UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31, 2019~~

June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

~~for~~

For the transition period from _____ to

_____

Commission ~~file number 1-08323~~

File Number 001-38769

The Cigna ~~Corporation~~

Group

(Exact name of registrant as specified in its charter)

~~Delaware~~	~~82-4991898~~
Delaware		82-4991898
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
~~900 Cottage Grove Road Bloomfield, Connecticut~~	~~06002~~
~~(Address of principal executive offices)~~	~~(Zip Code)~~
~~(860) 226-6000~~
~~Registrant’s telephone number, including area code~~
~~(860) 226-6741 or (215) 761-5511~~
~~Registrant’s facsimile number, including area code~~
~~Not Applicable~~
~~(Former name, former address and former fiscal year, if changed since last report)~~

900 Cottage Grove Road

Bloomfield,Connecticut06002

(Address of principal executive offices) (Zip Code)

(860)226-6000

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

~~Indicate by check mark~~				~~YES~~	NO
·whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.				þ	o
·whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).				þ	o
·whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
~~Large accelerated filer~~ þ	~~Accelerated filer~~o	~~Non-accelerated filer~~o	~~Smaller Reporting Company~~o	~~Emerging growth company~~o
·If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o
·~~whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).~~				o	þ

~~Securities registered pursuant to Section 12(b) of the Act:~~

Title of each class

Trading Symbol(s)

Name of each exchange on which
registered

Common Stock, Par Value $0.01

New York Stock Exchange, Inc.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of ~~April 15, 2019, 379,457,650~~July 31, 2023, 295,980,135 shares of the ~~issuer’s~~issuer's common stock were outstanding.

~~Table of Contents~~

~~Cigna Corporation~~

THE CIGNA GROUP

TABLE OF CONTENTS


				Page
PART I			FINANCIAL INFORMATION	~~Page~~

			Item 1.	Financial Statements (Unaudited)	3
			Consolidated Statements of Income	1 3
			Consolidated Statements of Comprehensive Income	2 4
			Consolidated Balance Sheets	3 5
			Consolidated Statements of Changes in Total Equity	4 6
			Consolidated Statements of Cash Flows	5 8
			Notes to the Consolidated Financial Statements	6 9

			Item 2. Management	~~Management’s~~'s Discussion and Analysis of Financial Condition and Results of Operations	44 38

			Item 3.	Quantitative and Qualitative Disclosures About Market Risk	63 53

			Item 4.	Controls and Procedures	63 54

PART II			OTHER INFORMATION
~~PART II~~			~~OTHER INFORMATION~~

~~Item 1.~~	~~Legal Proceedings~~	63
Item 1. A.Legal Proceedings	55

			Item 1A. Risk Factors	63 55

			Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds and Issuer Purchases of Equity Securities	63 55

			Item 5. Other Information	55

			Item 6. Exhibits	~~Exhibits~~56		64
SIGNATURE				65 57

As used herein, ~~“Cigna” or~~ the ~~“Company”~~term "Company" refers to one or more of The Cigna ~~Corporation~~Group and its consolidated subsidiaries.

~~Table~~

Part I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS


The Cigna Group Consolidated Statements of Income
	Unaudited				Unaudited


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per share amounts)	2023		2022 (1)		2023		2022 (1)
Revenues
Pharmacy revenues	$	33,964	$	31,972	$	66,108	$	62,669
Premiums	11,039		10,426		22,064		20,782
Fees and other revenues	3,305		2,755		6,376		5,294
Net investment income	278		325		555		739
TOTAL REVENUES	48,586		45,478		95,103		89,484
Benefits and expenses
Pharmacy and other service costs	33,442		31,150		64,901		60,963
Medical costs and other benefit expenses	9,034		8,192		18,080		16,464
Selling, general and administrative expenses	3,434		3,264		6,972		6,539
Amortization of acquired intangible assets	455		501		914		959
TOTAL BENEFITS AND EXPENSES	46,365		43,107		90,867		84,925
Income from operations	2,221		2,371		4,236		4,559
Interest expense and other	(363)		(301)		(721)		(600)


