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Cigna Profit Climbs, Lifts FY13 Adj. Earnings View, But Below Estimates


Health insurer Cigna Corp. (CI) reported a surge in fourth-quarter profit as revenues were benefited by strong growth in premiums and fees as well as the acquisition of HealthSpring. Further, the company lifted its fiscal 2013 adjusted earnings view, which is below analysts' estimates.

President and Chief Executive Officer David Cordani said, "Cigna's operating performance in 2012 was strong, driven by effective execution of our strategy and a consistent focus on delivering value for our customers. This focus on our global customers and the disciplined management of our differentiated businesses continues to drive our growth and positions Cigna well for attractive performance in 2013 and beyond."

For the fourth quarter, Cigna reported shareholders' net income of $406 million or $1.41 per share, compared to last year's $273 million or $0.98 per share. The latest quarter results included income of $7 million or $0.02 per share related to the Run-off GMIB business, more than offset by losses of $68 million or $0.24 per share related to litigation matters.

Adjusted income from operations, which excluded items, was $452 million, higher than $293 million last year. Adjusted income from operations per share climbed to $1.57 from $1.05 a year ago.

On average, 17 analysts polled by Thomson Reuters expected earnings of $1.48 per share for the quarter. Such estimates typically exclude special items.

Total revenues climbed to $7.62 billion from last year's $5.43 billion, while analysts were looking for $6.72 billion.

In the quarter, global healthcare segment's premiums and fees increased 48 percent reflecting strategic expansion into the Seniors market through the acquisition of HealthSpring and growth in targeted customer segments. As of December 31, global medical customers totaled 14.05 million, higher than prior year's 12.68 million.

For fiscal 2012, Cigna's shareholders' net income grew to $1.62 billion or $5.61 per share from last year's $1.26 billion or $4.59 per share. Adjusted income from operations was $1.73 billion, or $5.99 per share, representing per share growth of 21 percent over 2011. Consolidated revenues climbed 33 percent to $29.1 billion.

Looking ahead, Cigna increased its outlook for full year 2013 consolidated adjusted income from operations to be in the range of $1.7 billion to $1.83 billion or $5.85 to $6.30 per share. The previous forecast was for adjusted earnings between $1.69 billion and $1.82 billion, or $5.80 per share and $6.25 per share. Analysts estimates earnings of $6.34 per share for the full year.

The 2013 outlook excludes the expected after-tax charge of $500 million related to the transaction to exit its Run-off operations.

As per the previous forecast, revenues for the year are projected to be in the range of $31.50 billion to $32.50 billion. Analysts expect revenues of $28.61 billion.

For the year, the company also projects global medical customer growth between 1 percent and 2 percent.

Cigna shares closed Wednesday's trading at $59.67, down $0.71 or 1.18 percent.

by RTTNews Staff Writer

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