-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TbeJLX2x+w3UTV5qs+2XWxDu0KZCAdA/uqLGqRiK8eJMvPpMuyUCMRTlgYkYSbKH bBrt4dBzGAsb6im8DzHp1w== 0000950159-99-000003.txt : 19990113 0000950159-99-000003.hdr.sgml : 19990113 ACCESSION NUMBER: 0000950159-99-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990112 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIGNA CORP CENTRAL INDEX KEY: 0000701221 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 061059331 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08323 FILM NUMBER: 99505263 BUSINESS ADDRESS: STREET 1: ONE LIBERTY PLACE 1650 MARKET ST STREET 2: PO BOX 7716 CITY: PHILADELPHIA STATE: PA ZIP: 19192-1550 BUSINESS PHONE: 2157616211 MAIL ADDRESS: STREET 1: TWO LIBERTY PLACE 48TH FLOOR STREET 2: 1601 CHESTNUT STREET CITY: PHILADELPHIA STATE: PA ZIP: 19192 8-K 1 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) January 12, 1999 ---------------- CIGNA Corporation ----------------- (Exact name of registrant as specified in its charter) Delaware 1-8323 06-1059331 ----------- -------- ------------ (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) One Liberty Place, 1650 Market Street Philadelphia, Pennsylvania 19192-1550 ----------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (215) 761-1000 -------------- Not Applicable -------------- (Former name or former address, if changed since last report) Item 5. Other Events. ------------- A. On January 12, 1999, CIGNA Corporation announced that it had entered into a definitive agreement dated as of January 11, 1999, to sell its domestic and international property and casualty businesses to ACE Limited for $3.45 billion in cash. The sale has been approved by both companies' boards of directors and is expected to be completed by the end of the second quarter of calendar 1999, subject to certain U.S. and international regulatory approvals and other customary closing conditions. A copy of the press release announcing this sale is attached hereto as Exhibit 99.1, which exhibit is incorporated herein by reference. B. On January 12, 1999, CIGNA Corporation issued a news release regarding fourth quarter earnings, a copy of which is filed as Exhibit 99.2 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 Oral statements made by individuals authorized to speak on behalf of CIGNA Corporation ("CIGNA") that do not deal with historical results are forward-looking and are based on estimates, assumptions and projections. CIGNA cautions that actual results could differ materially from those expected by CIGNA, depending on the outcome of certain factors including: 1) adverse catastrophe experience in CIGNA's property and casualty businesses; 2) adverse property and casualty loss development for events that CIGNA insured in prior years; 3) an increase in medical costs in CIGNA's health care operations, including increases in utilization and costs of medical services; 4) heightened competition, particularly price competition, reducing product margins and constraining growth in CIGNA's businesses; 5) significant changes in interest rates; and 6) the effect on CIGNA's international operations and investments from further significant deterioration in Asian and Latin American economies. Item 7. Financial Statements and Exhibits. ---------------------------------- (c) The exhibits accompanying this report are listed in the Index to Exhibits below. 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: January 12, 1999 By: /s/ James A. Sears ------------------- James A. Sears, Vice President and Chief Accounting Officer Index to Exhibits Number Description Method of Filing 99.1 CIGNA Corporation Filed herewith news release dated January 12, 1999 99.2 CIGNA Corporation Filed herewith news release dated January 12, 1999 EX-99.1 2 Exhibit 99.1 [ACE Limited LOGO] [CIGNA LOGO] FOR IMMEDIATE RELEASE ACE Limited: CIGNA Corporation: Investor Contact: Helen M. Wilson Edwin J. Detrick 441-299-9283 215-761-6130 Media Contact: Wendy Davis Johnson Michael J. Monroe 441-299-9347 215-761-6133 ACE TO BUY CIGNA'S INTERNATIONAL AND DOMESTIC PROPERTY & CASUALTY OPERATIONS FOR $3.45 BILLION HAMILTON, Bermuda, and PHILADELPHIA, PA, January 12, 1999 - ACE Limited (NYSE: ACL) has agreed to acquire the international and domestic property and casualty insurance businesses of CIGNA Corporation (NYSE: CI) for $3.45 billion in cash, under an agreement announced today by both companies. The transaction, which is subject to receipt