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 November 1, 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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On November 1, 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
CIGNA and its representatives may from time to time make written or
oral forward-looking statements, including statements contained in CIGNA's
filings with the Securities and Exchange Commission and in its reports to
shareholders. In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, CIGNA cautions that actual results
could differ materially from those contained in any forward-looking statement
made by or on behalf of CIGNA depending on the outcome of certain factors (some
of which are described with the forward-looking statements) including: 1)
increases in medical costs in CIGNA's health care operations, including
increases in utilization and costs of medical services; 2) increased medical,
administrative or other costs resulting from legislative, regulatory and
potential litigation challenges to CIGNA's health care business; 3) heightened
competition, particularly price competition, reducing product margins and
constraining growth in CIGNA's businesses; 4) significant changes in interest
rates; 5) significant stock market declines resulting in payments contingent on
certain variable annuity account values; 6) the effect on CIGNA's international
operations and investments of further significant deterioration in Latin
American and Asian economies; and 7) proposals to change federal corporate
income taxes. CIGNA cautions that the foregoing list of important factors may
not be complete. CIGNA does not undertake to update any forward-looking
statement that may be made from time to time by or on behalf of CIGNA.
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: November 2, 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
Number Description Method of Filing
20 CIGNA Corporation Filed herewith
news release dated
November 1, 1999
NEWS RELEASE [CIGNA Logo]
Exhibit 20
For Release: Immediate
Contact: Edwin J. Detrick, Investor Relations - (215) 761-6130
Wendell Potter, Media Relations - (215) 761-6133
CIGNA REPORTS THIRD QUARTER 1999 RESULTS
PHILADELPHIA, November 1, 1999 -- CIGNA Corporation (NYSE: CI) today reported
third quarter operating income* from continuing operations of $286 million, or
$1.47 per share, compared with operating income from continuing operations of
$237 million ($1.12 per share) for the third quarter of 1998.
Third quarter 1999 operating income excludes the following non-recurring items:
o an after-tax gain of $1.2 billion for the sale of the property and
casualty (P&C) business to ACE Limited (reported in discontinued
operations);
o a $400 million after-tax charge attributable to certain Brazilian
investments; and
o $10 million of after-tax restructuring charges for cost reduction
initiatives subsequent to the sale of P&C.
For the nine months of 1999, operating income from continuing operations was
$766 million ($3.76 per share), excluding the non-recurring items noted above
and an after-tax gain of $43 million from the second quarter sale of a partial
interest in CIGNA's Japanese life insurance business. This
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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.
Earnings per share amounts are on a diluted basis, except as noted on
Exhibit 2.
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-2-
compares with $671 million ($3.12 per share) for the same period a year ago,
excluding an after-tax gain of $202 million from the sale of CIGNA's individual
life insurance and annuity business that was reported in the first quarter of
1998.
SEGMENT RESULTS:
Employee Health Care, Life and Disability Benefits
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This segment includes CIGNA's HMO, medical and dental indemnity, disability,
specialty health care and group life insurance operations. The segment had
operating income of $182 million in the third quarter of 1999, compared with
$159 million for the same period last year. For the nine months of 1999,
operating income was $512 million, compared with $433 million for the same
period in 1998.
Revenues for the third quarter were $3.4 billion, compared with $3.2 billion for
the same period last year.
Total medical covered lives were 13.3 million at September 30, 1999, up 6% from
September 30, 1998. HMO medical membership was 6.7 million members, up 4% from
September 30, 1998. Medical indemnity lives were 6.6 million, up 9% from
September 30, 1998.
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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 $66 million in the
third quarter of 1999, compared with $63 million for the same period last year.
For the nine months of 1999 and 1998, operating income was $196 million and $184
million, respectively.
Assets under management at September 30, 1999 were $52.8 billion, an increase of
7% from $49.3 billion as of September 30, 1998.
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 third quarter operating
income of $6 million, excluding the $400 million after-tax charge for Brazilian
investments noted above and a $3 million after-tax restructuring charge. This
compares with operating income of $14 million for the same period last year. The
segment's operating income for the nine months of 1999 was $10 million,
excluding the charge attributable to Brazilian investments, the restructuring
charge and the after-tax gain of $43 million associated with the sale of a
partial interest in CIGNA's Japanese life insurance business. Operating income
for the segment was $30 million for the nine months of 1998.
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-4-
Other Operations
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Other Operations includes gain recognition related to the sale of the individual
life insurance and annuity business, and the results of the leveraged corporate
life insurance operation, the life and health reinsurance business, certain new
business initiatives, the settlement annuity business and investment and real
estate subsidiaries. Other Operations had operating income of $33 million in the
third quarter of 1999, compared with $30 million for the same period last year.
For the nine months ended September 30, 1999, Other Operations had operating
income of $100 million, compared with $90 million reported for the nine months
ended September 30, 1998, 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. The Corporate segment reported a loss of $1 million in
the third quarter of 1999, excluding a $7 million after-tax restructuring
charge, compared with a loss of $29 million for the same period last year.
