Cigna Corp. is planning to cut its workforce by 4 percent — including 200 layoffs in Connecticut — between now and June 2013, but the health insurer still plans to meet its obligations to grow jobs in exchange for benefits from the state.
The Bloomfield-based health insurance company is planning to cut 1,300 jobs companywide, which started last month with almost 300 in Europe. Others will be spread out in other places where Cigna has major operations.
Some employees have been notified already and others will be notified in the coming months, with all layoffs expected to be complete by June 2013.
Cigna was the first company to take advantage of a state program in July 2011 as Gov. Dannel P. Malloy’s administration tried to spur job growth in the weakest economy since the Great Depression. The program, initially called First Five and now called Next Five, offers state tax credits and other benefits to any company that adds a minimum of 200 jobs and makes an investment of at least $25 million.
Cigna agreed to add 200 workers and spend $100 million in Connecticut in exchange for up to $47 million in benefits from the state. Cigna still will have grown its Connecticut employment base from 3,880 in July 2011 to the required 4,080 by July 2013.
“During this environment, we’re continuing to hire because there are certain skill sets, like certain technologists, certain clinicians, certain other skill sets that we need to add, and we continue to add around the world, as well as here in Connecticut,” Cigna CEO David M. Cordani said in an interview with The Courant.
“We’re isolating this one event, to provide visibility as we should,” Cordani told The Courant. “But both in advance of that time frame, during that time frame and subsequent to that time frame, we continue to hire. So, the headline is: We are a net employment grower here in Connecticut. This one event, which we don’t take lightly, is a disruptive event, and it just net-net decreases the overall rate of growth because we will remove some employees from our overall population.”
Cigna had about 30,000 workers companywide in 2009 and has about 35,000 today, including about 4,000 in Connecticut. A 4 percent reduction would still leave 33,600, which is more than the 30,000 the company had three years ago.
The layoffs were mentioned as a “realignment and efficiency plan,” a foot note in the third-quarter earnings report that came out Thursday morning. The company will take a one-time charge of $50 million after taxes for $39 million in after-tax savings annually starting in 2014.
Cigna didn’t specify exactly which workers will be laid off, though it is generally support staff for the operation. The jobs Cigna intends to add are well-paid professional jobs: clinicians and people in technology.
“These actions will position Cigna to be more competitive and enable the company to invest in programs to make health care delivery more cost effective in all our businesses,” said Cigna spokesman Jon Sandberg. “By investing in our future, the company expects its job base in Connecticut to continue growing in 2013, adding high level professional jobs to support a growing global health leader.”
It’s not the only health insurer to cut jobs recently. Aetna has been cutting workers in recent years, including 160 earlier this fall, of which 80 are in Connecticut. Aetna spokeswoman Cynthia Michener said in early October that layoffs were to make the company a more consumer-centric and efficient operation. Specifically, she said the company needed to reduce expenses as it prepared for public health exchanges, which is an online marketplace for health insurance that was a part of the Affordable Care Act sometimes called Obamacare.
In Cigna’s case, the cost cutting is partly due to “global headwinds,” the company said, referring to economic conditions abroad.
Cigna’s earnings were up 31 percent for the three-month period ending Sept. 30, at $7.36 billion compared with $5.6 billion for the same period a year earlier. Profits were driven, in part, by new business from Cigna’s $3.8 billion acquisition of HealthSpring in January.
Sometimes when companies acquire a competitor, layoffs follow as overlapping positions are eliminated. That is not the case with this round of layoffs, a Cigna official said.
A spokesman for Malloy’s office, Andrew Doba, said, “Any time you hear layoffs, it’s obviously never a good thing. But I think what’s important about Cigna, in particular, is that they moved their corporate headquarters here … which is something that’s not happened in Connecticut in quite a while. … If they are going to be adding more jobs in the future, then this is the natural place they would do that.”
Connecticut Department of Economic and Community Development Commissioner Catherine Smith responded to the Cigna layoffs news by saying, “We’re always sad and sorry that anyone has to lose their job, I think they (Cigna executives) are too,” she said, but big businesses have to make adjustments as they realize certain divisions aren’t as profitable as others.
While she said that Cigna might end up growing by only 600 jobs over the next 10 years in Connecticut, rather than 800 that was the highest possible projection, she believes there is no danger at all that Cigna will not live up to its commitment to have at least 4,100 jobs in the state when its subsidies are evaluated through the First Five program in July 2013.
Smith said not only is Cigna on target with its hiring goals, it’s also on track to spend more than $100 million on construction and renovation at its Bloomfield campus.
“All those things are beneficial to the state,” she said. “The deals that we’re making they aren’t meant to be evaluated week by week day by day, they are long-term pluses for the state economy.”
She said while she’d rather the news from the state-supported companies only be of growth, she said that First Five is doing what it’s supposed to do.
Hartford Courant Staff Writer Mara Lee contributed to this report.