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Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-02-23 · 597 added, 512 removed, 1809 unchanged (38% of the section changed)

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment - U.S.

Government Reporting Unit

As described in Note 19 to the consolidated financial statements, as of December 31, 2022, goodwill in the Cigna Healthcare segment was $10.7 billion, of which a portion of the balance relates to the U.S.

Government reporting unit.

Management conducts its annual quantitative evaluation for goodwill impairment during the third quarter at the reporting unit level and writes it down through shareholders' net income if impaired.

On a quarterly basis, management performs a qualitative impairment assessment to determine if events or changes in circumstances indicate that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value.

Fair value of a reporting unit is generally estimated based on both a discounted cash flow analysis and a market approach using assumptions that management believes a hypothetical market participant would use to determine a current transaction price.

Assessment of Held for Sale and Associated Loss on Sale

As described in Notes 6 and 20 to the consolidated financial statements, the Company determined that the Medicare Advantage, Medicare Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits and CareAllies businesses met the criteria to be classified as held for sale and aggregated and classified the assets and liabilities as held for sale in the Consolidated Balance Sheet as of December 31, 2023.

The Company measured the assets and liabilities held for sale at estimated fair value less costs to sell and recognized an estimated loss of $1.5 billion pre-tax that was included within (Loss) gain on sale of businesses in the Consolidated Statement of Income for the year ended December 31, 2023.

The estimated loss on sale represents primarily asset write-downs and estimated costs to sell.

The fair value of a reporting unit is generally estimated based on discounted cash flow analysis and market approach models using assumptions that management believes a hypothetical market participant would use to determine a current transaction price.

Following a change in reporting units or held for sale determination, goodwill is allocated using relative fair value.

The significant assumptions and estimates used in determining fair value primarily include the discount rate and future cash flows.

A discount rate is selected to correspond with each reporting unit's weighted average cost of capital.

Future cash flows for the U.S.

Government reporting unit is primarily driven by forecasted revenues, benefit expenses, operating expenses and long-term growth rates.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the U.S.

Government reporting unit is a critical audit matter are the significant judgment by management when developing the fair value estimate of the reporting unit.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's significant assumptions related to the discount rate, forecasted revenues, benefit expenses, operating expenses, and long-term growth rates (collectively referred to as the "significant assumptions").

In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

Future cash flows are primarily driven by forecasted revenues, benefit expenses, operating expenses and long-term growth rates.

The principal considerations for our determination that performing procedures relating to the assessment of held for sale classification and the associated loss on sale is a critical audit matter are (i) the significant judgment by management when determining the held for sale classification and developing the fair value estimate of the reporting unit, including goodwill allocated to businesses held for sale using relative fair value;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to (a) management's determination of the held for sale classification, and (b) management’s significant assumptions used to develop the fair value estimate of the reporting unit, including goodwill allocated to businesses held for sale using relative fair value related to the discount rate, forecasted revenues, benefit expenses, operating expenses and long-term growth rates (collectively referred to as the "significant assumptions");

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management's goodwill impairment assessment, including controls over management's methodology, inputs, and assumptions used in developing the fair value estimate of the U.S.

Government reporting unit.

These procedures also included, among others (i) testing management's process for developing the fair value estimate of the reporting unit;

(ii) evaluating the appropriateness of the discounted cash flow analysis and market approach;

(iii) testing the completeness and accuracy of underlying data used in the discounted cash flow analysis and market approach;

and (iv) evaluating the reasonableness of the significant assumptions used by management.

Evaluating the reasonableness of the significant assumptions involved consideration of (i) the current and past performance of the reporting unit;

These procedures included testing the effectiveness of controls relating to (i) management’s assessment of held for sale classification and (ii) management’s estimation of the loss on sale of businesses, including controls over the fair value estimation of the reporting unit, including goodwill allocated to businesses held for sale using relative fair value.

These procedures also included, among others, (i) evaluating the reasonableness of management’s assessment of held for sale classification, which included reading the written agreement in place between the parties related to the sale;

(ii) testing management’s process for estimating the loss on sale of businesses and developing the fair value estimate of the reporting unit, including goodwill allocated to businesses held for sale using relative fair value;

(iii) evaluating the appropriateness of the discounted cash flow analysis and market approach used by management;

(iv) testing the completeness and accuracy of underlying data used in the discounted cash flow analysis and market approach;

and (v) evaluating the reasonableness of the significant assumptions used by management.

Evaluating management’s significant assumptions involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit;

(ii) the consistency with external market and industry data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit, as applicable.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the reasonableness related to the discount rate and long-term growth rates significant assumptions .

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the discount rate and long-term growth rates significant assumptions.

/s/ PricewaterhouseCoopers LLP

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Debt extinguishment costs — — ( 141 )

Gain on sale of businesses 1,662 — 4,203

(Loss) gain on sale of businesses ( 1,499 ) 1,662 —

Net realized investment (losses) gains

( 78 ) ( 487 ) 198

Income before income taxes 5,513 8,397 6,790

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Diluted $ 17.39 $ 21.41 $ 15.75

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

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

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

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Other comprehensive income (loss), net of tax

Net unrealized depreciation on securities and derivatives ( 1,005 ) ( 215 ) ( 75 )

Net unrealized appreciation (depreciation) on securities and derivatives

503 ( 1,598 ) ( 302 )

Net long-duration insurance and contractholder liabilities measurement adjustments ( 715 ) 509 67

Net translation gains (losses) on foreign currencies

Postretirement benefits liability adjustment 1 420 410

Other comprehensive (loss) income, net of tax ( 513 ) ( 37 ) 72

Other comprehensive loss, net of tax

( 206 ) ( 592 ) ( 57 )

Total comprehensive income 5,166 6,190 5,363

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SHAREHOLDERS' COMPREHENSIVE INCOME $ 4,958 $ 6,114 $ 5,327

(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 are an integral part of these statements.

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Separate account assets 7,430 7,278

Assets of businesses held for sale, non-current 2,922 —

TOTAL ASSETS $ 152,761 $ 143,885

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Separate account liabilities 7,430 7,278

Liabilities of businesses held for sale, non-current 591 —

TOTAL LIABILITIES 106,410 99,131

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Total liabilities and equity $ 152,761 $ 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 ;

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(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 December 31, 2019 $ 4 $ 28,306 $ ( 941 ) $ 20,162 $ ( 2,193 ) $ 45,338 $ 6 $ 45,344 $ 35

Cumulative effect of adopting new credit loss guidance (ASU 2016-13) ( 30 ) ( 30 ) ( 30 )

Balance at December 31, 2020, as previously disclosed

$ 4 $ 28,975 $ ( 861 ) $ 28,575 $ ( 6,372 ) $ 50,321 $ 7 $ 50,328 $ 58

Cumulative effect of adopting LDTI (ASU 2018-12) ( 164 ) 25 ( 139 ) ( 139 )

Balance at December 31, 2020, as retrospectively restated 4 28,975 ( 1,025 ) 28,600 ( 6,372 ) 50,182 7 50,189 58

Effect of issuing stock for employee benefit plans 604 ( 93 ) 511 511

Other comprehensive income (loss)

Other comprehensive loss

( 43 ) ( 43 ) ( 43 ) ( 14 )

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Other transactions impacting noncontrolling interests ( 5 ) ( 5 ) ( 20 ) ( 25 ) ( 9 )

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

Balance at December 31, 2021, as retrospectively restated $ 4 $ 29,574 $ ( 1,068 ) $ 32,623 $ ( 14,175 ) $ 46,958 $ 18 $ 46,976 $ 54

Effect of issuing stock for employee benefit plans 659 ( 76 ) 583 583

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Other transactions impacting noncontrolling interests — — ( 72 ) ( 72 ) 3

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

Balance at December 31, 2022, as retrospectively restated $ 4 $ 30,233 $ ( 1,658 ) $ 37,940 $ ( 21,844 ) $ 44,675 $ 13 $ 44,688 $ 66

Effect of issuing stock for employee benefit plans 477 ( 112 ) 365 365

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( 1,659 ) ( 472 ) ( 216 )

Gain on sale of businesses

Loss (gain) on sale of businesses

1,499 ( 1,662 ) —

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Other, net ( 332 ) ( 170 ) 97

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 3,098 ( 3,611 ) 2,976

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES ( 5,174 ) 3,098 ( 3,611 )

Cash Flows from Financing Activities

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Net change in short-term debt 1,198 ( 2,059 ) 975

Net proceeds on issuance of term loan — — 1,398

Repayment of term loan — — ( 1,400 )

Payments for debt extinguishment — — ( 136 )

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Cash, cash equivalents and restricted cash January 1, 5,976 5,548 10,245

5,548 10,245 5,411

Cash, cash equivalents and restricted cash, December 31, (2)

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

( 467 ) — ( 425 )

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

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Interest paid $ 1,330 $ 1,229 $ 1,253

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

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

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Accounts Receivable, Net

Supplier Finance Program

Mergers, Acquisitions and Divestitures

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Note 1 – Description of Business

The Cigna Group, together with its subsidiaries, is a global health company.

On February 13, 2023, we changed our corporate name from Cigna Corporation to The Cigna Group.

We will not distinguish between our prior and current corporate name and will refer to our current corporate name throughout the Financial Statements and related footnotes.

As such, unless expressly indicated or the context requires otherwise, the terms "Company," "we," "us," and "our" in this document refer to The Cigna Group, a Delaware corporation, and, where appropriate, its subsidiaries.

On February 13, 2023, we also changed the name of our Evernorth segment to Evernorth Health Services.

We will not distinguish between our prior and current segment name and will refer to our current segment name throughout the Financial Statements and related footnotes.

Our common stock continues to be listed with, and trades on, the New York Stock Exchange under the ticker symbol "CI".

The Cigna Group has a mission of helping those we serve improve their health and vitality.

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

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

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 committed to creating a better future built on the vitality of every individual and every community.

We relentlessly challenge ourselves to partner and innovate solutions for better health.

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

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

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.

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

A full description of our segments follows:

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.

Evernorth Health Services partners with health plans, employers, governmental organizations and health care providers to solve challenges in the areas of pharmacy benefits, home delivery pharmacy, specialty pharmacy, specialty distribution, and care delivery and management solutions.

Cigna Healthcare includes the U.S.

Commercial, U.S.

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 comprises the remainder of our business operations, which includes ongoing businesses and exiting businesses.

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

During the fourth quarter of 2023, the U.S.

Commercial and U.S.

Government operating segments merged to form the U.S.

Healthcare operating segment.

Healthcare provides commercial medical plans and specialty benefits and solutions for insured and self-insured clients, Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors and individual health insurance plans.

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

In January 2024, the Company entered into a definitive agreement to sell the Medicare Advantage, Medicare Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits and CareAllies businesses within the U.S.

Healthcare operating segment to Health Care Service Corporation ("HCSC") for $ 3.3 billion cash, subject to applicable regulatory approvals and other customary closing conditions (the "HCSC transaction").

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) 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 exiting businesses include our interest in a joint venture in Türkiye, which was sold to our partner in December 2022, the international life, accident and supplemental benefits businesses sold on July 1, 2022, and the Group Disability and Life business sold on December 31, 2020.

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 Note 4).

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.

Our run-off businesses include (i) variable annuity reinsurance business (formerly 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 which were sold through reinsurance agreements.

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

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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Recent Accounting Pronouncements

There were no new accounting standards adopted during the year ended December 31, 2022 that had a material impact on our Consolidated Financial Statements.

