Cigna Corp. (CI): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


Cigna Corp. reported third-quarter 2014 net operating earnings of $1.95 per share, comfortably beating the Zacks Consensus Estimate of $1.81. Earnings were also up 3.2% year over year. Cigna's better-than-expected earnings came from premium growth across all its business segments. Over the longer term, the company is set to benefit from its differentiated portfolio of businesses. Its strong global supplemental business, Pharmacy Benefit Management (PBM) Services Agreement, organizational efficiency plans as well as expansion of Seniors and Medicare business with the acquisition of HealthSpring are likely to drive growth. A strong balance sheet and investment grade ratings are the other positives. However, the company continues to face pressure from the medicare advantage rate cut, higher medical cost and rising expenses. We thus maintain our Neutral recommendation on the stock


Headquartered in Philadelphia, Pennsylvania and formed in 1982, Cigna Corp. is a result of a merger between Connecticut General Life Insurance Company (CG) and Insurance Company of North America (INA). The company, along with its subsidiaries, constitutes one of the largest investor-owned health service organizations in the United States. Its subsidiaries are major providers of healthcare and related benefits, the majority of which are offered through the workplace, including healthcare products and services, group disability, life and accident insurance, and workers' compensation case management and related services. The company also has certain inactive businesses, including a run-off reinsurance operation.

During the fourth quarter of 2012 the company made changes in its reporting segments. Instead of reporting in five segments, the company now reports its earnings in three segments Global Health Care, Global Supplemental Benefits and Group Disability and Life.

Global Health Care (78% of 2013 revenues), is one of the largest providers of health care benefits and health services, based on premiums and covered lives. The segment offers a broad portfolio of medical and specialty health care products and services, as well as a wide range of funding and plan design options. It also provides select health programs, which often include information and tools to help people gain the full benefit of available health and wellness resources. It has offerings in all 50 states, the District of Columbia and Puerto Rico.

Global Supplemental Benefits (9%) directly markets life, accident and supplemental health insurance to individuals. Cigna is also a leading provider of specialized health care and related employee insurance benefits to expatriate employees of multinational companies on international assignments.

Group Disability and Life (11%) is one of the top providers of group disability, life and accident coverage in the United States. Cigna's disability programs help to improve employee productivity and lower employers' disability costs. These may be integrated with Cigna HealthCare medical, dental, pharmacy, behavioral and care management programs to further improve return-to-work rates and lower medical and disability costs.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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