What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-03 compared with 2022-08-04 · 191 added, 171 removed, 486 unchanged (43% of the section changed)

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Investment Assets

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide information to assist you in better understanding and evaluating our financial condition as of June 30, 2022, compared with December 31, 2021 and our results of operations for the three and six months ended June 30, 2022, compared with the same periods last year and is intended to help you understand the ongoing trends in our business.

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide information to assist you in better understanding and evaluating our financial condition as of September 30, 2022, compared with December 31, 2021 and our results of operations for the three and nine months ended September 30, 2022, compared with the same periods last year and is intended to help you understand the ongoing trends in our business.

We encourage you to read this MD&A in conjunction with our Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2021 ("2021 Form 10-K").

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future growth, business strategy, and strategic or operational initiatives;

economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas and the impact of developing inflationary pressures;

economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas and the impact of developing inflationary and interest rate pressures;

the ongoing Russia-Ukraine conflict;

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our prospects for growth in the coming years;

strategic transactions, including the sale of our international life, accident and supplemental benefits businesses;

strategic transactions;

the impact of the Inflation Reduction Act (as defined below);

the impact of revised accounting rules related to accounting for long-duration contracts;

expectations related to our CMS (as defined below) Star Ratings and Medicare Advantage Capitation Rates;

and other statements regarding Cigna's future beliefs, expectations, plans, intentions, liquidity, cash flows, financial condition or performance.

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changes in drug pricing or industry pricing benchmarks;

political, legal, operational, regulatory, economic and other risks that could affect our multinational operations;

political, legal, operational, regulatory, economic and other risks that could affect our multinational operations, including currency exchange rates;

the scale, scope and duration of the COVID-19 pandemic and its potential impact on our business, operating results, cash flows or financial condition;

risks related to strategic transactions and realization of the expected benefits of such transactions, including with respect to the sale of our international life, accident and supplemental benefits businesses, as well as integration or separation difficulties or underperformance relative to expectations;

risks related to strategic transactions and realization of the expected benefits of such transactions, as well as integration or separation difficulties or underperformance relative to expectations;

dependence on success of relationships with third parties;

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potential failure of our prevention, detection and control systems;

unfavorable economic and market conditions, including the risk of a recession or other economic downturn and resulting impact on employment metrics, stock market or interest rate declines and risks related to a downgrade in financial strength ratings of our insurance subsidiaries;

unfavorable economic and market conditions, including the risk of a recession or other economic downturn and resulting impact on employment metrics, stock market or changes in interest rates and risks related to a downgrade in financial strength ratings of our insurance subsidiaries;

the impact of our significant indebtedness and the potential for further indebtedness in the future;

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See Note 1 to the Consolidated Financial Statements for a description of our segments.

The commentary provided below describes our results for the three and six months ended June 30, 2022 compared with the same periods in 2021.

Unless specified otherwise, commentary applies to both the three and six month periods.

Summarized below are certain key measures of our performance by segment for the three and six months ended June 30, 2022 and 2021:

The commentary provided below describes our results for the three and nine months ended September 30, 2022 compared with the same periods in 2021.

Unless specified otherwise, commentary applies to both the three and nine month periods.

Summarized below are certain key measures of our performance by segment for the three and nine months ended September 30, 2022 and 2021:

Financial highlights by segment

Three Months Ended June 30, Six Months Ended June 30,

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

(Dollars in millions, except per share amounts) 2022 2021 % Change 2022 2021 % Change

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Income attributable to noncontrolling interests 22 16 38 54 39 38

Net realized investment gains (losses) (1)

Net realized investment (losses) gains (1)

(161) 46 N/M (629) 116 N/M

Amortization of acquired intangible assets (460) (501) 8 (1,419) (1,499) 5

Special items (30) (26) (15) (82) (159) 48

Special items 1,711 (13) N/M 1,629 (172) N/M

Income before income taxes $ 3,491 $ 2,059 70 % $ 7,025 $ 5,470 28 %

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Dollars in millions) 2022 2021 % Change 2022 2021 % Change

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Debt extinguishment costs — — N/M — (141) N/M

Net realized investment gains (losses) (95) 59 N/M (414) 60 N/M

Gain on sale of businesses 1,735 — N/M 1,735 — N/M

Net realized investment (losses) gains (81) 68 N/M (495) 128 N/M

Income before income taxes 3,491 2,059 70 7,025 5,470 28

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Three Months Ended

June 30, Six Months Ended

June 30, Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30, Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021 2022 2021 2022 2021

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After-tax adjustments required to reconcile to adjusted income from operations

Net realized investment (gains) losses (1)

Net realized investment losses (gains) (1)

144 (42) 515 (99) 0.47 (0.12) 1.63 (0.29)

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Special items

Integration and transaction-related costs 26 14 63 36 0.08 0.04 0.20 0.10

Integration and transaction-related costs (benefits) 23 (35) 86 1 0.07 (0.10) 0.27 —

Charge for organizational efficiency plan — — 17 — — — 0.05 —

Charges (benefits) associated with litigation matters (20) — (20) (21) (0.06) — (0.06) (0.06)

(Benefits) associated with litigation matters — — (20) (21) — — (0.06) (0.06)

(Gain) on sale of businesses (1,388) — (1,388) — (4.52) — (4.39) —

Debt extinguishment costs — — — 110 — — — 0.32

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The United States economy continues to be impacted by rising inflation.

We have not experienced material impacts from inflation on our results of operations or cash flows for the three and six months ended June 30, 2022.

We continue to monitor our operations, including vendor costs, health care provider costs and drug pricing for any inflationary impacts, and believe we are prepared to respond to inflationary pressures.

We have not experienced material impacts from inflation on our results of operations or cash flows for the three and nine months ended September 30, 2022.

We are proactively addressing potential impacts from inflation on our workforce, third party relationships (including relationships with vendors and health care providers) and drug pricing.

We are prepared to respond to inflationary pressures.

For further information regarding risks we encounter in our business due to economic conditions including inflationary pressures, see "Risk Factors" contained in Part I, Item 1A of our 2021 Form 10-K.

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We continue to leverage our resources, expertise, data and actionable intelligence to assist customers, clients and care providers throughout this time.

The situation surrounding COVID-19 remains fluid with continued uncertainty and a wide range of potential outcomes.

