-----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, SgGgY9KmTbisuq8KhJlD7Ye6Thz0a1ItSefSfXBOsTi1dm8Ejo2/41myZlPxTC8A l8N3qN/ISA83d97PVz4Ttg== 0001010410-99-000019.txt : 19990211 0001010410-99-000019.hdr.sgml : 19990211 ACCESSION NUMBER: 0001010410-99-000019 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990209 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990210 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: 99528869 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) February 9, 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 February 9, 1999, 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 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 Latin American and Asian economies. Item 7. Financial Statements and Exhibits. ---------------------------------- (c) The exhibit accompanying this report is listed in the Index to Exhibits. 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 10, 1999 By: /s/ James A. Sears ------------------ James A. Sears, Vice President and Chief Accounting Officer Index to Exhibits Number Description Method of Filing - ------ ----------- ---------------- 20 CIGNA Corporation Filed herewith news release dated February 9, 1999 EX-20 2 [CIGNA LOGO] NEWS RELEASE For Release: Immediate Contact: Edwin J. Detrick, Investor Relations - (215) 761-6130 Michael J. Monroe, Media Relations - (215) 761-6133 CIGNA REPORTS FOURTH QUARTER AND FULL YEAR 1998 RESULTS PHILADELPHIA, February 9, 1999 -- CIGNA Corporation (NYSE:CI) today reported fourth quarter 1998 operating income of $216 million, or $1.04 per share, compared with operating income of $179 million, or $0.81 per share for the fourth quarter of 1997. Excluding after-tax charges of $19 million in 1998 for restructuring activities and $81 million in 1997 primarily for Healthsource integration and health care cost reduction activities, operating income was $235 million, or $1.13 per share for 1998, compared with $260 million, or $1.18 per share for 1997. Full year 1998 operating income was $988 million, or $4.63 per share, excluding an after-tax gain of $202 million from the first quarter sale of CIGNA's individual life insurance and annuity business. Including the gain on the sale, operating income was $1.2 billion, or $5.58 per share. For 1997, operating income was $971 million, or $4.36 per share. "Operating results for our employee benefits businesses were strong in 1998. We also made several significant further steps in positioning the company to focus on our employee benefits strategy, including the successful integration of the Healthsource acquisition, the sale of our individual life and annuity business and the recent agreement to sell our property and casualty businesses," said Wilson H. Taylor, CIGNA's CEO. - -------------------------------- Operating income (loss) is defined as net income (loss) excluding after-tax realized investment results. All earnings per share amounts are on a diluted basis. -2- CIGNA adopted a new accounting standard for segment reporting in the fourth quarter of 1998, which resulted in changes to CIGNA's operating segments. The following segment discussion reflects these changes. See attached exhibits 2 and 3 for analysis of the changes. In addition, the following discussion of segment operating results excludes the specific adjustments noted in the attached exhibit 1. SEGMENT RESULTS: Employee Health Care, Life and Disability Benefits - -------------------------------------------------- This segment includes CIGNA's HMO and indemnity operations. The segment had operating income of $184 million in the fourth quarter of 1998, compared with $139 million for the same period last year. Full year 1998 operating income was $617 million, compared with $511 million for 1997. Revenues for the fourth quarter and full year of 1998 were $3.3 billion and $12.6 billion, respectively, compared with $3.0 billion and $10.6 billion for the same periods last year. HMO medical membership was 6.5 million members, up 11 percent over year-end 1997. Employee Retirement Benefits and Investment Services - ---------------------------------------------------- This segment, which operates in the defined contribution, defined benefit and corporate life insurance markets, had operating income of $64 million in the fourth quarter of 1998. This compares with -3- operating income of $59 million for the same period last year. Full year 1998 operating income was $248 million, compared with $225 