cigna8k.htm
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported) March 4,
2009
CIGNA
Corporation
(Exact
name of registrant as specified in its charter)
Delaware
(State
or other jurisdiction of
incorporation)
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1-08323
(Commission
File Number)
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06-1059331
(IRS
Employer
Identification
No.)
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Two
Liberty Place, 1601 Chestnut Street
Philadelphia, Pennsylvania
19192
(Address
of principal executive offices) (Zip Code)
Registrant's
telephone number, including area code:
(215)
761-1000
Not
Applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 7.01
Regulation FD
Disclosure.
On March
4, 2009 and for the remainder of the week, Company officials expect to
participate in telephone calls and meetings with investors and
analysts. During these meetings, Company officials expect to discuss
consolidated adjusted income from operations estimates for full year 2009, which
remain in the range of $1.08 billion to $1.15 billion, excluding the Guaranteed
Minimum Death Benefits book of business also known as Variable Annuity Death
Benefits (VADBe). Company officials also expect to reaffirm the
outlook for medical membership for full year 2009, as discussed on the Company’s
fourth quarter 2008 earnings conference call. A transcript of that
earnings call is available at
http://www.cigna.com/about_us/investor_relations/recent_disclosures.html.
Consolidated
adjusted income from operations is consolidated income from continuing
operations excluding realized investment results, special items and results of
the Company’s Guaranteed Minimum Income Benefits business, otherwise known as
GMIB, which is reported in the Run-off Reinsurance segment.
In the
2009 earnings outlook discussed on the Company’s fourth quarter 2008 earnings
conference call, management assumed that VADBe would be approximately break-even
for full-year 2009. In its current full year 2009 outlook,
management has excluded the VADBe results due to the significant volatility of
and uncertainty in the current equity markets. As a result of
prevailing market conditions, if the first quarter of 2009 had ended at the
close of business on March 2, 2009, the Company would have experienced a loss
with respect to VADBe of approximately $75 million
after-tax. Actual VADBe results for the first quarter of 2009
may differ (positively or negatively) from this reference point depending upon a
number of factors, including the equity market and interest rate levels at March
31, 2009. Investors are strongly encouraged to review the factors
cited in the Cautionary Statement included in this report and the sensitivities
discussed in the “Critical Accounting Estimates” section of the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008 for further details and
information.
Information
is not available for management (1) to reasonably estimate future realized
investment gains (losses) or (2) to reasonably estimate future GMIB business
results due in part to interest rate and stock market volatility and other
internal and external factors; therefore it is not possible to provide a
forward-looking reconciliation of adjusted income from operations to income from
continuing operations. Potential losses related to the GMIB business,
as well as investment impairments (both of which are sensitive to equity market
and interest rate movements), could adversely impact the Company’s consolidated
results of operations and financial condition, and could reduce the capital of
the Company’s insurance subsidiaries as well as their dividend paying
capabilities.
Special
items for 2009 may include potential charges associated with CIGNA's continuing
cost reduction initiative and the potential recognition of loss in the first
half of 2009 related to the close of its treasury rate lock derivative. Other
than these items, information is not available for management to identify or
reasonably estimate 2009 special items.
The
foregoing statements represent management’s current estimate of CIGNA’s
consolidated adjusted income from operations (excluding VADBe) and medical
membership for full year 2009 as of the date of this report. Actual
results may differ materially depending on a number of factors, and investors
are urged to read the Cautionary Statement included in this report for a
description of those factors. Management does not assume any
obligation to update these estimates, whether as a result of new information,
future events or otherwise, except as required by law.
CAUTIONARY
STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
The
Company and its representatives may from time to time make written and oral
forward-looking statements, including statements contained in press releases, in
the Company’s filings with the Securities and Exchange Commission, in its
reports to shareholders and in meetings with analysts and
investors. Forward-looking statements may contain information about
financial prospects, economic conditions,
trends and other uncertainties. These forward-looking statements are
based on management’s beliefs and assumptions and on information available to
management at the time the statements are or were
made. Forward-looking statements include but are not limited to the
information concerning possible or assumed future business strategies, financing
plans, competitive position, potential growth opportunities, potential operating
performance improvements, trends and, in particular, the Company’s productivity
initiatives, litigation and other legal matters, operational improvement in the
health care operations, and the outlook for the Company’s full year 2009
results. Forward-looking statements include all statements that are
not historical facts and can be identified by the use of forward-looking
terminology such as the words “believe”, “expect”, “plan”, “intend”,
“anticipate”, “estimate”, “predict”, “potential”, “may”, “should” or similar
expressions.
You
should not place undue reliance on these forward-looking
statements. The Company cautions that actual results could differ
materially from those that management expects, depending on the outcome of
certain factors. Some factors that could cause actual results to
differ materially from the forward-looking statements include:
1.
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increased
medical costs that are higher than anticipated in establishing premium
rates in the Company’s health care operations, including increased use and
costs of medical services;
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2.
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increased
medical, administrative, technology or other costs resulting from new
legislative and regulatory requirements imposed on the Company’s employee
benefits businesses;
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3.