We continue to actively manage our response and assess impacts to our financial position and operating results, as well as mitigate adverse developments in our business.

For further information regarding the potential impact of COVID-19 on the Company, see "Risk Factors" contained in Part I, Item 1A of our 2021 Form 10-K.

Three and Six Months Ended June 30, 2022 versus Three and Six Months Ended June 30, 2021

The commentary presented below, and in the segment discussions that follow, compare results for the three and six months ended June 30, 2022 with results for the three and six months ended June 30, 2021.

Shareholders' net income increased, reflecting strong growth in adjusted income from operations (as discussed below) and, for the six month period, the absence in 2022 of debt extinguishment costs incurred in 2021.

These favorable effects were partially offset by higher realized investment losses primarily due to unfavorable mark-to-market adjustments on investments in 2022.

Adjusted income from operations increased, primarily due to improved results in Cigna Healthcare, primarily reflecting lower medical care ratios and increased specialty contributions, and in Evernorth, primarily reflecting continued contract affordability improvements and business growth.

Medical customers increased, reflecting growth in our Middle Market, Select and International Health market segments.

Three and Nine Months Ended September 30, 2022 versus Three and Nine Months Ended September 30, 2021

The commentary presented below, and in the segment discussions that follow, compare results for the three and nine months ended September 30, 2022 with results for the three and nine months ended September 30, 2021.

Shareholders' net income increased for the three months ended September 30, 2022, reflecting the gain on the sale of our life, accident and supplemental benefits businesses in six countries (the "Chubb transaction"), partially offset by lower realized investment results due to unfavorable mark to market adjustments in 2022 and lower adjusted income from operations.

For the nine months ended September 30, 2022, the increase in Shareholders' net income was due to the gain associated with the Chubb transaction, higher adjusted income from operations and the absence of debt extinguishment costs.

These favorable effects were partially offset by lower realized investment results due to unfavorable mark to market adjustments in 2022.

Adjusted income from operations decreased for the three months ended September 30, 2022, primarily due to the absence of earnings from the businesses sold on July 1, 2022 in the Chubb transaction, partially offset by increased earnings in Evernorth reflecting continued contract affordability improvements and business growth.

The increase in adjusted income from operations on a per share basis for the three months reflects the favorable effect of purchases of shares under our share repurchase program.

For the nine months ended September 30, 2022, the increase in adjusted income from operations reflects earnings growth in Cigna Healthcare reflecting lower medical care ratios and increased specialty contributions, partially offset by lower net investment income.

Increased earnings in Evernorth reflecting continued contract affordability improvements and business growth also contributed to the increase.

These favorable effects were partially offset by the absence of earnings in the third quarter of 2022 from the businesses sold in the Chubb transaction.

Medical customers increased, reflecting growth in our fee-based products from Middle Market and Select market segments as well as International Health.

See "Cigna Healthcare segment" section of this MD&A for discussion of an update to the definitions of U.S.

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See the "Evernorth segment" section of this MD&A for further discussion.

Premiums were higher, reflecting increased specialty contributions and higher premium rates due to anticipated underlying medical cost trend, partially offset by the disposition of the Medicaid business.

Premiums declined, reflecting the impact of the Chubb transaction and the disposition of the Medicaid business in Cigna Healthcare.

Partially offsetting these decreases were the impact of increased specialty contributions and premiums rates in Cigna Healthcare due to anticipated underlying medical cost trend.

See "Cigna Healthcare segment" section of this MD&A for further discussion.

Fees and other revenues increased, primarily reflecting customer growth from our Pharmacy Rebate Program services.

Fees and other revenues increased, primarily reflecting customer growth from our continued contract affordability services.

See "Evernorth segment" section of this MD&A for further discussion.

Net investment income increased primarily due to strong returns on our partnership investments.

Net investment income decreased primarily reflecting lower returns on our partnership investments and the impact of the Chubb transaction.

See the "Investment Assets" section of this MD&A for further discussion.

Pharmacy and other service costs increased, reflecting higher specialty claims volume due in part to Evernorth's collaboration with Prime Therapeutics, as well as increased prices, primarily due to inflation on branded drugs.

Medical costs and other benefit expenses decreased for the three and six months ended June 30, 2022, reflecting reduced customers in our U.S.

Government business, primarily resulting from the disposition of the Medicaid business.

Decreases also reflect lower direct COVID-19 costs and are partially offset by medical cost trend.

Medical costs and other benefit expenses decreased, primarily reflecting the impact of the Chubb transaction and the disposition of the Medicaid business.

Decreases also reflect lower direct COVID-19 testing, treatment and vaccine costs and are partially offset by medical cost trend.

See "Cigna Healthcare segment" section of this MD&A for further discussion.

Selling, general and administrative expenses increased for the three months ended June 30, 2022, compared with the same period last year, primarily due to the absence of favorable litigation developments recorded in the second quarter of 2021 and, to a lesser extent, an increase in expenses associated with business growth.

For the six months ended June 30, 2022, the increase was primarily driven by expenses associated with business growth.

Selling, general and administrative expenses increased, primarily driven by strategic investments in expanding our services portfolio and digital capabilities in Evernorth, as well as higher expenses in Cigna Healthcare, partially offset by decreased expenses in Other Operations driven by the impact of the Chubb transaction.

Interest expense and other was essentially flat.

Debt extinguishment costs declined as no debt was retired early in the first six months of 2022.

Debt extinguishment costs declined as no debt was retired early in the first nine months of 2022.

Gain on sale of businesses reflects the Chubb transaction, which closed on July 1, 2022.

Realized investment results were lower, primarily due to unfavorable mark-to-market adjustments on investments in 2022.

See Note 11 to the Consolidated Financial Statements for further discussion.

The effective tax rate decreased, driven by favorable results relative to our foreign operations and for the six months ended June 30, 2022 the favorable impact of the remeasurement of deferred taxes, partially offset by the absence of the favorable impact of non-recurring items recorded in 2021.

The effective tax rate decreased, driven largely by foreign tax rate differential, including the impact of the Chubb transaction.

