Item 7.01 Regulation FD Disclosure.
Beginning on September 10, 2012 and through the balance of this week, Company
officials expect to participate in meetings and discussions with investors and
analysts, including the Morgan Stanley Global Healthcare Conference. During
these meetings, Company officials expect to reaffirm consolidated adjusted
income from operations estimates for full year 2012, which remain in the range
of $1.53 billion to $1.63 billion. The Company's full year 2012 financial
outlook includes the impact of year-to-date results for its Guaranteed Minimum
Death Benefits business (also known as "VADBe"), but does not include an
estimate for future impacts. Future potential impacts from VADBe are not known
or reasonably estimable, including the impact of changes in capital markets or
periodic updates to long-term reserve assumptions. Company officials also expect
to reaffirm the outlook for medical membership for full year 2012, as discussed
on the Company's second quarter 2012 earnings conference call. A transcript of
that earnings call is available at
http://www.cigna.com/aboutus/investor-relations and clicking on the Second
Quarter 2012 Earnings Conference Call Transcript link on the Investor Relations
page.
Cigna will participate in a Q&A session at the Morgan Stanley Global Healthcare
Conference that is expected to begin at approximately 8:30 a.m. Eastern Time on
September 11, 2012. Investors, analysts and the general public are invited to
listen to the Q&A session over the Internet via webcast by visiting
http://www.cigna.com/aboutus/investor-relations and clicking on the Investor
Events link on the Investor Relations page. To listen to the Q&A session live on
the Internet, visit http://www.cigna.com at least 15 minutes prior to the Q&A
session (to download and install any necessary audio software).
Consolidated adjusted income from operations is shareholders' net income
excluding realized investment results, special items and results of the
Company's Guaranteed Minimum Income Benefits business, otherwise known as GMIB,
which is reported in the Run-off Reinsurance segment.
Investors are strongly encouraged to review the factors cited in the Cautionary
Statement included in this report and the sensitivities discussed in the
"Critical Accounting Estimates" section of the Company's Annual Report on Form
10-K for the year ended December 31, 2011 for further details and information.
Information is not available for management (1) to reasonably estimate future
net realized investment gains (losses) or (2) to reasonably estimate future GMIB
business results due in part to interest rate and stock market volatility and
other internal and external factors; therefore it is not possible to provide a
forward-looking reconciliation of adjusted income from operations to
shareholders' income from continuing operations.
We expect that special items for 2012 will include HealthSpring, Inc.
acquisition costs and may also include potential adjustments associated with
litigation and assessment related items. Other than these items, information is
not available for management to identify or reasonably estimate additional 2012
special items.
The foregoing statements represent management's current estimate of Cigna's
consolidated adjusted income from operations and medical membership for full
year 2012 as of the date of this report. Actual results may differ materially
depending on a number of factors, and investors are urged to read the Cautionary
Statement included in this report for a description of those factors. Management
does not assume any obligation to update these estimates, whether as a result of
new information, future events or otherwise, except as required by law.
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CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Cigna Corporation and its subsidiaries (the "Company") and its representatives
may from time to time make written and oral forward-looking statements,
including statements contained in press releases, in the Company's filings with
the Securities and Exchange Commission, in its reports to shareholders and in
meetings with analysts and investors. Forward-looking statements may contain
information about financial prospects, economic conditions, trends and other
uncertainties. These forward-looking statements are based on management's
beliefs and assumptions and on information available to management at the time
the statements are or were made. Forward-looking statements include, but are not
limited to, the information concerning possible or assumed future business
strategies, financing plans, competitive position, potential growth
opportunities, potential operating performance improvements, trends and, in
particular, the Company's strategic initiatives, litigation and other legal
matters, operational improvement initiatives in the Health Care operations, and
the outlook for the Company's full year 2012 and beyond results. Forward-looking
statements include all statements that are not historical facts and can be
identified by the use of forward-looking terminology such as the words
"believe", "expect", "plan", "intend", "anticipate", "estimate", "predict",
"potential", "may", "should" or similar expressions.