Accounting Guidance Not Yet Adopted

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

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

Targeted Improvements to the Accounting for Long-Duration Contracts, 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.

• 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 and DAC 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.

• 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:

• 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, contractholder deposit funds and DAC, as well as information about significant inputs, judgments, assumptions and methods used in measurement.

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

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

The impact of adoption was not material to Shareholders' equity and did not result in a material restatement of prior periods.

• 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 years 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 years 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 10 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 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 December 2022, the Financial Accounting Standards Board ("FASB") published Accounting Standards Update (ASU) 2022-05, which simplifies the retrospective adoption of LDTI.

The ASU permits 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.

• 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.

Accounting Guidance Not Yet Adopted

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

Significant Accounting Policies

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Inventories consist of prescription drugs and medical supplies and are stated at the lower of first-in-first-out cost or net realizable value.

Deferred Policy Acquisition Costs

Costs eligible for deferral, recorded within Other assets (non-current), include incremental, direct costs of acquiring new or renewal insurance and investment contracts and other costs directly related to successful contract acquisition.

Examples of deferrable costs include commissions, sales compensation and benefits, policy issuance and underwriting costs.

The Company records acquisition costs differently depending on the product line.

Acquisition costs for:

• Supplemental health, life and accident insurance products (primarily individual products) that comprise the majority of the Company's deferred policy acquisition costs and group health and accident insurance products are deferred and amortized, generally in proportion to the ratio of periodic revenue to the estimated total revenues over the contract periods.

• Universal life products are deferred and amortized in proportion to the present value of total estimated gross profits over the expected lives of the contracts.

• Other products are expensed as incurred.

Deferred policy acquisition costs also include the value of business acquired ("VOBA") for certain acquisitions with material long-duration insurance contracts.

The Company recorded amortization of deferred policy acquisition costs of $ 319 million in 2022, $ 478 million in 2021 and $ 502 million in 2020 primarily in Selling, general and administrative expenses.

Each year, deferred policy acquisition costs are tested for recoverability.

For universal life and other individual products, management estimates the present value of future revenues less expected payments.

For group health and accident insurance products, management estimates the sum of unearned premiums and anticipated net investment income less future expected claims and related costs.

If management's estimates of these sums are less than the deferred costs, the Company reduces deferred policy acquisition costs and records an additional expense.

Other Assets (Current and Non-Current)

Other current assets consist primarily of prepaid expenses, accrued investment income, the current portion of reinsurance recoverables and income tax receivables.

Other assets (non-current) consist primarily of the carrying value of our equity-method investments in business-related joint ventures in China, India, the U.S.

Other current assets consist primarily of prepaid expenses, income tax receivables, accrued investment income and the current portion of reinsurance recoverables.

Other assets (non-current) consist primarily of the Company's net deferred tax asset associated with foreign tax attributes (see Note 23) and the carrying value of our equity-method investments in business-related joint ventures in China, the U.S.

and other foreign jurisdictions.

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See Note 15 for additional information on unconsolidated subsidiaries.

Additionally, Other assets (non-current) include deferred policy acquisition costs, operating lease right-of-use assets, GMIB assets, overfunded pension obligations (see Note 17) and various other insurance-related assets.

See Note 10 for the Company's accounting policy for GMIB assets and Note 20 for the Company's accounting policy related to leases.

Additionally, Other assets (non-current) includes operating lease right-of-use assets, various insurance-related assets and overfunded pension obligations (see Note 18).

See Note 21 for the Company's accounting policy related to leases.

Redeemable Noncontrolling Interests

Redeemable noncontrolling interests in our Consolidated Balance Sheets represents the noncontrolling shareholders' preferred and common stock interests of the Company's consolidated less than fully owned subsidiaries.

Those shareholders may choose to require

the Company to purchase their equity interest.

Those shareholders may choose to require the Company to purchase their equity interest.

For certain entities, we may also have the right to require those shareholders to sell their equity interest to us.

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Accrued Expenses and Other Current and Non-Current Liabilities

Accrued expenses and other liabilities (current) primarily includes financial and performance guarantee liabilities under pharmacy contracts (see section H), management compensation and various insurance-related liabilities, including experience-rated refunds, reinsurance contracts and the risk adjustment and minimum medical loss ratio rebate accruals under The Patient Protection and Affordable Care Act (the "ACA").

Other non-current liabilities primarily include uncertain tax positions (see Note 22), GMIB contract liabilities (see Note 10), lease liabilities (see Note 20), self-insured exposures not expected to be settled within one year and underfunded pension obligations (see Note 17).

Accrued expenses and other liabilities (current) primarily includes financial and performance guarantee liabilities (see section G) and other liabilities arising from pharmacy contracts, management compensation, various insurance-related liabilities, including experience-rated refunds, reinsurance contracts and the risk adjustment and minimum medical loss ratio rebate accruals under The Patient Protection and Affordable Care Act (the "ACA"), and amounts due to financial institutions under the accounts receivable factoring facility (see Note 3).

Other non-current liabilities primarily include uncertain tax positions (see Note 23), amounts held for self-funded clients to cover the administration and payment of claims that may emerge post contract termination, lease liabilities (see Note 21) and underfunded pension obligations (see Note 18).

The Company accrues for legal and regulatory matters when a loss contingency is both probable and estimable.

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Legal costs to defend the Company's litigation and arbitration matters are expensed as incurred in cases that the Company cannot reasonably estimate the ultimate cost to defend.

If the Company can reasonably estimate the cost to defend, a liability for these costs is accrued when the claim is reported.

If the Company can reasonably estimate the cost to defend, a liability

for these costs is accrued when the claim is reported.

Litigation and legal or regulatory matters that the Company has identified with a reasonable possibility of material loss are described in Note 24.

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For experience-rated contracts, premium revenue includes an adjustment for experience-rated refunds based on contract terms and calculated using the customer's experience (including estimates of incurred but not reported claims).

Premiums received for the Company's Medicare Advantage plans, Medicare Part D products and Individual and Family Plans from the Centers for Medicare and Medicaid Services ("CMS") and customers are recognized as revenue ratably over the contract period.

CMS provides risk-adjusted premium payments for Medicare Advantage Plans and Medicare Part D products based on our customer demographics and medical diagnoses, which may change from period to period based on the underlying health of our customers.

Premiums received for the Company's Medicare Advantage plans, Medicare Part D plans and Individual and Family Plans from the Centers for Medicare and Medicaid Services ("CMS") and customers are recognized as revenue ratably over the contract period.

CMS provides risk-adjusted premium payments for Medicare Advantage plans and Medicare Part D plans based on our customer demographics and medical diagnoses, which may change from period to period based on the underlying health of our customers.

The Company recognizes changes to risk-adjusted premiums as revenue when the amounts are determinable and collection is reasonably assured.

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Medicare Part D premiums include payments from CMS for risk-sharing adjustments that are estimated quarterly based on claim experience by comparing actual incurred prescription drug costs to the estimated costs submitted in the original contracts.

adjustments may result in more or less revenue from CMS.

These adjustments may result in more or less revenue from CMS.

Final revenue adjustments generally occur in the year following the contract year.

The ACA prescribed a risk-adjustment program to mitigate the risk for participating health insurance companies selling coverage on the public exchanges.

The ACA prescribed a risk-adjustment program to mitigate the risk for participating health insurance companies selling individual coverage on the public exchanges.

The risk-adjustment program reallocates funds from insurers with lower risk populations to insurers with higher risk populations based on the relative risk scores of participants.

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Premiums for long-duration insurance contracts, including individual life, accident and supplemental health insurance and annuity products, and excluding universal life and investment-related products, are recognized as revenue when due.

Cigna Healthcare's long-duration premium revenues are associated with contracts that provide coverage greater than one year or are guaranteed to be renewed at the option of the policyholder beyond one year.

Benefits and expenses are matched with premiums.

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Expenses are recognized when claims are incurred and income is credited to policyholders in accordance with contract provisions.

The unrecognized portion of premiums received is recorded as unearned premiums included in Insurance and contractholder liabilities (current and non-current) (see Note 9 for further information).

The unrecognized portion of premiums received is recorded as unearned premiums included in Insurance and contractholder liabilities (current and non-current) (see Note 10 to the Consolidated Financial Statements for further information).

Fees and Related Expenses

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ASO arrangements allow plan sponsors to self-fund claims and assume the risk of medical or other benefit costs.

Most of the Company's ASO arrangements are for medical and specialty services, including pharmacy benefits.

Most of the Company's ASO arrangements are for medical and specialty solutions, including pharmacy benefits.

Generally, the Company's ASO arrangements are short-term.

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Fees are recorded gross in Fees and other revenues in the Consolidated Statements of Income because the Company is acting as a principal in arranging for and controlling the services provided by third-party network providers.

Contractual fees vary based on enrollment and provider costs and are billed, due and recognized monthly.

Contractual fees vary based on enrollment and provider costs and are billed, due

and recognized monthly.

Direct costs associated with these programs are recognized in Pharmacy and other service costs, and other related expenses are recorded in Selling, general and administrative expenses as incurred.

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The Company's estimation process for contractual allowances for pharmaceutical manufacturer receivables generally results in an allowance for balances outstanding greater than 90 days.

Contractual allowances for certain receivables from third-party payors are based on their contractual terms and are estimates based on the Company's best information available at the time revenue is recognized.

Allowances, discounts and claims adjustments issued to customers in the form of client credits and other non-credit adjustments are based on the current status of each customer's receivable balance, current economic and market conditions and a variety of other factors, including the length of time the receivables are past due, the financial health of customers and our past experience.

Contractual allowances for certain receivables from third-party payors are based on their contractual terms and are estimated based on the Company's best information available at the time revenue is recognized.

Discounts and claims adjustments issued to customers in the form of client credits and other non-credit adjustments are based on the current status of each customer's receivable balance, current economic and market conditions and a variety of other factors, including the length of time the receivables are past due, the financial health of customers and our past experience.

The allowance for expected credit losses for current accounts receivable is based primarily on past collections experience relative to the length of time receivables are past due;

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Other receivables 272 248

Total $ 18,844

Accounts receivable, net classified as assets of businesses held for sale

Accounts receivable, net per Consolidated Balance Sheets $ 17,218 $ 15,071

Total $ 17,722 $ 17,218

These receivables are reported net of our allowances of $ 3.7 billion as of December 31, 2023 and $ 1.9 billion as of December 31, 2022 as follows:

• Included in our Pharmaceutical manufacturers receivables are contractual allowances for certain rebates receivable with pharmaceutical manufacturers of $ 1.3 billion as of December 31, 2022 and $ 926 million as of December 31, 2021.

• Included in our Pharmaceutical manufacturers receivables are contractual allowances for certain rebates receivable with pharmaceutical manufacturers of $ 3.1 billion as of December 31, 2023 and $ 1.3 billion as of December 31, 2022.

• Included in our Noninsurance customer receivables are contractual allowances from third-party payors of $ 386 million as of December 31, 2023 and $ 336 million as of December 31, 2022 based upon the contractual payment terms.

• The remaining allowances of $ 226 million as of December 31, 2022 and $ 186 million as of December 31, 2021 include allowances, 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 remaining allowances of $ 219 million as of December 31, 2023 and $ 226 million as of December 31, 2022 include 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 $ 90 million as of December 31, 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 Consolidated Statements of Cash Flows.

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

For the year ended December 31, 2023, we sold $ 2.1 billion of accounts receivable under the Facility and factoring fees paid were not material.

