Cigna Corp. capped a disappointing two weeks of health insurer earnings announcements by posting an 80% drop in first-quarter profits largely because of troubles in its healthcare sector. Cigna earned $58 million in the first quarter, compared with $289 million a year ago. A severe flu season, litigation, run-off reinsurance losses and costs of integrating Great-West Healthcare, which Cigna acquired for $1.5 billion in April, were cited as reasons for the downturn.
H. Edward Hanway, Cigna’s chairman and chief executive officer, said the performance reflects a “challenging external environment” in healthcare. Cigna’s healthcare enrollment is expected to rise in 2008 between 2% and 2.5% over last year, excluding the 1.4 million Great-West enrollees. The Philadelphia-based insurer adjusted its year-end earnings estimate downward to between $4.05 and $4.25 per share, compared with analysts’ estimate of $4.25 per share.
WellPoint, UnitedHealth Group, Health Net and Humana posted weak earnings in recent weeks. Aetna’s profits also slipped, but it boosted revenue by 16% through membership growth and increases in premiums. -- by Rebecca Vesely
