What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-03 · 227 added, 190 removed, 1108 unchanged (27% of the section changed)

3 unchanged sentences

Unaudited Unaudited

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

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

(In millions, except per share amounts) 2023 2022 (1)

13 unchanged sentences

Interest expense and other ( 365 ) ( 304 ) ( 1,086 ) ( 904 )

Net realized investment gains (losses)

(Loss) gain on sale of businesses ( 21 ) 1,735 ( 21 ) 1,735

Net realized investment losses

( 14 ) ( 82 ) ( 44 ) ( 493 )

13 unchanged sentences

Unaudited Unaudited

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

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

(In millions) 2023 2022 (1)

2 unchanged sentences

Other comprehensive income (loss), net of tax

Net unrealized appreciation (depreciation) on securities and derivatives 20 ( 670 ) 214 ( 1,513 )

Net unrealized (depreciation) appreciation on securities and derivatives

( 192 ) ( 150 ) 22 ( 1,663 )

Net long-duration insurance and contractholder liabilities measurement adjustments ( 28 ) ( 19 ) ( 476 ) 446

Net translation losses on foreign currencies ( 19 ) ( 207 ) ( 3 ) ( 270 )

Net translation (losses) gains on foreign currencies

( 29 ) 175 ( 32 ) ( 95 )

Postretirement benefits liability adjustment 8 10 25 50

Other comprehensive loss, net of tax ( 109 ) ( 844 ) ( 220 ) ( 1,278 )

Other comprehensive (loss) income, net of tax

( 241 ) 16 ( 461 ) ( 1,262 )

Total comprehensive income 1,208 2,794 3,804 4,298

10 unchanged sentences

Consolidated Balance Sheets

June 30, As of

September 30, As of

(In millions) 2023 2022 (1)

40 unchanged sentences

(2) Par value per share, $ 0.01 ;

shares issued, 399 million as of June 30, 2023 and 398 million as of December 31, 2022;

shares issued, 399 million as of September 30, 2023 and 398 million as of December 31, 2022;

authorized shares, 600 million.

2 unchanged sentences

Consolidated Statements of Changes in Total Equity

Three Months Ended June 30, 2023

Three Months Ended September 30, 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 March 31, 2023 $ 4 $ 30,332 $ ( 1,769 ) $ 38,841 $ ( 22,906 ) $ 44,502 $ 16 $ 44,518 $ 78

Balance at June 30, 2023 $ 4 $ 30,436 $ ( 1,878 ) $ 39,936 $ ( 23,053 ) $ 45,445 $ 19 $ 45,464 $ 62

Effects of issuing stock for employee benefits plans 127 ( 5 ) 122 122

5 unchanged sentences

Other transactions impacting noncontrolling interests — — ( 12 ) ( 12 ) ( 35 )

Balance at June 30, 2023 $ 4 $ 30,436 $ ( 1,878 ) $ 39,936 $ ( 23,053 ) $ 45,445 $ 19 $ 45,464 $ 62

Three Months Ended June 30, 2022 (1)

Balance at September 30, 2023 $ 4 $ 30,563 $ ( 2,119 ) $ 40,982 $ ( 23,739 ) $ 45,691 $ 11 $ 45,702 $ 64

Three Months Ended September 30, 2022 (1)

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

Balance at June 30, 2022, as retrospectively restated (1)

4 29,930 ( 2,343 ) 34,668 ( 16,588 ) 45,671 30 45,701 45

Effect of issuing stock for employee benefit plans 165 ( 2 ) 163 163

Other comprehensive loss ( 843 ) ( 843 ) ( 843 ) ( 1 )

Other comprehensive income 15 15 15 1

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

3 unchanged sentences

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

Balance at June 30, 2022 $ 4 $ 29,930 $ ( 2,343 ) $ 34,668 $ ( 16,588 ) $ 45,671 $ 30 $ 45,701 $ 45

Balance at September 30, 2022 $ 4 $ 29,395 $ ( 2,328 ) $ 37,083 $ ( 19,390 ) $ 44,764 $ 42 $ 44,806 $ 50

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

3 unchanged sentences

Consolidated Statements of Changes in Total Equity

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

8 unchanged sentences

Other transactions impacting noncontrolling interests ( 2 ) ( 2 ) ( 16 ) ( 18 ) ( 118 )

Balance at June 30, 2023 $ 4 $ 30,436 $ ( 1,878 ) $ 39,936 $ ( 23,053 ) $ 45,445 $ 19 $ 45,464 $ 62

Six Months Ended June 30, 2022 (1)

Balance at September 30, 2023 $ 4 $ 30,563 $ ( 2,119 ) $ 40,982 $ ( 23,739 ) $ 45,691 $ 11 $ 45,702 $ 64

Nine Months Ended September 30, 2022 (1)

8 unchanged sentences

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

Balance at June 30, 2022 $ 4 $ 29,930 $ ( 2,343 ) $ 34,668 $ ( 16,588 ) $ 45,671 $ 30 $ 45,701 $ 45

Balance at September 30, 2022 $ 4 $ 29,395 $ ( 2,328 ) $ 37,083 $ ( 19,390 ) $ 44,764 $ 42 $ 44,806 $ 50

