SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8‑K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934


Date of Report (Date of earliest event reported) February 4, 2016


Cigna Corporation
(Exact name of registrant as specified in its charter)


Delaware
(State or other jurisdiction of incorporation)
1‑08323
(Commission File Number)
06‑1059331
(IRS Employer
Identification No.)



900 Cottage Grove Road
Bloomfield, Connecticut 06002
 (Address of principal executive offices)  (Zip Code)

Registrant's telephone number, including area code:

 (860) 226-6000


Not Applicable
 (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR    240.14d-2(b))
[ ] Pre-commencement communication pursuant to Rule 13e-49(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02                          Results of Operations and Financial Condition.

On February 4, 2016, Cigna Corporation issued a press release announcing results for the three months and year ended December 31, 2015.  The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

This information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act whether made before or after the date of this Current Report on Form 8-K, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01
Financial Statements and Exhibits.
 
 
(d)
Exhibits.
 
 
Exhibit No.
Description
99.1


            SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
Cigna Corporation
     
     
Date:  February 4, 2016
By:
/s/ Thomas A. McCarthy
   
Thomas A. McCarthy
   
Executive Vice President and
   
Chief Financial Officer
   
(Principal Financial Officer)
 
 
 
 


Exhibit 99.1
 
 
NEWS RELEASE
 
 
 
 

Contact: Will McDowell, Investor Relations – (215) 761-4198
 
Matt Asensio, Media Relations – (860) 226-2599
 
 
 
 
CIGNA REPORTS STRONG 2015 RESULTS,
EXPECTS REVENUE AND EARNINGS GROWTH IN 2016


o Consolidated revenues for 2015 increased 8% to $37.9 billion

o Adjusted income from operations1 for 2015 was $2.3 billion, or $8.66 per share, with per share growth of 10% over 2014

o Shareholders' net income for 2015 was $2.1 billion, or $8.04 per share

o Consolidated revenues and adjusted income from operations1,2 are expected to grow in 2016


BLOOMFIELD, CT, February 4, 2016 – Cigna Corporation (NYSE: CI) today reported strong fourth quarter and full year 2015 results with revenue and earnings contributions across the Company's diversified portfolio of businesses driven by the continued effective execution of our strategy.  Consolidated revenues for 2015 were $37.9 billion, an increase of 8% over 2014.

Cigna's adjusted income from operations1 for full year 2015 was $2.3 billion, or $8.66 per share, compared with $2.1 billion, or $7.87 per share, for 2014.  This represents per share growth of 10% and reflects strong revenue growth and continued favorable medical and operating costs in the Global Health Care segment.  For the fourth quarter of 2015, adjusted income from operations1 was $486 million, or $1.87 per share, compared to $475 million, or $1.80 per share, for the fourth quarter of 2014.

"The strong results we delivered in 2015 reflect our proven ability to create sustained value for customers and clients," said David M. Cordani, President and Chief Executive Officer.  "The effective execution of our global strategy and our differentiated capabilities provide us with strong momentum as we begin 2016.  Our pending combination with Anthem will further accelerate our strategy to improve quality, choice, and affordability in the marketplace."

Cigna also reported shareholders' net income in 2015 of $2.1 billion, or $8.04 per share, compared to $2.1 billion, or $7.83 per share, for 2014.  Shareholders' net income for 2015 included special items1, which resulted in after-tax charges of $122 million, or $0.47 per share, for costs associated with the early redemption of long term debt as well as transaction costs related to Cigna's proposed merger with Anthem.

For the fourth quarter of 2015, shareholders' net income was $426 million, or $1.64 per share, compared with $467 million, or $1.77 per share, for the fourth quarter of 2014.  Fourth quarter 2015 shareholders' net income included a special item1 charge of $28 million after-tax, or $0.11 per share, for transaction costs related to Cigna's proposed merger with Anthem.
 
