-----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, WzsKoRsDdmCjMbJ55/Wo+fPC6aYn8EJKTNFyDORxKYC376QdISRbGI3THL+w8D21 NkZjDyWpMWWep/fP78QaBQ== 0000950159-98-000032.txt : 19980212 0000950159-98-000032.hdr.sgml : 19980212 ACCESSION NUMBER: 0000950159-98-000032 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980210 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980211 SROS: NYSE SROS: PHLX SROS: PCX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIGNA CORP CENTRAL INDEX KEY: 0000701221 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] 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: 98532071 BUSINESS ADDRESS: STREET 1: ONE LIBERTY PL 1650 MARKET ST STREET 2: P O BOX 7716 CITY: PHILADELPHIA STATE: PA ZIP: 19192-1550 BUSINESS PHONE: 2157611000 8-K 1 CONFORMED COPY 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) February 10, 1998 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, P.O. Box 7716 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. On February 10, 1998, 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 Statements not dealing 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 economies. Item 7. Financial Statements and Exhibits. (c) The exhibit accompanying this report is 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: February 11, 1998 By:/s/ Gary A. Swords Gary A. Swords Vice President and Chief Accounting Officer Index to Exhibits Number Description Method of Filing 20 CIGNA Corporation Filed herewith news release dated February 10, 1998 EX-20 2 [CIGNA LOGO] NEWS RELEASE Immediate Albert D. Ciavardelli, Investor Relations - (215) 761-6128 Michael J. Monroe, Media Relations - (215) 761-6133 CIGNA REPORTS FOURTH QUARTER AND FULL YEAR 1997 RESULTS EPS IN LINE WITH FIRST CALL CONSENSUS ESTIMATES PHILADELPHIA, February 10, 1998 -- CIGNA Corporation (NYSE:CI) today reported fourth quarter 1997 operating income of $260 million, or $3.53 per share, excluding after-tax charges of $81 million primarily for integration costs associated with the June 1997 acquisition of Healthsource and health care cost reduction activities. Including the charges, fourth quarter operating income was $179 million, or $2.43 per share. Operating income in the fourth quarter of 1996 was $261 million, or $3.48 per share. Full year 1997 operating income was $1.1 billion, or $14.18 per share, before the charges ($971 million, or $13.09 per share, after the charges) versus $1.0 billion, or $13.20 per share, for 1996. "We are pleased with the continued growth in underlying earnings and with the structural changes that have strengthened our health care operations and added significantly to our capital position," said Wilson H. Taylor, CIGNA's Chief Executive Officer. _________________________________ Operating income (loss) is defined as net income (loss) excluding after-tax realized investment results. In the fourth quarter of 1997, CIGNA implemented the new accounting rules for earnings per share. All earnings per share amounts are on a diluted basis and prior periods have been restated. - 2 - The following discussions of segment operating results exclude the specific adjustments noted in the attached exhibit. SEGMENT RESULTS: Employee Life and Health Benefits This segment includes CIGNA's HMO and indemnity operations as well as Healthsource results since the acquisition date of June 25, 1997. The segment had operating income of $139 million in the fourth quarter of 1997, compared with $137 million for the same period last year. Full year 1997 operating income was $510 million, compared with $497 million for 1996. HMO medical membership, including the addition of 1.2 million Healthsource members, is now at 5.9 million members, up 9 percent over year-end 1996 on a comparable basis. Employee Retirement and Savings Benefits This segment, which operates in the defined contribution and defined benefit markets, had operating income of $56 million in the fourth quarter of 1997. This compares with operating income of $54 million for the same period last year. Full year 1997 operating income was $216 million, compared with $201 million for full year 1996. Assets under management at December 31, 1997 were $46.3 billion, an increase of 14 percent from $40.6 billion as of December 31, 1996. - 3 - Individual Financial Services This segment, which in 1997 included individual and corporate-owned life insurance; life, accident and health reinsurance; and annuity businesses, had operating income of $52 million in the fourth quarter of 1997. This compares with operating income of $40 million for the same period last