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    20 ANNUAL 1 7 REPORT People first. Performance follows.


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    TABLE OF CONTENTS Letter to our shareholders 2 People 8 Purpose 10 Performance 18 Cigna in perspective 22 Corporate and Board of Directors 24


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    PEOPLE WHAT DEFINES US IS NOT WHAT. IT’S WHO.


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    45K+ EMPLOYEES 1M+ RELATIONSHIPS WITH HEALTH CARE PROVIDERS, CLINICS AND FACILITIES 95M+ CUSTOMER RELATIONSHIPS1 1. This information provided as of December 31, 2017 (Source: Quarterly Financial Supplement).


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    PURPOSE OUR FOCUS IS TO HELP PEOPLE LIVE HEALTHIER, FULLER LIVES.


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    65K+ DOCTORS SIGNED THE CIGNA OPIOID QUALITY IMPROVEMENT PLEDGE TO HELP REDUCE OPIOID USE WITHIN THEIR PATIENT COMMUNITIES 24/7/365 FREE NATIONAL VETERAN SUPPORT LINE LAUNCHED IN 2017 10K+ FREE BIOMETRIC SCREENINGS PROVIDED NATIONWIDE IN 2017 THROUGH THE CIGNA HEALTH IMPROVEMENT TOUR


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    PERFORMANCE BECAUSE WHEN CUSTOMERS DO WELL, WE ALL DO WELL.


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    CIGNA NAMED TO THE DOW JONES SUSTAINABILITY INDICES IN 2017: WORLD INDEX AND NORTH AMERICA INDEX


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    OUR PERFORMANCE IS INSPIRED BY – AND, IN MANY WAYS, DEFINED BY – THE IMPACT WE HAVE ON OUR CUSTOMERS’ LIVES.


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    A message from our president and CEO, David Cordani CIGNA DELIVERED A STRONG 2017 Cigna delivered exceptionally strong performance on behalf of our customers, employer clients, partners and shareholders in 2017 – extending our long track record of differentiated results. Once again, these results were driven by the effective execution of our “Go” strategy, best-in-class medical cost trend performance on behalf of our employer clients, and strong contributions from each of our four priority growth platforms – Commercial Employer, United States Seniors, Global Supplemental Benefits, and Group Disability and Life. I’m proud of our contributions to all of our stakeholders, David M. Cordani energized by the opportunities ahead, and thankful for the President and ongoing commitment of more than 45,000 Cigna colleagues Chief Executive Officer around the world who remain passionate about our mission of Cigna Corporation helping to improve the health, well-being and sense of security of those we serve. We grew to more than 95 million customer relationships in 2017, and I’m privileged to witness examples every day of how our Cigna team helps our customers lead healthier, more productive lives. ADDRESSING OUR yet access to affordable, UNSUSTAINABLE HEALTH high-quality health care CARE SYSTEM remains elusive for many of our families, friends and At the same time, there’s a neighbors. People are living clear consensus around the longer on average, but too need for a more sustainable frequently are doing so health care system, and the without the vitality they tremendous pressure this puts desire. Health care costs on far too many individuals are growing, as individual and families. health status erodes due Unfortunately, debates around to behaviors and lifestyles, health care reform have been as well as an unsustainable largely unproductive, and rise in chronic disease. In challenges we have long faced the majority of individual still remain. situations, these challenges are preventable! For example, United States health expenditures absorb This environment is an increasing proportion of exacerbated by aging the gross domestic product, populations, historical 2 LE T TER TO O U R S HAR EH O LD ERS


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    “ Collectively, our best opportunities to improve affordability and build a more sustainable health care system will come from helping to improve individual health, in a highly personalized way. payment models that fail to incentivize health care dialogue focused on improving health care outcomes system participants to maintain or improve health, a in numerous ways, ranging from community health care reform debate which too often focuses engagement – such as our efforts to help reduce on symptoms – such as the financing of “sick care” the use of opioids among our customers – and interventions – rather than on underlying causes. In our value-based collaborations with health care short, in most countries, the social narrative equates professionals, to market-changing consumer support “health care” solely with “sick care,” rather than with programs and ongoing, principle-based engagement the broader aspiration and need of keeping people with elected officials. healthy in the first place. A FOCUS ON THE INDIVIDUAL No segment of society can successfully address these In the 1950s, the United States Air Force determined challenges alone, or in a vacuum. Collectively, we need that planes with cockpits designed to accommodate to commit to building more powerful connections and the stature of an average-sized pilot were solutions among individuals, physicians, health care contributing to an increase in crashes. In fact, a study companies, governments and communities. of 4,000 Air Force pilots showed none of them to be Cigna actively works to enable these connections, “average” based on the measurements used to create and to catalyze and contribute to a constructive a cockpit for the “average man.” 2 2. Rose, T. (2016, January 16). When U.S. air force discovered the flaw of averages. Retrieved March 02, 2018, from https://www.thestar.com/news/insight/2016/01/16/when-us-air-force-discovered-the-flaw-of-averages.html 3


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    Equipped with this information, the Air Force shifted to adjustable – personalized – cockpits. Averages can help us better understand theoretical groups of people, but not unique human beings. It didn’t work for the Air Force. And it doesn’t work in health care. We fervently believe the most powerful solutions transcend a monolithic, one-size-fits-all approach; rather, they’re oriented around the well-being and unique needs of the individual. Collectively, our best opportunities to improve affordability and build a more sustainable health care system will come from helping to improve individual health, in a highly personalized way. Too often, our dialogue around well-being is overly generalized; we forget the vulnerable, uncertain and often frightened person at the end of the health care equation. In reality, the definition of well-being is unique to every individual, and further influenced by factors ranging from the person’s life goals, to health disparities influenced by their demographics, lifestyles and behaviors, and where they live. Put differently, at certain levels, “well-being” is likely to mean something quite different to someone in Beijing compared with someone in Boston; however, it may very well also be different for two people in Boston living on the same block. This is why we find, time and again, that the best paths for health improvement are created one community, one neighborhood, and one person at a time. Even the nature of what constitutes health improvement itself is relative and also uniquely individual – any person can achieve greater vitality regardless of where they are on their health journey, and rightfully feel good about it. The already-healthy can be supported in staying healthy. The healthy, “at risk” populations can lower their risk; this is critical to avoid becoming chronically or acutely ill in the near future. Those with chronic disease can be supported to reverse or control their conditions, live life to the fullest, and avoid becoming acutely ill. Those with acute care needs can benefit from quality, high-value health care services. Grassroots engagement is critical, because in addition to all health being personal, it is local. In fact, health awareness programs can be instrumental in mobilizing individuals to take a more active role in managing their health. In the United States in the 1980s, public awareness campaigns reoriented habits around seat belt use and similarly, campaigns in the 1990s focused on smoking reduction – each with tremendously positive results. 4 LE T TER TO O U R S HAR EH O LD ERS


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    Cigna provided holiday gift cards to hurricane victims in Houston, where Cigna Market Leader Michael Koehler greeted families. 5


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    These give hope to the potential for community reasons, the community needs to play an essential engagement and activation to positively affect lifestyle role, which takes different shapes around the globe. choices negatively influencing individual health today. In the United States, for example, Cigna was the first BRIGHT SPOTS: WHERE IT’S WORKING in our industry to step up to the opioid epidemic, collaborating with physicians and dentists to In this equation, Cigna embraces our role as a dramatically reduce prescribing volumes to protect “connective fiber” or enabler, helping to connect and health, and expanding access to Medication Assisted mobilize employers, health care professionals and Treatments for those already addicted. Additionally, communities to create affordable, high-quality health we established a multi-city Health Improvement Tour outcomes for individuals. Working together, each of to bring free health screenings to communities, and these stakeholders plays a crucial role in contributing to created a Community Ambassador Fellowship Program, better and more affordable health care. with Cigna colleagues around the world supporting key initiatives such as clean water, prosthetics, mental Today in the United States, employers provide health health, children’s health and addiction. These kinds care insurance coverage to more than 175 million of community-driven efforts take on even greater Americans, 3 and remain the best positioned to put importance given findings that people who feel into place the benefit designs, physician networks and connected to their community demonstrate lower rates onsite health coaching programs that work best for of anxiety, isolation and loneliness.7 their employees. Increasingly, employers in countries around the world are introducing or adopting health At Cigna, we support customers on their life and health and chronic disease programs to supplement the journey every day, often at their most vulnerable services supplied by their government programs. Along moments. To share just three very different examples: with another “bright spot” in the American health care system – Medicare Advantage – these two access > One of our case managers worked closely with Katherine Rodriguez to address her chronic hypertension points of coverage collectively provide coverage to following multiple preterm deliveries, one of which almost two-thirds of the U.S. population,4 and are resulted in a miscarriage. Katherine remained susceptible highly functioning despite the burden of directly and to preterm delivery, but she and her husband desperately indirectly subsidizing the health care system at large. wanted more children. Our case manager helped ensure Health care providers are increasingly embracing she took her medicine to delay preterm labor, which incentive-based programs which prioritize the value contributed to her subsequent deliveries of two healthy of outcomes achieved, over the volume of services baby boys. Soon after her most recent delivery, Cigna provided. Through our collaboration with health care also helped to coordinate Katherine’s family’s evacuation providers, we have nearly 500 advanced collaborative plan during Hurricane Harvey. arrangements across physician practices and hospitals spanning 33 states. 5 Today, 88% of Cigna’s customers > Shawn King was a Marine who prided himself on physical fitness. Then, he began gaining weight, and in the United States are within 15 miles of a health care one morning woke up more than 20 pounds heavier provider in a collaborative care arrangement.6 than the day before. He was diagnosed with congestive Finally, the community piece is especially important heart failure, and then diabetes – a disease which here, and too often not considered. The health care contributed to the deaths of both Shawn’s father system alone, regardless of its structure, cannot meet and brother. Through the Cigna Collaborative CareSM the needs of every individual. The vast majority of program, a Cigna pharmacist and an embedded care factors that influence a person’s health exist outside coordinator from an accountable care provider worked the doctor’s office, pharmacy or hospital. For these together to ensure Shawn had the right medicine, 3. Rovner, J. (2016, September 13). A Record Percentage of Americans Now Have Health Insurance. Retrieved March 02, 2018, from http://time.com/money/4490196/health-insurance-coverage-census-2015/ 4. Barnett, J., & Berchick, E. (2017, September). Health Insurance Coverage in the United States: 2016. Retrieved March 2, 2018, from https://www.census.gov/content/dam/Census/library/publications/2017/demo/p60-260.pdf 5. Cigna Collaborative Care. (n.d.). Retrieved March 02, 2018, from https://www.cigna.com/newsroom/knowledge-center/aco/ 6. Large Healthcare Provider Network for Group Plans | Cigna. (n.d.). Retrieved March 02, 2018, from https://www.cigna.com/business-segments/large-employers/healthcare-provider-network 7. Brody, J. E. (2017, June 12). Social Interaction Is Critical for Mental and Physical Health. Retrieved March 02, 2018, from https://www.nytimes.com/2017/06/12/well/live/having-friends-is-good-for-you.html 6 LE T TER TO O U R S HAR EH O LD ERS


