What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-05 compared with 2022-11-03 · 470 added, 590 removed, 687 unchanged (61% of the section changed)

FINANCIAL STATEMENTS

Cigna Corporation

The Cigna Group

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) 2023 2022 (1)

12 unchanged sentences

Interest expense and other ( 358 ) ( 299 )

Debt extinguishment costs — — — ( 141 )

Gain on sale of businesses 1,735 — 1,735 —

Net realized investment (losses) gains ( 81 ) 68 ( 495 ) 128

Net realized investment losses

( 56 ) ( 322 )

Income before income taxes 1,601 1,567

6 unchanged sentences

Diluted $ 4.24 $ 3.73

(1) Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023.

See Note 2 to the Consolidated Financial Statements for further information.

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

Cigna Corporation

The Cigna Group

Consolidated Statements of Comprehensive Income

Unaudited Unaudited

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

Three Months Ended March 31,

(In millions) 2023 2022 (1)

1 unchanged sentence

Other comprehensive income (loss), net of tax

Net unrealized (depreciation) appreciation on securities and derivatives ( 99 ) 32 ( 1,069 ) ( 119 )

Net unrealized appreciation (depreciation) on securities and derivatives 194 ( 843 )

Net long-duration insurance and contractholder liabilities measurement adjustments ( 331 ) 459

Net translation gains (losses) on foreign currencies 16 ( 63 )

Postretirement benefits liability adjustment 10 13

Other comprehensive income (loss), net of tax 72 ( 77 ) ( 1,127 ) ( 298 )

Other comprehensive loss, net of tax ( 111 ) ( 434 )

Total comprehensive income 1,195 778

2 unchanged sentences

Net income attributable to other noncontrolling interests 5 12

Other comprehensive income (loss) attributable to redeemable noncontrolling interests 1 ( 1 ) ( 2 ) ( 6 )

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

Total comprehensive income attributable to noncontrolling interests 39 13

SHAREHOLDERS' COMPREHENSIVE INCOME $ 1,156 $ 765

(1) Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023.

See Note 2 to the Consolidated Financial Statements for further information.

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

Cigna Corporation

The Cigna Group

Consolidated Balance Sheets

September 30, As of

March 31, As of

(In millions) 2023 2022 (1)

4 unchanged sentences

Other current assets 1,263 1,298

Assets of businesses held for sale — 10,057

Total current assets 32,027 30,122

1 unchanged sentence

Reinsurance recoverables 5,286 5,416

Deferred policy acquisition costs 764 677

Property and equipment 3,837 3,774

9 unchanged sentences

Short-term debt 3,418 2,993

Liabilities of businesses held for sale — 6,423

Total current liabilities 44,727 41,225

17 unchanged sentences

Total liabilities and equity $ 147,976 $ 143,885

(1) Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023.

See Note 2 to the Consolidated Financial Statements for further information.

(2) Par value per share, $ 0.01 ;

shares issued, 397 million as of September 30, 2022 and 394 million as of December 31, 2021;

shares issued, 399 million as of March 31, 2023 and 398 million as of December 31, 2022;

authorized shares, 600 million.

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

Cigna Corporation

The Cigna Group

Consolidated Statements of Changes in Total Equity

Three Months Ended September 30, 2022

Three Months Ended March 31, 2023

(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, 2022 $ 4 $ 29,930 $ ( 2,080 ) $ 34,626 $ ( 16,588 ) $ 45,892 $ 30 $ 45,922 $ 45

Effects of issuing stock for employee benefits plans 165 ( 2 ) 163 163

Other comprehensive income 71 71 71 1

Net income 2,757 2,757 18 2,775 3

Common dividends declared (per share:

Balance at December 31, 2022, as retrospectively restated (1)

$ 4 $ 30,233 $ ( 1,658 ) $ 37,940 $ ( 21,844 ) $ 44,675 $ 13 $ 44,688 $ 66

Repurchase of common stock ( 700 ) ( 2,800 ) ( 3,500 ) ( 3,500 )

Other transactions impacting noncontrolling interests — — ( 6 ) ( 6 ) 1

Balance at September 30, 2022 $ 4 $ 29,395 $ ( 2,009 ) $ 37,041 $ ( 19,390 ) $ 45,041 $ 42 $ 45,083 $ 50

Three Months Ended September 30, 2021

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

Effect of issuing stock for employee benefit plans 99 ( 104 ) ( 5 ) ( 5 )

5 unchanged sentences

Other transactions impacting noncontrolling interests — ( 2 ) ( 2 ) ( 22 )

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

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, 2022

Balance at March 31, 2023 $ 4 $ 30,332 $ ( 1,769 ) $ 38,841 $ ( 22,906 ) $ 44,502 $ 16 $ 44,518 $ 78

Three Months Ended March 31, 2022 (1)

Balance at December 31, 2021 $ 4 $ 29,574 $ ( 884 ) $ 32,593 $ ( 14,175 ) $ 47,112 $ 18 $ 47,130 $ 54

Effect of issuing stock for employee benefit plans 521 ( 75 ) 446 446

Other comprehensive loss ( 1,125 ) ( 1,125 ) ( 1,125 ) ( 2 )

Net income 5,499 5,499 41 5,540 8

Common dividends declared (per share:

Balance at December 31, 2021, as retrospectively restated (1)

4 29,574 ( 1,068 ) 32,623 ( 14,175 ) 46,958 18 46,976 54

Repurchase of common stock ( 700 ) ( 5,140 ) ( 5,840 ) ( 5,840 )

Other transactions impacting noncontrolling interests — — ( 17 ) ( 17 ) ( 10 )

Balance at September 30, 2022 $ 4 $ 29,395 $ ( 2,009 ) $ 37,041 $ ( 19,390 ) $ 45,041 $ 42 $ 45,083 $ 50

Nine Months Ended September 30, 2021

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

Effect of issuing stock for employee benefit plans 162 ( 72 ) 90 90

5 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

Balance at March 31, 2022 $ 4 $ 29,736 $ ( 1,500 ) $ 33,464 $ ( 15,581 ) $ 46,123 $ 22 $ 46,145 $ 55

(1) Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023.

See Note 2 to the Consolidated Financial Statements to the Consolidated Financial Statements for further information.

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

Cigna Corporation

The Cigna Group

Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions) 2023 2022 (1)

3 unchanged sentences

Depreciation and amortization 749 717

Realized investment losses (gains), net

Realized investment losses, net

Deferred income tax benefit

( 108 ) ( 134 )

Gain on sale of businesses

Debt extinguishment costs — 141

Net changes in assets and liabilities, net of non-operating effects:

1 unchanged sentence

Inventories 566 222

Deferred policy acquisition costs ( 127 ) ( 182 )

Reinsurance recoverable and Other assets 72 584

15 unchanged sentences

Other (primarily short-term and other long-term investments)

( 377 ) ( 425 )

Property and equipment purchases, net ( 408 ) ( 288 )

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

Divestitures, net of cash sold 22 ( 57 )

Other, net ( 43 ) ( 6 )

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 3,714 ( 3,734 )

NET CASH USED IN INVESTING ACTIVITIES ( 2,983 ) ( 324 )

Cash Flows from Financing Activities

2 unchanged sentences

Net change in short-term debt ( 9 ) ( 463 )

Payments for debt extinguishment — ( 136 )

Repayment of long-term debt ( 80 ) —

8 unchanged sentences

Cash, cash equivalents and restricted cash January 1, (2)

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 (3)

$ 7,989 $ 4,469

2 unchanged sentences

Interest paid $ 322 $ 308

(1) Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023.

See Note 2 to the Consolidated Financial Statements for further information.

(2) 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 September 30, 2022 and September 30, 2021.

(3) Restricted cash and cash equivalents were reported in other long-term investments.

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

CIGNA CORPORATION

THE CIGNA GROUP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4 unchanged sentences

Accounts Receivable, Net

Supplier Finance Program

Mergers, Acquisitions and Divestitures

Assets and Liabilities of Businesses Held for Sale

Earnings Per Share

5 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

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

Organizational Efficiency Plan

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 affordable, predictable and simple.

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

The Cigna Group, together with its subsidiaries (either individually or collectively referred to as the "Company", "we," "us" or "our"), is a global health company with a mission of helping those we serve improve their health and vitality.

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

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

On July 1, 2022, the Company completed the sale of its 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") (see Notes 4 and 5).

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 nine months ended September 30, 2021 have been restated to conform to the new segment presentation (see Note 19).

Cigna Healthcare 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, The Cigna Group also has certain run-off operations.

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 benefits services, specialty pharmacy and care services, which are provided to health plans, employers, government organizations and health care providers.

Cigna Healthcare includes U.S.

Evernorth Health Services 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 Benefits, Home Delivery Pharmacy, Specialty Pharmacy, Distribution and Care Delivery and Management Solutions, which are provided to health plans, employers, government organizations and health care providers.

Cigna Healthcare includes the 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.

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

Commercial products and services include medical, pharmacy, behavioral health, dental and other products and services for insured and self-insured clients.

Government solutions include Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors and individual health insurance plans.

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.

• Exiting businesses:

• International Life, Accident and Supplemental Benefits Businesses in six countries sold on July 1, 2022 pursuant to the Chubb transaction.

• Our interest in a joint venture in Türkiye:

In October 2022, we entered into an agreement to sell our interest to our partner.

We are targeting to close the transaction by the end of 2022, subject to applicable regulatory approvals and customary closing conditions.

• Run-off businesses:

• Reinsurance:

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 and other businesses in run-off.

• Individual Life Insurance and Annuity and Retirement Benefits businesses:

deferred gains from the sales of these 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.

Other Operations comprises the remainder of our business operations, which includes ongoing businesses and exited businesses.

Our ongoing businesses include continuing business (corporate-owned life insurance ("COLI")) and our run-off businesses.

Our run-off businesses include (i) variable annuity reinsurance business (also referred to as "guaranteed minimum death benefit ("GMDB") and guaranteed minimum income benefit ("GMIB") business) that was effectively exited through reinsurance with Berkshire Hathaway Life Insurance Company of Nebraska ("Berkshire") in 2013, (ii) settlement annuity business, and (iii) individual life insurance and annuity and retirement benefits businesses comprised of deferred gains from the sales of these businesses.

Our exited businesses include our interest in a joint venture in Türkiye, which was sold in December 2022 and the international life, accident and supplemental benefits businesses sold in July 2022 (the "Chubb transaction").

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, operating severance, certain overhead and enterprise-wide project costs and intersegment eliminations for products and services sold between segments.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements include the accounts of Cigna Corporation and its consolidated subsidiaries.

The Consolidated Financial Statements include the accounts of The Cigna Group and its consolidated subsidiaries.

Intercompany transactions and accounts have been eliminated in consolidation.

These Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP").

Certain amounts in prior years have been reclassified to conform to the current year presentation.

Amounts recorded in the Consolidated Financial Statements necessarily reflect management's estimates and assumptions about medical costs, investment and receivable valuations, interest rates and other factors.

5 unchanged sentences

The preparation of interim Consolidated Financial Statements necessarily relies heavily on estimates.

This and other factors, including the seasonal nature of portions of the health care and related benefits business, competitive and other market conditions, as well as COVID-19 related impacts, call for caution in estimating full-year results based on interim results of operations.

This and other factors, including the seasonal nature of portions of the health care and related benefits business, as well as competitive and other market conditions, call for caution in estimating full-year results based on interim results of operations.

Recent Accounting Pronouncements

There were no new accounting standards adopted as of September 30, 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 Contracts ("LDTI") that are expected to impact Cigna's operations or our financial statements.

Targeted Improvements to the Accounting for Long-Duration Contracts (ASU 2018-12) and related amendments

Effective date of January 1, 2023 for Cigna (early adoption permitted) and requires the following key provisions (for insurance entities that issue long-duration contracts):

The Company's 2022 Form 10-K includes discussion of significant recent accounting pronouncements that either have impacted or may impact our financial statements in the future.

The following information provides updates on recently adopted accounting pronouncements that have occurred since the Company filed its 2022 Form 10-K.

There are no accounting pronouncements not yet adopted as of March 31, 2023.

Targeted Improvements to the Accounting for Long-Duration Contracts ("LDTI"), Accounting Standards Update ("ASU") 2018-12 and related amendments

The Cigna Group adopted LDTI January 1, 2023, which includes the following key provisions:

• Changes to the measurement of the future policy benefits liability for traditional and limited-pay insurance contracts:

• Assumptions used to measure cash flows (such as mortality, morbidity and lapse assumptions) to be updated at least annually with the effect of changes in those assumptions remeasured retrospectively and reflected in current period Net income.

• Discount rate assumptions to be updated quarterly based on market-level yields for low credit risk fixed income instruments ("upper-medium grade fixed-income instrument"), with any changes reflected in other comprehensive income.

• Assumptions used to measure cash flows (such as mortality, morbidity and lapse assumptions) are updated at least annually with the effect of changes in those assumptions remeasured retrospectively and reflected in current period net income.

• Discount rate assumptions are updated quarterly based on market-level yields for low credit risk fixed income instruments ("upper-medium grade fixed-income instrument"), with any changes reflected in other comprehensive income.

The upper-medium grade fixed-income instrument yield is interpreted to mean A-rated.

• Deferred policy acquisition costs ("DAC") related to long-duration insurance contracts to be amortized on a constant-level basis over the expected term of the related contracts.

• Deferred policy acquisition costs ("DAC") related to long-duration insurance contracts are amortized on a constant-level basis over the expected term of the related contracts.

Other related deferred or capitalized balances (such as unearned revenue liability and value of business acquired) may use this simplified amortization method.

• Market risk benefits (defined as protecting the contractholder from other-than-nominal capital market risk and exposing the insurer to that risk) to be measured at fair value, with changes in fair value recognized in Net income each period, except for the effect of changes in the insurance entity's credit risk to be recognized in other comprehensive income.

• Market risk benefits ("MRB"), defined as protecting the contractholder from other-than-nominal capital market risk and exposing the insurer to that risk, are measured at fair value, with changes in fair value recognized in net income each period, except for the effect of the Company's change in nonperformance risk (own credit risk), which is recognized in other comprehensive income.

• Additional disclosures, including disaggregated roll forwards for the liability for future policy benefits, market risk benefits, separate account liabilities and DAC, as well as information about significant inputs, judgments, assumptions and methods used in measurement.

• Transition methods at adoption vary:

• Changes to the liability for future policy benefits to use a modified retrospective approach applied to all outstanding contracts on the basis of their existing carrying amounts as of the beginning of the earliest period presented, with an option to elect a full retrospective transition under certain criteria.

Remeasuring the future policy benefits liability for the discount rate to be recorded through Accumulated other comprehensive loss at transition.

• DAC to follow the transition method used for future policyholder benefits.

• Market risk benefits to be transitioned retrospectively and measured at fair value at the beginning of the earliest period presented.

The difference between this fair value and carrying value to be recognized in the opening balance

of retained earnings, excluding the effect of credit risk changes that are to be recognized in Accumulated other comprehensive loss.

Expected effects:

• The new guidance will apply to our long-duration insurance products predominantly within the Cigna Healthcare segment and Other Operations.

• The Company developed a cross-functional implementation project plan and is executing on the necessary changes to our systems, processes and controls.

• The Company will adopt the standard on January 1, 2023, using the modified retrospective transition method for changes to the liability for future policy benefits and DAC.

We currently do not expect the impact of adoption to be material to Shareholders' equity.

• While we currently do not expect adoption to result in a material restatement of prior periods, we continue to model the new requirements of the standard and their impacts to financial results across various products.

It is possible that our income recognition pattern could change for several reasons:

• Applying periodic assumption updates, versus the current locked-in model, may change our timing of profit or loss recognition.

• DAC amortization will be on a constant level basis over the expected term of the related contracts and no longer tied to the emergence of profit on such contracts.

• Features, such as the Company's GMDB product, that provide market-risk benefits are not currently measured at fair value, so these liabilities and related reinsurance recoverables will become subject to market sensitivity, notably to interest rates.

In July 2022, the Financial Accounting Standards Board ("FASB") issued a proposed standard for comment that would simplify the retrospective adoption of LDTI.

The proposal would permit companies to make an accounting policy election to exclude contracts that are sold and removed from the balance sheet prior to the effective date of the standard from the retrospective adoption of LDTI.

If the FASB approves the proposed standard, Cigna expects to make this policy election for the contracts sold in the Chubb transaction.

• The transition methods applied at adoption were:

• The liability for future policy benefits was remeasured using a modified retrospective approach applied to all outstanding contracts as of the beginning of the earliest period presented and was recognized in the opening balance of retained earnings.

The impact of remeasuring the future policy benefits liability for the discount rate was recorded through accumulated other comprehensive income.

• DAC followed the transition method used for future policyholder benefits.

• Market risk benefits were remeasured at fair value at the beginning of the earliest period presented.

The difference between this fair value and carrying value was recognized in the opening balance of retained earnings, excluding the effect of the Company's change in nonperformance risk (own credit risk), which is recognized in accumulated other comprehensive income.

Effects of adoption:

• The new guidance applies to our long-duration insurance products predominantly within the Cigna Healthcare segment and Other Operations.

• The cumulative effects of adopting the new standard were immaterial.

The impacts were a decrease to January 1, 2021 Shareholders' equity of $ 139 million and an increase to Shareholders' net income for the year ended December 31, 2022 and December 31, 2021 of $ 36 million and $ 5 million, respectively.

The corresponding impact to diluted earnings per share was an increase of $ 0.11 and $ 0.02 for the year ended December 31, 2022 and December 31, 2021, respectively.

• The prior periods within our Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Changes in Total Equity and Consolidated Statements of Cash Flows were restated to conform to the current presentation.

• Prior period balances in the Company's footnote disclosures have been updated to reflect adjustments resulting from the adoption of this standard.

Refer to Note 9 to the Consolidated Financial Statements for the Company's updated accounting policies.

• It is possible that our income recognition pattern could change on a prospective basis for several reasons:

• Applying periodic assumption updates, versus the locked-in model, may change our timing of profit or loss recognition.

• DAC amortization is on a constant level basis over the expected term of the related contracts and no longer tied to the emergence of profit on such contracts.

Additionally, in December 2022, the Financial Accounting Standards Board ("FASB") published ASU 2022-05, which simplified the retrospective adoption of LDTI by permitting companies to make an accounting policy election to exclude contracts that are sold and removed from the balance sheet prior to the effective date of the standard from the retrospective adoption of LDTI.

The Cigna Group made this policy election for the contracts sold in the Chubb transaction and our divested interest in a joint venture in Türkiye.

Note 3 – Accounts Receivable, Net

The following amounts were included within Accounts receivable, net:

(In millions) September 30, 2022 December 31, 2021

(In millions) March 31, 2023 December 31, 2022

Noninsurance customer receivables $ 7,845 $ 6,899

2 unchanged sentences

Other receivables 264 248

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

Accounts receivable, net per Consolidated Balance Sheets $ 17,275 $ 15,071

These receivables are reported net of our allowances of $ 1.7 billion as of September 30, 2022 and $ 1.4 billion as of December 31, 2021.

Total $ 17,704 $ 17,218

These receivables are reported net of our allowances of $ 2.1 billion as of March 31, 2023 and $ 1.9 billion as of December 31, 2022.

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 $ 80 million as of September 30, 2022 and $ 60 million as of December 31, 2021.

The Company's allowance for current expected credit losses was $ 87 million as of March 31, 2023 and $ 86 million as of December 31, 2022.

Note 4 – Supplier Finance Program

The Company facilitates a voluntary supplier finance program (the "program") that provides suppliers the opportunity to sell their receivables due from us (i.e., our payment obligations to the suppliers) to a financial institution, on a non-recourse basis, in order to be paid earlier than our payment terms require.

The Cigna Group is not a party to the program and agrees to commercial terms with its suppliers independently of their participation in the program.

Amounts due to suppliers that participate in the program are generally paid within one month following the invoice date.

A supplier's participation in the program has no impact on the Company's payment terms and the Company has no economic interest in a supplier's decision to participate in the program.

The suppliers, at their sole discretion, determine which invoices, if any, to sell to the financial institution.

No guarantees or pledged assets are provided by the Company or any of our subsidiaries under the program.

As of March 31, 2023 and December 31, 2022, $ 1.5 billion and $ 1.3 billion, respectively, of the Company's outstanding payment obligations were confirmed as valid within the program by the financial institution and reflected in Accounts payable in the Consolidated Balance Sheets.

The amounts confirmed as valid for both periods are predominately associated with one supplier.

We have been informed by the financial institution that $ 324 million as of March 31, 2023 of the Company's outstanding payment obligations were voluntarily elected by suppliers to be sold to the financial institution under the program.

Note 5 – Mergers, Acquisitions and Divestitures

Divestiture of International Businesses

The Company recognized a gain of $ 1.7 billion pre-tax ($ 1.4 billion after-tax), which includes recognition of previously unrealized capital losses on investments sold and translation loss on foreign currencies (see Note 14 for further information).

Also see Note 5 for further information regarding the assets and liabilities of these divested businesses.

Acquisition of MDLIVE

On April 19, 2021, Cigna acquired 97 % of MDLIVE, Inc.

("MDLIVE"), a 24/7 virtual care platform.

