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On Jun 21, 2013, shares of CIGNA Corp. (CI - Analyst Report) hit a 52-week high of $71.40. The momentum was driven by favorable operating results over the past many quarters, effective execution of its long term growth strategy and the strength of its diverse portfolio of businesses.
 
We have increased confidence about the company and believe it as an attractive investment opportunity due to its exposure to strong growth areas, relative protection from healthcare reform and diversification into a number of products.
 
Cigna is performing well in its business segments. In commercial health care, the company has continuously grown its target markets by achieving strong customer retention, expanding its existing customer relationships and adding new customers.
 
In the Global Supplemental Benefits business, Cigna delivered a healthy increase in revenue and earnings, reflecting solid customer growth, effective cost management and contributions from recent acquisitions.
 
We also view Cigna's more significant International exposure favorably and see the company as having lower direct exposure to key health reform risks given its limited exposure to the Commercial market.
 
Cigna is also poised for significant earnings accretion in 2013 from its recent acquisition of HealthSpring as well as a strategic decision on its captive pharmacy Benefits Management business.
 
Additionally we are impressed with the company’s recent transaction with which it has exited from the Run-Off Reinsurance segment. This step will reduce the company’s future earnings volatility.
 
Cigna has also been delivering positive earnings surprise for past many quarters. For the second quarter the Zacks Consensus Estimate for EPS stands at $1.59. The long term earnings growth is expected to be 11.3%.  
 
Valuation for Cigna looks reasonable. The shares are trading at a discount to peer group average on a price-to-earnings basis but on a premium on a price-to-book basis. The return on equity is much above the peer group average. Additionally, the 1-year return from the stock came at 57.3%, much above the S&P’s return of 19.2%.
 
Cigna carries a Zacks Rank #2 (Buy). Multi-line insurers Assured Guaranty Ltd. (AGO - Snapshot Report), Eastern Insurance Holdings, Inc. , Old Republic International Corporation (ORI - Snapshot Report) carry favorable Zacks Rank #1 (Strong Buy) and are worth considering.

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