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    helped him to find a primary care physician and Cigna’s ability to develop new digital platforms that outpatient cardiologist, and to build a fitness regimen. meet localized needs. > After being diagnosed with colon cancer, and then And Go Beyond means we’ll further innovate and suffering from a heart attack which put him in the differentiate our business, the experiences we deliver intensive care unit soon after, Robert Harrison took and – consistent with Cigna’s emphasis on community – time off from work to heal. During his recovery, a Cigna the overall social impact we have. We’ll do this through vocational coach worked closely with Robert to create efforts such as our Community Ambassador Fellowship a personalized “recovery plan” to rebuild his strength Program; Cigna was proud to grant nine community and stamina. His Cigna coach also connected him with ambassador fellowships in 2017. a trainer from Achilles International – an organization, LOOKING FORWARD TO 2018 AND BEYOND sponsored by Cigna – which helps people with disabilities and other ailments to participate in mainstream As we look ahead to 2018 and beyond, we will continue athletics. Robert has since completed Achilles running creating strong value for our customers, clients, events and is leading an active and healthy life. partners, and, as a result, our shareholders, through our consistent focus on delivering affordable and Katherine, Shawn and Robert are three people with personalized products, services and solutions, as well different challenges and definitions of well-being. We as through collaborating with health care professionalss ultimately helped them to meet their needs, and to to help ensure our customers receive access to quality achieve greater health outcomes through personalized, affordable health care. individualized solutions which mobilized employer, health care provider and community relationships. Additionally, each of our four growth platforms remain well-positioned for sustained growth, and we continue BUILDING ON SUCCESS AND CHARTING OUR FUTURE to have a tremendous capital position – giving us We updated our successful “Go” strategy in 2017 to the confidence to recently enhance our long-term better address evolving market conditions and the Earnings Per Share8 target to $18 per share by 2021, needs of our customers and other stakeholders. resulting in a compounded growth rate at the high end of our strategic target of 10%–13%, and building Go Deeper drives Cigna to expand and deepen our on the prior five years where we also achieved the customer, client and partner relationships, while also high end of this range. intensifying our depth in targeted sub-segments and geographies. Thank you for your continued confidence and investment in Cigna. We’re excited about the future, and remain These efforts range from our collaborative physician driven by our unwavering mission of helping to improve relationships, to our continued growth for our One the health, well-being and sense of security of those we Guide® service, which helps our customers make more serve around the world – coupled with an unrelenting informed and more personalized health care choices. commitment to help unleash the unique potential of We anticipate doubling our number of One Guide every human being we have the opportunity to serve. customers to four million in 2018. Go Local intensifies our efforts to ensure our solution suite and services meet customer, client and partner needs at a local market level – as recently exemplified by our 2017 acquisitions of Zurich Middle East David M. Cordani and Brighter, one of health care’s most innovative President and Chief Executive Officer technology companies, which further accelerated Cigna Corporation 8. We use the term adjusted income from operations and earnings per share on this same basis as our principal measures of financial performance. Adjusted income (loss) from operations, defined on page 35 of our Form 10-K, is a 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. This consolidated measure is not determined in accordance with accounting principles generally accepted in the United States (GAAP) and should not be viewed as a substitute for the most directly comparable GAAP measure, shareholders’ net income. Management is not able to provide a reconciliation to shareholders’ net income (loss) on a forward-looking basis because we are unable to predict, without unreasonable effort, certain components thereof including (i) future net realized investment results and (ii) future special items. These items are inherently uncertain and depend on various factors, many of which are beyond our control. 7


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    R E CO G N I Z I N G A N D R E WA R D I N G support. Cigna also ensured that in all CO L L E AG U E S WO R L DW I D E countries where it operates outside the As Cigna looks forward to the next United States, employees have a minimum of chapter in its 225-year history, the 12 weeks of full paid maternity leave, and four company made a special one-time weeks of paid paternity and adoption leave. global stock award of five shares to “ employees worldwide. The stock award recognized the passion and commitment Invested in our of Cigna employees during a dynamic employees’ and disruptive environment over the past futures. several years. The stock award represents Cigna also introduced the Community PEOPLE an investment in employees’ futures and Ambassador Fellowship program, which promotes an ownership mentality that offers eligible employees an opportunity fuels our ability to support and change to take a sabbatical-style paid leave our customers’ lives for the better. from work to improve life in communities Additionally, to support employees in where they work and live by supporting balancing work and life demands, Cigna projects that exemplify Cigna’s mission. launched a Caregiver Leave Program, Program participants are selected a new benefit for U.S. employees that through a competitive application offers up to four weeks of paid leave for process for a one- to three-month employees caring for others, including fellowship, and receive full salary and child bonding, care for a seriously ill benefits plus a stipend to support their family member or qualifying military community work. 8


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    Together, the global stock award and new evaluated using publicly available data from benefits signal Cigna’s pride in its employees’ federal agencies, personal opinion data from continued high level of performance in a veteran employees and proprietary Military challenging environment. We’re investing Friendly survey data from participating in a bright future for Cigna, our employees organizations. Cigna also has received multiple and the people we serve around the world. recognitions from Military Times magazine for being a “Best for Vets” employer. CIGNA RATED A TOP EMPLOYER FOR Additionally, for the sixth year in a row, DIVERSITY AND INCLUSION Cigna scored a perfect 100 on the Human Cigna was recognized as a top employer Rights Campaign’s Corporate Equality for its diversity and inclusion practices and Index (CEI) and has been recognized by policies, including its hiring and support of the HRC Foundation as one of the “Best military veterans. Cigna was designated as a Places to Work for LGBTQ Equality.” The Military Friendly® Employer by Victory Media, CEI evaluates LGBTQ-related policies and which provides its list of Military Friendly practices including nondiscrimination Employers to service members and their workplace protections, domestic partner families, helping them discover post-military benefits, transgender-inclusive health care career opportunities. Companies that have benefits, competency programs, and public earned this designation are deemed to have engagement with the LGBTQ community. exceptionally strong hiring programs and Cigna’s commitment to a diverse workforce meaningful jobs for transitioning service runs deep, and includes Colleague Resource members, veterans and spouses. Groups within the company to focus on Companies and organizations earning the the needs of employees as well as those of Military Friendly Employer designation are diverse customers. RECOGNIZED BY HRC FOUNDATION FOR THE SIXTH YEAR IN A ROW, AS ONE OF THE CIGNA SCORED A BEST PLACES PERFECT 100 TO WORK ON THE HUMAN RIGHTS CAMPAIGN’S CORPORATE EQUALITY INDEX FOR LGBTQ EQUALITY 9


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    TV DOCTORS HELP CIGNA SAVE Cigna’s goal is to help save 100,000 lives LIVES THROUGH PREVENTIVE CARE a year, the number of lives the Centers for Disease Control and Prevention (CDC) Cigna’s TV Doctors of America campaign estimates would be saved if everyone used an ensemble of familiar TV doctors received his or her recommended to promote annual check-ups as a way preventive care. 9 The campaign to improve an individual’s health and encourages all consumers to get their encourage a dialogue with his or her health annual check-up – which most U.S. health PURPOSE care provider. Actors Patrick Dempsey, plans cover at 100% as part of a suite of Neil Patrick Harris, Kate Walsh and Donald preventive services.10 Faison donned scrubs and white coats to take on this role with Cigna. The TV doctors “ appeared in a multimedia platform including television, digital and social channels, using TV doctors. their star power to help influence consumers Real-life goal: to go get their annual check-ups, know their To help save key health numbers for blood pressure, 100,000 lives. cholesterol, blood sugar and body mass index (BMI), and take control of their health. 9. Source: CDC Prevention Checklist, Centers for Disease Control and Prevention, 2015; http://www.cdc.gov/prevention/ 10. Plans may vary. Includes eligible in-network preventive care services. Some preventive care services may not be covered, including most immunizations for travel. Reference plan documents for a list of covered and non-covered preventive care services. 10


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    HEALTH IMPROVEMENT TOUR DELIVERS country. Cigna has helped participants 10,000+ SCREENINGS NATIONWIDE IN 2017 become aware of their numbers and counseled people on how to follow up and Cigna’s Go. Know. Take Control.® Health seek medical support. Improvement Tour (HIT) delivers free health screenings and health coaching, reaching LEADING THE WAY IN HEALTH EQUITY individuals who may not have access to care Cigna was awarded the Innovation in through traditional means, and regardless Advancing Health Equity Award by the of whether they are Cigna customers. The National Business Group on Health for the Cigna Foundation arm of the HIT brings free second consecutive year. screenings to our nonprofit partners. This aspect of the HIT is supported by a generous New initiatives addressing health disparities grant from the Cordani Family Foundation. included several personalized programs that made it easier for customers to better The HIT represents an opportunity to make engage with their providers and the health a difference – connecting with communities care system, resulting in improvements on the importance of preventive health care. in health assessments and screenings – The program is helping to uncover health including an 84.7% increase in colorectal issues for people who may be unaware of screening rates for Hispanic customers their risks, meeting people where they are enrolled in Cigna’s Individual and Family and engaging them in managing their health. Plans in Texas and Colorado.11 This initiative delivers biometric screenings for blood pressure, cholesterol, blood sugar Additionally, health disparity training and body mass index in cities across the and resources were expanded. More 11. Cigna Internal Health Equity Data. 11


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    than 5,000 Cigna staff completed the new internal cultural competency learning series, and 1,000 providers completed the external cultural competency training.12 CIGNA CONNECTS RECOGNIZED FOR COMMITMENT TO CORPORATE RESPONSIBILITY To achieve Cigna’s mission of helping to improve the health, well-being and sense of security of the people we serve, we work to create connections that earn trust through responsible business practices, targeted corporate citizenship programs and our commitment to providing superior services that meet the unique needs of the individuals we serve. In 2017, Cigna was named to the Dow Jones Sustainability Indices, with recognition from the Dow Jones Sustainability World Index and the Dow Jones Sustainability North America Index. Cigna’s score of 78 placed the company in the leading position within the Health Care Providers & Services industry sector, where the industry average score was 35. Cigna scored in the 95th percentile in its industry for the Environmental Dimension and in the 100th percentile in its industry for the Economic and Social Dimensions.13 12. Cigna Internal Health Equity Data. 13. Dow Jones Sustainability Indices. www.robecosam.com/images/170907-djsi-review-2017-en-vdef.pdf 95TH PERCENTILE FOR THE ENVIRONMENTAL DIMENSION 12


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    Cigna Connects, our approach to corporate responsibility, supports our mission by making powerful connections that positively impact the health of people, communities and the environment, and by working more closely with our stakeholders on these topics. We publish our annual Cigna Connects Corporate Responsibility Report to communicate our progress toward our environmental, social and governance objectives. Our most recent report was prepared in accordance with the new Global Reporting Initiative Standards and includes a GRI Index to assist our stakeholders in locating corporate responsibility topics of interest. Also, as a signatory of the United Nations Global Compact (UNGC), we communicate our progress and activities with respect to the Compact’s 10 principles on human rights, labor, environment and anti-corruption within our report. We also provide a UNGC Index for ease of locating our reporting on these topics as well as a section discussing our work to align efforts with the UN Sustainable Development Goals. In our latest report, we highlight the key issues our Cigna Connects platform centered on; health and well-being, the environment and inclusive business. For each issue area, we identified the specific initiatives that demonstrate how we work to address these complex social challenges. 100TH PERCENTILE FOR THE ECONOMIC AND SOCIAL DIMENSIONS 13


