Big auto insurers will be examining past auto accident claims involving Toyota vehicles for possible subrogation action, an insurance arbitration executive predicted, as Allstate said it has a case review underway.
Mark Bunim, president and chief executive of Case Closure--a New York-based insurance arbitration and mediation firm--said large auto insurers are “going to amalgamate their serious claims involving Toyotas over the past five or six months, and see how many of them are tied to or could be tied to the gas pedal recall.”
“Then they are going to try and subrogate. And why not?” added Mr. Bunim.
At Allstate spokesman, Mike Siemienas, said cases are being examined, but it is too early to discuss whether the company will be involved in subrogation activity. “We will wait and see,” he noted.
“Allstate has processes in place because vehicle recalls occur regularly,” Mr. Siemienas added. “Allstate is in the early stages of reviewing claims involving Toyota’s recalled vehicles. The results of this investigation will help Allstate determine the appropriate next steps to take on behalf of our customers.”
In the past after such reviews, the company has instituted subrogation actions, according to Mr. Siemienas.
Since last November, at least 10 negligence lawsuits have been instituted seeking class-action status against Toyota in the United States and Canada, according to the Web site, www.attorneyatlaw.com.
Friday, February 5, 2010
Recalling Insurance Claims
Healthcare Payor Results: CIGNA
CIGNA Reports Fourth Quarter and Full Year 2009 Results
- Shareholders’ net income1 for full year 2009 was $1.3 billion, or $4.73 per share2, compared to $292 million, or $1.05 per share2, for full year 2008. The 2008 result included a loss of $646 million, or $2.32 per share2, related to the Run-off Reinsurance operations.
- Adjusted income from operations3 for full year 2009 was $3.98 per share2, a 17% increase over full year 2008, driven by improvement in the Run-off Reinsurance results.
- The company continues to estimate full year 2010 earnings per share2, on an adjusted income from operations3,4 basis, to be in the range of $3.75 to $4.15 per share2. This outlook reflects the strength of our diversified portfolio of businesses against a challenging economic and competitive environment.
- The company continues to estimate full year 2010 adjusted income from operations3,4 for the Health Care segment to be in the range of $720 million to $790 million.
PHILADELPHIA--(BUSINESS WIRE)--CIGNA Corporation (NYSE: CI) today reported shareholders’ net income1 of $330 million, or $1.19 per share2, for the fourth quarter of 2009 compared with a shareholders’ net loss1 of $209 million, or $0.77 per share2, for the same period last year. Shareholders’ net income1 for the fourth quarter 2009 included income related to the GMIB5,6 business of $60 million after-tax, or $0.22 per share2, primarily related to favorable interest rate movements. Shareholders’ net income1 for the fourth quarter 2008 included losses of $408 million after-tax, or $1.51 per share2, related to the GMIB5,6 and VADBe5 businesses.
“In 2009, each of our ongoing operations delivered solid earnings in a challenging economic and competitive environment. We continue to deliver strong service and clinical results while driving ongoing efficiency gains”
CIGNA's adjusted income from operations3 for the fourth quarter of 2009 was $285 million, or $1.03 per share2, compared to adjusted income from operations3 of $132 million, or $0.48 per share2, for the same period last year. Fourth quarter 2008 results included losses of $192 million after-tax, or $0.71 per share2, from the VADBe5 business. As a result of continued stability in the equity markets, no reserve strengthening was required for the VADBe5 business in the fourth quarter of 2009.
For full year 2009, adjusted income from operations3 was $1.1 billion, or $3.98 per share2, compared to adjusted income from operations3of $946 million, or $3.39 per share2 in 2008. Consolidated revenues were $4.6 billion and $18.4 billion for the fourth quarter and full year of 2009, respectively, and $4.8 billion and $19.1 billion for the comparable periods of 2008.
- Health care medical claims payable9 were approximately $715 million at December 31, 2009 and $713 million at December 31, 2008.
- Cash and short term investments at the parent company were approximately $475 million at December 31, 2009 and $90 million at December 31, 2008.
