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Item 1. Financial Statements

2024-10-31 compared with 2024-08-01 · 213 added, 180 removed, 1067 unchanged (27% of the section changed)

3 unchanged sentences

Unaudited Unaudited

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

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

(In millions, except per share amounts) 2024 2023

14 unchanged sentences

Loss on sale of businesses

Net realized investment (losses) gains

( 87 ) ( 21 ) ( 106 ) ( 21 )

Net realized investment losses

( 921 ) ( 14 ) ( 2,805 ) ( 44 )

Income before income taxes

3 unchanged sentences

Net income attributable to noncontrolling interests

86 41 232 130

SHAREHOLDERS’ NET INCOME $ 739 $ 1,408 $ 2,010 $ 4,135

6 unchanged sentences

Unaudited Unaudited

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

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

(In millions) 2024

1 unchanged sentence

Other comprehensive income (loss), net of tax

Net unrealized appreciation on securities and derivatives

Net unrealized appreciation (depreciation) on securities and derivatives

264 ( 192 ) 493 22

Net long-duration insurance and contractholder liabilities measurement adjustments ( 28 ) ( 28 ) ( 800 ) ( 476 )

Net translation (losses) on foreign currencies

Net translation gains (losses) on foreign currencies

39 ( 29 ) 8 ( 32 )

Postretirement benefits liability adjustment 4 8 — 25

Other comprehensive loss, net of tax

Other comprehensive income (loss), net of tax

279 ( 241 ) ( 299 ) ( 461 )

10 unchanged sentences

Consolidated Balance Sheets

June 30, As of

September 30, As of

(In millions) 2024 2023

42 unchanged sentences

(1) Par value per share, $ 0.01 ;

shares issued, 402 million as of June 30, 2024 and 400 million as of December 31, 2023;

shares issued, 402 million as of September 30, 2024 and 400 million as of December 31, 2023;

authorized shares, 600 million.

2 unchanged sentences

Consolidated Statements of Changes in Total Equity

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

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

Balance at March 31, 2024 $ 4 $ 30,292 $ ( 2,324 ) $ 40,978 $ ( 27,769 ) $ 41,181 $ 169 $ 41,350 $ —

Balance at June 30, 2024 $ 4 $ 31,048 $ ( 2,442 ) $ 42,132 $ ( 29,410 ) $ 41,332 $ 195 $ 41,527 $ —

Effects of issuing stock for employee benefit plans 138 ( 2 ) 136 136

Other comprehensive loss ( 118 ) ( 118 ) ( 118 ) —

Other comprehensive income 279 279 279 —

739 739 86 825 —

3 unchanged sentences

Other transactions impacting noncontrolling interests — — ( 78 ) ( 78 ) —

Balance at June 30, 2024 $ 4 $ 31,048 $ ( 2,442 ) $ 42,132 $ ( 29,410 ) $ 41,332 $ 195 $ 41,527 $ —

Three Months Ended June 30, 2023

Balance at September 30, 2024 $ 4 $ 31,186 $ ( 2,163 ) $ 42,480 $ ( 29,412 ) $ 42,095 $ 203 $ 42,298 $ —

Three Months Ended September 30, 2023

Balance at March 31, 2023

Balance at June 30, 2023

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

6 unchanged sentences

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

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

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

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

1 unchanged sentence

Consolidated Statements of Changes in Total Equity

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

8 unchanged sentences

Other transactions impacting noncontrolling interests — — ( 50 ) ( 50 ) ( 107 )

Balance at June 30, 2024 $ 4 $ 31,048 $ ( 2,442 ) $ 42,132 $ ( 29,410 ) $ 41,332 $ 195 $ 41,527 $ —

Six Months Ended June 30, 2023

Balance at September 30, 2024 $ 4 $ 31,186 $ ( 2,163 ) $ 42,480 $ ( 29,412 ) $ 42,095 $ 203 $ 42,298 $ —

Nine Months Ended September 30, 2023

8 unchanged sentences

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

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

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

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

1 unchanged sentence

Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions) 2024

29 unchanged sentences

Property and equipment purchases, net ( 1,069 ) ( 1,208 )

Acquisitions, net of cash acquired ( 132 ) ( 443 )

Divestitures, net of cash sold — 13

15 unchanged sentences

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

Cash, cash equivalents and restricted cash, June 30, (2)

Cash, cash equivalents and restricted cash, September 30, (2)

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

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

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

$ 5,935 $ 8,546

31 unchanged sentences

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

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

Cigna Healthcare also offers health and dental insurance products to individuals in the United States and select international markets.

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

3 unchanged sentences

Specialty and Care Services provides specialty drugs for the treatment of complex and rare diseases, specialty distribution of pharmaceuticals and medical supplies, as well as clinical programs to help our clients drive better whole-person health outcomes through Care Delivery and Management Solutions.

The Company's reporting units remain aligned with its operating segments and Evernorth Health Services' goodwill was allocated on a relative fair value basis.

The Company's reporting units remain aligned with its operating segments and Evernorth Health Services' goodwill was allocated on a relative fair value basis during the three months ended March 31, 2024.

The Cigna Healthcare reportable segment includes the U.S.

3 unchanged sentences

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 approximately $ 3.3 billion cash, subject to applicable regulatory approvals and other customary closing conditions (the "HCSC transaction").

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

20 unchanged sentences

The following amounts were included within Accounts receivable, net:

(In millions) June 30, 2024 December 31, 2023

(In millions) September 30, 2024 December 31, 2023

Pharmaceutical manufacturers receivables $ 13,708 $ 8,169

6 unchanged sentences

Total $ 27,846 $ 17,722

These accounts receivable are reported net of our allowances of $ 4.4 billion as of June 30, 2024 and $ 3.7 billion as of December 31, 2023.

These accounts receivable are reported net of our allowances of $ 4.6 billion as of September 30, 2024 and $ 3.7 billion as of December 31, 2023.

