Cigna Investment

In: Business and Management

Submitted By dajiva27
Words 1590
Pages 7
Investment Project
CIGNA

In Partial Fulfillment of the Requirements of: FINC5210- Investments
Fall 1, 2012

Table of Contents
Page 1: Background
Page 2: CEO, Earnings and Finance
Page 3: ROA and ROE
Page 4: Net Profit Margin, Cigna Comparisons
Page 5: Historical Stock Prices/ Future Stock Price Valuation
Page 6: Stock Pricing, Dividends, Historical Returns
Page 7: Trailing PE, Forward PE, and Forward PEG
Page 8: References

CIGNA 1 With roots dating back to 1972, CIGNA is a leading provider of healthcare and health benefits. The current iteration of CIGNA officially formed in 1982 after the merger of Connecticut General Insurance Corporation and INA Corporation. While Philadelphia is the home of CIGNA’s operations, the company has a diverse footprint located throughout the United States and internationally. Operating in five segments: healthcare, disability and life, international, run-off reinsurance and other operations, CIGNA is able to compete within nearly every aspect of the healthcare sector. CIGNA also operates retail pharmacies, even further diversifying its business model. However, the majority of CIGNA’s revenues come from its health care plans for companies who self- insure. One major differing aspect of CIGNA, compared to its competitors, is that the majority of its pretax operating income comes from its investment income. Unfortunately, this may make the company much more vulnerable to market conditions than most other health insurance companies. On January 31, 2012, CIGNA acquired HealthSpring, Inc. About 6 months later, they acquired Great American Supplemental Benefits from American Financial Group, Inc. These transactions are a good indicator that CIGNA’s main priority is global growth and expanding on shareholder value. Another promising factor…...

Similar Documents

Investment

...The investor is aware of the risks involved and may be willing to invest in these bonds if there is an attractive coupon rate or high yield-to-maturity. Convertible bonds give the investor the option to convert the bonds into shares of common stock. The conditions, time frame, and price must all be set down at the time the bonds are issued. Risk Tolerance and the Security of Bonds Bonds are favored by investors seeking current income. Some of these investors are willing to take more investment risk to get higher returns than others. Depending upon your level of risk tolerance, you may choose bonds that are unsecured to obtain higher current income. Conversely, you may not be able to take much risk with your income. In this case, you would look for bonds that are backed by more than the good faith and credit of the issuers. As a bond investor, you should become familiar with the different ways in which bonds are secured. This will help you choose bond investments best suited to your investment objectives and risk tolerance. AYALA LAND- 10B Ayala 6.875% Bonds due 2027 -date of prospectus April 27, 2012...

Words: 811 - Pages: 4

Investment

...INVESTMENT APPRAISAL HANDOUT Example The capital investment committee of a state owned corporation is currently considering two projects. The estimated income from operations and net cash flows expected from each operation are as follows: | PROJECT A | PROJECT B | Year | Income from operations$ | Net Cash Flow$ | Income fromOperations$ | Net Cash Flow$ | 1 | 12,000 | 44,000 | 26,000 | 58,000 | 2 | 18,000 | 50,000 | 20,000 | 52,000 | 3 | 20,000 | 52,000 | 16,000 | 48,000 | 4 | 16,000 | 48,000 | 16,000 | 48,000 | 5 | 22,000 | 54,000 | 6,000 | 38,000 | | 88,000 | 248,000 | 84,000 | 244,000 | Each project requires an investment of $160,000. Straight line depreciation will be used, and no residual value is expected. The committee has selected a rate of 15% for purposes of the net present value analysis Required 1. Calculate the following: a) The average rate of return for each project b) The net present value for each project. Use the present value of $1 table available on the internet http://highered.mcgraw-hill.com/sites/0072994029/student_view0/present_and_future_value_tables.html 2. Why is the present value of Project B greater than Project A even though its average rate of return is less? 3. Prepare a summary for the capita; investment committee, advising it on the relative merits of the two projects SOLUTION 1. a ) Average rate of return for Project A $88,000 /5 = 22% ($160,000 +$0) /2 b) )......