HIGHLIGHTS OF SEGMENT RESULTS
- “Adjusted segment earnings (loss)” are adjusted income (loss) from operations3, as applicable, for each segment (see Exhibit 2).
Health Care
- This segment includes medical and specialty health care products and services provided on guaranteed cost, retrospectively experience-rated and service-only funding bases. Specialty health care includes behavioral, dental, disease and medical management, stop-loss, and pharmacy-related products and services.
Financial Results (dollars in millions, medical membership in thousands):
| Fourth Qtr. | Fourth Qtr. | Third Qtr. | Year ended | |||||||||||
| 2009 | 2008 | 2009 | Dec. 31, 2009 | |||||||||||
| Adjusted Segment Earnings, After-Tax | $ | 194 | $ | 209 | $ | 204 | $ | 729 | ||||||
| Premiums and Fees | $ | 2,806 | $ | 2,905 | $ | 2,812 | $ | 11,384 | ||||||
| Segment Margin, After-Tax10 | 6.0% | 6.3% | 6.3% | 5.6% | ||||||||||
Aggregate Medical Membership | 11,040 | 11,679 | 11,104 |
| ||||||||||
- Fourth quarter 2009 adjusted segment earnings reflect effective operating expense management, as well as sustained contributions from our specialty businesses. The fourth quarter 2008 earnings included a net favorable expense adjustment of $35 million after-tax, reflecting a significant reduction in management incentive compensation.
- Premiums and fees in the fourth quarter 2009 decreased approximately 3% relative to fourth quarter 2008, primarily due to a decline in medical membership, partially offset by rate increases.
Disability and Life
- This segment includes CIGNA’s group disability, life, and accident insurance operations that are managed separately from the health care business.
Financial Results (dollars in millions):
| Fourth Qtr. | Fourth Qtr. | Third Qtr. | Year ended | |||||||||||
| 2009 | 2008 | 2009 | Dec. 31, 2009 | |||||||||||
| Adjusted Segment Earnings, After-Tax | $ | 66 | $ | 64 | $ | 65 | $ | 279 | ||||||
| Premiums and Fees | $ | 647 | $ | 666 | $ | 654 | $ | 2,634 | ||||||
| Segment Margin, After-Tax10 | 9.0% | 8.5% | 8.7% | 9.3% | ||||||||||
- Fourth quarter 2009 adjusted segment earnings reflect strong accident results. In addition, results continue to reflect competitively strong margins driven by the sustained value we deliver to our customers from our disability management programs.
International
- This segment includes CIGNA’s life, accident and supplemental health insurance and expatriate benefits businesses operating in select international markets.
Financial Results (dollars in millions):
| Fourth Qtr. | Fourth Qtr. | Third Qtr. | Year ended | |||||||||||
| 2009 | 2008 | 2009 | Dec. 31, 2009 | |||||||||||
| Adjusted Segment Earnings, After-Tax | $ | 38 | $ | 44 | $ | 40 | $ | 182 | ||||||
| Premiums and Fees | $ | 504 | $ | 448 | $ | 482 | $ | 1,882 | ||||||
| Segment Margin, After-Tax10 | 7.2% | 9.3% | 8.0% | 9.2% | ||||||||||
- Adjusted segment earnings in the quarter reflect unfavorable claims experience in the expatriate benefits business, due in part to the impact of global economic pressures. Fourth quarter 2009 results also included an unfavorable adjustment of $4 million after-tax related to a change in tax legislation in South Korea. Our International business continues to deliver competitively strong margins.