As of December 31, 2023, all sold accounts receivable have been collected from manufacturers, $ 515 million of which have not been remitted to the financial institution.

Such amounts are recorded within Accrued expenses and other liabilities in 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 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.

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 December 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 are reflected in Accounts payable in the Consolidated Balance Sheets.

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

As of December 31, 2023, we have been informed by the financial institution that $ 298 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

Investment in CarepathRx Health Systems Solutions

In July 2023, Evernorth Health, Inc.

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 were immaterial for the year ended December 31, 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 Other non-current 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 (see Note 15 for further information).

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

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.

Divestiture of Group Disability and Life Business

On December 31, 2020, the Company completed the sale of its Group Disability and Life business to New York Life Insurance Company for cash proceeds of $ 6.2 billion.

The Company recognized a gain of $ 4.2 billion pre-tax ($ 3.2 billion after-tax), which included recognition of previously unrealized capital gains on investments sold (see Note 15 for further information).

Integration and Transaction-related Costs

As part of our strategic plan, we incurred non-routine costs associated with the disposition and acquisition of certain businesses.

In 2022 and 2021, the Company incurred costs related to the Chubb transaction, the sale of the Group Disability and Life business, acquisition of MDLIVE and the terminated merger with Elevance Health, Inc.

In 2023, the Company incurred net costs related to the HCSC and Chubb transactions.

In 2022 and 2021, the Company incurred costs related to the Chubb transaction, the sale of the Group Disability and Life business, the acquisition of MDLIVE and the terminated merger with Elevance Health, Inc.

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

In 2020, the Company incurred costs related to the acquisition and integration of Express Scripts Holding Company ("Express Scripts"), the terminated merger with Elevance, the sale of the Group Disability and Life business and other transactions.

These costs were $ 45 million pre-tax ($ 35 million after-tax) for the year ended December 31, 2023, compared with $ 135 million pre-tax ($ 103 million after-tax) for the year ended December 31, 2022 and $ 169 million pre-tax ($ 71 million after-tax) for the year ended December 31, 2021.

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Deferred policy acquisition costs continue to be amortized.

On July 1, 2022, the Company completed the sale of its life, accident and supplemental benefits businesses in six countries to Chubb for approximately $ 5.4 billion in cash.

Additionally, in December 2022, the Company divested its interest in a joint venture in Türkiye.

See Note 4 for additional information.

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

In January 2024, the Company entered into the HCSC transaction for a total purchase price of approximately $ 3.3 billion cash, subject to applicable regulatory approvals and other customary closing conditions.

The transaction is expected to close in the first quarter of 2025.

During the fourth quarter of 2023, the Company determined that the Medicare Advantage, Medicare Stand-Alone Prescription Drug Plans, Medicare Supplement and CareAllies businesses met the criteria to be classified as held for sale and aggregated and classified the assets and liabilities as held for sale in our Consolidated Balance Sheet as of December 31, 2023.

The Company measured the assets and liabilities held for sale at estimated fair value less costs to sell and recognized an estimated loss of $ 1.5 billion pre-tax ($ 1.4 billion after-tax) that was included within (Loss) gain on sale of businesses in the Consolidated Statements of Income for the year ended December 31, 2023.

The estimated loss on sale represents primarily asset write-downs and estimated costs to sell.

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

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Investments 1,438

Deferred policy acquisition costs 2,755

Separate account assets 878

Goodwill, other intangible assets and all other assets 909

Accounts receivable, net 1,122

Other assets, including Goodwill (1)

Total assets of businesses held for sale 5,990

Insurance and contractholder liabilities 1,636

Accounts payable, accrued expenses and other liabilities 452

Deferred tax liabilities, net 449

Separate account liabilities 878

All other liabilities 1,059

Total liabilities of businesses held for sale $ 2,695

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 Sheets as of December 31, 2021.

These amounts, as well as subsequent activity through the sale dates, were recognized within Gain on sale of businesses in our Consolidated Statements of Income as of December 31, 2022, as described in Note 4.

(1) Includes Goodwill of $ 396 million.

Note 7 – Earnings Per Share

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Earnings per share $ 17.57 $ ( 0.18 ) $ 17.39 $ 21.66 $ ( 0.25 ) $ 21.41 $ 15.89 $ ( 0.14 ) $ 15.75

Amounts reflected above for the years ended December 31, 2022 and 2021 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:

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Commercial paper $ 1,237 $ —

$ 500 million, 3.05 % Notes due November 2022

$ 17 million, 8.300 % Notes due January 2023

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

$ 500 million, 0.613 % Notes due March 2024

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

Other, including finance leases 42 33

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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

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$ 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

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$ 45 million, 8.080 % Step Down Notes due January 2033 (3)

$ 800 million, 5.400 % Notes due March 2033

$ 190 million, 6.150 % Notes due November 2036

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Total long-term debt $ 28,155 $ 28,100

(1) Included in the February 2024 debt tender offers discussed below.

(2) 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 12 to the Consolidated Financial Statements for further information about the Company's interest rate risk management and these derivative instruments.

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

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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.

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 December 31, 2023, there were no outstanding balances under these revolving credit agreements.

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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 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.

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

• a $ 1.0 billion 364-day revolving credit agreement that will mature in April 2024.

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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.

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 three facilities is diversified among 22 banks.

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 ("NRSRO") as of December 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.

The Credit Agreements replaced a prior $ 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.

Commercial Paper.

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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 December 31, 2022.

The weighted average interest rate of our commercial paper was 5.63 % at December 31, 2023.

Long-term debt

Debt Issuance and Redemption.

The Company did not enter into any debt issuances or redemptions in 2022.

During 2021, in order to decrease future interest expense, mitigate future refinancing risk and raise proceeds for general corporate purposes, the Company entered into the following transactions:

• Debt issuance:

Debt Issuance and Debt Tender Offers.

On February 5, 2024, we issued $ 4.5 billion of new senior notes.

The proceeds from this debt were used to pay the consideration for the cash tender offers as described below.

We intend to use the remaining net proceeds to fund the repayment of our senior notes maturing in March 2024 and for general corporate purposes, which may include repayment of indebtedness and repurchases of shares of our common stock.

Concurrent with the debt issuance, we commenced tender offers to purchase for cash up to $ 2.25 billion in aggregate principal amount of outstanding notes, which included any and all of the $ 1.0 billion senior notes due June 2024.

Following the early tender results, we increased the tender offers to up to $ 2.55 billion aggregate principal amount.

On February 22, 2024, we purchased $ 1.8 billion principal amount of notes at early settlement of the tender offers.

The tender offers will expire on March 5, 2024.

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

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

The remaining proceeds were used primarily for general corporate purposes.

• Debt redemption:

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

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

Debt Covenants.

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

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.

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.

Debt Maturities.

Maturities of outstanding long-term debt as of December 31, 2022 are as follows:

Maturities of outstanding long-term debt as of December 31, 2023 are as follows and exclude the impact of the 2024 debt issuance and debt tender offers described above:

(In millions) Scheduled Maturities (1)

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Interest Expense

Interest expense on long-term and short-term debt was $ 1.3 billion in 2022 and 2021 and $ 1.4 billion in 2020.

Interest expense on long-term and short-term debt was $ 1.4 billion in 2023 and $ 1.3 billion in both 2022 and 2021.

Debt Covenants

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

Note 9 – Common and Preferred Stock

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Issued- December 31, 399,894 397,819 394,194

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

In 2021, The Cigna Group initiated and declared quarterly cash dividends of $ 1.00 per share of the Company's common stock.

During 2023, 2022 and 2021, The Cigna Group declared quarterly cash dividends of $ 1.23 , $ 1.12 and $ 1.00 per share of the Company's common stock, respectively.

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

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December 6, 2022 December 21, 2022 $ 1.12 $ 334

March 10, 2020 April 9, 2020 $ 0.04 $ 15

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

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

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

December 7, 2021 December 22, 2021 $ 1.00 $ 324

On February 2, 2024, the Board of Directors declared the first quarter cash dividend of $ 1.40 per share of The Cigna Group common stock to be paid on March 21, 2024 to shareholders of record on March 6, 2024.

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.

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 may deem relevant.

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 may deem relevant.

Accelerated Share Repurchase Agreements

In February 2024, as part of our existing share repurchase program, we entered into separate accelerated share repurchase agreements ("2024 ASR agreements") with Deutsche Bank AG and Bank of America, N.A.

(collectively, the "2024 Counterparties") to repurchase $ 3.2 billion of common stock in aggregate.

We remitted $ 3.2 billion to the 2024 Counterparties and received an initial delivery of approximately 7.6 million shares of our common stock on February 15, 2024 representing $ 2.6 billion of the total remitted.

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

We expect final settlement under the ASR agreements to occur in the second quarter of 2024.

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

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

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

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Upon final settlement of the 2022 ASR agreements in November 2022, we received 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 2022 Counterparties pending final settlement of the agreements.

The total number of shares of our common stock repurchased under the 2022 ASR agreements was 12.3 million based on an average daily Volume-Weighted Average Share Price ("VWAP") of our common stock over the term of the agreements, less a discount, of $ 285.10 per share.

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

LLC and JP Morgan Chase Bank, N.A.

(collectively, the "2021 Counterparties") to repurchase $ 2.0 billion of common stock in aggregate.

We remitted $ 2.0 billion to the 2021 Counterparties and received an initial delivery of 7.7 million shares of our common stock representing $ 1.6 billion of the total remitted.

Upon final settlement of the 2021 ASR agreements in fourth quarter of 2021, we received an additional 1.8 million shares of our common stock for no additional consideration as the value of this stock was held back by the 2021 Counterparties pending final settlement of the agreements.

The total number of shares of our common stock repurchased under the 2021 ASR agreements was 9.5 million based on an average daily VWAP of our common stock over the term of the agreements, less a discount, of $ 209.53 per share.

The total number of shares of our common stock repurchased under the 2022 ASR agreements was 12.3 million based on an average daily volume-weighted average share price of our common stock over the term of the agreements, less a discount, of $ 285.10 per share.

Note 10 – Insurance and Contractholder Liabilities

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

Contractholder deposit funds $ 365 $ 6,515 $ 6,880 $ 352 $ 6,702 $ 7,054

Future policy benefits 229 4,708 4,937 312 9,194 9,506

Unearned premiums 576 22 598 558 418 976

Unpaid claims and claim expenses

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Other Operations 99 154 253 107 177 284

Future policy benefits

Cigna Healthcare

97 518 615 43 544 587

Other Operations 163 3,375 3,538 150 3,442 3,592

Contractholder deposit funds

Cigna Healthcare

12 133 145 14 157 171

Other Operations 362 6,178 6,540 351 6,358 6,709

Market risk benefits 37 966 1,003 51 1,217 1,268

Unearned premiums 846 22 868 576 22 598

Total 6,633 11,421 18,054

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( 1,119 ) ( 517 ) ( 1,636 )

Total insurance and contractholder liabilities per Consolidated Balance Sheets $ 5,385 $ 11,481 $ 16,866 $ 5,318 $ 12,563 $ 17,881

(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.

Total insurance and contractholder liabilities $ 5,514 $ 10,904 $ 16,418 $ 5,409 $ 11,976 $ 17,385

(1) Amounts classified as liabilities of businesses held for sale include $ 823 million of Unpaid claims, $ 429 million of Future policy benefits, $ 261 million of Unearned premiums and $ 123 million of Contractholder deposit funds as of December 31, 2023.