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

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 was finalized as of March 31, 2022 with 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.

We remain on track and are nearly complete with MDLIVE integration activities.

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

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

In July 2022, the Company completed the sale of its life, accident and supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) (the "Chubb transaction") for approximately $ 5.4 billion in cash.

In December 2022, the Company also divested its ownership interest in a joint venture in Türkiye.

Integration and Transaction-related Costs

In the first nine months of 2022 and 2021, 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 Elevance Health, Inc.

("Elevance"), formerly known as Anthem, Inc.

In the first nine months of 2022, the Company also incurred costs related to the Chubb transaction.

These costs were $ 24 million pre-tax ($ 23 million after-tax) for the three months ended and $ 112 million pre-tax ($ 86 million after-tax) for the nine months ended September 30, 2022, compared with $ 13 million pre-tax ($( 35 ) million after-tax) for the three months ended and $ 58 million pre-tax ($ 1 million after-tax) for the nine months ended September 30, 2021.

In 2023 and 2022, the Company incurred net costs mainly related to the Chubb transaction.

In the first three months of 2022, the Company also incurred net costs related to the sale of the Group Disability and Life business and acquisition of MDLIVE.

costs were $ 1 million pre-tax ($ 1 million after-tax) for the three months ended March 31, 2023 and $ 52 million pre-tax ($ 37 million after-tax) for the three months ended March 31, 2022.

These costs consisted primarily of certain projects to separate or integrate 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

See Note 4 for information on the gain recognized upon sale.

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

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

however, we subsequently agreed to exclude this business from the Chubb transaction 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) December 31, 2021

Cash and cash equivalents $ 406

Investments 5,109

Deferred policy acquisition costs 2,755

Separate account assets 878

Goodwill, other intangible assets and all other assets 909

Total assets of businesses held for sale 10,057

Insurance and contractholder liabilities 4,644

Accounts payable, accrued expenses and other liabilities 452

Deferred tax liabilities, net 449

Separate account liabilities 878

Total liabilities of businesses held for sale $ 6,423

The held for sale businesses reported Gross unrealized appreciation on securities and derivatives of $ 137 million and Gross cumulative translation losses on foreign currencies of $ 209 million within Accumulated other comprehensive loss in our Consolidated Balance Sheet as of December 31, 2021.

Note 6 – Earnings Per Share ("EPS")

Note 6 – Earnings Per Share

Basic and diluted earnings per share were computed as follows:

Three Months Ended

September 30, 2022 September 30, 2021

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

Dilution Diluted Basic Effect of

Dilution Diluted

Shareholders' net income $ 2,757 $ 2,757 $ 1,621 $ 1,621

Weighted average 303,854 303,854 335,166 335,166

Common stock equivalents 3,663 3,663 2,413 2,413

Total shares 303,854 3,663 307,517 335,166 2,413 337,579

EPS $ 9.07 $ ( 0.10 ) $ 8.97 $ 4.84 $ ( 0.04 ) $ 4.80

Nine Months Ended

September 30, 2022 September 30, 2021

March 31, 2023 March 31, 2022

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

5 unchanged sentences

Total shares 295,706 3,293 298,999 318,487 2,795 321,282

EPS $ 17.60 $ ( 0.18 ) $ 17.42 $ 12.44 $ ( 0.12 ) $ 12.32

Earnings per share $ 4.28 $ ( 0.04 ) $ 4.24 $ 3.76 $ ( 0.03 ) $ 3.73

Amounts reflected above for the three months ended March 31, 2022 have been restated to reflect the impact of adopting amended accounting guidance for long-duration insurance contracts (discussed in Note 2 to the Consolidated Financial Statements).

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) 2023 2022

Anti-dilutive options 0.9 2.8

The Company held approximately 91.8 million shares of common stock in treasury at September 30, 2022, 71.2 million shares as of December 31, 2021 and 62.6 million shares as of September 30, 2021.

The increase in Treasury stock as of September 30, 2022 and the reduction in weighted average shares outstanding for the three and nine months ended September 30, 2022 was driven in part by 10.4 million shares of our common stock repurchased in July 2022 under the accelerated share repurchase agreements (the "ASR agreements").

Additionally, we expect final settlement of the ASR agreements to occur in the fourth quarter.

S ee Note 8 for additional information.

The Company held approximately 102.7 million shares of common stock in treasury at March 31, 2023, 99.1 million shares as of December 31, 2022 and 77.3 million shares as of March 31, 2022.

Note 7 – Debt

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

(In millions) September 30, 2022 December 31, 2021

The outstanding amounts of debt, net of issuance costs, discounts or premiums, and finance leases were as follows:

(In millions) March 31, 2023 December 31, 2022

Short-term debt

Commercial paper $ — $ 2,027

$ 500 million, 3.05 % Notes due November 2022

$ 17 million, 8.300 % Notes due January 2023

3 unchanged sentences

$ 1,187 million, 3.750 % Notes due July 2023

$ 500 million, 0.613 % Notes due March 2024

Other, including finance leases 36 33

1 unchanged sentence

Long-term debt

$ 17 million, 8.3 % Notes due January 2023

$ 500 million, 0.613 % Notes due March 2024

$ 700 million, Floating Rate Notes due July 2023

$ 1,000 million, 3 % Notes due July 2023

$ 1,187 million, 3.75 % Notes due July 2023

$ 500 million, 0.613 % Notes due March 2024

$ 1,000 million, 3.500 % Notes due June 2024

4 unchanged sentences

$ 700 million, 5.685 % Notes due March 2026

$ 1,500 million, 3.400 % Notes due March 2027

$ 259 million, 7.875 % Debentures due May 2027

4 unchanged sentences

$ 45 million, 8.080 % Step Down Notes due January 2033 (2)

$ 800 million, 5.400 % Notes due March 2033

$ 190 million, 6.150 % Notes due November 2036

12 unchanged sentences

(1) The Company has entered into interest rate swap contracts hedging a portion of these fixed-rate debt instruments.

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

See Note 11 in the Company's 2022 Form 10-K for further information about the Company's interest rate risk management and these derivative instruments.

(2) Interest rate step down to 8.080 % effective January 15, 2023.

Long-term debt

Debt Issuance.

On March 7, 2023, the Company issued $ 1.5 billion of new senior notes.

The proceeds of this issuance will be used for general corporate purposes, and may include repayment of outstanding debt securities.

Interest on this debt is paid semi-annually.

Principal Maturity Date Interest Rate Net Proceeds

$ 700 million (1)

March 15, 2026 5.685 % $ 698 million

$ 800 million (2)

March 15, 2033 5.400 % $ 796 million

(1) Redeemable at any time discounted at the U.S.

Treasury rate plus 20 basis points.

Redeemable at par on or after March 15, 2024.

(2) Redeemable at any time discounted at the U.S.

Treasury rate plus 25 basis points.

Redeemable at par on or after December 15, 2032.

Short-term and Credit Facilities Debt

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, 2022, there were no outstanding balances under these revolving credit agreements.

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

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

As of March 31, 2023, The Cigna Group had a $ 3.0 billion five-year revolving credit and letter of credit agreement maturing in April 2027;

a $ 1.0 billion three-year revolving credit agreement maturing in April 2025;

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

There were no outstanding balances under these revolving credit agreements as of March 31, 2023.

In April 2023, The Cigna Group entered into the following revolving credit agreements (the "Credit Agreements"), which replaced the agreements discussed above:

• a $ 4.0 billion five-year revolving credit and letter of credit agreement that will mature in April 2028 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.

The Company can borrow up to $ 4.0 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 364-day revolving credit agreement that will mature in April 2024.

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

The Company 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 of the Credit Agreements include an option to increase commitments in an aggregate amount of up to $ 1.5 billion across both 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 the Company's senior unsecured credit ratings.

Each of the two facilities is diversified among 21 large commercial banks, all of which had an A- equivalent or higher rating by at least one Nationally Recognized Statistical Rating Organization as of March 31, 2023.

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.

The Credit Agreements replaced a prior $ 3.0 billion five-year revolving credit and letter of credit agreement maturing on April 2026;

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

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

Commercial Paper.

2 unchanged sentences

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

There was no commercial paper outstanding balance as of September 30, 2022.

There was no commercial paper outstanding balance as of March 31, 2023.

Debt Covenants.

The Company was in compliance with its debt covenants as of September 30, 2022.

The Company was in compliance with its debt covenants as of March 31, 2023.

Interest Expense

Interest expense on long-term and short-term debt was $ 317 million for the three months ended and $ 947 million for the nine months ended September 30, 2022, compared with $ 312 million for the three months ended and $ 948 million for the nine months ended September 30, 2021.

Interest expense on long-term and short-term debt was $ 345 million for the three months ended March 31, 2023 and $ 314 million for the three months ended March 31, 2022.

Note 8 – Common and Preferred Stock

In the first nine months of 2022, Cigna declared quarterly cash dividends 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 nine months ended September 30:

In the first quarter of 2023, The Cigna Group declared quarterly cash dividends of $ 1.23 per share of the Company's common stock.

In the first quarter of 2022, The Cigna Group declared quarterly cash dividends of $ 1.12 per share of the Company's common stock.

The following table provides details of the Company's dividend payments:

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

March 8, 2023 March 23, 2023 $ 1.23 $ 368

June 8, 2022 June 23, 2022 $ 1.12 $ 352

September 7, 2022 September 22, 2022 $ 1.12 $ 341

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

June 8, 2021 June 23, 2021 $ 1.00 $ 342

September 8, 2021 September 23, 2021 $ 1.00 $ 330

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.

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.

Accelerated Share Repurchase Agreements

As part of our existing share repurchase program, we entered into separate accelerated share repurchase 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.

The final number of shares to be received under the ASR agreements is determined based on the daily Volume-Weighted Average Share Price ("VWAP") 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 recorded the payments to the Counterparties as a reduction to Total Shareholders' Equity, consisting of a $ 2.8 billion increase in Treasury stock, which reflects the value of the initial 10.4 million shares received, and a $ 700 million decrease in Additional paid-in capital, which reflects the value of the stock held back by the Counterparties pending final settlement of the agreement.

The $ 700 million recorded in Additional paid-in capital will be reclassified to Treasury stock upon settlement of the ASR agreements in the fourth quarter of 2022.

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 July 1, 2022, the effective date of the ASR agreements.

The final VWAP 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.

The total number of shares of our common stock repurchased under the ASR agreements is expected to be 12.3 million.

On April 26, 2023, the Board of Directors declared the second quarter cash dividend of $ 1.23 per share of The Cigna Group common stock to be paid on June 22, 2023 to shareholders of record on June 7, 2023.

The Company 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 The Cigna Group and its shareholders.

