Cigna ( CI) raised its first-quarter earnings guidance Monday, saying lower outlays for medical coverage and the reversal of costs accrued in previous periods would boost its bottom line. The insurance company expects to earn $245 million to $275 million, or $1.75 to $1.95 a share, from continuing operations before special items in the quarter ended March 31. For all of 2004, the company expects to earn $720 million to $780 million on the same basis. Analysts surveyed by Thomson First Call were forecasting earnings of $1.33 a share in the most recent quarter. The shares were recently up $4.30, or 7%, to $64.95 on the Instinet premarket session -- a new 52-week high. "Our increased earnings expectations are a strong indicator of our success in managing medical costs and improving our overall operating efficiency," the company said in a release. "The first quarter of 2004 marks the third consecutive quarter of fundamental improvements in Cigna HealthCare -- notably in medical cost management, underwriting and service quality." Monday morning's gain takes Cigna's shares back above their level of Oct. 25, 2002, the day its market capitalization was roughly cut in half when it announced a wide earnings miss that reflected inadequate hedging for medical costs. The stock briefly breached that level in late January before falling back.