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    CIGNA IN THE COMMUNITY Kids Express asthma clinic in St. Louis; and the Ghetto Film School in New York City, Some of our 2017 World of Difference supporting young filmmakers in highlighting nonprofit partners include the Iraq and community health challenges and how Afghanistan Veterans of America, Bright the Cigna Foundation is helping nonprofit Star in Chicago, helping to support trauma partners improve health in those communities. counseling for victims of violence; St. Vincent’s Hospital in Montana, improving the In addition to major grants, the Cigna health of Native American women who are Foundation also supported the Global pregnant and their infants; the University of Workplace Wellness Summit in Singapore, Miami, helping to prevent cervical cancer focused on duty of care for non-governmental among the women of Little Haiti; Miles for organizations; disaster relief through packing Smiles dental clinic in Tennessee; Healthy meals with Feeding Children Everywhere. $21M+ INVESTED IN COMMUNITIES THROUGH CIGNA U.S. FOUNDATION GIVING, CIGNA U.S CORPORATE GIVING, CIGNA EMPLOYEE GIVING AND LINA KOREA/THE KOREA FOUNDATION14 14. Cigna Civic Affairs Data. 14


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    Among its many nonprofit partners, the Cigna Foundation supports a University of Maryland program to train barbers in talking to customers about health prevention; the Miles for Smiles Dental Clinic in Tennessee; and Feeding Children Everywhere. 57,751 336,000 CIGNA EMPLOYEE VOLUNTEER HOURS MEALS FOR HURRICANE VICTIMS IN PUERTO LOGGED BY OUR EMPLOYEES.14 RICO; AND HOLIDAY GIFT CARDS PROVIDED TO HURRICANE VICTIMS IN TEXAS. 14. Cigna Civic Affairs Data. 15


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    TAC K L I N G T H E N AT I O N A L 25% by 2019, while still providing the right OPIOID EPIDEMIC care at the right time. More than 65,270 doctors,15 through their medical groups, Cigna has been aggressively fighting the signed Cigna’s pledge to reduce opioid opioid epidemic by reducing the use of prescriptions and treat opioid use disorders opioids among customers and collaborating as chronic conditions. And Cigna reached with physicians and other parties to find out to 2,600 prescribers of high-dosage workable solutions. opioid medications to ensure the dosage of Cigna has committed to reducing the use the opioid medications were appropriate, of prescribed opioids among customers by medically necessary and safe for the patient. 15. Number of signed pledges received by Cigna for Performance Measurement and Improvement. 16


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    HELPING VETERANS FIGHT and treatment, PTSD, and many other needs H E A LT H C H A L L E N G E S related to housing, employment, financial assistance, family issues and more. Cigna is helping veterans overcome challenges – including opioid addiction. Many veterans In addition, Cigna also is now offering a weekly struggle as they transition back to civilian Mindfulness for Vets session, exclusively for life and face chronic pain, post-traumatic veterans, to help them manage pain and stress stress disorder, depression and other health more effectively. conditions that contribute to the use, and misuse, of painkillers. The opioid epidemic “ has hit veterans harder than other population They answered groups, with veterans 10 times more likely to our country’s call. misuse opioids than average Americans.16 Now we’re here to While many resources exist to help vets, in answer theirs. some cases waiting lists and social barriers, such as feeling embarrassed to seek Cigna views veterans as an important part of assistance, prevent vets from getting the help its global team, and commits approximately they need. Cigna is taking a leadership role in 10% of its annual recruitment budget in the addressing the unique needs of veterans and United States to recruit veterans and their introduced a free national Veteran Support spouses. We will continue to look for ways to Line, available 24/7/365 days a year to all give back to those individuals who served and veterans, their families and caregivers, whether protected our country. or not the veteran is a Cigna customer. The support line, available at 855.244.6211, gives veterans access to services and resources for 16. https://www.psychologytoday.com/blog/invisible-wounds/201701/va-says-68000- pain management, substance use counseling vets-addicted-opioid-painkillers 17


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    Accountable Care Program Specialist Program Hospital Program Delivery system joint venture MAPPING THE FUTURE OF HEALTH CARE “ Cigna is creating the future of health care Greater through offering greater affordability affordability. PERFORMANCE and better quality in health care. To Better quality achieve this goal, we reward providers of care. for the quality of care they deliver, and the health outcomes they achieve for patients, as we shift from traditional Cigna-HealthSpring business, we have fee-for-service reimbursement models to focused on collaborative care or aligned value-based partnerships. value-based relationships. Today, Cigna is proud to have approximately 500 For the last decade in Cigna’s of those relationships up and running, Commercial business, and 20 years in the spanning over 30 states.17 17. Cigna Internal Company document, National Cigna Collaborative Care Execution report for December 2017. 500 SPANNING OVER VALUE-BASED RELATIONSHIPS UP AND RUNNING 30 STATES 18


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    A BRIGHTER FUTURE FOR Brighter provides Cigna with the D I G I TA L C A PA B I L I T I E S technology, consumer expertise and speed-to-market capabilities necessary Cigna acquired Brighter Inc.®, a digital for the ongoing and critical digital health plan platform leader to enable Cigna transformation of health plans. These to accelerate and expand its consumer capabilities enable consumers to more initiatives and provider partnerships. regularly and confidently engage with the Brighter is a technology company that is plans, providers and wellness programs working with leading health service and that are best able to improve health while dental organizations to engage patients and reducing costs. providers in personalized and seamlessly integrated experiences to more efficiently In addition, providers gain more deliver higher-value health care. cost-efficient ways to provide quality services by leveraging reduced marketing, The acquisition accelerates Cigna’s administrative and patient-engagement development of mobile and desktop expenses, while employer plan sponsors platforms and the creation of new end- benefit from population health management to-end experiences that connect health and data-driven recommendations for consumers and providers with the guidance, ongoing improvements. support and incentives they need to increase quality of care and maximize cost savings. 19


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    O N E G U I D E : T H E P OW E R O F D I G I TA L getting the most value from their health care CO M B I N E D W I T H A H U M A N T O U C H investment. One Guide is increasing health engagement by making it easier for customers Cigna One Guide® combines the power to connect with, and use, their health plan and convenience of an interactive digital benefits and resources, such as a family health solution with the human touch of a live care provider team, and health and wellness person to deliver Cigna’s personalized rewards programs. service experience. It is designed to support customers in the optimal use of their benefits One Guide can help improve health and lower and is uniquely able to proactively connect health spending by helping customers find customers with health services, tools and and choose the right care, at the right place, resources they need to achieve better health for the right price; and get the most value outcomes and cost savings. from their Cigna health plans. Cigna One Guide provides customers the personalized service they need to navigate a confusing health care system, while For illustrative purposes only. 20


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    R E AC H I N G I N T E R N AT I O N A L M I L E S TO N E S Cigna International brings decades of local experience and expertise in delivering health, well-being and sense-of-security solutions around the world. Cigna’s mission and strategy are well suited to the needs of customers and clients around the globe. (1) Increased its (2,3) Launched (4) Introduced (5) Introduced a footprint in the Cigna Global Health our new DiaMedic suite of important Middle East after the Indonesia and product in Hong products in successful acquisition Dubai Healthguard. Kong, addressing South Korea of Zurich Insurance the growing that specifically Middle East. number of patients address seniors. with diabetes. 5 1 3 4 2 In addition, the launch of the 2017 Cigna We also had cause for celebration when the 360° Well-being Survey won a Public Affairs U.K.’s Virtual Health app won Best Technology Asia Gold Standard Award for Best Financial Provider 2017 at the annual Workplace Communications Campaign of the Year. Savings & Benefits (WS&B) awards. In South Korea, the company achieved And we contributed to the communities in the highest ROE in the industry and grew which we operate, through local Corporate sales by double digits where the industry Social Responsibility efforts that included full experienced negative growth.18 South Korea participation by all our markets as we came also introduced LINA Bot, a digital customer together on September 29 to support World and agent service, while the Next Generation Heart Day for Cigna. System was rolled out successfully. 18. Cigna competitive analysis in South Korea. 21


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    CIGNA IN PERSPECTIVE Global Health Care includes in all 50 states and the District of a commercial line of business Columbia, and Medicaid plans in encompassing the United select markets in Texas. States and certain international Global Supplemental Benefits operations. Commercial offers offers supplemental health, life a broad line of insured and and accident insurance products self-insured medical, dental, in select international markets behavioral health, vision, and the United States. With prescription drug benefit plans, licenses and partnerships across health advocacy programs and Asia-Pacific, Europe and North other products and services America, Cigna offers products that may be integrated to and services to local citizens and provide comprehensive global globally mobile individuals. Global health care benefit programs to Supplemental Benefits also offers employers and their employees, Medicare Supplement coverage. and individuals, including globally mobile individuals. Group Disability and Life provides insurance products Global Health Care also includes and related services for group a government line of business long- and short-term disability that offers Medicare Advantage, insurance, group life insurance, Medicare Part D and Medicaid and accident and specialty plans for Medicare- or Medicaid- insurance. Cigna markets eligible individuals, primarily products in all 50 states, the seniors. A significant portion District of Columbia, Puerto Rico, of our Medicare Advantage the United States Virgin Islands customers are served by health and Canada. Group Disability care providers in innovative plan programs are designed to help models, designed to improve improve employee productivity health outcomes and lower and lower employers’ overall medical costs. Cigna offers absence costs. Products are Medicare Advantage plans in coupled with comprehensive 17 states and the District of tools and services for easy Columbia, Medicare Part D plans benefit management. 22


  • Page 31

    25% Government GLOBAL HEALTH CARE PREMIUMS AND FEES IN MILLIONS BY LINE OF BUSINESS 75% COMMERCIAL $29,041 25% GOVERNMENT 75% Commercial 4% 7% U.K. Taiwan 15% GLOBAL SUPPLEMENTAL Other PREMIUMS AND FEES BENEFITS BY COUNTRY IN MILLIONS 51% SOUTH KOREA $3,707 23% UNITED STATES 51% South Korea 15% OTHER 23% 7% TAIWAN United States 4% U.K. 6% Other GROUP DISABILITY PREMIUMS AND FEES AND LIFE BY PRODUCT IN MILLIONS 51% DISABILITY 43% Life $4,088 43% LIFE 51% Disability 6% OTHER 23


  • Page 32

    CORPORATE AND BOARD OF DIRECTORS BOARD OF DIRECTORS Isaiah Harris, Jr. Roman Martinez IV Independent Chairman Private Investor of the Board, Former President John M. Partridge BOARD OF DIRECTORS and Chief Executive Officer Former President AT&T Advertising and Publishing – Visa Inc., a consumer East, a communications credit company services company James E. Rogers David M. Cordani Former Chairman, President President and and Chief Executive Officer Chief Executive Officer Duke Energy Corporation, Cigna Corporation an electric power company Eric J. Foss Eric C. Wiseman Chairman, President and Former Executive Chairman, Chief Executive Officer President and Chief Executive Officer ARAMARK Corporation, VF Corporation, an apparel a provider of food services, and footwear company facilities management and uniform services Donna F. Zarcone President and Chief Executive Officer Jane E. Henney, MD The Economic Club of Chicago, a civic Former Senior Vice President, and business leadership organization Provost and Professor of Medicine University of Cincinnati College of William D. Zollars Medicine, an educational institution Former Chairman, President and Chief Executive Officer YRC Worldwide Inc., a transportation and related services holding company


