(Reuters) - Cigna forecast annual profit below Wall Street expectations on Thursday and missed estimates for the fourth quarter, hurt by higher medical costs for a type of employer-sponsored healthcare plan.

Shares of the company fell 11% before the bell.

The plan, called "stop-loss insurance", entails the insurer covering for employers' self-funded plans when their costs surpass a certain threshold due to catastrophic or unexpected medical claims.

The company forecast annual profit per share of at least $29.50, below analysts estimates of $31.50 per share, according to data compiled by LSEG.

Cigna manages employer-sponsored healthcare plans, and unlike its peers, has a smaller presence in the Medicare Advantage market, where insurers have been grappling with increased medical costs driven by demand for healthcare services among older adults.

The health insurer is in the process of selling its Medicare Advantage business to Health Care Service Corp. The divestiture, announced last year, is expected to close in the first quarter of 2025.

For the quarter, its medical care ratio - the percentage of premiums spent on medical care - came in at 87.9%, up from 82.2% a year ago. Analysts expected a ratio of 84.84% for the reported quarter.

"While higher medical costs in our stop-loss product impacted fourth-quarter earnings, we are taking corrective actions to address these near-term pressures," said CEO David Cordani.

On an adjusted basis, Cigna posted fourth-quarter profit of $6.64 per share, compared with estimates of $7.82.