Cigna Corp. posted a higher-than-expected profit on Friday, helped by gains in its main healthcare business and international segment, and the insurer raised its full-year outlook.
Cigna also raised its forecast for earnings from its healthcare segment as it nudged up its expectation for membership growth this year.
"We are growing the number of customers we're servicing, both in the United States as well as abroad," Chief Executive David Cordani said in an interview.
Philadelphia-based Cigna is seen as more immune than rivals to the new U.S. healthcare reforms because of its focus on fee- and service-based relationships with large employers and its significant business outside the United States.
"The diversity and fee-based weighting of Cigna's earnings means 2010 upside should be more sustainable into next year and beyond as compared with others," Goldman Sachs analyst Matthew Borsch said in a research note.
Third-quarter net income fell to $307 million, or $1.13 per share, from $329 million, or $1.19 per share, a year earlier.
Excluding items, Cigna earned $1.10 per share. The results topped the average analyst forecast by 4 cents, according to Sanford Bernstein analysts.
Cigna is the second major U.S. health insurer to post stronger-than-expected third-quarter results following UnitedHealth Group Inc, although UnitedHealth's cautious view of 2011 hurt its share price.
Expectation of Republican gains in the U.S. mid-term elections has improved investor sentiment for health insurer stocks, as Democrats criticized the industry during the healthcare reform debate.
Concerns over new requirements under the reform law for spending on medical costs have left Wall Street uncertain about the industry's prospects.
Cigna's quarterly revenue rose about 17 percent to $5.27 billion. Profit at Cigna's healthcare segment rose 18 percent to $240 million, helped by client retention and lower-than-expected use of medical services by members.
International segment profit rose 25 percent to $50 million, helped by sales and client retention of products serving employees working abroad and supplemental products sold to individuals in Asia and elsewhere.
However, profit at the international segment was below levels of periods earlier this year, noted Citigroup analyst Carl McDonald.
"It will be important to understand the true run rate earnings base for the international product, since this is expected to be an area of big earnings growth in 2011," McDonald said in a research note.
Cigna forecast full-year earnings, excluding items, of $4.35 to $4.50 per share. In August, it had forecast $4.10 to $4.40.
Cigna forecast full-year membership growth of about 3.5 percent, up from 3 percent previously.
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