Cigna Corp. will take a $14 million charge and restate fourth quarter and full-year results following an adverse ruling in a reinsurance dispute, the Philadelphia-based insurer announced yesterday.
The change will reduce earnings in 2005's fourth quarter by 11 cents a share to $1.67, Cigna said.
A London arbitration panel found against the company in a dispute over a retrocessional reinsurance arrangement related to a portion of its runoff workers' compensation reinsurance business written in the London market.
Cigna explained that because the ruling relates to an exposure that existed as of Dec. 31, 2005, and because the company has not yet filed its 2005 financial statements, the ruling, under generally accepted accounting, must be recorded in the company's 2005 financial statements.
The 2005 fourth quarter and full-year financial results were announced for the company on Feb. 8. Cigna said it expects to file its 2005 Form 10-K, including the financial statements, later this month.
"The result of this ruling has no effect on our ongoing operations," said H. Edward Hanway, chairman and chief executive officer of Cigna. "In addition, our estimates for full-year 2006 consolidated adjusted income from operations and related per-share amounts are unchanged from the estimates we provided in our Feb. 8 earnings release."
Cigna said it will record the charge in its Run-off Reinsurance segment.
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