HomeMy WebLinkAboutExhibit12CIGNA Corporation
Quarterly Statistical Supplement
September 30, 2007
TABLE OF CONTENTS
PAGE
Income and Per Share Data for Periods Ended September 30 1
Consolidated Income Statements for Periods Ended September 30 2
Consolidated Balance Sheets 3
Stock and Balance Sheet Analyses 4
Condensed Consolidated Statements of Cash Rows 5
Business Segment analysis:
Health Care 6
Disability and Life 10
International 11
Run-off Reinsurance 12
Other Operations 13
Corporate 14
BASIS OF PRESENTATION:
All dollar amounts are in millions, unless otherwise noted. Certain reclassifications have been made to prior year amounts to conform with the 2007 presentation.
Effective January 1, 2007, CIGNA changed its segment presentation to report the results of the Run-off Retirement business within Other Operations. Prior period results have been
restated to conform with the new segment presentation.
In the third quarter of 2007, CIGNA recorded income from discontinued operations of $2 million after-tax related to the completion of an IRS examination associated with the disposition
of a business in recent years. In the second quarter of 2007, CIGNA recorded a net loss from discontinued operations of $19 million after-tax, which consisted of a $23 million after-tax
loss associated with the probable sale of its Chile operations and a $4 million after-tax gain primarily associated with the disposition of certain real-estate investments. In the first quarter
of 2007, CIGNA recorded income from discontinued operations of $12 million after-tax associated with the disposition of certain real estate investments.
In the third quarter of 2006, CIGNA recorded a net loss from discontinued operations of $4 million after-tax, which consisted of a $16 million after-tax loss associated with the likely sale
of its Brazilian life operations and a $12 million after-tax gain associated with the disposition of certain real estate investments.
CIGNA measures the financial results of its segments using "segment earnings (loss)," which is defined as income (loss) from continuing operations before realized investment gains
(losses). Adjusted income (loss) from operations is segment earnings excluding special items, which are identified and quantified on page IA. Adjusted income (loss) from operations is
a measure of profitability used by CIGNA's management because it presents the underlying results of operations of CIGNA's businesses and permits trend analysis. This measure is
not determined in accordance with generally accepted accounting principles (GAAP) and should not be viewed as a substitute for income (loss) from continuing operations or net income
determined in accordance with GAAP.
In the second quarter of 2007, CIGNA completed a three -for -one stock split of CIGNA's common shares. All share and per share figures have been adjusted to reflect the stock split.
CIGNA Corporation
Income and Per Share Data
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 Change 2007 2006 Change
ADJUSTED INCOME (LOSS) FROM OPERATIONS
Health Care $ 173 $ 177 (2) % $ 509 $ 492 3 %
Disability and Life 63 58 9 191 180 6
International 47 31 52 129 104 24
Run-off Reinsurance 39 (6) - 35 (22) -
OtherOperations 30 -30 80 81 (1)
Corporate (29) (22) (32) (78) (39) (100)
Total
NET INCOME
$ 323 $ 268 21 % $ 866 $ 796 9 %
Segment Earnings (Loss)
Health Care $ 173 $ 177 (2) % $ 509 $ 492 3 %
Disability and Life 69 58 19 197 180 9
International 49 31 58 131 104 26
Run-off Reinsurance 39 (6) - (21) (22) 5
Other Operations 35 30 17 85 81 5
Corporate (19) (22) 14
(68) (39) (74)
Total 346 268 29 833 796 5
Realized investment gains (losses), net of taxes 17 34 (50) 24 131 (82)
Income from continuing operations $ 363 $ 302 20 % $ 857 $ 927 (8) %
Income (loss) from discontinued operations 2 (4) (5) (4) (25)
Net income $ 365 $ 298 22 % $ 852 $ 923 (8) %
DILUTED EARNINGS PER SHARE _
Adjusted Income from operations " $ 1.14 $ 0.83 37 % S 2.98 $ 2.29 30 %
Realized investment gains (losses), net of taxes 0.06 0.10 (40) 0.08 0.38 (79)
Special items, after-tax 0.08 (0.11)
Income from continuing operations $ 1.28 $ 0.93 38 % $ 2.95 $ 2.67 10 %
Income (loss) from discontinued operations - (0.01) - (0.01) (0.01)
Net income $ 1.28 • $ 0.92 39 % $ 2.94 $ 2.66 11 %
Weighted Average Shares (in thousands) " 284,462 324,704 (12)_ % 290,233 347,577 (16) %
" Adjusted income (loss) from operations is segment earnings (loss) (income (loss) (ram continuing operations before realized investment gains (losses)) excluding special items. See page 'IA for a detailed reconciliation of
adjusted income (loss) from operations to segment earnings (loss), consolidated income from continuing operations and consolidated net income presented in accordance with generally accepted accounting principles.
