The acquisition HealthSpring, another insurer, for $3.8 billion last year helped lift Cigna Corp.'s net income by 49 percent in the fourth quarter.
That deal helped Cigna gain a bigger stake in the fast-growing market for Medicare Advantage plans, which are privately run versions of the government's Medicare insurance program for the elderly and disabled. Cigna, based in Bloomfield, Conn., operates health care, group disability and life insurance segments in the U.S. It also sells coverage overseas and has an expatriate option for people living outside their home countries.
Cigna also on Thursday raised its 2013 earnings forecast.
Cigna earned $406 million, or $1.41 per share, in the three months that ended Dec. 31. That compares with earnings of $273 million, or 98 cents per share, in the final quarter of 2011. Excluding results from one of the discontinued businesses, adjusted earnings totaled $1.57 per share in the most recent quarter.
Revenue climbed 40 percent to $7.62 billion, helped by Cigna's HealthSpring acquisition.
Analysts expected, on average, earnings of $1.48 per share on $7.38 billion in revenue, according to FactSet.
Premiums and fees from its global health care segment climbed 48 percent to $5.4 billion in the quarter due to the HealthSpring acquisition, other business growth and rate hikes. Premiums and fees from its global supplemental benefits business rose 44 percent to $592 million on acquisitions and business growth, mainly in Korea.
For the full year, Cigna earned $1.62 billion, or $5.61 per share, on $29.12 billion in revenue. The quarter capped a strong year for Cigna, said Goldman Sachs analyst Matthew Borsch in a research note. The company's shares rose 27 percent last year, while the Standard & Poor's 500 index added 13 percent.
For this year, the insurer expects adjusted earnings of $5.85 to $6.30 per share, a 5-cent per share increase from its previous range. Analysts expect, on average, earnings of $6.34 per share.
Cigna announced earlier this week that it will also leave a couple discontinued businesses that had hurt its bottom line when markets soured, taking an after-tax charge of $500 million in the current quarter for the transaction.
Warren Buffett's conglomerate Berkshire Hathaway Inc. will provide reinsurance for its guaranteed minimum income benefits and variable annuity death benefits businesses. Cigna discontinued both in 2000 and operates them in run-off mode, meaning it seeks no new business. The businesses will remain on Cigna's balance sheet, but the company will no longer count the profit or loss from them on its quarterly income statements.
Shares rose 53 cents to $60.20 in premarket trading Thursday.
- Investment & Company Information