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 1, 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 May 1, 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: May 2, 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
May 1, 2000
NEWS RELEASE EXHIBIT 20 [Logo]
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For Release: Immediate
Contact: Edwin J. Detrick, Investor Relations - (215) 761-6130
Wendell Potter, Media Relations - (215) 761-6133
CIGNA REPORTS FIRST QUARTER RESULTS
PHILADELPHIA, May 1, 2000 -- CIGNA Corporation (NYSE:CI) today reported first
quarter 2000 operating income* from continuing operations of $265 million, or
$1.57 per share. This compares with operating income from continuing operations
of $229 million, or $1.10 per share for the first quarter of 1999.
"We continued to see good growth in revenues and profits, particularly for our
health businesses," said H. Edward Hanway, CIGNA's chief executive officer.
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 $175 million in the first quarter of 2000, compared with
$153 million for the same period last year.
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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 in 1999.
All earnings per share amounts are on a diluted basis.
CIGNA made certain segment reclassifications, effective 1/1/2000. See
Exhibit 1 for additional information.
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-2-
Revenues for the first quarter were $3.6 billion, compared with $3.3 billion for
the same period last year.
Total covered medical lives were approximately 14.0 million at March 31, 2000.
HMO medical membership was 7.1 million members, up 6% from March 31, 1999.
Medical indemnity lives were 6.9 million, up 9% from March 31, 1999.
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 $65 million in the
first quarter of 2000, compared with $63 million for the same period last year.
Assets under management at March 31, 2000 were $57 billion, an increase of 8%
from $53 billion as of March 31, 1999.
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 $8
million in the first quarter of 2000, compared with operating income of $3
million for the same period last year.
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-3-
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, the
settlement annuity business and investment and real estate subsidiaries. Other
Operations had operating income of $28 million in the first quarter of 2000,
compared with $34 million for the same period last year.
Corporate
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Corporate includes unallocated investment income and parent company expenses,
primarily debt service. Corporate had a loss of $11 million in the first quarter
of 2000, compared with a loss of $24 million for the same period last year.
NET INCOME
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Consolidated net income for the first quarter of 2000 was $271 million, or $1.60
per share. Consolidated net income for the same period last year was $188
million, or $0.91 per share, which included 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
sold on July 2, 1999.
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REVENUES
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Consolidated revenues for the first quarter of 2000 were $4.9 billion, compared
with $4.5 billion for the first quarter of 1999.
ASSETS/SHAREHOLDERS' EQUITY
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Assets at March 31, 2000 were $97.0 billion, compared with $95.3 billion at
December 31, 1999. Shareholders' equity was $5.8 billion ($35.85 per share) at
March 31, 2000, compared with $6.1 billion ($36.24 per share) at December 31,
1999.
SHARE REPURCHASE
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In the first quarter of 2000, CIGNA repurchased 7.2 million shares of its common
stock for $521 million. In April, CIGNA repurchased 1.6 million shares for $126
million. Total available repurchase authority was approximately $1.1 billion at
May 1, 2000.
Quarterly earnings and conference call information is available on CIGNA's home
page on the Internet (http://www.cigna.com).
