CIGNA Corp. Reports Operating Results (10-Q)
Cigna Corp has a market cap of $13.67 billion; its shares were traded at around $45.75 with a P/E ratio of 9.1 and P/S ratio of 0.6. The dividend yield of Cigna Corp stocks is 0.3%. Cigna Corp had an annual average earning growth of 9.2% over the past 5 years.
Highlight of Business Operations:Total revenues increased 25% for the three months ended March 31, 2012, compared with the same period in 2011. This increase primarily reflects growth in consolidated operating revenues as explained below, offset slightly by an increase in hedge losses reported in Other Revenues in the Run-off Reinsurance segment and lower realized investment gains (see Note 8 to the Consolidated Financial Statements for additional information).
Mail order pharmacy revenues increased by 14% for the three months ended March 31, 2012, compared with the same period in 2011, primarily reflecting increases in volume due to a higher customer base, partially offset by price decreases related to a shift in Oral utilization to generic drugs.
Other revenues included pre-tax losses of $95 million for the three months ended March 31, 2012, compared with $40 million for the three months ended March 31, 2011 related to futures and swaps entered into as part of a dynamic hedge program to manage equity and growth interest rate risks in the Company’s run-off reinsurance operations. These hedge losses are not included in consolidated operating revenues. See the Run-off Reinsurance section of the MD&A beginning on page 63 for more information on this program.
During the first quarter of 2012, the Company’s International segment expanded its capital management strategy to permanently invest the earnings of its China and Indonesia operations overseas. The implementation effect was an increase to segment earnings of $8 million. The Company has implemented a similar strategy for certain of its operations in prior years. Excluding the 2012 implementation effect, the International segment’s effective tax rate for the three months ended March 31, 2012 was 29.9%, compared with 28.7% for the first quarter of 2011. Permanently invested earnings are generally deployed in these countries, and where possible, other foreign jurisdictions, in support of the liquidity and capital needs of the Company’s foreign operations. This strategy does not materially limit the Company’s ability to meet its liquidity and capital needs in the United States. As of March 31, 2012 the Company’s cash and cash equivalents in its foreign operations were $363 million, and permanently reinvested earnings were approximately $338 million. Repatriation of foreign cash via a dividend of the previously-designated permanently reinvested earnings would result in a charge representing the U.S. taxes due on the repatriation.
For the Company’s International segment, South Korea is the single largest geographic market. South Korea generated 29% of the segment’s revenues and 40% of the segment’s earnings for the three months ended March 31, 2012. Due to the concentration of business in South Korea, the International segment is exposed to potential losses resulting from economic, regulatory and geopolitical developments in that country, as well as foreign currency movements affecting the South Korean currency, which could have a significant impact on the segment’s results and the Company’s consolidated financial results.
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