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

3 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions) 2023 2022 (1)

6 unchanged sentences

( 303 ) ( 298 )

Loss (gain) on sale of businesses

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

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Property and equipment purchases, net ( 1,208 ) ( 950 )

Acquisitions, net of cash acquired ( 443 ) —

Divestitures, net of cash sold 13 4,838

Other, net ( 117 ) ( 33 )

NET CASH USED IN INVESTING ACTIVITIES ( 3,397 ) ( 732 )

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES ( 4,734 ) 3,714

Cash Flows from Financing Activities

10 unchanged sentences

Effect of foreign currency rate changes on cash, cash equivalents and restricted cash 2 ( 98 )

Net increase (decrease) in cash, cash equivalents and restricted cash 3,660 ( 625 )

Net increase in cash, cash equivalents and restricted cash 2,570 1,569

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

Cash, cash equivalents and restricted cash, June 30,

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

Cash, cash equivalents and restricted cash June 30, per Consolidated Balance Sheets (3)

$ 9,636 $ 4,468

Cash, cash equivalents and restricted cash, September 30, (3)

Supplemental Disclosure of Cash Information:

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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.

Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate financing 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 eliminations for products and services sold between segments.

Note 2 – Summary of Significant Accounting Policies

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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.

Certain amounts in prior years related to the adoption of Targeted Improvements for the Accounting of Long-Duration Contracts, have been reclassified to conform to the current year presentation.

See "Recent Accounting Pronouncements" below.

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.

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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, as well as competitive and other market conditions, 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

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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 significant accounting pronouncements not yet adopted as of June 30, 2023.

There are no significant accounting pronouncements not yet adopted as of September 30, 2023.

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

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The following amounts were included within Accounts receivable, net:

(In millions) June 30, 2023 December 31, 2022

Pharmaceutical manufacturers receivables $ 7,922 $ 7,108

(In millions) September 30, 2023 December 31, 2022

Noninsurance customer receivables $ 8,384 $ 6,899

Pharmaceutical manufacturers receivables 8,188 7,108

Insurance customer receivables 2,256 2,963

1 unchanged sentence

Total $ 19,083 $ 17,218

These receivables are reported net of our allowances of $ 2.8 billion as of June 30, 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 $ 99 million as of June 30, 2023 and $ 86 million as of December 31, 2022.

These accounts receivable are reported net of our allowances of $ 3.3 billion as of September 30, 2023 and $ 1.9 billion as of December 31, 2022.

These allowances include contractual allowances for certain rebates receivable with pharmaceutical manufacturers and certain accounts receivable 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 $ 96 million as of September 30, 2023 and $ 86 million as of December 31, 2022.

Accounts Receivable Factoring Facility

In July 2023, the Company entered into an uncommitted factoring facility (the "Facility") under which certain accounts receivable may be sold on a non-recourse basis to a financial institution .

The Facility's total capacity is $ 1.0 billion with an initial term of two years , followed by automatic one year renewal terms unless terminated by either party.

The transactions under the Facility are accounted for as a sale and recorded as a reduction to accounts receivable in the Consolidated Balance Sheets because control of, and risk related to, the accounts receivable are transferred to the financial institution .

Although the sale is made without recourse, we provide collection services related to the transferred assets.

Amounts associated with this Facility are reflected within Net cash provided by operating activities in the Company's Consolidated Statements of Cash Flows.

Factoring fees paid under this Facility are reflected in Interest expense and other in the Consolidated Statements of Income.

During the three months ended September 30, 2023 we sold $ 1.0 billion and factoring fees paid were not material.

As of September 30, 2023, there were $ 253 million of sold accounts receivable that have not been collected from manufacturers and have been removed from the Company's Consolidated Balance Sheets.

There were $ 512 million of amounts received from manufacturers but not yet remitted to the financial institution.

Such amounts are recorded within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

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 Company facilitates a voluntary supplier finance program (the "Program") that provides suppliers the opportunity to sell their accounts receivable 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.

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

As of June 30, 2023 and December 31, 2022, $ 1.6 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.

As of September 30, 2023 and December 31, 2022, $ 1.6 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 are 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 $ 263 million as of June 30, 2023 of the Company's outstanding payment obligations were voluntarily elected by suppliers to be sold to the financial institution under the program.

As of September 30, 2023, we have been informed by the financial institution that $ 378 million 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

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In July 2023, Evernorth Health, Inc.

became a minority owner in CarepathRx Health Systems Solutions ("CHSS"), through a $ 437 million equity method investment in CHSS JV LLC (a holding company for the CHSS business and a CarepathRx company).

CarepathRx provides integrated hospital pharmacy solutions to support patients across their complete health care journey.

By pairing Evernorth Health Services' diverse specialty and care expertise with CHSS' robust pharmacy and infusion management capabilities, technology solutions and health system relationships, we can further improve, expand and accelerate pharmacy care delivery for the growing number of patients with chronic and complex care needs.

acquired a minority interest in CarepathRx Health Systems Solutions ("CHSS"), a provider of integrated hospital pharmacy solutions to support patients across their complete health care journey.

This equity method investment is reported in Other assets and the Company's share of CHSS' net income or loss is reported in Fees and other revenues.