Other Segments
- Adjusted segment earnings (losses) for CIGNA's remaining operations are presented below (after-tax, dollars in millions):
| Fourth Qtr. | Fourth Qtr. | Third Qtr. | Year ended | |||||||||||
| 2009 | 2008 | 2009 | Dec. 31, 2009 | |||||||||||
| Run-off Reinsurance | $ | 9 | $ | (179) | $ | 14 | $ | (24) | ||||||
| Other Operations | $ | 23 | $ | 23 | $ | 23 | $ | 85 | ||||||
| Corporate | $ | (45) | $ | (29) | $ | (35) | $ | (154) | ||||||
- Run-off Reinsurance results for the fourth quarter 2009 reflect favorable commutations in the workers compensation business. As a result of continued stability in the equity markets, no reserve strengthening was required for the VADBe5 business this quarter.
OUTLOOK
- CIGNA continues to estimate full year 2010 consolidated adjusted income from operations3,4 to be in the range of $1.05 billion to $1.15 billion, or $3.75 to $4.15 per share2. This outlook includes an assumption that VADBe5 results will be approximately break-even for full-year 2010, reflective of management’s view that the long-term reserve assumptions are appropriate and that capital markets remain stable during the year.
- CIGNA continues to estimate full year 2010 adjusted income from operations3,4 for the Health Care segment to be in the range of $720 million to $790 million.
- CIGNA continues to estimate full year 2010 adjusted income from operations3,4 for the Group Disability and Life and International segments to be in the range of $465 million to $495 million.
- CIGNA’s earnings and earnings per share2 outlooks exclude the impact of any future stock repurchase11.
- Full year 2010 medical membership outlook has been updated to reflect the growth in our Individual Private Fee for Services business of approximately 80,000 to 90,000 members. Our current full-year outlook is now a range of -1% to +2%.
- Management will provide additional information about the 2010 earnings outlook on CIGNA's fourth quarter 2009 earnings call.
Monday, February 1, 2010
Saving Media
The McClatchy Company’s prospects are looking up, just a year after investors seemed to expect the newspaper publisher to go bust. The company is marketing $875 million of bonds this week. But investors should be cautious. McClatchy’s recent performance will be tough to maintain.
The company has cut its work force and reduced pension costs. In the fourth quarter of 2009, operating expenses fell a third from the period a year earlier. And digital advertising revenue rose 15 percent compared with 2008, offsetting some declines in print advertising.
The stock recovered from levels that reflected bankruptcy expectations — 40 cents a share in the middle of last year — to $5.51 on Monday. But online ads make up only 16 percent of total ad revenue. So revenue from ads in McClatchy’s newspapers, including The Miami Herald, The Sacramento Bee and The Fort Worth Star-Telegram, was still a fifth lower in the quarter. The worry is that the company can’t cut costs fast enough to bridge the time it will take to replace print ad revenue with digital sales.
Assume that digital ad revenue continues its trajectory and an economic rebound helps print advertising so that the overall decline in advertising revenue slows to 10 percent annually. With expenses remaining at current levels, McClatchy’s earnings before interest, tax, depreciation and amortization, or Ebitda, could still fall by more than 30 percent by the end of 2011.
In that case, its debt-to-Ebitda ratio would soar to more than eight to one, from five to one now, and interest expenses would absorb over 40 percent of operating income.
Healthcare Payor Results: HUMANA
Health insurer Humana Inc. posted a 44 percent jump in fourth-quarter profit Monday as its robust Medicare Advantage business drove higher government income, offsetting a slumping commercial segment dragged by the sluggish economy.
Louisville-based Humana also raised its 2010 earnings projection to a range of $5.15 to $5.35 per share, up from $5.05 to $5.25. Analysts expected a higher profit of $5.40 per share, according to Thomson Reuters.
Shares of Humana edged up 9 cents to close at $48.71 Monday.
The company's government segment posted pretax income of $452.3 million in the fourth quarter, up from $267.3 million a year earlier. The increase was due in part to lower claims expenses in its Medicare prescription drug plans and higher Medicare Advantage membership.
The health insurer earned $250.7 million, or $1.48 per share, for the period ended Dec. 31, meeting analysts' estimates. That's up from $174.1 million, or $1.03 per share, in 2008.
Revenue grew 2 percent to $7.63 billion but missed Wall Street's view of $7.78 billion.
