Aug. 1 (Bloomberg) -- Cigna Corp., the U.S. insurer that specializes in employer-sponsored health benefits, said profit rose 37 percent as acquisitions added to membership.

Second-quarter net income grew to $272 million, or 97 cents a share, from $198 million, or 68 cents, a year earlier, Philadelphia-based Cigna said today in a statement. Profit per share, excluding certain items, beat analysts' estimates.

Cigna increased its health-plan enrollment to 12.1 million, up 23 percent from a year earlier. The insurer gained 327,000 customers from buying an Indiana company in August and 1.76 million from acquiring Great-West Healthcare in April, accounting for all except 179,000 of the new members. Limited involvement in government programs such as Medicare has spared Cigna from claims increases that have hit competitors.

```Cigna is perceived to be the safest company in the group,'' of U.S. insurers, said Carl McDonald, an analyst with Oppenheimer & Co. in New York, in a telephone interview July 28. ``They've done alright this year in the face of a difficult economic environment.''

Cigna rose 16 cents to $37.02 yesterday in New York Stock Exchange composite trading. The company had the second-best performance this year through yesterday of the six members of the Standard & Poor's 500 Managed Health Care Index.

Revenue Increase

Revenue for the quarter rose 11 percent to $4.86 billion. Adjusted income of $1.08 a share exceeded the 97-cent average of 13 analysts surveyed by Bloomberg.

The insurer left unchanged its 2008 profit goal of $4.05 to $4.25 per share of adjusted income from operations. The average estimate of analysts surveyed by Bloomberg was $4.15.

For the year, enrollment excluding customers added through acquisitions is expected to grow 1 percent, less than the company's previous forecast of more than 2 percent, Cigna said. Membership in the second quarter declined by 58,000 from the previous quarter as employers trimmed their staffs because of economic conditions, said Cigna spokesman Christopher Curran in a telephone interview today.

About 80 percent of Cigna's members are covered by self- insured employers that pay flat fees for a network of doctors and hospitals and for claims services. They don't pay premiums for risk-based insurance, a more profitable business that is losing membership to fee-based plans. Analysts praised the company's acquisition of Great-West's employer-sponsored plans.

`Strategic Move'

``Great-West was a good strategic move for Cigna,'' said Charles Boorady, an analyst with Citigroup in New York, in a note to clients on July 17. Cigna can profit from linking incoming members to its existing network, he said.

Operating profit for Cigna health plans in the U.S., the company's biggest business segment, climbed 7.7 percent to $181 million. The international unit gained 9.1 percent to $48 million, and the group life and disability business increased 7.3 percent to $73 million.

Analysts and investors view changes in the share of premium revenue spent on medical care as an indicator of future profitability. Cigna's ratio for employer-based risk plans was 85.7 percent in the second quarter, compared with 84.7 percent a year earlier and 83.8 percent in the first quarter of 2008.

Adjusted income for the quarter excluded a $52 million after-tax charge for litigation costs, $12 million in investment losses, and a $34 million gain on a discontinued retirement- income business. Cigna spent $220 million on share repurchases in the second quarter and has board approval to buy back up to $565 million in additional shares.

For the second quarter of 2007, Cigna's net income of 68 cents a share included a 21-cent charge for its retirement- income business.

UnitedHealth, WellPoint

Health insurer shares fell beginning in March after companies, led by the biggest, UnitedHealth Group Inc. of Minnetonka, Minnesota, and second-biggest, WellPoint Inc. of Indianapolis, reduced earnings forecasts. The managed-care index lost 36 percent from March 10 until last week, when UnitedHealth and WellPoint beat analysts' estimates. Aetna Inc. yesterday reported that quarterly profits increased 6.5 percent and medical costs matched its expectations. By yesterday the index had regained 16 percent.

To contact the reporter on this story: Avram Goldstein in Washington at agoldstein1@bloomberg.net.

Last Updated: August 1, 2008 08:00 EDT