Risk Adjustment Data Validation ("RADV") Audit Rule

On November 1, 2018, the Centers for Medicare and Medicaid Services ("CMS") released a proposed rule titled "Medicare and Medicaid Programs;

Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, Program for All-inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service, and Medicaid Managed Care Programs for Years 2020 and 2021" that would revise its RADV audit methodology for contract year 2011 and all subsequent years by, among other things, extrapolating the error rate related to RADV audit findings without applying the Medicare Fee for Service adjuster to audit findings.

In October 2022, CMS delayed the timeline to finalize the proposed rule until February 1, 2023.

Centene Corporation

In October 2022, Evernorth and Centene Corporation ("Centene") announced a multi-year agreement effective January 2024 to manage pharmacy benefit services and make prescription medications more accessible and affordable for Centene's approximately 20 million customers.

In addition to greater savings on prescription drugs, Centene customers will also have access to Express Scripts' extensive national network of retail pharmacies.

Inflation Reduction Act

The Inflation Reduction Act of 2022, which was signed into law in August 2022, contains a variety of provisions that impact our business, including:

• providing a one percent excise tax on repurchases of stock made after December 31, 2022;

• extending the American Rescue Plan Act of 2021's enhanced Premium Tax Credits for three years from January 2023 to January 2026;

• instituting caps on insulin cost sharing in federal Medicare Part B medical insurance ("Part B") and federal Medicare Part D prescription drug program ("Part D") beginning in 2023 and removing deductibles for insulin provided via durable medical equipment under Part B beginning in July 2023;

• adding a requirement that drug manufacturers pay rebates beginning in 2023 if prescription drug prices for certain Part B and Part D drugs increase beyond inflation;

• redesigning of the Part D benefit in 2024 and capping of annual out-of-pocket costs starting in 2025;

• allowing CMS to select Part D and Part B drugs for the drug price negotiation program beginning in 2023 and 2026, respectively, with the maximum fair prices for select Part D drugs taking effect in 2026;

• delaying implementation of the 2020 Medicare drug rebate rule to 2032.

Kaiser Permanente

In April 2022, we entered into a five-year agreement with Kaiser Permanente aimed at delivering increased convenience, affordability and expanded access to high-quality care for Kaiser Permanente members.

Initially, the agreement will focus on providing Kaiser Permanente and its members access to:

• Cigna's Preferred Provider Organization ("PPO") provider network for Kaiser Permanente members who need urgent or emergency care and are traveling outside of Kaiser Permanente's service areas, and

• specialty pharmacy services through Evernorth's Accredo specialty pharmacy and Evernorth's CuraScript SD.

In April 2022, we entered into a five-year agreement with Kaiser Permanente.

Initially, the agreement will focus on providing Kaiser Permanente and its members access to Cigna's Preferred Provider Organization ("PPO") provider network for Kaiser Permanente members who need urgent or emergency care and are traveling outside of Kaiser Permanente's service areas and specialty pharmacy services through Evernorth.

The agreement has the potential to extend in additional areas.

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Sale of International Life, Accident and Supplemental Benefits Businesses in Six Countries

On July 1, 2022, we completed the sale of our life, accident and supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) to Chubb INA Holdings, Inc.

As discussed in Notes 4 and 5 to the Consolidated Financial Statements, on July 1, 2022, we completed the sale of our life, accident and supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) to Chubb INA Holdings, Inc.

("Chubb") for approximately $5.4 billion in cash (the "Chubb transaction").

as previously agreed, we excluded our interest in a joint venture in Türkiye from the Chubb Transaction.

We aggregated and classified the assets and liabilities of these businesses as held for sale in our Consolidated Balance

Sheets as of June 30, 2022 and December 31, 2021.

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

The "Liquidity and Capital Resources" section of this MD&A provides further information on the impact of this transaction to liquidity.

See "Other Operations" section of this MD&A for further information on the results of these businesses.

See "Other Operations" section of this MD&A for further information on the results of these businesses prior to the divestiture.

Purchase of MDLIVE

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Medicare Star Quality Ratings ("Star Ratings")

The Centers for Medicare & Medicaid Services ("CMS") uses a Star Rating system to measure how well Medicare Advantage ("MA") plans perform, scoring how well plans perform in several categories, including quality of care and customer service.

CMS uses a Star Rating system to measure how well Medicare Advantage ("MA") plans perform.

Categories of measurement include quality of care and customer service.

Star Ratings range from one to five stars.

CMS recognizes plans with Star Ratings of four stars or greater with quality bonus payments and the ability to offer enhanced benefits.

Approximately 87% of our MA customers were in four star or greater plans for bonus payments received in 2021 and approximately 89% were in four star or greater plans for bonus payments to be received in 2022;

we expect this percentage to decrease to 85% for bonus payments to be received in 2023 based upon the mix of new and existing MA plans.

Approximately 89% of our MA customers were in four star or greater plans for bonus payments to be received in 2022 and we expect 84% to be in four star or greater plans for bonus payments to be received in 2023.

On October 7, 2022, CMS announced Medicare Star ratings for bonus payments to be received in 2024.

Based upon the current customer mix associated with the announced star ratings, we estimate 67% of our MA customers will be in four star or greater plans.

Medicare Advantage Rates

On April 4, 2022, CMS released the final Calendar Year 2023 Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (the "2023 Final Notice").

While the 2023 Final Notice rates are modestly higher than the advance notice rates (previously released on February 2, 2022), we do not expect the final rates to have a material impact on our consolidated results of operations in 2023.

While the 2023 Final Notice rates are modestly higher than the advance notice rates (previously

released on February 2, 2022), we do not expect the final rates to have a material impact on our consolidated results of operations in 2023.

LIQUIDITY AND CAPITAL RESOURCES

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Most of the Evernorth segment operations are not subject to regulatory restrictions regarding dividends and therefore provide significant financial flexibility to Cigna.

Cash flows for the six months ended June 30 were as follows:

Six Months Ended June 30,

Cash flows for the nine months ended September 30 were as follows:

Nine Months Ended September 30,

(In millions) 2022 2021

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Financing activities $ (8,604) $ (5,841)

The following discussion explains variances in the various categories of cash flows for the six months ended June 30, 2022 compared with the same period in 2021.

The following discussion explains variances in the various categories of cash flows for the nine months ended September 30, 2022 compared with the same period in 2021.

