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Previous: FLORIDA PROGRESS CORP, 4, 1999-07-16 |
Next: SHELTER PROPERTIES IV LIMITED PARTNERSHIP, SC 14D9/A, 1999-07-16 |
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) July 2, 1999
------------
CIGNA Corporation
-----------------
(Exact name of registrant as specified in its charter)
Delaware 1-8323 06-1059331
-------- ------ ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Liberty Place, 1650 Market Street
Philadelphia, Pennsylvania 19192-1550
-------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(215) 761-1000
--------------
Not Applicable
----------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Disposition of Assets.
----------------------
On July 2, 1999, CIGNA Corporation ("CIGNA") completed the sale of its domestic
and international property and casualty businesses to ACE Limited for $3.45
billion in cash. A copy of the press release announcing the sale is attached as
Exhibit 99 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
----------------------------------
(b) Pro Forma Financial Information.
--------------------------------
The following unaudited Pro Forma Income Statements for the quarters
ended March 31, 1999 and 1998 and the years ended December 31, 1998,
1997 and 1996 along with the unaudited Pro Forma Condensed Balance
Sheet as of March 31, 1999 are based on the historical results of
operations and financial position of CIGNA, adjusted to give effect to
the sale of CIGNA's property and casualty businesses. The Pro Forma
Income Statements have been prepared assuming the sale occurred as of
the beginning of the earliest period presented and the Pro Forma
Condensed Balance Sheet has been prepared assuming that the sale
occurred as of March 31, 1999.
The Pro Forma Financial Information is not necessarily indicative of
the results of operations or financial position that would have been
reported had such event occurred on the dates specified, nor is it an
indication of CIGNA's future results of operations or financial
position. These statements should be read in conjunction with the
historical consolidated financial statements of CIGNA, including the
notes thereto, in CIGNA's Form 10-Q for the three months ended March
31, 1999 and as incorporated by reference in CIGNA's Form 10-K for the
year ended December 31, 1998.
2
<PAGE>
<TABLE>
<CAPTION>
CIGNA CORPORATION
PRO FORMA INCOME STATEMENT
FOR THE QUARTER ENDED MARCH 31, 1999
(In millions, except share and per share amounts)
(Unaudited)
CIGNA PRO FORMA
CORPORATION ADJUSTMENTS (A) PRO FORMA
----------------- ------------------ ------------------
REVENUES
<S> <C> <C> <C>
Premiums and fees $ 4,263 $ (676) $ 3,587
Net investment income 858 (137) 721
Other revenues 237 (59) 178
Realized investment gains 42 (31) 11
----------------- ------------------ ------------------
Total revenues 5,400 (903) 4,497
----------------- ------------------ ------------------
BENEFITS, LOSSES AND EXPENSES
Benefits, losses and settlement expenses 3,516 (497) 3,019
Policy acquisition expenses 246 (179) 67
Other operating expenses 1,208 (165) 1,043
----------------- ------------------ ------------------
Total benefits, losses and expenses 4,970 (841) 4,129
----------------- ------------------ ------------------
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 430 (62) 368
----------------- ------------------ ------------------
Income taxes
Current 95 18 113
Deferred 56 (37) 19
----------------- ------------------ ------------------
Total taxes 151 (19) 132
----------------- ------------------ ------------------
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $ 279 $ (43) $ 236
================= ================== ==================
Earnings per share (before accounting change)
Basic $ 1.36 $ 1.15
================= ==================
Diluted $ 1.34 $ 1.14
================= ==================
Weighted average shares (in thousands)
Basic 204,881 204,881
================= ==================
Diluted 207,708 207,708
================= ==================
3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CIGNA CORPORATION
PRO FORMA INCOME STATEMENT
FOR THE QUARTER ENDED MARCH 31, 1998
(In millions, except share and per share amounts)
(Unaudited)
CIGNA PRO FORMA
CORPORATION ADJUSTMENTS (A) PRO FORMA
----------------- ------------------ ------------------
REVENUES
<S> <C> <C> <C>
Premiums and fees $ 3,901 $ (685) $ 3,216
Net investment income 937 (148) 789
Other revenues 514 (47) 467
Realized investment gains 59 (19) 40
----------------- ------------------ ------------------
Total revenues 5,411 (899) 4,512
----------------- ------------------ ------------------
BENEFITS, LOSSES AND EXPENSES
Benefits, losses and settlement expenses 3,333 (487) 2,846
Policy acquisition expenses 228 (181) 47
Other operating expenses 1,082 (146) 936
----------------- ------------------ ------------------
Total benefits, losses and expenses 4,643 (814) 3,829
----------------- ------------------ ------------------
INCOME BEFORE INCOME TAXES 768 (85) 683
----------------- ------------------ ------------------
Income taxes (benefits)
Current 432 (19) 413
Deferred (159) (10) (169)
----------------- ------------------ ------------------
Total taxes 273 (29) 244
----------------- ------------------ ------------------
NET INCOME $ 495 $ (56) $ 439
================= ================== ==================
Earnings per share
Basic $ 2.30 $ 2.04
================= ==================
Diluted $ 2.27 $ 2.02
================= ==================