  • Page 33

    EXECUTIVE COMMITTEE PEOPLE RESOURCES Alan M. Muney, MD, MHA COMMITTEE Executive Vice President Isaiah Harris, Jr. Total Health & Network and Chair William D. Zollars Chief Medical Officer David M. Cordani Chair Jane E. Henney, MD Eric J. Foss John M. Murabito Roman Martinez IV John M. Partridge Executive Vice President John M. Partridge Eric C. Wiseman Human Resources and Services William D. Zollars Eric Palmer Executive Vice President EXECUTIVE OFFICERS and Chief Financial Officer AUDIT COMMITTEE David M. Cordani Jason D. Sadler Roman Martinez IV President and President, International Markets Chair Chief Executive Officer Jane E. Henney, MD Michael Triplett Lisa R. Bacus James E. Rogers President, U.S. Markets Executive Vice President Donna F. Zarcone and Chief Marketing and Customer Officer OTHER OFFICERS CORPORATE GOVERNANCE Mark L. Boxer Neil Boyden Tanner COMMITTEE Executive Vice President and Vice President, Chief Counsel Chief Information Officer Jane E. Henney, MD and Corporate Secretary Chair Brian Evanko Timothy D. Buckley Eric J. Foss President, Government Vice President and Treasurer Donna F. Zarcone Business William D. Zollars Mary T. Agoglia Hoeltzel Christopher Hocevar Vice President and President, Strategy, Chief Accounting Officer Segments and Solutions FINANCE COMMITTEE Nicole S. Jones John M. Partridge Executive Vice President Chair and General Counsel Roman Martinez IV James E. Rogers Eric C. Wiseman


  • Page 34

    2018 ANNUAL MEETING CIGNA HEALTH AND LIFE DIRECT DEPOSIT OF DIVIDENDS INSURANCE COMPANY Wednesday, April 25 at 8:00 am Direct deposit of dividends provides Delamar Hotel 900 Cottage Grove Road a prompt, efficient way to have your 1 Memorial Road Bloomfield, CT 06002 dividends electronically deposited West Hartford, CT 06107 860.226.6000 into your checking or savings account. It avoids the possibility of Proxies and proxy statements lost or delayed dividend checks. have been made available The deposit is made electronically to shareholders of record LIFE INSURANCE COMPANY on the payment date. For more as of February 26, 2018. On OF NORTH AMERICA information and an enrollment December 31, 2017, there were authorization form, contact Two Liberty Place 5,618 common shareholders Computershare at 800.760.8864, 1601 Chestnut Street of record. or outside the U.S., U.S. territories Philadelphia, PA 19192-1550 215.761.1000 and Canada at 201.680.6578. You can access your account online FINANCIAL INFORMATION through the Computershare website: Cigna’s Form 10-K is available online Computershare.com/investor. DIRECT STOCK PURCHASE PLAN at Cigna.com. For a copy of Cigna’s quarterly earnings’ news releases, Shareholders can automatically STOCK LISTING visit our website at Cigna.com and reinvest their annual dividends and click on “News.” make optional cash purchases of Cigna’s common shares are listed common shares. For information on the New York Stock Exchange. on these services, please contact: The ticker symbol is CI. OFFICES AND PRINCIPAL Computershare SUBSIDIARIES PO Box 505000 TRANSFER AGENCY Cigna Corporation Louisville, KY 40233-5000 Toll-free: 800.760.8864 By regular mail: 900 Cottage Grove Road Computershare Bloomfield, CT 06002 Outside U.S., U.S. territories PO Box 505000 860.226.6000 and Canada: 201.680.6578 Louisville, KY 40233-5000 and Two Liberty Place Website: By overnight delivery: 1601 Chestnut Street Computershare.com/investor Computershare Philadelphia, PA 19192-1550 462 South 4th Street 215.761.1000 Suite 1600 SHAREHOLDER ACCOUNT ACCESS Louisville, KY 40202 You can access your Cigna Toll-free: 800.760.8864 CONNECTICUT GENERAL shareholder account online through Outside U.S., U.S. territories LIFE INSURANCE COMPANY the Computershare website: and Canada: 201.680.6578 900 Cottage Grove Road Computershare.com/investor TDD: 800.231.5469 Bloomfield, CT 06002 Or, call 800.760.8864 Website: 860.226.6000 Computershare.com/investor CIGNA ONLINE To access online information about Cigna, our products and services, visit Cigna.com


  • Page 35

    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ፼ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2017 OR 䡺 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-8323 29OCT201118203261 CIGNA CORPORATION (Exact name of registrant as specified in its charter) Delaware 06-1059331 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 900 Cottage Grove Road, Bloomfield, Connecticut 06002 (Address of principal executive offices) (Zip Code) (860) 226-6000 Registrant’s telephone number, including area code (860) 226-6741 or (215) 761-5511 Registrant’s facsimile number, including area code SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: Title of each class Name of each exchange on which registered Common Stock, Par Value $0.25 New York Stock Exchange, Inc. SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE Indicate by check mark Yes No • if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ፼ 䡺 • if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act 䡺 ፼ • whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days ፼ 䡺 • whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ፼ 䡺 • if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K ፼ • whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company’’ and ‘‘emerging growth company’’ in Rule 12b-2 of the Exchange Act. Large accelerated filer ፼ Accelerated filer 䡺 Non-accelerated filer 䡺 䡺 Smaller reporting company Emerging growth company 䡺 • If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 䡺 • whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 䡺 ፼ The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2017 was approximately $42.2 billion. As of January 31, 2018, 242,875,357 shares of the registrant’s Common Stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Part III of this Form 10-K incorporates by reference information from the registrant’s definitive proxy statement related to the 2018 annual meeting of shareholders.


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    Table of Contents FREQUENTLY REQUESTED 10-K INFORMATION Page Risk Factors ................................................................................................................................................. 21 Executive Overview................................................................................................................................... 35 Health Care Industry Developments.................................................................................................... 40 Liquidity and Capital Resources ........................................................................................................... 41 Critical Accounting Estimates................................................................................................................ 44 Segment Information................................................................................................................................ 105 Revenues by Product Type..................................................................................................................... 107 Page CAUTIONARY STATEMENT PART I Item 1. Business . Overview ............................................................................................................................ 1 . Global Health Care ................................................................................................................ 3 . Global Supplemental Benefits ..................................................................................................10 . Group Disability and Life........................................................................................................ 12 . Other Operations ................................................................................................................. 14 . Investments and Investment Income .......................................................................................... 14 . Regulation ......................................................................................................................... 15 . Miscellaneous .................................................................................................................... 20 Item 1A. Risk Factors..................................................................................................................................................................21 Item 1B. Unresolved Staff Comments ................................................................................................................................. 30 Item 2. Properties.................................................................................................................................................................... 30 Item 3. Legal Proceedings.................................................................................................................................................... 30 Item 4. Mine Safety Disclosures.......................................................................................................................................... 30 EXECUTIVE OFFICERS OF THE REGISTRANT....................................................................................................................31 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities...................................................................................................................................................32 Item 6. Selected Financial Data.......................................................................................................................................... 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ............35 Item 7A. Quantitative and Qualitative Disclosures about Market Risk..................................................................... 56 Item 8. Financial Statements and Supplementary Data..............................................................................................57 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ........109 Item 9A. Controls and Procedures ......................................................................................................................................109 Item 9B. Other Information....................................................................................................................................................109


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    Page PART III Item 10. Directors, Executive Officers and Corporate Governance. .........................................................110 A. Directors of the Registrant ....................................................................................................110 B. Executive Officers of the Registrant .........................................................................................110 C. Code of Ethics and Other Corporate Governance Disclosures ...........................................................110 D. Section 16(a) Beneficial Ownership Reporting Compliance ..............................................................110 Item 11. Executive Compensation ..........................................................................................................110 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ................................................................................................................................................. 111 Item 13. Certain Relationships and Related Transactions, and Director Independence ..................................... 111 Item 14. Principal Accountant Fees and Services............................................................................................................ 111 PART IV Item 15. Exhibits and Financial Statement Schedules ............................................................................ 112 Item 16. 10-K Summary ......................................................................................................................... 115 SIGNATURES ................................................................................................................................................................................. 116 INDEX TO FINANCIAL STATEMENT SCHEDULES......................................................................................................... FS-1 EXHIBITS.........................................................................................................................................................................................E-1


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    CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains 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 personalized and innovative solutions for our customers and clients; 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; and other statements regarding Cigna’s future beliefs, expectations, plans, intentions, 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 statements contain such terms. 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 financial, strategic and operational plans or initiatives; our ability to predict and manage medical costs and price effectively and develop and maintain good relationships with physicians, hospitals and other health care providers; the impact of modifications to our operations and processes; our ability to identify potential strategic acquisitions or transactions and realize the expected benefits of such transactions; 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; the outcome of litigation, regulatory audits, investigations, actions and/or guaranty fund assessments; uncertainties surrounding participation in government-sponsored programs such as Medicare; the effectiveness and security of our information technology and other business systems; unfavorable industry, economic or political conditions, including foreign currency movements; acts of war, terrorism, natural disasters or pandemics; as well as more specific risks and uncertainties discussed in Part I, Item 1A – Risk Factors and Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K and as described from time to time in our future reports filed with the Securities and Exchange Commission (the ‘‘SEC’’). You should not place undue reliance on forward-looking statements that 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.


  • Page 39

    PART I ITEM 1. Business PART I ITEM 1. Business Overview Cigna Corporation, together with its subsidiaries (either individually or collectively referred to as ‘‘Cigna,’’ the ‘‘Company,’’ ‘‘we,’’ ‘‘our’’ or ‘‘us’’) is a global health services organization dedicated to a mission of helping individuals improve their health, well-being and sense of security. Since 2009, our strategy in support of our mission has been to ‘‘Go Deep, Go Global and Go Individual’’. To further accelerate the differentiated value we deliver for our customers, clients, partners and communities, we have evolved this strategy in order to expand avenues for growth and performance. Cigna’s evolved strategy is to ‘‘Go Deeper’’, ‘‘Go Local’’ and ‘‘Go Beyond’’. Our Mission To improve the health, well-being and sense of security of the people we serve Our Strategy Go Deeper: To expand and deepen our customer, client and partner relationships; depth in targeted sub-segments, geographies Go Local: To ensure our solution suite and services meet customer, client and partner needs at a local market level Go Beyond: To innovate and further differentiate our businesses, the experiences we deliver, and overall social impact How We Will Win Be the Undisputed Partner of Choice Affordability Accelerating Next Customer Generation Value Integration Personalization Make the Complex Simpler 21FEB201816080645 We execute on this strategy with a differentiated set of medical, pharmacy, behavioral, dental, disability, life and accident insurance and related products and services offered by our subsidiaries. In an increasingly retail-oriented marketplace, we focus on delivering affordable and personalized products and services to customers through employer-based, government-sponsored and individual coverage arrangements. We increasingly collaborate with health care providers to continue the transition from volume-based fee for service arrangements toward a more value-based system designed to increase quality of care, lower costs and improve health outcomes. We operate a customer-centric organization enabled by keen insights regarding customer needs, localized decision-making and talented professionals committed to bringing our ‘‘Together All the Way’’ brand promise to life. CIGNA CORPORATION - 2017 Form 10-K 1


