Milberg Weiss Announces The Filing Of A Class Action Suit On Behalf Of Purchasers Of The Securities Of CIGNA Corp

Business Wire, Oct 25, 2002

Business Editors & Legal Writers

NEW YORK--(BUSINESS WIRE)--Oct. 25, 2002

The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on October 25, 2002, on behalf of purchasers of the securities of CIGNA Corp. ("CIGNA" or the "Company") (NYSE: CI) between May 2, 2001 to October 24, 2002, inclusive, (the "Class Period").

A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss' website at: http://www.milberg.com/cases/cigna/

The action, numbered 02-8088, is pending in the United States District Court for the Eastern District of Pennsylvania, against defendants CIGNA, H. Edward Hanway (CEO, President and Chairman), James G. Stewart (CFO) and James A. Sears (Chief Accounting Officer). The Honorable Clarence C. Newcomer is the Judge presiding over the action.

The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between May 2, 2001 to October 24, 2002. According to the complaint, CIGNA issued numerous press releases, and filed financial reports with the SEC, regarding its performance during the Class Period which represented that the Company was experiencing strong growth, that its operating income for 2002 is expected to be $1.1 billion and that its liabilities on its discontinued reinsurance operations were not expected to be material to its liquidity. The complaint further alleges that these, and other, representations were materially false and misleading because they failed to disclose that CIGNA had been under-reserving for its reinsurance obligations, particularly for its reinsurance of guaranteed minimum death benefits ("GMDB"), by (at least) hundreds of millions of dollars. In addition, according to the complaint, the statements were materially false and misleading because CIGNA was experiencing declining demand for its offerings, particularly in its Employee Health Care, Life and Disability segment, and its income guidance for 2002 was lacking in any reasonable basis when made. The Complaint further alleges that defendants engaged in the conduct alleged therein because CIGNA was planning to, and on October 16, 2002, did, issue $250 million of 6 3/8% notes and that the offering would have been negatively affected if the truth regarding CIGNA's business and financial condition was known. On September 3, 2002, after the market closed, CIGNA issued a press release announcing that it will take a $720 million after-tax ($1.1 billion pre-tax) charge in order to manage its GMDB liabilities, but reaffirmed its previously issued guidance for 2002. In response, credit ratings agencies Standard & Poor's and Fitch reduced CIGNA's credit rating and CIGNA's stock price dropped by 6%. Then, on September 24, 2002, after the close of trading, CIGNA shocked the market by announcing that, contrary to its recent reaffirmations, it would not meet its 2002 earnings guidance due to weakness in its Employee Health Care, Life and Disability segment. In reaction to the announcement, the price of CIGNA common stock plummeted by 42%, falling from a $63.60 per share close on October 24, 2002 to trade as low as $36.81 per share on October 25, on extremely heavy trading volume.

If you bought the securities of CIGNA between May 2, 2001 to October 24, 2002, you may, no later than December 24, 2002, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Milberg Weiss Bershad Hynes & Lerach LLP, or other counsel of your choice, to serve as your counsel in this action.

Milberg Weiss Bershad Hynes & Lerach LLP (http://www.milberg.com) is a 190-lawyer firm with offices in New York City, San Diego, San Francisco, Los Angeles, Boca Raton, Philadelphia and Seattle, and is active in major litigations pending in federal and state courts throughout the United States. Milberg Weiss has taken a leading role in many important actions on behalf of defrauded investors, consumers, and others, and has been responsible for more than $20 billion in aggregate recoveries. Please contact the Milberg Weiss website for more information about the firm. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following attorneys:

Steven G. Schulman or Samuel H. Rudman
One Pennsylvania Plaza, 49th fl.
New York, NY, 10119-0165

Phone number: (800) 320-5081
Email: cignacase@milbergNY.com
Website: http://www.milberg.com