By their nature, forward-looking statements: (i) speak only as of the date they
are made, (ii) are not guarantees of future performance or results and (iii) are
subject to risks, uncertainties and assumptions that are difficult to predict or
quantify. Therefore, actual results could differ materially and adversely from
those forward-looking statements as a result of a variety of factors. Some
factors that could cause actual results to differ materially from the
forward-looking statements include:
1. increased medical costs that are higher than anticipated in
establishing premium rates in the Company's Health Care
operations, including increased use and costs of medical
services;
2. increased medical, administrative, technology or other
costs resulting from new legislative and regulatory
requirements imposed on the Company's businesses;
3. challenges and risks associated with implementing
operational improvement initiatives and strategic actions
in the ongoing operations of the businesses, including
those related to: (i) growth in targeted geographies,
product lines, buying segments and distribution channels,
(ii) offering products that meet emerging market needs,
(iii) strengthening underwriting and pricing effectiveness,
(iv) strengthening medical cost results and a growing
medical customer base, (v) delivering quality service to
members and health care professionals using effective
technology solutions, and (vi) lowering administrative
costs;
4. adverse changes in state, federal and international laws
and regulations, including health care reform legislation
and regulation that could, among other items, affect the
way the Company does business, increase costs, limit the
ability to effectively estimate, price for and manage
medical costs, and affect the Company's products, services,
market segments, technology and processes;
5. the ability to successfully complete the integration of
acquired businesses, including the acquired HealthSpring
businesses by, among other things, operating Medicare
Advantage coordinated care plans and HealthSpring's
prescription drug plan, retaining and growing the customer
base, realizing revenue, expense and other synergies,
renewing contracts on competitive terms, successfully
leveraging the information technology platform of the
acquired businesses, and retaining key personnel;
6. the ability of the Company to execute its growth plans by
successfully leveraging its capabilities and those of the
businesses acquired in serving the Seniors segment and the
Company's other market segments, including through
successful execution of the Company's physician engagement
strategy;
7. the possibility that the acquired HealthSpring business may
be adversely affected by economic, business and/or
competitive factors, or by federal and/or state regulation,
including health care reform, reductions in funding levels
for Medicare programs, and potential changes in risk
adjustment data validation audit and payment adjustment
methodology;
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8. risks associated with pending and potential state and
federal class action lawsuits, disputes regarding
reinsurance arrangements, other litigation and regulatory
actions challenging the Company's businesses, including
disputes related to payments to health care professionals,
government investigations and proceedings, tax audits and
related litigation, and regulatory market conduct and other
reviews, audits and investigations;
9. heightened competition, particularly price competition,
that could reduce product margins and constrain growth in
the Company's businesses, primarily the Health Care
business;
10. risks associated with the Company's mail order pharmacy
business that, among other things, include any potential
operational deficiencies or service issues as well as loss
or suspension of state pharmacy licenses;
11. significant changes in interest rates or sustained
deterioration in the commercial real estate markets;
12. downgrades in the financial strength ratings of the
Company's insurance subsidiaries, that could, among other
things, adversely affect new sales and retention of current
business; downgrades in financial strength ratings of
reinsurers, that could result in increased statutory
reserves or capital requirements of the Company's insurance
subsidiaries;13. limitations on the ability of the Company's insurance
subsidiaries to dividend capital to the parent company as a
result of downgrades in the subsidiaries' financial
strength ratings, changes in statutory reserve or capital
requirements or other financial constraints;
14. inability of the hedge programs adopted by the Company to
substantially reduce equity market and certain interest
rate risks in the run-off reinsurance operations;
15. adjustments to the reserve assumptions (including lapse,
partial surrender, mortality, interest rates and
volatility) used in estimating the Company's liabilities
for reinsurance contracts covering guaranteed minimum death
benefits under certain variable annuities;
16. adjustments to the assumptions (including interest rates,
annuity election rates and amounts collectible from
reinsurers) used in estimating the Company's assets and
liabilities for reinsurance contracts covering guaranteed
minimum income benefits under certain variable annuities;
17. significant stock market declines, that could, among other
things, result in increased expenses for guaranteed minimum
income benefit contracts, guaranteed minimum death benefit
contracts and the Company's pension plans in future periods
as well as the recognition of additional pension
obligations;18. significant deterioration in economic conditions and
significant market volatility, that could have an adverse
effect on the Company's operations, investments, liquidity
and access to capital markets;
19. significant deterioration in economic conditions and
significant market volatility, that could have an adverse
effect on the businesses of our customers (including the
amount and type of health care services provided to their
workforce, loss in workforce and our customers' ability to
pay their obligations) and our vendors (including their
ability to provide services);
20. amendments to income tax laws, that could affect the
taxation of employer-provided benefits, the taxation of
certain insurance products such as corporate-owned life
insurance, or the financial decisions of individuals whose
variable annuities are covered under reinsurance contracts
issued by the Company;
21. potential public health epidemics, pandemics, natural
disasters and bio-terrorist activity, that could, among
other things, cause the Company's covered medical and
disability expenses, pharmacy costs and mortality
experience to rise significantly, and cause operational
disruption, depending on the severity of the event and
number of individuals affected;
22. risks associated with security or interruption of
information systems, that could, among other things, cause
operational disruption;
23. challenges and risks associated with the successful
management of the Company's outsourcing projects or key
vendors; and
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24. the unique political, legal, operational, regulatory and
other challenges associated with expanding our business
globally.
This list of important factors is not intended to be exhaustive. Other sections
of the Company's most recent Annual Report on Form 10-K, including the "Risk
Factors" section, the Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2012 and June 30, 2012, and other documents filed with the Securities
and Exchange Commission include both expanded discussion of these factors and
additional risk factors and uncertainties that could preclude the Company from
realizing the forward-looking statements. The Company does not assume any
obligation to update any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by law.
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