Citigroup analyst Charles Boorady lowered his rating on the insurer to "Sell" from "Hold," saying "there are significantly better opportunities in the managed care group," than Cigna.
Third-quarter net income fell to $171 million, or 62 cents per share, from $365 million, or $1.28 per share, a year earlier.
Adjusted income from operations totaled 89 cents per share, widely missing analysts' average estimate of $1.06 per share, according to a Thomson Reuters poll.
Revenue rose 10 percent to $4.85 billion from $4.41 billion - just shy of Wall Street's $4.86 billion forecast.
Cigna Chairman and CEO H. Edward Hanway said the company's expenses are too high, and that will put more pressure on next year's earnings.
"We are conducting a comprehensive review of all earnings levers to improve our health care results with a particular emphasis on reducing operating expenses," he said. Cost reductions may lead to a fourth-quarter charge not exceeding $50 million.
Cigna's run-off reinsurance business dragged down earnings in the third quarter. The company incurred losses totaling 47 cents per share from two parts of that business: variable annuity death benefits and guaranteed minimum income benefits.
Cigna officials said those losses were largely tied to market performance because the company's liabilities increase when returns are poor. Cigna discontinued the business in 2000.
Cigna said those losses plus an expected fourth-quarter loss of 45 cents per share in the variable annuity business prompted it to lower adjusted operating income guidance for 2008 to a range of $3.40 to $3.50 per share. The company previously estimated $4.05 to $4.25 per share.
Cigna also expects full-year membership to decline by about 1 percent, excluding its acquisition of Great-West Healthcare, which was completed earlier this year. Cigna membership stood at 11.9 million at the end of the quarter, counting the Great-West acquisition.
For 2009, Cigna forecasts full-year adjusted operating income will range between $4 and $4.30 a share.
Analysts have forecast much higher 2008 earnings of $4.18 per share and 2009 profit of $4.78, on average.
Goldman Sachs analyst Matthew Borsch said in a research note the insurer's balance sheet and liquidity remain sound "despite the extreme market volatility." He also noted that the quarterly hit from the variable annuity death benefit was "not catastrophic" and shouldn't recur unless the market takes another drastic plunge.
Cigna was the last in a string of large managed care companies to report third-quarter profit declines; its 53-percent decrease was the worst.
Coventry Health Care Inc. shares lost more than half their value to close at $13.93 on Oct. 22, a day after the insurer said its quarterly profit fell 49 percent.