NU Online News Service, Nov. 2, 11:46 a.m. – CIGNA Corp., Philadelphia, is reporting $270 million in net income on $4.8 billion in revenue, compared with $278 million in net income on $5 billion in revenue for the third quarter of 2000.
The earnings figures include a $50 million gain on an earlier sale of a life reinsurance unit, and $38 million in charges related to the Sept. 11 attacks.
CIGNA sells employee benefits, retirement and investment services, and international employee benefits.
The Sept. 11 charges “primarily related to life, accident and disability insurance claims and, to a lesser extent, increased utilization of HMO behavioral health services,” CIGNA says.
After taxes, the Sept. 11 charges amounted to $20 million for the major medical insurance and administration operations, $3 million for corporate-owned life insurance claims, and $2 million in reinsurance claims.
The employee benefits unit generated a total of $171 million in net income on $3.8 billion in revenue, compared with $202 million in net income on $3.7 billion in revenue.
Major medical enrollment held steady at 14 million. Average revenue per member increased 6%, to $598, but CIGNA estimates the underlying rate of medical cost inflation to be about 12% to 13%. Costs are up because doctors are charging more and patients are getting more inpatient and outpatient care, CIGNA says.
The retirement and investment services unit brought in $49 million in net income on $498 million in revenue, compared with $57 million in net income on $486 million revenue.
At the retirement services unit, defined contribution assets fell 15% from Sept. 30, 2000, to $28 billion, and new deposits fell 33%, to $1.3 billion.
But defined benefit assets fell only 4%, to $18 billion, and defined benefit plan deposits actually rose 19%, to $406 million, according to company figures.