What changed in this filing

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Item 1. Financial Statements

2022-05-06 compared with 2021-11-04 · 327 added, 441 removed, 757 unchanged (50% of the section changed)

2 unchanged sentences

Consolidated Statements of Income

Unaudited Unaudited

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In millions, except per share amounts) 2022 2021

25 unchanged sentences

Consolidated Statements of Comprehensive Income

Unaudited Unaudited

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In millions) 2022 2021

1 unchanged sentence

Other comprehensive income (loss), net of tax

Net unrealized appreciation (depreciation) on securities and derivatives 32 120 ( 119 ) 401

Net unrealized (depreciation) appreciation on securities and derivatives ( 560 ) ( 273 )

Net translation gains (losses) on foreign currencies ( 63 ) ( 119 )

Postretirement benefits liability adjustment 13 18

Other comprehensive income (loss), net of tax ( 77 ) 243 ( 298 ) 390

Other comprehensive (loss), net of tax ( 610 ) ( 374 )

Total comprehensive income 588 797

Comprehensive income (loss) attributable to noncontrolling interests

Net income attributable to redeemable noncontrolling interest 4 4 12 12

Net income attributable to redeemable noncontrolling interests 3 5

Net income attributable to other noncontrolling interests 12 5

Other comprehensive (loss) attributable to redeemable noncontrolling interest ( 1 ) ( 4 ) ( 6 ) ( 10 )

Other comprehensive (loss) attributable to redeemable noncontrolling interests ( 2 ) ( 4 )

Total comprehensive income attributable to noncontrolling interests 13 6

3 unchanged sentences

Consolidated Balance Sheets

September 30, As of

March 31, As of

(In millions) 2022 2021

4 unchanged sentences

Other current assets 1,042 1,283

Assets of businesses held for sale 9,693 10,057

Total current assets 35,393 36,134

13 unchanged sentences

Short-term debt 2,173 2,545

Liabilities of businesses held for sale 6,116 6,423

Total current liabilities 43,662 43,572

18 unchanged sentences

(1) Par value per share, $ 0.01 ;

shares issued, 394 million as of September 30, 2021 and 390 million as of December 31, 2020;

shares issued, 396 million as of March 31, 2022 and 394 million as of December 31, 2021;

authorized shares, 600 million.

2 unchanged sentences

Consolidated Statements of Changes in Total Equity

Three Months Ended September 30, 2021

(In millions) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Retained Earnings Treasury Stock Shareholders’ Equity Other Non- controlling Interests Total Equity Redeemable Noncontrolling Interests

Balance at June 30, 2021 $ 4 $ 29,403 $ ( 1,077 ) $ 30,513 $ ( 10,134 ) $ 48,709 $ 7 $ 48,716 $ 51

Effects of issuing stock for employee benefits plans 76 ( 1 ) 75 75

Other comprehensive (loss) ( 76 ) ( 76 ) ( 76 ) ( 1 )

Net income 1,621 1,621 10 1,631 4

Common dividends declared (per share:

( 331 ) ( 331 ) ( 331 )

Repurchase of common stock ( 400 ) ( 2,181 ) ( 2,581 ) ( 2,581 )

Other transactions impacting noncontrolling interests ( 2 ) ( 2 ) ( 5 ) ( 7 ) 2

Balance at September 30, 2021 $ 4 $ 29,077 $ ( 1,153 ) $ 31,803 $ ( 12,316 ) $ 47,415 $ 12 $ 47,427 $ 56

Three Months Ended September 30, 2020

(In millions) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Retained Earnings Treasury Stock Shareholders’ Equity Other Non- controlling Interests Total

Equity Redeemable Noncontrolling Interests

Balance at June 30, 2020 $ 4 $ 28,699 $ ( 788 ) $ 23,052 $ ( 3,601 ) $ 47,366 $ 5 $ 47,371 $ 34

Effect of issuing stock for employee benefit plans 78 ( 2 ) 76 76

Other comprehensive income (loss) 247 247 247 ( 4 )

Net income 1,388 1,388 6 1,394 4

Repurchase of common stock ( 1,045 ) ( 1,045 ) ( 1,045 )

Other transactions impacting noncontrolling interests ( 4 ) ( 4 ) 25

Balance at September 30, 2020 $ 4 $ 28,777 $ ( 541 ) $ 24,440 $ ( 4,648 ) $ 48,032 $ 7 $ 48,039 $ 59

The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.

Cigna Corporation

Consolidated Statements of Changes in Total Equity

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

(In millions) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Retained Earnings Treasury Stock Shareholders’ Equity Other Non- controlling Interests Total

8 unchanged sentences

Other transactions impacting noncontrolling interests — — ( 8 ) ( 8 ) —

Balance at September 30, 2021 $ 4 $ 29,077 $ ( 1,153 ) $ 31,803 $ ( 12,316 ) $ 47,415 $ 12 $ 47,427 $ 56

Nine Months Ended September 30, 2020

Balance at March 31, 2022 $ 4 $ 29,736 $ ( 1,492 ) $ 33,420 $ ( 15,581 ) $ 46,087 $ 22 $ 46,109 $ 55

Three Months Ended March 31, 2021

(In millions) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Retained Earnings Treasury Stock Shareholders’ Equity Other Non- controlling Interests Total

1 unchanged sentence

Balance at December 31, 2020 $ 4 $ 28,975 $ ( 861 ) $ 28,575 $ ( 6,372 ) $ 50,321 $ 7 $ 50,328 $ 58

Cumulative effect of adopting new credit loss guidance (ASU 2016-13)

( 30 ) ( 30 ) ( 30 )

Effect of issuing stock for employee benefit plans 279 ( 87 ) 192 192

Other comprehensive income (loss) 400 400 400 ( 10 )

Other comprehensive (loss) ( 370 ) ( 370 ) ( 370 ) ( 4 )

Net income 1,161 1,161 5 1,166 5

3 unchanged sentences

Other transactions impacting noncontrolling interests ( 6 ) ( 6 ) —

Balance at September 30, 2020 $ 4 $ 28,777 $ ( 541 ) $ 24,440 $ ( 4,648 ) $ 48,032 $ 7 $ 48,039 $ 59

Balance at March 31, 2021 $ 4 $ 29,254 $ ( 1,231 ) $ 29,389 $ ( 9,267 ) $ 48,149 $ 6 $ 48,155 $ 59

The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2021

Three Months Ended March 31,

(In millions) 2022 2021

28 unchanged sentences

Property and equipment purchases, net ( 288 ) ( 242 )

Acquisitions, net of cash acquired ( 1,836 ) ( 135 )

Divestiture, net of cash sold ( 57 ) —

5 unchanged sentences

Net change in short-term debt ( 463 ) ( 1,030 )

Net proceeds on issuance of term loan — 1,398

Payments for debt extinguishment — ( 126 )

7 unchanged sentences

Effect of foreign currency rate changes on cash, cash equivalents and restricted cash ( 23 ) ( 26 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 6,705 ) 793

Net (decrease) in cash, cash equivalents and restricted cash ( 488 ) ( 3,701 )

Cash, cash equivalents and restricted cash January 1, (1)

Cash, cash equivalents and restricted cash, September 30,

Cash reclassified to assets of business held for sale — ( 798 )

Cash, cash equivalents and restricted cash September 30, per Consolidated Balance Sheets (2)

Cash, cash equivalents and restricted cash, March 31,

Cash and cash equivalents reclassified to Assets of businesses held for sale

Cash, cash equivalents and restricted cash March 31, per Consolidated Balance Sheets (2)

$ 4,469 $ 6,544

2 unchanged sentences

Interest paid $ 308 $ 331

(1) Includes $ 743 million reported in Assets of business held for sale as of January 1, 2020.

(2) Restricted cash and cash equivalents were reported in other long-term investments as of September 30, 2021, December 31, 2020 and September 30, 2020.

Restricted cash and cash equivalents were reported in other long-term investments and other assets as of December 31, 2019.

(1) Includes $ 425 million reported in Assets of businesses held for sale as of January 1, 2022.

(2) Restricted cash and cash equivalents were reported in Other long-term investments as of March 31, 2022 and March 31, 2021.

The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.

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Mergers , Acqui sitions and Divestitures

Assets and Liabilities of Businesses Held for Sale

Earnings Per Share

C ommon and Preferred S tock

I NSURANCE I NFORMATION

4 unchanged sentences

P ROPERTY , L EASES AND O THER A SSET B ALANCES

O rganizational Efficiency P lan

C OMPLIANCE , R EGULATION AND C ONTINGENCIES

3 unchanged sentences

Note 1 – Description of Business

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 with a mission of helping those we serve improve their health, well-being and peace of mind by making health care simple, affordable and predictable.

Our subsidiaries offer a differentiated set of pharmacy, medical, dental and related products and services.

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 with a mission of helping those we serve improve their health, well-being and peace of mind by making health care affordable, predictable and simple.

Our subsidiaries offer a differentiated set of pharmacy, medical, behavioral, dental and supplemental products and services.

The majority of these products are offered through employers and other groups such as governmental and non-governmental organizations, unions and associations.

Cigna also offers commercial health and dental insurance, Medicare and Medicaid products and health, life and accident insurance coverages to individuals in the United States and selected international markets.

Cigna also offers commercial health and dental insurance and Medicare products to individuals in the United States and selected international markets.

In addition to these ongoing operations, Cigna also has certain run-off operations.

The Company provides details of its reporting segments and recent changes below:

In connection with the sale of the U.S.

Group Disability and Life business on December 31, 2020, the remainder of our operations previously referred to as "Group Disability and Other" in our 2020 Form 10-K is now referred to as "Other Operations".

There were no changes to the underlying business included in this category.

Our business that offers group voluntary products and services was not sold to New York Life Insurance Company ("New York Life") and results of this business are reported in the U.S.

Medical segment.

Evernorth includes a broad range of coordinated and point solution health services capabilities, as well as those from partners across the health care system, in pharmacy solutions, benefits management solutions, care solutions and intelligence solutions, which are provided to health plans, employers, government organizations and health care providers.

Medical includes U.S.

Commercial and U.S.

Government businesses that provide comprehensive medical and coordinated solutions to clients and customers.

Commercial products and services include medical, pharmacy, behavioral health, dental, vision, health advocacy programs and other products and services for insured and administrative services only ("ASO") clients.

Government solutions include Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors, Medicaid plans and individual health insurance plans both on and off the public exchanges.

International Markets includes supplemental health, life and accident insurance products and health care coverage in our international markets, as well as health care benefits for globally mobile employees of multinational organizations.

Cigna entered into a definitive agreement in October 2021 to sell its life, accident and supplemental benefits businesses in seven countries to Chubb INA Holdings, Inc.