The purchase price has been allocated to the acquired tangible and intangible assets, including customer relationships, trade names, internal-use software and goodwill.

Amortization of the acquired intangibles is included in Fees and other revenues.

The Company's share of CHSS' net loss and amortization of acquired intangibles was immaterial for the three months ended September 30, 2023.

The Company guaranteed $ 125 million of CHSS' credit facilities through July 2026.

The fair value of the guarantee is reflected in other liabilities and is not material.

The acquisition also includes separate put and call options to increase our ownership which become exercisable annually beginning as early as April 2025.

The net fair value of the options, determined using a Monte Carlo simulation, are not material and are included in Accrued expenses and other liabilities and Other assets, respectively.

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.

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 and recognized a gain of $ 1.7 billion pre-tax ($ 1.4 billion after-tax), which included recognition of previously unrealized capital losses on investments sold and translation loss on foreign currencies.

In 2023, we recorded immaterial adjustments to the sales price reflecting resolution of certain contractual matters.

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

Integration and Transaction-related Costs

In the first six months of 2023 and 2022, the Company incurred net costs related to the Chubb transaction and continued strategic realignment.

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

These net costs were $ 6 million pre-tax ($ 5 million after-tax) for the three months ended and $ 7 million pre-tax ($ 6 million after-tax) for the six months ended June 30, 2023, compared with $ 36 million pre-tax ($ 26 million after-tax) for the three months ended and $ 88 million pre-tax ($ 63 million after-tax) for the six months ended June 30, 2022.

In the first nine months of 2023 and 2022, the Company incurred net costs related to the Chubb transaction and continued strategic realignment initiatives.

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

These net costs were $ 13 million pre-tax ($ 9 million after-tax) for the three months ended and $ 20 million pre-tax ($ 15 million after-tax) for the nine months ended September 30, 2023, compared with $ 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.

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.

2 unchanged sentences

Three Months Ended

June 30, 2023 June 30, 2022

September 30, 2023 September 30, 2022

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

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Earnings per share $ 4.79 $ ( 0.05 ) $ 4.74 $ 9.07 $ ( 0.10 ) $ 8.97

Six Months Ended

June 30, 2023 June 30, 2022

Nine Months Ended

September 30, 2023 September 30, 2022

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

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Earnings per share $ 14.03 $ ( 0.14 ) $ 13.89 $ 17.64 $ ( 0.18 ) $ 17.46

Amounts reflected above for the three and six months ended June 30, 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).

Amounts reflected above for the three and nine months ended September 30, 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 June 30, Six Months Ended June 30,

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

(In millions) 2023 2022 2023 2022

Anti-dilutive options 0.9 — 0.9 1.3

The Company held approximately 103.3 million shares of common stock in treasury at June 30, 2023, 99.1 million shares as of December 31, 2022 and 81.3 million shares as of June 30, 2022.

The Company held approximately 105.7 million shares of common stock in treasury at September 30, 2023, 99.1 million shares as of December 31, 2022 and 91.8 million shares as of September 30, 2022.

Note 7 – Debt

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

(In millions) June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022

Short-term debt

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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.

The proceeds of this issuance were used for general corporate purposes, and included repayment of outstanding debt securities.

Interest on this debt is paid semi-annually.

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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 June 30, 2023, there were no outstanding balances under these revolving credit agreements.

As of September 30, 2023, there were no outstanding balances under these revolving credit agreements.

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

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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 June 30, 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.

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

The average interest rate of our commercial paper was 5.41 % at June 30, 2023.

The weighted average interest rate of our commercial paper was 5.50 % at September 30, 2023.

Debt Covenants.

The Company was in compliance with its debt covenants as of June 30, 2023.

The Company was in compliance with its debt covenants as of September 30, 2023.

Interest Expense

Interest expense on long-term and short-term debt was $ 350 million for the three months ended and $ 695 million for the six months ended June 30, 2023, compared with $ 316 million for the three months ended and $ 630 million for the six months ended June 30, 2022.

Interest expense on corporate financing was $ 353 million for the three months ended and $ 1,048 million for the nine months ended September 30, 2023, compared with $ 317 million for the three months ended and $ 947 million for the nine months ended September 30, 2022.

Note 8 – Common and Preferred Stock

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

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

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

During the first nine months 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:

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June 7, 2023 June 22, 2023 $ 1.23 $ 362

September 6, 2023 September 21, 2023 $ 1.23 $ 362

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

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

On July 26, 2023, the Board of Directors declared the third quarter cash dividend of $ 1.23 per share of The Cigna Group common stock to be paid on September 21, 2023 to shareholders of record on September 6, 2023.

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

On October 25, 2023, the Board of Directors declared the fourth quarter cash dividend of $ 1.23 per share of The Cigna Group common stock to be paid on December 21, 2023 to shareholders of record on December 6, 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.

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

June 30, 2023 December 31, 2022 June 30, 2022

September 30, 2023 December 31, 2022 September 30, 2022

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

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Unearned premiums 1,362 23 1,385 576 22 598 1,283

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

Total insurance and contractholder liabilities $ 7,352 $ 11,286 $ 18,638 $ 5,409 $ 11,976 $ 17,385 $ 18,281

(1) Amounts classified as Liabilities of businesses held for sale primarily include $ 3.6 billion of Future policy benefits, $ 0.4 billion of Unpaid claims and $ 0.4 billion of Unearned premiums as of June 30, 2022.