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

The Company's allowance for current expected credit losses was $ 95 million as of June 30, 2024 and $ 90 million as of December 31, 2023.

The Company's allowance for current expected credit losses was $ 88 million as of September 30, 2024 and $ 90 million as of December 31, 2023.

Accounts Receivable Factoring Facility

3 unchanged sentences

Further information regarding the accounting policy for the Facility can be found in Note 3 in the Company's 2023 Form 10-K.

For the three and six months ended June 30, 2024, we sold $ 1.3 billion and $ 3.2 billion of accounts receivable under the Facility and factoring fees paid were not material.

As of June 30, 2024, there were $ 322 million of sold accounts receivable that have not been collected from pharmaceutical manufacturers and have been removed from the Company's Consolidated Balance Sheets.

We sold accounts receivable under the Facility of $ 1.3 billion and $ 1.0 billion for the three months ended September 30, 2024 and 2023, respectively, and $ 4.5 billion and $ 1.0 billion for the nine months ended September 30, 2024 and 2023, respectively.

For the three and nine months ended September 30, 2024 and 2023, factoring fees paid were not material.

As of September 30, 2024, there were $ 258 million of sold accounts receivable that have not been collected from pharmaceutical manufacturers and have been removed from the Company's Consolidated Balance Sheets.

At December 31, 2023, all sold accounts receivable had been collected from pharmaceutical manufacturers.

As of June 30, 2024 and December 31, 2023, there were $ 713 million and $ 515 million, respectively, of collections from pharmaceutical manufacturers that have not been remitted to the financial institution.

As of September 30, 2024 and December 31, 2023, there were $ 1.1 billion and $ 515 million, respectively, of collections from pharmaceutical manufacturers that 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.

Further information regarding the Program's terms can be found in Note 4 in the Company's 2023 Form 10-K.

As of June 30, 2024 and December 31, 2023, $ 1.7 billion and $ 1.5 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.

As of September 30, 2024 and December 31, 2023, $ 1.6 billion and $ 1.5 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 June 30, 2024, we have been informed by the financial institution that $ 348 million of the Company's outstanding payment obligations were voluntarily elected by suppliers to be sold to the financial institution under the Program.

As of September 30, 2024, we have been informed by the financial institution that $ 534 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 – Assets and Liabilities of Businesses Held for Sale

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.

In January 2024, the Company entered into the HCSC transaction for a purchase price of approximately $ 3.3 billion cash, subject to applicable regulatory approvals and other customary closing conditions, including adjustments to align with the final balance sheet of the divested businesses.

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

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

(In millions) June 30, 2024 December 31, 2023

(In millions) September 30, 2024 December 31, 2023

Cash and cash equivalents $ 1,249 $ 467

6 unchanged sentences

Total liabilities of businesses held for sale $ 2,775 $ 2,695

(1) Includes Goodwill of $ 396 million as of June 30, 2024 and December 31, 2023.

(1) Includes Goodwill of $ 396 million as of September 30, 2024 and December 31, 2023.

Integration and Transaction-related Costs

2 unchanged sentences

These costs incurred in both 2024 and 2023 consisted primarily of certain projects to separate or integrate the Company's systems, products and services, fees for legal, advisory and other professional services and certain employment-related costs.

These costs were $ 63 million pre-tax ($ 47 million after-tax) for the three months ended and $ 100 million pre-tax ($ 76 million after-tax) for the six months ended June 30, 2024, compared with $ 6 million pre-tax ($ 5 million after-tax) for the three months ended and $ 7 million pre-tax ($ 6 million after-tax) for the six months ended June 30, 2023.

These costs were $ 77 million pre-tax ($ 59 million after-tax) for the three months ended and $ 177 million pre-tax ($ 135 million after-tax) for the nine months ended September 30, 2024, compared with $ 13 million pre-tax ($ 9 million after-tax) for the three months ended and $ 20 million pre-tax ($ 15 million after-tax) for the nine months ended September 30, 2023.

Note 6 – Earnings Per Share

1 unchanged sentence

Three Months Ended

June 30, 2024 June 30, 2023

September 30, 2024 September 30, 2023

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

6 unchanged sentences

Earnings per share $ 2.65 $ ( 0.02 ) $ 2.63 $ 4.79 $ ( 0.05 ) $ 4.74

Six Months Ended

June 30, 2024 June 30, 2023

Nine Months Ended

September 30, 2024 September 30, 2023

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

8 unchanged sentences

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

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

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

(In millions) 2024 2023 2024 2023

Anti-dilutive options 0.8 0.9 1.0 0.9

The Company held approximately 122.5 million shares of common stock in treasury at June 30, 2024, 107.4 million shares as of December 31, 2023 and 103.3 million shares as of June 30, 2023.

The increase in Treasury stock as of June 30, 2024 and the reduction in weighted average shares outstanding for the six months ended June 30, 2024 was driven in part by 9.3 million shares of our common stock repurchased under the accelerated share repurchase agreements (the "ASR agreements"), approximately 1.7 million of which were received in the three months ended June 30, 2024.

The Company held approximately 122.5 million shares of common stock in treasury at September 30, 2024, 107.4 million shares as of December 31, 2023 and 105.7 million shares as of September 30, 2023.

The increase in Treasury stock as of September 30, 2024 and the reduction in weighted average shares outstanding for the three and nine months ended September 30, 2024 was driven in part by 9.3 million shares of our common stock repurchased under the accelerated share repurchase agreements (the "ASR agreements").

S ee Note 8 for additional information.

1 unchanged sentence

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

(In millions) June 30, 2024 December 31, 2023

(In millions) September 30, 2024 December 31, 2023

Short-term debt

42 unchanged sentences

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

As of June 30, 2024, there were no outstanding balances under these revolving credit agreements.

As of September 30, 2024, there were no outstanding balances under these revolving credit agreements.