Note 9 – Insurance and Contractholder Liabilities

1 unchanged sentence

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

September 30, 2022 December 31, 2021 September 30, 2021

March 31, 2023 December 31, 2022 March 31, 2022

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

Contractholder deposit funds $ 365 $ 6,563 $ 6,928 $ 352 $ 6,702 $ 7,054 $ 7,079

Future policy benefits 240 4,775 5,015 312 9,194 9,506 9,490

Unearned premiums 1,204 79 1,283 558 418 976 902

Unpaid claims and claim expenses

2 unchanged sentences

Other Operations 97 175 272 107 177 284 744

Total 5,929 16,596 22,525

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

Future policy benefits

Cigna Healthcare

59 542 601 43 544 587 681

Total insurance and contractholder liabilities per Consolidated Balance Sheets $ 6,095 $ 11,655 $ 17,750 $ 5,318 $ 12,563 $ 17,881 $ 22,493

(1) Amounts classified as Liabilities of businesses held for sale primarily include $ 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.

Other Operations 290 3,341 3,631 150 3,442 3,592 7,981

Contractholder deposit funds

Cigna Healthcare

12 151 163 14 157 171 181

Other Operations 361 6,309 6,670 351 6,358 6,709 6,843

Market risk benefits 48 1,172 1,220 51 1,217 1,268 1,558

Unearned premiums 1,419 21 1,440 576 22 598 1,030

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

Total insurance and contractholder liabilities $ 7,166 $ 11,790 $ 18,956 $ 5,409 $ 11,976 $ 17,385 $ 18,947

(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.

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

The Company adopted amended accounting guidance for long-duration insurance contracts on January 1, 2023, discussed further in Note 2 to the Consolidated Financial Statements, which resulted in restatement of prior period amounts.

Additionally, see below updated accounting policies and incremental disclosures associated with future policy benefits (Note 9C), contractholder deposit funds (Note 9D), and market risk benefits (Note 9E).

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.

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 $ 4.0 billion at September 30, 2022 and $ 4.1 billion at September 30, 2021.

Activity, net of intercompany transactions, in the unpaid claims liability for the Cigna Healthcare segment for the nine months ended September 30 was as follows:

Nine Months Ended

(In millions) September 30, 2022 September 30, 2021

The total of incurred but not reported liabilities plus expected development on reported claims, including reported claims in process, was $ 4.6 billion at March 31, 2023 and $ 4.2 billion at March 31, 2022.

Activity, net of intercompany transactions, in the unpaid claims liability for the Cigna Healthcare segment was as follows:

Three Months Ended

(In millions) March 31, 2023 March 31, 2022

Beginning balance $ 4,176 $ 4,261

13 unchanged sentences

Reinsurance and other amounts recoverable reflect amounts due from reinsurers and policyholders to cover incurred but not reported and pending claims of certain business for which the Company administers the plan benefits without any right of offset.

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, 2022 September 30, 2021

See Note 10 to the Consolidated Financial Statements 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 were as follows:

Three Months Ended

March 31, 2023 March 31, 2022

(Dollars in millions) $ % (1)

Actual completion factors $ 1 — % $ 99 0.3 %

4 unchanged sentences

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 presented in the following table.

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) September 30, 2022 September 30, 2021

Other Operations

Our interest in a joint venture in Türkiye and divested international businesses

Other Operations 268 267

Unpaid claims and claim expenses - Other Operations

Activity in the unpaid claims and claim expenses for the divested international businesses and our interest in a joint venture in Türkiye 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.

Nine Months Ended

(In millions) September 30, 2022 (1)

September 30, 2021

Future Policy Benefits

Accounting Policy.

Future policy benefits represent the present value of estimated future obligations, estimated using actuarial methods, for long-term insurance policies and annuity products currently in force, consisting primarily of reserves for annuity contracts, life insurance benefits, and certain supplemental health products that are guaranteed renewable beyond one year.

Contracts are grouped at a level no higher than issue year, based on the original contract issue date, and at lower levels of disaggregation within each issue year for certain businesses to reflect factors including product type, plan type and currency.

Management estimates these obligations based on assumptions for premiums, interest rates, mortality or morbidity, future claim adjudication expenses and surrenders.

Mortality, morbidity and surrender assumptions are based on the Company's own experience and published actuarial tables, and are updated at least annually, to the extent changes in circumstances require.

Interest rate assumptions are based on market-level yields for low credit risk fixed income instruments ("upper-medium grade fixed-income instrument").

For interest accretion purposes, interest rates are fixed at the year of the cohort's inception, however for purposes of liability measurement, are updated to the current rate quarterly, with all changes in the interest rate from inception to current period reported through Accumulated other comprehensive loss.

For contracts issued domestically, we use observable inputs from a published spot rate curve for terms up to 30 years and extrapolate for longer terms using a constant forward rate approach.

For contracts issued by foreign operating entities with functional currencies other than the U.S.

dollar, we use observable inputs to approximate a risk free rate and add a credit spread adjustment to align with a low credit risk fixed income instrument.

For terms beyond the last observable risk free rates, which vary by international market, we extrapolate to the ultimate forward rate assuming a constant credit spread.

For the annuity business, the premium paying period is shorter than the benefit coverage period, and a deferred profit liability ("DPL") is reported in future policy benefits representing gross premium received in excess of net premiums.

DPL is amortized based on expected future benefit payments.

Cigna Healthcare

The weighted average interest rates applied and duration for future policy benefits in the Cigna Healthcare segment, consisting primarily of supplemental health products including individual Medicare supplement, limited benefit health products and individual private medical insurance, were as follows:

March 31, 2023 March 31, 2022

Interest accretion rate 2.59 % 2.64 %

Current discount rate 5.29 % 4.90 %

Weighted average duration 8.05 years 7.45 years

The net liability for future policy benefits for the segment's supplemental health products represents the present value of benefits expected to be paid to policyholders, net of the present value of expected net premiums, which is the portion of expected future gross premium expected to be collected from policyholders that is required to provide for all expected future benefits and expenses.

The present values of expected net premiums and expected future policy benefits for the Cigna Healthcare segment are as follows:

Three Months Ended

(In millions) March 31, 2023 March 31, 2022

Present value of expected net premiums

Beginning balance $ 8,557 $ 9,314

Reinsurance 46 45

Beginning balance, net 401 407

Incurred claims related to:

Current year 497 746

Prior years 4 ( 1 )

Total incurred 501 745

Paid claims related to:

Current year 313 526

Prior years 187 211

Total paid 500 737

Foreign currency ( 28 ) ( 31 )

Divestiture of international businesses ( 369 ) —

Ending balance, net 5 384

Reinsurance 1 46

Reversal of effect of beginning of period discount rate assumptions 1,537 ( 367 )

Effect of assumption changes and actual variances from expected experience — —

Issuances and lapses 306 143

Net premiums collected ( 326 ) ( 310 )

Interest and other (1)

Ending balance at original discount rate 10,130 8,826

Effect of end of period discount rate assumptions ( 1,312 ) ( 376 )

Ending balance (2)

(1) Beginning balance 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.

See Note 10 for additional information on reinsurance.

$ 8,818 $ 8,450

Present value of expected policy benefits

Beginning balance $ 8,945 $ 9,794

Reversal of effect of discount rate assumptions 1,611 ( 379 )

Effect of assumption changes and actual variances from expected experience — —

Issuances and lapses 307 215

Benefit payments ( 326 ) ( 385 )

Interest and other (1)

Ending balance at original discount rate 10,595 9,297

Effect of discount rate assumptions ( 1,378 ) ( 392 )

Ending balance (3)

$ 9,217 $ 8,905

Liability for future policy benefits $ 399 $ 455

Total liability for future policy benefits (5)

(1) Includes the foreign exchange rate impact of translating from transactional and functional currency to United States dollar and the impact of flooring the liability at zero.

The flooring impact is calculated at the cohort level after discounting the reserves at the current discount rate.

(2) As of March 31, 2023 and March 31, 2022, respectively, undiscounted expected future gross premiums were $ 17.6 billion and $ 13.5 billion.

As of March 31, 2023 and March 31, 2022, respectively, discounted expected future gross premiums were $ 12.5 billion and $ 10.7 billion.

(3) As of March 31, 2023 and March 31, 2022, respectively, undiscounted expected future policy benefits were $ 12.8 billion and $ 11.2 billion.

(4) The liability for future policyholder benefits includes immaterial businesses shown as reconciling items above, most of which are in run-off.

(5) $ 154 million and $ 171 million of reinsurance recoverable asset reported in the Consolidated Balance Sheets as of March 31, 2023 and March 31, 2022, respectively, relate to the liability for future policy benefits.

Other Operations

The weighted average interest rates applied and duration for future policy benefits in Other Operations, consisting of annuity and life insurance products, were as follows:

March 31, 2023 March 31, 2022

Interest accretion rate 5.64 % 5.64 %

Current discount rate 4.95 % 3.59 %

Weighted average duration 11.7 years 13.9 years

Obligations for annuities represent discounted periodic benefits to be paid to an individual or groups of individuals over their remaining lives.

Other Operations ' traditional insurance contracts, which are in run-off, have no premium remaining to be collected;

therefore, future policy benefit reserves represent the present value of expected future policy benefits, discounted using the current discount rate and the remaining amortizable DPL.

Future policy benefits for Other Operations includes DPL of $ 392 million as of March 31, 2023 and $ 384 million as of March 31, 2022.

Future policy benefits excluding DPL, were $ 3.2 billion as of both March 31, 2023 and December 31, 2022 and $ 3.9 billion and $ 4.3 billion as of March 31, 2022 and December 31, 2021, respectively.

These balances exclude amounts classified as Liabilities of businesses held for sale of $ 3.7 billion as of March 31, 2022 and $ 3.8 billion as of December 31, 2021.

The change in future policy benefits reserves year-to-date was primarily driven by changes in the current discount rate.

Undiscounted expected future policy benefits were $ 4.6 billion as of March 31, 2023 and $ 4.7 billion as of March 31, 2022.

As of March 31, 2023 and March 31, 2022, $ 1.0 billion and $ 1.2 billion of the future policy benefit reserve was recoverable through treaties with external reinsurers.

Contractholder Deposit Funds

Accounting Policy.

Liabilities for contractholder deposit funds primarily include deposits received from customers for investment-related and universal life products and investment earnings on their fund balances in Other Operations.

These liabilities are adjusted to reflect administrative charges and, for universal life fund balances, mortality charges.

Interest credited on these funds is accrued ratably over the contract period.

Contractholder deposit fund liabilities within Other Operations were $ 6.7 billion as of both March 31, 2023 and December 31, 2022 and $ 6.8 billion and $ 6.9 billion as of March 31, 2022 and December 31, 2021, respectively.

