With membership down, CIGNA plans cuts

CIGNA Corp., which has announced job cuts in each of the last two years, said it planned to eliminate 3,000 positions over the course of 2004.

The Philadelphia-based insurer, which saw membership drop by nearly 1.5 million, or more than 11%, in 2003 to 11.5 million, also planned to reduce its quarterly dividend from 33 cents per share this quarter to 2.5 cents in the future, according to its quarterly report filed in February.

CIGNA spokesman Wendell Potter said that although no final decisions had been made on the cuts, physicians who do business with the company would not notice any effects.

CIGNA Chair and CEO H. Edward Hanway said the firm would record a charge in the first quarter of 2004 of up to $75 million, but it expected the job cuts to save about $300 million.

The announcement of future cuts comes on the heels of the fourth quarter 2003 report, in which CIGNA showed net income of $290 million, or $2.06 per share, compared with income of $47 million, or 33 cents per share, during the fourth quarter of the previous year. Income for the year was $620 million, compared with a loss of $397 million in 2002.

Potter said that in spite of the improvements, the company anticipated the need to continue to cut expenses last fall. Revenues for the fourth quarter and full year of 2003 were $4.5 billion and $18.8 billion, compared with $4.7 billion and $19.3 billion for the same periods of 2002. Revenues from premiums and fees were $3.8 billion for the fourth quarter of 2003, compared with nearly $4 billion during the fourth quarter of 2002.

The announcement is the latest in a string of troubling financial news for the company.

About 5,000 jobs previously were eliminated. The company's stock, which traded for more than $100 as recently as 2002, had a value of about $54 per share in mid-February.