year. Full year 1997 operating income was $198 million, compared with $161 million in 1996. The individual life insurance and annuity businesses, which were sold to Lincoln National Corporation effective January 1, 1998, represented $28 million and $98 million of this segment's operating income for the fourth quarter and full year of 1997, respectively. The corporate-owned life insurance and reinsurance businesses, with operating income of $24 million and $100 million for the fourth quarter and full year of 1997, respectively, have been retained by CIGNA. Upon closing the transaction, CIGNA received $1.4 billion in cash and retained approximately $200 million of capital previously committed to the businesses that were sold. The sale resulted in an after-tax gain of approximately $800 million, of which approximately $225 million will be immediately recognized and the remainder deferred and recognized as earnings in future periods beginning in 1998. Property and Casualty The property and casualty (P&C) segment includes the Ongoing operations (International and Domestic) and Run-off. - 4 - Ongoing operations had operating income of $55 million and a GAAP combined ratio after policyholders' dividends ("combined ratio") of 99 for the fourth quarter of 1997. This compares with operating income of $57 million and a combined ratio of 100 for the same period last year. Full year 1997 operating income was $229 million and the combined ratio was 100, compared with operating income of $211 million and a combined ratio of 102 for 1996. Within the Ongoing operations, International had operating income of $23 million and a combined ratio of 97 for the fourth quarter of 1997. This compares with operating income of $33 million and a combined ratio of 93 for the fourth quarter of 1996. Full year 1997 operating income was $125 million and the combined ratio was 95, compared with operating income of $135 million and a combined ratio of 93 for 1996. Domestic had operating income of $32 million and a combined ratio of 102 for the fourth quarter of 1997. This compares with operating income of $24 million and a combined ratio of 109 for the fourth quarter of 1996. Full year 1997 operating income was $104 million and the combined ratio was 105, compared with operating income of $76 million and a combined ratio of 110 for 1996. Run-off operations were breakeven in the fourth quarter of 1997, compared with an operating loss of $3 million for the same period in 1996. Full year 1997 operating income was $1 million, compared with $2 million for 1996. - 5 - Other Other Operations includes unallocated investment income, expenses (including debt service) and taxes, and the results of CIGNA's settlement annuity business, investment and real estate subsidiaries and certain new business initiatives. Other Operations had an operating loss of $42 million in the fourth quarter of 1997, compared with an operating loss of $24 million for the same period last year. For full year 1997, the operating loss was $102 million, compared with a loss of $70 million in 1996. NET INCOME Consolidated net income for the fourth quarter and full year of 1997, including specific adjustments of $81 million after-tax, was $240 million, or $3.26 per share, and $1.1 billion, or $14.64 per share, respectively. Consolidated net income for the same periods last year was $306 million, or $4.08 per share, and $1.1 billion, or $13.91 per share, respectively. REVENUES Consolidated revenues for the fourth quarter and full year of 1997 were $5.5 billion and $20.0 billion, respectively, compared with $4.9 billion and $19.0 billion for the same periods last year. - 6 - ASSETS/SHAREHOLDERS' EQUITY Assets at December 31, 1997 were $108.2 billion, compared with $98.9 billion at year-end 1996. Shareholders' equity was $7.9 billion ($109.66 per share) at December 31, 1997, compared with $7.2 billion ($97.15 per share) at December 31, 1996. SHARE REPURCHASE In the fourth quarter of 1997, CIGNA repurchased 1.8 million shares of its common stock for $292 million, bringing share repurchase activity for full year 1997 to 2.1 million shares at a cost of $340 million. As of February 10, 1998, CIGNA had repurchased an additional 230,000 shares for $40 million, leaving $321 million of remaining share repurchase authority. Quarterly earnings are available on CIGNA's home page on the Internet (http://www.cigna.com). CIGNA CORPORATION COMPARATIVE SUMMARY OF FINANCIAL RESULTS (Dollars in millions, except per share amounts) [CIGNA LOGO]
