Cigna Corp. reports that the president of its healthcare business will be leaving, following lower earnings expectations and a drop in enrollment.
The Philadelphia-based company Friday announced it expects earnings for the second quarter and for the full year will be lower than previous company estimates, reflecting higher-than-expected medical costs and a higher-than-expected enrollment drop.
Patrick Welch, president of Cigna HealthCare, will leave within weeks, and H. Edward Hanway, company chairman and chief executive, will assume direct control of the healthcare business, the company says.
"Given slower-than-expected progress in our health care improvement initiatives, we intend to further intensify our efforts," Hanway says in a release. "I will be working directly with the health care management team as we focus on these initiatives."
Specifically, the company reports that:
- Earnings from its healthcare segment would come in between $500 million and $550 million in 2003, $175 million short of previous expectations.
- Operating profits are now expected to be $1 to $1.15 a share for the second quarter, instead of the previous $1.40 to $1.60 forecast.
- Full-year operating income is now estimated to be $5 to $5.25 a share instead of the previous guidance of $6.25 to $6.50 a share.
- Enrollment is projected to end this year 10% lower than at the end of 2002. The company reports that enrollment was 12.3 million on March 31, 6% lower than a year earlier.