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Cigna Corp. (NYSE: CI)
One Liberty Place
Philadelphia, PA 19192-1550
Chairman: Wilson H. Taylor
President and CEO:
H. Edward Hanway
Revenues (FYE December 31, 1999): $18.781 billion
Net Income (FYE December 31, 1999): $1.774 billion
Market Capitalization: $13.644 billion
Employees: 41,900
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Business New Haven
5/1/2000
By: Kristine Hansen
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Last year Cigna Corp. took the final step in eliminating operations that no linger fit into its corporate strategy - the company sold its property and casualty business. Now what?
Plenty. With $95 billion in assets, Cigna is focusing its attention on establishing itself as a leading employee-benefits company. Employee benefits can mean different things to different people, and to fulfill those needs Cigna offers an array of products and services under the employee-benefits banner.
Cigna's Employee Health Care, Life and Disability Benefits business offers health-care programs in all 50 states, managed health-care networks in 45 states and managed dental care in 44 states (its managed programs are also offered in the District of Columbia). Last year enrollment grew to 13.3 million people. The company also provides managed pharmacy services as well as cost and utilization management.
Through its group insurance segment the company offers employer-paid and voluntary life, accident, travel and disability plans as well as specialty non-employer sponsored group plans. This group also offers management of health care, disability and workers compensation programs.
Cigna's employee retirement, benefits and investment services unit offers a range of retirement benefits plans, 401(k) and other defined contribution plans as well as defined benefit plans, IRAs and discount brokerage. For the 1999 year this business generated $8.5 billion in deposits and $55.754 billion in assets under management. Cigna also offers institutional investment management through its investment-management group. Invested assets for the 1999 were $90.5 billion, with consolidated net investment income of almost $3 billion.
Risk-management services and reinsurance is sold through Cigna Reinsurance for the U.S. and international markets. Internationally, Cigna also offers group and employee benefits such as medical indemnity and managed care, life insurance, pensions, accident, health and disability programs.
Cigna's big premium producers for 1999 were the HMO medical- and dental-care plans which accounted for 44 percent of total adjusted premiums and fees for the year. Medical indemnity plans finished a close second, contributing 39 percent. The remainder was spread among dental, indemnity, life insurance, long-term disability and other insurance products. 1999 revenues from premiums and fees were $15.1 billion.
Total 1999 revenues including premiums and fees, net investment income, investment gains and other revenues were $18.8 billion, compared to $17.7 billion for 1998. Net income for 1999, including discontinued operations, was $1.8 billion ($3.54 per diluted share from continuing operations, $5.91 per diluted share from discontinued operations). This compares to 1998 net income of $1.3 billion ($5.56 per diluted share from continuing operations and 49 cents per diluted share from discontinued operations).
Highlights for the year include the company's use of proceeds from the sale of its property and casualty operations to repurchase 36.7 million shares its outstanding common stock for $3.1 billion. The company also undertook a cost-reduction initiative resulting in a $10 million after-tax charge, largely for severance. Late in the year, Cigna was named along with several other health-care companies in potential class-action lawsuits regarding managed-care practices.
The company's stock price for the past 52 weeks ranges from a low of 60 3/4 to a high of 98 5/8. It is presently trading in the $80 range, closing on April 17 at 80 15/16. A majority of analysts recommend a strong buy, although some recommend a moderate buy or hold. Earnings per share estimates are $6.34 per share for 2000 and $7.24 per share for 2001.
Part of the Cigna strategy of building its reputation as an employee-benefits company has been to concentrate its attention on the consumer. Cigna has introduced a company-wide initiative, using e-commerce, to improve operating efficiency and keep customers informed so it can make better decisions regarding health care and investments.
To provide better distribution of services to small and growing businesses, Cigna's retirement and investment services unit recently announced the implementation of a three-part strategy that includes increased staffing for selling through brokers and administrators, adding a distribution unit and looking for additional distribution through banks. This new strategy marks the first time Cigna will use banks to offer its retirement products and services.
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