Weighted average shares (in thousands)
Basic 215,637 215,637
================= ==================
Diluted 217,755 217,755
================= ==================
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CIGNA CORPORATION
PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1998
(In millions, except share and per share amounts)
(Unaudited)
CIGNA PRO FORMA
CORPORATION ADJUSTMENTS (A) PRO FORMA
----------------- ------------------ ------------------
REVENUES
<S> <C> <C> <C>
Premiums and fees $ 16,413 $ (2,957) $ 13,456
Net investment income 3,705 (590) 3,115
Other revenues 1,163 (217) 946
Realized investment gains 156 (22) 134
----------------- ------------------ ------------------
Total revenues 21,437 (3,786) 17,651
----------------- ------------------ ------------------
BENEFITS, LOSSES AND EXPENSES
Benefits, losses and settlement expenses 13,861 (2,247) 11,614
Policy acquisition expenses 954 (753) 201
Other operating expenses 4,612 (634) 3,978
----------------- ------------------ ------------------
Total benefits, losses and expenses 19,427 (3,634) 15,793
----------------- ------------------ ------------------
INCOME BEFORE INCOME TAXES 2,010 (152) 1,858
----------------- ------------------ ------------------
Income taxes (benefits)
Current 841 (2) 839
Deferred (123) (44) (167)
----------------- ------------------ ------------------
Total taxes 718 (46) 672
----------------- ------------------ ------------------
NET INCOME $ 1,292 $ (106) $ 1,186
================= ================== ==================
Earnings per share
Basic $ 6.12 $ 5.62
================= ==================
Diluted $ 6.05 $ 5.56
================= ==================
Weighted average shares (in thousands)
Basic 210,948 210,948
================= ==================
Diluted 213,447 213,447
================= ==================
5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CIGNA CORPORATION
PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
(In millions, except share and per share amounts)
(Unaudited)
CIGNA PRO FORMA
CORPORATION ADJUSTMENTS (A) PRO FORMA
----------------- ------------------ ------------------
REVENUES
<S> <C> <C> <C>
Premiums and fees $ 14,935 $ (3,154) $ 11,781
Net investment income 4,245 (647) 3,598
Other revenues 691 (208) 483
Realized investment gains 167 (74) 93
----------------- ------------------ ------------------
Total revenues 20,038 (4,083) 15,955
----------------- ------------------ ------------------
BENEFITS, LOSSES AND EXPENSES
Benefits, losses and settlement expenses 13,029 (2,220) 10,809
Policy acquisition expenses 1,046 (789) 257
Other operating expenses 4,313 (652) 3,661
----------------- ------------------ ------------------
Total benefits, losses and expenses 18,388 (3,661) 14,727
----------------- ------------------ ------------------
INCOME BEFORE INCOME TAXES 1,650 (422) 1,228
----------------- ------------------ ------------------
Income taxes (benefits)
Current 493 (31) 462
Deferred 71 (117) (46)
----------------- ------------------ ------------------
Total taxes 564 (148) 416
----------------- ------------------ ------------------
NET INCOME $ 1,086 $ (274) $ 812
================= ================== ==================
Earnings per share
Basic $ 4.93 $ 3.69
================= ==================
Diluted $ 4.88 $ 3.65
================= ==================
Weighted average shares (in thousands)
Basic 220,263 220,263
================= ==================
Diluted 222,513 222,513
================= ==================
6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CIGNA CORPORATION
PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1996
(In millions, except share and per share amounts)
(Unaudited)
CIGNA PRO FORMA
CORPORATION ADJUSTMENTS (A) PRO FORMA
----------------- ------------------ ------------------
REVENUES
<S> <C> <C> <C>
Premiums and fees $ 13,916 $ (3,417) $ 10,499
Net investment income 4,333 (688) 3,645
Other revenues 610 (146) 464
Realized investment gains 91 (39) 52
----------------- ------------------ ------------------
Total revenues 18,950 (4,290) 14,660
----------------- ------------------ ------------------
BENEFITS, LOSSES AND EXPENSES
Benefits, losses and settlement expenses 12,473 (2,467) 10,006
Policy acquisition expenses 1,138 (860) 278
Other operating expenses 3,738 (590) 3,148
----------------- ------------------ ------------------
Total benefits, losses and expenses 17,349 (3,917) 13,432
----------------- ------------------ ------------------
INCOME BEFORE INCOME TAXES 1,601 (373) 1,228
----------------- ------------------ ------------------
Income taxes
Current 419 (113) 306
Deferred 126 (5) 121
----------------- ------------------ ------------------
Total taxes 545 (118) 427
----------------- ------------------ ------------------
NET INCOME $ 1,056 $ (255) $ 801
================= ================== ==================
Earnings per share
Basic $ 4.68 $ 3.55
================= ==================
Diluted $ 4.64 $ 3.52
================= ==================
Weighted average shares (in thousands)
Basic 225,495 225,495
================= ==================
Diluted 227,754 227,754
================= ==================
7
</TABLE>
<PAGE>
CIGNA CORPORATION
Explanatory Note to Pro Forma Income Statement Adjustments
(A) These adjustments reflect the elimination of revenues and expenses of the
property and casualty businesses sold to ACE Limited, including adjustments
to exclude certain general corporate overhead previously charged to the
property and casualty businesses.