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

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

The total of incurred but not reported liabilities plus expected development on reported claims, including reported claims in process, was $ 5.0 billion at June 30, 2023 and $ 4.1 billion at June 30, 2022.

The total of incurred but not reported liabilities plus expected development on reported claims, including reported claims in process, was $ 5.0 billion at September 30, 2023 and $ 4.0 billion at September 30, 2022.

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

Six Months Ended

(In millions) June 30, 2023 June 30, 2022

Nine Months Ended

(In millions) September 30, 2023 September 30, 2022

Beginning balance $ 4,176 $ 4,261

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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:

Six Months Ended

June 30, 2023 June 30, 2022

Nine Months Ended

September 30, 2023 September 30, 2022

(Dollars in millions) $ % (1)

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

F uture Policy Benefits

Future Policy Benefits

Accounting Policy.

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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:

June 30, 2023 June 30, 2022

September 30, 2023 September 30, 2022

Interest accretion rate 2.85 % 2.34 %

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

Six Months Ended

(In millions) June 30, 2023 June 30, 2022

Nine Months Ended

(In millions) September 30, 2023 September 30, 2022

Present value of expected net premiums

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Total liability for future policy benefits (6)

(1) Includes the effect of actual variances from expectations, which (decreased)/increased the total liability for future policy benefits by $( 12 ) million and $ 58 million, respectively, for the nine months ended September 30, 2023 and September 30, 2022.

(2) 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 June 30, 2023 and June 30, 2022, respectively, undiscounted expected future gross premiums were $ 17.7 billion and $ 13.7 billion.

As of June 30, 2023 and June 30, 2022, respectively, discounted expected future gross premiums were $ 12.3 billion and $ 10.2 billion.

(3) As of June 30, 2023 and June 30, 2022, respectively, undiscounted expected future policy benefits were $ 12.9 billion and $ 11.2 billion.

(3) As of September 30, 2023 and September 30, 2022, respectively, undiscounted expected future gross premiums were $ 18.5 billion and $ 17.1 billion.

As of September 30, 2023 and September 30, 2022, respectively, discounted expected future gross premiums were $ 12.5 billion and $ 11.8 billion.

(4) As of September 30, 2023 and September 30, 2022, respectively, undiscounted expected future policy benefits were $ 13.1 billion and $ 12.4 billion.

(5) 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 $ 150 million of reinsurance recoverable asset reported in the Consolidated Balance Sheets as of June 30, 2023 and June 30, 2022, respectively, relate to the liability for future policy benefits.

(6) $ 154 million and $ 156 million of reinsurance recoverable asset reported in the Consolidated Balance Sheets as of September 30, 2023 and September 30, 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:

June 30, 2023 June 30, 2022

September 30, 2023 September 30, 2022

Interest accretion rate 5.64 % 5.64 %

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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 $ 386 million as of June 30, 2023 and $ 380 million as of June 30, 2022.

Future policy benefits excluding DPL were $ 3.2 billion as of both June 30, 2023 and December 31, 2022 and $ 3.5 billion and

$ 4.3 billion as of June 30, 2022 and December 31, 2021, respectively.

These balances exclude amounts classified as Liabilities of businesses held for sale of $ 3.6 billion as of June 30, 2022 and $ 3.8 billion as of December 31, 2021.

Future policy benefits for Other Operations includes DPL of $ 390 million as of September 30, 2023 and $ 380 million as of September 30, 2022.

Future policy benefits excluding DPL were $ 3.0 billion as of September 30, 2023, $ 3.2 billion as of each of December 31, 2022 and September 30, 2022, and $ 4.3 billion as of December 31, 2021.

These balances exclude amounts classified as Liabilities of businesses held for sale of $ 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 $ 4.5 billion as of June 30, 2023 and $ 4.7 billion as of June 30, 2022.

As of June 30, 2023 and June 30, 2022, $ 1.0 billion and $ 1.1 billion of the future policy benefit reserve was recoverable through treaties with external reinsurers.

Undiscounted expected future policy benefits were $ 4.5 billion as of September 30, 2023 and $ 4.7 billion as of September 30, 2022.

As of September 30, 2023 and September 30, 2022, $ 1.0 billion and $ 1.1 billion of the future policy benefit reserve was recoverable through treaties with external reinsurers.

Contractholder Deposit Funds

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

Contractholder deposit fund liabilities within Other Operations were $ 6.6 billion as of June 30, 2023 and $ 6.7 billion as of December 31, 2022 and $ 6.8 billion and $ 6.9 billion as of June 30, 2022 and December 31, 2021, respectively.

Contractholder deposit fund liabilities within Other Operations were $ 6.6 billion as of September 30, 2023 and $ 6.7 billion as of each of December 31, 2022 and September 30, 2022, and $ 6.9 billion as of December 31, 2021.

Approximately 38 % of the balance is reinsured externally.