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

Accounting policy - Contractholder Deposit Funds.

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.

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

In addition, this caption includes:

1) premium stabilization reserves under group health insurance contracts representing experience refunds left with the Company to pay future premiums;

2) deposit administration funds used to fund non-pension retiree insurance programs;

3) retained asset accounts and 4) annuities or supplementary contracts without significant life contingencies.

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

Accounting policy - Future Policy Benefits.

Future policy benefits represent the present value of estimated future obligations under long-term life and supplemental health insurance policies and annuity products currently in force.

These obligations are estimated using actuarial methods and consist primarily of reserves for annuity contracts, life insurance benefits, GMDB contracts (GMDB

contracts are fully reinsured, see Note 10 for additional information) and certain life and accident insurance products of our sold international businesses.

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

Obligations for life insurance policies and GMDB contracts represent benefits expected to be paid to policyholders, net of future premiums expected to be received.

Management estimates these obligations based on assumptions as to premiums, interest rates, mortality or morbidity, future claim adjudication expenses and surrenders, allowing for adverse deviation as appropriate.

Mortality, morbidity and surrender assumptions are based on the Company's own experience and published actuarial tables.

Interest rate assumptions are based on management's judgment considering the Company's experience and future expectations and range from 2 % to 9 %.

Obligations for the direct and assumed run-off settlement annuity business include adjustments for realized and unrealized investment returns consistent with GAAP when a premium deficiency exists.

As of December 31, 2022, approximately 24 % of the liability for future policy benefits was supported by assets held in trust for the benefit of the ceding company under reinsurance agreements.

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 10C), contractholder deposit funds (Note 10D), and market risk benefits (Note 10E).

Accounting policy - Unearned Premium.

The unrecognized portion of premiums received is recorded as unearned premiums included in Insurance and contractholder liabilities (current and non-current).

The Company evaluates certain insurance contracts subject to premium deficiency testing and recognizes a premium deficiency loss and corresponding reserve when expected claims costs, claims adjustment expenses, maintenance costs, and unamortized acquisition costs exceed unearned premium.

Anticipated investment income is considered in the calculation of premium deficiency.

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 reflects estimates of the ultimate cost of claims that have been incurred but not reported, expected development on reported claims, claims 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.

Accounting policy.

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Completion factors are impacted by several key items including changes in:

1) electronic (auto-adjudication) versus manual claim processing;

1) electronic (auto-adjudication) versus manual

claim processing;

2) frequency and timeliness of provider claims submissions;

5 unchanged sentences

Medical cost trend is primarily impacted by medical service utilization and unit costs that are affected by changes in the level and mix of health benefits offered, including inpatient, outpatient and pharmacy, the impact of copays and deductibles, changes in provider practices and changes in consumer demographics and consumption behavior.

The total of incurred but not reported liabilities plus expected development on reported claims, including reported claims in process, was $ 3.9 billion at December 31, 2022 and $ 4.0 billion at December 31, 2021.

The total of incurred but not reported liabilities plus expected development on reported claims and reported claims in process was $ 4.8 billion at December 31, 2023 and $ 3.9 billion at December 31, 2022.

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

15 unchanged sentences

Ending balance (1)

$ 5,092 $ 4,176 $ 4,261

(1) Includes $ 823 million classified as liabilities of businesses held for sale as of December 31, 2023.

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 .

See Note 11 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:

33 unchanged sentences

Claims that did not result in a liability are not included in the frequency metric.

The claim frequency for 2022 and 2021 was approximately 5 million.

Unpaid Claims and Claim Expenses – Other Operations

The claim frequency for 2023 and 2022 was approximately 5.5 million and 5.0 million, respectively.

Future Policy Benefits

Accounting Policy.

Liabilities for unpaid claims and claim expenses are established by book of business within Other Operations including the liabilities divested in the Chubb transaction and divested through the sale of our ownership interest in a joint venture in Türkiye ("divested International businesses").

Unpaid claims and claim expenses within Other Operations consist of (1) case or claims reserves for reported claims that are unpaid as of the balance sheet date;

(2) incurred but not reported reserves for claims when the insured event has occurred but has not been reported to the Company and (3) loss adjustment expense reserves for the expected costs of settling these claims.

The Company consistently estimates incurred but not yet reported losses using actuarial principles and assumptions based on historical and projected claim incidence patterns, claim size and the expected payment period.

The Company recognizes the actuarial best estimate of the ultimate liability within a level of confidence, consistent with actuarial standards of practice that the liabilities be adequate under moderately adverse conditions.

The Company immediately records an adjustment in Medical costs and other benefit expenses when estimates of these liabilities change.

See Note 4 for a discussion of the divestiture of the Group Disability and Life business on December 31, 2020.

Prior to the sale, the liabilities for unpaid claims and claim expenses in the Group Disability and Life business reflected reserves for long-term and short-term disability, life insurance and accident products.

The majority of the unpaid claim liability related to disability claims that was measured as the present value of estimated future benefit payments, including expected development, for each reported claim that was receiving benefit payments over the expected disability period or pending a decision on eligibility for benefits.

Liability balance details.

The liability details for unpaid claims and claim expenses are presented in the following table.

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

Other Operations

Divested International businesses

Other Operations 275 281

Unpaid claims and claim expenses - Other Operations

Activity in the unpaid claims and claim expenses for the divested International and Group Disability and Life business 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.

Future policy benefits represent the present value of estimated future obligations, estimated using actuarial methods, for long-duration 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 is reported in future policy benefits representing gross premium received in excess of net premiums.

Deferred profit liability is amortized based on expected future benefit payments.

As of December 31, 2023, approximately 34 % of the liability for future policy benefits, excluding amounts held for sale, was supported by assets in trust for the benefit of the ceding company under reinsurance agreements.

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:

December 31, 2023 December 31, 2022

Interest accretion rate 2.54 % 2.58 %

Current discount rate 4.92 % 5.57 %

Weighted average duration 7.9 years 7.7 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:

For the Years Ended December 31,

(In millions) 2023 2022

Present value of expected net premiums

Beginning balance $ 8,557 $ 9,314

Reinsurance 46 45 169

Beginning balance, net 401 407 5,203

Incurred claims related to:

Current year 507 982 4,205

Interest accretion — — 154

All other incurred 3 11 48

Total incurred 510 993 4,407

Paid claims related to:

Current year 322 738 2,392

Prior years 187 227 1,690

Total paid 509 965 4,082

Foreign currency ( 28 ) ( 34 ) 21

Divestiture of businesses (2)

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

Effect of assumption changes and actual variances from expected experience (1)

Issuances and lapses 1,255 1,067

Net premiums collected ( 1,370 ) ( 1,280 )

Interest and other (2)

Ending balance at original discount rate 10,387 10,094

Effect of end of period discount rate assumptions ( 1,154 ) ( 1,537 )

Ending balance (3)

$ 9,233 $ 8,557

Ending balance, net — 401 407

Reinsurance — 46 45

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 (1)

Issuances and lapses 1,309 1,176

Benefit payments ( 1,374 ) ( 1,401 )

Interest and other (2)

Ending balance at original discount rate 10,853 10,556

Effect of discount rate assumptions ( 1,220 ) ( 1,611 )

Ending balance (4)

$ 9,633 $ 8,945

(1) Beginning balance includes unpaid claims amounts classified as Liabilities of businesses held for sale.

(2) 2020 amounts include Group Disability and Life reserves sold or reinsured to New York Life Insurance Company as part of the sale of the Group Disability and Life business and immaterial retained balances which are now excluded from this table.

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

See Note 10 for additional information on reinsurance.

Liability for future policy benefits $ 400 $ 388

Total liability for future policy benefits (6)(7)

(1) Includes the effect of actual variances from expectations, which (decreased)/increased the total liability for future policy benefits by $( 12 ) million and $ 46 million, respectively, for the years ended December 31, 2023 and December 31, 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.

(3) As of December 31, 2023 and December 31, 2022 undiscounted expected future gross premiums were $ 18.7 billion and $ 17.5 billion, respectively.

As of December 31, 2023 and December 31, 2022 discounted expected future gross premiums were $ 13.5 billion and $ 12.2 billion, respectively.

(4) As of December 31, 2023 and December 31, 2022, undiscounted expected future policy benefits were $ 13.3 billion and $ 12.7 billion, respectively.

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

(6) $ 72 million and $ 155 million reported in Reinsurance recoverables in the Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022, respectively, relate to the liability for future policy benefits.

Additionally, $ 79 million of reinsurance recoverables are reported in assets of businesses held for sale in the Consolidated Balance Sheets as of December 31, 2023.

(7) Includes $ 429 million of future policy benefits classified as liabilities of businesses held for sale in the Consolidated Balance Sheets as of December 31, 2023.

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:

December 31, 2023 December 31, 2022

Interest accretion rate 5.64 % 5.64 %

Current discount rate 4.87 % 5.19 %

Weighted average duration 11.4 years 11.5 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 deferred profit liability.

Future policy benefits for Other Operations includes deferred profit liability of $ 384 million and $ 390 million as of December 31, 2023 and December 31, 2022, respectively.

Future policy benefits excluding deferred profit liability were $ 3.2 billion as of both December 31, 2023 and December 31, 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 December 31, 2023 and $ 4.6 billion as of December 31, 2022.

As of December 31, 2023 and December 31, 2022, $ 1.0 billion and $ 1.1 billion, respectively, 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 as well as 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 $ 6.5 billion, $ 6.7 billion and $ 6.9 billion as of December 31, 2023, December 31, 2022 and December 31, 2021, respectively.

Approximately 39 % of the balance is reinsured externally as of both December 31, 2023 and December 31, 2022.

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 December 31, 2023, the weighted average crediting rate, net amount at risk and cash surrender value for contractholder deposit fund liabilities not effectively exited through reinsurance were 3.31 %, $ 3.0 billion and $ 2.8 billion, respectively.

The comparative amounts as of December 31, 2022 were 3.08 %, $ 3.0 billion and $ 2.4 billion, respectively.

More than 99 % of the $ 4.0 billion liability as of December 31, 2023 and the $ 4.1 billion liability as of December 31, 2022 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 $ 1.6 billion as of December 31, 2023 and $ 1.7 billion as of December 31, 2022 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 (formerly 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 benefit expenses, 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 13 to the Consolidated Financial Statements because assumptions related to future annuitant behavior are largely unobservable.

As discussed further in Note 11 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 benefit expenses 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:

For the Years Ended December 31,

(Dollars in millions) 2023 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 ( 19 ) ( 54 )

Changes due to capital markets versus expected ( 254 ) ( 567 )

Changes due to policyholder behavior versus expected ( 5 ) ( 14 )

Assumption changes ( 16 ) 65

Balance, end of period, before the effect of changes in nonperformance risk (own credit risk) 1,085 1,379

Nonperformance risk (own credit risk), end of period ( 82 ) ( 111 )

Balance, end of period $ 1,003 $ 1,268

Reinsured market risk benefit, end of period $ 1,081 $ 1,374

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

The net amount at risk is the amount that 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.

