Cigna Corporation (CI) is one of the largest US health insurers. I have held stock in this company off and on since 2001. Prior to today, I have last gotten into this stock on May 3, 2006 at $94.20 ($31.40 split adjusted), a year before their 3-for-1 split. It has been trading in fair territory (between $52.5 and $57.50) for most of 2007. Over the past year revenues have grown at a very healthy 6.5% rate, while earnings have grown even faster. Cigna has very little long term debt (so little that it could just about be paid off with cash on hand). At its current price, Cigna is trading at a P/E of around 11, below its own long term historical average and at a steep discount to the industry average 14.7 over the past 12 months and almost 1/2 of the industry 5 year P/E average.

So why is Cigna selling at a 20% discount these days? Traditionally Health Care is a safe investment, when economy is in a recession, so many investors expecting trouble ahead rebalanced their portfolios at the end of the year to include a bigger exposure to Health Care related stocks. However, as S&P 500 underwent a major correction falling more than 8% YTD, investors in all sectors got nervous. Major Drugs companies lost more than 9% just over the past 4 weeks. Life Insurance companies lost almost 11%, Accident & Health Insurance companies did somewhat better on average, but were certainly not immune to the greater market forces. Investors found something to worry about in financial results recently announced by each of the major Health Insurers and others fell in sympathy. Than this morning all hell broke loose as New York Attorney General Andrew Cuomo announced that he would sue one of the health insurance companies for fraud and investigate others. Details were to be announced at noon. This uncertainty created a golden opportunity to dive in and double up on my position in Cigna (perhaps the most conservative of the Health Insurance majors) at $45.95 /share.

Once Cuomo at his noon conference announced that he plans to sue Ingenix, its parent, UnitedHealth Group Inc, and three additional subsidiaries, Cigna stock recovered to above its closing price the previous day, even though Cuomo has additionally announced that he has also issued 16 subpoenas to the nation's largest health insurance companies including Cigna. That's because nobody really expects anything to come from this subpoena. On the oter hand, United Health and Fisher Investments portfolio pick Humana, have not fared as well today, as investors worry that these companies' dealings with Medicare / Medicaid government programs may not have been all above board. They have good reasons to worry, as much of these companies' recent earnings growth has come from government programs.