PHILADELPHIA-- CIGNA Corporation today reported net income for the fourth quarter of 2003 of $290 million, or $2.06 per share, compared with net income of $47 million, or $0.33 per share, for the same period last year.

For full year 2003, consolidated net income was $668 million, or $4.75 per share, compared with a net loss of $398 million, or $2.83 per share, in 2002.

Income from continuing operations before realized investment results and special items was $233 million, or $1.65 per share, for the fourth quarter of 2003 versus $178 million, or $1.27 per share, for the fourth quarter of 2002.

For the full year 2003, income from continuing operations before realized investment results and special items was $800 million, or $5.69 per share, versus $935 million, or $6.65 per share, for the full year 2002.

"Strong earnings for the quarter reflect higher results in our health care business - driven by improved fundamentals and progress we have made in implementing our health care performance improvement initiatives - as well as continued good performance in our disability and life, international, and retirement businesses," said H. Edward Hanway, CIGNA's chairman and chief executive officer. "We are keenly focused on further strengthening health care results and continuing to develop our other businesses, and we are optimistic about the prospects for continued improvement in results in 2004 and beyond."

"CIGNA's new strategic focus is to be a leading provider of health care and related benefits. Our strategy builds on a foundation of strong capabilities in medical, pharmacy, behavioral health, clinical information management, dental and vision benefits, case and disease management, and disability, life and accident products," Hanway said.

"Our health care and related benefits businesses are headed by experienced leaders who are committed to meeting our customers' needs for cost-effective solutions to their benefit challenges, continuous productivity improvement, and benefit plans that help them control costs while enhancing their ability to attract and retain talent.

"The pending sale of CIGNA's retirement business is an important step in the strategic repositioning of our company. In recognition of this new focus, we are realigning our organization and consolidating support functions to increase our efficiency and customer responsiveness.

"Through a combination of job eliminations and productivity-driven attrition, we plan to eliminate approximately 3,000 positions and reduce operating expenses in 2004 by about $300 million. We expect to record a related charge in the first quarter not to exceed $75 million, after-tax, and we expect that the total of all restructuring related charges in 2004 will be less than $100 million, after-tax. The expense reductions will contribute to 2004 Health Care adjusted segment earnings, excluding these charges, in the range of $450 million to $500 million, after-tax, consistent with our previous outlook.

"In 2003 we materially strengthened our capital position, which will be further enhanced by the cash proceeds from the retirement business sale and by earnings from our ongoing businesses. We are well-positioned to support growth opportunities in our core businesses," Hanway said.

In conjunction with the company's new strategic focus, CIGNA's Board of Directors has approved a change in the company's dividend policy to position CIGNA more in line with other dividend-paying managed care companies. The change will take effect for dividends declared after the closing of the retirement transaction, which CIGNA continues to expect to close around the end of the first quarter. At that time, the Board intends to establish a quarterly dividend of $0.025 per share of common stock. The Board expects the dividend that will be declared in February and paid in April to remain at the current quarterly level of $0.33 per share.

"Following implementation of the new dividend policy, we expect to use share repurchase as the primary means for distributing excess capital to shareholders," said Hanway. "The amount and pace of future repurchase activity will depend on market conditions and other considerations, including continued progress in improving the financial performance of our health care business."

 

Source: Cigna Corp.

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