes unallocated investment income and parent company expenses,
primarily debt service. Corporate had a loss of $20 million in the first quarter
of 1999, compared with a loss of $18 million for the same period last year.
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Property and Casualty (P&C)
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The P&C operations, which are under agreement of sale to ACE Limited, reported
operating income of $18 million in the first quarter of 1999, compared with $41
million in the same period last year. The current quarter was impacted by
after-tax catastrophe losses of $15 million, primarily for additional charges
for Hurricanes Georges and Mitch.
NET INCOME
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Consolidated net income for the first quarter of 1999 was $188 million, or $0.91
per share, which includes a $91 million after-tax charge for the cumulative
effect of adopting a new accounting standard for guaranty fund and other
insurance-related assessments, primarily related to the P&C business.
Consolidated net income for the same period last year was $293 million, or $1.34
per share, excluding the after-tax gain of $202 million from the sale of CIGNA's
individual life insurance and annuity business.
REVENUES
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Consolidated revenues for the first quarter of 1999 were $5.4 billion, compared
with $5.1 billion for the first quarter of 1998, excluding the gain on the sale
of the individual life insurance and annuity business.
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ASSETS/SHAREHOLDERS' EQUITY
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Assets at March 31, 1999 were $112.5 billion, compared with $114.6 billion at
December 31, 1998. Shareholders' equity was $7.9 billion ($38.68 per share) at
March 31, 1999, compared with $8.3 billion ($40.25 per share) at December 31,
1998.
SHARE REPURCHASE
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In the first quarter of 1999, CIGNA repurchased 2.9 million shares of its common
stock for $230 million. In April, CIGNA repurchased 1 million shares for $85
million. CIGNA's share repurchase authority was increased by $500 million at the
January 1999 Board of Directors meeting. Total available repurchase authority
was approximately $475 million at May 3, 1999.
Quarterly earnings are available on CIGNA's home page on the Internet
(http://www.cigna.com).