'" During the second quarter of 2007, CIGNA completed a three -for -one stock split of CIGNA's common shares. All weighted average shares and eamings per share figures have been adjusted to reflect the stock split.
1
CIGNA Corporation
Supplemental Financial Information
Reconciliation of Adjusted Income from Operations to GAAP Net Income
(Dollars in millions. except per share amounts)
Three Months Ended September 30,
Adjusted income (loss) from operations
Special items, after-tax:
Income tax benefit related to the completion of an IRS examination
Segment earnings (loss)**
Realized investment gains (losses), net of taxes
Income from continuing operations •'•
Income (loss) from discontinued operations
Net income •""
Nine Months Ended September 30,
Adjusted Income (loss) from operations
Diluted
Earnings
Per Share •
2007 2006
$ 1.14 $ 0.83
0.08
1.22 0.83
0.06 0.10
1.28 0.93
(0.01)
$ 1.28 $ 0.92
Consolidated
2007 2006
$ 323 $ 268
23
Health Care
2007 2006
$ 173 $ 177
Disability
& Life
2007 2006
$ 63 $ 58
6
International
2007 2006
$ 47 $ 31
2
Runoff
Reinsurance
2007 2006
$ 39 $ (6)
Other
Operations
2007 2006
$ 30 $ 30
5
Corporate
2007 2006
$ (29) $ (22)
10
346 268
17 34
363 302
2 (4)
$ 365 $ 298
Diluted
Earnings
Per Share •
2007 2006
$ 2.98 $ 2.29
Special items, after-tax:
Income tax benefit related to the completion of an IRS examination 0.08
Charge associated with guaranteed minimum income
benefit reserves (0.19)
Consolidated
2007 2006
$ 866 $ 796
23
(56)
$ 173 $ 177
Health Care
2007 2006
$ 509 $ 492
$ 69 $ 58
Disability
& Life
2007 2006
$ 191 $ 180
6
$ 49 $ 31
$ 39 $ (6)
Run-off
International Reinsurance
2007 2006 2007 2006
$ 129 $ 104
2
$ 35 $ (22)
(56)
$ 35 $ 30
Other
Operations
2007 2006
$ 80 $ 81
5
$ (19) $ (22)
Corporate
2007 2006
$ (78) $ (39)
10
Segment earnings (loss)** 2.87 2.29
Realized investment gains (losses), net of taxes 0.08 0.38
Income from continuing operations ••• 2.95 2.67
Income (loss) from discontinued operations (0.01) (0.01)
Net income *•" $ 2.94 $ 2.66
833 796
24 131
857 927
(5) (4)
S 852 $ 923
$ 509 $ 492
$ 197 $ 180
$ 131 $ 104
$ (21) $ (22)
$ 85 $ 81
* All earnings per share figures have been adjusted to reflect the three -for -one stock split of CIGNA s common shares.
** CIGNA measures the financial results of its segments using "segment earnings (loss), which is defined as income (loss) from continuing operations before realized investment gains (losses).
••• Income from continuing operations and net income are presented in accordance with generally accepted accounting principles (GAAP).