Operating activities

Cash flows from operating activities consist principally of cash receipts and disbursements for pharmacy revenues and costs, premiums, fees, investment income, taxes, benefit costs and other expenses.

As a result of the receipt of the delayed 2021 CMS Part D settlement, lower income tax payments and timing of payments in accounts payable and accrued liabilities in 2022 compared to 2021, cash provided by operating activities increased.

Operating cash flows for the nine months ended September 30, 2022 include the benefits from the early receipt of October 2022 monthly payments from CMS and the delayed 2021 CMS Part D settlement.

The remaining benefits were driven by timing of accounts receivable and accrued liabilities as well as lower income tax payments, partially offset by lower insurance liabilities and higher inventories.

Investing and Financing activities

The Company acquired MDLIVE and had higher net purchases of investments in 2021.

These activities resulted in lower cash used in investing activities in 2022.

The Company repurchased less stock and repaid less debt, which resulted in a reduction in cash used in financing activities in 2022.

In 2022, the Company received cash proceeds from the Chubb transaction.

In 2021, the Company had cash outflows related to the acquisition of MDLIVE.

These factors, along with lower net purchases of investments in 2022, resulted in higher cash inflow from investing activities in 2022 compared with 2021.

The Company repaid more debt, partially offset by lower stock repurchases, which resulted in an increase in cash used in financing activities in 2022.

Capital Resources

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Dividends from U.S.

regulated subsidiaries were $1.0 billion for the six months ended June 30, 2022 and $1.3 billion for the six months ended June 30, 2021.

regulated subsidiaries were $1.4 billion for the nine months ended September 30, 2022 and $2.1 billion for the nine months ended September 30, 2021.

Non-regulated subsidiaries also generate significant cash flow from operating activities, which is typically available immediately to the parent company for general corporate purposes.

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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 above.

As of June 30, 2022, Cigna's revolving credit agreements include:

As of September 30, 2022, Cigna's revolving credit agreements include:

a $3.0 billion five-year revolving credit and letter of credit agreement that expires in April 2027;

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and a $1.0 billion 364-day revolving credit agreement that expires in April 2023.

As of June 30, 2022, we had $5.0 billion of undrawn committed capacity under our revolving credit agreements (these amounts are available for general corporate purposes, including providing liquidity support for our commercial paper program), $3.2 billion of remaining capacity under our commercial paper program and $4.6 billion in cash and short-term investments, approximately $0.7 billion of which was held by the parent company or certain non-regulated subsidiaries.

As of September 30, 2022, we had $5.0 billion of undrawn committed capacity under our revolving credit agreements (these amounts are available for general corporate purposes, including providing liquidity support for our commercial paper program), $5.0 billion of remaining capacity under our commercial paper program and $7.2 billion in cash and short-term investments, approximately $0.8 billion of which was held by the parent company or certain non-regulated subsidiaries.

See Note 7 to the Consolidated Financial Statements for further information on our credit agreements and commercial paper program.

Our debt-to-capitalization ratio was 42.1% at June 30, 2022 and 41.7% at December 31, 2021.

Our debt-to-capitalization ratio was 41.2% at September 30, 2022 and 41.7% at December 31, 2021.

We actively monitor our debt obligations and engage in issuance or redemption activities as needed in accordance with our capital management strategy.

Subsidiary Borrowings.

In addition to the sources of liquidity discussed above, the parent company can borrow an additional $2.5 billion from its subsidiaries without further approvals as of June 30, 2022.

In addition to the sources of liquidity discussed above, the parent company can borrow an additional $3.5 billion from its subsidiaries without further approvals as of September 30, 2022.

Use of Capital Resources

Capital Expenditures .

Capital expenditures for property, equipment and computer software were $612 million in the six months ended June 30, 2022 compared to $500 million in the six months ended June 30, 2021.

We expect to continue to invest in technology that we believe will drive future growth.

Capital expenditures for property, equipment and computer software were $950 million in the nine months ended September 30, 2022 compared to $850 million in the nine months ended September 30, 2021.

This increase reflects our continued strategic investment in technology for future growth.

Anticipated capital expenditures will be funded primarily from operating cash flow.

During the first six months of 2022, Cigna declared and paid quarterly cash dividends of $1.12 per share of Cigna common stock.

During the first nine months of 2022, Cigna declared and paid quarterly cash dividends of $1.12 per share of Cigna common stock.

See Note 8 to the Consolidated Financial Statements for further information on our dividend payments.

On July 27, 2022, the

Board of Directors declared the third quarter cash dividend of $1.12 per share of Cigna common stock to be paid on September 22, 2022 to shareholders of record on September 7, 2022.

On October 26, 2022, the Board of Directors declared the fourth quarter cash dividend of $1.12 per share of Cigna common stock to be paid on December 21, 2022 to shareholders of record on December 6, 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.

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In February 2022, the Board increased repurchase authority by an additional $6.0 billion.

We repurchased 9.7 million shares for approximately $2.3 billion during the six months ended June 30, 2022, compared to 16.3 million shares for approximately $3.7 billion during the six months ended June 30, 2021.

From July 1, 2022 through August 3, 2022, we repurchased 10.4 million shares through the initial delivery under the accelerated share repurchase agreements ("ASR agreements") discussed below.

Share repurchase authority was $5.3 billion as of August 3, 2022.

On June 15, 2022, as part of our existing share repurchase program, we entered into separate ASR agreements with Mizuho Markets Americas LLC and Morgan Stanley & Co.

We repurchased 20.1 million shares for approximately $5.8 billion during the nine months ended September 30, 2022, compared to 26.5 million shares for approximately $6.3 billion during the nine months ended September 30, 2021.

From October 1, 2022, through November 2, 2022, we did not repurchase shares except for the accelerated share repurchases discussed below.

Share repurchase authority was $5.3 billion as of November 2, 2022.

As part of our existing share repurchase program, we entered into separate accelerated share repurchase agreements ("ASR agreements") with Mizuho Markets Americas LLC and Morgan Stanley & Co.

LLC (collectively, the "Counterparties") to repurchase $3.5 billion of common stock in aggregate.

In July 2022, in accordance with the ASR agreements we remitted $3.5 billion to the Counterparties and received an initial delivery of 10.4 million shares of our common stock.

