Cigna shares outpace other health insurance stocks

AP News
Posted: Dec 01, 2009 4:23 PM

Shares of managed care company Cigna Corp. outpaced other health insurers Tuesday, as they climbed more in line with financial stocks.

Philadelphia-based Cigna operates health care, group disability and life and international business segments, which is a broader risk profile than other major health insurers. The insurer also has commercial real estate holdings scattered around the country and a large reinsurance business for which it does not seek new customers.

BMO Capital analyst Dave Shove said he didn't see a single reason behind Cigna's share price growth Tuesday. He said the company can follow the movement of financial stocks because its investment portfolio resembles companies in those sectors.

The KBW Bank Index rose 4.1 percent in Tuesday afternoon trading.

Shove also said Cigna is more "reform resistant" than other health insurers, and its shares sometimes trade counter to companies in the sector because of that. Congress is debating some bills that propose to cover millions of uninsured people and clamp down on costs.

Cigna does not operate a large Medicare Advantage or individual health insurance business, two product lines seen as vulnerable to an overhaul push.

Cigna also is working to cut costs and has projected strong growth next year for its international business, two factors that can appeal to investors, said Argus Research analyst David Toung. He also said he didn't see a single reason behind Tuesday's stock movement.

The insurer's shares climbed 3.1 percent, or $1, to $33.08 in Tuesday trading. Other health insurance stocks rose between 1 percent and 2.4 percent.

The broader Standard & Poor's 500 index rose 1.3 percent.