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challenges
and risks associated with implementing operational improvement initiatives
and strategic actions in the ongoing business operations, including those
related to: (i) offering products that meet emerging market needs, (ii)
strengthening underwriting and pricing effectiveness, (iii) strengthening
medical cost and medical membership results, (iv) delivering quality
member and provider service using effective technology solutions, (v)
lowering administrative costs, and (vi) transitioning to an integrated
operating company model, including operating efficiencies related to the
transition;
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4.
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risks
associated with pending and potential state and federal class action
lawsuits, disputes regarding reinsurance arrangements, other litigation
and regulatory actions challenging the Company’s businesses, government
investigations and proceedings, and tax
audits;
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5.
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heightened
competition, particularly price competition, which could reduce product
margins and constrain growth in the Company’s businesses, primarily
the health care
business;
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6. |
risks
associated with the Company’s mail order pharmacy business which, among
other things, includes any potential operational deficiencies or service
issues as well as loss or suspension of state pharmacy licenses; |
7.
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significant
changes in interest rates for a sustained period of
time;
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8.
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downgrades
in the financial strength ratings of the Company’s insurance subsidiaries,
which could, among other things, adversely affect new sales and retention
of current business;
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9. |
limitations
on the ability of the Company’s insurance subsidiaries to dividend capital
to the parent company as a result of downgrades in the subsidiaries’
financial strength ratings, changes in statutory reserve or capital
requirements or other financial constraints; |
10. |
inability
of the program adopted by the Company to substantially reduce equity
market risks for reinsurance contracts that guarantee minimum death
benefits under certain variable annuities (including possible market
difficulties in entering into appropriate futures contracts and in
matching such contracts to the underlying equity risk); |
11. |
adjustments
to the reserve assumptions (including lapse, partial surrender, mortality,
interest rates and volatility) used in estimating the Company’s
liabilities for reinsurance contracts covering guaranteed minimum death
benefits under certain variable annuities; |
12. |
adjustments
to the assumptions (including annuity election rates and amounts
collectible from reinsurers) used in estimating the Company’s assets and
liabilities for guaranteed minimum income benefits under certain variable
annuities; |
13. |
significant
stock market declines, which could, among other things, result in
increased expenses for |
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guaranteed
minimum income benefit contracts, guaranteed minimum death benefit
contracts and pension expenses for the Company’s pension plan in future
periods as well as the recognition of additional pension
obligations;
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14. |
unfavorable
claims experience related to workers’ compensation and personal accident
exposures of the run-off reinsurance business, including losses
attributable to the inability to recover claims from
retrocessionaires; |
15. |
significant
deterioration in economic conditions and significant market volatility,
which could have an adverse effect on the Company’s
operations, investments, liquidity and access to capital
markets; |
16.
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significant
deterioration in economic conditions and significant market volatility,
which could have an adverse effect on the businesses of our customers
(including the amount and type of healthcare services provided to their
workforce and our customers' ability to pay receivables) and our vendors
(including their ability to provide
services);
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17.
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changes
in public policy and in the political environment, which could affect
state and federal law, including legislative and regulatory proposals
related to health care issues, which could increase cost and affect the
market for the Company’s health care products and services; and amendments
to income tax laws, which could affect the taxation of employer provided
benefits, and pension legislation, which could increase pension
cost;
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18.
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potential
public health epidemics and bio-terrorist activity, which could, among
other things, cause the Company’s covered medical and disability expenses,
pharmacy costs and mortality experience to rise significantly, and cause
operational disruption, depending on the severity of the event and number
of individuals affected;
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19.
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risks
associated with security or interruption of information systems, which
could, among other things, cause operational
disruption;
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20.
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challenges
and risks associated with the successful management of the Company’s
outsourcing projects or key vendors, including the agreement with IBM for
provision of technology infrastructure and related
services;
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21.
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the
ability to successfully integrate and operate the businesses acquired from
Great-West by, among other things, renewing insurance and administrative
services contracts on competitive terms, retaining and growing membership,
realizing revenue, expense and other synergies, successfully leveraging
the information technology platform of the acquired businesses, and
retaining key personnel; and
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22.
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the
ability of the Company to execute its growth plans by
successfully managing Great-West Healthcare’s outsourcing projects and
leveraging the Company's capabilities and those of the business acquired
from Great-West to further enhance the combined organization’s network
access position, underwriting effectiveness, delivery of quality member
and provider service, and increased penetration of its membership base
with differentiated product
offerings.
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This list
of important factors is not intended to be exhaustive. Other sections
of the Company’s most recent Annual Report on Form 10-K, including the “Risk
Factors” section and other documents filed with the Securities and Exchange
Commission include both expanded discussion of these factors and additional risk
factors and uncertainties that could preclude the Company from realizing the
forward-looking statements. The Company does not assume any
obligation to update any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by law.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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CIGNA
CORPORATION
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Date: March
4, 2009
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By:
/s/ Michael W.
Bell
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Michael
W. Bell
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Executive
Vice President and
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Chief
Financial Officer
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