Net realized investment gains (losses)	26		(89)		(30)		(411)
Income before income taxes	1,884		1,981		3,485		3,548
TOTAL INCOME TAXES	374		411		669		766
Net income	1,510		1,570		2,816		2,782
Less: Net income attributable to noncontrolling interests	50		13		89		28
SHAREHOLDERS' NET INCOME	$	1,460	$	1,557	$	2,727	$	2,754
Shareholders' net income per share
Basic	$	4.96	$	4.94	$	9.24	$	8.69
Diluted	$	4.92	$	4.89	$	9.15	$	8.61

(1) Amounts have been restated to reflect the adoption of ~~Contents~~

~~Part I.~~ ~~FINANCIAL INFORMATION~~

~~Item 1.~~~~FINANCIAL STATEMENTS~~

~~Cigna Corporation~~

Targeted Improvements to the Accounting for Long-Duration Contracts in 2023. See Note 2 to the Consolidated Financial Statements ~~of Income~~

Unaudited

Three Months Ended

March 31,

(In millions, except per share amounts)

2019

2018

Revenues

Pharmacy revenues

$
25,179

$
717

Premiums

9,971

8,999

Fees and other revenues

2,450

1,368

Net investment income

346

329

TOTAL REVENUES

37,946

11,413

Benefits and expenses

Pharmacy and other service costs

24,050

561

Medical costs and other benefit expenses

7,620

6,772

Selling, general and administrative expenses

3,303

2,745

Amortization of acquired intangible assets

743

27

TOTAL BENEFITS AND EXPENSES

35,716

10,105

Income from operations

2,230

1,308

Interest expense and other

(452)

(57)

Net realized investment gains (losses)

10

(33)

Income before income taxes

1,788

1,218

TOTAL INCOME TAXES

416

301

Net income

1,372

917

Less: net income attributable to noncontrolling interests

4

2

SHAREHOLDERS’ NET INCOME

$
1,368

$
915

Shareholders’ net income per share

Basic

$
3.61

$
3.78

Diluted

$
3.56

$
3.72

for further information.

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

~~Table~~


The Cigna Group Consolidated Statements of Comprehensive Income
	Unaudited				Unaudited
	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2023		2022 (1)		2023		2022 (1)
Net income	$	1,510	$	1,570	$	2,816	$	2,782
Other comprehensive income (loss), net of tax
Net unrealized appreciation (depreciation) on securities and derivatives	20		(670)		214		(1,513)
Net long-duration insurance and contractholder liabilities measurement adjustments	(117)		6		(448)		465
Net translation losses on foreign currencies	(19)		(207)		(3)		(270)
Postretirement benefits liability adjustment	7		27		17		40
Other comprehensive loss, net of tax	(109)		(844)		(220)		(1,278)
Total comprehensive income	1,401		726		2,596		1,504

Comprehensive income (loss) attributable to noncontrolling interests
Net income attributable to redeemable noncontrolling interests	45		2		79		5
Net income attributable to other noncontrolling interests	5		11		10		23
Other comprehensive loss attributable to redeemable noncontrolling interests	—		(1)		—		(3)
Total comprehensive income attributable to noncontrolling interests	50		12		89		25
SHAREHOLDERS' COMPREHENSIVE INCOME	$	1,351	$	714	$	2,507	$	1,479

(1) Amounts have been restated to reflect the adoption of ~~Contents~~

~~Cigna Corporation~~

Targeted Improvements to the Accounting for Long-Duration Contracts in 2023. See Note 2 to the Consolidated Financial Statements ~~of Comprehensive Income~~

Unaudited

Three Months Ended

March 31,

(In millions)

2019

2018

Shareholders’ net income

$
1,368

$
915

Shareholders’ other comprehensive income, net of tax

Net unrealized appreciation (depreciation), securities and derivatives

442

(284)

Net translation of foreign currencies

(24)

45

Postretirement benefits liability adjustment

11

13

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

429

(226)

Shareholders’ comprehensive income

1,797

689

Comprehensive income (loss) attributable to noncontrolling interests

Net income attributable to redeemable noncontrolling interests

3

2

Net income attributable to other noncontrolling interests

1

-

Other comprehensive (loss) attributable to redeemable noncontrolling interests

(2)

(2)

Total comprehensive income attributable to noncontrolling interests

2

-

TOTAL COMPREHENSIVE INCOME

$
1,799

$
689

for further information.

