Cigna begins the 3,150 job cuts it plans

  1. Two-thirds will be eliminated in the next three months. The goal is to save $100 million a year.
    By Joseph N. DiStefano
    Inquirer Staff Writer

    Cigna Corp. will cut 2,150 health insurance jobs over the next three months in a bid to reduce expenses by $100 million a year, and will eliminate an additional 1,000 by the end of 2003.

    Yesterday, the Center City-based employee benefits company began giving the bad news to the first batch of workers whose jobs are doomed, including 42 in the Philadelphia area.

    Cigna has not "refined" how many local jobs it will slice later this winter, but it expects the majority of the affected workers will be in Connecticut, where Cigna's health-care division has headquarters, or at field offices elsewhere in the country, said spokesman Wendell Potter.

    The company, one of the nation's largest health insurers, employed 3,180 at its Philadelphia headquarters and at offices in Voorhees, Wilmington, Horsham, Plymouth Meeting and Berwyn, and a total of 41,800 at all its offices, before yesterday's cuts.

    Cigna first warned of the job cuts last fall. In October, chairman H. Edward Hanway apologized to shareholders for unprofitable pricing policies and more than $1 billion in unexpected losses, mostly from workers' compensation and investment annuity arrangements the company set up in the 1990s. In November, the company cut 700 workers and said bigger cuts were pending.

    While admitting other job cuts in the first half of last year had left the company scrambling to manage customer claims, Hanway and Cigna Healthcare head Patrick Welch maintained last fall that the company can improve services even as it cuts more jobs. Although it is cutting middle-management positions and trimming local office staff, the company will hire 650 new workers this year for customer service, computer and other key positions.

    Skeptical investors have dropped Cigna's share price from $111 as recently as last May to a seven-year low of less than $40 in November. Shares closed down 20 cents at $41.30 yesterday, before the latest job announcement.

    The yearly savings will total about $100 million after taxes; severance will cost the company $150 million, which will be charged to Cigna's fourth-quarter earnings, after discounting $52 million for a tax write-off.

    Cigna will release its fourth-quarter and year-end 2002 earnings next month.
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  3. by   sjoe
    "Hanway and Cigna Healthcare head Patrick Welch maintained last fall that the company can improve services even as it cuts more jobs."

    Funny thing, that is the line hospitals have been giving the public for several years now.
  4. by   hoolahan
    Holy Crap!!!

    I guess the CEO's didn;t get their million dollar bonuses this year!
    I used to work at Cigna until last year. That was when they started laying people off. I was afraid of being laid off. so I decided to go back to school. My last day was on a Friday, and our team got laid off three days later. From my office, there has been at least 75 people already laid off. These are people who has been there at least 20 years. That was so sad! It just came all of a sudden. It don't look like it is going to get any better either. Hissy
  6. by   TheBrainMusher
    I did my internship there about 3 years ago, was there when the stock hit $100 and it was all big. I had looked into going there for a job after school, but hiring was minimum. Most people probably saw this coming with the selling of one of its less profitable departments to ACE, etc. It was downhill and lots of reorganizing from there ...