Cigna Corp., Philadelphia, reduced it third-quarter profit estimate by almost 30%, saying that its health plans had failed to accurately forecast increasing costs. The nation's third-largest insurer, with 14 million members, now expects to earn $205 million, or $1.47 per share, down from the $1.90 to $2.05 per share that it had predicted in August. Last month, Cigna warned it would take more than $1 billion in charges against third-quarter earnings because of losses in its reinsurance business. The company began to exit the reinsurance market two years ago. It said it is undertaking cost-saving measures that will lead to further charges in the fourth quarter. Cigna's financial report is due out Nov. 1.
Meanwhile, strong premium growth and enrollment gains helped WellPoint Health Networks, Thousand Oaks, Calif., nearly double its third-quarter earnings to $211.3 million, or $1.38 per share, from $108.4 million, or 82 cents per share, in the year-ago period. Revenue jumped 39% to $4.5 billion. Membership at the nation's fourth-largest health insurer climbed 27% to 13.1 million, thanks partly to its acquisitions of Blue Cross and Blue Shield of Missouri and MethodistCare of Texas. The company's medical-loss ratio, or the share of premium dollars spent on medical care, held steady at 81.7%, one of the lowest in the industry. Administrative costs declined to 16.3% of revenue from 17.5% a year earlier. Last month, WellPoint agreed to review its proposed $1.3 billion purchase of CareFirst Blue Cross and Blue Shield, Owings Mills, Md., which operates Blues plans in Delaware, Maryland and Washington. -- by Laura B. Benko