Excluding the restructuring charge, the operating loss for the nine months of
1999 was $52 million, compared with a loss of $66 million for the same period
last year.
NET INCOME
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Consolidated net income was $1.1 billion, or $5.44 per share for the third
quarter of 1999, including the non-recurring items noted above. Consolidated net
income for the third quarter of 1998 was $251 million, or $1.19 per share. For
the nine months of 1999, consolidated net income was $1.5
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billion, or $7.28 per share, including the non-recurring items noted earlier,
the $43 million after-tax gain in the second quarter from the sale of a partial
interest in CIGNA's Japanese life insurance business, and a $91 million
after-tax charge in the first quarter for the cumulative effect of adopting a
new accounting standard for guaranty fund and other insurance-related
assessments, primarily related to the discontinued P&C operations. Consolidated
net income for the nine months of 1998 was $1.1 billion, or $4.90 per share,
including the after-tax gain of $202 million, recognized in the first quarter,
from the sale of CIGNA's individual life insurance and annuity business.
REVENUES
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Consolidated revenues from ongoing operations for the third quarter and nine
months of 1999 were $4.7 billion and $13.9 billion, respectively, compared with
$4.3 billion and $12.8 billion for the third quarter and nine months of 1998,
excluding the effects of the sale of the property and casualty and individual
life insurance and annuity businesses.
ASSETS/SHAREHOLDERS' EQUITY
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Assets at September 30, 1999 were $92.8 billion, compared with $95.9 billion at
December 31, 1998. Shareholders' equity was $7.2 billion ($38.59 per share) at
September 30, 1999, compared with $8.3 billion ($40.25 per share) at December
31, 1998.
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SHARE REPURCHASE
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During the third quarter of 1999, CIGNA repurchased 12.8 million shares of its
common stock for $1.1 billion. In October, CIGNA repurchased 7.3 million shares
for $539 million. CIGNA's share repurchase authority was increased by $2 billion
at the September 1999 Board of Directors meeting, and remaining authority at
November 1 was $1.5 billion.
Quarterly earnings are available on CIGNA's home page on the Internet
(http://www.cigna.com).
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<TABLE>
<CAPTION>
Exhibit 1
CIGNA CORPORATION
COMPARATIVE SUMMARY OF FINANCIAL RESULTS [CIGNA LOGO]
(Dollars in millions, except per share amounts)
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Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
REVENUES (Excluding discontinued operations)
Premiums and fees $ 3,781 $ 3,344 $ 11,092 $ 9,914
Net investment income 762 766 2,217 2,344
Other revenues 157 150 495 469
Gain on sale of businesses (1) -- -- 66 316
Realized investment gains (losses) (11) 42 13 121
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Total $ 4,689 $ 4,302 $ 13,883 $ 13,164
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OPERATING INCOME (LOSS) BY SEGMENT (1)(2) (Excluding
discontinued operations)
Employee Health Care, Life and Disability Benefits:
Indemnity operations $ 78 $ 77 $ 219 $ 219
HMO operations 104 82 293 214
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Total Employee Health Care, Life and Disability Benefits 182 159 512 433
Employee Retirement Benefits and Investment Services 66 63 196 184
International Life, Health and Employee Benefits (3) (397) 14 (350) 30
Other Operations 33 30 100 292
Corporate (4) (8) (29) (59) (66)
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Total $ (124) $ 237 $ 399 $ 873
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INCOME (LOSS) FROM CONTINUING OPERATIONS
Employee Health Care, Life and Disability Benefits:
Indemnity operations $ 72 $ 96 $ 222 $ 274
HMO operations 104 82 293 214
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Total Employee Health Care, Life and Disability Benefits 176 178 515 488
Employee Retirement Benefits and Investment Services 65 69 202 203
International Life, Health and Employee Benefits (3) (397) 12 (351) 28
Other Operations 32 34 100 299
Corporate (4) (8) (29) (59) (66)
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Total $ (132) $ 264 $ 407 $ 952
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DILUTED EARNINGS PER SHARE:
Operating income (loss) (Excluding discontinued operations) $ (0.64) $ 1.12 $ 1.96 $ 4.06
After-tax realized investment gains (losses)
(Excluding discontinued operations) (0.04) 0.13 0.04 0.36
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Income (loss) from continuing operations (0.68) 1.25 2.00 4.42
Income (loss) from discontinued operations, net of taxes (5) 6.12 (0.06) 5.73 0.48
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Income before cumulative effect of accounting change 5.44 1.19 7.73 4.90
Cumulative effect of accounting change, net of taxes -- -- (0.45) --
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Net income $ 5.44 $ 1.19 $ 7.28 $ 4.90
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Weighted average shares (in thousands) 195,137 211,512 203,474 215,247
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SHAREHOLDERS' EQUITY at September 30: $ 7,176 $ 8,156
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SHAREHOLDERS' EQUITY PER SHARE at September 30: $ 38.59 $ 39.50
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<FN>
(1) Reflects the second quarter 1999 pre-tax gain of $66 million ($43 million
after-tax) recognized upon the sale of a partial interest in CIGNA's Japanese
life insurance operations and the first quarter 1998 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 (loss) in 1999 also excludes the
cumulative effect of adopting a new accounting pronouncement.
