Cigna Corp. (CI), one of the biggest U.S. health insurers, posted a second-quarter profit Wednesday, reversing a year-earlier loss, but its shares declined after a bleak enrollment forecast unsettled investors.

The company attributed most of an improved 2004 forecast to the recent sale of its retirement unit, and it predicted further enrollment losses into 2005.

"At first blush results looked great, but on second blush my big concern is the continued decline in membership" and the one-time benefits in the quarter, said Adam Miller, an analyst Williams Capital Group.

The last of the big health insurers to post quarterly results, Cigna is turning itself around after losses in 2002 and 2003 after difficulties in gauging medical costs. It culled enrollment from a peak of 13.4 million in 2001 to 10 million at present, as the health plan focused on profitable members.

While shedding unprofitable members can help results, many analysts wonder when the membership losses will stop and enrollment growth can resume.

Net income totaled $515 million, or $3.67 a share, compared with a net loss of $53 million, or 38 cents a share, a year earlier.

The Philadelphia-based company also boosted its 2004 profit estimate. But a big part of earnings came from sales of its retirement unit to Prudential Financial Inc. (search) in April.

Revenue, mostly from premiums, was nearly unchanged at $4.63 billion.

Excluding investment gains and losses and other items, net income from continuing operations rose 56 percent to $246 million, or $1.75 per share, from $158 million, or $1.13 per share. On that basis, Wall Street analysts polled by Reuters Estimates on average expected Cigna to earn $1.24 per share.

Total medical membership fell 17 percent to 10 million in the quarter from 12 million a year earlier. Earlier this year, Cigna had predicted a decline in health plan membership as it proceeded with its turnaround.

But Chief Executive Ed Hanway said he expects membership down 17 percent for 2004 and that he expects "additional downward pressure" on membership in 2005.

Cigna also increased its 2004 forecast for profit from continuing operations, excluding items, to between $835 million and $875 million, or $5.95 to $6.25 per share, up from its April forecast of $5.15 to $5.55 per share.

It forecast a third-quarter profit on that basis of $175 million to $195 million, or $1.25 to $1.40 per share.

Analysts on average forecast $1.26 for the third quarter and $5.73 for the year.

While many in the sector have posted healthy profit growth, others, including Health Net Inc. and First Health Group, were hurt by unpredictable medical costs.

Shares of Cigna are up 9 percent since the beginning of the year, roughly in the line with the rest of the managed health-care sector.

Shares fell $1.44 or 2.3 percent to $61.14 on the New York Stock Exchange (search), off an earlier low at $60.60.