$ (68) $ (39)
1A
CIGNA Corporation
Consolidated Income Statements
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 Change 2007 2006 Change
Revenues:
Premiums and fees $ 3,744 $ 0 3,433 9 % $ 11,209 $ 10,070 11
Net investment income 281 296 (5) 840 924 (9)
Other revenues In 361 360 - 1,082 1,150 (6)
Realized investment gains (losses) 27 48 (44) 37 198 (81) —
Total revenues 4,413 4,137 7 13,168 12,342 7
Benefits and Expenses:
Health Care medical claims expense
Other benefit expenses
Cost of goods sold - pharmacy
Policy acquisition expenses
Other operating expenses excluding special items
Special items (2)
Total benefits and expenses
1,659 1,595 4
837 743 13
225 224 -
107 91 18
1,083 1,038 4
3,911 3,691 6
Income from continuing operations before income taxes (benefits) 502 446 13
Income taxes (benefits): (3)
Current • 125 158 (21) 420 477 (12)
Deferred 14 (14) - (34) (22) (55)
Total taxes 139 144 (3) 386 455 (15)
5,107 4,536 13
2,507 2,356 6
669 692 (3)
295 253 17
3,261 3,123 4
86 - -
11,925
10,960 9
1,243 1,382 (10)
Income from continuing operations 363 302 20 857 927 (8)
Income (loss) from discontinued operations 2 (4) - (5) (4) (25)
OA
Net income $ 365 $ 298 22 % $ 852 $ 923 (8) %
(1) Includes pre-tax results from certain derivatives recorded in run-off reinsurance operations ($11 million loss for the third quarter of 2007, $46 million loss for the nine months of 2007, $32 million loss for the
third quarter of 2006, $56 million loss for the nine months of 2006). CIGNA recorded corresponding offsets in other benefit expenses to adjust liabilities for certain specialty life reinsurance contracts.
(2) Reflects pre-tax charge of $86 million ($56 mil/ion after-tax) for the nine months of 2007 associated with guaranteed minimum income benefit reserves. This amount is noted as a special item on page 1A
and would otherwise be included in other operating expenses:
(3) Includes income tax benefit of $23 million for the third quarter and nine months of 2007 related to the completion of an IRS examination. This amount Is noted as a special item on page 1A.
2
CIGNA Corporation
Consolidated Balance Sheets
As of As of
September 30, December 31,
2007 2006
As of
September 30,
2007
As of
December 31,
2006
Assets
Investments:
Fixed maturities, at fair value
(amortized cost, $11,655 and $11,202)
Equity securities, at fair value
(cost, $112 and $112)
Mortgage loans
Policy loans
Real estate
Other long-term investments
Short-term investments
Total investments
Cash and cash equivalents
Accrued investment income
Premiums, accounts and notes receivable
Reinsurance recoverables
Deferred policy acquisition costs
Property and equipment
Deferred income taxes, net
Goodwill
Other assets, including other intangibles
Separate account assets
Total
$ 12,234 $ 11,955
122 131
3,292 3,988
1,449 1,405
48 117
527 418
21 89
17,693 18,103
1,421 1,392
230 223
1,603 1,459
7,446 8,045.
787 707
601 632
942 926
1,774 1,736
524 611
6,779 8,565
$ 39,800 $ 42,399
Liabilities
Conrractholder deposit funds
Future -policy benefits
Unpaid claims and claim expenses
Health Care medical claims payable
Unearned premiums and fees
Total insurance and contractholder liabilities
Accounts payable, accrued expenses and
other liabilities
Short-term debt
Long-term debt
Nonrecourse obligations
Separate account liabilities
Total liabilities
Shareholders' Equity
Common stock
Additional paid -in capital
Net unrealized appreciation - fixed maturities
Net unrealized appreciation - equity securities
Net unrealized depredation - derivatives
Net translation of foreign currencies
Postretirement benefits liability adjustment
Accumulated other comprehensive loss
Retained earnings
Less treasury stock, at cost
Total shareholders' equity
Total
$ 8,754
8,092
4,164
1,011
487
22,508
4,468
1,793
16
6,779
35,564
$ 114
7
(26)
56
(327)
88
2,465
(176)
6,865
(5,006)
4,236
$ 9164
8,245
4,271
960
499
23,139
4,602
382
1,294
87
8,565
38,069
40
2,451
$ 187
22
(15)
33
(396)
(169)
6,177
(4,169)
4,330
$ 39,800 $ 42,399
3
CIGNA Corporation
Stock and Balance Sheet Analyses
(In millions, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 2007 2006
Price range of common stock: High $ 54.70 $ 39.83 $ 56.87 $ 44.59
Low $ 43.65 $ 30.35 $ 42.33 $ 29.35
Market price (as of end of period) $ 53.29 $ 38.77
Dividends declared per share $ 0.010 $ 0.008 $ 0.028 $ 0.025
Common dividends declared $ 3 $ 3 $ 8 $ 9
As of September 30, As of December 31,
2007 2006 2006
Common shares outstanding (in thousands) *
279,157 307,704 295,963
Book value per share $ 15.17 $ 13.83 $ 14.63
Note: All share and per share amounts have been adjusted to reflect the three -for -one stock split of CIGNA's common shares.