of necessary regulatory approvals and other customary closing conditions, is expected to be completed by the end of the second quarter of calendar 1999. "The acquisition of one of the very few truly global franchises in our core business of property and casualty insurance represents a quantum leap for ACE," said Brian Duperreault, chairman, president and chief executive officer of ACE. "This transaction significantly strengthens ACE's position as a premier player in each of the world's major insurance markets, including the U.S., with a business that is diversified by industry, market and client type. This is an historic event, one that transforms ACE into one of only a handful of truly international property and casualty insurance concerns, and provides a tremendous platform for future growth," he added. Under the agreement, ACE will acquire CIGNA's domestic property and casualty insurance operations, including its run-off business. ACE will also purchase CIGNA's international property and casualty insurance companies and branches, including most of the accident and health business written through those companies. "This transaction further positions CIGNA to capitalize on its strengths in the global employee benefits business. Over the past several years we have been reshaping our company to achieve our strategic goal of becoming the premier, and consistently most profitable, employee benefits company in the United States and internationally," said Wilson H. Taylor, chief executive officer of CIGNA. "We currently expect that there will be in place at the closing of the acquisition significant third-party protection against adverse development with respect to the loss and loss adjustment expense reserves of the run-off operations to be acquired, as well as certain other asbestos and environmental exposures," Mr. Duperreault said. ACE expects that the transaction will be financed with a combination of available cash and newly issued equity, debt, preferred and mandatorily convertible securities. Gross written premiums of the businesses being acquired were $4.3 billion in 1997 with operating income for the same period of $198 million. Upon completion of the transaction, ACE will be a company with approximately $30 billion in assets and will employ more than 9,000 people in 47 countries worldwide. "There are significant benefits and efficiencies to be derived from being a global organization whose primary focus is property and casualty insurance. As we assume CIGNA's business operations, we will seek to capitalize on ACE's strength and focus in property and casualty underwriting to enhance our profitability and growth potential," said Mr. Duperreault. ACE's financial advisor in this transaction is Merrill Lynch & Co. 2 The ACE Group of Companies provides insurance and reinsurance for a diverse group of international clients. Operating subsidiaries are based in Bermuda, the United States, the United Kingdom (Lloyd's), and the Republic of Ireland. At September 30, 1998, ACE Limited had approximately $8.8 billion in assets and approximately $3.7 billion in shareholders' equity. CIGNA's businesses rank among the largest employee benefits organizations in the United States and include a full range of health care, life, disability and retirement and investment services, both in the U.S. and internationally. Revenues for the first nine months of 1998 (includes all businesses) were $16 billion and operating income was $772 million (excludes $202 million of gains from the sale of life and annuity businesses). As of September 30, 1998 CIGNA had consolidated assets of $109 billion and shareholders' equity of approximately $8.2 billion. Editor's Note: ACE Limited's press releases are available at no charge through - ------------- News on Demand Plus by dialing 888-329-8941. (tables to follow) 3 Supplemental Financial Information ----------------------------------
