Cigna Cutting 1,100 Jobs WorldWide
PHILADELPHIA, Jan 06, 2009 (A. M. Best via COMTEX News Network) -- Cigna Corp. is cutting about 1,100 jobs worldwide, or about 4% of its work force, and consolidating some office locations. It expects to record between $30 million and $40 million in fourth-quarter cost-reduction charges, after-tax.
It's all about the economic downturn, said Chris Curran, a spokesman for Cigna (NYSE: CI). "We are seeing a lot of membership declines," he said. Many of Cigna's employer group customers are reducing their work forces "so it has that trickle-down effect," Curran said.
Cigna's customers "are looking to reduce costs, so we've got to help them manage those costs by being efficient and competitive," he said.
Cigna said it expects most of the job eliminations to be completed by midyear and that all affected employees will be eligible for severance benefits and outplacement support.
"Given the unprecedented economic situation we and our customers are facing, these actions are essential to ensure we can meet their needs for high-value, cost-effective products and services," said H. Edward Hanway, chairman and chief executive officer of Cigna Corp., in a statement.
Last month, health insurer Aetna Inc. (NYSE: AET) said it would eliminate about 1,000 jobs, or about 3% of its work force, to slash administrative expenses. It said it would record about $35 million in restructuring charges, after-tax, in the fourth quarter (BestWire, Dec. 17, 2008).
During the third quarter, investment losses tied to the global financial crisis dragged down profits for many of the big publicly traded health insurers. The results compounded ailments many companies continue to struggle with ? enrollment declines as employers lay off workers and high medical costs taking too big a bite into Medicare and commercial health plan premium revenue (BestWire, Nov. 17, 2008).
During the company's earnings conference call, Hanway said, "we are clearly not satisfied with our outlook for 2009 for our ongoing businesses, but we view it as realistic given the current competitive and economic environment including rising levels of unemployment, which we anticipate will impact health care membership."
Cigna's third-quarter net income dropped 53.2% to $171 million, as its profit also was hit by losses from the guaranteed minium income benefits business and from guaranteed minimum death benefits, also known as variable annuity death benefits, in its run-off reinsurance segment.
Cigna is scheduled to release fourth-quarter earnings on Feb. 5.
Connecticut General Life Insurance Co., a member of Cigna Group, currently has a Best's Financial Strength Rating of A (Excellent). On the morning of Jan. 6, Cigna Corp.'s stock was trading at $17.78 a share, down 2.04% from the previous close.
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
Fran Lysiak
Copyright (C) 2009 by A. M. Best Company, Inc.
|
Make WallSt.net My Homepage!