Approximately 39 % of the balance is reinsured externally.

Activity in these liabilities is presented net of reinsurance in the Consolidated Statements of Cash Flows.

The net year-to-date decrease in contractholder deposit fund liabilities generally relates to withdrawals and benefit payments from contractholder deposit funds, partially offset by deposits and interest credited to contractholder deposit funds.

As of March 31, 2023, the weighted average crediting rate, net amount at risk and cash surrender value for contractholder deposit fund liabilities not externally reinsured were 3.25 %, $ 3.2 billion and $ 2.8 billion, respectively.

The comparative amounts as of March 31, 2022 were 3.18 %, $ 3.5 billion and $ 2.9 billion, respectively.

As of both March 31, 2023 and March 31, 2022, more than 99 % of the $ 4.1 billion liability not reinsured externally is for contracts with guaranteed interest rates of 3 % - 4 %, and approximately $ 1.2 billion represented contracts with policies at the guarantee.

At both of these same period ends, $ 1.2 billion was 50-150 bps above the guarantee and the remaining $ 1.7 billion represented contracts above the guarantee that pay the policyholder based on the greater of a guaranteed minimum cash value or the actual cash value.

More than 90 % of these contracts have actual cash values of at least 110% of the guaranteed cash value.

Market Risk Benefits

Liabilities for market risk benefits consist of variable annuity reinsurance contracts (also referred to as GMDB and GMIB contracts) in Other Operations.

These liabilities arise under annuities and riders to annuities written by ceding companies that guarantee the benefit received at death and, for a subset of policies, also provide contractholders the option, within 30 days of a policy anniversary after the appropriate waiting period, to elect minimum income payments.

The Company's capital market risk exposure on variable annuity reinsurance contracts arises when the reinsured guaranteed minimum benefit exceeds the contractholder's account value in the related underlying mutual funds at the time the insurance benefit is payable under the respective contract.

The Company receives and pays premium periodically based on the terms of the reinsurance agreements.

Accounting Policy.

Variable annuity reinsurance liabilities are measured as MRBs at fair value, net of nonperformance risk, with fluctuations in value gross of reinsurer nonperformance risk reported in benefits expense while fluctuations in the Company's own

nonperformance risk (own credit risk) are reported in Accumulated other comprehensive loss.

Nonperformance risk reflects risk that a party might default and therefore not fulfill its obligations (i.e.

nonpayment risk).

The nonperformance risk adjustment reflects a market participant's view of nonpayment risk by adding an additional spread to the discount rate in the calculation of both (a) the variable annuity reinsurance liabilities to be paid by the Company and (b) the variable annuity reinsurance assets to be paid by the reinsurers, after considering collateral.

The Company classifies variable annuity assets and liabilities in Level 3 of the fair value hierarchy described in Note 12 to the Consolidated Financial Statements because assumptions related to future annuitant behavior are largely unobservable.

As discussed further in Note 10 to the Consolidated Financial Statements, due to the reinsurance agreements covering these liabilities, the liabilities do not generally impact net income except for the change in nonperformance risk on the reinsurance recoverable, which is reported in benefits expense and does not offset the nonperformance risk valuation on the liability.

Variable annuity liabilities are established using capital market assumptions and assumptions related to future annuitant behavior (including mortality, lapse and annuity election rates).

Market risk benefits activity was as follows:

Three Months Ended

(Dollars in millions) March 31, 2023 March 31, 2022

Balance, beginning of year $ 1,268 $ 1,824

Balance, beginning of year, before the effect of nonperformance risk (own credit risk) 1,379 1,949

Changes due to expected run-off ( 6 ) ( 19 )

Changes due to capital markets versus expected ( 41 ) ( 271 )

Changes due to policyholder behavior versus expected 6 ( 9 )

Assumption changes ( 33 ) 39

Balance, end of year, before the effect of changes in nonperformance risk (own credit risk) 1,305 1,689

Nonperformance risk (own credit risk), end of period ( 85 ) ( 131 )

Balance, end of period $ 1,220 $ 1,558

Reinsured market risk benefit, end of period $ 1,301 $ 1,681

The following table presents the net amount at risk and the average attained age of contractholders (weighted by exposure) for contracts assumed by the Company.

The net amount at risk is the amount the Company would have to pay to contractholders if all deaths or annuitizations occurred as of the earliest possible date in accordance with the insurance contract.

The Company should be reimbursed in full for these payments unless the Berkshire reinsurance limit is exceeded, as discussed further in Note 10 to the Consolidated Financial Statements.

(Dollars in millions, excludes impact of reinsurance ceded) March 31, 2023 March 31, 2022

Net amount at risk $ 2,183 $ 1,892

Average attained age of contractholders (weighted by exposure) 75.4 years 76.4 years

Note 10 – Reinsurance

8 unchanged sentences

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

The Company's reinsurance recoverables as of September 30, 2022 are presented in the following table by range of external credit rating and collateral level:

The Company's reinsurance recoverables as of March 31, 2023 are presented at amount due by range of external credit rating and collateral level in the following table, with reinsurance recoverables that are market risk benefits separately presented at fair value:

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

9 unchanged sentences

Acquisition, disposition or run-off activities

A- equivalent and higher current ratings (1)

BBB+ equivalent and higher current ratings (1)

Lincoln National Life and Lincoln Life & Annuity of New York — 2,750 — 2,750

Berkshire Hathaway Life Insurance Company of Nebraska 254 469 — 723

Prudential Retirement Insurance and Annuity (marketed under Empower brand) 142 — — 142

Empower Annuity Insurance Company — — 133 133

Prudential Insurance Company of America 380 — — 380

3 unchanged sentences

Total recoverables related to acquisition, disposition or run-off activities 567 3,170 151 3,888

Total $ 1,120 $ 3,718 $ 196 $ 5,034

Total reinsurance recoverables before market risk benefits $ 709 $ 3,175 $ 367 $ 4,251

Allowance for uncollectible reinsurance ( 35 )

Market risk benefits (4)

Total reinsurance recoverables (2)

2 unchanged sentences

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

(4) Total Berkshire and certain Other recoverables reflected under acquisition, disposition or run-off activities in the Company's 2022 Form 10-K that relate to the Company’s variable annuity reinsurance products discussed in section B below are now reported at fair market value as MRBs, as further discussed in Note 9 to the Consolidated Financial Statements.

At December 31, 2022, we reported $ 711 million related to these recoverables related to the GMDB variable annuity reinsurance product.

The restated December 31, 2022 variable annuity reinsurance recoverable balance is $ 1.4 billion, which also includes the GMIB variable annuity reinsurance product that was classified in Other assets prior to the adoption of LDTI.

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.

Effective Exit of GMDB and GMIB Business

The Company entered into an agreement with Berkshire to effectively exit the GMDB and GMIB business via a reinsurance transaction in 2013.

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 $ 3.1 billion remaining at September 30, 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.

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

The GMDB exposure arises under annuities written by ceding companies that guarantee the benefit received at death.

The Company's exposure arises when the guaranteed minimum death benefit exceeds the fair value of the related mutual fund investments at the time of a contractholder's death.

The following table presents the account value, net amount at risk and the number of contractholders for guarantees assumed by the Company in the event of death.

The net amount at risk is the amount that the Company would have to pay if all contractholders died as of the specified date.

As of September 30, 2022, the account value decreased primarily due to unfavorable equity market performance, which resulted in an increase to the net amount at risk.

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, 2022 December 31, 2021

Account value $ 7,143 $ 9,795

Net amount at risk $ 2,471 $ 1,392

Number of contractholders (estimated) 160,000 170,000

The Company reinsured contracts with issuers of GMIB products.

The Company's exposure represents the excess of a contractually guaranteed amount over the level of variable annuity account values.

Payment by the Company depends on the actual account value in the related underlying mutual funds and the level of interest rates when the contractholders elect to receive minimum income payments that can only occur within 30 days of a policy anniversary after the appropriate waiting period.

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

GMIB liabilities totaling $ 410 million as of September 30, 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 September 30, 2022 and December 31, 2021 as follows:

Effective Exit of Variable Annuity Reinsurance Business

The Company entered into an agreement with Berkshire to effectively exit the variable annuity reinsurance business via a reinsurance transaction in 2013.

Variable annuity contracts are accounted for as assumed and ceded reinsurance and categorized as market risk

benefits as discussed in Note 9 to the Consolidated Financial Statements.

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

The reinsurance agreement is subject to an overall limit with approximately $ 3.1 billion remaining at March 31, 2023.

As a result of the reinsurance transaction, reserve increases are offset by a corresponding increase in the recorded reinsurance recoverable, provided the increased recoverable remains within the overall Berkshire limit.

(In millions)

Line of Business Reinsurer September 30, 2022 December 31, 2021 Collateral and Other Terms at September 30, 2022

GMIB Berkshire $ 207 $ 283 100 % were secured by assets in a trust.

Reinsurer (1)

March 31, 2023 December 31, 2022 Collateral and Other Terms at March 31, 2023

Berkshire $ 1,043 $ 1,116 90 % were secured by assets in a trust.

Sun Life Assurance Company of Canada 117 115

1 unchanged sentence

128 128 100 % were secured by assets in a trust.

Total GMIB recoverables reported in Other current assets and Other assets $ 437 $ 601

SCOR SE 35 39 70 % were secured by a letter of credit.

Market risk benefits (2)

$ 1,323 $ 1,398

(1) All reinsurers are rated A- equivalent and higher by an NRSRO.

(2) Includes IBNR and outstanding claims of $ 25 million offset by premium due of $ 3 million.

These amounts are excluded from market risk benefits at March 31, 2023 in Note 9 and Note 10A to the Consolidated Financial Statements.

At December 31, 2022, IBNR and outstanding claims of $ 27 million offset by premium due of $ 3 million were excluded from the market risk benefits as restated due to the adoption of LDTI.

The impact of nonperformance risk (i.e.

the risk that a counterparty might default) on the variable annuity reinsurance asset was immaterial for the three months ended March 31, 2023 and March 31, 2022.

Note 11 – Investments

Cigna's investment portfolio consists of a broad range of investments including debt securities, equity securities, commercial mortgage loans, policy loans, other long-term investments, short-term investments and derivative financial instruments.

The Cigna Group's investment portfolio consists of a broad range of investments including debt securities, equity securities, commercial mortgage loans, policy loans, other long-term investments, short-term investments and derivative financial instruments.

The sections below provide more detail regarding our investment balances and realized investment gains and losses.

See Note 12 for information about the valuation of the Company's investment portfolio.

Further information about our accounting policies for investment assets can be found in Note 11 of the Company's 2021 Form 10-K.

See Note 12 to the Consolidated Financial Statements for information about the valuation of the Company's investment portfolio.