Words: 480 - Pages: 2

Cigna-Corporate Social Responsibility

...environmental responsibility. But the concept of corporate social responsibility extends far beyond what the company is doing for the community around them and how they handle business internally. It affects employees, consumers, and investors and each of these groups have a different idea of how companies should be conducting business and these ideas need to be taken into consideration when drafting their CSR reports. Cigna is a good example of how publicly traded companies formulate and report their involvement in CSR. Community involvement and philanthropic activities are some of the most visible ways companies can market to their consumers as well as potential employees. “Cigna believes that investing in the health of their communities directly connects with their overall success” (Corporate Responsibility, n.d.). They provide their employees with a variety of programs to help them get involved with the surrounding community. Some of these programs include paid time off to volunteer at a charity of their choice, corporate sponsorship for the March of Dimes and the Cigna Foundation which matches employee donations to certain organizations. Not only is the company dedicated to helping the community but it encourages and supports its employees to do the same. Geoffrey Heal states in his book When Principles Pay, “people seek to work for ‘good’ companies, companies that they can be proud of and are willing to take lower pay in order to work for companies that have......

Words: 964 - Pages: 4

Investment

...covariance between shares, so that I can know if the share is good or not. If the covariance is positive, then it means the share is bad, when the covariance is +1, we never select this share; if the covariance is negative, then it means the share is good, when it equals to -1, we must select the share. I am using arbitrage pricing theory because there are many factors that could influence the fair return, including macroeconomic index such as GDP surprise, inflation surprise, investors’ investment trend etc. APT theory takes those factors into account then multiplies each factor’s sensitivity. The formula is: APT return = [E(r) +( F1*F1Beta +F2*F2Beta+F3*F3Beta)]+ ei Sharpe measure tells how well the return of an asset compensates the investor for the risk taken. When the result is positive, it means that the increasing rate excess risk free rate so is good to investment. When the result is negative, it means that the increasing rate is lower than risk free rate. It’s better to investment in treasury bills. Treynor measure gives excess return per unit of risk. It estimates when the risk increases per unit, how much the return is moving. When Tp is positive, the higher the result is, the higher the risk premium is, so it means the better the performance of this asset/portfolio is. When the result is negative, there is no meaning of ranking. Jensen’s alpha is similar to CAPM, Jensen’s measure is the portfolio’s alpha value. When the result is bigger than......

Words: 1947 - Pages: 8

Investment

...Chapter 01 The Investment Environment Multiple Choice Questions 11. The material wealth of a society is equal to the sum of _________. A. all financial assets B. all real assets C. all financial and real assets D. all physical assets E. none of the above Financial assets do not directly contribute the productive capacity of the economy. 13. _______ are financial assets. A. Bonds B. Machines C. Stocks D. A and C E. A, B and C Machines are real assets; stocks and bonds are financial assets. Difficulty: Easy 14. An example of a derivative security is ______. A. a common share of General Motors B. a call option on Mobil stock C. a commodity futures contract D. B and C E. A and B The values of B and C are derived from that of an underlying financial asset; the value of A is based on the value of the firm only. 17. An example of a primitive security is __________. A. a common share of General Motors B. a call option on Mobil stock C. a call option on a stock of a firm based in a Third World country D. a U.S. government bond E. A and D A primitive security's return is based only upon the earning power of the issuing agency, such as stock in General Motors and the U.S. government. Difficulty: Easy 19. _________ financial asset(s). A. Buildings are B. Land is a C. Derivatives are D. U.S. Agency bonds are E. C and D A and B are real assets. Difficulty: Easy 20. The value of a derivative security _______. A. depends on the value of the related......