* Prior period common shares outstanding are presented pro -forma as if the stock split had occurred at the beginning of the prior periods. The
reported shares outstanding were 98,654 as of December 31, 2006 and 102,568 as of September 30, 2006.
4
CIGNA Corporation
Condensed Consolidated Statements of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Nine Months Ended September 30,
2007 2006
852 $ 923
Loss from discontinued operations 5 4
Insurance liabilities 17 (283)
Reinsurance recoverables 59 81
Deferred policy acquisition costs
Premiums, accounts and notes receivable (79) (98)
(120) 98
Other assets (125) (17)
Accounts payable, accrued expenses and other liabilities - 76 (236)
Current income taxes 54 214
Deferred income taxes
(34)
Realized investment gains (37)(22)
(198)
Depreciation and amortization 147 155
Gains on sates of businesses (excluding discontinued operations) (36) (48)
Mortgage loans originated and held for sale (5) (315)
Proceeds from sales of mortgage loans held for sale 1 99
Other, net (9) (30)
Net cash provided by operating activities 766 380
Net cash provided by investing activities 93 1,312
Net cash used in financing activities (833) (2,197)
Effect of foreign currency rate changes on cash and cash equivalents 3 4
Net increase (decrease) in cash and cash equivalents 29 (501)
Cash and cash equivalents, beginning of period 1,392 1,709
Cash and cash equivalents, end of period $ 1,421 $ 1,208
5
CIGNA Corporation
Health Care
Segment Earnings
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 Change 2007 2006 Change
Revenues:
Premiums and fees $ 2,643 $ 2,474 7 % $ 8,016 $ 7,253 11 %
Net investment income 51 68 (25) 157 206 (24)
Other revenues 340 341 - 1,012 1,035 - (2)
Segment revenues
3,034 2,883 5 9,185 8,494 8
Benefits and Expenses:
Health Care medical claims expense 1,659 1,595 4 5,107 4,536 13
Other benefit expenses 57 13 338 184 173 6
Cost of goods sold - pharmacy 225 224 - 669 692 (3)
Policy acquisition expenses 29 18 61 70 51 37
Other operating expenses 796 762 4 2,367 2,287 3
Benefits and expenses
2,766 2,612 6 8,397 7,739
Income before income taxes 268 271 (1) 788 755 4
Income taxes 95 94 1 279 263 6
Segment earnings, after-tax 173 177 (2)
Less: Special items, after-tax
Adjusted income from operations
509 492 3
173 $ 177 (2) % $ 509 $ 492
Realized investment gains (losses), net of taxes $ 11 $ 26 (58) %
6
$ 21
3 %-
98 (79) %
CIGNA Corporation
Health Care
Revenue Analysis
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 Change 2007 2006 Change
Premiums:
Medical:
Commercial HMO (1) $ 514 $ 710 (28) % $ 1,734 $ 2,054 (16) %
Open Access / Other Guaranteed Cost (2) 433 250 73 1,212 652 86
Voluntary / Limited Benefits (3) 40 35 14 118 35 237
Experience -rated (4) 475 424 12 1,387 1,315 5
Dental 192 194 (1) 573 582 (2)
Medicare 86 83 4 261 243 7
Medicare Part D 73 57 28 252 167 51
Other (5) 268 231 16 788 690 14
Total medical (1) 2,081 1,984 5 6,325 5,738 10
Life and other non -medical 55 45 22 194 211 (8)
Total premiums 2,136 2,029 5 6.519 5,949 10
Fees (6) 507 445 14 1,497 1,304 15
Other revenues (7) 340 341 1,012 1,035 (2)
Net investment income 51 68 (25) 157 206 (24)
Segment revenues
$ 3,034 $ 2,883 5 % $ 9.185 $ 8,494 8 %
(1) Includes premiums of $1 million for the third quarter of 2007, $57 million for the nine months of 2007, $44 million for the third quarter of 2006, and $49 million for the nine months of 2006
(of which $1 million, $52 million, $39 million and $44 million, respectively, are reflected in Commercial HMO) associated with the health care members in Tucson, Arizona, which were
transitioned to CIGNA as the result of a Department of Justice requirement related to the merger of two health care industry competitors. The remaining premiums associated with these
members are included in Other guaranteed cost premiums.