Further information about our accounting policies for investment assets can be found in Note 11 in the Company's 2022 Form 10-K.

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

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

6 unchanged sentences

Total $ 914 $ 19,010 $ 19,924 $ 905 $ 16,288 $ 17,193

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

( 344 ) ( 4,765 ) ( 5,109 )

Investments per Consolidated Balance Sheets $ 783 $ 16,273 $ 17,056 $ 920 $ 18,438 $ 19,358

(1) Investments related to the international life, accident and supplemental benefits businesses that were held for sale as of December 31, 2021.

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

See Note 4 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, 2022:

Accounting policy.

Our accounting policy for debt securities (including bonds, mortgage and other asset-backed securities and preferred stocks redeemable by the investor) remains materially consistent with the policy disclosed in the Company's 2022 Form 10-K.

However, with the adoption of amended accounting guidance for long-duration insurance contracts on January 1, 2023 (discussed in Note 2 to the Consolidated Financial Statements), net unrealized appreciation on debt securities supporting the Company's run-off settlement annuity business is no longer reported in Non-current insurance and contractholder liabilities but rather is reported in Accumulated other comprehensive loss.

See Note 14 to the Consolidated Financial Statements for the impact to Accumulated other comprehensive loss.

The amortized cost and fair value by contractual maturity periods for debt securities were as follows as of March 31, 2023:

(In millions) Amortized

6 unchanged sentences

Actual maturities of these securities could differ from their contractual maturities used in the table above because issuers may have the right to call or prepay obligations, with or without penalties.

Our allowance for credit losses on debt securities was not material as of September 30, 2022 and December 31, 2021.

Gross unrealized appreciation (depreciation) on debt securities by type of issuer is shown below:

3 unchanged sentences

Depreciation Fair

September 30, 2022

March 31, 2023

Federal government and agency $ 276 $ — $ 29 $ ( 8 ) $ 297

11 unchanged sentences

Total $ 10,842 $ ( 44 ) $ 133 $ ( 1,059 ) $ 9,872

Investments supporting liabilities of the Company's run-off settlement annuity business (included in total above) (1)

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

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

As of September 30, 2022 net unrealized depreciation for these investments is included in Accumulated other comprehensive loss.

Review of declines in fair value.

5 unchanged sentences

Unrealized depreciation on these debt securities is primarily due to declines in fair value resulting from increasing interest rates since these securities were purchased.

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(Dollars in millions) Fair

14 unchanged sentences

Equity Securities

The following table provides the values of the Company's equity security investments as of September 30, 2022 and December 31, 2021:

September 30, 2022 December 31, 2021

The following table provides the values of the Company's equity security investments as of March 31, 2023 and December 31, 2022:

March 31, 2023 December 31, 2022

(In millions) Cost Carrying Value Cost Carrying Value

2 unchanged sentences

Total $ 3,606 $ 3,120 $ 1,053 $ 622

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.

Consistent with our strategy to invest in targeted startup and growth-stage companies in the health care industry, approximately 95 % of our investments in equity securities are in the health care sector.

Commercial Mortgage Loans

2 unchanged sentences

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 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 September 30, 2022 and December 31, 2021:

(Dollars in millions) September 30, 2022 December 31, 2021

For more information on the Company's accounting policies and methodologies regarding these investments, see Note 11 in the Company's 2022 Form 10-K.

The following table summarizes the credit risk profile of the Company's commercial mortgage loan portfolio:

(Dollars in millions) March 31, 2023 December 31, 2022

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

2 unchanged sentences

80% to 100% 191 1.32 149 1.17

Greater than 100% 63 1.04 — —

Allowance for credit losses ( 13 ) ( 6 )

Total $ 1,607 1.89 60 % $ 1,614 1.89 60 %

7 unchanged sentences

Carrying Value as of

(In millions) September 30, 2022 December 31, 2021

(In millions) March 31, 2023 December 31, 2022

Real estate investments $ 1,434 $ 1,319

4 unchanged sentences

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 certain 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.

Derivatives in the Company's separate accounts are excluded from the following discussion because associated gains and losses generally accrue directly to separate account policyholders.

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

Although we may incur a loss if dealers failed to perform under derivative contracts, collateral has been posted to cover substantially all of the net fair value owed to the Company.

As of September 30, 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.

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

Notional Value as of

(In millions) September 30, 2022 December 31, 2021

Purpose Type of Instrument

Fair value hedge:

To hedge the foreign exchange-related changes in fair values of certain foreign-denominated bonds.

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

$ 1,078 $ 1,081

Fair value hedge:

To convert a portion of the interest rate exposure on the Company's long-term debt from fixed to variable rates.

This more closely aligns the Company's interest expense with the interest income received on its cash equivalent and short-term investment balances.

The variable rates are benchmarked to SOFR.

Interest rate swap contracts $ 1,500 $ 750

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 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)

Economic hedge:

To hedge the foreign exchange-related changes in fair value of U.S.

dollar-denominated investment assets to reflect the local currency for the Company's foreign subsidiary in South Korea.

The notional value of hedging instruments generally aligns with the fair value of the hedged investments.

Foreign currency forward contracts (1)

(1) These instruments were associated with the international life, accident and supplemental benefits businesses that were disposed in the Chubb transaction as discussed in Note 4 to the Consolidated Financial Statements.

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.

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 certain long-term debt.

As of March 31, 2023, there have been no material changes to the Company's derivative financial instruments.

The effects of derivative financial instruments used in our individual hedging strategies were not material to the Consolidated Financial Statements as of March 31, 2023 and December 31, 2022.

The gross fair values of our derivative financial instruments are presented in Note 12 to the Consolidated Financial Statements.

Please refer to the Company's 2022 Form 10-K for further discussion of the types of derivative financial instruments and associated accounting policies.

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,

Accounting policy.

Realized investment gains and losses are based on specifically identified assets and result from sales, investment asset write-downs, change in the fair value of certain derivatives and equity securities and changes in allowances for credit losses on debt securities and commercial mortgage loan investments.

With the adoption of amended accounting guidance for long-duration insurance contracts on January 1, 2023 (discussed in Note 2 to the Consolidated Financial Statements), realized investment gains and losses no longer exclude amounts that were previously required to adjust future policy benefits for the run-off settlement annuity business.

Prior period net realized investment losses have been updated to reflect the impact of adopting LDTI.

The following realized gains and losses on investments exclude 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 March 31,

(In millions) 2023 2022

Net realized investment (losses) gains, excluding credit loss expense and asset write-downs $ ( 65 ) $ 44 $ ( 455 ) $ 114

Credit loss (expense) recoveries ( 16 ) 24 ( 40 ) 14

Net realized investment (losses) gains, before income taxes $ ( 81 ) $ 68 $ ( 495 ) $ 128

Net realized investment losses for the nine months ended September 30, 2022 were primarily due to mark-to-market losses on a strategic health care equity securities investment.

Net realized investment (losses), excluding credit loss expense and asset write-downs

$ ( 51 ) $ ( 322 )

Credit loss recoveries

Other investment asset write-downs ( 8 ) —

Net realized investment (losses), before income taxes

$ ( 56 ) $ ( 322 )

Net realized investment losses for the three months ended March 31, 2023 and March 31, 2022 were primarily due to mark-to-market losses on a strategic health care equity securities investment.

Note 12 – Fair Value Measurements

7 unchanged sentences

For example, a financial asset or liability carried at fair value would be classified in Level 3 if unobservable inputs were significant to the instrument's fair value, even though the measurement may be derived using inputs that are both observable (Levels 1 and 2) and unobservable (Level 3).

For a description of the policies, methods and assumptions that are used to estimate fair value and determine the fair value hierarchy for each class of financial instruments, see Note 12 "Fair Value Measurements" to the Company's 2021 Form 10-K.

Financial Assets and Financial Liabilities Carried at Fair Value

The following table provides information as of September 30, 2022 and December 31, 2021 about the Company's financial assets and liabilities carried at fair value.

The following table provides information about the Company's financial assets and liabilities carried at fair value.

Further information regarding insurance assets and liabilities carried at fair value is provided in Note 9E to the Consolidated Financial Statements.

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 contractholders:

3 unchanged sentences

(Level 3) Total

As of September 30, 2022 As of December 31, 2021 As of September 30, 2022 As of December 31, 2021 As of September 30, 2022 As of December 31, 2021 As of September 30, 2022 As of December 31, 2021

March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022

Financial assets at fair value

10 unchanged sentences

Derivative assets — — 206 230 1 1 207 231

— — 340 143 — — 340 143

Financial liabilities at fair value

Derivative liabilities $ — $ — $ — $ 33 $ — $ — $ — $ 33

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

(2) Derivative assets above include $ 5 million as of September 30, 2022 that are presented in the Short-term investments category disclosed in Note 11.

See Note 11 for more information on our Derivative Financial Instruments.

Level 3 Financial Assets and Financial Liabilities

1 unchanged sentence

Unobservable inputs reflect the Company's best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date.

Additionally, as discussed in Note 9 to the Consolidated Financial Statements, the Company classifies variable annuity assets and liabilities in Level 3 of the fair value hierarchy.

Quantitative Information about Unobservable Inputs

1 unchanged sentence

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, 2022 and December 31, 2021.

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.

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, 2022 December 31, 2021 Unobservable input September 30, 2022 September 30, 2022 December 31, 2021

(Fair value in millions) March 31, 2023 December 31, 2022 Unobservable input March 31, 2023 March 31, 2023 December 31, 2022

Debt securities

7 unchanged sentences

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, 2022 and 2021.

The following table summarizes the changes in financial assets and financial liabilities classified in Level 3.

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) 2023 2022

1 unchanged sentence

Beginning balance $ 447 $ 796

Gains (losses) included in Shareholders' net income

(Losses) gains included in Other comprehensive income (loss)

( 34 ) 2 ( 62 ) ( 7 )

Gains (losses) required to adjust future policy benefits for settlement annuities (1)

Gains included in Shareholders' net income

Gains (losses) included in Other comprehensive loss

Losses required to adjust future policy benefits for settlement annuities (1)

Purchases, sales and settlements

Purchases 4 49

Sales — ( 36 ) — ( 36 )

Settlements ( 9 ) ( 81 )

5 unchanged sentences

Ending balance $ 471 $ 686

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

$ — $ ( 3 ) $ ( 2 ) $ ( 3 )

Change in unrealized gains or losses included in Other comprehensive income (loss) for assets held at the end of the reporting period $ ( 33 ) $ 2 $ ( 60 ) $ ( 8 )

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

Change in unrealized gain or (loss) included in Other comprehensive loss for assets held at the end of the reporting period

(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 (losses) gains and Net investment income.