In April 2024, The Cigna Group replaced its previous revolving credit agreements and entered into the following (the "Credit Agreements"):

6 unchanged sentences

The Credit Agreements allow for borrowings at either a base rate or an adjusted term Secured Overnight Funding Rate ("SOFR") plus, in each case, an applicable margin based on the Company's senior unsecured credit ratings.

Each of the two facilities is diversified among 22 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 June 30, 2024.

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.

1 unchanged sentence

Under our commercial paper program, we may issue short-term, unsecured commercial paper notes privately placed on a discounted basis through certain broker-dealers at any time not to exceed an aggregate amount of $ 6.5 billion.

In July 2024, our commercial paper program size was increased to $ 6.5 billion.

Our commercial paper program size was increased from $ 5.0 billion to $ 6.5 billion during the third quarter 2024.

Amounts available under the program may be borrowed, repaid and re-borrowed from time to time.

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

The weighted average interest rate of our commercial paper was 5.47 % at June 30, 2024.

The weighted average interest rate of our commercial paper was 5.33 % at September 30, 2024.

Long-term debt

21 unchanged sentences

Interest Expense

Interest expense on corporate financing was $ 378 million for the three months ended and $ 747 million for the six months ended June 30, 2024, compared with $ 350 million for the three months ended and $ 695 million for the six months ended June 30, 2023.

Interest expense on corporate financing was $ 380 million for the three months ended and $ 1.1 billion for the nine months ended September 30, 2024, compared with $ 353 million for the three months ended and $ 1.0 billion for the nine months ended September 30, 2023.

Debt Covenants

The Company was in compliance with its debt covenants as of June 30, 2024.

The Company was in compliance with its debt covenants as of September 30, 2024.

Note 8 – Common and Preferred Stock

3 unchanged sentences

June 4, 2024 June 20, 2024 $ 1.40 $ 392

September 4, 2024 September 19, 2024 $ 1.40 $ 390

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

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

On July 24, 2024, the Board of Directors declared the third quarter cash dividend of $ 1.40 per share of The Cigna Group common stock to be paid on September 19, 2024 to shareholders of record on September 4, 2024.

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

On October 23, 2024, the Board of Directors declared the fourth quarter cash dividend of $ 1.40 per share of The Cigna Group common stock to be paid on December 19, 2024 to shareholders of record on December 4, 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.

8 unchanged sentences

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

June 30, 2024 December 31, 2023 June 30, 2023

September 30, 2024 December 31, 2023 September 30, 2023

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

17 unchanged sentences

Total insurance and contractholder liabilities $ 5,477 $ 10,573 $ 16,050 $ 5,514 $ 10,904 $ 16,418 $ 18,638

(1) Amounts classified as liabilities of businesses held for sale include $ 900 million of Unpaid claims, $ 417 million of Future policy benefits, $ 129 million of Unearned premiums and $ 111 million of Contractholder deposit funds as of June 30, 2024 and $ 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.

(1) Amounts classified as liabilities of businesses held for sale include $ 937 million of Unpaid claims, $ 422 million of Future policy benefits, $ 98 million of Unearned premiums and $ 111 million of Contractholder deposit funds as of September 30, 2024 and $ 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.

1 unchanged sentence

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.

The total of incurred but not reported liabilities plus expected development on reported claims and reported claims in process was $ 4.8 billion at June 30, 2024 and $ 5.0 billion at June 30, 2023.

The total of incurred but not reported liabilities plus expected development on reported claims and reported claims in process was $ 4.7 billion at September 30, 2024 and $ 5.0 billion at September 30, 2023.

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

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions) 2024 (1)

14 unchanged sentences

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

As of June 30, 2024 and December 31, 2023, $ 900 million and $ 823 million classified as liabilities of businesses held for sale, respectively.

As of September 30, 2024 and December 31, 2023, $ 937 million and $ 823 million classified as liabilities of businesses held for sale, respectively.

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.

1 unchanged sentence

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

Six Months Ended June 30,

Nine Months Ended September 30,

(Dollars in millions) $ % (1)

Actual completion factors $ 83 0.2 % $ 29 0.1 %

Actual completion factors and other $ 212 0.6 % $ 45 0.2 %

Medical cost trend 210 0.6 192 0.6

2 unchanged sentences

(2) Percentage of current year incurred costs as reported for the year ended December 31, 2022.

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

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

Future Policy Benefits

1 unchanged sentence

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

June 30, 2024 June 30, 2023

September 30, 2024 September 30, 2023

Interest accretion rate 2.83 % 2.85 %

3 unchanged sentences

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

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions) 2024 (1)

23 unchanged sentences

Total liability for future policy benefits (1)(7)

(1) Includes $ 417 million and $ 429 million of future policy benefits classified as liabilities of businesses held for sale in the Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023, respectively.

(2) Includes the effect of actual variances from expectations, which (decreased) increased the total liability for future policy benefits by $( 2 ) million and $ 2 million, respectively, for the six months ended June 30, 2024 and June 30, 2023.

(1) Includes $ 422 million and $ 429 million of future policy benefits classified as liabilities of businesses held for sale in the Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023, respectively.

(2) Includes the effect of actual variances from expectations, which decreased the total liability for future policy benefits by $( 43 ) million and $( 12 ) million, respectively, for the nine months ended September 30, 2024 and September 30, 2023.

(3) 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.

(4) As of June 30, 2024 and June 30, 2023 undiscounted expected future gross premiums were $ 18.9 billion and $ 17.7 billion, respectively.

As of June 30, 2024 and June 30, 2023 discounted expected future gross premiums were $ 13.2 billion and $ 12.3 billion, respectively.

(5) As of June 30, 2024 and June 30, 2023, undiscounted expected future policy benefits were $ 13.7 billion and $ 12.9 billion, respectively.

