* No. 5 U.S. insurer raises 2013 outlook, again
* 1st-quarter profit falls, including $507 mln charge
* Shares rise 4.3 percent
(Adds CEO comments, share price)
By Caroline Humer
May 2 Cigna Corp on Thursday reported
higher-than-expected quarterly earnings that benefited from the
insurer's acquisition of Medicare specialist HealthSpring and
low medical costs as visits to doctors and hospitals dropped.
Shares of the No. 5 U.S. health insurer were up 4.3 percent
Competitors including UnitedHealth Group Inc,
WellPoint Inc and Aetna Inc have also posted
strong quarterly profit due to Americans' low use of medical
Low medical spending enabled Cigna to retain and expand
product sales to customers for whom it administers benefits,
about 85 percent of its health insurance business. The other 15
percent of its health insurance business is more profitable as
it spends less on medical services, Chief Executive David
Cordani said in an interview.
Cigna and rivals are preparing for the Oct. 1 launch of
health exchanges, which were formed as part of the Affordable
Care Act and will create a new market for insurance for
individuals starting in 2014.
Cordani said the company would participate on a "limited"
number of exchanges in specific regions.
"You should assume that where we will play are markets where
we are well-established today in the employer market and with
physicians and that we would be bringing to market new
exchange-based alternatives. You should assume that in 2014 it
wouldn't be a de novo market for Cigna," he said.
NET INCOME FALLS
Cigna's first-quarter net income fell to $57 million, or 20
cents per share, from $371 million, or $1.28 per share, a year
The results included a previously announced $507 million
charge for a February deal with Berkshire Hathaway Inc,
which will reinsure two of Cigna's closed annuity reinsurance
businesses and remove risk from the company's balance sheet.
Excluding that charge and other items, earnings were $497
million, or $1.72 per share, up from $359 million, or $1.24 per
share, a year earlier.
On that basis, analysts were expecting $1.43 per share,
according to Thomson Reuters I/B/E/S.
"The beat was driven by stronger-than-expected medical cost
management," Oppenheimer & Co analyst Michael Wiederhorn wrote
in a research note.
Cigna administers health insurance benefits for companies in
the United State and overseas; sells health, life, disability
and accident insurance; and offers Medicare and Medicaid plans.
The company raised its 2013 earnings outlook to a range of
$6.00 to $6.45 per share from its February forecast of $5.85 to
$6.25 - also a raised projection. Analysts expect profit of
$6.35 per share this year.
Cigna shares were up 4.3 percent at $68.18 at midday on the
New York Stock Exchange on Thursday. The shares have risen about
27.5 percent so far this year.
(Reporting by Caroline Humer in New York; editing by Lisa Von
Ahn and Matthew Lewis)