(2) Includes premiums associated with other risk -related products, primarily open access products.
(3) Voluntary / Limited Benefits reflects premiums related to Star HRG members acquired effective July 1, 2006 who have voluntary or other limited health care benefit coverages.
(4) Minimum premium funding arrangements combine insurance protection with an element of self -funding. The policyholder assumes the risk for, and self -funds, claim Costs up to a
predetermined aggregate, maximum amount, and CIGNA bears the risk for claim costs incurred in excess of that amount, but has the potential to recover this excess from policyholders that
renew their minimum premium contracts with CIGNA. Accordingly, minimum premium funding arrangements have a risk profile similar to retrospectively experience -rated funding
arrangements and therefore minimum premium members are presented with experience -rated members. The risk portion of minimum premium revenue is reported In experience -rated
premium whereas the self -funding portion of minimum premium revenue is recorded in fees.
(5) Other medical premiums primarily include risk revenue for stop loss and specialty products.
(6) Fees represent administrative service fees for Medical members and related specialty products and also include fees related to Medicare Part 0 of $17 mllllon for the third quarter of
2007, $44 million for the nine months of 2007, $7 million for the third quarter of 2006, and $19 million for the nine months of 2006. In additlon, fees include $3 million for the third quarter of
2007 related to the Sagamore Heatth Network acquisition.
(7) Includes amounts relating to Medicare Claim Administration of $23 million for the third quarter of 2007, $56 million for the nine months of 2007, $18 million for the third quarter of 2006,
and $61 million for the nine months of 2006. Net of this item, Other revenues primarily reflect non -risk revenues for pharmacy mail-order fulfillment services and direct channel specialty
products.
CIGNA Corporation
Health Care
Key Metrics
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 Change 2007 2006 Change
OTHER OPERATING EXPENSES
EXCLUDING SPECIAL ITEMS:
Pharmacy expenses $ 43 $ 44 (2) % $ 135 $ 127 6 %
Medicare Part D expenses 13 13 39 46 (15)
Disease management expenses 45 42 7 136 123 11
Transformation amortization expenses 22 21 5 67 65 3
Voluntary / limited benefits expenses * 13 15 (13) 45 15 200
Medicare claim administration 25 18 39 57 60
Other 9peratingexpenses " 635 609 4 1,888 1,851 2
Other operating expenses excluding special items
$ 796 $ 762
4 % $ 2,367 $ 2,287 3
Represents operating expenses of the Star HRG voluntary /limited benefits business acquired in July 2006.
"' Includes $3 million of expenses for the third quarter and nine months of 2007 related to Sagamore Health Network, which was acquired in August 2007.
Three Months Ended September 30, Change Nine Months Ended September 30, Change
RATIOS "" 2007 2006 Better (Worse) 2007 2006 Better (Worse)
Guaranteed Cost loss ratio (excluding voluntary / limited benefits)
Guaranteed Cost loss ratio (including voluntary / limited benefits)
Guaranteed Cost loss ratio excluding prior year claim development
(excluding voluntary / limited benefits)
Guaranteed Cost Toss ratio excluding prior year claim development
(including voluntary / limited benefits)
83.0 % 85.6 % 2.6 83.7 % 85.4 % 1.7
81.8 % 84.7 % 2.9 82.5 % 85.1 % 2.6
83.9 % 85.7 % 1.8 84.3 % 86.4 % 2.1
82.6 % 84.7 % 2.1 83.1 % 86.0 % 2.9
"•' The Guaranteed Cost loss ratio includes Commercial HMO and Other Guaranteed Cost medical premiums and excludes the stop loss products associated with experience -rated and service members.