(4) As of September 30, 2024 and September 30, 2023, undiscounted expected future gross premiums were $ 20.7 billion and $ 18.5 billion, respectively.

As of September 30, 2024 and September 30, 2023, discounted expected future gross premiums were $ 14.4 billion and $ 12.5 billion, respectively.

(5) As of September 30, 2024 and September 30, 2023, undiscounted expected future policy benefits were $ 15.6 billion and $ 13.1 billion, respectively.

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

(7) $ 73 million and $ 154 million reported in Reinsurance recoverables in the Consolidated Balance Sheets as of June 30, 2024 and June 30, 2023, respectively, relate to the liability for future policy benefits.

Additionally, $ 80 million of reinsurance recoverables are reported in assets of businesses held for sale in the Consolidated Balance Sheets as of June 30, 2024.

(7) $ 73 million and $ 154 million reported in Reinsurance recoverables in the Consolidated Balance Sheets as of September 30, 2024 and September 30, 2023, respectively, relate to the liability for future policy benefits.

Additionally, $ 78 million of reinsurance recoverables are reported in assets of businesses held for sale in the Consolidated Balance Sheets as of September 30, 2024.

Other Operations

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

June 30, 2024 June 30, 2023

September 30, 2024 September 30, 2023

Interest accretion rate 5.64 % 5.64 %

4 unchanged sentences

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 $ 0.4 billion as of both June 30, 2024 and June 30, 2023.

Future policy benefits excluding deferred profit liability were $ 3.0 billion as of June 30, 2024 and $ 3.2 billion as of December 31, 2023, June 30, 2023 and December 31, 2022.

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

Undiscounted expected future policy benefits were $ 4.4 billion as of June 30, 2024 and $ 4.5 billion as of June 30, 2023.

As of June 30, 2024 and June 30, 2023, $ 0.9 billion and $ 1.0 billion, respectively, of the future policy benefit reserve was recoverable through treaties with external reinsurers.

Future policy benefits for Other Operations includes deferred profit liability of $ 0.4 billion as of both September 30, 2024 and September 30, 2023.

Future policy benefits excluding deferred profit liability were $ 3.1 billion as of September 30, 2024, $ 3.0 billion as of September 30, 2023, and $ 3.2 billion as of both December 31, 2023, and December 31, 2022.

The decrease in future policy benefit reserve as of both September 30, 2024 and September 30, 2023 was primarily driven by benefit payments and for the nine months ended September 30, 2023 current discount rate increases were an additional factor contributing to the decrease in future policy benefit reserve.

For both periods, the decreases were partially offset by interest accretion.

Undiscounted expected future policy benefits were $ 4.3 billion as of September 30, 2024 and $ 4.5 billion as of September 30, 2023.

As of September 30, 2024 and September 30, 2023, $ 0.9 billion and $ 1.0 billion, respectively, of the future policy benefit reserve was recoverable through treaties with external reinsurers.

Contractholder Deposit Funds

Contractholder deposit fund liabilities within Other Operations were $ 6.4 billion as of June 30, 2024, $ 6.5 billion as of December 31, 2023, $ 6.6 billion as of June 30, 2023 and $ 6.7 billion as of December 31, 2022.

Contractholder deposit fund liabilities within Other Operations were $ 6.3 billion as of September 30, 2024, $ 6.5 billion as of December 31, 2023, $ 6.6 billion as of September 30, 2023 and $ 6.7 billion as of December 31, 2022.

Approximately 38 % of the balance is reinsured externally.

1 unchanged sentence

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

As of June 30, 2024, the weighted average crediting rate, net amount at risk and cash surrender value for contractholder deposit fund liabilities not effectively exited through reinsurance were 3.25 %, $ 2.9 billion and $ 2.8 billion, respectively.

The comparative amounts as of June 30, 2023 were 3.26 %, $ 3.2 billion and $ 2.8 billion, respectively.

More than 99 % of the $ 4.0 billion liability as of June 30, 2024 and the $ 4.1 billion liability as of June 30, 2023 not reinsured externally is for contracts with guaranteed interest rates of 3 % - 4 %, and approximately $ 1.1 billion and $ 1.2 billion, as of June 30, 2024 and June 30, 2023, respectively, represented contracts with policies at the guarantee.

As of both June 30, 2024 and June 30, 2023, $ 1.2 billion was 50 - 150 basis points ("bps") above the guarantee and the remaining $ 1.7 billion represented contracts above the guarantee that pay the policyholder based on the greater of a guaranteed minimum cash value or the actual cash value.

As of both June 30, 2024 and June 30, 2023, more than 90 % of these contracts have actual cash values of at least 110% of the guaranteed cash value.

As of September 30, 2024, the weighted average crediting rate, net amount at risk and cash surrender value for contractholder deposit fund liabilities not effectively exited through reinsurance were 3.33 %, $ 2.9 billion and $ 2.8 billion, respectively.

The comparative amounts as of September 30, 2023 were 3.27 %, $ 3.1 billion and $ 2.8 billion, respectively.

More than 99 % of the $ 4.0 billion liability as of September 30, 2024 and the $ 4.1 billion liability as of September 30, 2023 not reinsured externally is for contracts with guaranteed interest rates of 3 % - 4 %, and approximately $ 1.1 billion and $ 1.2 billion, as of September 30, 2024 and September 30, 2023, respectively, represented contracts with policies at the guarantee.

As of both September 30, 2024 and September 30, 2023, $ 1.2 billion was 50 - 150 basis points ("bps") above the guarantee and the remaining $ 1.7 billion represented contracts above the guarantee that pay the policyholder based on the greater of a guaranteed minimum cash value or the actual cash value.

As of both September 30, 2024 and September 30, 2023, more than 90 % of these contracts have actual cash values of at least 110% of the guaranteed cash value.

