Cigna 2Q profit climbs, enrollment falls

Health insurer Cigna Corp. said today its second-quarter profit jumped 60 percent on a more favorable interest rate and other items, but enrollment fell 7 percent. The Philadelphia-based company's shares tumbled 6.6 percent, or $1.89, to $26.58 in pre-market trading. Cigna said it earned $435 million, or $1.58 per share, up from $272 million, or 96 cents per share. Revenue fell 8 percent, to $4.49 billion from $4.86 billion. Adjusted profit from operations grew 3 percent to $313 million, or $1.14 per share. Analysts expected a profit of 96 cents per share and $4.8 billion in revenue, according to Thomson Reuters. Cigna said 40 cents per share of its profit came from its guaranteed minimum income benefits business, which took a large charge in the first half of 2008 and had been a drag on past earnings. Cigna discontinued that business and its variable annuity death benefits in 2000. The insurer operates both in run-off mode, meaning it seeks no new business for them. Declines in equity markets had led to charges from both businesses in recent quarters. The insurer also was helped in the second quarter by a benefit of 11 cents per share tied to its decision to freeze its pension plan. Total enrollment at the end of the quarter was 11.2 million, down from 12.1 million in the same quarter last year. Cigna said its premiums and fees — the largest portion of its revenue — fell due to that decline. The company raised its full-year adjusted profit outlook, to $3.80 to $4 per share. That tops analysts' profit expectations of $3.71 per share. In June, Cigna had projected earnings of $3.70 to $3.90 per share. Cigna now expects a larger membership decline, however. It forecast a 5 to 5.5 percent decrease in enrollment, compared with an earlier forecast of a decline of 3 to 4 percent.