(Adds shares, details)
July 29 (Reuters) - Health insurer Cigna Corp reported a lower-than-expected quarterly profit on Friday due to a rise in medical costs in its business that sells plans under the Affordable Care Act and a loss in its group disability and life insurance division.
Cigna's shares fell 7.1 percent before the opening bell after it also slashed its full-year forecast for adjusted income from operations in the expectation that medical costs will continue to rise. It said it now expected to earn $7.75 to $8.10 per share, compared with its earlier forecast of $8.95 to $9.35.
Cigna, which manages insurance plans for companies and sells health plans on government exchanges created under Obamacare, said the medical loss ratio in its commercial business rose to 78.8 percent in the latest quarter from 77.5 percent due to a rise in medical costs in its individual business.
The ratio reflects what an insurer spends on claims compared with its premium income - the lower the number, the better.
The company said its group disability and life insurance business recorded a loss following modifications to its claims management process implemented in the first quarter.
U.S. antitrust officials moved last week to block an unprecedented consolidation of the national health insurance market, filing a lawsuit against Anthem Inc's purchase of Cigna on the basis that a deal would reduce the number of nationwide health insurers to three from five.
Cigna said shareholders' income fell to $510 million, or $1.97 per share in the second quarter ended June 30 from $588 million, or $2.26 per share, a year earlier.
On an adjusted basis, the company earned $1.98 per share, missing the average analyst estimate of $2.39, according to Thomson Reuters I/B/E/S.
Total revenue rose to $9.96 billion from $9.49 billion, missing the average estimate of $9.97 billion.
(Reporting by Amrutha Penumudi in Bengaluru; Editing by Kirti Pandey and Ted Kerr)