Market Risk Benefits

4 unchanged sentences

Market risk benefits activity was as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

(Dollars in millions) 2024 2023

12 unchanged sentences

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

(Dollars in millions, excludes impact of reinsurance ceded) June 30, 2024 June 30, 2023

(Dollars in millions, excludes impact of reinsurance ceded) September 30, 2024 September 30, 2023

Net amount at risk $ 1,361 $ 1,986

10 unchanged sentences

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

The Company's reinsurance recoverables as of June 30, 2024 are presented at amount due by range of external credit rating and collateral level in the following table, with reinsurance recoverables that are market risk benefits separately presented at fair value:

The Company's reinsurance recoverables as of September 30, 2024 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

28 unchanged sentences

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

The reinsurance agreement is subject to an overall limit with approximately $ 3.0 billion remaining at June 30, 2024.

The reinsurance agreement is subject to an overall limit with approximately $ 3.0 billion remaining at September 30, 2024.

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

1 unchanged sentence

Reinsurer (1)

June 30, 2024 December 31, 2023 Collateral and Other Terms

at June 30, 2024

September 30, 2024 December 31, 2023 Collateral and Other Terms

at September 30, 2024

Berkshire $ 836 $ 873 80 % were secured by assets in a trust.

6 unchanged sentences

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

(2) Includes incurred but not reported ("IBNR") and outstanding claims of $ 22 million as of June 30, 2024 and $ 19 million as of December 31, 2023.

These amounts are excluded from market risk benefits as of June 30, 2024 in Note 9 and Note 10A to the Consolidated Financial Statements.

The impact of nonperformance risk (i.e., the risk that a counterparty might default) on the variable annuity reinsurance asset was immaterial for the three and six months ended June 30, 2024 and June 30, 2023.

(2) Includes incurred but not reported ("IBNR") and outstanding claims of $ 19 million as of September 30, 2024 and $ 19 million as of December 31, 2023.

These amounts are excluded from market risk benefits as of September 30, 2024 in Note 9 and Note 10A to the Consolidated Financial Statements.

The impact of nonperformance risk (i.e., the risk that a counterparty might default) on the variable annuity reinsurance asset was immaterial for the three and nine months ended September 30, 2024 and September 30, 2023.

Note 11 – Investments

4 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

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

9 unchanged sentences

Investments per Consolidated Balance Sheets $ 864 $ 15,270 $ 16,134 $ 925 $ 17,985 $ 18,910

(1) Investments related to the HCSC transaction that were held for sale as of June 30, 2024.

(1) Investments related to the HCSC transaction that were held for sale as of September 30, 2024.

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

1 unchanged sentence

Debt Securities

The amortized cost and fair value by contractual maturity periods for debt securities were as follows as of June 30, 2024:

The amortized cost and fair value by contractual maturity periods for debt securities were as follows as of September 30, 2024:

(In millions) Amortized

11 unchanged sentences

Depreciation Fair

June 30, 2024

September 30, 2024

Federal government and agency $ 273 $ — $ 21 $ ( 5 ) $ 289

18 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(Dollars in millions) Fair

15 unchanged sentences

The following table provides the values of the Company's equity security investments:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(In millions) Cost Carrying Value Cost Carrying Value

4 unchanged sentences

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

In the first quarter of 2024, we determined our investment in VillageMD was impaired and wrote down the carrying value to an estimated fair value of $ 0.9 billion, resulting in a $ 1.8 billion loss recorded in Net realized investment (losses) gains in the Company's Consolidated Statements of Income.

Consistent with our strategy to invest in targeted startup and growth-stage companies in the health care industry, approximately 90 % of our investments in equity securities are in the health care sector.

We determined our investment in VillageMD was fully impaired and recorded a $ 2.7 billion loss in Net realized investment losses in the Company's Consolidated Statements of Income .

Commercial Mortgage Loans

2 unchanged sentences

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

The annual review performed in the second quarter of 2024 confirmed ongoing strong overall credit quality in line with the previous year's results.

The annual portfolio review performed in the second quarter of 2024 confirmed ongoing strong overall credit quality in line with the previous year's results.

For more information on the Company's accounting policies and methodologies regarding these investments, see Note 12 in the Company's 2023 Form 10-K.

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

(Dollars in millions) June 30, 2024 December 31, 2023

(Dollars in millions) September 30, 2024 December 31, 2023

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

11 unchanged sentences

Carrying Value as of

(In millions) June 30, 2024 December 31, 2023

(In millions) September 30, 2024 December 31, 2023

Real estate investments $ 1,760 $ 1,606

5 unchanged sentences

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

As of June 30, 2024, the notional value of interest rate swap contracts increased to $ 1.9 billion compared to $ 1.5 billion as of December 31, 2023.

There have been no other material changes to the Company's derivative financial instruments during the six months ended June 30, 2024.

As of September 30, 2024, the notional value of interest rate swap contracts increased to $ 2.1 billion compared to $ 1.5 billion as of December 31, 2023.

There have been no other material changes to the Company's derivative financial instruments during the nine months ended September 30, 2024.

Please refer to the Company's 2023 Form 10-K for further discussion of the types of derivative financial instruments and associated accounting policies.

The effects of derivative financial instruments used in our individual hedging strategies were not material to the Consolidated Financial Statements as of June 30, 2024 and December 31, 2023.

The effects of derivative financial instruments used in our individual hedging strategies were not material to the Consolidated Financial Statements as of September 30, 2024 and December 31, 2023.

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

1 unchanged sentence

The following realized gains and losses on investments exclude realized gains and losses attributed to the Company's separate accounts because those gains and losses generally accrue directly to separate account policyholders:

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

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

(In millions) 2024 2023 2024 2023

2 unchanged sentences

Credit (loss)/recovery and other investment write-downs ( 946 ) ( 5 ) ( 2,837 ) ( 15 )

Net realized investment (losses) gains, before income taxes

Net realized investment (losses), before income taxes

$ ( 921 ) $ ( 14 ) $ ( 2,805 ) $ ( 44 )

Net realized investment losses for the three months ended June 30, 2024 were primarily due to expected credit loss charges on debt securities.