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

~~Cigna Corporation~~

The Cigna Group
Consolidated Balance Sheets
Unaudited
As of
June 30, As of
December 31,
(In millions) 2023
2022 (1)
Assets
Cash and cash equivalents $ 9,585 $ 5,924
Investments 872 905
Accounts receivable, net 18,333 17,218
Inventories 4,514 4,777
Other current assets 1,407 1,298
Total current assets 34,711 30,122
Long-term investments 18,967 16,288
Reinsurance recoverables 5,143 5,416
Property and equipment 3,884 3,774
Goodwill 45,811 45,811
Other intangible assets 31,713 32,492
Other assets 2,501 2,704
Separate account assets 7,324 7,278
TOTAL ASSETS $ 150,054 $ 143,885
Liabilities
Current insurance and contractholder liabilities $ 7,539 $ 5,409
Pharmacy and other service costs payable 18,617 17,070
Accounts payable 8,072 7,775
Accrued expenses and other liabilities 8,499 7,978
Short-term debt 4,618 2,993
Total current liabilities 47,345 41,225
Non-current insurance and contractholder liabilities 11,575 11,976
Deferred tax liabilities, net 7,594 7,786
Other non-current liabilities 2,575 2,766
Long-term debt 28,115 28,100
Separate account liabilities 7,324 7,278
TOTAL LIABILITIES 104,528 99,131
Contingencies — Note 16
Redeemable noncontrolling interests 62 66
Shareholders' equity
Common stock (2)
4 4
Additional paid-in capital 30,436 30,233
Accumulated other comprehensive loss (1,878) (1,658)
Retained earnings 39,936 37,940
Less: Treasury stock, at cost (23,053) (21,844)
TOTAL SHAREHOLDERS' EQUITY 45,445 44,675
Other noncontrolling interests 19 13
Total equity 45,464 44,688
Total liabilities and equity $ 150,054 $ 143,885

(1)Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023. See Note 2 to the Consolidated ~~Balance Sheets~~

Unaudited

As of

As of

March 31,

December 31,

(In millions, except per share amounts)

2019

2018

Assets

Cash and cash equivalents

$
4,976

$
3,855

Investments

1,662

2,045

Accounts receivable, net

10,941

10,473

Inventories

2,382

2,821

Other current assets

1,175

1,236

Total current assets

21,136

20,430

Long-term investments

27,257

26,929

Reinsurance recoverables

5,385

5,507

Deferred policy acquisition costs

2,817

2,821

Property and equipment

4,523

4,562

Goodwill

44,537

44,505

Other intangible assets

38,338

39,003

Other assets

2,276

1,630

Separate account assets

8,079

7,839

TOTAL ASSETS

$
154,348

$
153,226

Liabilities

Current insurance and contractholder liabilities

$
7,060

$
6,801

Pharmacy and service costs payable

11,145

10,702

Accounts payable

4,488

4,366

Accrued expenses and other liabilities

7,361

7,071

Short-term debt

2,915

2,955

Total current liabilities

32,969

31,895

Non-current insurance and contractholder liabilities

20,043

19,974

Deferred tax liabilities, net

9,403

9,453

Other non-current liabilities

3,832

3,470

Long-term debt

37,571

39,523

Separate account liabilities

8,079

7,839

TOTAL LIABILITIES

111,897

112,154

Contingencies — Note 16

Redeemable noncontrolling interests

38

37

Shareholders’ equity

Common stock (1)

4

4

Additional paid-in capital

27,855

27,751

Accumulated other comprehensive loss

(1,282)

(1,711)

Retained earnings

16,426

15,088

Less: treasury stock, at cost

(595)

(104)

TOTAL SHAREHOLDERS’ EQUITY

42,408

41,028

Other noncontrolling interests

5

7

Total equity

42,413

41,035

Total liabilities and equity

$
154,348

$
153,226

SHAREHOLDERS’ EQUITY PER SHARE

$
111.52

$
107.71

~~(1)~~ Financial Statements for further information.

