Cigna posts strong revenue growth in third quarter 2013

Cigna Corporation (NYSE: CI) today reported strong third quarter 2013 results with each of the Company's business segments posting strong revenue and earnings contributions.

Consolidated revenues in the quarter were $8.1 billion, an increase of 10% over the third quarter of 2012. Revenues reflect growth in premiums and fees of 7% in Global Health Care, 29% in Global Supplemental Benefits and 9% in Group Disability and Life, driven by continued growth in Cigna's targeted customer segments.

Cigna's adjusted income from operations¹ for the third quarter of 2013 was $536 million, or $1.89 per share, compared with $489 million, or $1.69 per share, for the third quarter of 2012. These results reflect strong revenue growth, continued effective medical cost management, and a lower operating expense ratio, partially offset by pressure in Medicare Advantage results.

"Our customers and clients continue to benefit from improved health outcomes and productivity driven by our differentiated capabilities," said David M. Cordani, President and Chief Executive Officer. "The consistent, effective execution of our strategy coupled with ongoing strategic investments is driving strong financial performance in 2013 and positions us for continued long term growth."

Cigna reported shareholders' net income¹ of $553 million, or $1.95 per share, for the third quarter of 2013, compared to $466 million, or $1.61 per share, for the third quarter of 2012. Shareholders' net income¹ for the third quarter of 2012 included income of $32 million, or $0.11 per share, related to the Guaranteed Minimum Income Benefits (GMIB)² business and losses of $62 million, or $0.21 per share, related to costs associated with a realignment and efficiency plan and the HealthSpring acquisition.

CONSOLIDATED HIGHLIGHTS

The following table includes highlights of results and a reconciliation of adjusted income from operations¹ to shareholders' net income¹ (dollars in millions, except per share amounts; customers in thousands):

• Cash and short term investments at the parent company were approximately $500 million at September 30, 2013 and approximately $700 million at December 31, 2012.

• During the period August 1 through October 31, 2013, the Company repurchased⁵ approximately 6.4 million shares of stock for approximately $500 million.
• Year to date, as of October 31, 2013, the Company has repurchased⁵ approximately 13.6 million shares of stock for approximately $1 billion.

HIGHLIGHTS OF SEGMENT RESULTS

See Exhibit 2 for a reconciliation of adjusted income (loss) from operations¹ to segment earnings (loss)¹.

Global Health Care

This segment includes Cigna's Commercial and Government businesses which deliver medical and specialty health care products and services to domestic and multi-national clients and customers on guaranteed cost, retrospectively experience-rated and Administrative Services Only ("ASO") 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, customers in thousands):

• Overall, Global Health Care results reflect continued growth in the Company's targeted customer segments.
• Third quarter premiums and fees increased approximately 7% relative to third quarter 2012, driven by customer growth, specialty contributions, and renewal rate increases.
• Third quarter 2013 adjusted income from operations¹ reflects sustained growth in medical and specialty businesses, continued effective medical cost management in our Commercial business, and improvement in the operating expense ratio, partially offset by an elevated Medicare Advantage care ratio.
• Adjusted income from operations¹ for third quarter 2013, second quarter 2013 and third quarter 2012 included favorable prior year reserve development on an after-tax basis of approximately $9 million, $20 million, and $6 million, respectively.
• Global Health Care net medical claims payable⁷ was approximately $1.8 billion at September 30, 2013 and $1.6 billion at December 31, 2012.

Global Supplemental Benefits

This segment includes Cigna's supplemental health, life, and accident insurance globally, primarily in Asia, and Medicare supplement coverage in the U.S.

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

• Third quarter 2013 premiums and fees grew 29% relative to third quarter 2012, reflecting recent acquisitions of Great American Supplemental Benefits and our Cigna Finansbank joint venture in Turkey as well as customer growth, primarily in South Korea.
• Third quarter 2013 adjusted income from operations¹ and adjusted margin⁶ reflect the impact of strong customer retention and business growth, partially offset by increased strategic investments supporting long term customer growth.
• The quarter over quarter increase in policies as of September 30, 2013 reflects the recent acquisitions as well as organic business growth.

Group Disability and Life

This segment includes Cigna's group disability, life, and accident insurance operations.

Financial Results (dollars in millions):

• Third quarter 2013 results benefited from premium and fee growth of 9% relative to third quarter 2012 due to growth in both disability and life businesses.
• Adjusted income from operations¹ and adjusted margin⁶ for the third quarter of 2013 reflect the favorable after-tax impact of reserve studies as well as unfavorable life claims experience.
• Third quarter 2013 and 2012 adjusted income from operations¹ include favorable after-tax impacts related to reserve studies of $26 million and $5 million, respectively. Second quarter 2013 includes favorable after-tax impacts related to reserve studies of $27 million as well as $14 million related to an updated discount rate assumption.

Other Segments

Adjusted income (loss) from operations¹ for Cigna's remaining operations is presented below (dollars in millions):

• Third quarter 2013 Other Operations results include a $14 million after-tax benefit related to an IRS examination.

OUTLOOK

• Cigna increased its outlook for full year 2013 consolidated adjusted income from operations^1,3 to be in the range of $1.90 billion to $1.96 billion, or $6.70 to $6.90 per share. Cigna's outlook excludes the potential effects of future capital deployment⁵.

The foregoing statements represent management's current estimate of Cigna's 2013 consolidated and segment adjusted income from operations^1,3 as of the date of this release. Actual results may differ materially depending on a number of factors, and investors are urged to read the Cautionary Statement included in this release for a description of those factors. Management does not assume any obligation to update these estimates.