CIGNA Corporation
Health Care
Covered Lives
ESTIMATED COVERED LIVES:
(Lives in thousands)
As of September 30, As of December 31,
2007 2006 Change 2006 Change
Medical membership : -
Guaranteed Cost:
Commercial HMO 557 785 (29) %
Medicare 32 32 -
Open Access / Other guaranteed cost(1) 513 325 58
Total guaranteed cost excluding voluntary / limited benefits(2) 1,102 1,142 (4)
Voluntary / Limited Benefits (3) 176 166 6
Total guaranteed cost 1,278 1,308 (2)
Experience -rated 898 931 (4)
Service (4)
Total medical membership
Non -medical membership :
Medicare Part D (5)
Dental (6)
8,047 7,082 14
10,223 9,321 10 %
307
10,973
183 68 %
10,478 5 %
764 (27) %
32
366 40
1,162 (5)
164 7
1,326 (4)
935 (4)
7,128 13
9,389 9 %
183 68 %
10,458 5 %
Behavioral care (6) 17,708 16,315 9 %
16,387 8 %
Pharmacy (6) 6,440 6,285 2 % 6,326 2 %
(1) Includes membership associated with other risk -related products, primarily open access products.
(2) In 2006, approximately 54 thousand health care members in Tucson, Arizona were transitioned to CIGNA as the result of a Department of Justice requirement related to the merger of two health care
industry competitors. Initially, CIGNA served as a reinsurer and subsequently worked to underwrite these customers directly on CIGNA contracts at the time of renewal. Given the unique nature of this
transaction, CIGNA had not included these members in ifs reported medical membership until affected customers renewed on CIGNA contracts. As of September 30, 2007, all customers that were part of
this transaction had come up for renewal. As of September 30, 2007 and December 31, 2006, approximately 46 thousand and 11 thousand members, respectively, renewed on CIGNA contracts and are
included in the membership totals above.
(3) Reflects members who have voluntary or other limited health care benefit coverages.
(4) Includes 357 thousand members related to Sagamore Health Network, acquired August 1, 2007, and 26 thousand members related to Mid -South Administrative Group, LLC, acquired January 1, 2007.
(5) Reflects members enrolled in CIGNA's Medicare Part D program, which provides access to prescription medications through a nationwide pharmacy network.
(6) Reflects members enrolled in CIGNA's dental, behavioral care or managed pharmacy programs, which provide access to services through a nationwide network. These members may also be medical
members, or they may have stand-alone dental, behavioral care or pharmacy coverage.
9
CIGNA Corporation
Disability and Life
Segment Earnings
Revenues:
Premiums and fees:
Life
Disability
Other
Total premiums and fees
Net investment income
Other revenues
Segment revenues
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 Change 2007 2006 Change
$ 287 $ 260 10 % $ 854 $ 778 10 %
252 202 25 702 588 19
71 66 8 211 196 8
610 528 16 1,767 1,562 13
70 65 8 207 195 6
33 38 (13) 101 129 (22)
713 631 13 2,075 1,886 10
Benefits and Expenses:
Benefit expenses 473 402 18 1,347 1,168 15
Policy acquisition expenses 1 1 - 5 - 4 25
Other operating expenses 150 148 1 - 455 466 (2)
Benefits and expenses 624 551 13 1,807 1,638 10
Income before income taxes 89 80 11 268 248 8
Income taxes* 20 22 (9) 71 68 4
Segment earnings, after-tax 69 58 19 197 180
Less: Special items, after-tax'
6 6
Adjusted income from operations
$ 63 $ 58 9 % $ 191 $ 180 6
Realized investment gains (losses), net of taxes $ $ % $ (1)
" Includes income tax benefit of $6 million for the third quarter and nine months of 2007 related to the completion of an IRS examination.
10
4 -
CIGNA Corporation
International
Segment Earnings
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 Change 2007 - 2006 Change
Revenues:
Premiums and fees $ 454 $ 388 17 % $ 1,304 $ 1,117 17 %
Net investment income 18 22 (18) 56 59 (5)
Other revenues 1 - - 3 1 200
Segment revenues 473 410 15 1,363 1,177 16
Benefits and Expenses:
Benefit expenses 248 224 11 724 630 15
Policy acquisition expenses 75 70 7 210 191 10
Other operating expenses 78 67 16 229 195 17
Benefits and expenses 401 361 11 1,163 1,016 14
Income before income taxes 72 49 47 - 200 161 24
Income taxes " 23 18 28 69 57 21
Segment earnings, after-tax 49 31 58 131 104 26
Less: Special items, after-tax •
2 2
Adjusted income from operations
$ 47 $ 31 52 % $ 129 $ 104 24
Realized investment gains (losses), net of taxes
$ 1 $
$ 1 $ (1) - %
* Includes income tax benefit of $2 million for the third quarter and nine months of 2007 related to the completion of an IRS examination.