("Chubb") for $ 5.75 billion cash.

Subject to applicable regulatory approvals and customary closing conditions, we expect to complete the sale of our life, accident and supplemental benefits businesses in Hong Kong, Indonesia, New Zealand, South Korea, Taiwan, Thailand and our interest in a joint venture in Turkey in 2022.

The remainder of our business operations are reported in Other Operations, consisting of the following:

• Group Disability and Life .

Prior to the sale of the U.S.

Group Disability and Life business on December 31, 2020, this segment provided group long-term and short-term disability, group life, accident, voluntary and specialty insurance products and related services.

Details of the Company's reporting segments and recent changes are provided below:

We entered into a definitive agreement in October 2021 to sell our life, accident and supplemental benefits businesses in several countries to Chubb INA Holdings, Inc.

As of March 31, 2022, we now expect to sell our life, accident and supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) to Chubb for $ 5.72 billion in cash (the "Chubb Transaction");

we no longer expect to sell our interest in a joint venture in Turkey as part of the Chubb Transaction.

See Note 5 for further information on the classification of these businesses as held for sale.

In connection with the pending Chubb Transaction, we revised our business reporting structure.

As such, we adjusted our segment reporting effective in the fourth quarter of 2021 and segment results for the three months ended March 31, 2021 have been restated to conform to the new segment presentation (see Note 19).

A full description of our segments follows:

Evernorth includes a broad range of coordinated and point solution health services and capabilities, as well as those from partners across the health care system, in pharmacy solutions, benefits management solutions, care delivery and care management solutions and intelligence solutions, which are provided to health plans, employers, government organizations and health care providers.

Cigna Healthcare includes U.S.

Commercial, U.S.

Government and International Health operating segments that provide comprehensive medical and coordinated solutions to clients and customers.

Commercial products and services include medical, pharmacy, behavioral health, dental, vision, health advocacy programs and other products and services for insured and self-insured customers.

Government solutions include Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors and individual health insurance plans both on and off the public exchanges.

International Health solutions include health care coverage in our international markets, as well as health care benefits for globally mobile individuals and employees of multinational organizations.

Other Operations contains the remainder of our business operations, consisting of the following:

• Ongoing business:

• Corporate-Owned Life Insurance ("COLI") offers permanent insurance contracts sold to corporations to provide coverage on the lives of certain employees for the purpose of financing employer-paid future benefit obligations.

• Our interest in a joint venture in Turkey.

• Exiting businesses:

• International Life, Accident and Supplemental Benefits Businesses in six countries to be sold pursuant to the Chubb Transaction.

• Run-off businesses:

1 unchanged sentence

predominantly comprised of guaranteed minimum death benefit ("GMDB") and guaranteed minimum income benefit ("GMIB") business effectively exited through reinsurance with Berkshire Hathaway Life Insurance Company of Nebraska ("Berkshire") in 2013.

• Settlement Annuity business in run-off.

• Settlement Annuity and other businesses in run-off.

• Individual Life Insurance and Annuity and Retirement Benefits businesses:

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Recent Accounting Pronouncements

The Company's 2020 Form 10-K includes discussion of significant recent accounting pronouncements that either have impacted our financial statements or may impact them in the future.

There have been no updates to accounting guidance not yet adopted or recently issued accounting pronouncements that have occurred since the Company filed its 2020 Form 10-K that would have a material impact to our financial statements.

There were no new accounting standards adopted as of September 30, 2021 that had a material impact to our financial statements.

There were no new accounting standards adopted as of March 31, 2022 that had a material impact on our financial statements.

There are no accounting pronouncements not yet adopted, with the exception of Accounting Standards Update 2018-12, Targeted Improvements to the Accounting for Long-Duration Insurance Contracts ("LDTI") that are expected to impact Cigna's operations or our financial statements.

Refer to the Company's 2021 Form 10-K for discussion of the LDTI standard and related expected effects to Cigna.

We continue to make progress on our LDTI implementation plan and are on track for the January 1, 2023 adoption date.

Note 3 – Accounts Receivable, Net

The following amounts were included within Accounts receivable, net:

(In millions) September 30, 2021 December 31, 2020

(In millions) March 31, 2022 December 31, 2021

Noninsurance customer receivables $ 7,200 $ 6,274

Pharmaceutical manufacturers receivable 6,526 4,676

Pharmaceutical manufacturers receivables 5,805 5,463

Insurance customer receivables 2,647 2,932

1 unchanged sentence

Total 16,051 15,125

These receivables are reported net of our allowances of $ 1.5 billion as of September 30, 2021 and $ 1.2 billion as of December 31, 2020.

Accounts receivable, net classified as Assets of businesses held for sale ( 48 ) ( 54 )

Accounts receivable, net per Consolidated Balance Sheets $ 16,003 $ 15,071

These receivables are reported net of our allowances of $ 1.5 billion as of March 31, 2022 and $ 1.4 billion as of December 31, 2021.

These allowances include contractual allowances for certain rebates receivable with pharmaceutical manufacturers and certain receivables from third-party payors, discounts and claims adjustments issued to customers in the form of client credits, an allowance for current expected credit losses and other non-credit adjustments.

The Company's allowance for current expected credit losses was $ 57 million as of September 30, 2021 and $ 65 million as of December 31, 2020.

The Company's allowance for current expected credit losses was $ 65 million as of March 31, 2022 and $ 60 million as of December 31, 2021.

Note 4 – Mergers, Acquisitions and Divestitures

3 unchanged sentences

Combined with Cigna's previously held equity investment, Cigna now owns 100 % of MDLIVE.

The acquisition of MDLIVE will enable Cigna's Evernorth segment to continue expanding access to virtual care and delivering a more affordable, convenient and connected care experience for consumers.

The purchase price of $ 2.0 billion consisted of cash consideration.

In accordance with GAAP, the total consideration transferred has been allocated to the tangible and intangible net assets acquired based on management's preliminary estimates of their fair values and may change as additional information becomes available over the next several months.

During the three months ended September 30, 2021, the Company made immaterial measurement period adjustments to the purchase price allocation.

The estimated fair values of assets acquired and liabilities assumed as of the closing date were as follows:

(In millions)

Goodwill $ 1,438

Acquired intangible assets 627

Tangible assets acquired net of liabilities assumed 17

Total consideration transferred 2,082

Fair value to Cigna's previously held equity interest ( 55 )

Total purchase price $ 2,027

Most of the goodwill is assigned to the Evernorth segment ($ 1.3 billion).

Goodwill is not deductible for federal income tax purposes.

The acquired intangible assets primarily consist of customer relationships ($ 577 million) as well as internal-use software, provider networks and a trade name.

The fair value of the customer relationships and the amortization period were determined using an income approach that relies heavily on projected future net cash flows including key assumptions for customer attrition, margins and discount rates.

The customer relationship intangible asset is amortized over a period of 17 years in a pattern that reflects when Cigna expects to receive the benefits of the related cash flows.

The Company's 2021 Form 10-K includes detailed disclosures of merger consideration, purchase price allocation and intangible assets identified in this transaction.

In accordance with GAAP, the total consideration transferred has been allocated to the tangible and intangible net assets acquired based on management's estimates of their fair values and is now finalized as of March 31, 2022.

For the three months ended March 31, 2022, there were immaterial changes to the purchase price allocation.

The results of MDLIVE have been included in the Company's Consolidated Financial Statements from the date of the acquisition.

Revenues from MDLIVE and their results of operations were not material to Cigna's consolidated results of operations for the three or nine months ended September 30, 2021.

The pro forma effects of this acquisition for current and prior periods were not material to our consolidated results of operations.

Divestiture of U.S.

Group Disability and Life business

On December 31, 2020, Cigna completed the sale of its U.S.

Group Disability and Life business to New York Life Insurance Company for cash proceeds of $ 6.2 billion.

The Company recognized a gain of $ 4.2 billion pre-tax ($ 3.2 billion after-tax), which included recognition of previously unrealized capital gains on investments sold.

Revenues from MDLIVE and their results of operations were not material to Cigna's consolidated results of operations for the three months ended March 31, 2022.

The pro forma effects of this acquisition for prior periods were not material to our consolidated results of operations.

Integration and Transaction-related Costs

In the first nine months of 2021, the Company incurred costs related to the acquisition of MDLIVE, the terminated merger with Anthem, Inc.

(“Anthem”) and the sale of the U.S.

Group Disability and Life business.

In the first nine months of 2020, the Company incurred costs related to the acquisition and integration of Express Scripts Holding Company ("Express Scripts"), the terminated merger with Anthem, the sale of the U.S.

Group Disability and Life insurance business and other transactions.

These costs were $ 13 million pre-tax ($( 35 ) million after-tax) for the three months and $ 58 million pre-tax ($ 1 million after-tax) for the nine months ended September 30, 2021, compared with $ 112 million pre-tax ($ 83 million after-tax) for the three months and $ 339 million pre-tax ($ 256 million after-tax) for the nine months ended September 30, 2020.

The Company incurred costs related to the acquisition of MDLIVE, the sale of the U.S.

Group Disability and Life business and the terminated merger with Anthem, Inc.

In the first three months of 2022, the Company also incurred costs related to the pending Chubb Transaction (see Note 5 for further information on assets and liabilities of businesses held for sale).

These costs were $ 52 million pre-tax ($ 37 million after-tax) for the three months ended March 31, 2022 and $ 29 million pre-tax ($ 22 million after-tax) for the three months ended March 31, 2021.

These costs consisted primarily of certain projects to integrate or separate the Company's systems, products and services, fees for legal, advisory and other professional services and certain employment-related costs.

After-tax costs for the three and nine months ended September 30, 2021 included a tax benefit from the resolution of a tax matter related to the sold Group Disability and Life business.

Note 5 – Assets and Liabilities of Businesses Held for Sale

We entered into a definitive agreement in October 2021 to sell our life, accident and supplemental benefits businesses in several countries to Chubb.

Subject to applicable regulatory approvals and customary closing conditions, we expect to complete the sale of these businesses in the second quarter of 2022.

The Company has aggregated and classified the assets and liabilities of these businesses as held for sale in our Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021.

The assets and liabilities of our interest in a joint venture in Turkey were classified as held for sale in our Consolidated Balance Sheet as of December 31, 2021;

however, we no longer expect to sell this business to Chubb and the assets and liabilities are no longer classified as held for sale.