As of December 31, 2023, the account value increased primarily due to favorable equity market performance, which resulted in an decrease 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) December 31, 2023 December 31, 2022

Account value $ 7,736 $ 7,436

Net amount at risk $ 1,609 $ 2,494

Average attained age of contractholders (weighted by exposure) 77.3 years 74.7 years

Number of contractholders (estimated) 140,000 150,000

Note 11 – Reinsurance

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

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

The Company's reinsurance recoverables as of December 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

7 unchanged sentences

Total recoverables related to ongoing operations 151 5 331 487

139 4 188 331

Acquisition, disposition or run-off activities

1 unchanged sentence

Lincoln National Life and Lincoln Life & Annuity of New York — 2,656 — 2,656

Berkshire Hathaway Life Insurance Company of Nebraska 248 432 — 680

Empower Annuity Insurance Company — — 130 130

4 unchanged sentences

Total recoverables related to acquisition, disposition or run-off activities 507 3,038 148 3,693

Total $ 965 $ 3,649 $ 340 $ 4,954

Total reinsurance recoverables before market risk benefits $ 658 $ 3,043 $ 479 $ 4,180

Allowance for uncollectible reinsurance ( 35 )

Market risk benefits (3)

Total reinsurance recoverables (4)

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

(2) Includes $ 174 million of current reinsurance recoverables that are reported in Other current assets.

(1) Certified by a NRSRO.

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

(3) Prior to the adoption of LDTI, "acquisition, disposition or run-off activities" in the table above included Berkshire and certain Other recoverables that are related to the Company's variable annuity reinsurance products discussed in section B below.

These amounts are now reported at fair market value as MRBs, as further discussed in Note 10 to the Consolidated Financial Statements.

At December 31, 2022, we reported $ 711 million of 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.

(4) Includes $ 183 million of current reinsurance recoverables that are reported in Other current assets and $ 208 million of reinsurance recoverables classified as assets of businesses held for sale.

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 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 10 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 December 31, 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.

(In millions)

Reinsurer (1)

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

at December 31, 2023

Berkshire $ 873 $ 1,116 95 % were secured by assets in a trust.

Sun Life Assurance Company of Canada 92 115

Liberty Re (Bermuda) Ltd.

104 128 100 % were secured by assets in a trust.

SCOR SE 31 39 80 % were secured by a letter of credit.

Market risk benefits (2)

$ 1,100 $ 1,398

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

(2) Includes IBNR and outstanding claims of $ 19 million.

These amounts are excluded from market risk benefits at December 31, 2023 in Note 10 and Note 11A 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 years ended 2023, 2022 and 2021.

Effects of Reinsurance

The following table presents direct, assumed and ceded premiums for both short-duration and long-duration insurance contracts.

The following table presents direct, assumed and ceded earned premiums for both short-duration and long-duration insurance contracts.

It also presents reinsurance recoveries that have been netted against Medical costs and other benefit expenses in the Company's Consolidated Statements of Income.

6 unchanged sentences

Total short-duration contract premiums (1)

42,292 36,898 36,700

Long-duration contracts

5 unchanged sentences

Total reinsurance recoveries $ 456 $ 702 $ 552

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 December 31, 2022.

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

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

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.

Accounting policy.

The Company estimates the gross liability and reinsurance recoverable with an internal model based on the Company's experience and future expectations over an extended period, consistent with the long-term nature of this product.

As a result of the reinsurance transaction, reserve increases have a corresponding increase in the recorded reinsurance recoverable, provided the increased recoverable remains within the overall Berkshire limit (including the GMIB asset presented below).

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 December 31, 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) December 31, 2022 December 31, 2021

Account value $ 7,436 $ 9,795

Net amount at risk $ 2,114 $ 1,392

Average attained age of contractholders (weighted by exposure) 75 77

Number of contractholders (estimated) 150,000 170,000

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.

Accounting policy.

The Company reports GMIB liabilities and assets as derivatives at fair value because cash flows of these liabilities and assets are affected by equity markets and interest rates, but are without significant life insurance risk and are settled in lump sum payments.

The Company receives and pays fees periodically based on either contractholders' account values or deposits increased at a contractual rate.

The Company will also pay and receive cash depending on changes in account values and interest rates when contractholders first elect to receive minimum income payments.

Assumptions used in fair value measurement .

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

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

The only assumption expected to impact future shareholders' net income is non-performance risk.

The non-performance 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 GMIB liabilities to be paid by the Company and (b) the GMIB assets to be paid by the reinsurers, after considering collateral.

The impact of non-performance risk was immaterial for the years ended December 31, 2022 and December 31, 2021.

GMIB liabilities totaled $ 404 million as of December 31, 2022 and $ 572 million as of December 31, 2021.

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 December 31, 2022 and December 31, 2021 as follows:

(In millions)

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

GMIB Berkshire $ 203 $ 283 100 % were secured by assets in a trust.

Sun Life Assurance Company of Canada 119 167

Liberty Re (Bermuda) Ltd.

108 151 100 % were secured by assets in a trust.

Total GMIB recoverables reported in Other current assets and Other assets

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

(1) Total short-duration contracts written premiums were $ 41.1 billion, $ 35.0 billion and $ 35.6 billion for 2023, 2022 and 2021, respectively.

Note 12 – Investments

18 unchanged sentences

Investments per Consolidated Balance Sheets $ 925 $ 17,985 $ 18,910 $ 905 $ 16,288 $ 17,193

(1) Investments related to the divested International 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 for additional information.

(1) Investments related to the HCSC transaction that were held for sale as of December 31, 2023.

These investments were primarily comprised of debt securities and commercial mortgage loans, and to a lesser extent, other long term investments.

Investment Portfolio

2 unchanged sentences

Debt securities (including bonds, mortgage and other asset-backed securities and preferred stocks redeemable by the investor) are classified as available for sale and are carried at fair value with changes in fair value recorded either in Accumulated other comprehensive loss within Shareholders' equity or in credit loss expense based on fluctuations in the allowance for credit losses, as further discussed below.

Net unrealized appreciation on debt securities supporting the Company's run-off settlement annuity business is reported in Non-current insurance and contractholder liabilities rather than Accumulated other comprehensive loss.

Prior to the adoption of LDTI on January 1, 2023, net unrealized appreciation on debt securities supporting the Company's run-off settlement annuity business was reported in Non-current insurance and contractholder liabilities rather than Accumulated other comprehensive loss.

See Note 16 for impact to Accumulated other comprehensive loss.

When the Company intends to sell or determines that it is more likely than not to be required to sell an impaired debt security, the excess of amortized cost over fair value is directly written down with a charge to Net realized investment (losses) gains.

6 unchanged sentences

When interest payments are delinquent based on contractual terms or when certain terms (interest rate or maturity date) of the investment have been restructured, accrued interest, reported in Other current assets, is written off through a charge to Net investment income and interest income is recognized on a cash basis.

The amortized cost and fair value by contractual maturity periods for debt securities were as follows:

December 31, 2022

The amortized cost and fair value by contractual maturity periods for debt securities were as follows as of December 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 December 31, 2022 and December 31, 2021.

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

17 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 December 31, 2022, net unrealized depreciation for these investments is included in Accumulated other comprehensive loss.

Review of declines in fair value.

33 unchanged sentences

Total $ 3,904 $ 3,362 $ 1,053 $ 622

As of December 31, 2022, the Company had a commitment to purchase up to $ 2.7 billion of preferred equity in VillageMD.

We funded $ 2.5 billion of this commitment during January 2023.

Approximately 70 % of our investments in equity securities as of December 31, 2022 are in the health care sector, consistent with our strategy to invest in targeted startup and growth-stage companies in the health care industry.

In 2023, we became a minority owner in VillageMD by investing $ 2.7 billion in VillageMD preferred equity.

VillageMD is a provider of primary, multi-specialty and urgent care services that is majority-owned by Walgreens Boots Alliance, Inc.

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

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.

Commercial Mortgage Loans

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Investment real estate as of December 31, 2023 and 2022 is expected to be held longer than one year and may include real estate acquired through the foreclosure of commercial mortgage loans.

Additionally, foreign currency swaps carried at fair value as well as statutory and other restricted deposits are reported in the table below as "Other." See discussion below for information on the Company's accounting policies for derivative financial instruments.

Additionally, foreign currency swaps carried at fair value and certain restricted deposits are reported in the table below as "Other." See discussion below for information on the Company's accounting policies for derivative financial instruments.

Other long-term investments and related commitments are diversified by issuer, property type and geographic regions.

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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.

Accounting policy.

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The Company applies hedge accounting when derivatives are designated, qualified and highly effective as hedges.

Under hedge accounting, the changes in fair value of the derivative and the hedged risk are generally recognized together and offset each other

when reported in Shareholders' net income Various qualitative or quantitative methods appropriate for each hedge are used to formally assess and document hedge effectiveness at inception and each period throughout the life of a hedge.

Under hedge accounting, the changes in fair value of the derivative and the hedged risk are generally recognized together and offset each other when reported in Shareholders' net income.

Various qualitative or quantitative methods appropriate for each hedge are used to formally assess and document hedge effectiveness at inception and each period throughout the life of a hedge.

The Company's derivative financial instruments are presented as follows:

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Offsetting changes in fair values attributable to the foreign exchange risk of the swap contracts and the hedged bonds are reported in Net realized investment (losses) gains.

The portion of the swap contracts' changes in fair value excluded from the assessment of hedge effectiveness is recorded in Other comprehensive (loss) income and recognized in Net investment income as swap coupon payments are accrued, offsetting the foreign-denominated coupons received on the designated bonds.

The portion of the swap contracts' changes in fair value excluded from the assessment of hedge effectiveness is recorded in Other comprehensive loss and recognized in Net investment income as swap coupon payments are accrued, offsetting the foreign-denominated coupons received on the designated bonds.

Net cash flows are reported in Operating activities, while exchanges of notional principal amounts are reported in Investing activities.

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

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

As a result, the carrying value of the hedged debt is adjusted to reflect changes in its fair value driven by the SOFR.

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

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The fair values of the foreign currency swap and forward contracts are reported in other assets or other liabilities.

The changes in fair values of these instruments are reported in Other comprehensive (loss) income, specifically in translation of foreign currencies.

The changes in fair values of these instruments are reported in Other comprehensive loss, specifically in translation of foreign currencies.

The portion of the change in fair values relating to foreign exchange spot rates will be recognized in earnings upon deconsolidation of the hedged foreign subsidiaries.

1 unchanged sentence

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

• Economic hedges for derivatives not designated as accounting hedges :

Fair values of forward contracts are reported in Investments (current) or Accrued expenses and other liabilities.

The changes in fair values are reported in Net realized investment (losses) gains.

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

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 December 31, 2022 and December 31, 2021, the effects of derivative financial instruments used in these individual hedging strategies were not material to the Consolidated Financial Statements.

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

The gross fair values of our derivative financial instruments are presented in Note 13 to the Consolidated Financial Statements.

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

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Foreign currency swap contracts

Foreign currency forward contracts used in net investment hedge and economic hedge strategies with notional values of approximately $ 1.4 billion and $ 0.7 billion as of December 31, 2021, respectively, were associated with the International businesses divested to Chubb during 2022.

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

Concentration of Risk

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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.

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:

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:

For the Years Ended December 31,

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$ ( 68 ) $ ( 451 ) $ 196

Credit loss (expense) recoveries

( 36 ) 2 ( 27 )

Other investment asset write-downs — — ( 10 )

Credit (loss) / recovery and other investment write-down (losses) ( 10 ) ( 36 ) 2

Net realized investment (losses) gains, before income taxes

$ ( 78 ) $ ( 487 ) $ 198

Net realized investment losses for the year ended December 31, 2022 were primarily due to mark-to-market losses on a strategic health care equity securities investment.

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

Note 13 – Fair Value Measurements

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

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 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).

The Company estimates fair values using prices from third parties or internal pricing methods.

