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Cigna's Quarter Not Big Enough

The stock falls on enrollment concerns.


(CI) - Get Cigna Corporation Report

returned to profitability in the second quarter, as the insurer recorded a big gain from the sale of one of its retirement businesses earlier this year and benefited from tighter controls on medical costs.

In the quarter, the Philadelphia-based insurer earned $515 million, or $3.67 a share, compared to a year-ago loss of $53 million, or 38 cents a share. The year-ago quarter included a $286 million after-tax charge.

Revenue remained largely unchanged at $4.6 billion, but this past quarter included an additional $306 million in investment gains.

On an operating basis, Cigna earned $246 million, or $1.75 a share, compared to $158 million, or $1.13 a share, a year ago. On that basis, the insurer easily beat the Thomson First Call consensus estimate of $1.25 a share.

Cigna also upped its full-year operating earnings outlook. The firm now expects to earn between $5.95 and $6.25 a share for the year. The Thomson consensus forecast had Cigna earning $5.72.

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But the stock fell in early trading, after the company predicted more enrollment losses in the coming year. The stock was down 45 cents to $62.13.

Cigna has been struggling to reinvent itself by reducing enrollment by nearly 3 million customers and streamlining its business. In April, it sold its retirement business to

Prudential Financial

(PRU) - Get Prudential Financial, Inc. Report

for $2.1 billion.

Cigna said it ultimately will record an $800 million after-tax gain from the sale of the retirement business. In the second quarter, it recorded a $267 million gain from the sale and expects to include the rest of the gain in future quarters.

Revenue from premiums and fees declined 9% from a year ago to $3.5 billion.