 
 

 

2


CONSOLIDATED HIGHLIGHTS

The following table includes highlights of results and a reconciliation of adjusted income from operations1 to shareholders' net income:
 
Consolidated Financial Results (dollars in millions, customers in thousands):
   
 
 
   
 
   
Year
 
 
Three Months Ended
   
Ended
 
 
December 31,
 
September 30,
   
December 31,
 
 
2015
   
2014
 
2015
   
2015
 
 
           
Consolidated Revenues
 
$
9,528
   
$
8,928
   
$
9,389
   
$
37,876
 
 
                               
Consolidated Earnings, net of taxes
                               
Adjusted income from operations
 
$
486
   
$
475
   
$
593
   
$
2,256
 
Net realized investment gains (losses)
   
(28
)
   
21
     
7
     
40
 
Amortization of other acquired intangible assets, net1
   
(4
)
   
(29
)
   
(24
)
   
(80
)
Special items1
   
(28
)
   
-
     
(29
)
   
(122
)
Shareholders' net income
 
$
426
   
$
467
   
$
547
   
$
2,094
 
 
                               
Adjusted income from operations1, per share 
 
$
1.87
   
$
1.80
   
$
2.28
   
$
8.66
 
Shareholders' net income, per share
 
$
1.64
   
$
1.77
   
$
2.10
   
$
8.04
 
 
                               
 
As of the Periods Ended
         
 
December 31,
 
September 30,
         
 
   
2015
     
2014
     
2015
         
 
                               
Global Medical Customers
   
14,999
     
14,456
     
14,849
         


· Cash and marketable investments at the parent company were approximately $1.4 billion at December 31, 2015 and approximately $400 million at December 31, 2014.

· In 2015, the Company repurchased approximately 5.5 million shares of stock for approximately $685 million.  During the period January 1, 2016 through February 3, 2016, the Company repurchased an additional 785,000 shares of common stock for approximately $110 million.3

· Given the pending combination with Anthem, it is unlikely that the Company will make further share repurchases in 2016.
 
 
 

 

3



HIGHLIGHTS OF SEGMENT RESULTS

See Exhibit 2 for a reconciliation of adjusted income (loss) from operations1 to shareholders'  net income.

Global Health Care

This segment includes Cigna's Commercial and Government businesses that deliver medical and specialty health care products and services to domestic and multi-national clients and customers using guaranteed cost, retrospectively experience-rated and administrative services only ("ASO") funding arrangements.  Specialty health care includes behavioral, dental, disease and medical management, stop loss and pharmacy-related products and services.

Financial Results (dollars in millions, customers in thousands):
   
   
 
 
   
   
   
Year
 
 
Three Months Ended
   
Ended
 
 
December 31,
 
September 30,
   
December 31,
 
 
2015
   
2014
   
2015
   
2015
 
 
       
     
Premiums and Fees
 
$
6,721
   
$
6,254
   
$
6,619
   
$
26,803
 
Adjusted Income from Operations1
 
$
394
   
$
397
   
$
482
   
$
1,848
 
Adjusted Margin, After-Tax5
   
5.2
%
   
5.7
%
   
6.5
%
   
6.2
%
 
                               
 
As of the Periods Ended
         
 
December 31,
 
September 30,
         
Customers:
   
2015
     
2014
     
2015
         
Commercial
   
14,432
     
13,938
     
14,291
         
Government
   
567
     
518
     
558
         
Medical
   
14,999
     
14,456
     
14,849
         
 
                               
Behavioral Care
   
24,674
     
23,853
     
24,591
         
Dental4
   
13,869
     
13,571
     
13,872
         
Pharmacy
   
8,068
     
7,542
     
7,980
         
Medicare Part D
   
1,476
     
1,188
     
1,472
         


· Global Health Care delivered another strong result in 2015, reflecting consistent strong performance in our well-positioned growth businesses.

· Full year 2015 premiums and fees grew 10% to $26.8 billion reflecting ongoing growth in our self-funded programs, specialty products, and Government businesses.