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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 10E 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:

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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 10E to the Consolidated Financial Statements, the Company classifies variable annuity assets and liabilities in Level 3 of the fair value hierarchy.

The Company classifies certain newly-issued, privately-placed, complex or illiquid securities in Level 3.

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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.

The range and weighted average basis point 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

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Debt securities

Corporate and government debt securities $ 412 $ 664 Liquidity 60 - 1060 ( 265 )

Corporate $ 401 $ 412 Liquidity 70 - 1235 ( 310 )

bps 60 - 1060 ( 270 )

1 unchanged sentence

bps 105 - 520 ( 310 )

Other debt securities — 1

Total Level 3 debt securities $ 447 $ 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

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Beginning balance $ 447 $ 796

Gains (losses) included in Shareholders' net income

Losses included in Other comprehensive (loss) income

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

(Losses) gains included in Shareholders' net income

Gains (losses) included in Other comprehensive loss

Purchases, sales and settlements

Purchases 10 158

Sales — ( 36 )

Settlements ( 52 ) ( 207 )

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$ ( 2 ) $ ( 2 )

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

$ ( 60 ) $ ( 10 )

(1) Amounts do not accrue to shareholders.

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

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

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

activity typically decreases during periods of economic uncertainty and this decrease in activity reduces the availability of market observable data.

Market activity typically decreases during periods of economic uncertainty and this decrease in activity reduces the availability of market observable data.

As a result, the level of unobservable judgment that must be applied to the pricing of certain instruments increases and is typically observed through the widening of liquidity spreads .

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Investments that are measured using the practical expedient of net asset value ("NAV") are excluded from the fair value hierarchy.

The separate account activity for the year ended December 31, 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:

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

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

Separate account assets per Consolidated Balance Sheets $ 7,278 $ 8,337

(1) Non-guaranteed separate accounts include $ 4.0 billion as of December 31, 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 December 31, 2022 and $ 0.3 billion as of December 31, 2021.

(2) Investments related to the divested International businesses that were held for sale as of December 31, 2021.

See Note 4 for additional information.

Total $ 7,430 $ 7,278

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

Separate account assets classified as Level 1 primarily include exchange-listed equity securities.

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

For the years ended December 31, 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 years ended December 31, 2022 and December 31, 2021 were not material.

For the years ended December 31, 2023 and 2022, realized investment gains and losses, including those from impairments recognized and observable price changes, were not material.

Fair Value Disclosures for Financial Instruments Not Carried at Fair Value

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The Company has invested in approximately 190 limited partnerships that have a carrying value of $ 2.9 billion as of December 31, 2023 reported in other long-term investments.

We have commitments to contribute an additional $ 2.1 billion to these entities.

The Company's maximum exposure to loss from these investments is $ 4.8 billion, calculated as the sum of our carrying value and the additional funding commitments.

As of December 31, 2023, we have commitments to contribute an additional $ 2.6 billion to these entities and the Company's maximum exposure to loss from these investments is $ 5.5 billion, calculated as the sum of our carrying value and the additional funding commitments.

Our noncontrolling interest in each of these limited partnerships is generally less than 8 % of the partnership ownership interests.

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The Company is involved in other types of variable interest entities, including certain asset-backed and corporate securities, real estate joint ventures that develop properties for residential and commercial use, independent physician associations ("IPAs") that provide care management services and international health care joint ventures.

The Company's maximum exposure to loss is $ 0.6 billion from certain asset-backed and corporate securities and $ 0.6 billion from real estate joint ventures, which represents the sum of our carrying value and the additional funding commitments for these entities.

The carrying values and maximum exposures for the remaining unconsolidated variable interest entities were not material as of December 31, 2022.

As of December 31, 2023, the Company's maximum exposure to loss is $ 0.5 billion from certain asset-backed and corporate securities and $ 0.9 billion from real estate joint ventures, which represents the sum of our carrying value and the additional funding commitments for these entities.

carrying values and maximum exposures for the remaining unconsolidated variable interest entities were not material as of December 31, 2023.

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

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In addition to equity method investments, including certain limited partnerships and limited liability companies holding real estate, securities or loans (as disclosed in Note 12), we maintain a portfolio of operating joint ventures accounted for as equity method investments.

Operating joint ventures accounted for under the equity method had a carrying value of $ 1.1 billion as of December 31, 2022 and $ 1.2 billion as of December 31, 2021.

Operating joint ventures accounted for under the equity method had a carrying value of $ 911 million as of December 31, 2023 and $ 734 million as of December 31, 2022, of which $ 214 million as of December 31, 2023 and $ 602 million as of December 31, 2022 related to our joint venture in China.

Total Accumulated Other Comprehensive Income ("AOCI") includes losses of $ 510 million as of December 31, 2023 and $ 88 million as of December 31, 2022 related to the Company's share from unconsolidated entities reported on the equity method primarily driven by the requirement to update discount rate assumptions for certain long-duration liabilities following the adoption of LDTI (discussed in Note 2 to the Consolidated Financial Statements).

For the years ended December 31, 2023, 2022 and 2021, none of our unconsolidated subsidiary investments were individually significant.

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The below summarized results of operations and financial position of the operating joint venture investments accounted for under the equity method reflects the latest available financial information and does not represent the Company's proportionate share of the assets, liabilities or earnings of such entities.

The net loss for the year ended December 31, 2022 is primarily attributable to realized investment losses as a result of market volatility experienced by our joint venture in China.

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

For the Years Ended December 31,

1 unchanged sentence

Revenues $ 5,962 $ 4,665 $ 3,750

Net (loss) income $ ( 15 ) $ 200 $ 401

Net income (loss) $ 98 $ ( 12 ) $ 180

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

1 unchanged sentence

Total liabilities $ 25,534 $ 19,462

Note 15 – 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 also includes the Company's share from unconsolidated entities accounted for under the equity method.

Note 16 – Accumulated Other Comprehensive Income (Loss)

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 10 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:

Shareholders' other comprehensive (loss), net of tax, for the years ended 2023, 2022 and 2021, is primarily driven by the change in discount rates for certain long-duration liabilities, unrealized changes in the market values of securities and derivatives and changes in postretirement benefits liabilities, 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:

For the Years Ended December 31,

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Securities and Derivatives

Beginning balance $ 685 $ 900 $ 975

Unrealized (depreciation) appreciation on securities and derivatives

( 1,528 ) ( 230 ) 776

Tax benefit (expense)

310 31 ( 150 )

Net unrealized (depreciation) appreciation on securities and derivatives

( 1,218 ) ( 199 ) 626

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

172 — ( 862 )

Beginning balance, as previously disclosed $ 900

Cumulative effect of accounting for Long-duration Insurance Contracts guidance (ASU 2018-12) 668

Beginning balance, as retrospectively restated $ ( 332 ) $ 1,266 1,568

Unrealized appreciation (depreciation) on securities and derivatives 620 ( 2,274 ) ( 335 )

Tax (expense) benefit ( 146 ) 467 52

Net unrealized appreciation (depreciation) on securities and derivatives 474 ( 1,807 ) ( 283 )

Reclassification adjustment for losses included in Shareholders' net income ((Loss) gain on sale of businesses) — 172 —

Reclassification adjustment for losses (gains) included in Shareholders' net income (Net realized investment (losses) gains) 38 47 ( 24 )

52 ( 21 ) ( 26 )

Reclassification adjustment for (gains) included in Shareholders' net income (Selling, general and administrative expenses) ( 1 ) — —

Reclassification adjustment for tax (benefit) expense included in Shareholders' net income ( 8 ) ( 10 ) 5

Net losses (gains) reclassified from AOCI to Shareholders' net income 29 209 ( 19 )

213 ( 16 ) ( 701 )

Other comprehensive (loss), net of tax

( 1,005 ) ( 215 ) ( 75 )

Other comprehensive income (loss), net of tax 503 ( 1,598 ) ( 302 )

Ending balance $ 171 $ ( 332 ) $ 1,266

For the Years Ended December 31,

(In millions) 2023 2022 2021

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

Beginning balance, as previously disclosed $ —

Cumulative effect of accounting for Long-duration Insurance Contracts guidance (ASU 2018-12) ( 832 )

Beginning balance, as retrospectively restated $ ( 256 ) $ ( 765 ) ( 832 )

Current period change in discount rate for certain long-duration liabilities ( 913 ) 642 59

Tax benefit (expense) 222 ( 122 ) ( 3 )

Net current period change in discount rate for certain long-duration liabilities ( 691 ) 520 56

Current period change in instrument-specific credit risk for market risk benefits ( 29 ) ( 14 ) 13

Tax benefit (expense) 5 3 ( 2 )

Net current period change in instrument-specific credit risk for market risk benefits ( 24 ) ( 11 ) 11

Other comprehensive (loss) income, net of tax ( 715 ) 509 67

Ending balance $ ( 971 ) $ ( 256 ) $ ( 765 )

(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.

For the Years Ended December 31,

(In millions) 2023 2022 2021

Translation of foreign currencies

Beginning balance $ ( 233 ) $ ( 15 ) $ ( 275 )

Beginning balance, as retrospectively restated $ ( 154 ) $ ( 233 ) $ ( 15 )

Translation of foreign currencies — ( 277 ) ( 213 )

Tax (expense) benefit

( 33 ) ( 19 ) 12

Tax benefit (expense) 5 ( 33 ) ( 19 )

Net translation of foreign currencies 5 ( 310 ) ( 232 )

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

Reclassification adjustment for tax expense (benefit) included in Net income

Reclassification adjustment for losses included in Net income ((Loss) gain on sale of businesses) — 358 —

Reclassification adjustment for tax expense included in Net income — 29 —

Net translation losses reclassified from AOCI to Net income — 387 —

Translation of foreign currencies — 81 ( 213 )

Tax benefit (expense) 5 ( 4 ) ( 19 )

Other comprehensive income (loss), net of tax 5 77 ( 232 )

72 ( 232 ) 252

Net translation (loss) on foreign currencies attributable to noncontrolling interests — ( 2 ) ( 14 )

( 2 ) ( 14 ) ( 8 )

Shareholders' other comprehensive income (loss), net of tax 5 79 ( 218 )

74 ( 218 ) 260

Ending balance $ ( 149 ) $ ( 154 ) $ ( 233 )

For the Years Ended December 31,

(In millions) 2023 2022 2021

Postretirement benefits liability

1 unchanged sentence

Reclassification adjustment for amortization of net prior actuarial losses and prior service costs (Interest expense and other) 46 65 85

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

Reclassification adjustment for (gains) included in Shareholders' net income ((Loss) gain on sale of businesses) — ( 1 ) —

Reclassification adjustment for settlement (Interest expense and other) — — 4

Reclassification adjustment for tax (benefit) included in Shareholders' net income ( 11 ) ( 16 ) ( 21 )

( 16 ) ( 21 ) ( 17 )

Net adjustments reclassified from AOCI to Shareholders' net income 35 48 68

Valuation update ( 46 ) 487 448

Tax (expense) benefit

( 115 ) ( 106 ) 48

Tax benefit (expense) 12 ( 115 ) ( 106 )

Net change due to valuation update ( 34 ) 372 342

Other comprehensive income (loss), net of tax

420 410 ( 105 )

Other comprehensive income, net of tax 1 420 410

Ending balance $ ( 915 ) $ ( 916 ) $ ( 1,336 )

For the Years Ended December 31,

(In millions) 2023 2022 2021

Total Accumulated other comprehensive loss

Beginning balance $ ( 884 ) $ ( 861 ) $ ( 941 )

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

( 511 ) ( 23 ) 80

Beginning balance, as previously disclosed $ ( 861 )

Cumulative effect of accounting for Long-duration Insurance Contracts guidance (ASU 2018-12) ( 164 )

Beginning balance, as retrospectively restated $ ( 1,658 ) $ ( 1,068 ) ( 1,025 )

Shareholders' other comprehensive (loss), net of tax ( 206 ) ( 590 ) ( 43 )

Ending balance $ ( 1,864 ) $ ( 1,658 ) $ ( 1,068 )

Note 17 – Organizational Efficiency Plan

During 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 of December 31, 2022, the remaining accrued liability recorded in Accrued expenses and other liabilities was $ 39 million.