11
CIGNA Corporation
Run-off Reinsurance
Segment Earnings
Revenues:
Premiums and fees
Net investment income
Other revenues *
Segment revenues
Benefits and Expenses:
Benefit expenses
Other operating expenses, excluding special items
Special items **
Benefits and expenses
Income (loss) before income tax benefits
Income taxes (benefits)
Segment income (loss), after-tax
Less: Special items, after-tax **
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 Change 2007 2006 Change
$ 12 $ - 16 (25) 10
25 26 (4)
(22) (32) 31
15 10 50
41 $ 49 (16)
70 73 (4)-
(58) (56) (4)
53 66 (20)
(34) 3 (35) 48 -
8 16 (50) 63 46 37
- - 86 -
(26) 19
114
94 21
41 (9) (61) (28) (118)
2 D) - (40) (6) (567)
39 (6) (21) (22) 5
(56)
Adjusted income (loss) from operations
$ 39 $ (6) - % $ 35 $ (22) - %
Realized investment gains (losses), net of taxes
$ 2 $ 8 (75) % $ 3 $ 18 (83) %
" Includes pre-tax results of $11 million loss for the third quarter of 2007, $46 mr7llon loss for the nine months of 2007, $32 million loss for the third quarter of 2006 and $56 million loss for
the nine months of 2006 from futures and forward contracts entered Into as part of a program to manage equity risks In CIGNA's run-off reinsurance operations. CIGNA recorded
corresponding offsets in benefits and expenses to adjust liabilities for certain specialty life reinsurance contracts.
** Consists of the following pre-tax special items noted on page 1A. These amounts are included in other operating expenses:
(1) Charge associated with guaranteed minimum income benefit reserves of $86 million ($56 million after-tax) for the nine months of 2007.
12
CIGNA Corporation
Other Operations
Segment Earnings
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 Change 2007 2006 Change
Revenues:
Premiums and fees $ 25 $ 27 (7) % $ 81 $ 89 (9) %
Net investment income 110 107 3 329 360 (9)
Other revenues 24 25 (4) 64 78 , (18)
Segment revenues 159 159 474 527 (10)
Benefits and Expenses:
Benefit expenses 97 105 (8) 298 347 (14)
Policy acquisition expenses 2 2 - 10 7 43
Other operating expenses 19 12 58 50 59 (15)
Benefits and expenses 118 119 (1) 358 413 (13)
Income before income taxes 41 40 3 - 116 114 2
Income taxes * 6 10 (40) - 31 33 (6)
Segment earnings, after-tax 35 . 30 17 85 81 5
Less: Special items, after-tax "
Adjusted income from operations
5 5
$ 30 $ 30
-
$ 80 $ 81 (1) %
Realized investment gains (losses), net of taxes
$ 3 $ - % $ $ 12 -
Effective January 1, 2007, CIGNA changed its segment presentation to report the results of the Run-off Retirement business within Other Operations. Prior period results have
been restated to conform with the new segment presentation.
" Includes income tax benefit of $5 million for the third quarter and nine months of 2007 related to the completion of an IRS examination.
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CIGNA Corporation
Corporate
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 Change 2007 2006 Change
Revenues: -
Net investment income $ 7 $ 8 (13) % $ 21 $ 31 (32) %
Other revenues • (15) (12) (25) (40) (37) (8)
Segment revenues (8) (4) (100) (19) (6) (217)
Benefits and Expenses:
Benefit expenses (4) (4) - (11) (10) (10)
Other operating expenses .32 33 (3) 97 70 39
Benefits and expenses 28 29 (3) 86 60 43
Loss before income tax benefits (36) (33) (9) (105) (66) (59)
Income tax benefits "' (17) (11) (55) (37) (27) (37)
Loss, after-tax (19) (22) 14 (68) (39) (74)
Less: Special items, after-tax '• 10 10
Adjusted loss from operations $ (29) $ (22) (32) % $ (78) $ (39) (100) %
Realized investment gains (losses), net of taxes $ $ - % $ $ -
• Other revenues includes amounts for elimination of intercompany revenues and expenses.
•• Includes income tax benefit of $10 million for third quarter and nine months of 2007 related to the completion of art IRS examination.
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