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 February 8, 2000
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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 February 8, 2000, 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 and
oral forward-looking statements, including statements contained in CIGNA's
filings with the Securities and Exchange Commission and in its reports to
shareholders. These statements may contain information about financial
prospects, economic conditions, trends and known uncertainties. CIGNA cautions
the reader that actual results could differ materially from those that
management expects, depending on the outcome of certain factors. In some cases,
CIGNA describes uncertainties when offering a forward-looking statement. Some
factors that could cause CIGNA's actual results to differ materially from the
forward-looking statements include:
1. increases in medical costs in CIGNA's health care operations, including
increased use and costs of medical services;
2. increased medical, administrative or other costs resulting from
legislative, regulatory and litigation challenges to CIGNA's health care
business;
3. heightened competition, particularly price competition, which could reduce
product margins and constrain 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. significant deterioration in economic conditions, which could have an
adverse effect on CIGNA's investments; and
7. proposals to change federal income taxes.
This list of important factors may not be complete. CIGNA will not update any
forward-looking statement that may be made by or on behalf of CIGNA prior to the
next required filing with the Securities and Exchange Commission.
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: February 9, 2000 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
February 8, 2000
EXHIBIT 20
NEWS RELEASE [CIGNA Logo]
For Release:
Immediate
Contact: Edwin J. Detrick, Investor Relations - (215) 761-6130
Wendell Potter, Media Relations - (215) 761-6133
CIGNA REPORTS FOURTH QUARTER AND FULL YEAR 1999 RESULTS
PHILADELPHIA, February 8, 2000-- CIGNA Corporation (NYSE: CI) today reported
fourth quarter operating income* from continuing operations of $296 million, or
$1.66 per share. This compares with operating income from continuing operations
of $226 million, or $1.09 per share, for the fourth quarter of 1998, excluding
the non-recurring item noted below.
Excluding certain non-recurring items, full year 1999 operating income from
continuing operations was $1.1 billion, or $5.38 per share, compared with $897
million, or $4.20 per share, for the same period a year ago.
Full year 1999 operating income from continuing operations excludes the
following non-recurring items:
o a third quarter after-tax gain of $1.2 billion from the sale of the
property and casualty (P&C) business to ACE Limited (reported in
Discontinued Operations);
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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.
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-2-
o a third quarter after-tax charge of $10 million for cost reduction
initiatives subsequent to the sale of P&C ($3 million reported in the
International Life, Health and Employee Benefits segment and $7 million
reported in the Corporate segment);
o a third quarter after-tax charge of $400 million attributable to certain
Brazilian investments (reported in the International segment); and
o a second quarter after-tax gain of $43 million from the sale of a partial
interest in CIGNA's Japanese life insurance business (reported in the
International segment).
Full year 1998 operating income from continuing operations excludes the
following non-recurring items:
o a first quarter after-tax gain of $202 million from the sale of CIGNA's
individual life insurance and annuity business (reported in the Other
Operations segment); and
o a fourth quarter after-tax charge of $19 million for restructuring
activities. ($1 million reported in the International segment and $18
million reported in Discontinued Operations).
"Operating results for our employee benefits businesses were strong again in
1999. The sale of our property and casualty business to ACE Limited further
positioned the company to focus on our employee benefits strategy," said Ed
Hanway, CIGNA's CEO.
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-3-
SEGMENT RESULTS:
The following discussion of segment operating results excludes the specific
adjustments described above (and noted in the attached Exhibit 2).
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 $216 million in the fourth quarter of 1999, compared with
$184 million for the same period last year. Full year 1999 operating income was
$728 million, compared with $617 million in 1998.
Revenues for the fourth quarter of 1999 were $3.6 billion, compared with $3.3
billion for the same period last year.
Total medical covered lives were 13.3 million at December 31, 1999, up 5% from
December 31, 1998. HMO medical membership was 6.7 million members, up 4% from
December 31, 1998. Medical indemnity lives were 6.6 million, up 7% from December
31, 1998.
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-4-
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 $69 million in the
fourth quarter of 1999, compared with $64 million for the same period last year.
Full year 1999 and 1998 operating income was $265 million and $248 million,
respectively.