- ------------------------------------------------------------------------------------------------------------ Net Written Premiums by Product Line (in $ millions) - ------------------------------------------------------------------------------------------------------------ Year ended Year ended Sept. 30, 1998 Dec. 31, 1997 ----------------------------------------------- CIGNA's P&C ops. ACE & CIGNA's P&C ops. ---------------- ---------------------- ACE Domestic Int'l Combined Combined % ----- ---------- ------- ---------- ------------ Property $181 $ 354 $ 471 $1,006 25.4% Casualty 147 308 279 734 18.6% Accident & Health - - 482 482 12.2% Marine & Aviation (including satellite) 77 271 123 471 11.9% Workers' Compensation - 342 - 342 8.7% Lloyd's Syndicates 314 - - 314 7.9% Automobile - - 194 194 4.9% Commercial Packages - 161 - 161 4.1% Financial Lines 142 - - 142 3.6% Other 22 60 27 109 2.7% ---- ------ ------ ------ ----- Total $883 $1,496 $1,576 $3,955 100.0% ==== ====== ====== ====== ===== - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------- Net Written Premiums by Geographic Region (in $ millions) - ------------------------------------------------------------------------------------------------------------- Year ended Year ended Sept. 30, 1998 Dec. 31, 1997 ------------------------------------------------- CIGNA's P&C ops. ACE & CIGNA's P&C ops. ---------------- ---------------------- ACE Domestic Int'l Combined Combined % ----- ---------- ------- ---------- ------------ North America $ 503 $1,496 $ - $1,999 50.6% UK & Europe 129 - 644 773 19.5% Japan 21 - 420 441 11.2% Other Pacific 16 - 213 229 5.8% Latin America 5 - 171 176 4.4% Other 209 - 128 337 8.5% ------ ------ ------ ------ ----- Total $ 883 $1,496 $1,576 $3,955 100.0% ====== ====== ====== ====== ===== - -------------------------------------------------------------------------------------------------------------
4 Supplemental Financial Information ----------------------------------
- ------------------------------------------------------------------------------------------------------------- Balance Sheet Information (in $ millions) - ------------------------------------------------------------------------------------------------------------- CIGNA's P&C Operations to be Acquired -------------------------------------- Dec. 31, 1997 Dec. 31, 1997 Sept. 30, 1998 ------------- ------------- -------------- As reported by CIGNA (Unaudited) (Unaudited) Investments & cash $12,457 $10,051 $ 9,907 Premium accounts and notes receivable 2,735 2,423 2,690 Reinsurance recoverables 6,211 6,181 6,013 Goodwill 411 392 378 Other assets 2,881 2,384 2,418 ------- ------- ------- Total assets $24,695 $21,431 $21,406 ======= ======= ======= Unpaid claims and claim expenses 15,252 14,929 14,738 Future policy benefits 1,889 - - Unearned premiums 1,543 1,318 1,389 Accounts payable 3,050 2,396 2,333 Other liabilities 419 438 495 ------- ------- ------- Total liabilities 22,153 19,081 18,955 ------- ------- ------- Net Assets $ 2,542 $ 2,350 $ 2,451 ======= ======= ======= - -------------------------------------------------------------------------------------------------------------
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Supplemental Financial Information - --------------------------------------------------------------------------------------------------------------------- Income Statement Information (in $ millions) - --------------------------------------------------------------------------------------------------------------------- Year ended Nine months ended December 31, 1997 September 30, 1998 --------------------------------------- ----------------------------------- Operations As reported Operations As reported to be by CIGNA to be acquired by CIGNA acquired ----------- -------------- ----------- ---------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Domestic Ongoing - ---------------- Gross premiums written $2,301 $2,301 $1,901 $1,901 Net premiums written 1,496 1,496 1,149 1,149 Net premiums earned 1,593 1,593 1,133 1,133 Losses and loss adjustment expenses (1,165) (1,165) (826) (826) Policy acquisition expenses (367) (367) (274) (274) Operating expenses (141) (154) (101) (101) -------- -------- --------- -------- Underwriting gain (loss) (80) (93) (68) (68) Net investment income 239 239 172 172 Other revenues and expenses, net (16) (6) (8) (9) -------- -------- --------- -------- Operating income before tax 143 140 96 95 Income taxes (45) (44) (24) (25) -------- -------- --------- -------- Net operating income $ 98 $ 96 $ 72 $ 70 ======== ======== ========= ======== Loss & LAE ratio 73.1% 73.1% 72.9% 72.9% Expense ratio 31.9% 32.7% 33.1% 33.1% -------- -------- --------- -------- Combined ratio 105.0% 105.8% 106.0% 106.0% ======== ======== ========= ======== International Ongoing - --------------------- Gross premiums written 2,265 1,999 1,690 1,418 Net premiums written 1,834 1,576 1,348 1,104 Net premiums earned 1,784 1,539 1,294 1,062 Losses and loss adjustment