Words: 1247 - Pages: 5

Investment

...Part of income that is invested monthly or yearly in some well managed plans to gener­ate some additional income is called invest­ment. Money can be invested in number of ways. For proper investment of money one should have detailed knowledge of the schemes. Following are the main means of investment: Bank Bank is an organised institution which deals with money matters. A person can de­posit his savings in the bank and can with-draw when he requires it. Bank pays inter at a fixed rate on the deposits. There are two main functions of a bank: (i) Deposits the money of people (ii) Gives back the demanded money cheque, draft, etc. Advantages of bank account Following are the advantages of a bank account: 1. There is no possibility of theft of t money kept in a bank. 2. Bank pays interest on deposits where the money kept at home fetches no in­terest. 3. A person spends economically in ord to deposit maximum amount in the bar 4. One can avail the facility of bank lock by having a bank account. Valuables jewellery, share certificates, other important documents, etc. can be kept safe in the locker. 5. Transaction of money from different places is possible through bank. 6. Small amount deposited at regular in­tervals becomes a considerable amount after sometime. This money can be invested in business, etc. Depositing money in a bank There are three main types of bank]' accounts for depositing money: 1. Fixed Deposit Account 2. Savings......

Words: 513 - Pages: 3

Investment

...Chapter 1 UNDERSTANDING INVESTMENTS Multiple Choice Questions Establishing a Framework for Investors 1. Which of the following is the best definition of wealth? a. the sum of all current and future income b. the total of all assets and all income c. the total of assets and income less any liabilities. d. the sum of current income and the present value of future income. (d, moderate) 2. Stocks and bonds would be classified as: a. real assets b. indirect assets c. personal assets d. financial assets (d, easy) 3. Technically, investments include: a. only financial assets. b. only marketable assets. c. financial and real assets that are marketable or non-marketable. d. only financial and real assets that are marketable. (c, easy) 4. The retirement plans that guarantee retirees a set amount of money each month are known as: a. 401(k) plans b. self-directed plans c. defined-benefit plans d. defined-contribution plans (c, moderate) The Importance of Studying Investments 5. The investment professionals that arrange the sale of new securities are called: a. arbitragers b. traders c. investment bankers d. specialists (c, moderate) 6. Another name for stockbrokers is: a.......

Words: 1615 - Pages: 7

Investment

...whether it is a gain or a loss. _ _ _ _ _ _ _ _ _ _ 5. A trader sells 100 European put options (i.e., one contract) with a strike price of $50 and a time to maturity of six months. The price received for each option is $4. The price of the underlying asset is $41 in six months. What is the trader’s gain or loss? Show a dollar amount and indicate whether it is a gain or a loss. _ _ _ _ _ _ _ _ _ _ 6. The price of a stock is $36 and the price of a three-month call option on the stock with a strike price of $36 is $3.60. Suppose a trader has $3,600 to invest and is trying to choose between buying 1,000 options and 100 shares of stock. How high does the stock price have to rise for an investment in options to lead to the same profit as an investment in the stock? _ _ _ _ _ _ 7. A one-year call option on a stock with a strike price of $30 costs $3; a one-year put option on the stock with a strike price of $30 costs $4. Suppose that a trader buys two call options and one put option. i) What is the breakeven stock price, above which the trader makes a profit? _ _ _ _ _ _ ii) What is the breakeven stock price below which the trader makes a profit? _ _ _ _ _ _...

Words: 510 - Pages: 3

Investment

... Investment Banking Giuliano Iannotta Investment Banking A Guide to Underwriting and Advisory Services Professor Giuliano Iannotta Department of Finance ` Universita Bocconi via Roentgen 1 20136 Milano Italy giuliano.iannotta@unibocconi.it ISBN: 978-3-540-93764-7 e-ISBN: 978-3-540-93765-4 DOI 10.1007/978-3-540-93765-4 Springer Heidelberg Dordrecht London New York Library of Congress Control Number: 2009943831 # Springer-Verlag Berlin Heidelberg 2010 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover design: WMXDesign GmbH, Heidelberg, Germany Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com) To my......