Assets under management at December 31, 1999 were $55.8 billion, an increase of
5% from $52.9 billion as of December 31, 1998.
International Life, Health and Employee Benefits
- ------------------------------------------------
This segment, which includes CIGNA's life insurance and employee benefits
businesses operating in international markets, had fourth quarter operating
income of $8 million. This compares with an operating loss of $12 million for
the same period last year. The segment's full year operating income was $18
million for both 1999 and 1998.
Other Operations
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Other Operations includes deferred 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 $22
million in the fourth quarter of 1999, compared with $21 million for the same
period last year. For full year 1999, Other Operations had operating income of
$122 million, compared with $111 million in 1998.
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-5-
Corporate
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Corporate includes unallocated investment income and parent company expenses,
primarily debt service. The Corporate segment reported a loss of $19 million in
the fourth quarter of 1999, compared with a loss of $31 million for the same
period last year. For full year 1999, the operating loss was $71 million,
compared with a loss of $97 million in 1998.
NET INCOME
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Net income includes, for the appropriate periods, the non-recurring items noted
above and a first quarter 1999 $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 discontinued P&C
operations. On this basis, consolidated net income was $292 million, or $1.63
per share for the fourth quarter of 1999, compared with $238 million, or $1.14
per share, for the fourth quarter of 1998. For full year 1999, consolidated net
income was $1.8 billion, or $8.99 per share. Consolidated net income for full
year 1998 was $1.3 billion, or $6.05 per share.
REVENUES
- --------
Consolidated revenues from ongoing operations for the fourth quarter and full
year of 1999 were $4.9 billion and $18.7 billion, respectively, compared with
$4.5 billion and $17.3 billion for the same periods last year, excluding the
effects of the non-recurring items noted earlier.
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ASSETS/SHAREHOLDERS' EQUITY
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Assets at December 31, 1999 were $95.3 billion, compared with $95.9 billion at
December 31, 1998. Shareholders' equity was $6.1 billion ($36.24 per share) at
December 31, 1999, compared with $8.3 billion ($40.25 per share) at December 31,
1998.
SHARE REPURCHASE
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During the fourth quarter of 1999, CIGNA repurchased 16.3 million shares of its
common stock for $1.3 billion, bringing full year 1999 share repurchase activity
to 36.7 million shares for $3.1 billion. In January of 2000, CIGNA repurchased
1.2 million shares for $101 million. CIGNA's Board of Directors recently
approved a $1 billion increase in share repurchase authority, which brings the
total current authority to approximately $1.6 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 [CIGNA Logo]
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
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Three Months Ended Year Ended
December 31, December 31,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
REVENUES (Excluding discontinued operations)
Premiums and fees $ 3,987 $ 3,542 $ 15,079 $ 13,456
Net investment income 742 771 2,959 3,115
Other revenues 174 161 669 630
Gain on sale of businesses (1) - - 66 316
Realized investment gains (losses) (5) 13 8 134
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Total $ 4,898 $ 4,487 $ 18,781 $ 17,651
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OPERATING INCOME (LOSS) BY SEGMENT (1)(2) (Excluding
discontinued operations)
Employee Health Care, Life and Disability Benefits:
Indemnity operations $ 108 $ 95 $ 327 $ 314
HMO operations 108 89 401 303
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Total Employee Health Care, Life and Disability Benefits 216 184 728 617
Employee Retirement Benefits and Investment Services 69 64 265 248
International Life, Health and Employee Benefits (3) 8 (13) (342) 17
Other Operations 22 21 122 313
Corporate (4) (19) (31) (78) (97)
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Total $ 296 $ 225 $ 695 $ 1,098
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INCOME (LOSS) FROM CONTINUING OPERATIONS
Employee Health Care, Life and Disability Benefits:
Indemnity operations $ 104 $ 94 $ 326 $ 368
HMO operations 107 89 400 303
----------- ----------- ---------- ----------
Total Employee Health Care, Life and Disability Benefits 211 183 726 671
Employee Retirement Benefits and Investment Services 70 70 272 273
International Life, Health and Employee Benefits (3) 8 (11) (343) 17
Other Operations 22 23 122 322
Corporate (4) (19) (31) (78) (97)
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Total $ 292 $ 234 $ 699 $ 1,186
- ----------------------------------------------------------------------=============================================================
DILUTED EARNINGS PER SHARE:
Operating income (Excluding discontinued operations) $ 1.66 $ 1.08 $ 3.52 $ 5.14
After-tax realized investment gains (losses)
(Excluding discontinued operations) (0.03) 0.04 0.02 0.42
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Income from continuing operations 1.63 1.12 3.54 5.56
Income from discontinued operations (5) - 0.02 5.91 0.49
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Income before cumulative effect of accounting change 1.63 1.14 9.45 6.05
Cumulative effect of accounting change, net of taxes - - (0.46) -
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 1.63 $ 1.14 $ 8.99 $ 6.05
- ----------------------------------------------------------------------=============================================================
Weighted average shares (in thousands) 178,774 208,072 197,248 213,447
- ----------------------------------------------------------------------=============================================================
SHAREHOLDERS' EQUITY at December 31: $ 6,149 $ 8,277
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SHAREHOLDERS' EQUITY PER SHARE at December 31: $ 36.24 $ 40.25
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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, and, in 1999, the cumulative effect of adopting a
new accounting pronouncement.