1 unchanged sentence

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 June 30, 2023, the weighted average crediting rate, net amount at risk and cash surrender value for contractholder deposit fund liabilities not externally reinsured were 3.26 %, $ 3.2 billion and $ 2.8 billion, respectively.

The comparative amounts as of June 30, 2022 were 3.20 %, $ 3.4 billion and $ 2.8 billion, respectively.

As of both June 30, 2023 and June 30, 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.

As of September 30, 2023, the weighted average crediting rate, net amount at risk and cash surrender value for contractholder deposit fund liabilities not externally reinsured were 3.27 %, $ 3.1 billion and $ 2.8 billion, respectively.

The comparative amounts as of September 30, 2022 were 3.14 %, $ 3.3 billion and $ 2.8 billion, respectively.

As of both September 30, 2023 and September 30, 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 basis points ("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.

14 unchanged sentences

Market risk benefits activity was as follows:

Six Months Ended

(In millions) June 30, 2023 June 30, 2022

Nine Months Ended

(In millions) September 30, 2023 September 30, 2022

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

11 unchanged sentences

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) June 30, 2023 June 30, 2022

(Dollars in millions, excludes impact of reinsurance ceded) September 30, 2023 September 30, 2022

Net amount at risk $ 1,986 $ 2,881

10 unchanged sentences

The Company reviews its reinsurance arrangements and establishes reserves against the recoverables primarily for expected credit losses.

The Company's reinsurance recoverables as of June 30, 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:

The Company's reinsurance recoverables as of September 30, 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

7 unchanged sentences

Total recoverables related to ongoing operations 157 3 264 424

150 1 244 395

Acquisition, disposition or run-off activities

11 unchanged sentences

Total reinsurance recoverables (2)

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

(1) Certified by a NRSRO.

(2) Includes $ 238 million of current reinsurance recoverables that are reported in Other current assets.

8 unchanged sentences

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 June 30, 2023.

The reinsurance agreement is subject to an overall limit with approximately $ 3.1 billion remaining at September 30, 2023.

As a result of the reinsurance transaction, amounts payable are offset by a corresponding reinsurance recoverable, provided the increased recoverable remains within the overall Berkshire limit.

1 unchanged sentence

Reinsurer (1)

June 30, 2023 December 31, 2022 Collateral and Other Terms

at June 30, 2023

September 30, 2023 December 31, 2022 Collateral and Other Terms

at September 30, 2023

Berkshire $ 810 $ 1,116 90 % were secured by assets in a trust.

6 unchanged sentences

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

(2) Includes IBNR and outstanding claims of $ 28 million offset by premium due of $ 3 million.

These amounts are excluded from market risk benefits at June 30, 2023 in Note 9 and Note 10A to the Consolidated Financial Statements.

(2) Includes IBNR and outstanding claims of $ 21 million.

These amounts are excluded from market risk benefits at September 30, 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 and six months ended June 30, 2023 and June 30, 2022.

the risk that a counterparty might default) on the variable annuity reinsurance asset was immaterial for the three and nine months ended September 30, 2023 and September 30, 2022.

Note 11 – Investments

4 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

12 unchanged sentences

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

The amortized cost and fair value by contractual maturity periods for debt securities were as follows as of June 30, 2023:

The amortized cost and fair value by contractual maturity periods for debt securities were as follows as of September 30, 2023:

(In millions) Amortized

11 unchanged sentences

Depreciation Fair

June 30, 2023

September 30, 2023

Federal government and agency $ 278 $ — $ 19 $ ( 14 ) $ 283

18 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.

June 30, 2023 December 31, 2022

September 30, 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 June 30, 2023 and December 31, 2022:

June 30, 2023 December 31, 2022

The following table provides the values of the Company's equity security investments as of September 30, 2023 and December 31, 2022:

September 30, 2023 December 31, 2022

(In millions) Cost Carrying Value Cost Carrying Value

5 unchanged sentences

These securities are included in Equity securities with no readily determinable fair value in the above table.

A dividend of 5.5 % accrues annually on $ 2.2 billion of these shares.

A compounding dividend of 5.5 % accrues annually on $ 2.2 billion of our cost basis in these shares.

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.

5 unchanged sentences

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

(Dollars in millions) June 30, 2023 December 31, 2022

(Dollars in millions) September 30, 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

11 unchanged sentences

Carrying Value as of

(In millions) June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022

Real estate investments $ 1,511 $ 1,319

5 unchanged sentences

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 June 30, 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 June 30, 2023 and December 31, 2022.

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

As of September 30, 2023, there have been no material changes to the Company's derivative financial instruments.

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

The effects of derivative financial instruments used in our individual hedging strategies were not material to the Consolidated Financial Statements as of September 30, 2023 and December 31, 2022.

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

Realized Investment Gains and Losses

4 unchanged sentences

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 June 30, Six Months Ended June 30,

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

(In millions) 2023 2022 2023 2022

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

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

$ ( 9 ) $ ( 67 ) $ ( 29 ) $ ( 454 )

Credit loss (expense) recoveries

Credit loss (expense)

( 5 ) ( 15 ) ( 3 ) ( 39 )

Other investment asset write-downs — — ( 12 ) —

Net realized investment gains (losses), before income taxes

Net realized investment (losses), before income taxes

$ ( 14 ) $ ( 82 ) $ ( 44 ) $ ( 493 )

Net realized investment losses for the six months ended June 30, 2023 and June 30, 2022 were primarily due to mark-to-market losses on a strategic health care equity securities investment.