expenses (953) (823) (780) (649) Policy acquisition expenses (453) (410) (323) (291) Operating expenses (289) (269) (205) (177) -------- -------- --------- -------- Underwriting gain (loss) 89 37 (14) (55) Net investment income 126 121 83 79 Other revenues and expenses, net (14) 13 8 9 -------- -------- --------- -------- Operating income before tax 201 171 77 33 Income taxes (74) (62) (31) (14) -------- -------- --------- -------- Net operating income $ 127 $ 109 $ 46 $ 19 ======== ======== ========= ======== Loss & LAE ratio 53.4% 53.5% 60.3% 61.1% Expense ratio 41.6% 44.1% 40.8% 44.1% -------- -------- --------- -------- Combined ratio 95.0% 97.6% 101.1% 105.2% ======== ======== ========= ======== - ---------------------------------------------------------------------------------------------------------------------
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Supplemental Financial Information - --------------------------------------------------------------------------------------------------------------------- Income Statement Information (in $ millions) - --------------------------------------------------------------------------------------------------------------------- Year ended Nine months ended December 31, 1997 September 30, 1998 -------------------------------------- ------------------------------------- Operations As reported Operations As reported to be by CIGNA to be acquired by CIGNA acquired ----------- -------------- ----------- ----------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Total Ongoing - ------------- Gross premiums written $4,566 $4,300 $3,591 $3,319 Net premiums written 3,330 3,072 2,497 2,253 Net premiums earned 3,377 3,132 2,427 2,195 Losses and loss adjustment expenses (2,118) (1,988) (1,606) (1,475) Policy acquisition expenses (820) (777) (597) (565) Operating expenses (430) (423) (306) (278) ------- -------- ------- ------- Underwriting gain (loss) 9 (56) (82) (123) Net investment income 365 360 255 251 Other revenues and expenses, net (30) 7 - - ------- -------- ------- ------- Operating income before tax 344 311 173 128 Income taxes (119) (106) (55) (39) ------- -------- ------- ------- Net operating income $ 225 $ 205 $ 118 $ 89 ======= ======== ======= ======= Loss & LAE ratio 62.7% 63.5% 66.2% 67.2% Expense ratio 37.0% 38.3% 37.2% 38.4% ------- -------- ------- ------- Combined ratio 99.7% 101.8% 103.4% 105.6% ======= ======== ======= ======= Net catastrophe losses, pre-tax $17 $97 % of net earned premiums 0.5% 4.0% Run-off - ------- Gross premiums written 19 19 2 2 Net premiums written 11 11 (2) (2) Net premiums earned 22 22 (1) (1) Losses and loss adjustment expenses (232) (232) (143) (143) Policy acquisition expenses (14) (14) (6) (6) Operating expenses (81) (82) (61) (61) ------- -------- ------- ------- Underwriting gain (loss) (305) (306) (211) (211) Net investment income 282 282 191 191 Other revenues and expenses, net 20 5 15 6 ------- -------- ------- ------- Operating income (loss) before tax (3) (19) (5) (14) Income tax recovery 5 12 5 8 ------- -------- ------- ------- Net operating income (loss) $ 2 $ (7) $ - $ (6) ======= ======== ======= ======= - ---------------------------------------------------------------------------------------------------------------------
# # # 7 EX-99.2 3 Exhibit 99.2 NEWS RELEASE [CIGNA LOGO] For Release: Immediate One Liberty Place 1650 Market Street P.O. Box 7716 Philadelphia, PA 19192-1520 (215) 761-1000 Concact: Ted Detrick, Financial Relations - (215) 761-6130 Michael J. Monroe, Media Relations - (215) 761-6133 CIGNA TO RECORD FOURTH QUARTER CHARGES FOR PROPERTY AND CASUALTY BUSINESSES PHILADELPHIA, January 12, 1999 -- CIGNA Corporation (NYSE: CI) today announced that its fourth quarter earnings would include approximately $60 million after-tax for weather-related losses, restructuring charges and additional large loss and reserve strengthening affecting its domestic and international property and casualty businesses. The weather-related losses are for $14 million (after-tax) of claims associated with Hurricane Mitch and an additional $10 million (after-tax) of claims for Hurricane Georges. The businesses also will incur charges of $16 million after-tax to restructure their operations. The international P&C results also will include $20 million of after-tax charges for large loss activity and reserve strengthening reflecting continued soft market conditions. -----END PRIVACY-ENHANCED MESSAGE-----