· Cigna's medical customer base grew 543,000, or 4%, in 2015 to a total of 15 million customers, driven by organic growth in our Middle Market, International, Select, and Medicare segments as well as the impact of our acquisition of Qualcare Alliance Networks.

· Full year adjusted income from operations1 reflects business growth, including specialty contributions, and continued favorable medical costs in our Commercial employer business.
 
 
 

 

4
 

 
· Fourth quarter 2015 adjusted income from operations1 and adjusted margin, after-tax5 reflect strong contributions from our Commercial employer and specialty businesses, as well as unfavorable medical costs in our Individual and Government businesses.  The decline in fourth quarter 2015 relative to the third quarter 2015 is primarily driven by the seasonal impact of medical costs as well as higher spending on strategic initiatives.

· Adjusted income from operations1 included favorable prior year reserve development on an after-tax basis of approximately $60 million for full year 2015 compared to $53 million for full year 2014.

· For full year 2015, Cigna has recorded receivables of approximately $250 million, after-tax related to 2015 risk mitigation programs with approximately 40% of the total related to reinsurance and the remainder split fairly evenly between risk adjustment and risk corridor.

· The Total Commercial medical care ratio9 (MCR) of 78.1% for the full year 2015, and 80.4% in fourth quarter 2015, reflect the ongoing strong performance of our Commercial employer business as well as continued high medical costs in our U.S. Individual business.  The fourth quarter MCR also reflects expected higher seasonal medical costs.

· The Total Government MCR9 of 85.2% for the full year 2015, and 83.1% in fourth quarter 2015, reflect the ongoing strong performance in our Medicare Advantage business, partially offset by pressure in our Medicare Part D business.  Fourth quarter Medicare Advantage results also include some unfavorable medical cost variability in a specific market.

· Full year medical cost trend for our total U.S. Commercial book of business was approximately 5% and reflects continued favorable medical costs, physician engagement and low utilization trend.

· The 2015 Global Health Care operating expense ratio9 of 21.4%, and the fourth quarter 2015 ratio of 22.7%, reflect ongoing efficiency gains, offset by continued investments in strategic initiatives and higher non-recurring expenses in the fourth quarter.

· Global Health Care net medical costs payable6 was approximately $2.11 billion at December 31, 2015 and $1.93 billion at December 31, 2014.

 
 
 

 

5
 
 
Global Supplemental Benefits

This segment includes Cigna's global individual supplemental health, life and accident insurance business, primarily in Asia, and Medicare supplement coverage in the United States.

Financial Results (dollars in millions, policies in thousands):
 
 
 
 
Year
 
 
Three Months Ended
 
Ended
 
 
December 31,
 
September 30,
 
December 31,
 
 
2015
 
2014
 
2015
 
2015
 
 
   
   
Premiums and Fees7
 
$
776
   
$
726
   
$
761
   
$
3,021
 
Adjusted Income from Operations1
 
$
54
   
$
36
   
$
62
   
$
262
 
Adjusted Margin, After-Tax5
   
6.7
%
   
4.8
%
   
7.8
%
   
8.3
%
 
                               
 
As of the Periods Ended
         
 
December 31,
 
September 30,
         
     
2015
     
2014
     
2015
         
                                 
Policies7
   
12,888
     
12,342
     
12,808
         



· Global Supplemental Benefits delivered attractive growth and profitability in 2015 on a currency adjusted basis as we continue to provide value to individual consumers with affordable and personalized solutions on a direct basis.

· Excluding the impact of foreign currency movements, 2015 premiums and fees grew 12% in Global Supplemental, reflecting ongoing customer growth in Cigna's target markets and strong retention.

· Full year 2015 adjusted income from operations1 and adjusted margin, after-tax5 reflect business growth and favorable claims experience in Korea partially offset by the impact of foreign currency movements.

· Fourth quarter 2015 adjusted income from operations1 and adjusted margin, after-tax5 reflect favorable claims experience in Korea and business growth.

· Foreign currency movements adversely impacted full year 2015 adjusted income from operations1 by $26 million after-tax8.

