On May 30, 2013, shares of CIGNA Corp. ( CI ) hit a 52-week high
of $69.87. The momentum was driven by a strong first quarter, which
included a 20.3% positive surprise, effective execution of its
strategy and the strength of its diverse portfolio of
On May 2, 2013, Cigna reported first-quarter 2013 net operating
earnings of $1.72 per share, which outpaced the Zacks Consensus
Estimate of $1.43 per share. Moreover, the results surged nearly
39% year over year. The better-than-expected results came on the
back of improved top-line, favorable operating expenses and medical
costs, including favorable prior-year reserve development in the
Global Health Care business.
Cigna's first quarter consolidated revenues increased by 21% to
With respect to earnings trend, Cigna witnessed positive
earnings surprises in each of the last 4 quarters with an average
beat of 13.8%. The company expects to deliver operating earnings of
$1.735-$1.865 billion or $6.00-$6.45 per share in 2013.
The company is also performing well in its business segments. In
commercial health care, Cigna has continuously grown its target
markets by achieving strong customer retention, expanding its
existing customer relationships and adding new customers.
In the Global Supplemental Benefits business, Cigna delivered a
healthy increase in revenue and earnings, reflecting solid customer
growth, effective cost management and contributions from recent
Recently, Cigna also enhanced its financial flexibility through
the exit of its Run-off Reinsurance business.
Valuation for ACE Limited looks reasonable. The shares are
trading at a 10.8% discount to the peer group average on a forward
price-to-earnings basis but at a 189% premium to peer group average
on a price-to-book basis. Return on equity is 147.5% higher than
the peer group average. However, the 1-year return from the stock
is 56.7%, higher than the S&P 500's return of 25.5%.
Cigna carries a Zacks Rank #2 (Buy).
Multi-line insurers Hartford Financial Services Group
Inc. ( HIG
), American International Group Inc. ( AIG ), and CNO
Financial Group Inc. ( CNO ), among others are
carrying the same Zacks Rank and are worth considering.AMER INTL GRP (AIG): Free Stock Analysis ReportCIGNA CORP (CI): Free Stock Analysis ReportCNO FINL GRP (CNO): Free Stock Analysis ReportHARTFORD FIN SV (HIG): Free Stock Analysis
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