Cigna (NYSE: CI) reported Thursday that the insurer posted a fourth-quarter profit, citing interest rates and improved equity markets for its better performance, according to Associated Press.
The managed care company said it earned $60 million from its guaranteed minimum income benefits in the fourth quarter of 2009, after losing a total of $408 million in the same quarter last year from that business and its variable annuity death benefits.
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Cigna discontinued both segments in 2000 and seeks no new business for them. Those businesses hurt the company's performance when the market turns bad because Cigna's liabilities toward them increase.
Cigna, the fourth-largest publicly traded health insurer based on enrollment, earned $330 million, or $1.19 per share, in the three months that ended in December. That compares with a loss of $209 million, or 77 cents per share, in the 2008 quarter.
Revenue fell 4 percent to $4.64 billion from $4.82 billion. Excluding one-time items and one of its discontinued businesses, Cigna earned $1.03 per share.
Analysts polled by Thomson Reuters forecast a profit of 96 cents per share on $4.6 billion in revenue. However, comparing these averages to Cigna's adjusted results can be difficult because the insurer includes results from a discontinued business. Many analysts' projections do not.
Premium revenue fell 3 percent to $2.81 billion in the company's largest segment, its health care division, mainly due to declining enrollment that was partially offset by rate increases.
Medical membership fell 5.5 percent to 11 million compared to the final quarter of 2008. But enrollment fell less than 1 percent from the third to fourth quarters of last year.
Cigna said it expects medical enrollment to range from a 1 percent loss to a 2 percent gain in 2010. The recession forced companies to cut jobs, thus lowering insurance enrollment.
Cigna backed its 2010 profit forecast of $1.05 billion to $1.15 billion, or $3.75 to $4.15 per share. Analysts are expecting $4.04 per share and $19.08 billion in revenue.
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