(3) Includes a third quarter 1999 after-tax charge of $400 million ($478 million
pre-tax) attributable to certain Brazilian investments and a third quarter 1999
after-tax charge of $3 million ($4 million pre-tax) for restructuring costs.
(4) Includes a third quarter 1999 after-tax charge of $7 million ($11 million
pre-tax) for restructuring costs.
(5) Includes a third quarter 1999 after-tax gain of $1.2 billion recognized upon
completion of the sale of the property and casualty business.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
CIGNA Corporation
Supplemental Financial Information
Financial Data Excluding Specific Adjustments - Results of Operations
(Dollars in millions, except per share amounts)
Exhibit 2
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Employee Health Care, Life & Disability Benefits Employee
Retirement Benefits
Indemnity HMOs Total & Investment Svcs.
Three months ended September 30, 1999 1998 1999 1998 1999 1998 1999 1998
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Operating income (loss) before adjustments $ 78 $ 77 $ 104 $ 82 $ 182 $ 159 $ 66 $ 63
Adjustments: increase (decrease)
Brazilian operations charge - - - - - - - -
Restructuring charge - - - - - - - -
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Operating income (loss) as published 78 77 104 82 182 159 66 63
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After-tax realized investment gains (losses) (6) 19 - - (6) 19 (1) 6
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Income (loss) from continuing operations $ 72 $ 96 $ 104 $ 82 $ 176 $ 178 $ 65 $ 69
=============================================================================================================
International Diluted
Life, Health & Other Earnings
Emp. Benefits Operations Corporate Consolidated Per Share
Three months ended September 30, 1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
----------------------------------------------------------------------------------
Operating income (loss) before adjustments $ 6 $ 14 $ 33 $ 30 $ (1) $ (29) $ 286 $ 237 $ 1.47 * $ 1.12
Adjustments: increase (decrease)
Brazilian operations charge (400) - - - - - (400) - (2.06) -
Restructuring charge (3) - - - (7) - (10) - (0.05) -
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Operating income (loss) as published (397) 14 33 30 (8) (29) (124) 237 (0.64) 1.12
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After-tax realized investment gains (losses) - (2) (1) 4 - - (8) 27 (0.04) 0.13
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Income (loss) from continuing operations $ (397) $ 12 $ 32 $ 34 $ (8) $ (29) $ (132) $ 264 $(0.68) $ 1.25
=================================================================================================================================
Employee Health Care, Life & Disability Benefits Employee
Retirement Benefits
Indemnity HMOs Total & Investment Svcs.
Nine months ended September 30, 1999 1998 1999 1998 1999 1998 1999 1998
--------------------------------------------------------------
Operating income (loss) before adjustments $ 219 $ 219 $ 293 $ 214 $ 512 $ 433 $ 196 $ 184
Adjustments: increase (decrease)
Brazilian operations charge - - - - - - - -
Restructuring charge - - - - - - - -
Gain on sale of Japanese
life insurance operations - - - - - - - -
Gain on sale of individual life
insurance and annuity business - - - - - - - -
--------------------------------------------------------------
Operating income (loss) as published 219 219 293 214 512 433 196 184
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After-tax realized investment gains (losses) 3 55 - - 3 55 6 19
- -------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations $ 222 $ 274 $ 293 $ 214 $ 515 $ 488 $ 202 $ 203
=============================================================================================================
International Diluted
Life, Health & Other Earnings
Emp. Benefits Operations Corporate Consolidated Per Share
Nine months ended September 30, 1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
----------------------------------------------------------------------------------
Operating income (loss) before adjustments $ 10 $ 30 $ 100 $ 90 $ (52) $ (66) $ 766 $ 671 $ 3.76 $ 3.12
Adjustments: increase (decrease)
Brazilian operations charge (400) - - - - - (400) - (1.96) -
Restructuring charge (3) - - - (7) - (10) - (0.05) -
Gain on sale of Japanese
life insurance operations 43 - - - - - 43 - 0.21 -
Gain on sale of individual life
insurance and annuity business - - - 202 - - - 202 - 0.94
----------------------------------------------------------------------------------
Operating income (loss) as published (350) 30 100 292 (59) (66) 399 873 1.96 4.06
----------------------------------------------------------------------------------
After-tax realized investment gains (losses) (1) (2) - 7 - - 8 79 0.04 0.36
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Income (loss) from continuing operations $ (351) $ 28 $ 100 $ 299 $ (59) $ (66) $ 407 $ 952 $ 2.00 $ 4.42
=================================================================================================================================
* Because of the overall loss from continuing operations for the quarter, the
number of shares used to compute operating income per share before adjustments
does not reflect the dilution caused by stock options and restricted stock
grants of approximately 2.6 million shares. If they were included in the
computation of per share amounts, operating income per share before adjustments
would have been $1.45 per share for the quarter.
</TABLE>
