Medical Costs Hurt Cigna’s Profit

Cigna Corp. reported a decline in second-quarter profit due to rising medical costs that could also hurt results for the rest of the year. Cigna, the third-largest U.S. health insurer, said earnings fell 6% to $262 million, or $1.73 a share, missing lowered expectations, as revenue also declined 6%, to $4.7 billion.

Cigna had lowered its profit forecast in May, citing higher-than-expected medical costs and a weak stock market that was hurting its retirement-plan business. Analysts then revised their estimates to $1.77 on average, according to First Call/Thomson Financial.

The Philadelphia-based company said it expects earnings of $1.70 to $1.80 a share for the third quarter and $7.00 to $7.25 for the year, although it will raise prices to offset rising costs. Analysts had forecast earnings of $1.86 and $7.37, respectively.

Shares of Cigna, which also provides group life, accident and disability insurance and retirement services, fell $13.66, or 14%, to $86.65 on the NYSE.