Net realized investment losses for the nine months ended September 30, 2023 and September 30, 2022 were primarily due to mark-to-market losses on a strategic health care equity securities investment.

Note 12 – Fair Value Measurements

16 unchanged sentences

(Level 3) Total

June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

Financial assets at fair value

14 unchanged sentences

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.

Additionally, as discussed in Note 9E 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

4 unchanged sentences

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

(Fair value in millions) June 30, 2023 December 31, 2022 Unobservable Input June 30, 2023 June 30, 2023 December 31, 2022

(Fair value in millions) September 30, 2023 December 31, 2022 Unobservable Input September 30, 2023 September 30, 2023 December 31, 2022

Debt securities

4 unchanged sentences

Total Level 3 debt securities $ 434 $ 447

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

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

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

2 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

3 unchanged sentences

( 1 ) 4 ( 1 ) 14

Losses included in Other comprehensive loss

Losses included in Other comprehensive (loss) income

( 5 ) ( 11 ) ( 5 ) ( 62 )

10 unchanged sentences

$ ( 1 ) $ — $ ( 1 ) $ ( 2 )

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

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

$ ( 4 ) $ ( 33 ) $ ( 9 ) $ ( 60 )

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

Gains and losses included in Other comprehensive 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.

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) income, net of tax in the tables above are reflected in Net unrealized (depreciation) appreciation on securities and derivatives in the Consolidated Statements of Comprehensive Income.

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

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.

The separate account activity for the six months ended June 30, 2023 and 2022 was primarily driven by changes in the market values of the underlying separate account investments.

The separate account activity for the nine months ended September 30, 2023 and 2022 was primarily driven by changes in the market values of the underlying separate account investments.

Fair values of Separate account assets were as follows:

3 unchanged sentences

(Level 3) Total

(In millions) June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

Guaranteed separate accounts (See Note 16)

5 unchanged sentences

Total $ 7,028 $ 7,278

(1) Non-guaranteed separate accounts include $ 4.0 billion as of June 30, 2023 and December 31, 2022 in assets supporting the Company's pension plans, including $ 0.2 billion classified in Level 3 as of June 30, 2023 and December 31, 2022.

(1) Non-guaranteed separate accounts include $ 3.8 billion as of September 30, 2023 and $ 4.0 billion as of December 31, 2022 in assets supporting the Company's pension plans, including $ 0.2 billion classified in Level 3 as of September 30, 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 and six months ended June 30, 2023 or 2022.

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

1 unchanged sentence

The following table provides additional information on these investments:

Fair Value as of Unfunded Commitment as of June 30, 2023 Redemption Frequency

Fair Value as of Unfunded Commitment as of September 30, 2023 Redemption Frequency

(if currently eligible) Redemption Notice

(In millions) June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022

Securities partnerships $ 416 $ 451 $ 204 Not applicable Not applicable

2 unchanged sentences

Total $ 686 $ 757 $ 204

As of June 30, 2023, the Company does not have plans to sell any of these assets at less than fair value.

As of September 30, 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 six months ended June 30, 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 and six months ended June 30, 2023 and June 30, 2022 were not material.

For the nine months ended September 30, 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 and nine months ended September 30, 2023 and September 30, 2022 were not material.

Fair Value Disclosures for Financial Instruments Not Carried at Fair Value

1 unchanged sentence

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 June 30, 2023 December 31, 2022

Classification in Fair Value Hierarchy September 30, 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 June 30, 2023 or December 31, 2022.

The Company determined that it was no t a primary beneficiary in any material variable interest entity as of September 30, 2023 or December 31, 2022.

For details of our accounting policy for variable interest entities and the composition of variable interest entities with which the Company is involved, refer to Note 13 in the Company's 2022 Form 10-K.

The Company has not provided, and does not intend to provide, financial support to any of these variable interest entities in excess of its maximum exposure.

The Company's maximum exposure to loss from securities limited partnerships and real estate limited partnerships is $ 5.2 billion as of June 30, 2023 compared to $ 4.8 billion as of December 31, 2022 and the maximum exposure from real estate joint ventures is $ 0.8 billion as of June 30, 2023 compared to $ 0.6 billion as of December 31, 2022.

The Company's maximum exposure to loss from securities limited partnerships and real estate limited partnerships is $ 5.1 billion as of September 30, 2023 compared to $ 4.8 billion as of December 31, 2022 and the maximum exposure from real estate joint ventures is $ 0.9 billion as of September 30, 2023 compared to $ 0.6 billion as of December 31, 2022.

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

2 unchanged sentences

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.

Shareholders' other comprehensive (loss), net of tax, for both the three and six months ended June 30, 2023 and June 30, 2022, is primarily driven by the change in discount rates for certain long duration liabilities and unrealized changes in the market values of securities and derivatives, including the impacts from unconsolidated entities reported on the equity method.