Gains and losses included in Other comprehensive income (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.

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 losses and Net investment income.

Gains and losses included in Other comprehensive loss, net of tax in the tables above are reflected in Net unrealized appreciation (depreciation) 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.

5 unchanged sentences

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, 2022 and December 31, 2021 were as follows:

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

Fair values of Separate account assets were as follows:

Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other Observable Inputs

1 unchanged sentence

(Level 3) Total

September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021

(In millions) March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022

Guaranteed separate accounts (See Note 16)

4 unchanged sentences

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

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

Separate account assets per Consolidated Balance Sheets $ 7,260 $ 8,337

(1) Non-guaranteed separate accounts include $ 4.0 billion as of September 30, 2022 and $ 4.5 billion as of December 31, 2021 in assets supporting the Company's pension plans, including $ 0.2 billion classified in Level 3 as of September 30, 2022 and $ 0.3 billion as of December 31, 2021.

(2) Investments related to the international life, accident and supplemental benefits businesses that were held for sale as of December 31, 2021.

See Note 4 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, 2022 or 2021.

Total $ 7,340 $ 7,278

(1) Non-guaranteed separate accounts include $ 4.0 billion as of March 31, 2023 and December 31, 2022 in assets supporting the Company's pension plans, including $ 0.2 billion classified in Level 3 as of March 31, 2023 and December 31, 2022.

Separate account assets classified in Level 3 primarily support the Company'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 months ended March 31, 2023 or 2022.

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 .

Substantially all of these assets support the Cigna pension plans.

Substantially all of these assets support the Company's pension plans.

The following table provides additional information on these investments:

Fair Value as of Unfunded Commitment as of September 30, 2022 Redemption Frequency

Fair Value as of Unfunded Commitment as of March 31, 2023 Redemption Frequency

(if currently eligible) Redemption Notice

(In millions) September 30, 2022 December 31, 2021

(In millions) March 31, 2023 December 31, 2022

Securities partnerships $ 467 $ 451 $ 228 Not applicable Not applicable

2 unchanged sentences

Total $ 758 $ 757 $ 228

As of September 30, 2022, the Company does not have plans to sell any of these assets at less than fair value.

As of March 31, 2023, 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.

3 unchanged sentences

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, 2022 and 2021, impairments recognized requiring these assets to be measured at fair value were not material.

Realized investment gains and losses from these observable price changes for the three and nine months ended September 30, 2022 and September 30, 2021 were not material.

For the three months ended March 31, 2023 and 2022, impairments recognized requiring these assets to be measured at fair value were not material.

Realized investment gains and losses from these observable price changes for the three months ended March 31, 2023 and March 31, 2022 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, however fair value disclosure is required at September 30, 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, 2022 December 31, 2021

The following table includes the Company's financial instruments not recorded at fair value but for which fair value disclosure is required.

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

Classification in Fair Value Hierarchy March 31, 2023 December 31, 2022

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

3 unchanged sentences

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

The Company determined that it was no t a primary beneficiary in any material variable interest entity as of September 30, 2022 or December 31, 2021.

The Company determined that it was no t a primary beneficiary in any material variable interest entity as of March 31, 2023 or December 31, 2022.

The Company's involvement with variable interest entities for which it is not the primary beneficiary has not changed materially from December 31, 2022.

2 unchanged sentences

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

AOCI includes net unrealized (depreciation) appreciation 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 net unrealized (depreciation) appreciation on securities and derivatives, change in discount rate and instrument specific credit risk for certain long-duration insurance contractholder liabilities (Note 9 to the Consolidated Financial Statements), foreign currency translation and the net postretirement benefits liability adjustment.

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

Generally, tax effects in AOCI are established at the currently enacted tax rate and reclassified to Shareholders' net income in the same period that the related pre-tax AOCI reclassifications are recognized.

Changes in the components of AOCI were as follows:

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

Changes in the components of AOCI, including the impact of adopting amended accounting guidance for long-duration insurance contracts (discussed in Note 2 to the Consolidated Financial Statements), were as follows:

Three Months Ended March 31,

(In millions) 2023 2022

Securities and Derivatives

Beginning balance $ ( 285 ) $ 749 $ 685 $ 900

(Depreciation) appreciation on securities and derivatives

Beginning balance, as retrospectively restated $ ( 332 ) 1,266

Unrealized appreciation (depreciation) on securities and derivatives

252 ( 1,065 )

Tax (expense) benefit

( 22 ) ( 16 ) 233 9

Net (depreciation) appreciation on securities and derivatives

( 281 ) 43 ( 1,272 ) ( 104 )

Reclassification adjustment for losses included in Shareholders' net income (Gain on sale of businesses)

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

14 ( 14 ) 41 ( 20 )

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

( 3 ) 3 ( 9 ) 5

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

182 ( 11 ) 203 ( 15 )

Net unrealized appreciation (depreciation) on securities and derivatives

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

Reclassification adjustment for tax expense included in Shareholders' net income

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

Other comprehensive income (loss), net of tax

Ending balance $ ( 138 ) $ 423

Net long-duration insurance and contractholder liabilities measurement adjustments (1)

Beginning balance ( 256 ) ( 765 )

Current period change in discount rate for certain long duration liabilities ( 411 ) 584

Tax benefit (expense)

Net current period change in discount rate for certain long duration liabilities ( 310 ) 454

Current period change in instrument-specific credit risk for market risk benefits ( 26 ) 6

Tax benefit (expense)

Net current period change in instrument-specific credit risk for market risk benefits ( 21 ) 5

Other comprehensive (loss) income, net of tax

( 99 ) 32 ( 1,069 ) ( 119 )

Ending balance ( 587 ) ( 306 )

Translation of foreign currencies

Beginning balance $ ( 499 ) $ ( 113 ) $ ( 233 ) $ ( 15 )

Beginning balance, as retrospectively restated $ ( 154 ) ( 233 )

Translation of foreign currencies 15 ( 60 )

Tax benefit (expense)

1 ( 7 ) ( 28 ) ( 12 )

Net translation of foreign currencies 16 ( 63 )

Reclassification adjustment for losses included in Net income (Gain on sale of businesses)

Reclassification adjustment for tax expense included in Net income

Net translation losses reclassified from AOCI to Net income

Translation of foreign currencies 131 ( 118 ) ( 109 ) ( 216 )

Tax benefit (expense)

30 ( 7 ) 1 ( 12 )

Other comprehensive income (loss), net of tax

161 ( 125 ) ( 108 ) ( 228 )

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

1 ( 1 ) ( 2 ) ( 6 )

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

Shareholders' other comprehensive income (loss), net of tax

160 ( 124 ) ( 106 ) ( 222 )

Ending balance $ ( 138 ) $ ( 294 )

2 unchanged sentences

Reclassification adjustment for amortization of net prior actuarial losses and prior service costs (Interest expense and other)

Reclassification adjustment for (gains) included in Shareholders' net income (Gain on sale of businesses)

( 2 ) — ( 2 ) —

Reclassification adjustment for settlement (Interest expense and other)

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

( 5 ) ( 5 ) ( 12 ) ( 15 )

Net adjustments reclassified from AOCI to Shareholders' net income

Valuation update — — 18 —

Tax (expense)

Net change due to valuation update — — 14 —

Other comprehensive income, net of tax

Ending balance $ ( 906 ) $ ( 1,323 )

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.

As previously anticipated, during the second quarter of 2022, the Company updated our strategic plan and recognized an additional charge in Selling, general and administrative expenses of $ 22 million, pre-tax ($ 17 million, after-tax) related to accrued expenses primarily for severance costs.

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 ( 65 )

Second quarter 2022 charge 22

Balance, September 30, 2022 $ 60

We expect most of the accrued liability to be paid by the end of 2023.

Note 16 – Leases

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

(In millions) September 30, 2022 December 31, 2021

Operating leases:

Operating lease ROU assets in Other assets

Accrued expenses and other liabilities $ 133 $ 159

Other non-current liabilities 368 436

Total operating lease liabilities $ 501 $ 595

Finance leases:

Property and equipment, gross $ 147 $ 101

Accumulated depreciation ( 46 ) ( 51 )

Property and equipment, net $ 101 $ 50

Short-term debt $ 32 $ 23

Long-term debt 69 28

Total finance lease liabilities $ 101 $ 51

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

Total Accumulated other comprehensive loss

Beginning balance, as retrospectively restated ( 1,658 ) ( 1,068 )

Shareholders' other comprehensive (loss), net of tax

( 111 ) ( 432 )

Ending balance $ ( 1,769 ) $ ( 1,500 )

(1) Established upon the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023.

See Note 2 to the Consolidated Financial Statements for further information.

Note 15 – Income Taxes

Income Tax Expense

The 20.4 % effective tax rate for the three months ended September 30, 2022 and the 21.0 % effective tax rate for the nine months ended September 30, 2022 were each lower than the 20.6 % rate for the three months ended September 30, 2021 and the 21.7 % rate for the nine months ended September 30, 2021.

These decreases are driven largely by a foreign tax rate differential, including the impact of the Chubb transaction.

As of September 30, 2022, we had approximately $ 360 million in deferred tax assets ("DTAs") associated with unrealized investment losses that are primarily recorded in Accumulated other comprehensive loss.

We have determined that a valuation allowance against the DTAs is not currently required based on the Company's ability to carryback losses and other known investment strategies.

We will monitor and evaluate the need for any valuation allowance in the future.

The 18.4 % effective tax rate for the three months ended March 31, 2023 was lower than the 22.7 % rate for the three months ended March 31, 2022.

This decrease was driven largely by favorable results relative to the Company's foreign operations, partially offset by an increase pertaining to the year over year impact of remeasurement of deferred taxes.

As of March 31, 2023, we had approximately $ 255 million in deferred tax assets ("DTAs") associated with unrealized investment losses that are partially recorded in Accumulated other comprehensive loss.

We have determined that a valuation allowance against the DTAs is not currently required based on the Company's ability to carryback losses and our ability and intent to hold certain securities until recovery.

We continue to monitor and evaluate the need for any valuation allowance in the future.

Note 16 – Contingencies and Other Matters

5 unchanged sentences

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, 2022, employers maintained assets that generally exceeded the benefit obligations under these arrangements of approximately $ 420 million.

As of March 31, 2023, employers maintained assets that generally exceeded the benefit obligations under these arrangements of approximately $ 420 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, 2022.

there were no additional liabilities required for these guarantees, net of reinsurance, as of March 31, 2023.

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

1 unchanged sentence

Certain Other Guarantees

The Company had indemnification obligations as of September 30, 2022 in connection with acquisition and disposition transactions.

The Company had indemnification obligations as of March 31, 2023 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.

2 unchanged sentences

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, 2022.