We expect final settlement under the ASR agreements to occur in the fourth quarter of 2022.

The final Volume-Weighted Average Share Price calculation dates of the ASR agreements are November 2, 2022 and November 3, 2022.

In aggregate, we expect to receive an additional 1.9 million shares of our common stock for no additional consideration as the value of this stock was held back by the Counterparties pending final settlement of the agreements.

See Note 8 to the Consolidated Financial Statements for further information on our ASR agreements.

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Cigna estimates it will receive approximately $5.1 billion of net after-tax proceeds from this transaction and expects to utilize the after-tax proceeds primarily for share repurchases, with $3.5 billion used to fund the purchases of our common stock pursuant to the ASR agreements (as described above).

Net after-tax proceeds of approximately $5.1 billion were utilized primarily for share repurchases, with $3.5 billion used to fund the purchases of our common stock pursuant to the ASR agreements (as described above).

Risks to our liquidity and capital resources outlook include cash projections that may not be realized and the demand for funds could exceed available cash if our ongoing businesses experience unexpected shortfalls in earnings or we experience material adverse effects from one or more risks or uncertainties described more fully in the "Risk Factors" section of our 2021 Form 10-K.

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No guarantees are provided by Cigna or any of our subsidiaries under the program.

We have been informed by the financial institution that $133 million as of June 30, 2022 and $331 million as of December 31, 2021 of our outstanding payment obligations were voluntarily elected by suppliers to be sold to the financial institution under the program.

We have been informed by the financial institution that less than $1 million as of September 30, 2022 and $331 million as of December 31, 2021 of our outstanding payment obligations were voluntarily elected by suppliers to be sold to the financial institution under the program.

These amounts are reflected in Accounts payable in Cigna's Consolidated Balance Sheets.

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See Note 18 to the Consolidated Financial Statements for discussion of various guarantees.

During the six months ended June 30, 2022, there was no material change to the contractual obligations reported in our 2021 Form 10-K.

As reported in our 2021 Form 10-K contractual obligations for insurance liabilities, we had $22.3 billion of undiscounted obligations related to contractholder deposit funds, future policy benefits and unpaid claims and claim expenses.

As a result of the Chubb transaction our undiscounted obligations decreased by approximately $6.1 billion to $16.2 billion.

See Note 9 to the Consolidated Financial Statements for additional information regarding insurance liabilities.

There was no material change to any other obligations reported in our 2021 Form 10-K during the nine months ended September 30, 2022.

CRITICAL ACCOUNTING ESTIMATES

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Our most critical accounting estimates, as well as the effect of hypothetical changes in material assumptions used to develop each estimate, are described in the 2021 Form 10-K.

As of June 30, 2022, there were no significant changes to the critical accounting estimates from what was reported in our 2021 Form 10-K.

As of September 30, 2022, there were no significant changes to the critical accounting estimates from what was reported in our 2021 Form 10-K.

Goodwill and Other intangible assets

Our annual evaluations of goodwill and other intangible assets for impairments were completed during the third quarter of 2022.

These evaluations were performed at the reporting unit level, based on discounted cash flow analyses or market data.

The estimated fair value of each of our reporting units exceeded their carrying values by sufficient margins.

Management believes the current assumptions used to estimate amounts reflected in our Consolidated Financial Statements are appropriate.

However, if actual experience significantly differs from the assumptions used in estimating amounts reflected in our Consolidated Financial Statements, the resulting changes could have a material adverse effect on our consolidated results of operations and in certain situations, could have a material adverse effect on liquidity and our financial condition.

SEGMENT REPORTING

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During the fourth quarter of 2021, in connection with the Chubb transaction, we revised our business reporting structure and adjusted our segment reporting accordingly.

Segment results for the three and six months ended June 30, 2021 have been restated to conform to the new segment presentation.

Segment results for the three and nine months ended September 30, 2021 have been restated to conform to the new segment presentation.

See Note 1 to the Consolidated Financial Statements for further description of our segments.

In segment discussions, we present "adjusted revenues" and "pre-tax adjusted income (loss) from operations," defined as income (loss) 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.

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.

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• The mix of claims generally considers the type of drug and distribution method used for dispensing and fulfilling.

Types of drugs can have an impact on our pharmacy revenues, pharmacy and other service costs and gross profit, including amounts

payable under certain financial and performance guarantees with our clients.

Types of drugs can have an impact on our pharmacy revenues, pharmacy and other service costs and gross profit, including amounts payable under certain financial and performance guarantees with our clients.

In addition to the types of drugs, the mix of generic claims (i.e., generic fill rate) also impacts our gross profit.

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Financial Summary Three Months Ended

June 30, Change Favorable

(Unfavorable) Six Months Ended

June 30, Change Favorable

September 30, Change Favorable

(Unfavorable) Nine Months Ended

September 30, Change Favorable

(Unfavorable)

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Three Months Ended

June 30, Change Favorable

(Unfavorable) Six Months Ended

June 30, Change Favorable

September 30, Change Favorable

(Unfavorable) Nine Months Ended

September 30, Change Favorable

(Unfavorable)

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1,877 1,625 16 5,316 4,403 21

Net investment income 16 5 220 26 8 225

Net investment income 25 4 N/M 51 12 N/M

Adjusted revenues (1)

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(4) Generic fill rate is defined as the total number of generic scripts divided by the total overall scripts filled.

Three and Six Months Ended June 30, 2022 versus Three and Six Months Ended June 30, 2021

Adjusted network revenues increased for the six months ended June 30, 2022, reflecting increased prices due to inflation on branded drugs;

partially offset by lower claims volume and a slight change in claims mix due to an increase in the generic fill rate.

Adjusted network revenues decreased for the three months ended, reflecting lower claims volume and a slight change in claims mix due to an increase in the generic fill rate;

partially offset by increased prices due to inflation on branded drugs.

Adjusted home delivery and specialty revenues increased, reflecting higher specialty claims volume due in part to our collaboration with Prime Therapeutics, as well as increased prices, primarily due to inflation on branded drugs.

These increases were partially offset by slightly lower home delivery claims volume.

Other pharmacy revenues increased, reflecting higher volume from our CuraScript SD business.

Adjusted fees and other revenues increased, reflecting customer growth from our Pharmacy Rebate Program services and the acquisition and subsequent growth of the MDLIVE business.