Net realized investment losses for the six months ended June 30, 2024 were primarily driven by the impairment of equity securities in 2024.

Net realized investment losses for the three and nine months ended September 30, 2024 were primarily driven by the impairment of equity securities, as described above.

Note 12 – Fair Value Measurements

6 unchanged sentences

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).

For a description of the policies, methods and assumptions that are used to estimate fair value and determine the fair value hierarchy for each class of financial instruments, see Note 13 in the Company's 2023 Form 10-K.

7 unchanged sentences

(Level 3) Total

June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

September 30,

2024 December 31, 2023 September 30,

2024 December 31, 2023

Financial assets at fair value

23 unchanged sentences

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

(Fair value in millions) June 30, 2024 December 31, 2023 Unobservable Input June 30, 2024 June 30, 2024 December 31, 2023

(Fair value in millions) September 30, 2024 December 31, 2023 Unobservable Input September 30, 2024 September 30, 2024 December 31, 2023

Debt securities

8 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended

September 30,

(In millions) 2024 2023 2024 2023

3 unchanged sentences

( 10 ) ( 1 ) ( 71 ) ( 1 )

Losses included in Other comprehensive loss

Gains (losses) included in Other comprehensive income (loss)

8 ( 5 ) 3 ( 5 )

1 unchanged sentence

Purchases 4 6 15 10

Sales ( 2 ) — ( 2 ) —

Settlements ( 4 ) ( 5 ) ( 19 ) ( 32 )

7 unchanged sentences

$ ( 9 ) $ ( 1 ) $ ( 71 ) $ ( 1 )

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

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

$ 8 $ ( 4 ) $ 3 $ ( 9 )

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

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

Gains and losses included in Other comprehensive income (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.

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 .

Transfers between Level 2 and Level 3 during 2024 and 2023

primarily reflected changes in liquidity estimates for certain private placement issuers across several sectors.

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 .

Transfers between Level 2 and Level 3 during 2024 and 2023 primarily reflected changes in liquidity estimates for certain private placement issuers across several sectors.

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

1 unchanged sentence

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

The separate account activity for the six months ended June 30, 2024 and 2023 was primarily driven by changes in the market values of the underlying separate account investments.

The separate account activity for the nine months ended September 30, 2024 and 2023 was primarily driven by changes in the market values of the underlying separate account investments.

Fair values of Separate account assets were as follows:

3 unchanged sentences

(Level 3) Total

(In millions) June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

(In millions) September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023

Guaranteed separate accounts (See Note 16)

5 unchanged sentences

Total $ 7,651 $ 7,430

(1) Non-guaranteed separate accounts include $ 3.9 billion as of June 30, 2024 and $ 4.0 billion as of December 31, 2023 in assets supporting the Company's pension plans, including $ 0.2 billion classified in Level 3 as of both June 30, 2024 and December 31, 2023.

(1) Non-guaranteed separate accounts include $ 4.0 billion as of both September 30, 2024 and December 31, 2023 in assets supporting the Company's pension plans, including $ 0.2 billion classified in Level 3 as of both September 30, 2024 and December 31, 2023.

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

Activity, including transfers into and out of Level 3, was not material for the three and six months ended June 30, 2024 or 2023.

Activity, including transfers into and out of Level 3, was not material for the three and nine months ended September 30, 2024 or 2023.

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

1 unchanged sentence

The following table provides additional information on these investments:

Fair Value as of Unfunded Commitment as of June 30, 2024 Redemption Frequency

Fair Value as of Unfunded Commitment as of September 30, 2024 Redemption Frequency

(if currently eligible) Redemption Notice

(In millions) June 30, 2024 December 31, 2023

(In millions) September 30, 2024 December 31, 2023

Securities partnerships $ 413 $ 419 $ 224 Not applicable Not applicable

2 unchanged sentences

Total $ 651 $ 680 $ 227

As of June 30, 2024, the Company does not have plans to sell any of these assets at less than fair value.

As of September 30, 2024, the Company does not have plans to sell any of these assets at less than fair value.

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

3 unchanged sentences

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

In the first quarter of 2024, our equity investment in VillageMD was written down to an estimated fair value of $ 0.9 billion resulting in an investment loss of $ 1.8 billion recorded in Net realized investment (losses) gains in the Company's Consolidated Statements of Income.

For the three months ended June 30, 2024 and six months ended June 30, 2023, impairments recognized requiring the assets

and liabilities described above to be measured at fair value were not material.

Observable price changes for equity securities with no readily determinable fair value were not material for the three and six months ended June 30, 2024 and June 30, 2023.

For the nine months ended September 30, 2024, we determined our investment in VillageMD was fully impaired and recorded a $ 2.7 billion loss in Net realized investment losses in the Company's Consolidated Statements of Income.

For the nine months ended

September 30, 2023, impairments recognized requiring the assets and liabilities described above to be measured at fair value were not material.

Observable price changes for equity securities with no readily determinable fair value were not material for the nine months ended September 30, 2024 and September 30, 2023.

Fair Value Disclosures for Financial Instruments Not Carried at Fair Value

1 unchanged sentence

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

Classification in Fair Value Hierarchy June 30, 2024 December 31, 2023

Classification in Fair Value Hierarchy September 30, 2024 December 31, 2023

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

3 unchanged sentences

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

The Company determined that it was no t a primary beneficiary in any material variable interest entity as of June 30, 2024 or December 31, 2023.

The Company determined that it was no t a primary beneficiary in any material variable interest entity as of September 30, 2024 or December 31, 2023.

The Company's involvement with variable interest entities for which it is not the primary beneficiary has not materially changed from December 31, 2023.