  • Page 40

    PART I ITEM 1. Business In particular, over the past several years, to achieve the goals of better health, affordability, localization and an improved experience for the customer, we have continued expanding our participation in collaborative care and other delivery arrangements with health care professionals across the care delivery spectrum, including large and small physician groups, specialist groups and hospitals. More recently, we have developed innovative tools and flexible provider arrangements that provide a truly personalized customer experience. These arrangements and tools are discussed in more detail in the ‘‘Global Health Care’’ section of this Annual Report on Form 10-K (‘‘Form 10-K’’) beginning on page 3. We present the financial results of our businesses in the following three reportable segments: Global Health Care aggregates the Commercial and Government operating segments. • The Commercial operating segment encompasses both the U.S. commercial and certain international health care businesses serving employers and their employees, other groups, and individuals. In this segment, we refer to employer or other groups as the ‘‘client’’ and the individual as the ‘‘customer.’’ Products and services include medical, dental, behavioral health, vision, and prescription drug benefit plans, health advocacy programs and other products and services to insured and self-insured customers. • The Government operating segment offers Medicare Advantage and Medicare Part D plans to seniors as well as Medicaid plans. Global Supplemental Benefits offers supplemental health, life and accident insurance products in selected international markets and in the United States. Group Disability and Life provides group long-term and short-term disability, group life, accident and specialty insurance products and related services. Financial Results for the year ended and as of December 31, 2017 (in billions) Consolidated basis: Consolidated basis: Total revenues $ 41.6 Shareholders’ net income $ 2.2 Operating revenues (1) $ 41.4 Adjusted income from operations (1) $ 2.7 Total assets $ 61.8 Total shareholders’ equity $ 13.7 Reportable segments’ results: (2) Reportable segments’ results: (2) Operating revenues (1) $40.9 Adjusted income from operations (1) $ 2.8 (1) See page 35 for the definition of these metrics. (2) Global Health Care, Global Supplemental Benefits and Group Disability and Life segments Operating Revenue by Segment % Adjusted Income from Operations by Segment % 11% 10% 9% 13% 80% 77% Global Health Care Global Health Care Global Supplemental Benefits Global Supplemental Benefits Group Disability and Life Group Disability and Life 21FEB201813420426 We present the remainder of our segment results in Other Operations, consisting of the corporate-owned life insurance business (‘‘COLI’’), run-off reinsurance and settlement annuity businesses and deferred gains associated with the sales of the individual life insurance and annuity and retirement benefits businesses. Our revenues are derived principally from premiums on insured products, fees from self-insured products and services, mail-order pharmacy sales and investment income. The ACA and Health Care Reform The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (collectively referred to throughout this Form 10-K as the ‘‘ACA’’ or ‘‘PPACA’’) continues to have a significant impact on our business operations. The future of the ACA is uncertain due to congressional efforts to repeal and replace the ACA, various executive actions of the Trump administration, and repeal of the individual mandate as part of H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (referred to throughout this Form 10-K as the ‘‘Tax Cuts and Jobs Act’’ or ‘‘U.S. tax reform legislation’’). The effects of the ACA, and efforts to repeal and replace it, are discussed throughout this Form 10-K where appropriate, including in the Global Health Care business description, Regulation, Risk Factors, Management’s Discussion and Analysis of Financial Condition and Results of Operations (‘‘MD&A’’), and the Notes to the Consolidated Financial Statements. 2 CIGNA CORPORATION - 2017 Form 10-K


  • Page 41

    PART I ITEM 1. Business Other Information The financial information included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2017 is in conformity with accounting principles generally accepted in the United States of America (‘‘GAAP’’) unless otherwise indicated. Industry rankings and percentages set forth herein are for the year ended December 31, 2017 unless otherwise indicated. In addition, statements set forth in this document concerning our rank or position in an industry or particular line of business have been developed internally based on publicly available information unless otherwise noted. Cigna Corporation was incorporated in Delaware in 1981. Our annual, quarterly and current reports, proxy statements and other filings, and any amendments to these filings, are made available free of charge on our website (http://www.cigna.com, under the ‘‘Investors – Quarterly Reports and SEC Filings’’ captions) as soon as reasonably practicable after we electronically file these materials with, or furnish them to, the Securities and Exchange Commission (the ‘‘SEC’’). We use our website as a channel of distribution for material company information. Important information, including news releases, analyst presentations and financial information regarding Cigna is routinely posted on and accessible at www.cigna.com. See ‘‘Code of Ethics and Other Corporate Governance Disclosures’’ in Part III, Item 10 beginning on page 110 of this Form 10-K for additional available information. Global Health Care How We Win • Broad and deep portfolio of solutions across Commercial and Government operating segments • Committed to highest quality health outcomes and customer experiences • Collaborative physician engagement models emphasizing value over volume of services • Integrated solutions that deliver value for our customers, clients and partners • Technology powering actionable insights and affordable, personalized solutions • Talented and caring people embracing change and putting customers at the center of all we do Products and Services Funding Solutions • Medical • Pharmacy • Medicare Advantage • Administrative Services • Stop Loss • Behavioral • Medicare Part D Only (ASO or • Dental • Health Advocacy and • Medicaid self-funded) • Vision Coaching • Insured – Guaranteed Cost • Insured – Experience Rated Physician Engagement Market Segments Distribution Channels • Collaborative Accountable • National • Insurance brokers and Care Organizations • Middle Market consultants • Independent Practice • Select • Cigna Sales representatives Associations • Individual • Cigna private exchange • CareAllies姞 • Government • 3rd party private exchanges • Delivery System Alliances • International • Public exchanges We seek to differentiate ourselves in this business by providing innovative personalized and affordable health care benefit solutions to our clients and customers. We sub-segment and target distinct buyer groups in a personalized and localized way. We focus on anticipating, understanding, and meeting their needs and we will continue to drive growth by deepening our approach to consultative partnership, accelerating the value of our integrated solutions, and enhancing the customer experience. As a leader in the drive to transition the health care delivery system from volume-based reimbursements to a value orientation, our strategy is to accelerate our engagement with employers and individuals in order to: 1) increase our customers’ involvement in their health care and 2) develop deep insights into customer needs. Our differentiated approach to partnering with health care providers allows us to leverage information, incentives and care resources to help them evolve towards value-based care delivery and improve the quality and affordability of care for our customers and clients. Innovation is core to the way we do business and will be a critical factor to our success in the highly dynamic health care industry. We have delivered innovative solutions that improve affordability and are more personalized, such as the Cigna One Guide姞 program that combines a state-of-the-art digital experience with a human concierge service; and the Cigna SureFit姞 network that allows individual family members to choose their personal care networks, consistent with their health needs and provider preferences. CIGNA CORPORATION - 2017 Form 10-K 3


  • Page 42

    PART I ITEM 1. Business Principal Products and Services Commercial Medical Health Plans – U.S. and International The Commercial operating segment, either directly or through its partners, offers some or all of its products in all 50 states, the District of Columbia, the U.S. Virgin Islands, Canada, Europe, the Middle East, Asia, Africa and Australia. We offer a variety of medical plans including: • Managed Care Plans including HMO, Network, Network Open Access and Open Access Plus. Through our insurance companies, Health Maintenance Organizations (‘‘HMOs’’) and third party administrator (‘‘TPA’’) companies, we offer insured and self-insured indemnity and managed care benefit plans that use meaningful cost-sharing incentives to encourage the use of ‘‘in-network’’ versus ‘‘out-of-network’’ health care providers and provide the option to select a primary care physician. The national provider network for Managed Care Plans is somewhat smaller than the national network used with the preferred provider (‘‘PPO’’) plan product line. If a particular plan covers non-emergency services received from a non-participating health care provider, the customer’s cost-sharing obligation is usually greater for the out-of-network care. • PPO Plans. Our PPO product line features a network with broader provider access than the Managed Care Plans. The preferred provider product line may be at a higher cost than our Managed Care Plans. • Consumer-Driven Products. Cigna’s suite of consumer-driven products – health savings accounts (‘‘HSAs’’), health reimbursement accounts (‘‘HRAs’’) and flexible spending accounts (‘‘FSAs’’) – are typically paired with a high-deductible medical plan and offer customers a tax-advantaged way to pay for eligible health care expenses. The nature of these products encourages customers to play an active role in managing their health and their health care costs. When integrated with a Cigna medical plan, we can deliver a seamless experience for our customers and clients. More than three million customers have chosen one of these integrated product solutions. • Cigna Connect is an individual plan offered in markets within eight states. The product is comprised of a network of health care providers in a geographic area who have been selected with cost and quality in mind. Customers who participate in the Connect network will receive care at Cigna’s lower negotiated rates to help keep out-of-pocket costs down. Out-of-network coverage is not available except for urgent and emergent care. Approximately 90% of our commercial medical customers are enrolled in medical plans with either ASO or experience rated funding arrangements that allow the corporate client to directly benefit from lower medical costs. The funding arrangements available for our commercial medical and dental health plans are as follows: Funding Solutions: Commercial Chart presents percentage of customers by funding solution as of December 31, 2017. ASO Guaranteed Cost Shared Returns 6% ASO • Plan sponsors self-fund all claims, but may purchase 13% integrated stop loss insurance to limit exposure. • We collect fees from plan sponsors for providing access to our participating provider network and for other services 81% and programs including: claims administration; behavioral health; disease management; utilization management; cost containment; dental; and pharmacy benefit management. 21FEB201815523798 Insured – Experience Rated (‘‘Shared Returns’’ funding suite) • Premium rates are established at the beginning of a policy period and are typically based on prior claim experience of the policyholder. The policyholder receives detailed claim and utilization reporting to understand actual plan costs and help make informed decisions about future benefit plan design. • The policyholder participates, or shares in, favorable claim experience. When claims and expenses are less than the premium charged (an ‘‘experience surplus’’ or ‘‘margin’’), the policyholder may be credited for a portion of this experience surplus/margin. If claims and expenses exceed the premium charged (an ‘‘experience deficit’’), we bear these costs. In certain cases, experience deficits incurred while the policy is in effect are accumulated and may be recovered through future policy year experience surpluses/margins. Insured – Guaranteed Cost (‘‘Fully Insured’’) • Premium rates are established at the beginning of a policy period and, depending on group size, may be based in whole or in part on prior experience of the policyholder or on a pool of similar policyholders. We generally cannot subsequently adjust premiums to reflect actual claim experience until the next annual renewal. • The policyholder does not participate, or share in, actual claim experience. We keep any experience surplus/margin if costs are less than the premium charged (subject to minimum medical loss ratio rebate requirements discussed below) and bear the risk for actual costs in excess of the premium charged. 4 CIGNA CORPORATION - 2017 Form 10-K