Adjusted gross profit and pre-tax adjusted income from operations increased, reflecting continued contract affordability improvements and business growth.

The increase was partially offset by strategic investments in expanding our services portfolio and digital capabilities as well as lower volume in our network and home delivery businesses.

Pre-tax adjusted income from operations also increased due to expense favorability.

The adjusted expense ratio was flat, reflecting higher revenues as well as increased strategic investments in expanding our services portfolio and digital capabilities.

Three and Nine Months Ended September 30, 2022 versus Three and Nine Months Ended September 30, 2021

Adjusted network revenues increased for the three months ended September 30, 2022, reflecting an increase in claims mix and increased prices due to inflation on branded drugs;

partially offset by lower claims volume.

Adjusted network revenues increased for the nine months ended September 30, 2022, reflecting increased prices due to inflation on branded drugs, partially offset by lower claims volume.

Adjusted home delivery and specialty revenues increased for the three months ended September 30, 2022, reflecting higher specialty claims volume due in part to our collaboration with Prime Therapeutics.

Adjusted home delivery and specialty revenues increased for the nine months ended September 30, 2022, reflecting higher specialty claims volume due in part to our collaboration with Prime Therapeutics, and increased prices, primarily due to inflation on branded drugs;

partially offset by lower home delivery claims volume.

Other pharmacy revenues decreased for the three months ended September 30, 2022, reflecting lower volume from our CuraScript SD business.

Other pharmacy revenues increased for the nine months ended September 30, 2022, reflecting higher volume from our CuraScript SD business.

Adjusted fees and other revenues increased, reflecting customer growth from our continued contract affordability services and the growth of the Care Plus services.

Adjusted gross profit and pre-tax adjusted income from operations increased, reflecting continued contract affordability improvements and business growth, partially offset by strategic investments in expanding our services portfolio and digital capabilities.

The adjusted expense ratio increased, reflecting higher revenues and expense discipline which enabled us to increase strategic investments in expanding our services portfolio and digital capabilities.

Cigna Healthcare Segment

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Results of Operations

Financial Summary Three Months Ended June 30, Change Favorable

(Unfavorable) Six Months Ended June 30, Change Favorable

Financial Summary Three Months Ended September 30, Change Favorable

(Unfavorable) Nine Months Ended September 30, Change Favorable

(Unfavorable)

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Adjusted expense ratio 21.9 % 20.7 % (120) bps 21.0 % 20.6 % (40) bps

Three and Six Months Ended June 30, 2022 versus Three and Six Months Ended June 30, 2021

Adjusted revenues increased for the three months and six months ended June 30, 2022, reflecting increases in U.S.

Commercial partially offset by decreases in U.S.

The increases in U.S.

Commercial adjusted revenues reflects increased specialty contributions, higher premium rates due to anticipated underlying medical cost trend as well as customer growth.

The decreases in U.S.

Government adjusted revenues reflects the disposition of the Medicaid business.

Pre-tax adjusted income from operations increased for the three months and six months ended June 30, 2022, reflecting increased contributions from U.S.

Commercial, U.S.

Government and International Health.

These increases were primarily due to lower medical care ratios and increased specialty contributions in U.S.

partially offset by the absence of favorable non-recurring items recorded in 2021.

The medical care ratio decreased for the three months and six months ended June 30, 2022, primarily due to medical costs that have moderated since 2021, including lower direct COVID-19 costs and effective execution in pricing and affordability initiatives, in U.S.

Commercial as well as improved Medicare Advantage risk adjustment revenues.

The decrease for the six months ended June 30, 2022 was partially offset by U.S.

Government risk adjustment updates related to prior years that were recognized in the first quarter of 2022.

The adjusted expense ratio increased for the three months ended June 30, 2022, primarily reflecting the absence of favorable litigation developments recor ded in 2021.

The adjusted expense ratio was flat for the six months ended June 30, 2022.

Three and Nine Months Ended September 30, 2022 versus Three and Nine Months Ended September 30, 2021

Adjusted revenues were essentially flat for the three months and nine months ended September 30, 2022, primarily reflecting increased specialty contributions, higher premium rates due to anticipated underlying medical cost trend and customer growth in U.S.

Commercial, mostly offset by a decrease in U.S.

Government customers, including the disposition of the Medicaid business, as well as lower net investment income.

Pre-tax adjusted income from operations increased for the three months and nine months ended September 30, 2022, primarily due to lower medical care ratios in U.S.

Commercial and U.S.

Government and increased specialty contributions in U.S.

Commercial, offset by lower net investment income.

The medical care ratio decreased for the three months and nine months ended September 30, 2022, reflecting lower medical costs, primarily due to decreased direct COVID-19 testing, treatment and vaccine costs in U.S.

Commercial and U.S.

Government, as well as for the nine months ended September 30, 2022, effective execution in pricing and affordability initiatives.

The adjusted expense ratio increased for the three months and nine months ended September 30, 2022, due to a higher expense ratio in U.S.

Government reflecting a change in mix and increased costs to support future growth as well as lower net investment income.

These increases were partially offset by revenue growth and expense efficiencies in U.S.

Commercial and International Health.

Medical Customers

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There have been no updates to the Select (employers generally with 51 to 499 eligible employees) or Small Group (employers generally with 2 to 50 eligible employees) market segments.

As of June 30,

As of September 30,

(In thousands) 2022 2021 % Change

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(1) International Health excludes medical customers served by less than 100% owned subsidiaries and customers that are part of the businesses sold pursuant to the Chubb transaction.

Our medical customer base increased at June 30, 2022, reflecting growth in our Middle Market, Select and International Health market segments;

partially offset by the disposition of the Medicaid business.

Our medical customer base increased at September 30, 2022, reflecting growth in our fee-based products from Middle Market and Select market segments as well as International Health, partially offset by the disposition of the Medicaid business.

Unpaid Claims and Claim Expenses

(In millions) As of June 30, 2022 As of December 31, 2021 % Change

(In millions) As of September 30, 2022 As of December 31, 2021 % Change

Unpaid claims and claim expenses – Cigna Healthcare

$ 4,250 $ 4,261 — %

Our unpaid claims and claim expenses liability was higher as of June 30, 2022, primarily due to stop loss seasonality;

partially offset by Medicare Part D invoice cycle timing and the disposition of the Medicaid business.

Our unpaid claims and claim expenses liability was slightly lower as of September 30, 2022, primarily driven by timing of payments in U.S.

Government as well as the disposition of Medicaid, offset by stop loss seasonality.

Other Operations

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Results of Operations

Financial Summary Three Months Ended June 30, Change

(Unfavorable) Six Months Ended

June 30, Change

Financial Summary Three Months Ended September 30, Change

(Unfavorable) Nine Months Ended

September 30, Change

(Unfavorable)

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Pre-tax adjusted margin 11.1 % 22.5 % (1140) bps 22.9 % 22.4 % 50 bps

Three and Six Months Ended June 30, 2022 versus Three and Six Months Ended June 30, 2021

Adjusted revenues decreased primarily due to unfavorable foreign currency movements, largely offset by business growth and higher net investment income in the International businesses.

Pre-tax adjusted income from operations increased primarily due to higher earnings in the Run-off businesses and COLI.

Three and Nine Months Ended September 30, 2022 versus Three and Nine Months Ended September 30, 2021

Adjusted revenues and Pre-tax adjusted income from operations decreased primarily due to the absence of revenues and earnings from the businesses divested in the Chubb transaction.

Other Items Related to International Businesses Sold to Chubb

For the three months ended June 30, 2022 , 84% of Other Operations' adjusted revenues and 85% of its pre-tax adjusted income from operations was associated with International businesses sold to Chubb on July 1, 2022.

For the six months ended June 30, 2022, 84% of Other Operations' adjusted revenues and 88% of its pre-tax adjusted income from operations was associated with sold International businesses;

as a result of the sale, Other Operations' adjusted revenues and pre-tax adjusted income from operations will decrease in future periods.

For the nine months ended September 30, 2022, 78% of Other Operations' adjusted revenues and 85% of its pre-tax adjusted income from operations was associated with sold International businesses.

Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate debt less net investment income on investments not supporting segment and other operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, severance, certain overhead and enterprise-wide project costs and intersegment eliminations for products and services sold between segments.

Financial Summary Three Months Ended

June 30, Change Favorable (Unfavorable) Six Months Ended June 30, Change Favorable (Unfavorable)

September 30, Change Favorable (Unfavorable) Nine Months Ended September 30, Change Favorable (Unfavorable)

(In millions) 2022 2021 2022 2021

Pre-tax adjusted loss from operations $ (316) $ (308) (3) % $ (1,060) $ (1,006) (5) %

Three and Six Months Ended June 30, 2022 versus Three and Six Months Ended June 30, 2021

Three and Nine Months Ended September 30, 2022 versus Three and Nine Months Ended September 30, 2021

Pre-tax adjusted loss from operations increased, reflecting an increase in operating expenses for enterprise-wide initiatives.

INVESTMENT ASSETS

The following table presents our investment asset portfolio excluding separate account assets as of June 30, 2022 and December 31, 2021.

The following table presents our investment asset portfolio excluding separate account assets as of September 30, 2022 and December 31, 2021.

Additional information regarding our investment assets is included in Notes 11, 12, 13 and 14 to the Consolidated Financial Statements.

(In millions) June 30,

(In millions) September 30,

2022 December 31, 2021

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Short-term investments 136 428

Total 21,996 24,467

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

(4,518) (5,109)

Investments per Consolidated Balance Sheets $ 17,056 $ 19,358

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

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

See Note 4 to the Consolidated Financial Statements for additional information.

Investment Outlook

We continue to actively monitor current economic conditions driven by the pace of the pandemic recovery, recent geopolitical events and fiscal and monetary policy responses (including the resulting supply chain and labor market dynamics), and the portfolio impact of recent higher levels of both interest rates and inflation.

We continue to actively monitor current economic conditions driven by geopolitical events and fiscal and monetary policy responses (including the resulting supply chain and labor market dynamics), and the portfolio impact of ongoing higher levels of both interest rates and inflation.

Future realized and unrealized investment results will be driven largely by market conditions and these future conditions are not reasonably predictable.

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Based on our strategy to match the duration of invested assets to the duration of insurance and contractholder liabilities, we expect to hold a significant portion of these assets for the long-term.

The below discussion addresses the strategies and risks associated with our various classes of investment assets.

Although future declines in investment fair values resulting from interest rate movements and credit deterioration due to both investment-specific and the global economic uncertainties in the following discussion remain possible, we do not expect these losses to have a material adverse effect on our financial condition or liquidity.

The following discussion addresses the strategies and risks associated with our various classes of investment assets.

Although future declines in investment fair values remain possible due to interest rate movements and credit deterioration due to both investment-specific uncertainties and global economic uncertainties as discussed below, we do not expect these losses to have a material adverse effect on our financial condition or liquidity.

Debt Securities

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More detailed information about debt securities by type of issuer and maturity dates is included in Note 11 to the Consolidated Financial Statements.

The following table reflects our portfolio of debt securities by type of issuer as of June 30, 2022 and December 31, 2021:

(In millions) June 30,

The following table reflects our portfolio of debt securities by type of issuer as of September 30, 2022 and December 31, 2021:

(In millions) September 30,

2022 December 31,

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Foreign government 369 2,616

10,754 13,266

Mortgage and other asset-backed 345 518

Total $ 9,830 $ 16,958

Our debt securities portfolio decreased during the six months ended June 30, 2022, reflecting a decrease in valuations driven by a significant rise in treasury rates and credit spreads, and net sales activity.

As of June 30, 2022, $12.0 billion, or 86% of the debt securities in our investment portfolio were investment grade (Baa and above, or equivalent) and the remaining $1.9 billion were below investment grade.

Our debt securities portfolio decreased during the nine months ended September 30, 2022 primarily due to the completion of our transaction with Chubb during the third quarter (see Note 4 to the Consolidated Financial Statements) and a decrease in valuations due to a significant rise in interest rates.

As of September 30, 2022, $7.9 billion, or 81% of the debt securities in our investment portfolio were investment grade (Baa and above, or equivalent) and the remaining $1.9 billion were below investment grade.

The majority of the bonds that are below investment grade are rated at the higher end of the non-investment grade spectrum.