 
 
 

 

6
 
Group Disability and Life

This segment includes Cigna's group disability, life and accident insurance operations.

Financial Results (dollars in millions):
 
 
   
   
 
Year
 
 
 
Three Months Ended
   
Ended
 
 
 
December 31,
 
September 30,
 
December 31,
 
 
 
2015
   
2014
   
2015
   
2015
 
 
         
     
Premiums and Fees
 
$
998
   
$
920
   
$
980
   
$
3,932
 
Adjusted Income from Operations1
 
$
83
   
$
85
   
$
84
   
$
324
 
Adjusted Margin, After-Tax5
   
7.6
%
   
8.4
%
   
7.9
%
   
7.6
%


· Group Disability and Life results continue to reflect the value created for our customers by our differentiated productivity and return to work programs.

· Full year 2015 premiums and fees increased 8% over 2014 driven by business growth across the disability, life and accident product lines.

· Adjusted income from operations1 and adjusted margin, after-tax5 for full year 2015 reflect continued strong results, including an improvement in claims experience in our life business.

· Third quarter 2015 adjusted income from operations1 and adjusted margin, after-tax5 includes the favorable after-tax impact related to reserve studies of $11 million.


 



Corporate & Other Operations

Adjusted income (loss) from operations1 for Cigna's remaining operations is presented below:
 
Financial Results (dollars in millions):
 
 
 
 
 
        
 
 
 
 
 
 
        Year
 
Three Months Ended
 
Ended
 
  
December 31,
September 30,
December 31,
 
 
  2015
 2014
 
  2015
 
 2015
 
     
 
 
 
          
Corporate & Other Operations
 
$(45)
$(43)
 
$(35)
 
$(178)


· Third quarter 2015 adjusted income from operations1 benefited from lower corporate expenses.

 
 
 

 

7

 
2016 OUTLOOK

Cigna's outlook for full year 2016 consolidated adjusted income from operations1, 2 is in the range of $8.85 to $9.25 per share.  This outlook excludes the impact of prior year reserve development and the potential effects of future capital deployment.3



 
Full-Year Ending
Projected 2016 Growth in:
December 31, 2016
   
Consolidated Revenue
Mid-single digit percentage range
   
Consolidated Adjusted Income (Loss) from Operations1,2,11
High single digit percentage range
   
Global Medical Customers10
Low single digit percentage range
   
   
   
   
   
Consolidated Adjusted Income (Loss) from Operations, per share1,2,3
$                 8.85 to 9.25
   

Effective January 21, 2016, the Centers for Medicare & Medicaid Services ("CMS") imposed sanctions suspending Cigna's enrollment and marketing activities related to all Cigna Medicare Advantage and standalone prescription drug plan contracts.  The suspension does not impact current Cigna Medicare Advantage and Medicare Part D enrollees' benefits or plans.  Cigna is committed to ensuring that its customers have access to the quality healthcare, customer service and prescription drugs that they need and is working to resolve these matters as quickly as possible in full cooperation with CMS.  The expected impact from these sanctions is reflected in Cigna's 2016 outlook for growth in revenue, adjusted income from operations1,2, adjusted income from operations per share1,2, and global medical customers.





 

The foregoing statements represent the Company's current estimates of Cigna's 2016 consolidated and segment adjusted income from operations1,2 and other key metrics as of the date of this release.  Actual results may differ materially depending on a number of factors.  Investors are urged to read the Cautionary Note Regarding Forward-Looking Statements included in this release.  Management does not assume any obligation to update these estimates.

This quarterly earnings release and the Quarterly Financial Supplement are available on Cigna's website in the Investor Relations section (http://www.cigna.com/aboutcigna/investors).
 
 
 
 

8
 
 
Notes:

1. Effective January 1, 2015, adjusted income (loss) from operations is defined as shareholders' net income (loss) excluding the following after-tax adjustments: net realized investment results, net amortization of other acquired intangible assets and special items.  Prior year amounts have been adjusted for the exclusion of net amortization of other acquired intangible assets.  Net amortization of other acquired intangible assets in 2015 includes the after-tax impact of $23 million from the one-time benefit of an acquisition in which the fair value of acquired net assets exceeded the purchase price. Special items are identified in Exhibit 2 of this earnings release.
 