million for full year 1997. Assets under management at December 31, 1998 were $52.9 billion, an increase of 10 percent from $48.2 billion as of December 31, 1997. International Life, Health and Employee Benefits - ------------------------------------------------ This segment, which includes CIGNA's individual life insurance and employee benefits businesses operating in international markets, had an operating loss of $12 million in the fourth quarter of 1998. This compares with operating income of $6 million for the same period last year. Full year 1998 operating income was $18 million, compared with $21 million in 1997. Property and Casualty - --------------------- The property and casualty (P&C) segment includes the domestic and international P&C business (collectively known as "ongoing P&C operations") as well as the run-off operations. CIGNA has agreed to sell these businesses to ACE Limited for $3.45 billion (see release dated January 12, 1999 for details). Completion of the sale is subject to receipt of regulatory approvals and other conditions to closing. Ongoing P&C operations had breakeven results for the fourth quarter of 1998. The quarter was impacted by after-tax catastrophe losses of $29 million. This compares with operating income of $49 -4- million for the same period last year, which included $1 million of after-tax catastrophe losses. Full year 1998 P&C operating income was $88 million, compared with operating income of $209 million for 1997. The 1998 results include $92 million of after-tax catastrophe losses, primarily for Hurricanes Georges and Mitch, as compared to $12 million of after-tax catastrophe losses in 1997. Other Operations - ---------------- Other Operations includes gain recognition related to the sale of the individual life insurance and annuity business, the leveraged corporate life insurance operation, the life and health reinsurance business and certain new business initiatives, as well as the results of the settlement annuity business and investment and real estate subsidiaries. Other Operations had operating income of $21 million in the fourth quarter of 1998, compared with operating income of $42 million for the same period last year. For full year 1998, operating income was $111 million, compared with $173 million in 1997. Corporate - --------- Corporate primarily includes unallocated investment income and parent company expenses, including debt service. Corporate had a loss of $22 million in the fourth quarter of 1998, compared with a loss of $35 million for the same period last year. For full year 1998, the loss was $75 million, compared with a loss of $87 million in 1997. -5- NET INCOME - ---------- Consolidated net income for the fourth quarter and full year of 1998 was $238 million, or $1.14 per share, and $1.3 billion, or $6.05 per share, respectively. Consolidated net income for the same periods last year was $240 million, or $1.09 per share, and $1.1 billion, or $4.88 per share, respectively. REVENUES - -------- Consolidated revenues for the fourth quarter and full year of 1998 were $5.5 billion and $21.4 billion, respectively, compared with $5.5 billion and $20.0 billion for the same periods last year. ASSETS/SHAREHOLDERS' EQUITY - --------------------------- Assets at December 31, 1998 were $114.6 billion, compared with $108.2 billion at year-end 1997. Shareholders' equity was $8.3 billion ($40.25 per share) at December 31, 1998, compared with $7.9 billion ($36.55 per share) at December 31, 1997. SHARE REPURCHASE - ---------------- In the fourth quarter of 1998, CIGNA repurchased 1.0 million shares of its common stock for $65 million, bringing share repurchase activity for full year 1998 to 12.4 million shares at a cost of $822 million. -6- CIGNA's board of directors recently approved a $500 million increase in share repurchase authority, which brings the total current authority to approximately $800 million. Quarterly earnings are available on CIGNA's home page on the Internet (http://www.cigna.com).