================================================================================================================================== Three Months Ended Year Ended December 31, December 31, 1997 1996 1997 1996 - ---------------------------------------------------------------------------------------------------------------------------------- REVENUES Premiums and fees $ 4,140 $ 3,583 $ 14,935 $ 13,916 Net investment income 1,073 1,070 4,245 4,333 Other revenues 193 162 691 610 Realized investment gains 86 74 167 91 - ---------------------------------------------------------------------------------------------------------------------------------- Total $ 5,492 $ 4,889 $ 20,038 $ 18,950 - -----------------------------------------------------------======================================================================= OPERATING INCOME (LOSS) BY SEGMENT Employee Life and Health Benefits: Indemnity operations $ 94 $ 88 $ 296 $ 286 HMO operations (41) 49 128 211 ----------- ----------- ---------- ----------- Total Employee Life and Health Benefits 53 137 424 497 Employee Retirement and Savings Benefits 61 54 221 201 Individual Financial Services 54 40 200 161 Property and Casualty: International 25 33 127 135 Domestic 26 24 98 76 ----------- ----------- ---------- ----------- Ongoing operations 51 57 225 211 Run-off operations - (3) 1 2 ----------- ----------- ---------- ----------- Total Property and Casualty 51 54 226 213 Other Operations (40) (24) (100) (70) - ---------------------------------------------------------------------------------------------------------------------------------- Total $ 179 $ 261 $ 971 $ 1,002 - -----------------------------------------------------------======================================================================= NET INCOME (LOSS) BY SEGMENT Employee Life and Health Benefits: Indemnity operations $ 109 $ 94 $ 313 $ 289 HMO operations (41) 49 128 211 ----------- ----------- ---------- ----------- Total Employee Life and Health Benefits 68 143 441 500 Employee Retirement and Savings Benefits 66 64 233 222 Individual Financial Services 57 47 208 168 Property and Casualty: International 37 42 164 156 Domestic 26 31 112 84 ----------- ----------- ---------- ----------- Ongoing operations 63 73 276 240 Run-off operations (1) 7 (1) - ----------- ----------- ---------- ----------- Total Property and Casualty 62 80 275 240 Other Operations (13) (28) (71) (74) - ---------------------------------------------------------------------------------------------------------------------------------- Total $ 240 $ 306 $ 1,086 $ 1,056 - -----------------------------------------------------------======================================================================= BASIC EARNINGS PER SHARE: Operating income $ 2.45 $ 3.52 $ 13.23 $ 13.33 After-tax realized investment gains 0.84 0.60 1.56 0.72 - ---------------------------------------------------------------------------------------------------------------------------------- Net income $ 3.29 $ 4.12 $ 14.79 $ 14.05 - -----------------------------------------------------------======================================================================= Weighted average shares (in thousands) 72,916 74,244 73,421 75,165 - -----------------------------------------------------------======================================================================= DILUTED EARNINGS PER SHARE: Operating income $ 2.43 $ 3.48 $ 13.09 $ 13.20 After-tax realized investment gains 0.83 0.60 1.55 0.71 - ---------------------------------------------------------------------------------------------------------------------------------- Net income $ 3.26 $ 4.08 $ 14.64 $ 13.91 - -----------------------------------------------------------======================================================================= Weighted average shares (in thousands) 73,621 74,935 74,171 75,918 - -----------------------------------------------------------======================================================================= SHAREHOLDERS' EQUITY at December 31 $ 7,932 $ 7,208 - ------------------------------------------------------------------------------------------------------============================ SHAREHOLDERS' EQUITY PER SHARE at December 31 $ 109.66 $ 97.15 - ------------------------------------------------------------------------------------------------------============================
Operating income (loss) is defined as net income (loss) excluding after-tax realized investment results. In the fourth quarter of 1997, CIGNA implemented SFAS No. 128, "Earnings Per Share" by replacing primary EPS with basic EPS and fully diluted EPS with diluted EPS. The effect on CIGNA's EPS was not material. Prior year data has been restated in conformity with the new requirements. CIGNA Corporation Supplemental Financial Information Financial Data Excluding Specific Fourth Quarter 1997 Adjustments - Results of Operations (Dollars in millions, except per share amounts)