  • Page 43

    PART I ITEM 1. Business In most states, individual and group insurance premium rates must be approved by the applicable state regulatory agency (typically department of insurance) and state or federal laws may restrict or limit the use of rating methods. Premium rates for groups and individuals are subject to state review for reasonableness. In addition, the ACA subjects individual and small group policy rate increases above an identified threshold to review by the United States Department of Health and Human Services (‘‘HHS’’) and requires payment of premium refunds on individual and group medical insurance products if minimum medical loss ratio (‘‘MLR’’) requirements are not met. The MLR represents the percentage of premiums used to pay medical claims and expenses for activities that improve the quality of care. In our individual business, premiums may also be adjusted as a result of the government risk adjustment program that takes into account the relative health status of our customers. See the ‘‘Regulation’’ section of this Form 10-K for additional information on the commercial MLR requirements and the risk mitigation programs of the ACA. Government Health Plans Medicare Advantage We offer Medicare Advantage plans in 17 states and the District of Columbia through our Cigna-HealthSpring brand. Under such a plan, Medicare-eligible beneficiaries may receive health care benefits, including prescription drugs, through a managed care health plan such as our coordinated care plans. A significant portion of our Medicare Advantage customers receive medical care from our value based models that focus on developing highly engaged physician networks, aligning payment incentives to improved health outcomes, and using timely and transparent data sharing. We are focused on continuing to expand these models in the future. We receive revenue from the Centers for Medicare and Medicaid Services (‘‘CMS’’) for each plan customer based on customer demographic data and actual customer health risk factors compared to the broader Medicare population. We also may earn additional revenue from CMS related to quality performance measures (known as ‘‘Star Ratings’’). See the ‘‘Executive Overview’’ section of our MD&A beginning on page 35 of this Form 10-K for additional discussion of our Star Ratings. Premiums may be received from customers when our plan premium exceeds the revenue received from CMS. The ACA requires Medicare Advantage and Medicare Part D plans to meet a minimum MLR of 85%. If the MLR for a CMS contract is less than 85%, we are required to pay a rebate to CMS and could be required to make additional payments if the MLR continues to be less than 85% for successive years. Medicare Part D Our Medicare Part D prescription drug program provides a number of plan options, as well as service and information support, to Medicare and Medicaid eligible customers. Our plans are available in all 50 states and the District of Columbia and offer the savings of Medicare combined with the flexibility to provide enhanced benefits and a drug list tailored to individuals’ specific needs. Eligible beneficiaries benefit from broad network access and value-added services intended to help keep them well and save them money. Medicaid We offer Medicaid coverage to low income individuals in select markets in Texas. We also offered Medicaid coverage to low income individuals in select markets in Illinois throughout 2017; however, as of December 31, 2017, all of our Medicaid contracts with the state of Illinois have been terminated. Our Medicaid customers benefit from many of the coordinated care aspects of our Medicare Advantage programs. We receive revenue from the states of Texas and Illinois for our Medicaid only customers. For customers eligible for both Medicare and Medicaid (‘‘dual eligible’’) we receive revenue from both the state and CMS. All revenue is based on customer demographic data and actual customer health risk factors. Similar to Medicare Advantage, there are minimum MLR requirements in Illinois (85% for the dual product and 88% for the Medicaid only product). However, Texas utilizes an experience rebate in an effort to provide better value to consumers and increase transparency. The Texas experience rebate takes into account operating expenses and requires a rebate of dollars to the state as different profitability thresholds are met. Specialty Products and Services Our specialty products and services described below are designed to improve the quality of care, lower cost and help customers achieve better health outcomes. Many of these products can be sold on a standalone basis, but we believe they are most effective when integrated with a Cigna-administered health plan. Our specialty products are focused in the areas of medical, behavioral, pharmacy management, dental and vision. Medical Specialty • Stop Loss. We offer stop loss insurance coverage for ASO clients that provides reimbursement for claims in excess of a predetermined amount for individuals (‘‘specific’’), the entire group (‘‘aggregate’’), or both. • Cost-Containment Service. We administer cost-containment programs on behalf of our clients and customers for health care services and supplies that are covered under health benefit plans. These programs may involve vendors who perform activities designed to control health costs by reducing out-of-network utilization and costs, educating customers regarding the availability of lower cost in-network services, negotiating discounts, reviewing provider bills, and recovering overpayments from other payers or health care providers. We charge fees for providing or arranging for these services. • Consumer Health Engagement. We offer an array of medical management, disease management, and wellness services to customers covered under plans administered by Cigna, or by third-party administrators. Our Medical Management programs include case, specialty and utilization management including a 24-hour nurse information line. Our Health Advocacy programs and services include early intervention in the treatment of chronic conditions and an array of health and wellness coaching. Additionally, we administer incentives to motivate customers to engage in and improve their health. CIGNA CORPORATION - 2017 Form 10-K 5


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    PART I ITEM 1. Business Pharmacy Management We offer prescription drug plans to our commercial and government customers both in conjunction with our medical products and on a standalone basis. With a network of over 69,000 pharmacies, Cigna Pharmacy Management is a comprehensive pharmacy benefits manager (‘‘PBM’’) offering clinical programs and specialty pharmacy solutions. We also offer high quality, efficient, and cost-effective mail order, telephone and on-line pharmaceutical fulfillment services through our home delivery operation. Our medical and pharmacy coverage meets the needs of customers with complex medical conditions requiring specialty pharmaceuticals. These types of medications are covered under the pharmacy or medical benefit depending on whether they are dispensed by a pharmacy to the customer or administered to the customer by a health care professional or facility. Uses of these typically expensive medications often require associated lab work and coordination between the pharmacy and the patient’s medical professionals may be critical in improving clinical outcomes and affordability. Customers with Cigna-administered medical and pharmacy coverage may experience greater continuity of care and affordability, and clients may benefit from integrated reporting and meaningful unit cost discounts on specialty drugs. Behavioral Health We arrange for behavioral health care services for customers through our network of approximately 122,000 participating behavioral health care professionals and 14,000 facilities and clinics. We offer behavioral health care case management services, employee assistance programs (‘‘EAP’’), and work/life programs to employers, government entities and other groups sponsoring health benefit plans. We focus on integrating our programs and services with medical, pharmacy and disability programs to facilitate customized, holistic care. Dental We offer a variety of insured and self-insured dental benefit solutions including dental health maintenance organization plans (‘‘Dental HMO’’) in 37 states, dental preferred provider organization (‘‘Dental PPO’’) plans in 49 states and the District of Columbia, exclusive dental provider organization plans, traditional dental indemnity plans and a dental discount program. Employers and other groups can purchase our products as standalone products or in conjunction with medical products. Additionally, individual customers can purchase Dental PPO plans as standalone products or in conjunction with individual medical policies. Beginning in 2016 Cigna launched a suite of digital enhancements to our web portal and mobile application, for our dental customers to schedule appointments online, compare out-of-pocket costs across multiple dentists, and access information that evaluates the dentist’s professional history, affordability and patient experience. Cigna’s recent acquisition of Brighter, a leader in digital engagement with health care consumers, will accelerate developing and delivering deep end-to-end experiences that further connect our dental consumers with high quality providers. As of December 31, 2017, our dental customers totaled 15.8 million worldwide and approximately 67% are enrolled in plans with funding arrangements that allow clients to directly benefit from lower dental costs. Our U.S. customers access care from one of the largest Dental PPO networks and Dental HMO networks, with approximately 140,600 Dental PPO and 19,900 Dental HMO health care professionals. Vision Cigna Vision offers flexible, cost-effective PPO coverage that includes a range of both in and out-of-network benefits for routine vision services offered in conjunction with our medical and dental product offerings. Our national vision care network, consisting of approximately 89,800 health care providers in over 26,300 locations, includes private practice ophthalmologist and optometrist offices, as well as retail eye care centers. Service and Quality Customer Service For U.S.-based customers, we operate 22 service centers that together in 2017 processed approximately 168 million claims and handled 33 million calls providing our customers service 24 hours a day, 365 days a year. In our international health care business, we have a service model dedicated to the unique needs of our 1.5 million customers around the world. We service them from 12 globally deployed service centers that allow us to provide service 24 hours a day, 365 days a year. Technology Cigna Information Technology supports the Go Deeper, Go Local, Go Beyond strategy by focusing first and foremost on strong foundational technology services and delivering against an aligned business and technology portfolio that creates market differentiation. We target specific innovation in the customer experience, digital capabilities, advanced analytics and artificial intelligence that provide key areas of competitive advantage. Our goal is to continue to focus on targeted technology investments to enable our strategic business objectives. This goal is accomplished by delivering innovative technology that enables more efficient operations, improves process integrity and cyber-protections, builds stronger relationships with our key stakeholders; optimizes our economies of scale; and maximizes flexible payment arrangements, innovative products and services and intelligent analytics to support evidence-based medicine. Through continued execution of these capabilities, we are able to better and more rapidly deliver market-differentiating and innovative solutions. Technology plays an essential role, both as a critical enabler and as a core asset, in Cigna’s drive to be the partner of choice and to deliver a superior experience to numerous stakeholders. To support these goals, our global IT strategy continues to focus on technology, infrastructure and platforms, as well as adopting Agile development methods. Execution across each of these dimensions results in improved delivery, quality and speed, stronger integration, improved transparency and greater optionality. As part of the execution of our global IT strategy, we have launched a growing portfolio of innovative solutions that leverage technologies such as virtual reality, mobile, advanced analytics and machine learning. Utilizing virtual reality technology coupled with biometrics and brain wave analysis, we developed a solution that monitors and 6 CIGNA CORPORATION - 2017 Form 10-K


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    PART I ITEM 1. Business manages the stress level of call center agents. We also have introduced a global mobile application that enables access to a virtual health team as well as personalized health content, internet of things integration and consolidated medical record information. We are leveraging machine learning and analytics to proactively engage customers with our new, integrated customer decision support and service program, One Guide姞. We are also using analytics to address the opioid epidemic. In addition to collaborating with our network of doctors, we leverage our Opioid Likely Overdose Risk Model, which uses machine learning with integrated claims data and analytics to detect opioid use patterns that suggest possible misuse. Innovation is core to the way we do business; we continuously seek opportunities to drive efficiencies and create a superior customer experience through technology. Our business strategy is predicated on providing customers with differentiated, easy to use, seamless and secure products and solutions that leverage analytics and information to meet their increasing expectations. That means we need to anticipate those needs and meet customers where they are. From predicting and preventing chronic diseases, to mining data to reduce payment and claims fraud, to using the data from wearable’s to optimize health, we foresee even more opportunities going forward to use sophisticated artificial intelligence and machine learning techniques. This will allow us to build even better models to answer the complex questions, and will lead to better health care outcomes. Data Analytics Cigna has transformed substantial investments in analytics talent, data infrastructure, and machine learning capabilities over the past several years into a closed loop, self-learning insights system that guides our decision making and executing on our strategy. Our Insights That Matter analytics process helps our business leaders identify the questions that matter most to our customers and partners. We focus our data science experts on answering those questions with innovative methodologies and transform our insights into targeted business actions. Cigna is using advanced analytic capabilities throughout all facets of the business to: • Identify and quantify the financial and clinical cost of discrete health opportunities and insights into how to best engage individual customers (e.g., digital, phone, or physician-based interactions). We convert these insights into a Health Matters Score that is used to connect each customer to the right clinical services and drive better clinical, financial, and quality outcomes. • Enable customized service experiences. In our pharmacy business we are proactively offering our customers value added pharmacy and medical services during inbound customer calls, realizing the value of an integrated medical and pharmacy offering. To maximize impact, we apply our proprietary Customer Segmentation models to tailor customer communications to make interactions more meaningful. • Build a deep understanding of risk adjusted total cost and quality performance metrics at the individual physician level and aggregate market level to develop relative benchmarks. This data is being used to fuel our drive to fee for value physician reimbursements and flexible provider networks. • Leverage advanced analytic models and tools to better identify prospects that best align with Cigna’s mission and value proposition for our client engagement team. Going forward, we view insights as a strategic imperative and will continue to heavily invest in expanding and strengthening our capabilities to meet and exceed our customer and partner expectations. Quality Health Care Our commitment to promoting quality health care to the people we serve is reflected in a variety of activities. Health Improvement through Engaging Providers and Customers Cigna improves health outcomes, reduces health care costs, and delivers a better customer and provider experience by enabling optimized relationships that connect care between customers and providers. We refer to this as our Connected Care strategy. Key aspects of this strategy include engaging customers in their health, collaborating with providers to help them improve their performance, and connecting customers and providers through aligned health goals and incentives and actionable information to enable better decisions and outcomes. Cigna is committed to developing innovative solutions that span the health care delivery system and can be applied to different types of providers. Currently we have numerous collaborative arrangements with our participating health care providers and are actively developing new arrangements to support our Connected Care strategy. The key principles that guide our innovative solutions include: • improving access to care at the local market level; • collaborating with and supporting providers to be successful with value-based care; • leveraging actionable, personalized patient information, enhancing the patient experience; and, • shifting reimbursement incentives to reward quality medical and cost outcomes. We continue to increase our engagement with physicians and hospitals by rapidly developing the types of arrangements discussed below. Over two million medical customers are currently serviced by more than 136,000 health care providers in these types of arrangements. • Cigna Collaborative Care. • Accountable Care Program – we have over 200 collaborative care arrangements with primary care groups built on the patient- centered medical home and accountable care organization (‘‘ACO’’) models. Our arrangements span over 30 states and reach over 2.4 million customers. We are committed to increasing the number of groups over the next several years. Our goal is to reach 280 programs by the end of 2020. CIGNA CORPORATION - 2017 Form 10-K 7