CIGNA CORPORATION COMPARATIVE SUMMARY OF FINANCIAL RESULTS [CIGNA LOGO] (Dollars in millions, except per share amounts) - ---------------------------------------------------------------------------------------------------------------------------- Three Months Ended Year Ended December 31, December 31, 1998 1997 1998 1997 - ---------------------------------------------------------------------------------------------------------------------------- REVENUES Premiums and fees $ 4,304 $ 4,140 $ 16,413 $ 14,935 Net investment income 915 1,073 3,705 4,245 Other revenues 227 193 847 691 Gain on sale of business (1) - - 316 - Realized investment gains 33 86 156 167 - ---------------------------------------------------------------------------------------------------------------------------- Total $ 5,479 $ 5,492 $ 21,437 $ 20,038 - -----------------------------------------------------------================================================================ OPERATING INCOME (LOSS) BY SEGMENT (1)(2)(3) Employee Health Care, Life and Disability Benefits: Indemnity operations $ 95 $ 94 $ 314 $ 297 HMO operations 89 (41) 303 128 ----------- ---------- ----------- ------------ Total Employee Health Care, Life and Disability Benefits 184 53 617 425 Employee Retirement Benefits and Investment Services 64 64 248 230 International Life, Health and Employee Benefits (13) 6 17 21 Property and Casualty: International (29) 19 (13) 106 Domestic 13 26 85 98 ----------- ---------- ----------- ------------ Ongoing operations (16) 45 72 204 Run-off operations (2) 0 (2) 1 ----------- ---------- ----------- ------------ Total Property and Casualty (18) 45 70 205 Other Operations 21 49 313 180 Corporate (22) (38) (75) (90) - ---------------------------------------------------------------------------------------------------------------------------- Total $ 216 $ 179 $ 1,190 $ 971 - -----------------------------------------------------------================================================================ NET INCOME (LOSS) BY SEGMENT (1)(3) Employee Health Care, Life and Disability Benefits: Indemnity operations $ 94 $ 109 $ 368 $ 314 HMO operations 89 (41) 303 128 ----------- ---------- ----------- ------------ Total Employee Health Care, Life and Disability Benefits 183 68 671 442 Employee Retirement Benefits and Investment Services 70 71 273 245 International Life, Health and Employee Benefits (11) 7 17 23 Property and Casualty: International (21) 30 (23) 141 Domestic 18 26 94 112 ----------- ---------- ----------- ------------ Ongoing operations (3) 56 71 253 Run-off operations (2) (1) 10 (1) ----------- ---------- ----------- ------------ Total Property and Casualty (5) 55 81 252 Other Operations 23 78 322 215 Corporate (22) (39) (72) (91) - ---------------------------------------------------------------------------------------------------------------------------- Total $ 238 $ 240 $ 1,292 $ 1,086 - -----------------------------------------------------------================================================================ DILUTED EARNINGS PER SHARE: Operating income $ 1.04 $ 0.81 $ 5.58 $ 4.36 After-tax realized investment gains 0.10 0.28 0.47 0.52 - ---------------------------------------------------------------------------------------------------------------------------- Net income $ 1.14 $ 1.09 $ 6.05 $ 4.88 - -----------------------------------------------------------================================================================ Weighted average shares (in thousands) 208,072 220,863 213,447 222,513 - -----------------------------------------------------------================================================================ SHAREHOLDERS' EQUITY at December 31: $ 8,277 $ 7,932 - -----------------------------------------------------------------------------------------------============================ SHAREHOLDERS' EQUITY PER SHARE at December 31: $ 40.25 $ 36.55 - -----------------------------------------------------------------------------------------------============================ (1) Reflects the pre-tax gain of $316 million ($202 million after-tax) recognized as of January 1, 1998 in connection with the sale of the individual life insurance and annuity business. (2) Operating income (loss) is defined as net income (loss) excluding after-tax realized investment results. (3) Segment results reflect the adoption of SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information". The key changes are that: 1) CIGNA's international life, health and employee benefits operations are reported as a separate segment and 2) most businesses previously reported in the Individual Financial Services segment have been reclassified to Other Operations as a result of the January 1998 sale of the individual life insurance and annuity business. In addition, unallocated corporate income and expenses (primarily interest), which were previously included in Other Operations, are now presented as Corporate.