Adjusted income (loss) from operations is a measure of profitability used by Cigna's management because it presents the underlying results of operations of Cigna's businesses and permits analysis of trends in underlying revenue, expenses and shareholders' net income. This consolidated measure is not determined in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be viewed as a substitute for the most directly comparable GAAP measure, shareholders' net income. See Exhibit 2 for a reconciliation of adjusted income from operations to shareholders' net income.
 
2. Management is unable to provide a forward-looking reconciliation of adjusted income (loss) from operations to shareholders' net income for full year 2016 because future net realized investment results, net amortization of other acquired intangible assets and special items cannot be identified or reasonably estimated at this time.

3. The Company's outlook excludes the potential effects of any share repurchases or business combinations that may occur after the date of this earnings release.

4. Prior period dental customers have been revised to conform to current presentation.

5. Adjusted margin, after-tax, is calculated by dividing adjusted income (loss) from operations by operating revenues for each segment.

6. Global Health Care medical costs payable are presented net of reinsurance and other recoverables.  The gross Global Health Care medical costs payable balance was $2.36 billion as of December 31, 2015 and $2.18 billion as of December 31, 2014.

7. Cigna owns a 50% noncontrolling interest in its China joint venture.  Cigna's 50% share of the joint venture's earnings is reported in Other Revenues using the equity method of accounting under GAAP.  As such, the premiums and fees and policy counts for the Global Supplemental Benefits segment do not include the China joint venture.

8. Impact of foreign currency movements was determined by applying actual 2015 currency exchange rates to results for the full year 2014.

9. Operating ratios are defined as follows:
· Total Commercial medical care ratio represents medical costs as a percentage of premiums for all commercial risk products, including medical, pharmacy, dental, stop loss and behavioral products provided through guaranteed cost or experience-rated funding arrangements in both the United States and internationally.
· Total Government medical care ratio represents medical costs as a percentage of premiums for Medicare Advantage, Medicare Part D, and Medicaid products.
· Global Health Care Operating Expense Ratio represents operating expenses excluding acquisition related amortization expense as a percentage of operating revenue in the Global Health Care segment.

10. Global medical customers include individuals who meet any one of the following criteria: are covered under a medical insurance policy, managed care arrangement, or service agreement issued by Cigna; have access to Cigna's provider network for covered services under their medical plan; or have medical claims and services that are administered by Cigna.

11. The percentage growth projected in 2016 for Consolidated Adjusted Income (Loss) from Operations reflects an increase over such metric for 2015, excluding prior year reserve development of $60 million after-tax recognized in 2015.
 
 
 

 

9

 
NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release, and oral statements made with respect to information contained in this release, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are based on Cigna's current expectations and projections about future trends, events and uncertainties.  These statements are not historical facts.  Forward-looking statements may include, among others, statements concerning our projected consolidated adjusted income (loss) from operations outlook for 2016; projected consolidated revenue growth and global medical customer growth, each over year end 2015; future financial or operating performance, including our ability to deliver personalized and innovative solutions for our customers and clients and future growth, business strategy, strategic or operational initiatives; economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas; financing or capital deployment plans; our prospects for growth in the coming years; statements regarding the proposed merger between Cigna and Anthem, Inc. (Anthem); statements regarding the timing of resolution of the issues raised by CMS; and other statements regarding Cigna's and Anthem's future beliefs, expectations, plans intentions, financial condition or performance.  You may identify forward-looking statements by the use of words such as "believe," "expect," "plan," "intend," "anticipate," "estimate," "predict," "potential," "may," "should," "will" or other words or expressions of similar meaning, although not all forward-looking statements contain such terms.   