The assets and liabilities of businesses held for sale were as follows:

(In millions) March 31, 2022 December 31, 2021

Cash and cash equivalents $ 591 $ 406

Investments 4,771 5,109

Deferred policy acquisition costs 2,717 2,755

Separate account assets 718 878

Goodwill, other intangible assets and all other assets 896 909

Total assets of businesses held for sale 9,693 10,057

Insurance and contractholder liabilities 4,562 4,644

Accounts payable, accrued expenses and other liabilities 436 452

Deferred tax liabilities, net 400 449

Separate account liabilities 718 878

Total liabilities of businesses held for sale $ 6,116 $ 6,423

The held for sale businesses reported Gross unrealized (depreciation) appreciation on securities and derivatives of $( 33 ) million and $ 137 million and Gross cumulative translation losses on foreign currencies of $ 160 million and $ 209 million on our Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, respectively.

Note 6 – Earnings Per Share ("EPS")

1 unchanged sentence

Three Months Ended

September 30, 2021 September 30, 2020

(Shares in thousands, dollars in millions, except per share amounts) Basic Effect of

Dilution Diluted Basic Effect of

Dilution Diluted

Shareholders’ net income $ 1,621 $ 1,621 $ 1,388 $ 1,388

Weighted average 335,166 335,166 364,427 364,427

Common stock equivalents 2,413 2,413 2,763 2,763

Total shares 335,166 2,413 337,579 364,427 2,763 367,190

EPS $ 4.84 $ ( 0.04 ) $ 4.80 $ 3.81 $ ( 0.03 ) $ 3.78

Nine Months Ended

September 30, 2021 September 30, 2020

March 31, 2022 March 31, 2021

(Shares in thousands, dollars in millions, except per share amounts) Basic Effect of

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The following outstanding employee stock options were not included in the computation of diluted earnings per share because their effect was anti-dilutive:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In millions) 2022 2021

Anti-dilutive options 2.8 1.5

The Company held approximately 62.6 million shares of common stock in treasury at September 30, 2021, 35.5 million shares as of December 31, 2020 and 26.7 million shares as of September 30, 2020.

On August 23, 2021, as part of our existing share repurchase program, we entered into separate accelerated share repurchase agreements (“ASR agreements”) with Morgan Stanley & Co.

LLC and JP Morgan Chase Bank, N.A.

(collectively, the “Counterparties”) to repurchase $ 2.0 billion of common stock in aggregate.

On August 24, 2021, in accordance with the ASR agreements we remitted $ 2.0 billion to the Counterparties and received an initial delivery of 7.7 million shares of our common stock.

The final number of shares to be received under the ASR agreements will be determined based on the daily volume-weighted average share price of our common stock over the term of the agreements, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements.

We expect final settlement under the ASR agreements to occur in the fourth quarter of 2021.

At final settlement, we may be entitled to receive additional shares of our common stock from the Counterparties or we may be required to make a payment.

If we are obligated to make a payment, we may elect to satisfy such obligation in cash or shares of our common stock.

We recorded the payments to the Counterparties as a reduction to stockholders’ equity, consisting of a $ 1.6 billion increase in treasury stock, which reflects the value of the initial 7.7 million shares received upon initial settlement, and a $ 400 million decrease in capital in excess of par value or Additional paid-in capital, which reflects the value of the stock held back by the Counterparties pending final settlement of the agreements.

The $ 400 million recorded in Additional paid-in capital will be reclassified to treasury stock upon settlement of the ASR agreements.

The initial delivery of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted net income per share on the effective date of the ASR agreements.

The Company held approximately 77.3 million shares of common stock in treasury at March 31, 2022, 71.2 million shares as of December 31, 2021 and 48.7 million shares as of March 31, 2021.

Note 7 – Debt

The outstanding amounts of debt and finance leases were as follows:

(In millions) September 30, 2021 December 31, 2020

(In millions) March 31, 2022 December 31, 2021

Short-term debt

Commercial paper $ 1,570 $ 2,027

$ 500 million, 3.05 % Notes due 11/2022

$ 1,000 million, Floating Rate Notes due 9/2021

$ 17 million, 8.3 % Notes due 1/2023

Commercial paper 2,680 1,030

$ 63 million, 7.65 % Notes due 3/2023

Other, including finance leases 27 23

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$ 63 million, 7.65 % Notes due 2023

$ 500 million, 3.05 % Notes due 2022

$ 17 million, 8.3 % Notes due 2023

$ 63 million, 7.65 % Notes due 2023

$ 700 million, Floating Rate Notes due 2023

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See Note 11 for further information about the Company's interest rate risk management and these derivative instruments.

Debt Issuance and Redemption.

In order to decrease future interest expense, mitigate future refinancing risk and raise proceeds for general corporate purposes, the Company entered into the following transactions during the nine months ended September 30, 2021:

• Debt issuance:

On March 3, 2021, the Company issued $ 4.3 billion of new senior notes.

The proceeds of this issuance were mainly used to redeem outstanding debt securities.

The remaining proceeds are available for general corporate purposes.

Interest on this debt is paid semi-annually.

Principal Maturity Date Interest Rate Net Proceeds

$ 500 million March 15, 2024 0.613 % $ 499 million

$ 800 million March 15, 2026 1.250 % $ 797 million

$ 1,500 million March 15, 2031 2.375 % $ 1,492 million

$ 1,500 million March 15, 2051 3.400 % $ 1,479 million

• Debt redemption:

During the first nine months of 2021, the Company completed the redemption of a total of $ 4.5 billion in aggregate principal amount of certain of its outstanding debt securities.

The Company recorded a pre-tax loss of $ 141 million ($ 110 million after-tax), consisting primarily of premium payments.

Revolving Credit Agreements.

Our revolving credit agreements provide us with the ability to borrow amounts for general corporate purposes, including for the purpose of providing liquidity support if necessary under our commercial paper program discussed below.

As of September 30, 2021, there were no outstanding balances under these revolving credit agreements.

In April 2021, Cigna entered into a $ 3.0 billion five-year revolving credit and letter of credit agreement that matures in April 2026 and a $ 1.0 billion three-year revolving credit agreement that matures in April 2024, which are diversified among 23 banks and replaced the five-year revolving credit and letter of credit agreement that was scheduled to mature in April 2023.

Under the current agreements, Cigna can borrow up to $ 3.0 billion and $ 1.0 billion, respectively, for general corporate purposes, with up to $ 500 million available under the five-year facility for issuance of letters of credit.

The revolving credit agreements also include an option to extend the termination date for an additional one-year period, subject to consent of the banks.

Additionally, in April 2021, Cigna entered into a $ 1.0 billion 364-day revolving credit agreement that will mature in April 2022 and is diversified among 23 banks.

This agreement replaced the prior $ 1.0 billion 364-day revolving credit agreement that was scheduled to expire in October 2021.

Pursuant to this revolving credit agreement, Cigna can borrow up to $ 1.0 billion for general corporate purposes.

The agreement includes the option to “term out” any revolving loans that are outstanding at maturity by converting them into a term loan maturing on the one-year anniversary of conversion.

Each of the five-year facility, the three-year facility and the 364-day facility include an option to increase commitments in an aggregate amount of up to $ 1.5 billion across all three facilities.

Each of the three facilities also contain customary covenants and restrictions including a financial covenant that the Company’s leverage ratio may not exceed 60 %, subject to certain exceptions upon the consummation of an acquisition.

As of March 31, 2022, Cigna had a $ 3.0 billion five-year revolving credit and letter of credit agreement maturing in April 2026;

a $ 1.0 billion three-year revolving credit agreement maturing in April 2024;

and a $ 1.0 billion 364-day revolving credit agreement maturing in April 2022.

There were no outstanding balances under these revolving credit agreements as of March 31, 2022.

In April 2022, Cigna entered into the following revolving credit agreements ("Credit Agreements"), which replaced the agreements discussed above:

• a $ 3.0 billion five-year revolving credit and letter of credit agreement that will mature in April 2027 with an option to extend the maturity date for additional one-year periods, subject to consent of the banks.

Cigna can borrow up to $ 3.0 billion under the credit agreement for general corporate purposes, with up to $ 500 million available for issuance of letters of credit.

• a $ 1.0 billion three-year revolving credit agreement that will mature in April 2025 with an option to extend the maturity date for additional one-year periods, subject to consent of the banks.

Cigna can borrow up to $ 1.0 billion under the credit agreement for general corporate purposes.

• a $ 1.0 billion 364-day revolving credit agreement that will mature in April 2023.

Cigna can borrow up to $ 1.0 billion under the credit agreement for general corporate purposes.

This agreement includes the option to "term out" any revolving loans that are outstanding at maturity by converting them into a term loan maturing on the one-year anniversary of conversion.

Each of the Credit Agreements include an option to increase commitments in an aggregate amount of up to $ 1.5 billion across all three facilities for a maximum total commitment of $ 6.5 billion.

The Credit Agreements allow for borrowings at either a base rate or an adjusted term secured overnight funding rate ("SOFR") plus, in each case, an applicable margin based on Cigna's senior unsecured credit ratings.

Each of the three facilities is diversified among 22 banks.

Each facility also contains customary covenants and restrictions, including a financial covenant that the Company's leverage ratio, as defined in the Credit Agreements, may not exceed 60 %, subject to certain exceptions upon the consummation of an acquisition.

Commercial Paper.

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The net proceeds of issuances have been and are expected to be used for general corporate purposes.

The Company was in compliance with its debt covenants as of September 30, 2021.

The commercial paper average interest rate was 0.60 % at March 31, 2022.

The Company was in compliance with its debt covenants as of March 31, 2022.

Interest expense on long-term and short-term debt was $ 314 million for the three months ended March 31, 2022 and $ 325 million for the three months ended March 31, 2021.

Note 8 – Common and Preferred Stock

In the first quarter of 2022, Cigna declared and paid a quarterly cash dividend of $ 1.12 per share of Cigna common stock.

In 2021, Cigna initiated and declared quarterly cash dividends of $ 1.00 per share of Cigna common stock.

The following table provides details of Cigna's dividend payments for the three months ended March 31:

Record Date Payment Date Amount per Share Total Amount Paid (in millions)

March 9, 2022 March 24, 2022 $ 1.12 $ 357

March 10, 2021 March 25, 2021 $ 1.00 $ 345

On April 27, 2022, the Board of Directors declared the second quarter cash dividend of $ 1.12 per share of Cigna common stock to be paid on June 23, 2022 to shareholders of record on June 8, 2022.

Cigna currently intends to pay regular quarterly dividends, with future declarations subject to approval by its Board of Directors and the Board's determination that the declaration of dividends remains in the best interests of Cigna and its shareholders.

The decision of whether to pay future dividends and the amount of any such dividends will be based on the Company's financial position, results of operations, cash flows, capital requirements, the requirements of applicable law and any other factors the Board of Directors may deem relevant.

