NU Online News Service, Aug. 1, 2003, 7:24 p.m. EDT – CIGNA Corp., Philadelphia, says its health insurance unit was still profitable during the second quarter.
The company as a whole is reporting a $53 million net loss for the quarter on $4.6 billion in revenue, compared with $214 million in net income on $4.7 billion in revenue for the second quarter of 2002.
CIGNA realized $104 million in losses on investments sold, written down or written off during the second quarter of 2002. During the latest quarter, CIGNA benefited from realizing $109 million in investment gains.
CIGNA has attributed the latest net loss to an increase in health insurance claims costs and a $296 million charge related to problems with the effects of investment market volatility on a block of old annuity reinsurance contracts.
Analysts at Moody’s Investors Service, New York, recently suggested that CIGNA should consider insulating its retirement unit from the volatility of the health insurance operations by splitting up the company.
CIGNA’s statistical supplement shows that the company insured or administered medical insurance for 12 million people at the end of the second quarter, down from 13 million people a year earlier.
Increasing claims costs and operating costs ate away at the profits of the Employee Health Care, Life and Disability unit. The unit’s operating income fell to $108 million, from $229 million.
But the unit increased the average amount of premiums, fees and premium equivalents per plan member 17%, to $809, and total premiums, fees and premium equivalents increased to $9.7 billion, from $9 billion.