8
<PAGE>
<TABLE>
<CAPTION>
CIGNA CORPORATION
PRO FORMA CONDENSED BALANCE SHEET
AS OF MARCH 31, 1999
(In millions, except per share amounts)
(Unaudited)
CIGNA PRO FORMA
CORPORATION ADJUSTMENTS PRO FORMA
----------------- ----------------- -------------------
ASSETS
<S> <C> <C> <C>
Investments $ 48,577 $ (8,744) (A) $ 39,833
Cash and cash equivalents 2,227 (759) (A) 4,918
3,450 (B)
Accrued investment income 768 (146) (A) 622
Premiums, accounts and notes receivable 4,664 (2,139) (A) 2,525
Reinsurance recoverables 12,803 (6,262) (A) 6,541
Deferred policy acquisition costs 1,075 (339) (A) 736
Property and equipment 905 (222) (A) 683
Deferred income taxes 2,022 (921) (A) 1,101
Other assets 1,396 (762) (A) 634
Goodwill and other intangibles 2,461 (399) (A) 2,062
Separate account assets 35,555 - 35,555
----------------- ----------------- -------------------
Total assets $ 112,453 $ (17,243) $ 95,210
================= ================= ===================
LIABILITIES
Contractholder deposit funds $ 28,781 $ (192) (A) $ 28,589
Unpaid claims and claim expenses 17,848 (14,492) (A) 3,356
Future policy benefits 12,290 - 12,290
Unearned premiums 1,933 (1,456) (A) 477
----------------- ----------------- -------------------
Total insurance and contractholder liabilities 60,852 (16,140) 44,712
Accounts payable, accrued expenses and other liabilities 6,871 (2,140) (A) 4,731
Current income taxes 28 (26) (A) 2
Short-term debt 293 - 293
Long-term debt 1,404 - 1,404
Separate account liabilities 35,136 - 35,136
----------------- ----------------- -------------------
Total liabilities 104,584 (18,306) 86,278
----------------- ----------------- -------------------
SHAREHOLDERS' EQUITY
Common stock (par value, $0.25; shares issued, 266) 67 - 67
Additional paid-in capital 2,788 - 2,788
Accumulated other comprehensive income 503 (137) (C) 366
Retained earnings 6,873 1,200 (D) 8,073
Less treasury stock, at cost (2,362) - (2,362)
----------------- ----------------- -------------------
Total shareholders' equity 7,869 1,063 8,932
----------------- ----------------- -------------------
Total liabilities and shareholders' equity $ 112,453 $ (17,243) $ 95,210
================= ================= ===================
9
</TABLE>
<PAGE>
CIGNA CORPORATION
Explanatory Notes to Pro Forma Condensed Balance Sheet Adjustments
(A) These adjustments primarily reflect the elimination of the assets and
liabilities of the property and casualty businesses sold to ACE Limited,
adjusted to include accruals of estimated costs associated with the sale.
(B) CIGNA received $3.45 billion in cash upon closing of the sale of its
property and casualty businesses.
(C) Reflects the recognition in net income of unrealized appreciation on
investments and net translation of foreign currencies related to the
property and casualty businesses as part of the gain.
(D) Reflects the estimated after-tax gain on the sale. The actual gain to be
reported in discontinued operations in CIGNA's income statement for the
quarter ended September 30, 1999, is subject to change pending final
determination of the net assets of the property and casualty businesses,
transaction costs and other adjustments.
10
<PAGE>
(c) Exhibits.
---------
The exhibit accompanying this report is listed in the Index to Exhibits
below.
11
<PAGE>
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: July 16, 1999 By: /s/ James A. Sears
--------------------
James A. Sears
Vice President and
Chief Accounting Officer
12
<PAGE>
Index to Exhibits
-----------------
Number Description Method of Filing
- ------ ----------- ----------------
99 CIGNA Corporation Filed herewith
news release dated
July 2, 1999
13
NEWS RELEASE [CIGNA LOGO]
- -------------------------------------------------------------------------------
For Release: Immediate
Contact: Wendell Potter, Media Relations -- 215-761-6133
Edwin J. Detrick, Investor Relations -- 215-761-6130
CIGNA FINALIZES SALE OF P&C BUSINESSES
TO ACE LIMITED
Philadelphia, PA, July 2, 1999: CIGNA Corporation (NYSE: CI) announced today
that the sale of its property and casualty businesses to ACE Limited has been
completed for $3.45 billion in cash. CIGNA also announced that it will report an
after-tax charge of $64 million related to the second quarter earnings of the
discontinued property and casualty segment. The after-tax gain, which CIGNA will
recognize in the third quarter, will be approximately $1.2 billion.
"This sale is a further important step in our plan to capitalize on our
strengths in the global employee benefits businesses," said CIGNA Chief
Executive, Wilson H. Taylor.
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