Note 9 – Insurance and Contractholder Liabilities

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The Company's insurance and contractholder liabilities were comprised of the following:

September 30, 2021 December 31, 2020 September 30, 2020

March 31, 2022 December 31, 2021 March 31, 2021

(In millions) Current Non-current Total Current Non-current Total Total

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Unpaid claims and claim expenses

Cigna Healthcare

4,459 32 4,491 4,159 102 4,261 4,027

Other segments 929 247 1,176 980 292 1,272 6,235

Insurance and contractholder liabilities classified as Liabilities of business held for sale (1)

Other Operations 503 231 734 548 180 728 723

Total 6,186 16,216 22,402 5,929 16,596 22,525

Insurance and contractholder liabilities classified as Liabilities of businesses held for sale (1)

( 513 ) ( 4,049 ) ( 4,562 ) ( 611 ) ( 4,033 ) ( 4,644 )

Total insurance and contractholder liabilities $ 5,673 $ 12,167 $ 17,840 $ 5,318 $ 12,563 $ 17,881 $ 22,167

(1) Amounts classified as Liabilities of business held for sale primarily include $ 5.2 billion of unpaid claims, $ 759 million of contractholder deposit funds and $ 646 million of future policy benefits as of September 30, 2020.

(1) Amounts classified as Liabilities of businesses held for sale primarily include $ 3.7 billion of Future policy benefits, $ 0.4 billion of Unpaid claims and $ 0.4 billion of Unearned premiums as of March 31, 2022 and $ 3.8 billion of Future policy benefits, $ 0.4 billion of Unpaid claims and $ 0.4 billion of Unearned premiums as of December 31, 2021.

Insurance and contractholder liabilities expected to be paid within one year are classified as current.

Unpaid Claims and Claim Expenses – U.S.

Unpaid Claims and Claim Expenses – Cigna Healthcare

This liability reflects estimates of the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process) and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities.

The total of incurred but not reported liabilities plus expected development on reported claims, including reported claims in process, was $ 3.6 billion at September 30, 2021 and $ 3.0 billion at September 30, 2020.

Activity, net of intercompany transactions, in the unpaid claims liability for the U.S.

Medical segment for the nine months ended September 30 was as follows:

Nine Months Ended

(In millions) September 30, 2021 September 30, 2020

This liability includes amounts from the International Health businesses now reported in Cigna Healthcare following our change in segment reporting in 2021.

The prior year roll forward has been updated to reflect this segment change.

The total of incurred but not reported liabilities plus expected development on reported claims, including reported claims in process, was $ 4.2 billion at March 31, 2022 and $ 3.7 billion at March 31, 2021.

Activity, net of intercompany transactions, in the unpaid claims liability for the Cigna Healthcare segment for the three months ended March 31 was as follows:

Three Months Ended

(In millions) March 31, 2022 March 31, 2021

Beginning balance $ 4,261 $ 3,695

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See Note 10 for additional information on reinsurance .

Variances in incurred costs related to prior years’ unpaid claims and claim expenses that resulted from the differences between actual experience and the Company’s key assumptions for the nine months ended September 30 were as follows:

Nine Months Ended

(Dollars in millions) September 30, 2021 September 30, 2020

Variances in incurred costs related to prior years' unpaid claims and claim expenses that resulted from the differences between actual experience and the Company's key assumptions for the three months ended March 31 were as follows:

Three Months Ended

(Dollars in millions) March 31, 2022 March 31, 2021

Actual completion factors $ 99 0.3 % $ 107 0.4 %

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(2) Percentage of current year incurred costs as reported for the year ended December 31, 2020.

Favorable prior year development in both years reflects utilization of medical services that is lower than our estimates used to establish prior year reserves.

Unpaid Claims and Claim Expenses – International Markets and Other Operations

Favorable prior year development in both years reflects lower than expected utilization of medical services as compared to our assumptions.

Unpaid Claims and Claim Expenses – Other Operations

Liability balance details.

The liability details for unpaid claims and claim expenses are as follows.

(In millions) September 30, 2021 September 30, 2020

The liability balance no longer includes the International Health businesses now reported in Cigna Healthcare following our change in segment reporting.

The prior year roll forward has been updated to reflect the segment change.

(In millions) March 31, 2022 March 31, 2021

Other Operations

Group Disability and Life $ — $ 5,206

International businesses to be sold and our interest in a joint venture in Turkey $ 436 $ 442

Other Operations 298 281

Total Other Operations

International Markets

Unpaid claims and claim expenses Other Operations and International Markets

$ 1,176 $ 6,235

Activity, net of intercompany transactions, in the unpaid claims and claim expenses for International Markets and, prior to the sale, Group Disability and Life (see Note 4 for further information) is presented in the following table.

Prior to the sale, the majority of the liability related to disability claims with long tailed payouts.

See Note 9C to the Consolidated Financial Statements included in our 2020 Form 10-K for additional discussion of these disability reserves that are now sold.

Liabilities associated with Other Operations are excluded because they pertain to obligations for long-duration insurance contracts or, if short-duration, the liabilities have been fully reinsured.

Nine Months Ended

(In millions) September 30, 2021

September 30, 2020 (1)

Unpaid claims and claim expenses Other Operations

Activity in the unpaid claims and claim expenses for international businesses held for sale and our interest in a joint venture in Turkey is presented in the following table.

Liabilities associated with Other Operations are excluded because they pertain to obligations for long-duration insurance contracts or, if short-duration, the liabilities have been largely reinsured.

Three Months Ended

(In millions) March 31, 2022 (1)

March 31, 2021

Beginning balance $ 447 $ 452

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Current year 259 254

Interest accretion — 118

All other incurred ( 38 ) ( 12 )

Prior years ( 7 ) —

Total incurred 252 254

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Ending balance

(1) Includes unpaid claims amounts classified as Liabilities of business held for sale.

(1) Includes unpaid claims amounts classified as Liabilities of businesses held for sale.

Reinsurance in the table above reflects amounts due from reinsurers related to unpaid claims liabilities.

The Company’s insurance subsidiaries enter into agreements with other companies primarily to limit losses from large exposures and to permit recovery of a portion of incurred losses.

See Note 10 for additional information on reinsurance.

Note 10 – Reinsurance

The Company’s insurance subsidiaries enter into agreements with other insurance companies to assume and cede reinsurance.

The Company's insurance subsidiaries enter into agreements with other insurance companies to limit losses from large exposures and to permit recovery of a portion of incurred losses.

Reinsurance is ceded primarily in acquisition and disposition transactions when the underwriting company is not being acquired.

Reinsurance is also used to limit losses from large exposures and to permit recovery of a portion of direct or assumed losses.

Reinsurance does not relieve the originating insurer of liability.

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The majority of the Company's reinsurance recoverables resulted from acquisition and disposition transactions in which the underwriting company was not acquired.

Included in the table below are $ 214 million of current reinsurance recoverables that are reported in Other current assets as of September 30, 2021;

as of December 31, 2020 there was $ 217 million of current reinsurance recoverables reported in Other current assets.

The Company’s reinsurance recoverables as of September 30, 2021 are presented in the following table by range of external credit rating and collateral level:

The Company bears the risk of loss if its reinsurers and retrocessionaires do not meet or are unable to meet their reinsurance obligations to the Company.

The Company reviews its reinsurance arrangements and establishes reserves against the recoverables.

The Company's reinsurance recoverables as of March 31, 2022 are presented in the following table by range of external credit rating and collateral level:

(In millions) Fair value of collateral contractually required to meet or exceed carrying value of recoverable

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Ongoing Operations

Upper-medium grade and higher (1)

A- equivalent and higher current ratings (1)

$ — $ — $ 176 $ 176

Lower-medium grade (2)

BBB- to BBB+ equivalent current credit ratings (1)

Not rated 116 — 43 159

Total recoverables related to ongoing operations (2)

Acquisition, disposition or runoff activities

Upper-medium grade and higher (1)

116 — 280 396

Acquisition, disposition or run-off activities

A- equivalent and higher current ratings (1)

Lincoln National Life and Lincoln Life & Annuity of New York — 2,908 — 2,908

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Prudential Retirement Insurance and Annuity 149 — — 149

Prudential Insurance Company of America 404 — — 404

Life Insurance Company of North America — 437 — 437

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Not rated — 13 3 16

Total recoverables related to acquisition, disposition or runoff activities 1,090 3,805 20 4,915

Total recoverables related to acquisition, disposition or run-off activities 1,040 3,750 19 4,809

Total $ 1,156 $ 3,750 $ 299 $ 5,205

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Total reinsurance recoverables (2)

(1) Includes A- equivalent and higher current ratings certified by a nationally recognized statistical rating organization ("NRSRO")

(2) Includes BBB- to BBB+ equivalent current credit ratings certified by an NRSRO

(1) Certified by a Nationally Recognized Statistical Rating Organization ("NRSRO").

(2) Includes $ 143 million of current reinsurance recoverables that are reported in Other current assets and $ 95 million of recoverables classified as Assets of businesses held for sale as of March 31, 2022.

(3) Includes collateral provisions requiring the reinsurer to fully collateralize its obligation if its external credit rating is downgraded to a specified level.

Collateral levels are defined internally based on the fair value of the collateral relative to the carrying amount of the reinsurance recoverable, the frequency at which collateral is required to be replenished and the potential for volatility in the collateral's fair value.

The Company bears the risk of loss if its reinsurers and retrocessionaires do not meet or are unable to meet their reinsurance obligations to the Company.

The Company reviews its reinsurance arrangements and establishes reserves against the recoverables.

Effects of Reinsurance

In the Company’s Consolidated Statements of Income, Premiums were reported net of amounts ceded to reinsurers and Medical costs and other benefit expenses were reported net of reinsurance recoveries in the following amounts:

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2021 2020 2021 2020

Total ceded premiums $ 134 $ 122 $ 418 $ 367

Total reinsurance recoveries $ 138 $ 117 $ 419 $ 397

Effective Exit of GMDB and GMIB Business

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Berkshire reinsured 100 % of the Company's future claim payments in this business, net of other reinsurance arrangements existing at that time.

The reinsurance agreement is subject to an overall limit with approximately $ 3.2 billion remaining at September 30, 2021.

The reinsurance agreement is subject to an overall limit with approximately $ 3.2 billion remaining at March 31, 2022.

GMDB is accounted for as assumed and ceded reinsurance and GMIB assets and liabilities are reported as derivatives at fair value as discussed below.

GMIB assets are reported in Other current assets and Other assets and GMIB liabilities are reported in Accrued expenses and other liabilities and Other non-current liabilities.

GMIB assets are reported in Other current assets and Other assets and GMIB liabilities are reported in Accrued

expenses and other liabilities and Other non-current liabilities.

Assumptions used in fair value measurement for these assets and liabilities are discussed in Note 10 of the Company's 2021 Form 10-K.

