Cigna third quarter adjusted income from operations increases to $325 million

Cigna Corporation (NYSE: CI) today reported third quarter 2011 results that included strong revenue and earnings from each of our ongoing businesses, reflecting continued effective execution of the fundamentals supporting our long-term growth strategy.

“Our strong third quarter results reflect our continued focus on delivering solutions to improve the health and well being of our customers and clients through differentiated service and clinical quality in targeted geographies and customer segments”

Cigna's adjusted income from operations for the third quarter of 2011 was $325 million, or $1.20 per share, compared with $299 million, or $1.10 per share, for the third quarter of 2010. Additionally, adjusted income from operations in the third quarter of 2011 included losses of $45 million, or $0.16 per share, compared to $34 million, or $0.12 per share for the third quarter of 2010, from VADBe.

Cigna reported shareholders' net income of $200 million, or $0.74 per share, for the third quarter of 2011, compared with shareholders' net income of $307 million, or $1.13 per share, for the third quarter of 2010. Shareholders' net income included losses of $179 million, or $0.66 per share, in the third quarter of 2011 and losses of $44 million, or $0.16 per share, for the same period last year related to the VADBe and GMIB businesses within our Run-off Reinsurance segment, primarily related to the impact of low interest rates and sustained volatile equity market conditions.

"Our strong third quarter results reflect our continued focus on delivering solutions to improve the health and well being of our customers and clients through differentiated service and clinical quality in targeted geographies and customer segments," said David M. Cordani, President and Chief Executive Officer. "We are pleased with the consistent execution of our growth strategy and the positive momentum it creates for 2012 and beyond for the benefit of customers, clients, health care professionals and shareholders."

CONSOLIDATED HIGHLIGHTS

• Cash and short term investments at the parent company were approximately $925 million at September 30, 2011 and $810 million at December 31, 2010.
• Year to date through October 28, 2011, the Company repurchased approximately 5.3 million shares of stock for $225 million.

HIGHLIGHTS OF SEGMENT RESULTS

Health Care

This segment includes medical and specialty health care products and services provided on guaranteed cost, retrospectively experience-rated and service-only funding bases. Specialty health care includes behavioral, dental, disease and medical management, stop-loss, and pharmacy-related products and services.

Financial Results (dollars in millions, membership in thousands):

• Overall, Health Care results reflect continued growth in our targeted customer segments. Results also reflect the impact of the expected exits from non-strategic markets, primarily Medicare IPFFS.
• Excluding Medicare IPFFS, third quarter premiums and fees increased 4% relative to third quarter 2010, due to continued business growth, rate increases and increased specialty penetration.
• Third quarter 2011 adjusted income from operations reflects continued growth in targeted medical and specialty businesses, as well as favorable prior period claim development of approximately $25 million after-tax, which includes approximately $5 million related to 2010. Favorable prior period claim development was approximately $30 million after-tax in third quarter 2010 and $42 million after-tax in second quarter 2011.
• Health Care medical claims payable was approximately $1.0 billion at September 30, 2011 as well as December 31, 2010, while the current business mix reflects a decline in risk membership, including the exit from Medicare IPFFS.

Disability and Life

This segment includes Cigna's group disability, life, and accident insurance operations that are managed separately from the health care business.

Financial Results (dollars in millions):

• Third quarter 2011 Disability and Life results reflect solid revenue growth, including a 6% increase in disability premiums and fees, reflecting the sustained value we deliver to our customers through our disability management programs. Adjusted income from operations also includes continued favorable life and accident claims experience, partially offset by higher disability claims incidence.
• Third quarter 2011 adjusted income from operations continues to reflect competitively attractive margins. Second quarter 2011 adjusted income from operations included the net favorable impact of $30 million after-tax related to reserve studies.

International

This segment includes Cigna's supplemental health, life, and accident insurance and expatriate benefits businesses operating in select international markets.

Financial Results (dollars in millions, membership and policies in thousands):

• Third quarter 2011 International segment results reflect strong organic premium and fee growth driven by continued attractive customer retention and sales in targeted markets within our supplemental Health, Life and Accident and Expatriate Benefits businesses. These results also reflect the impact of ongoing strategic investments in product and geographic expansion initiatives, some unfavorable Expatriate claims experience, and contributions to the Expatriate business from Vanbreda International, which was acquired during the third quarter of 2010.

Other Segments

Adjusted income (loss) from operations for Cigna's other segments are presented below (after-tax, dollars in millions):

• Run-off Reinsurance includes the results for the VADBe business. Third quarter 2011 and 2010 adjusted income from operations include losses of $45 million and $34 million after-tax, respectively, primarily related to the impacts of sustained volatile equity market conditions and low interest rates on the VADBe business. Run-off Reinsurance results for the third quarter 2010 also included favorable claim development in the workers compensation and personal accident businesses.