Forward-looking statements are subject to risks and uncertainties, both known and unknown, that could cause actual results to differ materially from those expressed or implied in forward-looking statements.  Such risks and uncertainties include, but are not limited to: our ability to achieve our financial, strategic and operational plans or initiatives; our ability to predict and manage medical costs and price effectively and develop and maintain good relationships with physicians, hospitals and other health care providers; our ability to identify potential strategic acquisitions or transactions and realize the expected benefits of such transactions; the substantial level of government regulation over our business and the potential effects of new laws or regulations, or changes in existing laws or regulations; the outcome of litigation, regulatory audits, including the CMS review and sanctions, investigations and actions and/or guaranty fund assessments; uncertainties surrounding participation in government-sponsored programs such as Medicare; the effectiveness and security of our information technology and other business systems; and unfavorable industry, economic or political conditions, including foreign currency movements; the timing and likelihood of completion of the proposed merger, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals for the proposed merger that could reduce anticipated benefits or cause the parties to abandon the transaction; the possibility that the expected synergies and value creation from the proposed merger will not be realized or will not be realized within the expected time period; the risk that the businesses of Cigna and Anthem will not be integrated successfully; disruption from the proposed merger making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred; the possibility that the proposed merger does not close, including due to the failure to satisfy the closing conditions; the risk that financing for the proposed merger may not be available on favorable terms, as well as more specific risks and uncertainties discussed in our most recent report on Form 10-K and subsequent reports on Forms 10-Q and 8-K available on the Investor Relations section of www.cigna.com as well as on Anthem's most recent report on Form 10-K and subsequent reports on Forms 10-Q and 8-K available on the Investor Relations section of www.antheminc.com.   You should not place undue reliance on forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance or results, and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify.  Cigna undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.

 
 
 
 

10
 
 
CIGNA CORPORATION       
 
COMPARATIVE SUMMARY OF FINANCIAL RESULTS (unaudited) 
Exhibit 1
     
(Dollars in millions, except per share amounts)     
     
         
   
Three Months Ended
    Year Ended  
   
December 31,
   
December 31,
 
   
2015
   
2014
   
2015
   
2014
 
                 
REVENUES
               
Premiums
 
$
7,461
   
$
6,906
   
$
29,642
   
$
27,214
 
Fees
   
1,056
     
1,021
     
4,217
     
3,880
 
Net investment income
   
295
     
303
     
1,153
     
1,166
 
Mail order pharmacy revenues
   
690
     
614
     
2,536
     
2,239
 
Other revenues
   
73
     
60
     
271
     
261
 
Total operating revenues
   
9,575
     
8,904
     
37,819
     
34,760
 
Net realized investment gains (losses)
   
(47
)
   
24
     
57
     
154
 
Total
 
$
9,528
   
$
8,928
   
$
37,876
   
$
34,914
 
                                 
ADJUSTED INCOME (LOSS) FROM OPERATIONS (1)
                         
Global Health Care
 
$
394
   
$
397
   
$
1,848
   
$
1,752
 
Global Supplemental Benefits
   
54
     
36
     
262
     
243
 
Group Disability and Life
   
83
     
85
     
324
     
317
 
Ongoing Operations
   
531
     
518
     
2,434
     
2,312
 
Corporate and Other
   
(45
)
   
(43
)
   
(178
)
   
(197
)
Total
 
$
486
   
$
475
   
$
2,256
   
$
2,115
 
After-tax adjustments to reconcile to shareholders' net income:
                         
Realized investment gains (losses)
   
(28
)
   
21
     
40
     
106
 
Amortization of other acquired intangible assets, net
   
(4
)
   
(29
)
   
(80
)
   
(119
)
Special items
   
(28
)
   
-
     
(122
)
   
-
 
Shareholders' net income
 
$
426
   
$
467
   
$
2,094
   
$
2,102
 
                                 
                                 
DILUTED EARNINGS PER SHARE
                               
Adjusted income from operations (1)
 
$
1.87
   
$
1.80
   
$
8.66
   
$
7.87
 
After-tax adjustments to reconcile to shareholders' net income:
                         