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    PART I ITEM 1. Business • Hospital Quality Program – we have contracts with over 450 hospitals where reimbursements are tied to quality metrics. We expect to grow this number to over 600 hospitals by the end of 2020. • Specialist Programs – we have approximately 150 arrangements with specialist groups in value-based reimbursement arrangements. Our goal is to reach approximately 260 arrangements by the end of 2020. Programs include arrangements with several types of specialist groups around the country, including orthopedics, obstetrics and gynecology, cardiology, gastroenterology, oncology, nephrology, and neurology. Arrangements include care coordination, and episodes of care reimbursements, for meeting cost and quality goals. • Independent Practice Associations are value based physician engagement models in our Cigna-HealthSpring business that allow the physician groups to share financial outcomes with us. The Cigna-HealthSpring clinical model also includes outreach to new and at-risk patients to ensure they are accessing their primary care physician. • CareAllies姞. In 2016, we announced the formation of CareAllies姞; this U.S.-based population health company is focused on helping physicians manage the health of their patients and improve their health outcomes. CareAllies姞 partners with physicians, provider groups and health systems to develop customized solutions that help them meet their goals across all patients and all payers. • Delivery System Alliances. Cigna is collaborating with select health care delivery systems to develop compelling and unique strategic relationships focused on addressing the local market’s unique health care needs. This includes jointly developed products designed to improve the experience of Cigna customers by offering integrated health care and providing access to quality, value-based care in local communities. • Customer Engagement Products – Cigna One Guide姞. Cigna is also delivering a personalized experience to help our customers navigate the complex health care system and make important health care choices. Cigna One Guide姞 provides customers with access to guided consultations via phone, mobile application and ‘‘Click-to-Chat’’ to help with choosing their benefits, building a personal health team of doctors, clinicians and coaches, navigating their health benefits and reducing their health expenses through reward programs. In the international health care business we use the Net Promoter Score (‘‘NPS’’) approach to continually gather insights from customers and health care professionals around the world and to guide how we proactively enhance product and service offerings. Participating Provider Network We provide our customers with an extensive network of participating health care professionals, hospitals, and other facilities, pharmacies and providers of health care services and supplies. In most instances, we contract with them directly; however, in some instances, we contract with third parties for access to their provider networks and care management services. In addition, we have entered into strategic alliances with several regional managed care organizations (e.g., Tufts Health Plan, HealthPartners, Inc., Health Alliance Plan, and MVP Health Plan) to gain access to their provider networks and discounts. We credential physicians, hospitals and other health care professionals in our participating provider networks using quality criteria that meet or exceed the standards of external accreditation or state regulatory agencies, or both. Typically, most health care professionals are re-credentialed every three years. The Cigna Care Network姞 is a benefit-plan design option offered in 74 service areas. The network distinguishes physicians in 21 specialties (3 primary care and 18 other specialties) who participate in our network, based on specific quality and/or cost-efficiency criteria. The benefit design is intended to encourage Cigna customers to consider using a Cigna Care Network姞 physician, affords a lower co-payment or coinsurance for services provided by a physician in this network than if the individual were to select a participating, non-Cigna Care Network姞 physician. LocalPlus姞 is a locally-tailored network of select health care providers and facilities designed to provide cost-effective and quality care. It links multiple local networks across geographic markets to provide consistency for both employers and the customers. LocalPlus姞 was available in 23 markets as of the end of 2017, and will be available in 24 markets by the end of 2018. The Cigna SureFit姞 network is built around a focused, local network of doctors and hospitals, who are rewarded for collaborating and providing quality care. Customers choose a primary care provider (‘‘PCP’’) at enrollment, which helps ensure care is coordinated within the network – creating a better, more affordable customer experience. This creates network efficiencies that result in significant client savings over our Open Access Plus (‘‘OAP’’) product. Traditional and alternative funding options are paired with integrated medical, pharmacy and behavioral health products to further maximize savings. Medical Care and Onsite Services • Cigna Medical Group is a multi-specialty medical group practice that delivers primary care and certain specialty care services through 20 medical facilities and 120 clinicians in Phoenix, Arizona. These health care centers have received the highest accreditation (level 3) from the National Committee for Quality Assurance (‘‘NCQA’’). • LivingWell Health Centers – HealthSpring姞. Medicare Advantage customers may receive care from one of our four free-standing clinics and 13 ‘‘embedded’’ clinics that incorporate the principles and resources of stand-alone clinics while allowing the customer access to their primary care physician. • Cigna Onsite Health provides employer-based onsite or nearby health centers and health and wellness coaches with nearly 60 health centers and 160 health coaches. Care delivery services include acute, episodic care through full primary care services. Additional services include a range of health and wellness and preventive services, pre-packaged generic prescription dispensing, biometrics screenings and health and wellness coaching for diet and nutrition as well as chronic condition management. Cigna Onsite Health also offers virtual health services to extend access to care for both coaching and treatment services. 8 CIGNA CORPORATION - 2017 Form 10-K


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    PART I ITEM 1. Business External Validation We continue to demonstrate our commitment to quality and have a broad scope of quality programs validated through nationally recognized external accreditation organizations. We achieved Health Plan accreditation from the NCQA in 38 of our markets. Additional NCQA recognitions include Full Accreditation for Managed Behavioral Healthcare Organization for Cigna Behavioral Health, Accreditation with Performance Reporting for Wellness & Health Promotion, Accreditation for our Disease Management programs and Physician & Hospital Quality Certification for our provider transparency program. We have Full Accreditation for Health Utilization Management, Case Management, Pharmacy Benefit Management and Specialty Pharmacy from URAC, an independent, nonprofit health care accrediting organization dedicated to promoting health care quality through accreditation, certification and commendation. We participate in the NCQA’s Health Plan Employer Data and Information Set (‘‘HEDIS姞’’) Quality Compass Report, whose Effectiveness of Care measures are a standard set of metrics to evaluate the effectiveness of managed care clinical programs. Markets and Distribution We offer health care and related products and services in the following market segments: % of Medical Customers National Multi-state employers with 5,000 or more U.S.-based, full-time employees. We offer primarily ASO funding solutions in 23% this market segment. Middle Market Employers generally with 250 to 4,999 U.S.-based, full-time employees. This segment also includes single-site employers 53% with more than 5,000 employees and Taft-Hartley plans and other groups. We offer ASO, experience rated and guaranteed cost insured funding solutions in this market segment. Select Employers generally with 51-249 eligible employees. We usually offer ASO with stop loss insurance coverage and 9% guaranteed cost insured funding solutions in this market segment. Individual In 2017, we offered plans in fifteen states. We had plans on public health insurance exchanges in seven states (Colorado, 2% Illinois, Maryland, Missouri, North Carolina, Tennessee and Virginia) and off-exchange in eight states (Arizona, California, Connecticut, Florida, Georgia, New Jersey, South Carolina, and Texas). In 2018, we offer plans in nine states. We have plans on public health insurance exchanges in six states (Colorado, Illinois, Missouri, North Carolina, Tennessee, and Virginia) and off-exchange in three states (Arizona, Florida, and New Jersey). Consistent with the regulations for Individual ACA compliant plans, we offer plans only on a guaranteed cost basis in this market segment. Government Individuals who are post-65 retirees, as well as employer group sponsored pre- and post-65 retirees. We offer Medicare 3% Advantage, Prescription Drug programs, and Medicaid products in this market segment including dual-eligible members who receive both Medicare and Medicaid benefits. International Local and multinational companies, international organizations and governments and their local and globally-mobile 10% employees and dependents working or travelling in more than 190 countries and jurisdictions. We offer guaranteed cost, experience rated insured and ASO funding solutions in this market segment. Cigna Guided Solutions姞 is Cigna’s benefit administration and private exchange solution that targets clients who value fully integrated solutions and focus on engaging employees in their benefit offering. It leverages Cigna’s ability to provide a fully integrated solution with our broad spectrum of products, benefit plans, services, and full suite of funding options focused on improving total cost, health, and productivity. Through Cigna Guided Solutions姞, employers enjoy simplified administration and the convenience of single source purchasing while employees receive more choice via an easy-to-use shopping experience and year round engagement. Together with integrated robust decision-support tools, employees are able to make personalized decisions to select the right benefit offering and get the most value from their plans. In addition, Cigna participates on many third party private exchanges. We actively evaluate private exchange participation opportunities as they emerge in the market, and target our participation to those models that best align with our mission and value proposition. We employ sales representatives to distribute our products and services through insurance brokers and insurance consultants or directly to employers, unions and other groups or individuals. We also employ sales representatives to sell access to our national participating provider network, utilization review services, behavioral health care and pharmacy management services, and employee assistance services directly to insurance companies, HMOs and third party administrators. As of December 31, 2017, our field sales force consisted of over 1,200 sales representatives in 124 field locations. In our Government business, Medicare Advantage enrollment is generally a decision made individually by the customer, and accordingly, sales agents and representatives focus their efforts on in-person contacts with potential enrollees, as well as telephonic and group selling venues. Competition Our business is subject to intense competition and continuing industry consolidation creates an even more competitive business environment. In certain geographic locations, some health care companies may have significant market share positions, but no one competitor dominates the health care market nationally. Given the current economic and political environment, we expect a continuing trend of consolidation across the health care industry supply chain (including insurers, hospitals, pharmaceutical companies, and providers). Competition in the health care market exists both for employers and other groups sponsoring plans and for employees in those instances where the employer offers a choice of products from more than one health care company. Most group insurance policies are subject to annual review by the plan sponsor, who may seek competitive quotations prior to renewal. Since the inception of the Individual Exchange marketplaces many carriers have incurred significant financial losses leading to many exiting the market. With the continued debate regarding the ACA and the health care industry more broadly, it is likely that legislative and regulatory changes to the ACA will occur in the future. CIGNA CORPORATION - 2017 Form 10-K 9