Words: 86170 - Pages: 345

Cigna

...Cigna was formed by the 1982 merger of the Connecticut General Life Insurance Company (CG) and INA Corporation ( the parent corporation of Insurance Company of North America), the first stock insurance company in America. Insurance Company of North America was formed in 1792, and is known as a corporate ancestor of Cigna. Cigna is one of the largest health insurance providers in the United States, providing health insurance solutions for businesses, families, and individuals. Currently employing more than 30,000 people. Offering insurance products in 27 countries and jurisdictions. Cigna provides medical, dental, vision, accident, pharmacy, behavioral care, life, and disability insurance. Most business is concentrated in large and also small group insurance, where the employee is able to obtain insurance through their employers. However Cigna also offers insurance products to individuals and families who do not receive health insurance through their employer. A benefit to the members, Cigna sponsors health and wellness programs to encourage a healthy living and to help lower health care costs. Programs include healthy programs for mothers and babies, chronic condition management, and also a 24 hour nurse help line. The 24 hour nurse line is able to help lower health care costs by allowing people to find answers on health questions from a nurse rather than having to visit an Urgent care or even local emergency room. Cigna offers many different plans for you to chose from...

Words: 724 - Pages: 3

Investment

...Investment Report Jane & Douglas Breighton Investment Report Jane & Douglas Breighton Best Choice Investment Solutions | FINM3008 Best Choice Investment Solutions | FINM3008 Minggang Gu|u5108473 Kejie Wang|u5133766 Tutorial Thursday 4pm Suggested Asset Allocation Breighton Holdings 14% Australian Equities 0% World Equities, Unhedged 0% World Equities, Hedged 11% Emerging Markets 13% EQUITIES 38% Australian Fixed Income 13% World Fixed Income, Hedged 19% Australian Index-Linked Bonds 0% Australian Cash 1% FIXED INCOME 33% Australian Listed Property 8% Australian Direct Property 9% PROPERTY 17% Hedge Funds 9% Commodities 1% US Private Equity 2% ALTERNATIVES 12% TOTAL 100% Contents Some critical assumption……………………………2 Asset Class Considerations………………………….2 Equities…………………………………………………..2 Fixed Income………………………………………….3 Alternatives and Property………………………4 Analysis Mothod………………………………………….5 Historical 3 Year Rolling Returns…………….5 Bootstrap Analysis………………………………….5 Mean-Variance Optimizer……………………..6 Results…………………………………………………………7 Final Recommendation……………………………….8 Building a Concrete Portfolio for Jane and Douglas Breighton………………………………….8 Appendices………………………………………………….9 References………………………………………………..13 Minggang Gu|u5108473 Kejie......

Words: 6636 - Pages: 27

Investment

...CHAPTER 1 THE INVESTMENT SETTING Answers to Questions 1. When an individual’s current money income exceeds his current consumption desires, he saves the excess. Rather than keep these savings in his possession, the individual may consider it worthwhile to forego immediate possession of the money for a larger future amount of consumption. This trade-off of present consumption for a higher level of future consumption is the essence of investment. An investment is the current commitment of funds for a period of time in order to derive a future flow of funds that will compensate the investor for the time value of money, the expected rate of inflation over the life of the investment, and provide a premium for the uncertainty associated with this future flow of funds. 2. Students in general tend to be borrowers because they are typically not employed so have no income, but obviously consume and have expenses. The usual intent is to invest the money borrowed in order to increase their future income stream from employment - i.e., students expect to receive a better job and higher income due to their investment in education. 3. In the 20-30 year segment an individual would tend to be a net borrower since he is in a relatively low-income bracket and has several expenditures - automobile, durable goods, etc. In the 30-40 segment again the individual would likely dissave, or borrow, since his expenditures would increase with the advent of family life, and......