For the full year, Humana earned $1.04 billion, or $6.15 per share, up nearly 61 percent from the previous year. Revenue grew 7 percent to $30.96 billion.
Dr Reddys signs Glaxo to give it a new pipeline
GSK Signed up with Dr Reddys for 100 drugs in 06/2009 ( no cash has changed hands)
GlaxoSmithKline (GSK) today signed an alliance with Dr Reddy’s Laboratories, an Indian generic drug maker, in its latest step towards building its business in emerging markets and copycat drugs.
The deal gives GSK access to Dr Reddy’s portfolio and future pipeline of more than 100 branded pharmaceuticals in areas including cardiovascular, diabetes and oncology. The first products are expected to reach the market in the second half of the year, with Mexico likely to be the first country.
The tie-up is chief executive, Andrew Witty’s latest move to expand in emerging markets and generic drugs, which can be sold as brands in poorer countries. The deal comes just six months after the drug giant signed an agreement with China’s Shenzhen Neptunus for flu vaccines and follows a collaboration with South Africa’s Aspen and last year’s purchase of Bristol-Myers Squibb’s mature business in Egypt.
Drug sales in emerging markets are expected to grow at a mid-teens percentage rate through 2013, against low single-digits for mature markets, according to IMS Health, a tracker of prescription drug data.
GSK gets R&D cuts 12000 jobs
The extent to which the recession has cut into high-value research and development jobs in the pharmaceutical industry will be laid bare this week as job losses in the industry climb to 12,000.
GlaxoSmithKline (GSK), the British drugs group, will announce plans on Thursday for further restructuring with the loss of 4,000 jobs, of which nearly half will be in GSK’s research and development centres.
The company employs 99,000 people, of whom 16,000 are located in the UK. The global job cull is likely to be felt in Britain, where the company has six R&D sites. The move will follow that of AstraZeneca, which last week announced a global job cut of 8,000 workers, of whom 3,500 are employed in R&D.
GSK’s third restructuring effort since 2007 will heighten fears in the medical research establishment that the recession is beginning to affect high-value scientific and technical jobs.
GSK will disclose plans for the upheaval when it announces its annual profits for 2009, which analysts believe will exceed £8.5 billion. The new round of cost cuts will raise the company’s target of costsavings from £1.7 billion, announced a year ago, to more than £2 billion. The company is also expected to increase provisions for restructuring, which total £3.6 billion at present, of which three quarters are cash costs. It will scale down activities at research facilities in Britain, across Europe and in the United States as it builds its activities in emerging markets.
The job attrition at the medical research coalface reflects widespread unease in pharmaceuticals companies about the loss of revenues from a small number of blockbuster medicines. This year GSK will lose patent protection for Seretide, an asthma treatment worth $4 billion (£2.5 billion) to the company, and AstraZeneca is facing the imminent patent expiry on Arimidex, a breast cancer drug that generated $878 million in sales last year.
Adding to their problems, the pharmaceuticals groups face a European Commission inquiry into allegations that they are delaying the arrival of generic medicines by offering payments to rival manufacturers. In response, the companies are seeking efficiencies in their labs, with greater focus on targeted areas of research.
AstraZeneca said last week that it would seek to outsource more of its research. The company is transferring almost all its manufacturing of pharmaceutical ingredients to a facility in China.
GSK started reshaping its business in 2007 by focusing on three areas: vaccines; consumer healthcare, including over-the-counter medicines and non-medical products, such as Lucozade and Horlicks; and emerging markets. The shift towards consumer products and emerging markets also reflects the group’s concern that it faces more cuts and penny-pinching among national healthcare buyers.
This will have ramifications for the R&D activities of all the big companies in the sector. “Their strategy is to diversify and to move away from work on small molecules,” one industry insider said.
GSK will be diverting investment away from pure research and towards products that will enable the company to catch a greater share of the consumer dollar. The focus on emerging markets will entail more investment in branded products that treat curable illnesses rather than in funding research into new medicines for incurable diseases.