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The Company should be reimbursed in full for these payments unless the Berkshire reinsurance limit is exceeded.

(Dollars in millions, excludes impact of reinsurance ceded) September 30, 2021 December 31, 2020

(Dollars in millions, excludes impact of reinsurance ceded) March 31, 2022 December 31, 2021

Account value $ 9,057 $ 9,795

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The Company has purchased retrocessional coverage ("GMIB assets") for these contracts including retrocessional coverage from Berkshire.

GMIB liabilities totaling $ 610 million as of September 30, 2021 and $ 729 million as of December 31, 2020 are classified as Level 3 because fair value inputs are largely unobservable.

There were three reinsurers covering 100 % of the GMIB exposures as of September 30, 2021 and December 31, 2020 as follows:

GMIB liabilities totaling $ 514 million as of March 31, 2022 and $ 572 million as of December 31, 2021 are classified as Level 3 because fair value inputs are largely unobservable.

The GMIB liabilities reflect the Company's credit risk, while the reinsurance recoverable reflects the credit risk of the reinsurers.

There were three reinsurers covering 100 % of the GMIB exposures as of March 31, 2022 and December 31, 2021 as follows:

(In millions)

Line of Business Reinsurer September 30, 2021 December 31, 2020 Collateral and Other Terms at September 30, 2021

Line of Business Reinsurer March 31, 2022 December 31, 2021 Collateral and Other Terms at March 31, 2022

GMIB Berkshire $ 257 $ 283 100 % were secured by assets in a trust.

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The following table summarizes the Company's investments by category and current or long-term classification:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(In millions) Current Long-term Total Current Long-term Total

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Total 1,056 22,139 23,195 1,264 23,203 24,467

Investments classified as assets of businesses held for sale (1)

( 325 ) ( 4,446 ) ( 4,771 ) ( 344 ) ( 4,765 ) ( 5,109 )

Investments per Consolidated Balance Sheets $ 731 $ 17,693 $ 18,424 $ 920 $ 18,438 $ 19,358

(1) Investments related to the international life, accident and supplemental benefits businesses that are held for sale.

These investments are primarily comprised of debt securities and other long-term investments, and to a lesser extent, equity securities and short-term investments.

See Note 5 to the Consolidated Financial Statements for additional information.

Investment Portfolio

Debt Securities

The amortized cost and fair value by contractual maturity periods for debt securities were as follows at September 30, 2021:

The amortized cost and fair value by contractual maturity periods for debt securities were as follows at March 31, 2022:

(In millions) Amortized

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Depreciation Fair

September 30, 2021

March 31, 2022

Federal government and agency $ 298 $ — $ 75 $ ( 4 ) $ 369

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$ 2,262 $ ( 5 ) $ 720 $ ( 10 ) $ 2,967

(1) Net unrealized appreciation for these investments is excluded from accumulated other comprehensive income.

(1) Net unrealized appreciation for these investments is excluded from Accumulated other comprehensive loss.

Review of declines in fair value.

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These debt securities are primarily corporate securities with a decline in fair value that reflects an increase in market yields since purchase.

Our allowance for credit losses on debt securities was not material as of September 30, 2021 and December 31, 2020.

September 30, 2021 December 31, 2020

Our allowance for credit losses on debt securities was not material as of March 31, 2022 and December 31, 2021.

March 31, 2022 December 31, 2021

(Dollars in millions) Fair

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Equity Securities

The following table provides the values of the Company's equity security investments as of September 30, 2021 and December 31, 2020.

The amount of impairments or value changes resulting from observable price changes on equity securities still held was not material to the financial statements as of September 30, 2021 or December 31, 2020.

September 30, 2021 December 31, 2020

The following table provides the values of the Company's equity security investments as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

(In millions) Cost Carrying Value Cost Carrying Value

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Equity securities with no readily determinable fair value 280 407 270 396

Hybrid equity securities 57 39 58 44

Total $ 1,120 $ 871 $ 527 $ 603

Approximately 65 % of our investments in equity securities are in the health care sector, consistent with our strategy to invest in targeted startup and growth-stage companies in the health care industry.

Commercial Mortgage Loans

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Loans are generally issued at fixed rates of interest and are secured by high quality, primarily completed and substantially leased operating properties.

Commercial mortgage loans are classified as either current or long-term investments based on their contractual maturities.

The Company regularly evaluates and monitors credit risk from the initial mortgage loan underwriting and throughout the investment holding period.

For more information on the Company's accounting policies and methodologies regarding these investments, see Note 11 to the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

Loan-to-value and debt service coverage ratio are the two most significant contributors to the credit quality ratings that the Company uses to evaluate and monitor credit risk in its commercial mortgage loan portfolio.

The following table summarizes the credit risk profile of the Company’s commercial mortgage loan portfolio as of September 30, 2021 and December 31, 2020:

(Dollars in millions) September 30, 2021 December 31, 2020

For more information on the Company's accounting policies and methodologies regarding these investments, see Note 11 to the Company's 2021 Form 10-K for the year ended December 31, 2021.

The following table summarizes the credit risk profile of the Company's commercial mortgage loan portfolio as of March 31, 2022 and December 31, 2021:

(Dollars in millions) March 31, 2022 December 31, 2021

Loan-to-Value Ratio Carrying Value Average Debt Service Coverage Ratio Average Loan-to-Value Ratio Carrying Value Average Debt Service Coverage Ratio Average Loan-to-Value Ratio

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Total $ 1,559 1.97 61 % $ 1,566 1.96 61 %

All commercial mortgage loans in the Company's portfolio are current as of September 30, 2021 and December 31, 2020.

All commercial mortgage loans in the Company's portfolio are current as of March 31, 2022 and December 31, 2021.

Other Long-Term Investments

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Carrying value as of

(In millions) September 30, 2021 December 31, 2020

(In millions) March 31, 2022 December 31, 2021

Real estate investments $ 1,212 $ 1,152

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The Company uses derivative financial instruments to manage the characteristics of investment assets (such as duration, yield, currency and liquidity) to meet the varying demands of the related insurance and contractholder liabilities.

The Company also uses derivative financial instruments to hedge the risk of changes in the net assets of certain of its foreign subsidiaries due to changes in foreign currency exchange rates and to hedge the interest rate risk of its long-term debt.

The Company has written and purchased GMIB reinsurance contracts in its run-off reinsurance business that are accounted for as freestanding derivatives as discussed in Note 10.

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The gross fair values of our derivative financial instruments are presented in Note 12.

As of September 30, 2021 and December 31, 2020, the effects of derivative financial instruments used in these individual hedging strategies were not material to the Consolidated Financial Statements, including gains or losses reclassified from Accumulated other comprehensive income into Shareholders' net income, amounts excluded from the assessment of hedge effectiveness and fair values of assets posted or held as collateral supporting these fair values.

As of March 31, 2022 and December 31, 2021, the effects of derivative financial instruments used in these individual hedging strategies were not material to the Consolidated Financial Statements, including gains or losses reclassified from Accumulated other comprehensive loss into Shareholders' net income, amounts excluded from the assessment of hedge effectiveness and fair values of assets posted or held as collateral supporting the fair values of these derivative financial instruments.

The following table summarizes the types and notional quantity of derivative instruments held by the Company:

Notional Value as of

(In millions) September 30, 2021 December 31, 2020

(In millions) March 31, 2022 December 31, 2021

Purpose Type of Instrument

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The notional value of these derivatives matches the amortized cost of the hedged bonds.

A majority of these instruments are denominated in Euros, with the remaining instruments denominated in British Pounds Sterling and Australian Dollars.

Foreign currency swap contracts

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Net investment hedge:

To reduce the risk of changes in net assets due to changes in foreign currency spot exchange rates for certain foreign subsidiaries that conduct their business principally in Euros, Korean Won and Taiwan Dollar.

To reduce the risk of changes in net assets due to changes in foreign currency spot exchange rates for certain foreign subsidiaries that conduct their business principally in currencies other than the U.S.

The notional value of hedging instruments matches the hedged amount of subsidiary net assets.

Foreign currency swap contracts are denominated in Euros, while foreign currency forward contracts are primarily denominated in Korean Won, with the remaining instruments denominated in New Zealand Dollars and Taiwan Dollars.

Foreign currency swap contracts

Foreign currency forward contracts

$ 1,360 $ 1,380

Economic hedge:

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Foreign currency forward contracts

Economic hedge:

To hedge against the foreign exchange depreciation of certain foreign subsidiary earnings denominated in South Korean Won.

The notional value of hedging instruments aligns with the U.S.

dollar equivalent of hedged foreign-denominated earnings.

Average rate option contracts $ 120 $ —

The Company implemented two new hedging strategies during the second quarter of 2021 that are described in the above table and are accounted for as follows:

• Fair value hedges of the interest rate exposure on the Company’s long-term debt:

Using fair value hedge accounting, the fair values of the swap contracts are reported in Other assets or Other liabilities.

The critical terms of these swaps match those of the long-term debt being hedged.

As a result, the carrying value of the hedged debt is adjusted to reflect changes in its fair value driven by the Secured Overnight Financing Rate ("SOFR").

The effects of those adjustments on interest expense are offset by the effects of corresponding changes in the swaps' fair value.

The net impact from the hedge reported in Interest

expense and other reflects interest expense on the hedged debt at the variable interest rate.

Cash flows relating to these contracts are reported in Operating activities.

• Economic hedge against the depreciation of foreign subsidiary earnings due to changes in the quarterly average exchange rate:

Fair values of average rate option contracts are reported in Other assets.

Because hedge accounting is not applied, changes in fair value are reported currently in earnings in Fees and other revenues.

Cash flows relating to these contracts are reported in Operating activities.

As there have been no other changes to the types of derivative financial instruments the Company uses, refer to the Company’s 2020 Form 10-K for further discussion on our accounting policy.

As there have been no changes to the types of derivative financial instruments the Company uses, refer to the Company's 2021 Form 10-K for further discussion on our accounting policy.

Realized Investment Gains and Losses

The following realized gains and losses on investments exclude amounts required to adjust future policy benefits for the run-off settlement annuity business (consistent with accounting for a premium deficiency), as well as realized gains and losses attributed to the Company's separate accounts because those gains and losses generally accrue directly to separate account policyholders:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In millions) 2022 2021

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Credit loss (expense) recoveries — ( 9 )

Other investment asset write-downs — — — ( 10 )

Net realized investment gains (losses), before income taxes $ ( 319 ) $ 1

Net realized investment gains, excluding credit loss expense and asset write-downs for the nine months ended September 30, 2021 was primarily driven by mark-to-market gains on equity securities and gains on the sales of real estate partnerships, partially offset by mark-to-market losses on derivatives.