Employee Life & Health Benefits Employee Individual Retirement & Financial Indemnity HMOs Total Savings Benefits Services Three months ended December 31, 1997 1996 1997 1996 1997 1996 1997 1996 1997 1996 -------------------------------------------------------------------------------- Operating income (loss) before adjustments $97 $88 $42 $49 $139 $137 $56 $54 $52 $40 Adjustments: increase (decrease) Healthcare restructuring and integration charge (5) - (75) - (80) - - - - - Tax and other account reviews 2 - (8) - (6) - 5 - 2 - ----------------------------------------------------------------------------------- Operating income (loss) as published 94 88 (41) 49 53 137 61 54 54 40 ----------------------------------------------------------------------------------- After-tax realized investment gains (losses) 15 6 - - 15 6 5 10 3 7 - ----------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $109 $94 ($41) $49 $68 $143 $66 $64 $57 $47 =================================================================================================================================== Diluted Property & Earnings Casualty Other Consolidated Per Share Three months ended December 31, 1997 1996 1997 1996 1997 1996 1997 1996 ----------------------------------------------------------------------- Operating income (loss) before adjustments $55 $54 ($42) ($24) $260 $261 $3.53 $3.48 Adjustments: increase (decrease) Healthcare restructuring and integration charge - - - - (80) - (1.09) - Tax and other account reviews (4) - 2 - (1) - (0.01) - ------------------------------------------------------------------------- Operating income (loss) as published 51 54 (40) (24) 179 261 2.43 3.48 ------------------------------------------------------------------------- After-tax realized investment gains (losses) 11 26 27 (4) 61 45 0.83 0.60 - ----------------------------------------------------------------------------------------------------------------------------- Net income (loss) $62 $80 ($13) ($28) $240 $306 $3.26 $4.08 ============================================================================================================================= Employee Life & Health Benefits Employee Individual Retirement & Financial Indemnity HMOs Total Savings Benefits Services Year ended December 31, 1997 1996 1997 1996 1997 1996 1997 1996 1997 1996 -------------------------------------------------------------------------------- Operating income (loss) before adjustments $299 $286 $211 $211 $510 $497 $216 $201 $198 $161 Adjustments: increase (decrease) Healthcare restructuring and integration charge (5) - (75) - (80) - - - - - Tax and other account reviews 2 - (8) - (6) - 5 - 2 - -------------------------------------------------------------------------------- Operating income (loss) as published 296 286 128 211 424 497 221 201 200 161 -------------------------------------------------------------------------------- After-tax realized investment gains (losses) 17 3 - - 17 3 12 21 8 7 - ----------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $313 $289 $128 $211 $441 $500 $233 $222 $208 $168 =================================================================================================================================== Diluted Property & Earnings Casualty Other Consolidated Per Share Year ended December 31, 1997 1996 1997 1996 1997 1996 1997 1996 ----------------------------------------------------------------------- Operating income (loss) before adjustments $230 $213 ($102) ($70) $1,052 $1,002 $14.18 $13.20 Adjustments: increase (decrease) Healthcare restructuring and integration charge - - - - (80) - (1.08) - Tax and other account reviews (4) - 2 - (1) - (0.01) - ------------------------------------------------------------------------- Operating income (loss) as published 226 213 (100) (70) 971 1,002 13.09 13.20 ------------------------------------------------------------------------- After-tax realized investment gains (losses) 49 27 29 (4) 115 54 1.55 0.71 - ----------------------------------------------------------------------------------------------------------------------------- Net income (loss) $275 $240 ($71) ($74) $1,086 $1,056 $14.64 $13.91 =============================================================================================================================
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