Realized investment gains (losses)
   
(0.11
)
   
0.08
     
0.15
     
0.40
 
Amortization of other acquired intangible assets, net
   
(0.01
)
   
(0.11
)
   
(0.30
)
   
(0.44
)
Special items
   
(0.11
)
   
-
     
(0.47
)
   
-
 
Shareholders' net income
 
$
1.64
   
$
1.77
   
$
8.04
   
$
7.83
 
Weighted average shares (in thousands)
   
260,518
     
264,284
     
260,592
     
268,603
 
Common shares outstanding (in thousands)
                   
256,544
     
259,276
 
                                 
SHAREHOLDERS' EQUITY at December 31,
                 
$
12,035
   
$
10,774
 
                                 
SHAREHOLDERS' EQUITY PER SHARE at December 31,
           
$
46.91
   
$
41.55
 
                                 
(1) Adjusted income (loss) from operations is defined as shareholders' net income (loss) excluding the following after-tax adjustments: realized investment results; net amortization of other acquired intangible assets; and special items (identified and quantified on Exhibit 2).
 
 

11
CIGNA CORPORATION
RECONCILIATION OF ADJUSTED INCOME (LOSS) FROM OPERATIONS TO SHAREHOLDERS' NET INCOME
 Exhibit 2
(Dollars in millions, except per share amounts)

 
Diluted
Earnings
Per Share
 
Consolidated
 
Global
Health Care
 
Three Months Ended December 31,
   
4Q15
     
4Q14
     
3Q15
     
4Q15
     
4Q14
     
3Q15
     
4Q15
     
4Q14
     
3Q15
 
                                                                         
Adjusted income (loss) from operations
 
$
1.87
   
$
1.80
   
$
2.28
   
$
486
   
$
475
   
$
593
   
$
394
   
$
397
   
$
482
 
After-tax adjustments to reconcile to shareholders' net income:
                                                                       
Realized investment gains (losses)
   
(0.11
)
   
0.08
     
0.02
     
(28
)
   
21
     
7
     
(20
)
   
14
     
14
 
Amortization of other acquired intangible assets, net
   
(0.01
)
   
(0.11
)
   
(0.09
)
   
(4
)
   
(29
)
   
(24
)
   
(20
)
   
(26
)
   
(21
)
Special items:
                                                                       
Merger-related transaction costs
   
(0.11
)
   
-
     
(0.11
)
   
(28
)
   
-
     
(29
)
   
-
     
-
     
-
 
Shareholders' net income
 
$
1.64
   
$
1.77
   
$
2.10
   
$
426
   
$
467
   
$
547
   
$
354
   
$
385
   
$
475
 
Weighted average shares (in thousands)
                                                                     
Special Items, pre-tax:
   
260,518
     
264,284
     
260,519
                                                
Merger-related transaction costs
                         
$
(31
)
 
$
-
   
$
(35
)
 
$
-
   
$
-
   
$
-
 
Total
                         
$
(31
)
 
$
-
   
$
(35
)
 
$
-
   
$
-
   
$
-
 
                                                                       
 
Diluted
Earnings
Per Share
 
Consolidated
 
Global
Health Care
 
Year Ended December 31,
   
2015
             
2014
     
2015
             
2014
     
2015
             
2014
 
                                                                         
Adjusted income (loss) from operations
 
$
8.66
           
$
7.87
   
$
2,256
           
$
2,115
   
$
1,848
           
$
1,752
 
After-tax adjustments to reconcile to shareholders' net income:
                                                                       
Realized investment gains (losses)
   
0.15
             
0.40
     
40
             
106
     
30
             
54
 
Amortization of other acquired intangible assets, net
   
(0.30
)
           
(0.44
)
   
(80
)
           
(119
)
   
(84
)
           
(106
)
Special items:
                                                                       
Debt extinguishment costs
   
(0.25
)
           
-
     
(65
)
           
-
     
-
             
-
 
Merger-related transaction costs
   
(0.22
)
           
