Cigna Corporation in Philadelpha today reported that it has received
an adverse ruling from a London arbitration panel concerning a dispute over a retrocessional reinsurance arrangement related to a portion of its runoff workers’ compensation reinsurance business written in the London market.
This ruling resulted in a $14 million after-tax charge.
Because the ruling relates to an exposure that existed at December 31, 2005 and because the company has not yet filed its 2005 financial statements, the ruling is considered a subsequent event under generally accepted accounting principles that must be recorded in the company’s 2005 financial statements.
The company announced 2005 fourth quarter and full year financial results on February 8, 2006, and is now adjusting those results to reflect the impact of the ruling. Cigna said it expects to file its 2005 Form 10-K, including the financial statements, later this month.
“The result of this ruling has no effect on our ongoing operations,” said H. Edward Hanway, chairman and chief executive officer. “In addition, our estimates for full year 2006 consolidated adjusted
income from operations and related per share amounts are unchanged from the estimates we provided in our February 8th earnings release.”
Cigna will record this charge in its Run-off Reinsurance segment. \
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