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    PART I ITEM 1. Business The primary competitive factors affecting our business are quality and cost-effectiveness of service and provider networks; effectiveness of medical care management; products that meet the needs of employers and their employees; total cost management; technology; and effectiveness of marketing and sales. Financial strength of the insurer, as indicated by ratings issued by nationally recognized rating agencies, is also a competitive factor. We believe that our health advocacy capabilities, holistic approach to consumer engagement, breadth of product offerings, clinical care and medical management capabilities and array of product funding options are competitive advantages in meeting the diverse needs of our customer base. We also believe that our focus on helping to improve the health, well-being and sense of security of the customers we serve will allow us to differentiate ourselves from our competitors. Our primary competitors in our U.S.-based health care businesses include: • other national insurance and health services companies that provide group health insurance products, including Aetna, Anthem, Humana, Kaiser Permanente and UnitedHealth Group; • not-for-profit managed care organizations, including Blue Cross/Blue Shield plans; • other regional stand-alone managed care and specialty companies, including newer health plans seeking to disrupt in part through technology (e.g. Bright Health and Oscar) • managed care organizations affiliated with major insurance companies and hospitals; and • national managed pharmacy, behavioral health and utilization review services companies. Our primary competitors in the international health care business include U.S.-based insurers such as Aetna, UnitedHealth Group GeoBlue and MetLife; global competitors such as BUPA and Allianz; and local and regional insurers in a range of countries. In addition to our traditional competitors, new sources of competition continue to emerge. These newer competitors are focused on delivering lower cost benefits and services through internet-enabled technology that allows consumers to take a more active role in the management of their health. This can be accomplished through financial incentives, access to enhanced quality medical data and other information sharing. The effective use of our health advocacy, customer insight and physician engagement capabilities, along with decision support tools (some of which are web-based) and enabling technology are critical to success in the health care industry, and we believe our capabilities in these areas will be competitive differentiators. Industry Developments The health insurance marketplace will continue to be shaped by the ACA over the near term. However, Congressional efforts to repeal and replace the ACA, various executive actions of the Trump administration, and the repeal of the individual mandate as part of the recently signed U.S. tax reform legislation make the future of the ACA uncertain. See the ‘‘Regulation’’ and ‘‘Risk Factors’’ sections of the Form 10-K for additional discussion about these developments. Global Supplemental Benefits How We Win • Leveraging deep consumer insights to drive product innovation • Targeting the growing middle class and seniors populations globally • Easy to understand, affordable products designed to fill gaps in either private or public coverage • Leading innovative, direct to consumer distribution capabilities • Locally licensed and managed by strong, locally developed talent Products Key Geographies and Distribution and Services Growth Markets Channels • Hospitalization • Asia: South Korea, China, • Telemarketing • Dental Taiwan, Hong Kong, Indonesia • Home Shopping & Direct • Medicare Supplement and India Response Television • Critical Illness • Turkey • Independent agents • Personal Accident • United States • Bancassurance • Term Life • Internet • Variable Universal Life • Individual Private Medical Insurance We continue to distinguish ourselves in the global supplemental health, life and accident businesses through our differentiated direct-to-consumer distribution, customer insights and marketing capabilities. We enter new markets when the opportunity to bring our product and health solutions is attractive. Over the past several years, we have continued to extend our product offerings and geographic reach. 10 CIGNA CORPORATION - 2017 Form 10-K


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    PART I ITEM 1. Business Principal Products and Services Supplemental Health, Life and Accident Insurance Supplemental health, life and accident insurance products generally provide simple, affordable coverage of risks for the health and financial security of individuals. Supplemental health products provide specified payments for a variety of health risks and include personal accident, accidental death, critical illness, hospitalization, travel, dental, cancer and other dread disease coverages. We also offer customers individual private medical insurance, term and variable universal life insurance and certain savings products. Medicare Supplement Plans We offer individual Medicare Supplement plans that provide retirees with federally standardized Medigap-style plans. Retirees may select among the various plans with specific plan options to meet their unique needs and may visit, without the need for a referral, any health care professional or facility that accepts Medicare throughout the United States. Pricing and Reinsurance Premium rates for our global supplemental benefits products are based on assumptions about mortality, morbidity, customer acquisition and retention, customer demographics, expenses and target profit margins, as well as interest rates. For variable universal life insurance products, fees consist of mortality, administrative, asset management and surrender charges assessed against the contractholder’s fund balance. Mortality charges on variable universal life may be adjusted prospectively to reflect expected mortality experience. Most contracts permit premium rate changes at least annually. A global approach to underwriting risk management allows each local business to underwrite and accept risk within specified limits. Retentions are centrally managed through cost effective use of external reinsurance to limit our liability on per life, per risk and per event (catastrophe) bases. Markets and Distribution Our supplemental health, life and accident insurance products sold in foreign countries are generally marketed through distribution partners with whom the individual insured has an affinity relationship. These products are sold primarily through direct marketing channels, such as outbound telemarketing, and in-branch bancassurance (when we partner with a bank and use the bank’s sales channels to sell our insurance products). Marketing campaigns are conducted through these channels under a variety of arrangements with affinity partners, including banks, credit card companies and other financial and non-financial institutions. We also market directly to consumers via direct response television and the Internet. In certain countries, we market our products through captive and third party brokers and agents. Our Medicare supplement product line is distributed primarily through independent agents and telemarketing directly to the consumer. South Korea represents our single largest geographic market for Global Supplemental Benefits. For information on this concentration of risk for the Global Supplemental Benefits segment’s business in South Korea, see ‘‘Other Items Affecting Results of Global Supplemental Benefits’’ in the Global Supplemental Benefits section of the MD&A beginning on page 49 of this Form 10-K. For our supplemental health, life and accident insurance products sold in foreign markets we are increasingly exposed to geopolitical, currency and other risks inherent in foreign operations. Also, given that we bill and collect a significant portion of premiums through credit cards, a substantial contraction in consumer credit could impact our ability to retain existing policies and sell new policies. A decline in customer retention would result in both a reduction of revenue and an acceleration of the amortization of acquisition-related costs. Changes in regulation for permitted distribution channels also may impact our business or results. Competition We expect that the competitive environment for global supplemental benefits will continue to intensify as U.S., Europe and other regionally-based insurance and financial services providers more aggressively pursue expansion opportunities across geographies, especially in Asia. We believe competitive factors will include branding, product and distribution innovation and differentiation, efficient management of marketing processes and costs, commission levels paid to distribution partners, the quality of claims, local network coverage, customer services and talent acquisition and retention. Additionally, in most overseas markets, perception of financial strength also will likely continue to be an important competitive factor. Our competitors are primarily locally-based insurance companies, including insurance subsidiaries of banks primarily in Asia and Europe and multi-national companies. Insurance company competitors in this segment primarily focus on traditional product distribution through captive agents, with direct marketing being secondary channels. We estimate that we have less than 3% market share of the total insurance premiums in any given market in which we operate. In the Medicare supplement business, the principal competitive factors are underwriting and pricing, relative operating efficiency, broker relations and the quality of claims and customer service. Our primary competitors in this business include U.S.-based health insurance companies. Industry Developments Pressure on social health care systems, a rapidly aging population and increased wealth and education in developing insurance markets are leading to higher demand for products providing health insurance and financial security. In the supplemental health, life and accident business, direct marketing channels continue to grow and attract new competitors with industry consolidation among financial institutions and other affinity partners. Data privacy regulation has tightened in all markets in the wake of data privacy news scandals, impacting affinity partner and customer attitudes toward direct marketing of insurance and other financial services. CIGNA CORPORATION - 2017 Form 10-K 11


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    PART I ITEM 1. Business Most of the businesses in this segment operate through foreign subsidiaries. We continue to maintain a capital management strategy to retain overseas a significant portion of the earnings from these foreign operations. These undistributed earnings are deployed outside of the United States in support of the liquidity and capital requirements of our foreign operations. As a result of U.S. tax reform legislation enacted in December 2017, we recorded additional U.S. taxes of $88 million related to the Company’s accumulated unremitted foreign earnings. Most of these taxes were incurred in the Global Supplemental Benefits segment. See the Management’s Discussion and Analysis section of this Form 10-K for additional discussion of our capital management strategy and the impact of tax reform. Group Disability and Life How We Win • Disability absence management model that reduces overall costs to employers • Integration of disability products with medical and specialty offerings, promoting health and wellness and optimizing employee productivity • Complementary portfolio of group disability, life and accident offerings • Disciplined underwriting, pricing and investment strategies supporting profitable long-term growth Products and Services Distribution Channels • Short-term disability • Personal and voluntary accident • Insurance brokers and consultants • Long-term disability • Business travel accident • Sales representatives • Leave administration • Critical illness, Accidental injury and Hospital indemnity • Paid family leave Customer Segments • Basic-term life • Voluntary term life • National • Group universal life • Middle Market • Select Our Group Disability and Life business markets its products and services in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Canada. Products and Services Group Disability Long-term and short-term group disability insurance products generally provide a fixed level of income to replace a portion of wages lost because of disability. Group disability coverage is typically employer-paid or a combination of employer and employee-paid, but also may include coverage paid for entirely by employees. As part of our group disability insurance products, we also provide assistance to employees in returning to work and assistance to employers with resources to manage the cost of employee disability. We are an industry leader in helping employees return to work quickly, resulting in higher productivity and lower cost for employers and a better quality of life for their employees. We seek to integrate the administration of our disability insurance products with other disability benefit programs, behavioral programs, medical programs, social security advocacy and administration of federal Family and Medical Leave Act (‘‘FMLA’’), State Leave Laws and other leave of absence programs. We believe this integration provides our customers with increased efficiency and effectiveness in disability claims management, enhances productivity and reduces overall costs to employers. This integration also provides early insight into employees at risk for future disability claims. Coordinating the administration of these disability programs with medical programs offered by our health care business provides enhanced opportunities to influence outcomes, reduce the cost of both medical and disability events and improve the return to work rate. The benefits of this integrated approach also include: • using information from the health care and disability databases to help identify, treat and manage disabilities before they become longer in duration or chronic and more costly; and • proactively reaching out to assist employees suffering from a mental health or chronic condition, either as a primary condition or as a result of another condition. Our disability products and services are offered on a fully insured, experience-rated and ASO basis, although most are fully insured. As measured by 2017 premiums and fees, disability constituted 51% of this segment’s business. Approximately 15,400 disability insurance policies covering approximately 8.8 million lives were in force as of December 31, 2017. Group Life Insurance Group life insurance products offered include term life and universal life. Group term life insurance may be employer-paid basic life insurance, employee-paid supplemental life insurance or a combination thereof. Group universal life insurance is an employee-paid, voluntary life insurance product in which the owner may accumulate a cash value. The cash value earns interest at rates declared from time to time, subject to a minimum guaranteed contracted rate, and may be borrowed, withdrawn, or, within certain limits, used to fund future life insurance coverage. 12 CIGNA CORPORATION - 2017 Form 10-K

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