This activity for the nine months ended September 30, 2020 primarily represent gains on sales of debt securities, partially offset by mark-to-market losses on equity securities and derivatives.

Credit loss (expense) recoveries on invested assets reflect credit losses incurred on debt securities primarily relating to issuers in certain industries that have been impacted by the global COVID-19 pandemic.

Realized gains and losses on equity securities still held at September 30, 2021 and 2020 were not material.

Net realized investment losses for the three months ended March 31, 2022 were primarily mark-to-market losses on equity securities held in a strategic health care sector investment.

Note 12 – Fair Value Measurements

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The Company's financial assets and liabilities carried at fair value have been classified based upon a hierarchy defined by GAAP.

The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3).

The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and

liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3).

An asset's or a liability's classification is based on the lowest level of input that is significant to its measurement.

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Financial Assets and Financial Liabilities Carried at Fair Value

The following table provides information as of September 30, 2021 and December 31, 2020 about the Company’s financial assets and liabilities carried at fair value.

The following table provides information as of March 31, 2022 and December 31, 2021 about the Company's financial assets and liabilities carried at fair value.

Separate account assets are also recorded at fair value on the Company's Consolidated Balance Sheets and are reported separately in the Separate Accounts section below as gains and losses related to these assets generally accrue directly to policyholders.

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(Level 3) Total

As of September 30, 2021 As of December 31, 2020 As of September 30, 2021 As of December 31, 2020 As of September 30, 2021 As of December 31, 2020 As of September 30, 2021 As of December 31, 2020

As of March 31, 2022 As of December 31, 2021 As of March 31, 2022 As of December 31, 2021 As of March 31, 2022 As of December 31, 2021 As of March 31, 2022 As of December 31, 2021

Financial assets at fair value

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Derivative assets — — 159 143 — — 159 143

— — 126 72 — — 126 72

Financial liabilities at fair value

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(1) Excludes certain equity securities that have no readily determinable fair value.

(2) Derivative assets above include an immaterial amount as of September 30, 2021 and $ 34 million as of December 31, 2020 that are presented in the Short-term investments category disclosed in Note 9.

See Note 9 for more information on our Derivative Financial Instruments.

Level 3 Financial Assets and Financial Liabilities

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This adjustment is needed to reflect current market conditions and issuer circumstances when there is limited trading activity for the security.

The following table summarizes the fair value and significant unobservable inputs that were developed directly by the Company and used in pricing these debt securities as of September 30, 2021 and December 31, 2020.

The following table summarizes the fair value and significant unobservable inputs that were developed directly by the Company and used in pricing these debt securities as of March 31, 2022 and December 31, 2021.

The range and weighted average basis point ("bps") amounts for liquidity reflect the Company's best estimates of the unobservable adjustments a market participant would make to calculate these fair values.

Fair Value as of Unobservable Adjustment Range (Weighted Average by Quantity) as of

(Fair value in millions ) September 30, 2021 December 31, 2020 Unobservable input September 30, 2021 September 30, 2021 December 31, 2020

(Fair value in millions ) March 31, 2022 December 31, 2021 Unobservable input March 31, 2022 March 31, 2022 December 31, 2021

Debt securities

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bps 60 - 390 ( 100 )

Securities not priced by the Company (1)

Other debt securities 1 1

Total Level 3 debt securities $ 655 $ 765

(1) The fair values for these securities use single, unadjusted non-binding broker quotes not developed directly by the Company.

A significant increase in liquidity spread adjustments would result in a lower fair value measurement, while a decrease would result in a higher fair value measurement.

Changes in Level 3 Financial Assets and Financial Liabilities Carried at Fair Value

The following table summarizes the changes in financial assets and financial liabilities classified in Level 3 for the three and nine months ended September 30, 2021 and 2020.

The following table summarizes the changes in financial assets and financial liabilities classified in Level 3 for the three months ended March 31, 2022 and 2021.

Gains and losses reported in the table may include net changes in fair value that are attributable to both observable and unobservable inputs.

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

(In millions) 2022 2021

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Purchases 49 29

Sales ( 36 ) ( 1 ) ( 36 ) ( 13 )

Settlements ( 81 ) ( 16 )

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Total gains (losses) included in Shareholders' net income attributable to instruments held at the reporting date

Change in unrealized gains or losses included in Other comprehensive income for assets held at the end of the reporting period $ 2 $ 17 $ ( 8 ) $ ( 37 )

Change in unrealized gains or losses included in Other comprehensive (loss), net of tax for assets held at the end of the reporting period

$ ( 13 ) $ ( 16 )

(1) Amounts do not accrue to shareholders.

Total gains and losses included in Shareholders' net income in the tables above are reflected in the Consolidated Statements of Income as Net realized investment gains (losses) and Net investment income.

Gains and losses included in Other comprehensive income in the tables above are reflected in Net unrealized appreciation (depreciation) on securities and derivatives in the Consolidated Statements of Comprehensive Income.

Gains and losses included in Other comprehensive (loss), net of tax in the tables above are reflected in Net unrealized (depreciation) appreciation on securities and derivatives in the Consolidated Statements of Comprehensive Income.

Transfers into or out of the Level 3 category occur when unobservable inputs, such as the Company's best estimate of what a market participant would use to determine a current transaction price, become more or less significant to the fair value measurement.

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Transfers between Level 2 and Level 3 during 2022 and 2021 primarily reflected changes in liquidity estimates for certain private placement issuers across several sectors.

Transfers into and out of Level 3 were higher in 2020 due to significant fluctuations in unobservable inputs experienced as a result of the uncertainty over the economic impacts related to COVID-19.

See discussion under Quantitative Information about Unobservable Inputs above for more information.

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The investment income and fair value gains and losses of separate account assets generally accrue directly to the contractholders and, together with their deposits and withdrawals, are excluded from the Company's Consolidated Statements of Income and Cash Flows.

Fair values of Separate account assets at September 30, 2021 and December 31, 2020 were as follows:

Fair values of Separate account assets at March 31, 2022 and December 31, 2021 were as follows:

(In millions) Quoted Prices in Active Markets for Identical Assets

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(Level 3) Total

September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021

Guaranteed separate accounts (See Note 18)

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Subtotal $ 699 $ 1,357 $ 6,947 $ 6,682 $ 311 $ 334 7,957 8,373

Non-guaranteed separate accounts priced at NAV as a practical expedient (1)

Non-guaranteed separate accounts priced at net asset value ("NAV") as a practical expedient (1)

Total 8,866 9,215

Separate account assets of businesses classified as held for sale (2)

( 718 ) ( 878 )

Separate account assets per Consolidated Balance Sheets $ 8,148 $ 8,337

(1) Non-guaranteed separate accounts included $ 4.4 billion as of September 30, 2021 and $ 4.2 billion as of December 31, 2020 in assets supporting the Company’s pension plans, including $ 0.3 billion classified in Level 3 as of September 30, 2021 and December 31, 2020.

(1) Non-guaranteed separate accounts include $ 4.4 billion as of March 31, 2022 and $ 4.5 billion as of December 31, 2021 in assets supporting the Company's pension plans, including $ 0.3 billion classified in Level 3 as of March 31, 2022 and December 31, 2021.

(2) Investments related to the international life, accident and supplemental benefits businesses that are held for sale.

See Note 5 to the Consolidated Financial Statements for additional information.

Separate account assets classified in Level 3 primarily support Cigna's pension plans and include certain newly-issued, privately-placed, complex or illiquid securities that are priced using methods discussed above, as well as commercial mortgage loans.

Activity, including transfers into and out of Level 3, was not material for the three and nine months ended September 30, 2021 or 2020.

Activity, including transfers into and out of Level 3, was not material for the three months ended March 31, 2022 or 2021.

Separate account investments in securities partnerships, real estate and hedge funds are generally valued based on the separate account's ownership share of the equity of the investee (NAV as a practical expedient), including changes in the fair values of its underlying investments .

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The following table provides additional information on these investments:

Fair Value as of Unfunded Commitment as of September 30, 2021 Redemption Frequency

Fair Value as of Unfunded Commitment as of March 31, 2022 Redemption Frequency

(if currently eligible) Redemption Notice

(In millions) September 30, 2021 December 31, 2020

(In millions) March 31, 2022 December 31, 2021

Securities partnerships $ 557 $ 513 $ 262 Not applicable Not applicable

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Total $ 909 $ 842 $ 262

As of September 30, 2021, the Company does not have plans to sell any of these assets at less than fair value.

As of March 31, 2022, the Company does not have plans to sell any of these assets at less than fair value.

These investments are structured to satisfy longer-term investment objectives.

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However, these financial assets and liabilities may be measured using fair value under certain conditions, such as when investments become impaired and are written down to their fair value, or when there are observable price changes from orderly market transactions of equity securities that otherwise had no readily determinable fair value.

For the nine months ended September 30, 2021 and 2020, no impairments were recognized requiring these assets to be measured at fair value.

Realized investment gains and losses from these observable price changes for the nine months ended September 30, 2021 and September 30, 2020 were not material.

For the three months ended March 31, 2022 and 2021, no impairments were recognized requiring these assets to be measured at fair value.

Realized investment gains and losses from these observable price changes for the three months ended March 31, 2022 and March 31, 2021 were not material.

Fair Value Disclosures for Financial Instruments Not Carried at Fair Value

The following table includes the Company’s financial instruments not recorded at fair value that are subject to fair value disclosure requirements at September 30, 2021 and December 31, 2020.

The following table includes the Company's financial instruments not recorded at fair value, however fair value disclosure is required at March 31, 2022 and December 31, 2021.

In addition to universal life products and finance leases, financial instruments that are carried in the Company's Consolidated Financial Statements at amounts that approximate fair value are excluded from the following table:

Classification in Fair Value Hierarchy September 30, 2021 December 31, 2020

Classification in Fair Value Hierarchy March 31, 2022 December 31, 2021

(In millions) Fair Value Carrying Value Fair Value Carrying Value

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We perform ongoing qualitative analyses of our involvement with variable interest entities to determine if consolidation is required.

The Company determined it was not a primary beneficiary in any material variable interest entity as of September 30, 2021 or December 31, 2020.

The Company determined that it was no t a primary beneficiary in any material variable interest entity as of March 31, 2022 or December 31, 2021.

The Company’s involvement with variable interest entities for which it is not the primary beneficiary has not changed materially from December 31, 2021.

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Note 14 – Accumulated Other Comprehensive Income (Loss) ("AOCI")

AOCI includes unrealized appreciation on securities and derivatives (excluding appreciation on investments supporting future policy benefit liabilities of the run-off settlement annuity business) (See Note 9), foreign currency translation and the net postretirement benefits liability adjustment.

