Cigna's first quarter earnings declined 10 percent, but this didn't prevent the fourth largest insurer from raising its 2012 earnings forecast.
The insurer on Thursday reported that it made $371 million, or $1.28 per share, compared with net income of $413 million, or $1.51 per share, a year ago. Revenue increased 25 percent to $6.79 billion, according to a Cigna news release.
Despite the earnings decline, Cigna raised its 2012 earnings forecast to $5.20 to $5.55 per share. It previously projected $5.00 to $5.40 per share, Reuters reported.
Cigna's earnings and revenue for the quarter reflected the insurer's $3.8 billion acquisition of Medicare-based insurer HealthSpring, which closed earlier in the quarter. Cigna took a $28-million, after-tax charge tied to the acquisition, but it also saw premiums and fees increase about 36 percent, the Associated Press reported. The HealthSpring acquisition increased Cigna's stake in the market for Medicare Advantage plans.
Cigna's revenue for the quarter also took a hit when the insurer absorbed an $11 million loss from a discontinued business and recorded a $13-million after-tax litigation charge. While earnings in Cigna's primary healthcare segment increased 6.5 percent to $262 million, its disability and life segment saw a decline of 16 percent to $65 million. The insurer attributed the drop to investments made in its disability management programs, Reuters reported.
Cigna joins Aetna and Humana as large insurers that reported declining profits for the quarter.
But David Cordani, Cigna's president and CEO, said the results were not a disappointment and actually contributed to the insurer increasing its outlook, according to a Cigna earnings call transcript.
"Our first quarter results exceeded our expectations in earnings and medical customer growth, resulting in a strong capital position at the end of the quarter," Cordani said. "We also accelerated investments in our technology infrastructure, which we expect will start to yield efficiency gains in the second half of this year, then in 2013 and beyond. Our integration of HealthSpring is progressing well. And based on the strength of our first quarter results, we are increasing our full year outlook for earnings and customer growth."
For more information:
- here's the Cigna news release
- read the Reuters article
- read the Associated Press article
- check out the earnings call transcript
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