NEW YORK Health insurer Cigna Corp (CI.N) posted a higher-than-expected fourth-quarter profit as Americans cut their use of medical services to save money, but the company forecast 2011 earnings below Wall Street's target.
Like its rivals, Cigna said its forecast reflected some pickup in Americans' use of healthcare services this year. It suggested that its membership would likely rise in 2011.
Analysts said investors might be disappointed in the initial profit forecast, but the company was likely being cautious. Cigna shares, strong performers so far this year, fell 1.3 percent to $41.71 in Thursday morning trading.
"Guidance looks pretty reasonable, not too different than what we're seeing from the other players in the space in terms of conservatism," Jefferies & Co analyst David Windley said.
Through Wednesday, Cigna's shares had risen 15 percent this year. The increase is in line with the rise for health insurers broadly so far in 2011 as investors gain more comfort with the U.S. healthcare overhaul law and are encouraged by the industry's strong results.
Other health insurers have so far given generally reassuring outlooks for 2011 as the industry adjusts to the law's new spending requirements.
Cigna officials speaking on a conference call with analysts described the company's 2011 outlook as "competitively attractive."
Cigna's quarterly net income rose nearly 40 percent to $461 million, or $1.69 per share, from $330 million, or $1.19 per share, a year earlier.
Excluding items, earnings of $1.15 per share topped the average estimate of analysts by 13 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 17 percent to $5.43 billion. Analysts were looking for $5.36 billion.
Cigna's healthcare membership grew nearly 4 percent to 11.44 million, with the company citing new customers and retention of old ones.
Profit in the healthcare unit rose nearly 7 percent to $207 million, $11 million ahead of Wall Street estimates, according to Goldman Sachs.
Under Chief Executive David Cordani, Cigna is redoubling its efforts to expand internationally, such as in Europe and Asia, where it sells supplemental insurance and offers coverage to employees working abroad.
Profit in its international unit jumped 50 percent to $57 million.
The "healthy beat" spanned across all segments, but particularly in healthcare and international, Sanford Bernstein analyst Ana Gupte said.
Cigna projected 2011 adjusted earnings, excluding items, at $4.30 to $4.70 per share, compared with $4.64 per share in adjusted earnings for 2010.
For 2011, analysts were looking for $4.73.
Windley noted that Cigna's forecast excludes potential share buybacks, which could boost its earnings per share for the year.
Cigna projected its full-year membership would range from unchanged to an increase of 3 percent, excluding membership losses from nonstrategic markets.
(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn, Maureen Bavdek, Dave Zimmerman)