AOCI includes net unrealized appreciation (depreciation) on securities and derivatives (excluding appreciation on investments supporting future policy benefit liabilities of the run-off settlement annuity business) (see Note 11), foreign currency translation and the net postretirement benefits liability adjustment.

AOCI includes the Company's share from unconsolidated entities reported on the equity method.

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Changes in the components of AOCI were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In millions) 2022 2021

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Beginning balance $ 685 $ 900

Appreciation (depreciation) on securities and derivatives 59 159 ( 113 ) 499

Tax (expense) benefit ( 16 ) ( 27 ) 9 ( 96 )

Net appreciation (depreciation) on securities and derivatives 43 132 ( 104 ) 403

(Depreciation) appreciation on securities and derivatives ( 705 ) ( 342 )

Tax benefit 154 65

Net (depreciation) appreciation on securities and derivatives ( 551 ) ( 277 )

Reclassification adjustment for (gains) losses included in Shareholders' net income (Net realized investment (gains) losses) ( 11 ) 5

Reclassification adjustment for tax expense included in Shareholders’ net income 3 4 5 1

Reclassification adjustment for tax expense (benefit) included in Shareholders' net income 2 ( 1 )

Net (gains) losses reclassified from AOCI to Shareholders' net income ( 9 ) 4

Other comprehensive income (loss), net of tax 32 120 ( 119 ) 401

Other comprehensive (loss), net of tax ( 560 ) ( 273 )

Ending balance $ 125 $ 627

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Translation of foreign currencies ( 60 ) ( 114 )

Tax (expense) benefit ( 7 ) 7 ( 12 ) ( 3 )

Other comprehensive income (loss), net of tax ( 125 ) 109 ( 228 ) 4

Tax (expense) ( 3 ) ( 5 )

Other comprehensive (loss), net of tax ( 63 ) ( 119 )

Net translation gain (loss) on foreign currencies attributable to noncontrolling interests ( 2 ) ( 4 )

Shareholders' other comprehensive income (loss), net of tax ( 124 ) 113 ( 222 ) 14

Shareholders' other comprehensive (loss), net of tax ( 61 ) ( 115 )

Ending balance $ ( 294 ) $ ( 130 )

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Net adjustments reclassified from AOCI to Shareholders' net income 13 18

Valuation update — — — ( 73 )

Tax benefit — — — 17

Net change due to valuation update — — — ( 56 )

Other comprehensive income (loss), net of tax 16 14 49 ( 15 )

Other comprehensive income, net of tax 13 18

Ending balance $ ( 1,323 ) $ ( 1,728 )

Note 15 – Organizational Efficiency Plan

During the fourth quarter of 2021, the Company approved a strategic plan to further leverage its ongoing growth to drive operational efficiency through enhancements to organizational structure and increased use of automation and shared services.

As a result, during the fourth quarter of 2021, we recognized a charge in Selling, general and administrative expenses of $ 168 million, pre-tax ($ 119 million, after-tax) that included $ 59 million of one-time expenses related to abandonment of leased assets and impairment of property and equipment as well as $ 109 million of accrued expenses primarily for severance costs related to headcount reductions.

We expect most of the severance to be paid by 2023.

The following table summarizes a roll forward of the accrued liability recorded in Accrued expenses and other liabilities:

(In millions)

Balance, December 31, 2021 $ 103

2022 payments ( 14 )

Balance, March, 31, 2022 $ 89

Note 16 – Leases

Operating and finance lease right-of-use ("ROU") assets and lease liabilities were as follows:

(In millions) September 30, 2021 December 31, 2020

(In millions) March 31, 2022 December 31, 2021

Operating leases:

Operating lease ROU assets $ 519 $ 552

Operating lease ROU assets in Other assets

Accrued expenses and other liabilities $ 154 $ 159

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Total finance lease liabilities $ 64 $ 51

(1) Operating leases include $ 28 million as of March 31, 2022 and $ 27 million as of December 31, 2021 classified as Assets of businesses held for sale and $ 25 million as of March 31, 2022, and $ 28 million as of December 31, 2021 classified as Liabilities of businesses held for sale.

Note 17 – Income Taxes

Income Tax Expense

The 21.7 % effective tax rate for the nine months ended September 30, 2021 was higher than the 20.8 % rate for the same period in 2020.

This increase is primarily attributable to the absence of favorable items which reduced the rate in 2020, including settlements of uncertain tax positions and the remeasurement of deferred state income taxes due to changes in statutory rates and adjustments in apportionment factors, partially offset by the elimination of the nondeductible health insurance industry tax in 2021 .

The 22.7 % effective tax rate for the three months ended March 31, 2022 was higher than the 22.6 % rate for the same period in 2021.

This increase is primarily attributable to an increase in state and foreign income taxes, partially offset by the favorable impact of the remeasurement of deferred income taxes.

Note 18 – Contingencies and Other Matters

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If employers fail to do so, the Company or an affiliate of the buyer of the retirement benefits business has the right to redirect the management of the related assets to provide for benefit payments.

As of September 30, 2021, employers maintained assets that generally exceeded the benefit obligations under these arrangements of approximately $ 440 million.

As of March 31, 2022, employers maintained assets that generally exceeded the benefit obligations under these arrangements of approximately $ 430 million.

An additional liability is established if management believes that the Company will be required to make payments under the guarantees;

there were no additional liabilities required for these guarantees, net of reinsurance, as of September 30, 2021.

there were no additional liabilities required for these guarantees, net of reinsurance, as of March 31, 2022.

Separate account assets supporting these guarantees are classified in Levels 1 and 2 of the GAAP fair value hierarchy.

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Certain Other Guarantees

The Company had indemnification obligations as of September 30, 2021 in connection with acquisition and disposition transactions.

The Company had indemnification obligations as of March 31, 2022 in connection with acquisition and disposition transactions.

These indemnification obligations are triggered by the breach of representations or covenants provided by the Company, such as representations for the presentation of financial statements, filing of tax returns, compliance with law or identification of outstanding litigation.

These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation.

In some cases, the maximum potential amount due is subject to contractual limitations based on a percentage of

the transaction purchase price, while in other cases limitations are not specified or applicable.

These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as

statutes of limitation.

In some cases, the maximum potential amount due is subject to contractual limitations based on a percentage of the transaction purchase price, while in other cases limitations are not specified or applicable.

The Company does not believe that it is possible to determine the maximum potential amount due under these obligations because not all amounts due under these indemnification obligations are subject to limitation.

There were no liabilities for these indemnification obligations as of September 30, 2021.

There were no liabilities for these indemnification obligations as of March 31, 2022.

Guaranty Fund Assessments

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The Company's exposure to assessments for certain obligations of insolvent insurance companies to policyholders and claimants is based on its share of business written in the relevant jurisdictions.

There were no material charges or credits resulting from existing or new guaranty fund assessments for the nine months ended September 30, 2021.

There were no material charges or credits resulting from existing or new guaranty fund assessments for the three months ended March 31, 2022.

Legal and Regulatory Matters

The Company is routinely involved in numerous claims, lawsuits, regulatory inquiries and audits, government investigations, including under the federal False Claims Act and state false claims acts initiated by a government investigating body or by a qui tam relator’s filing of a complaint under court seal and other legal matters arising, for the most part, in the ordinary course of managing a global health service business.

The Company is routinely involved in numerous claims, lawsuits, regulatory inquiries and audits, government investigations, including under the federal False Claims Act and state false claims acts initiated by a government investigating body or by a qui tam relator's filing of a complaint under court seal and other legal matters arising, for the most part, in the ordinary course of managing a global health services business.

Additionally, the Company has received and is cooperating with subpoenas or similar processes from various governmental agencies requesting information, all arising in the normal course of its business.

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Litigation Matters

Risk Corridors and CSR Litigation with the Federal Government .

As a result of a Supreme Court decision in April 2020, the Company filed suit in early May 2020 against the United States in the U.S.

Court of Federal Claims seeking to recover two types of payments the Federal Government owes Cigna under the risk corridors and cost-sharing reduction (“CSR”) programs of The Patient Protection and Affordable Care Act.

In aggregate, the complaint sought to recover more than $ 315 million:

$ 120 million in risk corridors payments and more than $ 195 million in CSR payments.

We received $ 120 million in payments in September 2020, which resolved our risk corridors claim.

Our claim seeking recovery for CSR payments remains pending.

Express Scripts Litigation with Anthem .

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Express Scripts filed its Motion for Summary Judgment on August 27, 2021.

Anthem’s completed filing of its Response to Express Scripts’ Motion for Summary Judgment on October 16, 2021.

Express Scripts’ Reply in Support of its Motion for Summary Judgment is due November 19, 2021.

There is no tentative trial date.

Anthem completed filing of its Response to Express Scripts' Motion for Summary Judgment on October 16, 2021.

Express Scripts filed its Reply in Support of its Motion for Summary Judgment on November 19, 2021.

On March 31, 2022, the court granted summary judgment in favor of Express Scripts on all of Anthem's pricing claims for damages totaling $ 14.8 billion and on most of Anthem's claims relating to service issues.

Anthem's only remaining service claim relates to the review or processing of prior authorizations.

Medicare Advantage.

A qui tam action that was filed by a private individual on behalf of the government in the United States District Court for the Southern District of New York in 2017 was unsealed on August 6, 2020.

The action asserts claims related to risk adjustment practices arising from certain health exams conducted as part of the Company's Medicare Advantage business.

In September 2021, the qui tam action was transferred to the United States District Court for the Middle District of Tennessee.

On January 11, 2022, the U.S.

Department of Justice ("DOJ") (U.S.

Attorney's Offices for the Southern District of New York and the Middle District of Tennessee) filed a motion to partially intervene, which is pending before the court.

The Company has opposed the

DOJ's motion to intervene and the government filed its reply brief on February 1, 2022.

The motion has been fully briefed and is under the court's review.

Regulatory Matters

Civil Investigative Demand .

Department of Justice (“DOJ”) is conducting industry-wide investigations of Medicare Advantage organizations’ risk adjustment practices under Medicare Parts C and D including medical chart reviews and health exams.

For certain Medicare Advantage organizations, those investigations have resulted in litigation.

The Company has received information requests (civil investigative demands) from the DOJ (U.S.

Attorney’s Offices for the Eastern District of Pennsylvania and the Southern District of New York ("SDNY")).

We are continuing to cooperate with the DOJ and have responded and continue to respond to its requests.

Additionally, in relation to the SDNY’s investigation, a qui tam action that was filed by a relator in the United States District Court for the Southern District of New York in 2017 was unsealed on August 6, 2020.

The action asserts claims related to risk adjustment practices arising from certain health exams conducted as part of Cigna’s Medicare Advantage business.

The DOJ has not intervened in the case at this time.

