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Cigna 2Q beats Street
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August 1, 2000: 6:20 p.m. ET
Health insurer tops 2Q forecast; profit, revenue up from year-ago figures
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NEW YORK (CNNfn) - Health insurer Cigna Corp. reported second-quarter earnings that surged past Wall Street expectations.
For the quarter ended June 30, the Philadelphia-based company posted operating income from continuing operations, excluding one-time items, of $279 million, or $1.71 a share, compared with operating income of $251 million, or $1.22 a share, in the year-earlier quarter. That surpasses the analysts' forecast of $1.56 a share, according to First Call/Thomson Financial.
The company reported net income for the quarter of $161 million, or 99 cents a share, compared with $232 million, or $1.13 a share for the same period a year ago.
Revenue for the quarter increased to $4 billion from $3.7 billion in the year-earlier quarter.
 Shares of Cigna (CI: Research, Estimates) closed up 1-3/8 to 101-1/4 Tuesday.
"Our health care operation continued to experience good profitability and good growth in business volume as measured by the addition of nearly one million medical members over the last 12 months," said H. Edward Hanway, Cigna's chief executive officer.
"It was a good quarter for them. They came in well ahead," said Peter Costa, an analyst with ABN AMRO Inc. "They did it by keeping control of their medical costs. Aetna's medical cost trend moved higher whereas Cigna was able to keep it in control."
Costa has had a "buy" rating on the company since March.
Cigna's strong results come a week after the nation's No. 1 health care provider, Aetna, warned of a second-quarter shortfall because of soaring medical costs.
Aetna's woes also dragged down United HealthGroup Inc. (UNH: Research, Estimates), the No 2. health insurer, and Pacific Health Systems Inc. (PHSY: Research, Estimates).
During the second quarter, Cigna recorded an $85 million gain after taxes following the sale of a portion of its reinsurance business for about $170 million, the company said.
Cigna also repurchased 5.6 million shares of its stock for $479 million during the quarter, bringing the total amount of shares outstanding down 8 percent since last December.
In the company's health maintenance organization business (HMO), premiums and premium equivalents increased 11 percent in the quarter, primarily due to membership growth and higher medical costs. 
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Cigna
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