Shareholders' other comprehensive (loss) income, net of tax, for both the three and nine months ended September 30, 2023 and 2022, is primarily driven by the change in discount rates for certain long-duration liabilities and unrealized changes in the market values of securities and derivatives, including the impacts from unconsolidated entities reported on the equity method.

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

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

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

(In millions) 2023 2022 2023 2022

1 unchanged sentence

Beginning balance, as retrospectively restated $ ( 118 ) $ ( 247 ) $ ( 332 ) $ 1,266

Unrealized appreciation (depreciation) on securities and derivatives

Unrealized (depreciation) appreciation on securities and derivatives

( 257 ) ( 325 ) 2 ( 2,259 )

Tax (expense) benefit

Tax benefit (expense)

57 ( 7 ) ( 9 ) 393

Net unrealized (depreciation) appreciation on securities and derivatives

Net unrealized (depreciation) on securities and derivatives

( 200 ) ( 332 ) ( 7 ) ( 1,866 )

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

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

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

Reclassification adjustment for (gains) included in Shareholders' net income (Selling, general and administrative expenses)

( 1 ) — ( 1 ) —

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

1 unchanged sentence

Net losses reclassified from AOCI to Shareholders' net income

Other comprehensive income (loss), net of tax

Other comprehensive (loss) income, net of tax

( 192 ) ( 150 ) 22 ( 1,663 )

7 unchanged sentences

Current period change in instrument-specific credit risk for market risk benefits ( 17 ) 16 ( 50 ) ( 6 )

Tax benefit (expense)

Net current period change in instrument-specific credit risk for market risk benefits ( 13 ) 13 ( 40 ) ( 5 )

6 unchanged sentences

Tax benefit (expense)

1 ( 25 ) 2 ( 28 )

Net translation of foreign currencies ( 29 ) ( 90 ) ( 32 ) ( 360 )

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

Reclassification adjustment for losses included in Net income ((Loss) 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 ( 31 ) 146 ( 36 ) ( 96 )

Other comprehensive (loss) income, net of tax

( 29 ) 175 ( 32 ) ( 95 )

Shareholders' other comprehensive (loss), net of tax

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

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

( 29 ) 174 ( 32 ) ( 93 )

3 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 ((Loss) gain on sale of businesses)

— ( 2 ) — ( 2 )

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

3 unchanged sentences

Tax benefit (expense)

1 ( 4 ) 1 ( 4 )

Net change due to valuation update — — ( 1 ) 14

3 unchanged sentences

Beginning balance, as retrospectively restated $ ( 1,878 ) $ ( 2,343 ) $ ( 1,658 ) $ ( 1,068 )

Shareholders' other comprehensive (loss), net of tax

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

( 241 ) 15 ( 461 ) ( 1,260 )

4 unchanged sentences

Income Tax Expense

The 19.9 % effective tax rate for the three months ended June 30, 2023 and the 19.2 % effective tax rate for the six months ended June 30, 2023 were each lower than the 20.7 % rate for the three months ended June 30, 2022 and the 21.6 % rate for the six months ended June 30, 2022.

These decreases are driven largely by favorable results relative to the Company's foreign operations and the release of uncertain tax positions resulting from favorable audit developments.

As of June 30, 2023, we had approximately $ 274 million in deferred tax assets ("DTAs") associated with unrealized investment losses that are partially recorded in Accumulated other comprehensive loss.

The 21.3 % effective tax rate for the three months ended September 30, 2023 was higher than the 20.4 % rate for the three months ended September 30, 2022, primarily as a result of increases for the remeasurement of deferred tax liabilities and the Medicare Advantage litigation settlement, partially offset by favorable results relative to the Company's foreign operations.

The 19.9 % effective tax rate for the nine months ended September 30, 2023 is lower than the 21.0 % rate for the nine months ended September 30, 2022.

The decrease is driven largely by favorable results relative to the Company's foreign operations and the release of uncertain tax positions resulting from favorable audit developments, partially offset by an increase for the remeasurement of deferred tax liabilities.

As of September 30, 2023, we had approximately $ 331 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 carry back losses and our ability and intent to hold certain securities until recovery.

7 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 June 30, 2023, employers maintained assets that generally exceeded the benefit obligations under these arrangements of approximately $ 420 million.

As of September 30, 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 June 30, 2023.

there were no additional liabilities required for these guarantees, net of reinsurance, as of September 30, 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 June 30, 2023 in connection with acquisition and disposition transactions.

The Company had indemnification obligations as of September 30, 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 June 30, 2023.

There were no liabilities for these indemnification obligations as of September 30, 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 six months ended June 30, 2023.

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

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.

16 unchanged sentences

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

Elevance's only remaining service claims relate to the review or processing of prior authorizations.

On June 10, 2022, Express Scripts filed a Motion for Partial Summary Judgment seeking to limit Elevance's remaining prior authorization claims and a Motion to Exclude certain opinions offered by its experts.

Elevance filed its opposition to both motions, and a cross-motion to submit a supplemental expert report, on July 9, 2022.

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 Judgment, 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.

Elevance's only remaining service claims relate to the review or processing of prior authorizations, with alleged damages over $ 100 million.

On November 1, 2023, the parties signed a settlement agreement pursuant to which Express Scripts agreed to resolve the service-related claims.

