Cigna Corp. again raised its guidance as fee and premium revenue grew along with its customer base in the third quarter.
The health insurer’s results easily topped analysts’ expectations.
The company predicted earnings for the year of $7.25 to $7.45 a share, up from $7.20 to $7.40. Fellow health insurers WellPoint Inc. and Aetna Inc. also raised their guidance this week, showing how the industry is profiting amid changes brought by the Affordable Care Act.
Cigna, which recently launched a new branding initiative, said its biggest unit, the global health-care segment, posted a 7.2% increase in premiums and fees to $6.11 billion in the quarter.
An increase in customers and rates in its commercial business also drove growth, which was somewhat offset by the company’s exit from its limited benefits business due to federal regulations and rate pressures in its Medicare Advantage business.
Cigna’s total medical customers increased to 14.3 million from 14.2 million in the prior period and about 14.1 million in the same period a year earlier.
The insurer reported improved medical-loss ratios in its commercial and Medicare Advantage businesses, reassuring investors nervous about the possibility of rising medical spending.
The company saw improvements in results for its individual business, which has about 250,000 to 300,000 members, with slightly less than 150,000 coming through health-law exchanges, Chief Executive David M. Cordani said in an interview. He said later sign-ups seemed to be using services at a slower clip than early enrollees. Also, he said, the earlier group had shown signs of pent-up demand for care, and “it appears some of that has mitigated.”
Mr. Cordani said Cigna still expected to lose money next year on its individual business, which is a small share of the insurer’s overall portfolio, but it would narrow compared with this year. Cigna will offer exchange plans in eight states in 2015, up from five this year, he said.
In all, the company posted a profit of $534 million, down from $553 million in the prior-year period. On a per-share basis, the company’s profit improved to $2.01 from $1.95, reflecting fewer overall shares outstanding. Excluding items, earnings from continuing operations were $1.95 a share, compared with $1.89 a share last year.
Cigna’s total operating revenue, which includes net investment income and mail-order pharmacy revenue, improved 8.7% to $8.73 billion. Revenue from premiums and fees improved 8.1% to $7.79 billion.
Analysts had projected earnings of $1.82 a share and premiums and fees revenue of $8.66 billion.
Date: October 30, 2014