(2)Par value per share, $0.01; shares issued, ~~384~~399 million as of ~~March 31, 2019~~June 30, 2023 and ~~381~~398 million as of December 31, ~~2018;~~2022; authorized ~~shares;~~shares, 600 million.

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

~~Cigna Corporation~~

~~Consolidated Statements~~

The Cigna Group
Consolidated Statements of Changes in Total Equity
Unaudited
Three Months Ended June 30, 2023
(In millions) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Retained Earnings Treasury Stock Shareholders' Equity Other Non- controlling Interests Total Equity Redeemable Noncontrolling Interests
Balance at March 31, 2023 $ 4 $ 30,332 $ (1,769) $ 38,841 $ (22,906) $ 44,502 $ 16 $ 44,518 $ 78
Effects of issuing stock for employee benefits plans 106 (1) 105 105
Other comprehensive loss (109) (109) (109) —
Net income 1,460 1,460 5 1,465 45
Common dividends declared (per share: $1.23) (365) (365) (365)
Repurchase of common stock — (146) (146) (146)
Other transactions impacting noncontrolling interests (2) (2) (2) (4) (61)
Balance at June 30, 2023 $ 4 $ 30,436 $ (1,878) $ 39,936 $ (23,053) $ 45,445 $ 19 $ 45,464 $ 62
Three Months Ended June 30, 2022 (1)
(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, 2022, as retrospectively restated (1)
4 29,736 (1,500) 33,464 (15,581) 46,123 22 46,145 55
Effect of issuing stock for employee benefit plans 194 (1) 193 193
Other comprehensive loss (843) (843) (843) (1)
Net income 1,557 1,557 11 1,568 2
Common dividends declared (per share: $1.12) (353) (353) (353)
Repurchase of common stock — (1,006) (1,006) (1,006)
Other transactions impacting noncontrolling interests — — (3) (3) (11)
Balance at June 30, 2022 $ 4 $ 29,930 $ (2,343) $ 34,668 $ (16,588) $ 45,671 $ 30 $ 45,701 $ 45

(1) Amounts have been restated to reflect the adoption of ~~Changes~~Targeted Improvements to the Accounting for Long-Duration Contracts in ~~Total Equity~~

Unaudited
Three Months Ended March 31, 2019
(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
Non-
controlling
Interests

Balance at December 31, 2018

$
4

$
27,751

$
(1,711)

$
15,088

$
(104)

$
41,028

$
7

$
41,035

$
37

Cumulative effect of adopting new lease accounting guidance (ASU 2016-02) (1)

(15)

(15)

(15)

Effect of issuing stock for employee benefit plans

104

(29)

75

75

Other comprehensive income (loss)

429

429

429

(2)

Net income

1,368

1,368

1

1,369

3

Common dividends declared (per share: $0.04)

(15)

(15)

(15)

Repurchase of common stock

(462)

(462)

(462)

Other transactions impacting noncontrolling interests

-

(3)

(3)

-

Balance at March 31, 2019

$
4

$
27,855

$
(1,282)

$
16,426

$
(595)

$
42,408

$
5

$
42,413

$
38

Three Months Ended March 31, 2018
(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
Non-
controlling
Interests

Balance at December 31, 2017

$
74

$
2,940

$
(1,082)

$
15,800

$
(4,021)

$
13,711

$
-

$
13,711

$
49

Cumulative effect of accounting for financial instruments and hedging

(10)

68

58

58

Reclassification adjustment related to U.S. tax reform legislation

(229)

229

-

-

Effect of issuing stock for employee benefit plans

23

(69)

68

22

22

Other comprehensive (loss)

(226)

(226)

(226)

(2)

Net income

915

915

915

2

Common dividends declared (per share: $0.04)

(10)

(10)

(10)

Repurchase of common stock

(275)

(275)

(275)

Other transactions impacting noncontrolling interests

-

-

Balance at March 31, 2018

$
74

$
2,963

$
(1,547)

$
16,933

$
(4,228)

$
14,195

$
-

$
14,195

$
49

~~(1)~~2023. See Note 2 to the Consolidated Financial Statements for further information ~~about the Company’s adoption of new leasing guidance (ASU 2016-02)~~.

