A managed care company is moving to resolve a dispute with investors who are angry about earnings shortfalls announced in 2002.
CIGNA Corp., Philadelphia, says it has agreed to pay $93 million to settle a class-action suit that lawyers have filed on behalf of shareholders in the U.S. District Court in Philadelphia.
The class includes investors who bought CIGNA stock from Nov. 2, 2001, to Oct. 24, 2002.
The settlement is subject to court approval, and it must attract a high level of class participation to take effect, CIGNA says.
The court has scheduled a fairness hearing for April 2007, CIGNA says.
The Pennsylvania State Employees’ Retirement System was the lead plaintiff in the case.
“We are extremely pleased with this excellent result, which will fairly compensate purchasers of CIGNA common stock for losses suffered as a result of their purchases during the class period,” Pennsylvania SERS officials say in a statement.
CIGNA executives also are welcoming the settlement announcement.
“CIGNA agreed to reach this settlement in order to avoid the time and expense involved in proceeding to trial,” CIGNA General Counsel Carol Ann Petren says. “It is important to note that, under the terms of the settlement, CIGNA does not admit to any wrongdoing by the company or its officers.”
CIGNA hopes insurance recoveries will help hold the effects of the settlement on net income to $25 million, the company says.
The company notes that it also will be reporting “charges associated with cost -reduction initiatives” for the fourth quarter.