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Cigna Earnings Down 3 Percent; Discontinued Offerings Bring Down Total

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(Courtesy Cigna.com)

(Courtesy Cigna.com)

BLOOMFIELD, Conn. (AP) _ Cigna Corp.’s second-quarter earnings
slipped 3 percent, as hits from discontinued businesses countered
acquisition-fueled revenue gains. The health insurer still raised
its forecast for 2012.

The Bloomfield, Conn., company said Thursday it added $10
million after taxes to reserves for its variable annuity death
benefits business in the second quarter. That amounted to a hit of
3 cents per share on Cigna’s earnings.

Cigna discontinued that business and its guaranteed minimum
income benefits years ago and seeks no new business for them. But
those businesses can still affect the company’s performance in a
tough market because Cigna’s liabilities toward them increase. The
insurer also recorded a loss of 17 cents per share in the quarter
from the guaranteed minimum income benefits business.

Overall, the insurer earned $380 million, or $1.31 per share, in
the three months that ended June 30. That compares with net income
of $391 million, or $1.43 per share, in last year’s second quarter.

Cigna said last year that it had earned $408 million, or $1.50
per share, in the 2011 second quarter. But the insurer has since
adjusted the figure to account for some new accounting rules it
adopted in 2012.

Adjusted earnings, which exclude some one-time items, were $1.49
per share in this year’s second quarter, and revenue climbed 35
percent to $7.46 billion.

That performance topped Wall Street expectations. Analysts
expected, on average, earnings of $1.43 per share on $7.24 billion
in revenue, according to FactSet.

The insurer’s U.S. medical membership climbed 10 percent to 12.6
million members compared with last year’s quarter, and premiums and
fees from its heath care business soared 52 percent, helped in part
by the acquisition of the insurer HealthSpring.

Premiums and fees from Cigna’s international business jumped 22
percent to $898 million. Cigna sells individual insurance in
several countries and operates an expatriate business that covers
people living outside their home countries.

Cigna now expects 2012 adjusted earnings to range between $5.25
and $5.60 per share, up from its previous forecast of $5.20 to
$5.55 per share. Analysts expect, on average, earnings of $5.51 per
share.

Company shares climbed 51 cents to $40.24 Thursday in premarket
trading.

(Copyright 2012 by The Associated Press.  All Rights Reserved.)

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