Cigna Posts Higher 2nd Quarter Profit, Revenue

Aug. 04--Cigna Corp. posted second-quarter revenue and profit Friday that exceeded Wall Street expectations, reflecting strength in each of its three businesses.

Chief Executive Officer David Cordani told investor analysts on a conference call that Cigna expects to increase its Medicare Advantage business, a popular private insurance offering that handles Medicare coverage for seniors.

Cigna sees the "U.S. seniors marketplace as a tremendous growth opportunity," he said.

In addition, the Bloomfield-based health insurer sees "meaningful growth opportunities" in international markets, Cordani said.

Revenue of $10.32 billion in the April-June period was up nearly 4 percent from the second quarter of 2016 and topped estimates of analysts surveyed by Bloomberg.

Net income of $750 million, or $2.91 a share, was up 45 percent from the April-June period last year and exceeded analysts' expectations.

Cigna raised its per-share earnings guidance for the year to between $9.75 and $10.05, from a previous estimate of $9.35 to $9.85. Industry analysts expect $9.77 per share for 2017.

Credit Suisse analyst Scott Fidel called it an "all-around excellent quarter" as Cigna posted strong results across its businesses.

Cigna operates its Global Health Care, Global Supplemental Benefits and Group Disability and Life businesses. Fidel said a turnaround in Cigna's Group Disability and Life segment "appears to be materializing at a faster pace" than Wall Street expected.

Cigna said it expects 2017 earnings for the Group Disability and Life business of between $260 million to $280 million, an increase of between $20 million and $30 million over previous expectations, "reflecting continued operational improvements."

Despite the quarter's strong results, Cigna's share price fell nearly 3 percent, to $171.02, in afternoon trading.

Cordani told CNBC that Cigna operates in Affordable Care Act exchanges in seven states and that the business the business accounts for 4 percent of revenue.

"We are losing money, but we are losing a little less than we expected," he said. "The broader portfolio of our business, the 96 percent of our business that's outside of that is performing very well today."

The ACA, or Obamacare, "is a challenging marketplace in 2017 as we look to 2018, no doubt," Cordani said.

A spokesman said Cigna does not disclose how much it has lost in its ACA business.

Cigna's results mirrored the strong second-quarter performance that Aetna Inc. posted on Thursday.

Bloomberg reported that all six of the major health insurers topped Wall Street expectations in the second quarter as the industry distanced itself from the turbulent debate in Congress over the future of Obamacare.

Senate Republicans have tried and failed to repeal the ACA, leaving it in limbo.

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