2 unchanged sentences

Note 14 – Accumulated Other Comprehensive Income (Loss)

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

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

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

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

Shareholders' other comprehensive loss, net of tax, for the three and six months ended June 30, 2024 and June 30, 2023, is primarily attributable to the change in discount rates for certain long-duration liabilities (following the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023) and unrealized changes in the market values of securities and derivatives, including the impacts from unconsolidated entities reported on the equity method.

Shareholders' other comprehensive loss, net of tax, for the three and nine months ended September 30, 2024 and September 30, 2023, is primarily attributable to the change in discount rates for certain long-duration liabilities (following the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023) and unrealized changes in the market values of securities and derivatives, including the impacts from unconsolidated entities reported on the equity method.

Changes in the components of AOCI were as follows:

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023 2024 2023

1 unchanged sentence

Beginning balance $ 400 $ ( 118 ) $ 171 $ ( 332 )

Unrealized appreciation on securities and derivatives

Unrealized appreciation (depreciation) on securities and derivatives

319 ( 257 ) 568 2

Tax (expense)

Tax (expense) benefit

( 65 ) 57 ( 133 ) ( 9 )

1 unchanged sentence

254 ( 200 ) 435 ( 7 )

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

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

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

— ( 1 ) — ( 1 )

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

1 unchanged sentence

Net losses reclassified from AOCI to Shareholders' net income

Other comprehensive income, net of tax

Other comprehensive income (loss), net of tax

264 ( 192 ) 493 22

Ending balance $ 664 $ ( 310 ) $ 664 $ ( 310 )

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023 2024 2023

2 unchanged sentences

Current period change in discount rate for certain long-duration liabilities ( 34 ) ( 27 ) ( 1,054 ) ( 585 )

76 36 262 137

Net current period change in discount rate for certain long-duration liabilities ( 31 ) ( 15 ) ( 789 ) ( 436 )

4 unchanged sentences

Ending balance $ ( 1,771 ) $ ( 732 ) $ ( 1,771 ) $ ( 732 )

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023 2024 2023

4 unchanged sentences

( 2 ) 2 ( 5 ) 4

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

Other comprehensive income (loss), net of tax

39 ( 29 ) 8 ( 32 )

Ending balance $ ( 141 ) $ ( 186 ) $ ( 141 ) $ ( 186 )

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023 2024 2023

7 unchanged sentences

Net change due to valuation update — — ( 16 ) ( 1 )

Other comprehensive (loss) income, net of tax

( 9 ) 7 ( 4 ) 17

Other comprehensive income, net of tax

Ending balance $ ( 915 ) $ ( 891 ) $ ( 915 ) $ ( 891 )

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023 2024 2023

1 unchanged sentence

Beginning balance $ ( 2,442 ) $ ( 1,878 ) $ ( 1,864 ) $ ( 1,658 )

Shareholders' other comprehensive (loss), net of tax

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

279 ( 241 ) ( 299 ) ( 461 )

2 unchanged sentences

Income Tax Expense

The 18.1 % effective tax rate for the three months ended June 30, 2024 was lower than the 19.9 % rate for the three months ended June 30, 2023, primarily as a result of decreases in state taxes following a favorable state audit resolution.

The 31.5 % effective tax rate for the six months ended June 30, 2024 was higher than the 19.2 % rate for the six months ended June 30, 2023 largely driven by an increase for a valuation allowance relative to the impairment of equity securities, partially offset by decreases in state taxes and a decrease relative to the businesses held for sale.

As of June 30, 2024, we had approximately $ 689 million in deferred tax assets ("DTAs") associated with the impairment of equity securities, as well as unrealized investment losses that are partially recorded in Accumulated other comprehensive loss.

A valuation allowance of $ 422 million, established in the six months ended June 30, 2024, drove the higher effective tax rate and was almost entirely related to the impairment of equity securities discussed in Note 11.

For the remainder of the DTAs, we have determined that a valuation allowance 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.

The 30.8 % and 31.2 % effective tax rates for the three and nine months ended September 30, 2024, respectively, were higher than the 21.3 % and 19.9 % rates for the three and nine months ended September 30, 2023, respectively.

These increases were primarily driven by the establishment of a valuation allowance on the tax benefit related to the impairment of equity securities.

As of September 30, 2024, we had approximately $ 836 million in deferred tax assets ("DTAs") associated with the impairment of equity securities as well as unrealized investment losses which are partially recorded in Accumulated other comprehensive loss.

A valuation allowance of $ 635 million, established in the nine months ended September 30, 2024, drove the higher effective tax rate and was almost entirely related to the impairment of equity securities discussed in Note 11 to the Consolidated Financial Statements.

For the remainder of the DTAs, we have determined that a valuation allowance is not currently required based on the Company's ability to carry back losses and ability and intent to hold certain securities until recovery.

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

6 unchanged sentences

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

As of June 30, 2024, employers maintained assets that generally exceeded the benefit obligations under these arrangements of approximately $ 410 million.

As of September 30, 2024, employers maintained assets that generally exceeded the benefit obligations under these arrangements of approximately $ 410 million.

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

there were no additional liabilities required for these guarantees, net of reinsurance, as of June 30, 2024.

there were no additional liabilities required for these guarantees, net of reinsurance, as of September 30, 2024.

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

1 unchanged sentence

Certain Other Guarantees

The Company had indemnification obligations as of June 30, 2024 in connection with acquisition and disposition transactions.

The Company had indemnification obligations as of September 30, 2024 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 laws or regulations or identification of outstanding litigation.

2 unchanged sentences

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

There were no recorded liabilities for these indemnification obligations as of June 30, 2024.

There were no recorded liabilities for these indemnification obligations as of September 30, 2024.

Guaranty Fund Assessments

1 unchanged sentence

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

There were no material charges or credits resulting from existing or new guaranty fund assessments for the six months ended June 30, 2024.

There were no material charges or credits resulting from existing or new guaranty fund assessments for the nine months ended September 30, 2024.

