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Cigna remains 'fully committed' to Anthem merger as profit drops

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Cigna remains 'fully committed' to Anthem merger as profit drops

Cigna Corp. on Friday said its net income fell 13.9% during the second quarter of 2016, to $503 million, as it attempted to dispel concerns about its lukewarm commitment to its controversial merger with rival Anthem Inc.

Despite reduced net income driven by lower earnings in its group life and disability business, as well as costs related to the Anthem combination, the Bloomfield, Connecticut-based health insurer's revenue rose 4.9% over the prior-year quarter, to $9.96 billion, as the insurer reported strong results in its commercial employer and specialty businesses.

The results come about a week after the U.S. Justice Department sued to block the $54 billion Anthem-Cigna tie-up.

Cigna CEO David Cordani told investment analysts Friday that the insurer had stepped back to evaluate its options, but remains “fully engaged” in the merger process and will support Anthem as it takes on the Justice Department's lawsuit independently.

“We have and will continue to fulfill our contractual obligations” under the merger agreement, Mr. Cordani said. “If there is a successful combination to be completed, it is fully our intent and commitment to continue to provide the support, as we have, dedicating significant resources, time and effort to do so.”

Cigna recorded $26 million in costs related to its merger with Anthem in the second quarter.

Premium revenue grew 3.0%, to $7.65 billion, from a year earlier, while the commercial medical care ratio for the quarter was 78.8% vs. 77.5% the same period a year ago.

Medical membership totaled 15.1 million as of June 30, up from 14.8 million a year earlier.

“Cigna's second-quarter financial results reflect solid performance in global health care and global supplemental benefits, with a current headwind in group disability and life that pressured overall results,” Mr. Cordani said in a Friday statement announcing the results. “We are taking a series of corrective actions to stabilize and improve group disability and life results while we continue to focus on driving innovation and enhancing value for our customers and clients around the globe, and remain fully committed to our long-term growth objective.”

For the six months ending June 30, net income totaled $1.02 billion, down 8.8% year over year. Revenue was $19.84 billion, up 4.7%, and premium revenue was $15.40 billion, up 3.8% from the year before.

Cigna's commercial medical care ratio was 77.3%, up from 76.3% a year earlier.

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