CIGNA Corporation Exhibit 1 Supplemental Financial Information Financial Data Excluding Specific Adjustments - Results of Operations (Dollars in millions, except per share amounts)
Employee Retirement International Employee Health Care, Life & Benefits & Life, Health Disability Benefits Investment & Emp. Indemnity HMOs Total Svcs. Benefits Three months ended December 31, 1998 1997 1998 1997 1998 1997 1998 1997 1998 1997 -------------------------------------------------------------------------------- Operating income (loss) before adjustments (1) $95 $97 $89 $42 $184 $139 $64 $59 ($12) $6 Adjustments: increase (decrease) Restructuring charge - - - - - - - - (1) - Healthcare restructuring and integration charge - (5) - (75) - (80) - - - - Tax and other account reviews - 2 - (8) - (6) - 5 - - -------------------------------------------------------------------------------- Operating income (loss) as published 95 94 89 (41) 184 53 64 64 (13) 6 -------------------------------------------------------------------------------- After-tax realized investment gains (losses) (1) 15 - - (1) 15 6 7 2 1 - ----------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $94 $109 $89 ($41) $183 $68 $70 $71 ($11) $7 =================================================================================================================================== Diluted Property & Other Earnings Casualty Operations Corporate Consolidated Per Share Three months ended December 31, 1998 1997 1998 1997 1998 1997 1998 1997 1998 1997 ------------------------------------------------------------------------------- Operating income (loss) before adjustments (1) $0 $49 $21 $42 ($22) ($35) $235 $260 $1.13 $1.18 Adjustments: increase (decrease) Restructuring charge (18) - - - - - (19) - (0.09) - Healthcare restructuring and integration charge - - - - - - - (80) - (0.37) Tax and other account reviews - (4) - 7 - (3) - (1) - - -------------------------------------------------------------------------------- Operating income (loss) as published (18) 45 21 49 (22) (38) 216 179 1.04 0.81 -------------------------------------------------------------------------------- After-tax realized investment gains (losses) 13 10 2 29 - (1) 22 61 0.10 0.28 - ----------------------------------------------------------------------------------------------------------------------------------- Net income (loss) ($5) $55 $23 $78 ($22) ($39) $238 $240 $1.14 $1.09 =================================================================================================================================== Employee Retirement International Employee Health Care, Life & Benefits & Life, Health Disability Benefits Investment & Emp. Indemnity HMOs Total Svcs. Benefits Year ended December 31, 1998 1997 1998 1997 1998 1997 1998 1997 1998 1997 -------------------------------------------------------------------------------- Operating income (loss) before adjustments (1) $314 $300 $303 $211 $617 $511 $248 $225 $18 $21 Adjustments: increase (decrease) Gain on sale of business - - - - - - - - - - Restructuring charge - - - - - - - - (1) - Healthcare restructuring and integration charge - (5) - (75) - (80) - - - - Tax and other account reviews - 2 - (8) - (6) - 5 - - -------------------------------------------------------------------------------- Operating income (loss) as published 314 297 303 128 617 425 248 230 17 21 -------------------------------------------------------------------------------- After-tax realized investment gains (losses) 54 17 - - 54 17 25 15 - 2 - ----------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $368 $314 $303 $128 $671 $442 $273 $245 $17 $23 =================================================================================================================================== Diluted Property & Other Earnings Casualty Operations Corporate Consolidated Per Share Year ended December 31, 1998 1997 1998 1997 1998 1997 1998 1997 1998 1997 ------------------------------------------------------------------------------- Operating income (loss) before adjustments (1) $88 $209 $111 $173 ($75) ($87) $1,007 $1,052 $4.72 $4.73 Adjustments: increase (decrease) Gain on sale of business - - 202 - - - 202 - 0.95 - Restructuring charge (18) - - - - - (19) - (0.09) - Healthcare restructuring and integration charge - - - - - - - (80) - (0.37) Tax and other account reviews - (4) - 7 - (3) - (1) - - -------------------------------------------------------------------------------- Operating income (loss) as published 70 205 313 180 (75) (90) 1,190 971 5.58 4.36 -------------------------------------------------------------------------------- After-tax realized investment gains (losses) 11 47 9 35 3 (1) 102 115 0.47 0.52 - ----------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $81 $252 $322 $215 ($72) ($91) $1,292 $1,086 $6.05 $4.88 =================================================================================================================================== (1) Operating income by segment (before adjustments) using the previous segment presentation is as follows (see Exhibit 3):
Three Months Ended Year Ended December 31, December 31, ======================= ======================= 1998 1997 1998 1997 ======= ======= ======= ======= Employee Life and Health Benefits $ 184 $ 139 $ 616 $ 510 Employee Retirement and Savings Benefits 59 56 230 216 Individual Financial Services 33 52 151 198 Property and Casualty (12) 55 106 230 Other Operations (29) (42) (96) (102) - ------------------------------------------------------------------------------------------------------- Total $ 235 $ 260 $ 1,007 $ 1,052 =======================================================================================================