On September 29, 2021, the qui tam action was transferred to the United States District Court for the Middle District of Tennessee.

The DOJ is conducting industry-wide investigations of Medicare Advantage organizations' risk adjustment practices.

For certain Medicare Advantage organizations, including Cigna, those investigations have resulted in litigation (see "Litigation Matters—Medicare Advantage" above).

The Company is currently responding to information requests (civil investigative demands) from the DOJ (U.S.

Attorney's Office for the Eastern District of Pennsylvania).

The Company is cooperating with the DOJ and has responded and continues to respond to its requests.

Note 19 – Segment Information

See Note 1 for a description of our segments.

A description of our basis for reporting segment operating results is outlined below.

Intersegment revenues primarily reflect pharmacy related transactions between the Evernorth and U.S.

Medical segments.

The Company uses "pre-tax adjusted income from operations" and "adjusted revenues" as its principal financial measures of segment operating performance because management believes they best reflect the underlying results of business operations and permit analysis of trends in underlying revenue, expenses and profitability.

We define pre-tax adjusted income from operations as income before taxes excluding net realized investment results, amortization of acquired intangible assets and special items.

Cigna’s share of certain realized investment results of its joint ventures reported in the International Markets segment using the equity method of accounting are also excluded.

See Note 1 for a description of our segments, including the segment change effective in the fourth quarter of 2021.

Prior year segment information has been adjusted to reflect the segment change and a description of our basis of reporting segment operating results is outlined below.

Intersegment revenues primarily reflect pharmacy related transactions between the Evernorth and Cigna Healthcare segments.

The Company uses "pre-tax adjusted income (loss) from operations" and "adjusted revenues" as its principal financial measures of segment operating performance because management believes these metrics best reflect the underlying results of business operations and permit analysis of trends in underlying revenue, expenses and profitability.

We define pre-tax adjusted income from operations as income before income taxes excluding pre-tax income/loss attributable to noncontrolling interests, net realized investment results, amortization of acquired intangible assets, and special items.

Cigna's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded.

Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size.

Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results.

The Company does not report total assets by segment because this is not a metric used to allocate resources or evaluate segment performance.

The Company defines adjusted revenues as total revenues excluding the following adjustments:

special items and Cigna's share of certain realized investment results of its joint ventures reported in the International Markets segment using the equity method of accounting.

special items and Cigna's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting.

Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size.

We exclude these items from this measure because management believes they are not indicative of past or future underlying performance of the business.

The following tables present the special items recorded by the Company for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended Nine Months Ended

(In millions) September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Description of Special Item Charges (Benefits) and Financial Statement Line Item(s) After-tax Before-tax After-tax Before-tax After-tax Before-tax After-tax Before-tax

Debt extinguishment costs $ — $ — $ — $ — $ 110 $ 141 $ 151 $ 199

Integration and transaction-related (benefits) costs

The Company does not report total assets by segment because this is not a metric used to allocate resources or evaluate segment performance.

The following tables present the special items recorded by the Company for the three months ended March 31, 2022 and 2021:

Three Months Ended

(In millions) March 31, 2022 March 31, 2021

Description of Special Item Charges (Benefits) and Financial Statement Line Item(s) After-tax Before-tax After-tax Before-tax

Integration and transaction-related costs

(Selling, general and administrative expenses) $ 37 $ 52 $ 22 $ 29

Debt extinguishment costs

(Benefits) charges associated with litigation matters

(Selling, general and administrative expenses) — — ( 21 ) ( 27 )

Charge for organizational efficiency plan

(Selling, general and administrative expenses) — — — — — — 24 31

Risk corridors recovery

(Selling, general and administrative expenses) — — ( 76 ) ( 101 ) — — ( 76 ) ( 101 )

Contractual adjustment for a former client

(Pharmacy revenues) — — ( 89 ) ( 117 ) — — ( 155 ) ( 204 )

Total impact from special items $ 37 $ 52 $ 102 $ 133

Summarized segment financial information was as follows:

(In millions) Evernorth

International Markets

Other Operations

Corporate and Eliminations

Three months ended September 30, 2021

Revenues from external customers $ 32,668 $ 9,588 $ 1,500 $ 63 $ 1 $ 43,820

Inter-segment revenues 942 587 — — ( 1,529 )

Net investment income 4 322 66 77 ( 1 ) 468

Total revenues 33,614 10,497 1,566 140 ( 1,529 ) 44,288

Net realized investment results from certain equity method investments — — 22 — — 22

Adjusted revenues $ 33,614 $ 10,497 $ 1,588 $ 140 $ ( 1,529 ) $ 44,310

Income (loss) before taxes $ 1,074 $ 1,075 $ 199 $ 32 $ ( 321 ) $ 2,059

Pre-tax adjustments to reconcile to adjusted income from operations

(Income) attributable to noncontrolling interests ( 10 ) — ( 6 ) — — ( 16 )

Net realized investment (gains) losses — ( 93 ) 46 1 — ( 46 )

Amortization of acquired intangible assets 484 6 11 — — 501

Special items

Integration and transaction-related (benefits) costs — — — — 13 13

Pre-tax adjusted income (loss) from operations $ 1,548 $ 988 $ 250 $ 33 $ ( 308 ) $ 2,511

(In millions) Evernorth

International Markets

Other Operations

Corporate and Eliminations

Three months ended September 30, 2020

Revenues from external customers $ 29,016 $ 9,047 $ 1,439 $ 1,156 $ — $ 40,658

Inter-segment revenues 926 478 — 6 ( 1,410 )

Net investment income 2 104 38 152 1 297

Total revenues 29,944 9,629 1,477 1,314 ( 1,409 ) 40,955

Net realized investment results from certain equity method investments — — ( 37 ) — — ( 37 )

Special item related to contractual adjustment for a former client ( 117 ) — — — — ( 117 )

Adjusted revenues $ 29,827 $ 9,629 $ 1,440 $ 1,314 $ ( 1,409 ) $ 40,801

Income (loss) before taxes $ 1,086 $ 846 $ 253 $ 97 $ ( 478 ) $ 1,804

Pre-tax adjustments to reconcile to adjusted income from operations

(Income) attributable to noncontrolling interests ( 5 ) — ( 5 ) — — ( 10 )

Net realized investment (gains) losses — 6 ( 48 ) ( 27 ) — ( 69 )

Amortization of acquired intangible assets 479 6 8 — — 493

Special items

Integration and transaction-related (benefits) costs — — — — 112 112

Risk corridors recovery — ( 101 ) — — — ( 101 )

Contractual adjustment for a former client ( 117 ) — — — — ( 117 )

Pre-tax adjusted income (loss) from operations $ 1,443 $ 757 $ 208 $ 70 $ ( 366 ) $ 2,112

(In millions) Evernorth

International Markets

(In millions) Evernorth Cigna Healthcare

Other Operations

Corporate and Eliminations

Nine months ended September 30, 2021

Three months ended March 31, 2022

Revenues from external customers $ 32,289 $ 10,461 $ 841 $ — $ 43,591

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Special items

Debt extinguishment costs — — — — 141 141

Integration and transaction-related (benefits) costs — — — — 58 58

(Benefits) charges associated with litigation matters — — — — ( 27 ) ( 27 )

Integration and transaction-related costs — — — 52 52

Pre-tax adjusted income (loss) from operations $ 1,302 $ 1,279 $ 226 $ ( 343 ) $ 2,464

(In millions) Evernorth

International Markets

Cigna Healthcare

Other Operations

Corporate and Eliminations

Nine months ended September 30, 2020

Three months ended March 31, 2021

Revenues from external customers

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Net realized investment results from certain equity method investments — 14 — — 14

Special item related to contractual adjustment for a former client ( 204 ) — — — — ( 204 )

Adjusted revenues $ 30,620 $ 11,067 $ 1,005 $ ( 1,707 ) $ 40,985

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Special items

Integration and transaction-related costs — — — 29 29

Debt extinguishment costs — — — 131 131

Integration and transaction-related (benefits) costs — — — — 339 339

(Benefits) charges associated with litigation matters — — — ( 27 ) ( 27 )

Charge for organizational efficiency plan — — — — 31 31

Risk corridors recovery — ( 101 ) — — — ( 101 )

Contractual adjustment for a former client ( 204 ) — — — — ( 204 )

Pre-tax adjusted income (loss) from operations $ 1,223 $ 1,042 $ 231 $ ( 354 ) $ 2,142

(1) Includes the Company's share of certain realized investment results of its joint ventures reported in the International Markets segment using the equity method of accounting.

(1) Includes the Company's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting.

Revenue from external customers includes Pharmacy revenues, Premiums and Fees and other revenues.

The following table presents these revenues by product, premium and service type for the three and nine months ended September 30:

Three Months Ended September 30, Nine Months Ended September 30,

The following table presents these revenues by product, premium and service type for the three months ended March 31:

Three Months Ended March 31,

(In millions) 2022 2021

3 unchanged sentences

Other 1,712 1,388

Intercompany eliminations ( 1,245 ) ( 1,275 )

Total pharmacy revenues 30,697 28,025

Insurance premiums (ASC 944)

Medical premiums

Health Insurance 3,591 3,397 10,692 9,948

Cigna Healthcare

Insured 3,720 3,523

Stop loss 1,325 1,194

3 unchanged sentences

Other 940 1,138

Medical premiums

8,771 8,196 26,311 24,428

International Markets premiums

1,446 1,360 4,338 4,079

Domestic disability, life and accident premiums — 1,106 — 3,346

Other premiums 58 20 163 75

International Health 702 641

Total Cigna Healthcare 9,526 9,348

International businesses held for sale 763 809

Intercompany eliminations ( 2 ) ( 1 )

Total premiums 10,356 10,214

Services (ASC 606)

Fees 2,513 2,120 7,185 6,253

Other external revenues 19 54 139 171

Total services 2,532 2,174 7,324 6,424

Services (Fees) (ASC 606)

Cigna Healthcare

Other Operations

Other revenues 15 19

Intercompany eliminations ( 602 ) ( 431 )

Total fees and other revenues 2,538 2,341

Total revenues from external customers $ 43,591 $ 40,580

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Actual performance is compared to the contractual guarantee for each measure throughout the period and the Company defers revenue for any estimated payouts within Accrued expenses and other liabilities (current).

These estimates are adjusted at the end of the guarantee period.

The performance guarantee liability was $ 1.0 billion as of September 30, 2021 and $ 1.1 billion as of December 31, 2020.

These estimates are adjusted and paid following the end of the annual guarantee period.

Historically, adjustments to original estimates have not been material.

The performance guarantee liability was $ 1.3 billion as of March 31, 2022 and $ 1.1 billion as of December 31, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements