Cigna's third-quarter profits more than doubled, boosted by its acquisition of Medicare-based insurer HealthSpring earlier this year and a jump in premiums and fees.
The Hartford, Conn.-based insurer earned $466 million in the third quarter, up from $183 million in the second quarter. Revenue also increased 31 percent to $7.36 billion, reported the Associated Press.
"It is a very strong quarter that has exceeded expectations in all segments," Ana Gupte, an analyst with Sanford C. Bernstein & Co., told Bloomberg. "Healthcare earnings are particularly strong with growth and solid metrics in the Medicare and Commercial segments."
One reason Cigna outperformed this quarter was its new HealthSpring business, which has withstood pricing pressure by using nurses and other healthcare managers to focus on preventive care and, thereby, manage costs.
But despite such a profitable quarter, Cigna CEO David Cordani is taking nothing for granted. He said "economic headwinds" will continue into 2013, including the so-called fiscal cliff of $600 billion in upcoming government spending cuts. "From a Cigna standpoint, I don't worry about the fiscal cliff as being a singular event that affects Cigna. I worry about it as an event that affects the overall economy and provides an overall headwind on employers and individuals," Cordani told Reuters.
In reporting its third-quarter earnings, Cigna also announced its "realignment and efficiency plan," which includes cutting some 1,300 jobs companywide, amounting to 4 percent of its workforce, between now and next June. The company didn't state which specific jobs would get cut, according to The Hartford Courant. "These actions will position Cigna to be more competitive and enable the company to invest in programs to make health care delivery more cost effective in all our businesses," said Cigna Spokesman Jon Sandberg.