CIGNA’s Growth for 2009 is Pessimistic; Posts 53% Decline in Third-Quarter Profit
As it continues to struggle with competition and broader economic turmoil, health insurer Cigna Corp forecasts disappointing profit growth for 2009.
The company projected it would see its enrollment fall by about 2 percent next year as it loses members to lower-priced rival plans and employer layoffs. Cigna also cut its health insurance outlook for 2008, after doing so in August.
The dour forecast came as Cigna posted a 53 percent decline in third-quarter profit, hurt by higher liabilities because of the market swoon that will also lead to a fourth-quarter loss.
Cigna appears to have swung from taking market share to ceding ground, while rivals such as Aetna Inc gain, said portfolio manager David Heupel.
"The fact that they moved their healthcare segment earnings down again after they did it last quarter is a little alarming," Heupel said. "They seem to be losing a little bit of their competitive footing right now."
Cigna CEO Ed Hanway said the company was "not satisfied" with its 2009 forecast, while the company is staying disciplined on pricing to maintain its profit margins. Cigna is working to reduce operating expenses and may take a fourth-quarter charge tied to cost-cutting initiatives.
Published on October 31, 2008
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