Wall Street rewarded Cigna Corp.'s positive 2006 earnings report today as share prices climbed to a 52-week high of $142.38 in heavy trading this morning.
The Philadelphia based health insurer also reported increased medical membership for the year - the first year membership has risen since a major computer integration foul-up sent Cigna's numbers plummeting from a peak of 14.2 million in 2000.
Medical membership rose to 9.39 million, up from 9.09 million at the end of 2005 and 9.32 million at the end of the third quarter, the company said.
Cigna had increases in its adjusted income from operations in both the fourth quarter and the year. In the fourth quarter, adjusted income from operations was $266 million or $2.61 per share, up from $235 million or $1.87 per share in 2005.
For the year, adjusted income from operations rose to $1.06 billion, or $9.45 per share, compared with $1.04 billion, or $8.03 per share in 2005 - an increase of 18 percent.
The company uses the adjusted income from operations to benchmark its performance.
Cigna's 2006 net income was $1.16 billion, down from $1.63 billion in 2005.
It includes an after-tax charge of $25 million for a settlement in a shareholder class-action lawsuit that stemmed from the company's previous problems with its computer system. Another $23 million was spent to improve efficiency in its health care operations.
The company also continued to repurchase its own stock, paying $550 million for 4.5 million shares and $2.8 billion for 25 million shares over the course of the year. The company had 102.6 million shares outstanding as of Sept. 30.
Cigna upgraded its expectations for 2007 performance to be in the range of $9.95 to $10.55 a share, or $1.0 billion to $1.06 billion on an adjusted income basis. The company expects $665 million to $715 million to come from its health care segment.
While nearly half of its membership growth in 2006 came as a result of an acquistion, Cigna said it expects its 2007 medical membership to grow 5 percent to 6 percent on its own.