Exhibit 2 CIGNA Corporation ----------------- Guide to New Segment Presentation --------------------------------- Previous Presentation - --------------------- Employee Life and Health Benefits (EL&HB) o Managed medical and dental care products o Group indemnity health insurance and related services o Group life, accident and disability insurance Employee Retirement and Savings Benefits (ER&SB) o Retirement and investment products and services Individual Financial Services o Individual life insurance and annuity business, including gains related to the sale of this business o Corporate life insurance (leveraged and non-leveraged) business o Life, accident and health reinsurance operations Property and Casualty o Commercial property-casualty, accident and health, and risk management services, including domestic (ongoing and run-off) and international operations o International life, health and employee benefits services Other Operations o Settlement annuity business o Certain new business initiatives o Unallocated corporate income and expenses New Presentation Effective for December 31, 1998 - ------------------------------------------------ Employee Health Care, Life and Disability Benefits o No significant change from previous presentation for EL&HB Employee Retirement Benefits and Investment Services o New presentation for ER&SB also includes non-leveraged corporate life insurance business (previously reported in the Individual Financial Services segment) Individual Financial Services o Sale of individual life insurance and annuity business eliminates this segment International Life, Health and Employee Benefits o International life, health, and employee benefits services (previously included in the Property and Casualty segment) Property and Casualty o Commercial property-casualty, accident and health, and risk management services, including domestic (ongoing and run-off) and international operations o In January 1999, CIGNA entered into an agreement to sell the businesses which comprise this segment Other Operations o Individual life insurance and annuity business, including gains related to the sale of this business o Leveraged corporate life insurance business o Life, accident and health reinsurance operations o Settlement annuity business o Certain new business initiatives Corporate o Unallocated corporate income and expenses
Exhibit 3 CIGNA Corporation Guide to New Segment Presentation (Excluding Specific Adjustments Noted on Exhibit 1) ====================================================================================== Three Months Ended Year Ended December 31, December 31, ================== ================= 1998 1997 1998 1997 ==== ==== ==== ==== OPERATING INCOME (LOSS) AFTER INCOME TAXES Employee Health Care, Life and Disability Benefits (EHL&DB) - ----------------------------------------------------------- Previous segment presentation $184 $139 $616 $510 add: Business previously reported in IFS - - 1 1 ------ ------ ------ ------ Total EHL&DB 184 139 617 511 ------ ------ ------ ------ Employee Retirement Benefits and Investment Services (ERB&IS) - ------------------------------------------------------------- Previous segment presentation 59 56 230 216 add: non-leveraged corporate life ins. (previously reported in IFS) 5 3 18 9 (A) ------ ------ ------ ------ Total ERB&IS 64 59 248 225 ------ ------ ------ ------ Individual Financial Services (IFS) (no longer a segment) - ---------------------------------------------------------- Previous segment presentation 33 52 151 198 less: IFS business now reported in EHL&DB - - (1) (1) less: non-leveraged corporate life ins. (now reported in ERB&IS) (5) (3) (18) (9)(A) less: business sold (including gains in 1998; now reported in Other) (17) (26) (68) (96)(B) less: Reinsurance and leveraged corporate life ins. (now reported in Other) (11) (23) (64) (92)(C) ------ ------ ------ ------ Total IFS - - - - ------ ------ ------ ------ International Life, Health and Employee Benefits (new segment) (12) 6 18 21 (D) - -------------------------------------------------------------- ------ ------ ------ ------ Property and Casualty (P&C) - --------------------------- Previous segment presentation (12) 55 106 230 less: International life, health and EB businesses (reported in new segment) 12 (6) (18) (21)(D) ------ ------ ------ ------ Total Property and Casualty 0 49 88 209 ------ ------ ------ ------ Other Operations - ---------------- Previous segment presentation (29) (42) (96) (102) add: IFS business sold (including gains in 1998; previously reported in IFS) 17 26 68 96 (B) add: Reinsurance and leveraged corporate life ins. (previously reported in IFS) 11 23 64 92 (C) less: unallocated corporate income and expenses (reported separately) 22 35 75 87 (E) ------ ------ ------ ------ Total Other Operations 21 42 111 173 ------ ------ ------ ------ Corporate (unalloc. corp. income and expenses; previously in Other) (22) (35) (75) (87)(E) - ------------------------------------------------------------------- ------ ------ ------ ------ Total $235 $260 $1,007 $1,052 =============================================================================================================================== Note: The alphabetical references in the far right column demonstrate the changes in segment presentation, i.e. (A) to (A), (B) to (B), etc.
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