During the fourth quarter of 2023, the Company approved a strategic realignment to drive greater operating effectiveness and efficiency.

This plan positions us to be more efficient and focused to deliver differentiated value and services to our clients and customers.

We recognized a charge in Selling, general and administrative expenses of $ 252 million, pre-tax ($ 193 million, after-tax).

This charge included $ 232 million of accrued expenses primarily for severance costs related to headcount reductions, as well as, $ 20 million of one-time expenses related to abandonment of leased assets and impairment of property and equipment.

We expect substantially all of the accrued liability to be paid by the end of 2024.

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

(In millions)

Balance, December 31, 2022

Fourth quarter 2023 charge

2023 payments

Balance, December 31, 2023

Note 18 – Pension

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Under the corridor method, net unrecognized actuarial gains (losses) are initially recorded in Accumulated other comprehensive loss.

When the unrecognized gain (loss) exceeds 10% of the benefit obligation, that excess is amortized to expense over the expected remaining lives of plan participants.

When the unrecognized gain (loss) exceeds 10% of the

benefit obligation, that excess is amortized to expense over the expected remaining lives of plan participants.

The net plan expense is reported in Interest expense and other in the Consolidated Statements of Income.

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Interest cost 204 140

Actuarial (gains), net (1)

( 1,094 ) ( 189 )

Actuarial losses (gains), net (1)

Benefits paid from plan assets ( 294 ) ( 296 )

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Amounts presented in Consolidated Balance Sheets

Accrued expenses and other liabilities

Other non-current liabilities

$ — $ ( 363 )

(1) 2022 and 2021 gains reflect an increase in the discount rate.

(1) 2023 losses reflect a decrease in the discount rate while 2022 gains reflect an increase in the discount rate.

We fund our qualified pension plans at least at the minimum amount required by the Employee Retirement Income Security Act of 1974 and the Pension Protection Act of 2006.

1 unchanged sentence

For 2024, contributions to the qualified pension plans are expected to be immaterial.

Future years' contributions will ultimately be based

on a wide range of factors including but not limited to asset returns, discount rates and funding targets.

Future years' contributions will ultimately be based on a wide range of factors including but not limited to asset returns, discount rates and funding targets.

Non-qualified pension plans are generally funded on a pay-as-you-go basis as there are no plan assets for these plans.

48 unchanged sentences

Commercial mortgage loans 46 63

Hedge funds — —

Guaranteed deposit account contract 48 50

3 unchanged sentences

The Company's current target investment allocation percentages are 90 % fixed income and 10 % in other investments, including private equity (securities partnerships), public equity securities, and real estate, and are developed by management as guidelines, although the fair values of each asset category are expected to vary as a result of changes in market conditions.

These allocation percentages were updated during 2022 to increase the allocation to fixed income investments as a result of improvements in the plan's funding status, as interest rates increased during the year.

The Company will evaluate further allocation changes to equity securities, other investments and fixed income securities as funding levels change.

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These assets are valued using recent trades of similar securities or are fund investments priced using their daily net asset value that is the exit price.

Approximately one-third of equity securities are classified in Level 1 because they are priced according to unadjusted quotes from active markets, while another one-third of this balance is classified in Level 2 and priced using the daily net asset value.

The remaining balance of equity securities is classified in Level 3.

All domestic equity securities and international equity funds within pension assets are classified as Level 3.

Securities partnerships, real estate and hedge funds are valued using net asset value as a practical expedient and are excluded from the fair value hierarchy.

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Participants in the plan may invest in various funds that invest in the Company's common stock, several diversified stock funds, a bond fund or stable value funds.

The Company common stock fund under the plan constitutes

an "employee stock ownership plan" as defined in the Internal Revenue Code.

The Company common stock fund under the plan constitutes an "employee stock ownership plan" as defined in the Internal Revenue Code.

Dividends from the Company common stock fund are reinvested in a participant's stock fund account unless the participant elects to receive the dividends in cash.

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The Company records tax benefits in Shareholders' net income during the vesting period based on the amount of expense being recognized.

The difference between tax benefits based on the expense and the actual tax benefit realized are also recorded in Net income when stock options are exercised, or when restricted stock and SPSs vest.

The difference between tax benefits based on the expense and the actual tax benefit realized are also recorded in income tax expense when stock options are exercised, or when restricted stock and SPSs vest.

For the Years Ended December 31,

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Fair value of a reporting unit is generally estimated based on discounted cash flow analysis and market approach models using assumptions that the Company believes a hypothetical market participant would use to determine a current transaction price.

Following a change in reporting units or held for sale determination, goodwill is allocated using relative fair value.

The significant assumptions and estimates used in determining fair value primarily include the discount rate and future cash flows.

A discount rate is selected to correspond with each reporting unit's weighted average cost of capital, consistent with that used for investment decisions considering the specific and detailed operating plans and strategies within each reporting unit.

A discount rate is selected to correspond with each reporting unit's weighted average cost of capital, consistent with

that used for investment decisions considering the specific and detailed operating plans and strategies within each reporting unit.

Projections of future cash flows differ by reporting unit and are consistent with our ongoing strategic projections.

6 unchanged sentences

$ 35,128 $ 10,683 $ 234 $ 46,045

Goodwill acquired 1,322 116 — 1,438

Goodwill disposed — — ( 234 ) ( 234 )

2 unchanged sentences

35,130 10,681 — 45,811

Goodwill disposed — — ( 234 ) ( 234 )

Goodwill transferred to assets of businesses held for sale — ( 1,553 ) — ( 1,553 )

Impact of foreign currency translation and other adjustments — 1 — 1

4 unchanged sentences

Accounting policy.

The Company's Other intangible assets primarily include purchased customer and producer relationships, provider networks and trademarks.

The Company's Other intangible assets primarily include purchased customer and producer relationships, trademarks and provider networks.

The fair value of purchased customer relationships and the amortization method were determined as of the dates of purchase using an income approach that relies on projected future net cash flows including key assumptions for customer attrition and discount rates.

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If the carrying value exceeds fair value, that excess is recognized as an impairment loss.

There were no material impairments in the years ended December 31, 2022, 2021 or 2020.

Components of other assets, including other intangibles.

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Value of business acquired ("VOBA" reported in Other assets)

Total $ 38,932 6,363 32,569

$ 38,906 $ 7,897 $ 31,009

December 31, 2022

4 unchanged sentences

Value of business acquired (reported in Other assets)

$ 39,490 4,791 34,699

(1) Includes $ 386 million of VOBA and $ 122 million of Other intangible assets intangible assets classified as Assets of businesses held for sale.

The Company has indefinite-lived intangible assets totaling $ 8.5 billion at December 31, 2022 and December 31, 2021, largely consisting of trade names and licenses.

Total $ 38,932 $ 6,363 $ 32,569

(1) Includes $ 69 million of VOBA and $ 77 million of Other intangible assets classified as assets of businesses held for sale.

The Company has indefinite-lived intangible assets totaling $ 8.5 billion at December 31, 2023 and December 31, 2022, largely consisting of the Express Scripts trade name.

Property and Equipment

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Cost includes interest, real estate taxes and other costs incurred during construction when applicable.

Internal-use software that is acquired, developed or modified solely to

meet the Company's internal needs, with no plan to market externally, is also included in this category.

Internal-use software that is acquired, developed or modified solely to meet the Company's internal needs, with no plan to market externally, is also included in this category.

Costs directly related to acquiring, developing or modifying internal-use software are capitalized.

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buildings and improvements, 10 to 40 years;

purchased software, three to five years ;

internally developed software, three to seven years and furniture and equipment (including computer equipment), three to 10 years.

purchased and internally developed software, three to five years ;

and furniture and equipment (including computer equipment), three to 10 years.

Improvements to leased facilities are depreciated over the lesser of the remaining lease term or the estimated life of the improvement .

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Total property and equipment (1)

$ 12,437 $ 8,566 $ 3,871

December 31, 2022

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Other property and equipment 2,256 1,330 926

Total 10,708 6,713 3,995

Property and equipment classified as Assets of businesses held for sale

( 424 ) ( 121 ) ( 303 )

Total Property and equipment per Consolidated Balance Sheets $ 10,284 $ 6,592 $ 3,692

Total property and equipment $ 11,204 $ 7,430 $ 3,774

(1) Includes $ 176 million of Property and equipment net carrying value classified as assets of businesses held for sale.

Components of depreciation and amortization.

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Both operating and finance leases result in (1) a right-of-use ("ROU") asset that represents our right to use the underlying asset for the lease term and (2) a lease liability that represents our obligation to make lease payments arising from the lease.

assets and lease liabilities are reflected in the following lines in the Company's Consolidated Balance Sheets:

ROU assets and lease liabilities are reflected in the following lines in the Company's Consolidated Balance Sheets:

ROU Asset Current Lease Liability Non-Current Lease Liability

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Finance leases $ 48 $ 84 $ 20

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

Operating and finance lease ROU assets and lease liabilities were as follows:

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

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Total finance lease liabilities $ 108 $ 99

(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.

As of December 31, 2023, the weighted average remaining lease term was 6 years for operating leases and 3 years for finance leases, and the weighted average discount rate was 3.45 % for operating leases and 4.29 % for finance leases.

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Foreign income (tax benefits) taxes

( 1,046 ) ( 28 ) 69

State income tax benefits

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Impact of sale of businesses — — ( 37 ) ( 0.4 ) — —

Impact of businesses held for sale ( 213 ) ( 3.9 ) — — — —

Effect of foreign earnings ( 173 ) ( 3.1 ) ( 96 ) ( 1.2 ) ( 33 ) ( 0.5 )

Health insurance industry tax — — — — 93 0.9

State income tax (benefit), net of federal income tax benefit

( 39 ) ( 0.7 ) 16 0.2 ( 9 ) ( 0.1 )

Swiss tax attributes ( 1,674 ) ( 30.4 ) — — — —

Other foreign tax attributes ( 153 ) ( 2.8 ) — — — —

Change in valuation allowance 1,290 23.4 — — — —

Other ( 55 ) ( 0.9 ) ( 31 ) ( 0.4 ) ( 14 ) ( 0.2 )

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Consolidated pre-tax income from the Company's foreign operations was approximately 48 % of the Company's pre-tax income in 2023, 46 % in 2022 and 26 % in 2021.

The increase over 2021 is primarily driven by the gain from the Chubb transaction, an increase to the Company's international pharmaceutical operations, partially offset by a reduction in earnings from the sold entities.

The increase over 2022 is primarily driven by an increase to the Company's international pharmaceutical operations, partially offset by a reduction in earnings from the sold entities.

Foreign Jurisdiction Tax Attributes.