Legal and Regulatory Matters

3 unchanged sentences

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

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.

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 accrual for the matter discussed below under "Litigation Matters" is not material.

21 unchanged sentences

Express Scripts filed its answering appellate brief on July 24, 2024.

Oral arguments before the Second Circuit were held on October 22, 2024.

Note 17 – Segment Information

2 unchanged sentences

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.

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 reflect the underlying results of business operations and facilitate analysis of trends in underlying revenue, expenses and profitability.

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

8 unchanged sentences

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

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

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

2024 2023 2024 2023

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

Impairment of dividend receivable

(Net investment income) $ 182 $ 138 $ — $ — $ 182 $ 138 $ — $ —

Integration and transaction-related costs

(Selling, general and administrative expenses) 77 59 13 9 177 135 20 15

Loss (gain) on sale of businesses — — — — 19 ( 43 ) — —

Loss on sale of businesses 87 62 21 19 106 19 21 19

Deferred tax expenses, net

(Income taxes, less amount attributable to noncontrolling interests) — 41 — — — 75 — —

Charges associated with litigation matters

(Selling, general and administrative expenses) — — 201 171 — — 201 171

Total impact from special items $ 346 $ 300 $ 235 $ 199 $ 465 $ 367 $ 242 $ 205

4 unchanged sentences

Corporate and Eliminations

Three months ended June 30, 2024

Three months ended September 30, 2024

Revenues from external customers $ 51,552 $ 11,919 $ 137 $ 1 $ 63,609

Intersegment revenues 1,045 1,279 18 ( 2,342 )

Net investment income

Net investment (loss) income

( 142 ) 142 79 6 85

1 unchanged sentence

Net realized investment results from certain equity method investments — ( 177 ) — — ( 177 )

Special item related to impairment of dividend receivable 182 — — — 182

Adjusted revenues $ 52,637 $ 13,163 $ 234 $ ( 2,335 ) $ 63,699

4 unchanged sentences

( 99 ) — — — ( 99 )

Net realized investment (gains) losses (1)

Net realized investment losses (gains) (1)

748 ( 8 ) 4 — 744

1 unchanged sentence

Special items

Impairment of dividend receivable 182 — — — 182

Integration and transaction-related costs — — — 77 77

Loss on sale of businesses — 87 — — 87

Pre-tax adjusted income (loss) from operations $ 1,876 $ 1,174 $ ( 6 ) $ ( 425 ) $ 2,619

3 unchanged sentences

Corporate and Eliminations

Three months ended June 30, 2023

Three months ended September 30, 2023

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

10 unchanged sentences

( 44 ) — — — ( 44 )

Net realized investment (gains) losses (1)

( 1 ) 5 — — 4

Net realized investment losses (1)

Amortization of acquired intangible assets 443 11 — — 454

1 unchanged sentence

Integration and transaction-related costs — — — 13 13

Loss on sale of businesses — — 21 — 21

Charges associated with litigation matters 44 157 — — 201

Pre-tax adjusted income (loss) from operations $ 1,716 $ 1,222 $ 26 $ ( 435 ) $ 2,529

4 unchanged sentences

Corporate and Eliminations

Six months ended June 30, 2024

Nine months ended September 30, 2024

Revenues from external customers $ 144,689 $ 35,752 $ 333 $ 2 $ 180,776

Intersegment revenues 3,558 3,606 63 ( 7,227 )

Net investment income

Net investment (loss) income

( 18 ) 463 231 20 696

2 unchanged sentences

— ( 238 ) — — ( 238 )

Special item related to impairment of dividend receivable 182 — — — 182

Adjusted revenues $ 148,411 $ 39,583 $ 627 $ ( 7,205 ) $ 181,416

8 unchanged sentences

Special items

Impairment of dividend receivable 182 — — — 182

Integration and transaction-related costs — — — 177 177

5 unchanged sentences

Corporate and Eliminations

Six months ended June 30, 2023

Nine months ended September 30, 2023

Revenues from external customers

11 unchanged sentences

( 140 ) ( 2 ) — — ( 142 )

Net realized investment (gains) losses (1)

( 1 ) 29 ( 6 ) — 22

Net realized investment losses (1)

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

1 unchanged sentence

Integration and transaction-related costs — — — 20 20

Loss on sale of businesses — — 21 — 21

Charges associated with litigation matters 44 157 — — 201

Pre-tax adjusted income (loss) from operations $ 4,552 $ 3,509 $ 70 $ ( 1,272 ) $ 6,859

2 unchanged sentences

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

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

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

(In millions) 2024 2023 2024 2023

40 unchanged sentences

Healthcare operating segment.

Information presented for the three and six months ended June 30, 2023 has been restated to conform to the new operating segment presentation.

Information presented for the three and nine months ended September 30, 2023 has been restated to conform to the new operating segment presentation.

Financial and performance guarantees.

4 unchanged sentences

Historically, adjustments to original estimates have not been material.

This guarantee liability was $ 1.7 billion as of June 30, 2024 and $ 1.6 billion as of December 31, 2023.

This guarantee liability was $ 2.0 billion as of September 30, 2024 and $ 1.6 billion as of December 31, 2023.

Major customers.

Revenues from a single pharmacy benefit client were approximately 16 % of consolidated revenues for both the three and six months ended June 30, 2024.

Revenues from a single pharmacy benefit client were approximately 16 % of consolidated revenues for the three and nine months ended September 30, 2024.

These amounts were reported in the Evernorth Health Services segment.

Additionally, revenues from U.S.

Federal Government agencies, under a number of contracts, were approximately 10 % and 12 % of consolidated revenues for the three and six months ended June 30, 2024, respectively.

Federal Government agencies, under a number of contracts, were approximately 10 % and 11 % of consolidated revenues for the three and nine months ended September 30, 2024, respectively.

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

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements