UPDATE 3-Cigna profit drops 53 percent, sees dour 2009

* Q3 EPS of 62 cents vs $1.28 a year ago

* Sees Q4 loss of 45 cents/share

* Sees FY 2009 EPS of $4-$4.30, below estimates

* Sees decline in membership for 2008, 2009

* Shares slump 18.1 percent (Recasts; adds analyst comment, shares, byline)

By Lewis Krauskopf

NEW YORK, Oct 30 (Reuters) - Health insurer Cigna Corp (CI.N) forecast disappointing profit growth for 2009 as it continues to struggle with competition and broader economic turmoil, sending shares down more than 18 percent on Thursday.

The company projected it would see its enrollment fall by about 2 percent next year as it loses members to lower-priced rival plans and employer layoffs. Cigna also cut its health insurance outlook for 2008, after doing so in August.

The dour forecast came as Cigna posted a 53 percent decline in third-quarter profit, hurt by higher liabilities because of the market swoon that will also lead to a fourth-quarter loss.

Cigna appears to have swung from taking market share to ceding ground, while rivals such as Aetna Inc (AET.N) gain, said portfolio manager David Heupel.

"The fact that they moved their healthcare segment earnings down again after they did it last quarter is a little alarming," Heupel said. "They seem to be losing a little bit of their competitive footing right now."

Cigna CEO Ed Hanway said the company was "not satisfied" with its 2009 forecast, while the company is staying disciplined on pricing to maintain its profit margins. Cigna is working to reduce operating expenses and may take a fourth-quarter charge tied to cost-cutting initiatives.

The Philadelphia-based company projected 2009 earnings of $4 to $4.30 per share, excluding items. Analysts were expecting $4.70, according to Reuters Estimates.

Health-insurer stocks have been slammed this year by a series of profit warnings, as well as recent investors worries about sizable write-downs stemming from the credit crisis. Cigna's quarterly results showed strain from the market volatility.

For the quarter, net income fell to $171 million, or 62 cents per share, from $365 million, or $1.28 per share, a year earlier.

Cigna was hurt by two businesses it no longer actively markets: a minimum income benefits business and a death benefits business, which involve annuities. In both businesses, the company said its liabilities increase in periods of declining equity markets and interest rates.