(3) Includes a third quarter 1999 after-tax charge of $400 million attributable
to certain Brazilian investments, a third quarter 1999 after-tax charge of $3
million for restructuring costs and a fourth quarter 1998 after-tax
restructuring charge of $1 million.
(4) Includes a third quarter 1999 after-tax charge of $7 million 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 Exhibit 2
Supplemental Financial Information
Financial Data Excluding Specific Adjustments - Results of Operations
(Dollars in millions, except per share amounts)
Employee Health Care, Life & Disability Benefits Employee
Retirement Benefits
Indemnity HMOs Total & Investment Svcs.
Year ended December 31, 1999 1998 1999 1998 1999 1998 1999 1998
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments $ 327 $ 314 $ 401 $ 303 $ 728 $ 617 $ 265 $ 248
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 - - - - - - - -
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Operating income (loss) as published 327 314 401 303 728 617 265 248
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After-tax realized investment gains (losses) (1) 54 (1) - (2) 54 7 25
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Income (loss) from continuing operations $ 326 $ 368 $ 400 $ 303 $ 726 $ 671 $ 272 $ 273
============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
International
Life, Health & Other
Emp. Benefits Operations Corporate Consolidated
Year ended December 31, 1999 1998 1999 1998 1999 1998 1999 1998
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments $ 18 $ 18 $ 122 $ 111 $ (71) $ (97) $ 1,062 $ 897
Adjustments: increase (decrease)*
Brazilian operations charge (400) - - - - - (400) -
Restructuring charge (3) (1) - - (7) - (10) (1)
Gain on sale of Japanese
life insurance operations 43 - - - - - 43 -
Gain on sale of individual life
insurance and annuity business - - - 202 - - - 202
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Operating income (loss) as published (342) 17 122 313 (78) (97) 695 1,098
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After-tax realized investment gains (losses) (1) - - 9 - - 4 88
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Income (loss) from continuing operations $ (343) $ 17 $ 122 $ 322 $ (78) $ (97) $ 699 $ 1,186
==========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Diluted
Earnings
Per Share
Year ended December 31, 1999 1998
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<S> <C> <C>
Operating income (loss) before adjustments $ 5.38 $ 4.20
Adjustments: increase (decrease)*
Brazilian operations charge (2.03) -
Restructuring charge (0.05) -
Gain on sale of Japanese
life insurance operations 0.22 -
Gain on sale of individual life
insurance and annuity business - 0.94
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Operating income (loss) as published 3.52 5.14
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After-tax realized investment gains (losses) 0.02 0.42
- ----------------------------------------------------------------
Income (loss) from continuing operations $ 3.54 $ 5.56
=================================================================
<FN>
* These adjustments include a fourth quarter 1998 after-tax restructuring
charge of $1 million in the International Life, Health and Employee Benefits
segment. Excluding this adjustment, consolidated operating income for the
fourth quarter of 1998 was $226 million, or $1.09 per share and the operating
loss for the International Life, Health and Employee Benefits segment was $12
million.
</FN>
</TABLE>
