Jan. 5 (Bloomberg) -- Cigna Corp., the health insurer whose shares fell 69 percent last year because of investment losses, said it will cut about 1,100 jobs and take a fourth-quarter after-tax charge of $30 million to $40 million for 2008.
The Philadelphia-based company’s 4 percent workforce reduction will be complete by the middle of the year, and some offices will be consolidated, although it didn’t offer details in a statement today. There may be more charges for 2009, the company said in a filing with the Securities and Exchange Commission.
A declining stock market and the recession have eroded the earnings outlook for Cigna, which relies on investment returns for almost two-thirds of pretax income. In November the company lowered its profit forecast for 2008 and said it will provide health insurance to fewer people in 2009 as customers trim their payrolls. The company has forecast 2009 adjusted earnings of $4 to $4.30 a share.
“Given the unprecedented economic situation we and our customers are facing, these actions are essential,” said Cigna Chief Executive Officer H. Edward Hanway in the statement today. “Decisions like these are difficult and never made lightly, but they are necessary given the current environment.”
The company rose 36 cents, or 2 percent, to $18.15 at 4:15 p.m. in New York Stock Exchange composite trading. Cigna’s shares in 2008 posted their worst performance for any year since at least 1983.
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To contact the reporter on this story: Avram Goldstein in Washington at agoldstein1@bloomberg.net.