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<TABLE>
<CAPTION>
CIGNA CORPORATION Exhibit 1
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
[CIGNA LOGO]
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Three Months Ended
March 31,
2000 1999
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<S> <C> <C>
REVENUES (Excluding discontinued operations)
Premiums and fees $ 3,989 $ 3,600
Net investment income 716 721
Other revenues 177 178
Realized investment gains 9 11
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Total $ 4,891 $ 4,510
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OPERATING INCOME (LOSS) BY SEGMENT (1) (2) (Excluding
discontinued operations)
Employee Health Care, Life and Disability Benefits:
Indemnity operations (3) $ 61 $ 59
HMO operations 114 94
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Total Employee Health Care, Life and Disability Benefits 175 153
Employee Retirement Benefits and Investment Services 65 63
International Life, Health and Employee Benefits 8 3
Other Operations (3) 28 34
Corporate (11) (24)
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Total $ 265 $ 229
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INCOME (LOSS) FROM CONTINUING OPERATIONS (2)
Employee Health Care, Life and Disability Benefits:
Indemnity operations (3) $ 69 $ 65
HMO operations 113 94
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Total Employee Health Care, Life and Disability Benefits 182 159
Employee Retirement Benefits and Investment Services 63 64
International Life, Health and Employee Benefits 8 3
Other Operations (3) 29 34
Corporate (11) (24)
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Total $ 271 $ 236
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DILUTED EARNINGS PER SHARE:
Operating income (Excluding discontinued operations) $ 1.57 $ 1.10
After-tax realized investment gains (excluding discontinued operations) 0.03 0.04
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Income from continuing operations 1.60 1.14
Income from discontinued operations -- 0.20
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Income before cumulative effect of accounting change 1.60 1.34
Cumulative effect of accounting change, net of taxes -- (0.43)
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Net income $ 1.60 $ 0.91
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Weighted average shares (in thousands) 169,310 207,708
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SHAREHOLDERS' EQUITY at March 31: $ 5,838 $ 7,869
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SHAREHOLDERS' EQUITY PER SHARE at March 31: $ 35.85 $ 38.68
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<FN>
(1) 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.
(2) In 1999, corporate overhead which would have been allocated to the P&C segment had the sale to ACE Limited
not occurred was reported in Corporate (other operating expenses). Effective January 1, 2000, this overhead was
allocated to the operating segments. See Exhibit 2 for additional information.
(3) Effective January 1, 2000, CIGNA combined the operations of one of its new business initiatives (Integrated
Care, the results of which had been previously reported in Other Operations) with a business reported in the
Employee Health Care, Life and Disability Benefits segment. Integrated Care's first quarter 1999 after-tax
operating loss of $4 million was reclassified to conform with this new presentation. See Exhibit 2 for
additional information.
</FN>
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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.
Three months ended March 31, 2000 1999 2000 1999 2000 1999 2000 1999
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating income (loss) prior to reclassification $ 61 $ 63 $ 114 $ 94 $ 175 $ 157 $ 65 $ 63
Reclassification for Integrated Care -- (4) -- -- -- (4) -- --
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Operating income (loss) as published 61 59 114 94 175 153 65 63
Pro forma overhead costs previously
allocated to Corporate* -- (3) -- (3) -- (6) -- --
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Operating income (loss) as adjusted for pro forma
allocation of corporate overhead $ 61 $ 56 $ 114 $ 91 $ 175 $ 147 $ 65 $ 63
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
International
Life, Health & Other
Emp. Benefits Operations Corporate Consolidated
Three months ended March 31, 2000 1999 2000 1999 2000 1999 2000 1999
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating income (loss) prior to reclassification $ 8 $ 3 $ 28 $ 30 $ (11) $ (24) $ 265 $ 229
Reclassification for Integrated Care -- -- -- 4 -- -- -- --
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Operating income (loss) as published 8 3 28 34 (11) (24) 265 229
Pro forma overhead costs previously
allocated to Corporate* -- (1) -- -- -- 7 -- --
----------------------------------------------------------------------------
Operating income (loss) as adjusted for pro forma
allocation of corporate overhead $ 8 $ 2 $ 28 $ 34 $ (11) $ (17) $ 265 $ 229
============================================================================
</TABLE>
<TABLE>
<CAPTION>
Diluted
Earnings
Per Share
Three months ended March 31, 2000 1999
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<S> <C> <C>
Operating income (loss) prior to reclassification $ 1.57 $ 1.10
Reclassification for Integrated Care -- --
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Operating income (loss) as published 1.57 1.10
Pro forma overhead costs previously
allocated to Corporate* -- --
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Operating income (loss) as adjusted for pro forma
allocation of corporate overhead $ 1.57 $ 1.10
====================
<FN>
* In 1999, corporate overhead which would have been allocated to the P&C segment had the sale to ACE Limited not occurred was
reported in Corporate (other operating expenses). Effective January 1, 2000, this overhead was allocated to the operating
segments. Prior period amounts have not been restated to reflect this change but are illustrated above on a pro forma basis.
</FN>
</TABLE>