The settlement agreement is not an admission of liability or fault by Express Scripts, the Company or its subsidiaries.

Following the settlement, Elevance would retain the right to appeal the pricing-related claims that were previously dismissed by the court, while Express Scripts would retain the ability to reassert its own pricing-related claims in the event any appeal by Elevance is successful.

Medicare Advantage.

8 unchanged sentences

The Company's motion to dismiss relator's complaint was denied as moot after relator asked for and was granted permission to amend his complaint.

Relator filed an amended complaint on July 28, 2023.

The Company's response to the complaint is due September 11, 2023.

Relator filed an amended complaint on July 28, 2023, which the Company moved to dismiss on September 11, 2023.

On September 29, 2023, the Company, the relator and the DOJ settled the matter for $ 37 million plus interest and attorney’s fees.

Regulatory Matters

2 unchanged sentences

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.

As part of these investigations, the Company responded to information requests (civil investigative demands) from the DOJ (U.S.

Attorney's Office for the Eastern District of Pennsylvania) regarding its risk adjustment submissions.

On September 29, 2023, the Company settled the DOJ’s investigation for approximately $ 135 million plus interest.

In connection with this settlement and the settlement of the litigation (see "Litigation Matters—Medicare

Advantage" above), The Cigna Group also entered into a Corporate Integrity Agreement with the U.S.

Department of Health and Human Services Office of the Inspector General, which contains certain auditing and governance requirements for a period of five years from the settlement date.

Note 17 – Segment Information

13 unchanged sentences

The following table presents the special items charges (benefits) recorded by the Company, as well as the respective financial statement line items impacted:

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

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

2023 2022 2023 2022

(In millions) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax

Charges (benefits) associated with litigation matters

(Selling, general and administrative expenses) $ 201 $ 171 $ — $ — $ 201 $ 171 $ ( 28 ) $ ( 20 )

Loss (gain) on sale of businesses 21 19 ( 1,735 ) ( 1,388 ) 21 19 ( 1,735 ) ( 1,388 )

Integration and transaction-related costs

2 unchanged sentences

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

(Benefits) associated with litigation matters

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

Total impact from special items $ 235 $ 199 $ ( 1,711 ) $ ( 1,365 ) $ 242 $ 205 $ ( 1,629 ) $ ( 1,305 )

7 unchanged sentences

Corporate and Eliminations

Three months ended June 30, 2023

Three months ended September 30, 2023

Revenues from external customers $ 37,230 $ 11,426 $ 71 $ — $ 48,727

10 unchanged sentences

( 44 ) — — — ( 44 )

Net realized investment (gains) losses (1)

( 1 ) 5 — — 4

Net realized investment losses (1)

Amortization of acquired intangible assets 443 11 — — 454

Special items

Charges associated with litigation matters 44 157 — — 201

Loss on sale of businesses — — 21 — 21

Integration and transaction-related costs — — — 13 13

4 unchanged sentences

Corporate and Eliminations

Three months ended June 30, 2022

Three months ended September 30, 2022

Revenues from external customers $ 34,670 $ 10,329 $ 78 $ — $ 45,077

10 unchanged sentences

( 17 ) ( 1 ) ( 4 ) — ( 22 )

Net realized investment (gains) losses (1)

Net realized investment losses (1)

— 158 4 — 162

1 unchanged sentence

Special items

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

Integration and transaction-related costs — — — 24 24

Charge for organizational efficiency plan — — — 22 22

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

Pre-tax adjusted income (loss) from operations $ 1,625 $ 1,050 $ 21 $ ( 316 ) $ 2,380

4 unchanged sentences

Corporate and Eliminations

Six months ended June 30, 2023

Nine months ended September 30, 2023

Revenues from external customers $ 108,462 $ 34,581 $ 232 $ — $ 143,275

4 unchanged sentences

Net realized investment results from certain equity method investments

— ( 8 ) — — ( 8 )

Adjusted revenues $ 112,980 $ 38,200 $ 462 $ ( 7,469 ) $ 144,173

4 unchanged sentences

( 140 ) ( 2 ) — — ( 142 )

Net realized investment (gains) losses (1)

( 1 ) 29 ( 6 ) — 22

Net realized investment losses (1)

Amortization of acquired intangible assets 1,330 38 — — 1,368

Special items

Charges associated with litigation matters 44 157 — — 201

Loss on sale of businesses — — 21 — 21

Integration and transaction-related costs — — — 20 20

4 unchanged sentences

Corporate and Eliminations

Six months ended June 30, 2022

Nine months ended September 30, 2022

Revenues from external customers

15 unchanged sentences

Special items

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

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

Integration and transaction-related costs — — — 112 112

Charge for organizational efficiency plan — — — 22 22

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

Pre-tax adjusted income (loss) from operations $ 4,402 $ 3,582 $ 478 $ ( 1,060 ) $ 7,402

3 unchanged sentences

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

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

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

(In millions) 2023 2022 2023 2022

45 unchanged sentences

Historically, adjustments to original estimates have not been material.

This guarantee liability was $ 1.2 billion as of June 30, 2023 and $ 1.3 billion as of December 31, 2022.

This guarantee liability was $ 1.3 billion as of each of September 30, 2023 and 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