CIGNA Item 7.01 Regulation FD Disclosure.
As previously disclosed,Cigna Corporation ("Cigna," the "Company," "we," or "our") entered into a definitive agreement inOctober 2021 to sell its life, accident and supplemental benefits businesses in seven countries toChubb INA Holdings, Inc. ("Chubb") for$5.75 billion cash (the "Chubb Transaction"). Subject to applicable regulatory approvals and customary closing conditions, we expect to complete this transaction during 2022. In connection with the pending Chubb Transaction, we revised our business reporting structure. As such, we adjusted our segment reporting effective in the fourth quarter of 2021 so that the results previously reported in the International Markets segment are now reported as follows:
• The businesses to be retained by Cigna are now reported in the newly created
existing
• The businesses to be sold pursuant to the Chubb Transaction are now reported in
Other Operations.
Prior period results for the newCigna Healthcare reporting segment and Corporate and Other Operations for the first three quarters and nine months endedSeptember 30, 2021 , each of the four quarters and full year endedDecember 31, 2020 and the full year endedDecember 31, 2019 are presented on the historic and new segment basis in the following tables. Information relating to the Evernorth segment for such periods is unchanged and accordingly not presented. Cigna intends to report its results for the fourth quarter and full year endedDecember 31, 2021 , as well as its results for future periods, utilizing the new segment basis.
Cigna's segments effective in the fourth quarter of 2021 are:
Evernorth includes a broad range of coordinated and point solution health services and capabilities, as well as those from partners across the health care system, in pharmacy solutions, benefits management solutions, care solutions and intelligence solutions, which are provided to health plans, employers, government organizations and health care providers.Cigna Healthcare includes Cigna'sU.S. Commercial,U.S. Government and International Health operating segments that provide comprehensive medical and coordinated solutions to clients and customers.U.S. Commercial products and services include medical, pharmacy, behavioral health, dental, vision, health advocacy programs and other products and services for insured and self-insured clients.U.S. Government solutions include Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors, and individual health insurance plans both on and off the public exchanges.International Health solutions include health care coverage in our international markets, as well as health care benefits for globally mobile individuals and employees of multinational organizations.The Cigna Healthcare segment is comprised of the previously namedU.S. Medical segment and the businesses to be retained from the previously named International Markets segment.
Other Operations contains the remainder of our business operations, consisting of the following:
• Ongoing business:
•
corporations to provide coverage on the lives of certain employees for the
purpose of financing employer-paid future benefit obligations. • Exiting businesses:
• International Life, Accident and Supplemental Benefits Businesses in seven
countries to be sold pursuant to the Chubb Transaction.
• Group Disability and Life. Prior to the sale of the
Life business on
long-term and short-term disability, group life, accident, voluntary and specialty insurance products and related services. • Run-off businesses:
• Reinsurance: predominantly comprised of guaranteed minimum death benefit and
guaranteed minimum income benefit business effectively exited through
reinsurance with
• Settlement Annuity business in run-off.
•
comprised of deferred gains from the sales of these businesses.
Prior to the sale of
2 Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate debt less net investment income on investments not supporting segment and other operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, severance, certain overhead and enterprise wide project costs and intersegment eliminations for products and services sold between segments.
Cigna's Investor Relations Department will be hosting a conference call this morning,January 24, 2022 , beginning at9:00 a.m. ET to describe the segment reporting changes and answer questions on this topic. The call-in numbers are as follows:
Live Call: Toll Free Dial-In Number: 1-888-566-1253
Toll Dial-In Number: 1-773-799-3825
Participant Passcode: 1242022
Replay: Toll Free Dial-In Number: 1-800-934-9450
Toll Dial-In Number: 1-203-369-3854
It is strongly suggested you dial in to the conference call by
3
TABLE OF CONTENTS
Title Page
Basis of Presentation 5
Financial Schedules - Consolidated results:
Consolidating Statement of Income - Restated Segment Basis - Nine Months 6
EndedSeptember 30, 2021 Consolidating Statement of Income - Restated Segment Basis - Year Ended
7
December 31, 2020 Consolidating Statement of Income - Restated Segment Basis - Year Ended
8
December 31, 2019 Financial Schedules - Segment results:Cigna Healthcare Third Quarter and Nine Months EndedSeptember 30, 2021
9
First and Second Quarters of 2021
10
Third and Fourth Quarters of 2020
11
First and Second Quarters of 2020
12
Years EndedDecember 31, 2020 andDecember 31, 2019
13
Corporate and Other Operations Third Quarter and Nine Months EndedSeptember 30, 2021
14
First and Second Quarters of 2021
15
Third and Fourth Quarters of 2020
16
First and Second Quarters of 2020
17
Years EndedDecember 31, 2020 andDecember 31, 2019
18
The information included in this Current Report on Form 8-K (the "Report") shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act whether made before or after the date of this report, except as shall be expressly set forth by specific reference in such a filing.
CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This Report and oral statements made with respect to information contained
within this Report may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
are based on Cigna's current expectations and projections about future trends,
events and uncertainties. These statements are not historical facts.
Forward-looking statements may include, among others, statements concerning
future financial or operating performance, including our ability to deliver
affordable, personalized and innovative solutions for our customers and clients,
including in light of the challenges presented by the COVID-19 pandemic; future
growth, business strategy, strategic or operational initiatives; economic,
regulatory or competitive environments, particularly with respect to the pace
and extent of change in these areas; financing or capital deployment plans and
amounts available for future deployment; our prospects for growth in the coming
years; strategic transactions, including the sale of our international life,
accident and supplemental benefits businesses; and other statements regarding
Cigna's future beliefs, expectations, plans, intentions, liquidity, cash flows,
financial condition or performance. You may identify forward-looking statements
by the use of words such as "believe," "expect," "plan," "intend," "anticipate,"
"estimate," "predict," "potential," "may," "should," "will" or other words or
expressions of similar meaning, although not all forward-looking statementscontain such terms. 4 Forward-looking statements are subject to risks and uncertainties, both known and unknown, that could cause actual results to differ materially from those expressed or implied in forward-looking statements. Such risks and uncertainties include, but are not limited to: our ability to achieve our strategic and operational initiatives; our ability to adapt to changes in an evolving and rapidly changing industry; the scale, scope and duration of the COVID-19 pandemic and its potential impact on our business, operating results, cash flows or financial condition; our ability to compete effectively, differentiate our products and services from those of our competitors and maintain or increase market share; price competition and other pressures that could compress our margins or result in premiums that are insufficient to cover the cost of services delivered to our customers; the potential for actual claims to exceed our estimates related to expected medical claims; our ability to develop and maintain satisfactory relationships with physicians, hospitals, other health service providers and with producers and consultants; our ability to maintain relationships with one or more key pharmaceutical manufacturers or if payments made or discounts provided decline; changes in the pharmacy provider marketplace or pharmacy networks; changes in drug pricing or industry pricing benchmarks; political, legal, operational, regulatory, economic and other risks that could affect our multinational operations; risks related to strategic transactions and realization of the expected benefits of such transactions, including with respect to the sale of our international life, accident and supplemental benefits businesses, as well as integration difficulties or underperformance relative to expectations; dependence on success of relationships with third parties; risk of significant disruption within our operations or among key suppliers or third parties; our ability to invest in and properly maintain our information technology and other business systems; our ability to prevent or contain effects of a potential cyberattack or other privacy or data security incident; potential liability in connection with managing medical practices and operating pharmacies, onsite clinics and other types of medical facilities; the substantial level of government regulation over our business and the potential effects of new laws or regulations or changes in existing laws or regulations; uncertainties surrounding participation in government-sponsored programs such as Medicare; the outcome of litigation, regulatory audits, investigations; compliance with applicable privacy, security and data laws, regulations and standards; potential failure of our prevention, detection and control systems; unfavorable economic and market conditions, stock market or interest rate declines, risks related to a downgrade in financial strength ratings of our insurance subsidiaries; the impact of our significant indebtedness and the potential for further indebtedness in the future; unfavorable industry, economic or political conditions; credit risk related to our reinsurers; as well as more specific risks and uncertainties discussed in our most recent report on Form 10-K and subsequent reports on Forms 10-K, 10-Q and 8-K available on the Investor Relations section of www.cigna.com. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Cigna undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except
as
may be required by law.
BASIS OF PRESENTATION
All dollar amounts are in millions, unless otherwise noted.
Cigna measures its financial results on a consolidated basis using adjusted income from operations and adjusted revenues. Adjusted income from operations and adjusted revenues on a consolidated basis are not determined in accordance with accounting principles generally accepted inthe United States of America ("GAAP") and should not be viewed as a substitute for the most directly comparable GAAP measures which are shareholders' net income and total revenues. Cigna also uses adjusted income (loss) from operations to measure the results of its segments, however the segment metric is determined before income taxes. Adjusted income (loss) from operations is a principal financial measure of profitability used by Cigna's management because it presents the underlying results of operations of Cigna's businesses and permits analysis of trends in underlying revenue, expenses and shareholders' net income. The Company defines adjusted income from operations as shareholders' net income (or income before income taxes for the segment metric) excluding net realized investment results, amortization of acquired intangible assets, earnings contributions from transitioning pharmacy benefit manager clients, Anthem, Inc. andCoventry Health Care, Inc. ("the transitioning clients") and special items. Cigna's share of certain realized investment results of its joint ventures reported in theCigna Healthcare segment using the equity method of accounting are also excluded. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results. Consolidated adjusted income (loss) from operations is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, shareholders' net income. Adjusted revenues is used by Cigna's management because it permits analysis of trends in underlying revenue. The Company defines adjusted revenues as total revenues excluding the following adjustments: revenue contributions from transitioning clients, special items and Cigna's share of certain realized investment results of its joint ventures reported in theCigna Healthcare segment using the equity method of accounting. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. We exclude these items from this measure because management believes they are not indicative of past or future underlying performance of the business. Adjusted revenues is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, total revenues.
