CIGNA consolidated revenues increase 7% for second quarter 2011

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

Consolidated revenues increased 7%, excluding the effect from exiting Medicare IPFFS. Revenues reflect premium and fee increases of 8% in Health Care, 10% in Disability and Life, and 36% in International, driven by continued growth in our targeted customer segments.

CIGNA reported shareholders' net income of $408 million, or $1.50 per share, for the second quarter of 2011, compared with shareholders' net income of $294 million, or $1.06 per share, for the second quarter of 2010. Shareholders' net income included a loss of $0.07 per share in the second quarter of 2011 and a loss of $0.37 per share for the same period last year related to the Guaranteed Minimum Income Benefits (GMIB) business.

CIGNA's adjusted income from operations for the second quarter of 2011 was $418 million, or $1.53 per share, compared with $384 million, or $1.38 per share, for the second quarter of 2010. Adjusted income from operations in the second quarter of 2011 included prior year favorable claim development in the Health Care business of $25 million after-tax, or $0.09 per share, compared to $14 million after-tax, or $0.05 per share, in the second quarter of 2010.

"Our second quarter results are strong and driven by our continued focus on growing in targeted geographies and customer segments through our diversified, global portfolio of businesses," said David M. Cordani, President and Chief Executive Officer of CIGNA Corporation. "We are confident we will continue to leverage our differentiated portfolio of solutions to deliver long-term value and sustainable growth for our customers and shareholders in this very dynamic marketplace."

CONSOLIDATED HIGHLIGHTS

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

• Shareholders' net income in the second quarter of 2011 was $408 million, up 39% over the same period last year, reflecting lower losses from the GMIB business and a higher contribution from our ongoing businesses.
• Cash and short term investments at the parent company were approximately $720 million at June 30, 2011 and $810 million at December 31, 2010.
• Year to date through August 3, 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 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, second quarter premiums and fees increased 8% relative to second quarter 2010, due to continued business growth, rate increases and increased specialty penetration.
• Second quarter 2011 adjusted income from operations reflect continued growth in targeted medical and specialty businesses, as well as total favorable prior period claim development of approximately $42 million after-tax, which includes approximately $25 million after-tax related to 2010 and $17 million after-tax related to the first quarter of 2011. Total favorable prior period claim development was approximately $40 million after-tax in second quarter 2010 and $22 million after-tax in first quarter 2011.
• Health Care medical claims payable was approximately $1.0 billion at June 30, 2011 and December 31, 2010, while our 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):

• Second quarter 2011 Disability and Life results reflect solid revenue growth, including a 16% increase in disability premiums and fees. Adjusted income from operations also include continued favorable accident claims experience, offset by a charge related to a litigation matter.
• Second quarter 2011 and 2010 adjusted income from operations include the favorable after-tax impacts related to reserve studies of $30 million and $29 million, respectively, reflecting the sustained value we deliver to our customers through our disability management programs. First quarter 2011 results also included $6 million after-tax from the favorable impact of 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):

• 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 and some unfavorable Expatriate claims experience. Results also include 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 Variable Annuity Death Benefits (VADBe) business. No VADBe reserve strengthening was required for the second quarter of 2011.

OUTLOOK

• CIGNA's updated 2011 outlook as of August 4, 2011 (dollars in millions, except per share amounts):

• CIGNA's earnings and earnings per share outlooks exclude the potential effects of future capital deployment.
• CIGNA's earnings and earnings per share outlooks assume break-even results for VADBe for full year 2011, which assumes that actual experience, including capital market performance, will be consistent with long term reserve assumptions. See the Critical Accounting Estimates section of the Management's Discussion and Analysis of the Company's Annual Report on Form 10-K for the year ended December 31, 2010 for more information on the effect of capital market assumption changes in shareholders' net income.