) reported second-quarter 2014 net operating earnings of $1.96 per
share, beating the Zacks Consensus Estimate of $1.85. Earnings were
also up 10.1% year over year. Cigna's better-than-expected earnings
came from premium growth across all its business segments.
Including one-time items, net income came in at $2.12 per share, up
20.5% year over year.
Cigna's consolidated revenue came in at $8.7 billion, up 9% year
over year and above the Zacks Consensus Estimate of $8.2 billion.
The improvement in revenues came from an increase in premiums and
fees across all the segments.
Quarterly Review by Segment
Premiums and fees from the
Global Health Care
segment increased 7.6% year over year to $6.1 billion, owing to
customer growth, strong performance in Commercial business,
partially offset by revenue loss from discontinuation of Limited
Benefits business, as well as rate pressure in Medicare Advantage
Operating earnings were $402 million compared with $403 million in
the year-ago quarter.
Premiums and fees from the
Global Supplemental Benefits
segment climbed 17.8% year over year to $722 million, driven by
customer growth, increased sales of higher premium products, and
favorable foreign currency movements.
Operating income increased 24.5% year over year to $61 million led
by the positive impact of strong customer retention, business
growth and cost saving from operating expense management.
Premiums and fees from Cigna's
Global Disability and Life
segment climbed 5.2% year over year to $890 million, due to growth
in both disability and life businesses. Operating earnings
increased 5.8% to $110 million attributable to strong operational
performance in the disability business and favorable reserve.
Cigna ended the quarter with cash and short-term investments of
approximately $325 million compared with $760 million as of Dec 31,
Shareholders' equity increased to $10.9 billion as of Jun 30, 2014,
up 11.9% year over year.
Cigna's Book value per share increased 20% year over year to $41.32
as of Jun 30, 2014.
Share Buyback Update
During the quarter, Cigna repurchased approximately 13.5 million
shares for approximately $1.15 billion.
Following a solid second-quarter earnings performance, Cigna pulled
up its earnings expectation for 2014 from $7.05-$7.35 per share.
The lower range of consolidated earnings from operations was pulled
up to the range of $1.94 billion to $2 billion from $1.93 billion
to $2 billion.
Segment-wise, operating income from Global Health Care was
reaffirmed at $1.605 billion to $1.635 billion.
Earnings expectation for Global Supplemental Benefits was raised to
$205 million to $220 million from the prior expectation of $195
million to $215 million. The same for Group Disability and Life was
upped to $315 million to $330 million from the earlier guidance of
$305 million to $325 million.
Global medical customer growth is estimated at 1% to 2%.
Despite tough operating industry conditions, Cigna delivered
impressive results. The health insurer has raised its earnings
outlook for the third time this year. Going forward, we expect the
company to continue posting favorable results from solid revenue
growth, disciplined expense management and continued effective
medical cost management. The company's niche market position and a
diversified business profile with a strong balance sheet will help
it to generate strong results despite the Health Care law posing
Cigna carries a Zacks Rank #3 (Hold).
Among other health insurers, UnitedHealth Group Inc. (
), Assurant Inc. (
) and Centene Corp. (
) surpassed the respective Zacks Consensus Estimate in their latest
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