The nation's third-largest insurer has been trying to right itself after missteps in recent years that led it to underestimate soaring medical costs and underprice its premiums. Now, the company must contend with a larger-than-expected drop in health-plan members, a situation that stifled revenue in the fourth quarter and led Cigna to warn that profit for the current quarter could come in well below analysts' expectations.

On Friday, Cigna said it would eliminate 3,000 jobs, following 3,900 layoffs last year. The quarterly dividend is being slashed 92% to 2.5 cents a share, from 33 cents, a payout that was one of the highest in the industry.

Cigna announced the moves as it reported a sixfold jump in fourth-quarter profit, although the year-earlier figure made for easy comparison because of charges related to its turnaround effort. The result was better than expected, but concerns about declining membership sent the company's shares tumbling $5.55, or 9%, to $56.55 at 4 p.m. on the New York Stock Exchange Friday.

The Philadelphia-based company faces new challenges to its growth as employers demand more favorable premiums, stoking competition in a market that isn't growing. With the exception of Cigna, most health insurers have enjoyed double-digit profit growth over the past several quarters as health-care cost increases began to moderate but premiums remained high.

Most managed-care companies have seen declines in membership in recent years as more U.S. employees lost jobs or had benefits cut back. Many insurers and analysts anticipate much more pressure on premium prices as companies battle for what business there is.

That could give the advantage in winning new business to insurers that have reined in medical-cost increases to between 8% and 10.5%, such as Aetna Inc. and UnitedHealth Group Inc. Cigna's medical costs rose 15% in 2003, limiting its room to compete on premium prices.

Cigna said efforts to control medical costs, such as steering more members to generic drugs and negotiating better reimbursement contracts with hospitals, will help lower medical-cost increases to between 11% and 12% this year. Premiums, it added, are rising between 12% and 13%.

"We will not seek to grow our business by compromising profitability," Chief Executive H. Edward Hanway said Friday.

Instead, Cigna is giving up business. Membership in its health plans fell by 1.5 million customers during 2003 to 11.5 million at the end of December, and the company lost another 1.2 million members in January. The company said the declines came from unprofitable and profitable accounts in which Cigna wouldn't or couldn't outbid other insurers.

As a result, fourth-quarter revenue fell 5.2% to $4.5 billion. Cigna's net income rose to $290 million, or $2.06 per share, in the fourth quarter, compared with $47 million, or 33 cents a share, a year earlier.

Cigna said it expects to save some $300 million in operating expenses, largely from the job eliminations, and to record a $75 million charge in the first quarter related to the cuts.

Mr. Hanway said he couldn't rule out more job cuts and membership losses. "There is going to be some pressure for the rest of the year," he said.

The company said it expects profit excluding items of between $645 million and $705 million in 2004. The company expects first-quarter earnings of between $1.20 and $1.40 per share, short of the $1.42 per share expected by analysts surveyed by Thomson First Call.

Cigna said it would cut its dividend once the sale of its retirement business to Prudential Financial Inc. closes, around the end of the first quarter.