Cigna's 2013 report ended a week full of news about slipping Medicare Advantage profits, but the company is still betting on U.S. seniors while also looking abroad.
The company saw revenue grow 11 percent last year to $32.4 billion, and adjusted income grow by about that rate as well, to $1.9 billion, $1.48 billion of it for shareholders.
Cigna's global supplemental benefits segment grew 27 percent, while group life/disability and global healthcare each rose about 10 percent. But still analysts were disappointed with what several said seem like rising cost trends.
In healthcare, Cigna's medical loss ratio for the commercial risk market was 86.6 percent, about 2 percent more than some analysts were expecting, and the Medicare Advantage MLR was 86.4 percent -- continuing a year-over-year increase from 82.5 percent in 2012 to 84.8 percent in 2013.
In Medicare Advantage, Cigna, like other companies, factored reductions "into our outlook," CEO David Cordani said in a conference call. In many U.S. healthcare markets, though, "the cost per episode of care is going up," if not necessarily "the severity of illness."
Cordani said the company's healthcare strategy is relying on establishing what Cordani called "risk-aligned" models with providers, including capitated and shared risk contracts.
The company is planning to "use the activated physicians to guide their patients to higher-value facilities or free-standing clinics," and possibly trying to adjust reimbursement or ending contracts with certain facilities.
Cordani tried to draw attention to positive "early results" from collaborative care arrangements, "still in the early stages of development," that cover about 1.2 million Medicare and commercial members.
Cordani also told analysts and investors that the company is going to continue its diversification strategy, especially the "go global" idea -- one of three areas he thinks are ripe for acquisitions this year, along with "U.S. seniors and/or duals" and "retail-based capabilities."
In other news, Cigna paid off $1 billion of its unfunded pension liability, bringing it down to $600 million. In health insurance exchanges, the transition is still minor in both public and private exchanges with "tens of thousands of lives," Cordani said, and public HIXs are not viewed as profitable for the next year at least.
The private exchange space, which Cigna just entered with the launch of its own, is "in the early stages of innovation," he said.