As of
Corporate and Other Operations in this Report combines the results reported as "Corporate" and "Other Operations."
5Cigna Corporation
Consolidating Statement of Income - Restated Segment Basis
Nine Months Ended
(unaudited)
Corporate and
(in millions) Evernorth Cigna Healthcare Other Operations Cigna Total
Revenues
Pharmacy revenues $ 92,411 $ - $ (3,326 ) $ 89,085
Premiums - 28,231 2,581 30,812
Fees and other revenues 4,403 4,423 (1,502 ) 7,324
Net investment income 12 772 385 1,169
Total revenues 96,826 33,426 (1,862 ) 128,390
Benefits and expensesPharmacy and other service costs 90,747 - (4,441 ) 86,306 Medical costs and other benefit expenses - 23,420 1,399 24,819 Selling, general and administrative expenses excluding special items 1,873 6,888 576 9,337 Amortization of acquired intangible assets 1,449 36 14 1,499 Special items - - 31 31
Total benefits and expenses 94,069 30,344 (2,421 ) 121,992 Income from operations 2,757 3,082 559 6,398 Interest expense and other (1 ) 9 (923 ) (915 ) Debt extinguishment costs - - (141 ) (141 ) Net realized investment gains (losses) (4 ) 175 (43 ) 128 Income (loss) before income taxes$ 2,752 $ 3,266$ (548 ) 5,470 Total income taxes 1,188 Net income 4,282 Less: Net income attributable to noncontrolling interests 33 Shareholders' net income 4,249 After-tax adjustments to reconcile adjusted income from operations Net realized investment (gains) losses (1) (99 ) Amortization of acquired intangible assets 1,168 Special items Debt extinguishment costs 110 Integration and transaction-related (benefits) costs 1 (Benefits) charges associated with litigation matters (21 ) Adjusted income from operations$ 5,408 Reconciliation of total revenues to adjusted revenues Total revenues$ 96,826 $ 33,426 $ (1,862 ) $ 128,390 Net realized investment results from certain equity method investments - 12 - 12 Adjusted revenues$ 96,826 $ 33,438 $ (1,862 ) $ 128,402
(1) Includes the Company's share of certain realized investment results of its joint ventures reported in theCigna Healthcare segment using the equity method of accounting. 6Cigna Corporation
Consolidating Statement of Income - Restated Segment Basis
Year EndedDecember 31, 2020 (unaudited) Corporate and (in millions) Evernorth Cigna Healthcare Other Operations Cigna Total Revenues Pharmacy revenues$ 111,674 $ -$ (3,905 ) $ 107,769 Premiums - 35,069 7,558 42,627 Fees and other revenues 4,628 5,723 (1,590 ) 8,761 Net investment income 32 473 739 1,244 Total revenues 116,334 41,265 2,802 160,401 Benefits and expenses
Pharmacy and other service costs 108,537 - (5,053 ) 103,484 Medical costs and other benefit expenses - 27,469 5,241 32,710 Selling, general and administrative expenses excluding special items 2,211 9,647 1,732 13,590 Amortization of acquired intangible assets 1,917 44 21 1,982 Special items - (101 ) 583 482
Total benefits and expenses 112,665 37,059 2,524 152,248 Income from operations 3,669 4,206 278 8,153 Interest expense and other (2 ) 13 (1,449 ) (1,438 ) Debt extinguishment costs - - (199 ) (199 ) Gain (loss) on sale of business - - 4,203 4,203 Net realized investment gains (losses) 17 72 60 149 Income before income taxes$ 3,684 $ 4,291 $
2,893 $ 10,868
Total income taxes 2,379
Net income 8,489
Less: Net income attributable to
noncontrolling interests 31
Shareholders' net income 8,458
After-tax adjustments to
reconcile adjusted income from
operations
Net realized investment (gains)
losses (1) (244 )
Amortization of acquired
intangible assets 1,431
Special items
Debt extinguishment costs 151
Integration and
transaction-related (benefits)
costs 404
(Benefits) charges associated
with litigation matters 19
Charge for organizational
efficiency plan 24
Risk corridors recovery (76 )
Contractual adjustment for a
former client (155 )
(Gain) on sale of business (3,217 )
Adjusted income from operations $ 6,795
Reconciliation of total revenues
to adjusted revenues
Total revenues $ 116,334 $ 41,265 $ 2,802 $ 160,401
Net realized investment results
from certain equity method
investments - (130 ) - (130 )
Special item related to
contractual adjustment for a
former client (204 ) - - (204 )
Adjusted revenues $ 116,130 $ 41,135 $ 2,802 160,067
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