-
     
(57
)
           
-
     
-
             
-
 
Shareholders' net income
 
$
8.04
           
$
7.83
   
$
2,094
           
$
2,102
   
$
1,794
           
$
1,700
 
Weighted average shares (in thousands)
   
260,592
             
268,603
                                                
Common shares outstanding as of December 31, (in thousands)
   
256,544
             
259,276
                                                
Special Items, pre-tax:
                                                                     
Debt extinguishment costs
                         
$
(100
)
         
$
-
   
$
-
           
$
-
 
Merger-related transaction costs
                           
(66
)
           
-
     
-
             
-
 
Total
                         
$
(166
)
         
$
-
   
$
-
           
$
-
 


12

 
Global
Supplemental
Benefits
 
Group
Disability
and Life
 
Corporate
and
Other
 
Three Months Ended December 31,
   
4Q15
     
4Q14
     
3Q15
     
4Q15
     
4Q14
     
3Q15
     
4Q15
     
4Q14
     
3Q15
 
                                                                         
Adjusted income (loss) from operations
 
$
54
   
$
36
   
$
62
   
$
83
   
$
85
   
$
84
   
$
(45
)
 
$
(43
)
 
$
(35
)
After-tax adjustments to reconcile to shareholders' net income:
                                                                       
Realized investment gains (losses)
   
2
     
3
     
(1
)
   
(9
)
   
(1
)
   
(6
)
   
(1
)
   
5
     
-
 
Amortization of other acquired intangible assets, net
   
16
     
(3
)
   
(3
)
   
-
     
-
     
-
     
-
     
-
     
-
 
Special items:
                                                                       
Merger-related transaction costs
   
-
     
-
     
-
     
-
     
-
     
-
     
(28
)
   
-
     
(29
)
Shareholders' net income
 
$
72
   
$
36
   
$
58
   
$
74
   
$
84
   
$
78
   
$
(74
)
 
$
(38
)
 
$
(64
)
Weighted average shares (in thousands)
                                                                     
Special Items, pre-tax:
                                                                     
Merger-related transaction costs
 
$
-
   
$
-
   
$
-
   
$
-
   
$
-
   
$
-
   
$
(31
)
 
$
-
   
$
(35
)
Total
 
$
-
   
$
-
   
$
-
   
$
-
   
$
-
   
$
-
   
$
(31
)
 
$
-
   
$
(35
)
                                            
 
Global
Supplemental
Benefits
 
Group
Disability
and Life
 
Corporate
and
Other
 
Year Ended December 31,
   
2015
             
2014
     
2015
             
2014
     
2015
             
2014
 
                                                                         
Adjusted income (loss) from operations
 
$
262
           
$
243
   
$
324
           
$
317
   
$
(178
)
         
$
(197
)
After-tax adjustments to reconcile to shareholders' net income:
                                                                       
Realized investment gains (losses)
   
1
             
3
     
4
             
14
     
5
             
35
 
Amortization of other acquired intangible assets, net
   
4
             
(13
)
   
-
             
-
     
-
             
-
 
Special items:
                                                                       
Debt extinguishment costs
   
-
             
-
     
-
             
-
     
(65
)
           
-
 
Merger-related transaction costs
   
-
             
-
     
-
             
-
     
(57
)
           
-
 
Shareholders' net income
 
$
267
           
$
233
   
$
328
           
$
331
   
$
(295
)
         
$
(162
)
Weighted average shares (in thousands)
                                                                     
Common shares outstanding as of December 31, (in thousands)
                                                                     
Special Items, pre-tax:
                                                                     
Debt extinguishment costs
 
$
-
           
$
-
   
$
-
           
$
-
   
$
(100
)
         
$
-
 
Merger-related transaction costs
   
-
             
-
     
-
             
-
     
(66
)
           
-
 
Total
 
$
-
           
$
-
   
$
-
           
$
-
   
$
(166
)
         
$
-
 

 
 
 
 
 
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