There were no liabilities for these indemnification obligations as of March 31, 2023.

Guaranty Fund Assessments

1 unchanged sentence

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, 2022.

There were no material charges or credits resulting from existing or new guaranty fund assessments for the three months ended March 31, 2023.

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 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.

Disputed tax matters arising from audits by the Internal Revenue Service or other state and foreign jurisdictions, including those resulting in litigation, are accounted for under GAAP guidance for uncertain tax positions.

Disputed tax matters arising

from audits by the Internal Revenue Service or other state and foreign jurisdictions, including those resulting in litigation, are accounted for under GAAP guidance for uncertain tax positions.

Pending litigation and legal or regulatory matters that the Company has identified with a reasonably possible material loss and certain other material litigation matters are described below.

9 unchanged sentences

Elevance also requested that the court enter declaratory judgment that Express Scripts is required to provide Elevance competitive benchmark pricing, that Elevance can terminate the agreement and that Express Scripts is required to provide Elevance with post-termination services at competitive benchmark pricing for one year following any termination by Elevance.

Elevance claims it is entitled to $ 13 billion in additional pricing concessions over the remaining term of the agreement, as well as $ 1.8 billion for one year following any contract termination by Elevance and $ 150 million damages for service issues ("Elevance's Allegations").

Elevance claimed it is entitled to $ 13 billion in additional pricing concessions over the remaining term of the agreement, as well as $ 1.8 billion for one year following any contract termination by Elevance and $ 150 million damages for service issues ("Elevance's Allegations").

On April 19, 2016, in response to Elevance's complaint, Express Scripts filed its answer denying Elevance's Allegations in their entirety and asserting affirmative defenses and counterclaims against Elevance.

8 unchanged sentences

Express Scripts' pending Motions were fully briefed at the end of July 2022.

On March 8, 2023, the Court granted Express Scripts' Motion for Partial Summary Judgement, excluding in full the testimony of four of Elevance's experts and in part the testimony of two additional experts, and granted Elevance leave to submit a supplemental expert report.

On April 5, 2023, the Court entered a scheduling order setting a trial on Elevance's remaining prior authorization claims to commence on December 4, 2023.

Medicare Advantage.

5 unchanged sentences

Attorney's Offices for the Southern District of New York and the Middle District of Tennessee) filed a motion to partially intervene, which was granted on August 2, 2022.

On October 14, 2022, the DOJ filed its complaint-in-intervention alleging that certain diagnoses made during in-home exams were invalid for risk adjustment purposes.

Cigna's response is due by December 16, 2022.

On October 14, 2022, the DOJ filed its complaint-in-intervention alleging that certain diagnoses made during in-home exams were invalid for risk adjustment purposes, seeking unspecified damages and penalties under the federal False Claims Act.

The Company filed motions to dismiss the DOJ's complaint and the remainder of the qui tam complaint on December 16, 2022.

Briefing is complete and the matter is pending before the court.

Regulatory Matters

1 unchanged sentence

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.

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

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

Attorney's Office for the Eastern District of Pennsylvania) and is continuing to cooperate with the DOJ.

Note 17 – Segment Information

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.

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

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

Intersegment revenues primarily reflect pharmacy and care services transactions between the Evernorth Health Services 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.

The Cigna Group'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.

1 unchanged sentence

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 Cigna Healthcare segment using the equity method of accounting.

special items and The Cigna Group'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.

1 unchanged sentence

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 and nine months ended September 30, 2022 and 2021:

Three Months Ended Nine Months Ended

(In millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

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

Integration and transaction-related costs (benefits)

(Selling, general and administrative expenses) $ 23 $ 24 $ ( 35 ) $ 13 $ 86 $ 112 $ 1 $ 58

Charge for organizational efficiency plan

(Selling, general and administrative expenses) — — — — 17 22 — —

(Benefits) associated with litigation matters

(Selling, general and administrative expenses) — — — — ( 20 ) ( 28 ) ( 21 ) ( 27 )

(Gain) on sale of businesses ( 1,388 ) ( 1,735 ) — — ( 1,388 ) ( 1,735 ) — —

Debt extinguishment costs — — — — — — 110 141

Total impact from special items $ ( 1,365 ) $ ( 1,711 ) $ ( 35 ) $ 13 $ ( 1,305 ) $ ( 1,629 ) $ 90 $ 172

Special items charges (benefits) recorded by the Company were $ 1 million both pre-tax and after-tax for the three months ended March 31, 2023 and $ 52 million pre-tax ($ 37 million after-tax) for the three months ended March 31, 2022.

Effective January 1, 2023, we adopted amended accounting guidance for long-duration insurance contracts.

See Note 2 to the Consolidated Financial Statements for further information.

Prior period summarized segment information has been retrospectively adjusted to conform to this new basis of accounting.

Summarized segment financial information was as follows:

(In millions) Evernorth

Cigna Healthcare

Other Operations

Corporate and Eliminations

Three months ended September 30, 2022

Revenues from external customers $ 34,670 $ 10,328 $ 78 $ — $ 45,076

Intersegment revenues 1,003 667 — ( 1,670 )

Net investment income

25 101 75 3 204

Total revenues 35,698 11,096 153 ( 1,667 ) 45,280

Net realized investment results from certain equity method investments — 80 — — 80

Adjusted revenues $ 35,698 $ 11,176 $ 153 $ ( 1,667 ) $ 45,360

Income (loss) before income taxes

$ 1,200 $ 879 $ 1,752 $ ( 340 ) $ 3,491

Pre-tax adjustments to reconcile to adjusted income from operations

(Income) attributable to noncontrolling interests

( 17 ) ( 1 ) ( 4 ) — ( 22 )

Net realized investment losses (1)

— 158 3 — 161

Amortization of acquired intangible assets 442 17 1 — 460

Special items

Integration and transaction-related costs — — — 24 24

(Gain) on sale of businesses — — ( 1,735 ) — ( 1,735 )

Pre-tax adjusted income (loss) from operations $ 1,625 $ 1,053 $ 17 $ ( 316 ) $ 2,379

(In millions) Evernorth

(In millions) Evernorth Health Services

Cigna Healthcare

1 unchanged sentence

Corporate and Eliminations

Three months ended September 30, 2021

Revenues from external customers $ 32,668 $ 10,283 $ 869 $ — $ 43,820

Intersegment revenues 942 584 — ( 1,526 )

Net investment income

4 333 131 — 468

Total revenues 33,614 11,200 1,000 ( 1,526 ) 44,288

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

Adjusted revenues $ 33,614 $ 11,222 $ 1,000 $ ( 1,526 ) $ 44,310

Income (loss) before income taxes

$ 1,074 $ 1,110 $ 196 $ ( 321 ) $ 2,059

Pre-tax adjustments to reconcile to adjusted income from operations

(Income) attributable to noncontrolling interests

( 10 ) ( 1 ) ( 5 ) — ( 16 )

Net realized investment (gains) losses (1)

— ( 73 ) 27 — ( 46 )

Amortization of acquired intangible assets 484 10 7 — 501

Special items

Integration and transaction-related costs — — — 13 13

Pre-tax adjusted income (loss) from operations $ 1,548 $ 1,046 $ 225 $ ( 308 ) $ 2,511

(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.

(In millions) Evernorth Cigna Healthcare

Other Operations

Corporate and Eliminations

Nine months ended September 30, 2022

Three months ended March 31, 2023

Revenues from external customers $ 34,511 $ 11,650 $ 79 $ — $ 46,240

11 unchanged sentences

( 42 ) ( 1 ) — — ( 43 )

Net realized investment losses (1)

Net realized investment losses (gains) (1)

— 24 ( 6 ) — 18

2 unchanged sentences

Integration and transaction-related costs — — — 1 1

Charge for organizational efficiency plan — — — 22 22

(Benefits) associated with litigation matters — — — ( 28 ) ( 28 )

(Gain) on sale of businesses — — ( 1,735 ) — ( 1,735 )

Pre-tax adjusted income (loss) from operations $ 1,320 $ 1,115 $ 15 $ ( 414 ) $ 2,036

(In millions) Evernorth

(In millions) Evernorth Health Services

Cigna Healthcare

1 unchanged sentence

Corporate and Eliminations

Nine months ended September 30, 2021

Three months ended March 31, 2022

Revenues from external customers

16 unchanged sentences

Integration and transaction-related costs — — — 52 52

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

Debt extinguishment costs — — — 141 141

Pre-tax adjusted income (loss) from operations $ 1,302 $ 1,297 $ 229 $ ( 343 ) $ 2,485

1 unchanged sentence

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, 2022 and 2021:

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

Prior period amounts have been retrospectively adjusted to reflect adoption of amended accounting guidance for long-duration insurance contracts, as discussed in Note 2 to the Consolidated Financial Statements.

The following table presents these revenues by product, premium and service type:

Three Months Ended March 31,

(In millions) 2023 2022

9 unchanged sentences

Stop loss 1,503 1,325

Other 353 320 1,065 938

Medicare Advantage 2,236 2,078

1 unchanged sentence

Other (1), (2)

Short-duration (Individual and family plans) 1,208 611

Long-duration (Individual Medicare supplement and limited benefit health products) 334 329

International Health (2)

Short-duration (Group medical insurance) 700 620

Long-duration (Individual private medical insurance) 86 82

Total Cigna Healthcare 10,930 9,526

Divested International businesses — 763

Other 76 61 219 169

Intercompany eliminations 16 ( 2 )

1 unchanged sentence

Services (Fees) (ASC 606)

1,875 1,623 5,289 4,393

Evernorth Health Services

Cigna Healthcare

1,530 1,433 4,504 4,292

Other Operations

3 unchanged sentences

Total revenues from external customers $ 46,240 $ 43,592

Evernorth may also provide certain financial and performance guarantees, including a minimum level of discounts a client may receive, generic utilization rates and various service levels.

(1) Other than supplemental benefits, all of U.S.

Commercial and U.S.

Government are short duration.

Government and International Health recognize premium revenue on long-duration insurance contracts (coverage greater than one year or guaranteed to be renewed at the option of the policyholder beyond one year) related to certain medicare supplement, supplemental health and life products.

All other premium revenue recognized as of March 31, 2023 and March 31, 2022 is primarily related to short-duration insurance contracts.

Evernorth Health Services may also provide certain financial and performance guarantees, including a minimum level of discounts a client may receive, generic utilization rates and various service levels.

Clients may be entitled to receive compensation if we fail to meet the guarantees.

2 unchanged sentences

Historically, adjustments to original estimates have not been material.

This guarantee liability was $ 1.1 billion as of September 30, 2022 and December 31, 2021.

This guarantee liability was $ 1.5 billion as of March 31, 2023 and $ 1.3 billion as of December 31, 2022.

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