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On an aggregate basis, the debt securities portfolio continues to perform according to original investment expectations.

Elevated global inflation rates experienced during 2022, as well as continuing supply chain disruptions have displaced the ongoing impacts of the COVID-19 pandemic as the primary risks that many of the issuers in our portfolio are facing.

Elevated global inflation and rising interest rates experienced during 2022, as well as continuing supply chain disruptions are the primary risks that many of the issuers in our portfolio are facing.

To date, most issuers have been successful in managing the cost escalation and product shortages without undue margin pressure.

We continue to monitor the economic environment and its effect on our portfolio and consider the impact of various factors in determining the allowance for credit losses on debt securities, which is discussed in Note 11 to the Consolidated Financial Statements.

Foreign government obligations are concentrated in Asia, primarily South Korea and Taiwan, consistent with our risk management practice and local regulatory requirements of our international business operations.

We expect the amount of these foreign government obligations to decrease significantly upon the close of our sale of certain international businesses during the third quarter of 2022 as discussed in Note 5 to the Consolidated Financial Statements.

Commercial Mortgage Loans

As of June 30, 2022, the $1.6 billion commercial mortgage loan portfolio consisted of approximately 50 fixed rate loans, diversified by property type, location and borrower.

As of September 30, 2022, the $1.6 billion commercial mortgage loan portfolio consisted of approximately 50 fixed rate loans, diversified by property type, location and borrower.

Given the quality and diversity of the underlying real estate, positive debt service coverage and significant borrower cash invested in the property generally ranging between 30 and 40%, we remain confident that the vast majority of borrowers will continue to perform as expected under their contract terms.

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Other Long-term Investments

Other long-term investments of $4.1 billion as of June 30, 2022 included investments in securities limited partnerships and real estate limited partnerships, direct investments in real estate joint ventures and other deposit activity that is required to support various insurance and health services businesses.

The increase in other long-term investments of $0.5 billion since December 31, 2021 is primarily driven by net additional funding activity and value creation in the underlying investments.

Other long-term investments of $3.6 billion as of September 30, 2022 included investments in securities limited partnerships and real estate limited partnerships, direct investments in real estate joint ventures and other deposit activity that is required to support various insurance and health services businesses.

The balance of other long-term investments is flat with December 31, 2021 reflecting net additional funding activity offset by the effects of completing our transaction with Chubb during the third quarter (see Note 4 to the Consolidated Financial Statements) .

These limited partnership entities typically invest in mezzanine debt or equity of privately-held companies and equity real estate.

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Income from our limited partnership investments is generally reported on a one quarter lag due to the timing of when financial information is received from the general partner or manager of the investments.

Accordingly, our net investment income in the second quarter largely reflects the underlying financial information from the first quarter of 2022.

Accordingly, our net investment income in the third quarter largely reflects the underlying financial information from the second quarter of 2022.

We expect continued volatility in private equity and real estate fund performance going forward as fair market valuations are adjusted to reflect market and portfolio transactions.

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We account for this joint venture under the equity method of accounting and report our share of the net assets of $0.9 billion in Other assets.

Our 50% share of the investment portfolio supporting the joint venture's liabilities is approximately $9.0 billion as of June 30, 2022.

Our 50% share of the investment portfolio supporting the joint venture's liabilities is approximately $9.0 billion as of September 30, 2022.

These investments were comprised of approximately 75% debt securities, including government and corporate debt diversified by issuer, industry and geography;

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and 10% long-term deposits and policy loans.

Approximately 1% of the joint venture's investment assets are exposed to private real estate property developers in the China market.

We participate in the approval of the joint venture's investment strategy and continuously review its execution.

There were no investments with a material unrealized loss as of June 30, 2022.

There were no investments with a material unrealized loss as of September 30, 2022.

Financial Instruments

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We encourage you to read this in conjunction with "Market Risk – Financial Instruments" included in the MD&A section of our 2021 Form 10-K.

Due primarily to decreases in the fair value of our debt securities and long-term debt since December 31, 2021, the effect of hypothetical changes in market rates or prices on the fair value of certain financial instruments has changed.

In the event of a hypothetical 100 basis point increase in interest rates, the fair value of certain non-insurance financial instruments would decrease approximately $1.1 billion at June 30, 2022 compared to $1.4 billion at December 31, 2021.

Further, under the same hypothetical 100 basis point increase in interest rates scenario, the fair value of the Company's long-term debt would decrease approximately $2.0 billion at June 30, 2022 compared to approximately $2.9 billion at December 31, 2021.

Changes in the fair value of our long-term debt do not impact our financial position or operating results.

After the Chubb Transaction we expect reductions in our risk exposures to interest rates and foreign currency exchange rates.

The impact of a hypothetical 100 basis point increase in interest rates on the fair value of certain non-insurance financial instruments of a $1.1 billion decrease cited above would decline to a $0.8 billion decrease excluding the businesses held for sale as of June 30, 2022.

The impact of a hypothetical 10% strengthening in the U.S.

dollar to foreign currencies excluding the businesses held for sale would be an insignificant amount as of June 30, 2022 as compared to a decrease of approximately $0.3 billion as of December 31, 2021.

As a result of decreases in the fair value of our debt securities and long-term debt since December 31, 2021, as well as the effect of completing the Chubb transaction as described in Note 4 to the Consolidated Financial Statements, the effect of hypothetical changes in market rates or prices on the fair value of certain financial instruments has changed.

In the event of a hypothetical 100 basis point increase in interest rates, the fair value of certain non-insurance financial instruments would decrease approximately $0.7 billion at September 30, 2022 compared to $1.4 billion at December 31, 2021.

Further, under the same hypothetical 100 basis point increase in interest rates scenario, the fair value of the Company's long-term debt would decrease approximately $1.8 billion at September 30, 2022 compared to approximately $2.9 billion at December 31, 2021.

Changes in the fair value of our long-term debt do not impact our financial position or operating results since long-term debt is not required to be recorded at fair value.

In addition, the impact of a hypothetical 10% strengthening in the U.S.

dollar to foreign currencies would be an insignificant amount as of September 30, 2022 as compared to a decrease of approximately $0.3 billion as of December 31, 2021.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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 2. Management’s Discussion and Analysis