Words: 2675 - Pages: 11

Investment

...Investment Memorandum FIN 3300 Step 1: Asset Allocation From the forecast provided by the Congressional Budget Office (CBO) and the Federal Reserve the economy is growing. According to the Federal Reserve, policy makers have raised the new forecast to 3.4 up to 3.9 percent growth in output and services. Real GDP is projected to increase by 3.1% this year and by 2.8% next year due to the continued strong growth in business, investment, and a modest increase in consumer spending. This also will reflect the impact of the Tax Relief, Unemployment Insurance, Reauthorization, and Job Creation Act of 2010. These four components not only will provide a short-term boost to the economy by reducing some taxes but also extend unemployment benefits. Inflation will remain very low in 2011 and 2012 and will average no more than 2.0% a year between 2013 and 2016. With job creation, the unemployment rate will gradually fall to 9.2% in the fourth quarter of 2011. Due to the current growth of the economy, low inflation rates, and a growing GDP, the majority of our investments will be allocated in stocks or higher risk securities that could potentially provide a higher yield. Therefore we are taking a Bullish strategy because we expect the underlying stock price to move upwards. We want higher expected returns, so we are willing to pay the price in terms of accepting higher investment risk. With the economic forecast reflecting a brighter growth prospectus this year, our......

Words: 1458 - Pages: 6

Investment

... Investments The McGraw-Hill/Irwin Series in Finance, Insurance and Real Estate Stephen A. Ross, Franco Modigliani Professor of Finance and Economics, Sloan School of Management, Massachusetts Institute of Technology, Consulting Editor Financial Management Block, Hirt, and Danielsen Foundations of Financial Management Fifteenth Edition Brealey, Myers, and Allen Principles of Corporate Finance Eleventh Edition Brealey, Myers, and Allen Principles of Corporate Finance, Concise Edition Second Edition Brealey, Myers, and Marcus Fundamentals of Corporate Finance Seventh Edition Brooks FinGame Online 5.0 Bruner Case Studies in Finance: Managing for Corporate Value Creation Seventh Edition Cornett, Adair, and Nofsinger Finance: Applications and Theory Second Edition Cornett, Adair, and Nofsinger M: Finance Second Edition DeMello Cases in Finance Second Edition Grinblatt (editor) Stephen A. Ross, Mentor: Influence through Generations Grinblatt and Titman Financial Markets and Corporate Strategy Second Edition Higgins Analysis for Financial Management Tenth Edition Kellison Theory of Interest Third Edition Ross, Westerfield, and Jaffe Corporate Finance Tenth Edition Ross, Westerfield, Jaffe, and Jordan Corporate Finance: Core Principles and Applications Fourth Edition Rose and Marquis Financial Institutions and Markets Eleventh Edition Ross, Westerfield, and Jordan Essentials of Corporate Finance Eighth......

Words: 239977 - Pages: 960

Anthem&Cigna Merger

...Representations and Warranties of Anthem and Cigna ( as well as of Anthem and Merger Sub), (d) Covenant Relating to the Conduct of Business, (e) Conditions to Consummation of the Merger, (f) Conditions Precedent, (g) Termination and Amendment, (h) General Provisions, and how do these provisions work together (please give examples from each sub-section to justify your answer)? (a) In a merger agreement, the assets and liabilities of the firm which is being acquired end up being absorbed by the buyers firm. A merger could be the most effective and efficient way to enter a new market without the need of creating another business entity. For the firms who have been functioning in their industry for a while, a merger creates new paths for them to expand their target areas. The opportunity for a growth of the market share and the opportunity to overcome a competition with a rival firm also make Mergers more attractive to these firms. In the end of a merger, both companies end up having access to each other’s resources and for a new company these resources bring the benefits of gaining experience thus an increased development phase. With this ‘reverse triangle merger’ agreement between Anthem and Cigna, (1) Merger Sub Corp of Anthem will be merged with and into Cigna, leaving Cigna to continue to exist as a surviving corporation. In this case we have two mergers currently being worked on. Consequently, Cigna will be the Initial Surviving Company and (1).1 Cigna will be wholly......

Words: 5295 - Pages: 22

Marrying the Mafia 4 (Movie) | Mary Poppins Returns | Facebook