Impacting the effective tax rate for the year ended December 31, 2023 was the recording of the Company's net deferred tax asset associated with foreign tax law changes and agreements in certain tax jurisdictions.

The Company established deferred tax assets of approximately $ 1.8 billion associated with the foreign tax attributes and a related $ 772 million valuation allowance against these deferred tax assets based on projections of future earnings and requirements to utilize the assets within certain time periods.

It is possible in future periods that the Company may revalue these net deferred tax assets due to modifications in certain assumptions such as forecasted future earnings.

Sale of Medicare Advantage and Related Businesses .

The Company recorded $ 584 million of deferred tax benefits and an equal amount of valuation allowance in connection with the HCSC transaction.

The valuation allowance has been recorded due to the uncertainty relative to the recovery of the deferred tax benefits as the Company does not currently have capital gain capacity to offset these capital losses.

Deferred Income Taxes

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Loss carryforwards 200 205

Deferred loss - sale of business 584 —

Other accrued liabilities 244 265

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Unrealized depreciation on investments and foreign currency translation 81 159

Foreign tax attributes 1,827 —

Other 242 190

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Acquisition-related basis differences 8,105 8,347

Policy acquisition expenses — 312

Unrealized appreciation on investments and foreign currency translation — 104

Total deferred tax liabilities 8,476 8,900

Net deferred income tax liabilities (1)

Net deferred income tax liabilities classified as Liabilities of businesses held for sale

Net deferred income tax liabilities per Consolidated Balance Sheets

$ ( 6,187 ) $ ( 7,786 )

(1) Deferred tax liabilities, net in the Consolidated Balance Sheets as of December 31, 2023, excludes $ 1,055 million reported in Other assets and $ 69 million reported in liabilities of businesses held for sale.

Management believes that future results will be sufficient to realize a majority of the Company's gross deferred tax assets.

As of December 31, 2022, we had approximately $ 270 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.

As of December 31, 2023, we had approximately $ 218 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.

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

As of December 31, 2023, we had approximately $ 1.8 billion in DTAs associated with the foreign tax attributes as discussed above.

We have determined that approximately $ 772 million valuation allowance against these DTAs is required based on the Company's taxable income projections and the requirement to utilize the assets within certain time periods.

Additionally, the Company has $ 584 million of deferred tax assets and a full valuation allowance associated with the HCSC transaction, as discussed above.

Valuation allowances are established against deferred tax assets when it is determined that it is more likely than not that the asset will not be recognized.

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Balance at January 1, $ 1,343 $ 1,230 $ 1,210

Increase due to prior year positions 8 21 128

(Decrease) / Increase due to prior year positions ( 26 ) 8 21

Increase due to current year positions 107 137 31

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The Company classifies net interest expense on uncertain tax positions as a component of income tax expense and in Other non-current liabilities in the Consolidated Balance Sheets.

In addition to the amounts in the table above, the liability for net interest expense on uncertain tax positions was approximately $ 176 million as of December 31, 2022, $ 148 million as of December 31, 2021 and $ 127 million as of December 31, 2020.

In addition to the amounts in the table above, the liability for net interest

expense on uncertain tax positions was approximately $ 220 million as of December 31, 2023, $ 176 million as of December 31, 2022 and $ 148 million as of December 31, 2021.

Other Tax Matters

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Generally, no further state or foreign audit activity is expected for tax years prior to 2014 for The Cigna Group's entities and 2010 for Express Scripts' entities.

On December 15, 2022, the European Union ("EU") Member States formally adopted the EU's Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development ("OECD") Pillar Two Framework that was supported by over 130 countries worldwide.

The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive.

A significant number of other countries are also implementing similar legislation, and the OECD continues to release additional guidance on these rules.

The Company is within the scope of the OECD Pillar Two model rules and continues to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries but expects the impact to not materially change its results from operations.

Note 24 – Contingencies and Other Matters

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The Company had indemnification obligations as of December 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.

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

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

The Company does not believe that it is

possible to determine the maximum potential amount due under these obligations because not all amounts due under these indemnification obligations are subject to limitation.

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

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

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

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For those matters that the Company has identified with a reasonably possible material loss, the Company provides disclosure in the aggregate of accruals and range of loss, or a statement that such information cannot be estimated.

The Company's accruals for the matters discussed below under "Litigation Matters" and "Regulatory Matters" are not material.

Due to numerous uncertain factors presented in these cases, it is not possible to estimate an aggregate range of loss (if any) for these matters at this time.

In light of the uncertainties involved in these matters, there is no assurance that their ultimate resolution will not exceed the amounts currently accrued by the Company.

An adverse outcome in one or more of these matters could be material to the Company's results of operations, financial condition or liquidity for any particular period.

The outcomes of lawsuits are inherently unpredictable and we may be unsuccessful in these ongoing litigation matters or any future claims or litigation.

The Company's accrual for the matter discussed below under "Litigation Matters" is not material.

Due to numerous uncertain factors presented in this case, it is not possible to estimate an aggregate range of loss (if any) for this matter at this time.

In light of the uncertainties involved in this matter, there is no assurance that its ultimate resolution will not exceed the amount currently accrued by the Company.

An adverse outcome in this matter could be material to the Company's results of operations, financial condition or liquidity for any particular period.

The outcomes of lawsuits are inherently unpredictable and we may be unsuccessful in this ongoing litigation matter or any future claims or litigation.

Litigation Matters

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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.

Medicare Advantage.

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

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

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

January 11, 2022, the U.S.

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

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

Regulatory Matters

Civil Investigative Demand .

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

For certain Medicare Advantage organizations, including The Cigna Group, 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 continues to respond to its requests.

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 retains the right to appeal the pricing-related claims that were previously dismissed by the court and Express Scripts retains the ability to reassert its own pricing-related claims in the event any appeal by Elevance is successful.

Elevance filed its Notice of Appeal of its pricing-related claims on December 12, 2023.

Elevance’s opening appellate brief is due March 25, 2024.

Note 25 – Segment Information

See Note 1 for a description of our segments.

On February 13, 2023, we changed the name of our Evernorth segment to Evernorth Health Services.

We will not distinguish between our prior and current segment name and will refer to our current segment name.

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-related transactions between the Evernorth Health Services and Cigna Healthcare segments.

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.

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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.

Special items are matters

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

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

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

Integration and transaction-related costs

(Selling, general and administrative expenses) $ 135 $ 103 $ 169 $ 71 $ 527 $ 404

Loss (gain) on sale of businesses $ 1,499 $ 1,429 $ ( 1,662 ) $ ( 1,332 ) $ — $ —

Charge for organizational efficiency plan

(Selling, general and administrative expenses) 252 193 22 17 168 119

(Benefits) charges associated with litigation matters

Charges (benefits) associated with litigation matters

(Selling, general and administrative expenses) 201 171 ( 28 ) ( 20 ) ( 27 ) ( 21 )

(Gain) on sale of businesses ( 1,662 ) ( 1,332 ) — — ( 4,203 ) ( 3,217 )

Debt extinguishment costs — — 141 110 199 151

Risk corridors recovery

Integration and transaction-related costs

(Selling, general and administrative expenses) 45 35 135 103 169 71

Contractual adjustment for a former client

(Pharmacy revenues) — — — — ( 204 ) ( 155 )

Deferred tax (benefits), net

(Income taxes, less amount attributable to noncontrolling interests) — ( 1,071 ) — — — —

Debt extinguishment costs — — — — 141 110

Total impact from special items $ 1,997 $ 757 $ ( 1,533 ) $ ( 1,232 ) $ 451 $ 279

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:

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Net realized investment results from certain equity method investments

— 126 — — 126

Adjusted revenues $ 153,499 $ 51,205 $ 596 $ ( 9,978 ) $ 195,322

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Special items

Integration and transaction-related costs — — — 135 135

Loss on sale of businesses — 1,481 18 — 1,499

Charge for organizational efficiency plan — — — 252 252

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

(Gain) on sale of businesses — — ( 1,662 ) — ( 1,662 )

Charges associated with litigation matters 44 157 — — 201

Integration and transaction-related costs — — — 45 45

Pre-tax adjusted income (loss) from operations $ 6,442 $ 4,478 $ 96 $ ( 1,698 ) $ 9,318

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Intersegment revenues 4,463 2,535 — ( 6,998 )

Net investment income (loss)

Net investment income

86 638 424 7 1,155

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( 66 ) ( 4 ) ( 14 ) — ( 84 )

Net realized investment losses (gains) (1)

Net realized investment losses (1)

— 530 83 — 613

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Special items

Integration and transaction-related costs — — — 169 169

(Gain) on sale of businesses — — ( 1,662 ) — ( 1,662 )

Charge for organizational efficiency plan — — — 22 22

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

Debt extinguishment costs — — — 141 141

Integration and transaction-related costs — — — 135 135

Pre-tax adjusted income (loss) from operations $ 6,127 $ 4,099 $ 509 $ ( 1,466 ) $ 9,269

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Intersegment revenues 4,203 2,271 — ( 6,474 )

Net investment income

Net investment income (loss)

17 1,003 530 ( 1 ) 1,549

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

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

Adjusted revenues $ 131,912 $ 44,643 $ 3,989 $ ( 6,475 ) $ 174,069

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( 31 ) ( 3 ) ( 24 ) — ( 58 )

Net realized investment (gains) (1)

Net realized investment losses (gains) (1)

4 ( 247 ) 45 — ( 198 )

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Special items

Integration and transaction-related costs — — — 527 527

Charge for organizational efficiency plan — — — 168 168

Charges associated with litigation matters — — — 25 25

(Gain) on sale of businesses — — ( 4,203 ) — ( 4,203 )

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

Integration and transaction-related costs — — — 169 169

Debt extinguishment costs — — — 141 141

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

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

Pre-tax adjusted income (loss) from operations $ 5,818 $ 3,601 $ 903 $ ( 1,339 ) $ 8,983

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

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) and to reflect the merger of the U.S.

Commercial and U.S.

Government operating segments into the U.S.

Healthcare operating segment (as discussed in Note 1 to the Consolidated Financial Statements).

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

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Cigna Healthcare

Insured 15,199 14,315 13,389

Stop loss 5,461 4,868 4,614

Other 1,418 1,290 1,135

Employer insured 16,490 15,199 14,315

Medicare Advantage 8,771 7,896 8,362

Medicare Part D 1,224 1,499 1,593

Stop loss 6,143 5,461 4,868

Individual and Family Plans 5,088 2,636 2,528

Other 4,095 3,996 5,076

40,587 35,188 35,149

International Health 3,295 2,906 2,588

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Divested International businesses — 1,596 3,205

Domestic disability, life and accident — — 4,423

Other 281 225 221

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4,259 4,823 5,894

Total $ 179,361 $ 172,529 $ 159,157

(1) The divested International businesses as described in Note 4 comprised $ 1.6 billion, $ 3.2 billion and $ 3.1 billion in 2022, 2021 and 2020, respectively.

Total revenues from external customers $ 194,099 $ 179,363 $ 172,520

(1) The divested International businesses as described in Note 5 comprised of $ 1.6 billion and $ 3.2 billion in 2022 and 2021, respectively.

Revenues from U.S.

Federal Government agencies, under a number of contracts, were 14 % of consolidated revenues in 2022 and 2021 and 15 % in 2020.

Federal Government agencies, under a number of contracts, were 15 % of consolidated revenues in 2023 and 14 % in both 2022 and 2021.

These amounts were reported in the Evernorth Health Services and Cigna Healthcare segments.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data