Third Quarter Profits High for Popular Health Insurance Company

Nov 29, 2007

Amidst calls for health insurance reform, some of the top insurance carriers in the nation continue to boast record profits. Despite some dips in stock prices based on lower income projections for 2008, Philadelphia based Cigna Corporation recently announced that its earnings for third-quarter '07 rose 22 percent. The increase was primarily based on increased premiums and fees. Cigna claimed that earnings would be lower than analysts projected for '08 due to stiff competition.

Cigna is a major player in the health insurance industry also sells life insurance as well as private disability health insurance. The company disclosed that net income climbed to $365 million up from $298 million a year ago.

The health insurance giant's total revenue increased up to $4.14 billion from $4. 41 billion in the same quarter of 2006. The CEO of the company said to analysts that he feels the company is well posed to keep the business growing on a sustained basis. This despite new projections for earnings in 2008 to be around $4.20 a share, still up but missing the mark of wall street expectations of an average of $4.23 per share.

Actually the increase in third-quarter earnings was not as a result of increased earnings in Cigna's core health insurance business. The profits for healthcare insurance earnings actually fell by about 2%. However that drop for the health insurance plan division was more than compensated for by earnings increases in Cigna's other areas of business. Profits in Cigna's life insurance and disability health insurance product lines rose significantly in the third quarter – up nearly 9% over the same quarter last year. International life, accidental, and supplemental insurance rose a remarkable 52% up to 47 million in profits – spurred by a 17% increase in premiums and fees for these product lines.

Overall Enrollment in Cigna's health insurance plans increased a little over five percent over the first nine months of 2007. The third quarter increase is a welcome bounce over the first two quarters of the year where net income dropped eight percent for the well-known insurer.