lowered its guidance for the second quarter and full year, citing slower than expected progress in improving the performance of the company's health care business.
The company now expects second-quarter earnings from continuing operations, before realized investment results and special items, of $140 million to $160 million, or $1 to $1.15 a share. For the full year, the company projected earnings of $700 million to $750 million, or $5 to $5.25 a share.
Shares of Cigna were dropping $2.57, or 5.8%, to $41.92 in Instinet trading after the regular session ended.
Analysts polled by Thomson First Call currently expect Cigna to earn $1.48 in the second quarter and $6.01 for 2003. Cigna will report its results for the second quarter on Aug. 1.
"Our actions to date to improve health care results have led to meaningful progress in several important areas," the company said in a press release. "However, preliminary second-quarter results indicate that earnings improvement in our health care business will be slower than previously expected, reflecting higher medical costs and lower medical membership. Meanwhile, our other employee benefits businesses continue to perform well."
Additionally, Cigna said Chairman and CEO H. Edward Hanway, who headed the company's health care business from 1996 to 1999, has assumed direct control of the operation in addition to his current role. Hanway will work directly with the health care management team "to accelerate the unit's progress and improve operational and financial performance."
As a result, Patrick E. Welch, the current president of Cigna's health care unit, has chosen to leave the company following a brief transition period. The company also said that John W. Coyle, formerly president and chief operating officer of Trigon Healthcare, has joined Cigna to lead the health care division's sales, distribution, marketing and medical management operations.