(Story updated at 1:58 p.m. ET)
Health insurer Cigna Corp.
reported higher income and revenue for its first quarter while saying that by year-end it expects to have roughly 116,000 individual policyholders in individual plans that comply with the Patient Protection and Affordable Care Act
, with 40% of those plans sold outside the exchanges.
Cigna was active in limited markets in five states during the recently closed open enrollment period, and the company's “bias is to extend into a few additional markets,” Cigna CEO David Cordani said in a call with Wall Street analysts after the early morning release of company earnings.
The initial wave of enrollees in Cigna ACA-complaint plans was older, bought higher benefit plans and had higher medical utilization in the first month or so of coverage than Cigna had expected, Cordani said. The late surge of enrollees came in late March and early April and was younger and bought leaner benefit plans, Cordani said. It's too early to discuss utilization rates for this late surge group, he added. Individual policies represent only 3% of Cigna revenue.
“First-quarter premiums and fees increased approximately 3% relative to first quarter 2013, driven by commercial specialty contributions and renewal rate increases, partially offset by the exit of the Limited Benefits business due to ACA regulation, funding mix shift in the commercial business as well as rate pressure in our seniors business,” the Connecticut-based insurer said in its initial earnings release.
First-quarter net income hit $528 million compared with $57 million in the same quarter of 2013. However, the 2013 figure was impacted by a special charge in the quarter of $558 million. Overall revenue reached $8.5 billion, up 4% compared with $8.2 billion in the same period last year.
Adjusted margins in Cigna's global healthcare segment fell slightly to 6.6% from 6.7% in the same period last year, the company announced.
Discussing its limited benefits offerings in a footnote to earnings, the company said, “In connection with U.S. healthcare reform legislation, the company ceased offering Limited Medical Benefits products effective Dec. 31, 2013. Therefore, the company's medical customer growth expectations for 2014 exclude these products from the 2013 customer numbers. As of March 31, 2013, and December 31, 2013, there were 188,000 and 139,000 customers enrolled in these products, respectively.”
Medicare and Medicaid customers covered by Cigna totaled 483,000 in the first quarter compared with 474,000 in the same period of 2013, the company said. Customers covered in Medicare Part D plans totaled 1.2 million compared with roughly the same level in the first quarter of 2013. Overall medical insurance customers, excluding those with limited benefit policies, reached 14.1 million, roughly the same number as in the first quarter of 2013.
In February, Cordani said the company's exchange plans were seeing "a much smaller book of business than anyone anticipated," while "on average you have an older book of business." The company at the time was projecting 50,000 to 60,000 exchange enrollees. While Cigna had offered exchange plans in only five states, competitors such as WellPoint have been much more active on the exchanges
. Indeed, WellPoint said this week that it had signed up more than 600,000 individuals through exchanges. Figures discussed in Thursday's call would put exchange enrollment for the calendar year at roughly 69,600, roughly in line with those earlier projections.Follow John N. Frank on Twitter: @MHJFrank