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

~~Cigna Corporation~~

The Cigna Group
Consolidated Statements of Changes in Total Equity
Unaudited
Six Months Ended June 30, 2023
(In millions) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Retained Earnings Treasury Stock Shareholders' Equity Other Non- controlling Interests Total Equity Redeemable Noncontrolling Interests
Balance at December 31, 2022, as retrospectively restated (1)
$ 4 $ 30,233 $ (1,658) $ 37,940 $ (21,844) $ 44,675 $ 13 $ 44,688 $ 66
Effect of issuing stock for employee benefit plans 205 (105) 100 100
Other comprehensive loss (220) (220) (220) —
Net income 2,727 2,727 10 2,737 79
Common dividends declared (per share: $2.46) (731) (731) (731)
Repurchase of common stock — (1,104) (1,104) (1,104)
Other transactions impacting noncontrolling interests (2) (2) (4) (6) (83)
Balance at June 30, 2023 $ 4 $ 30,436 $ (1,878) $ 39,936 $ (23,053) $ 45,445 $ 19 $ 45,464 $ 62
Six Months Ended June 30, 2022 (1)
(In millions) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Retained Earnings Treasury Stock Shareholders' Equity Other Non- controlling Interests Total Equity Redeemable Noncontrolling Interests
Balance at December 31, 2021, as retrospectively restated (1)
4 29,574 (1,068) 32,623 (14,175) 46,958 18 46,976 54
Effect of issuing stock for employee benefit plans 356 (73) 283 283
Other comprehensive loss (1,275) (1,275) (1,275) (3)
Net income 2,754 2,754 23 2,777 5
Common dividends declared (per share: $2.24) (709) (709) (709)
Repurchase of common stock — (2,340) (2,340) (2,340)
Other transactions impacting noncontrolling interests — — (11) (11) (11)
Balance at June 30, 2022 $ 4 $ 29,930 $ (2,343) $ 34,668 $ (16,588) $ 45,671 $ 30 $ 45,701 $ 45

(1)Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023. See Note 2 to the Consolidated Financial Statements ~~of Cash Flows~~

Unaudited

Three Months Ended March 31,

(In millions)

2019

2018

Cash Flows from Operating Activities

Net income

$
1,372

$
917

Adjustments to reconcile net income to net cash provided by operating activities:

       Depreciation and amortization

897

140

       Realized investment (gains) losses, net

(10)

33

       Deferred income tax (benefit) expense

(162)

9

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

       Accounts receivable

(396)

(53)

       Inventories

440

94

       Deferred policy acquisition costs

(51)

(76)

       Reinsurance recoverable and other assets

124

51

       Insurance liabilities

360

849

       Pharmacy and service costs payable

444

(124)

       Accounts payable and accrued expenses and other liabilities

91

193

       Other, net

83

(8)

NET CASH PROVIDED BY OPERATING ACTIVITIES

3,192

2,025

Cash Flows from Investing Activities

Proceeds from investments sold:

       Debt and equity securities

1,471

499

Investment maturities and repayments:

       Debt and equity securities

319

297

       Commercial mortgage loans

89

28

Other sales, maturities and repayments (primarily short-term and other long-term investments)

367

112

Investments purchased or originated:

       Debt and equity securities

(1,088)

(2,259)

       Commercial mortgage loans

(95)

(68)

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

(388)

(206)

Property and equipment purchases, net

(194)

(103)

Acquisitions, net of cash acquired

(6)

-

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

475

(1,700)

Cash Flows from Financing Activities

Deposits and interest credited to contractholder deposit funds

247

292

Withdrawals and benefit payments from contractholder deposit funds

(251)

(306)

Net change in short-term debt

(1,048)

(3)

Repayment of long-term debt

(1,000)

(131)

Repurchase of common stock

(462)

(310)

Issuance of common stock

53

20

Other, net

(73)

(92)

NET CASH (USED IN) FINANCING ACTIVITIES

(2,534)

(530)

Effect of foreign currency rate changes on cash and cash equivalents

(12)

4

Net increase (decrease) in cash and cash equivalents

1,121

(201)

Cash and cash equivalents, January 1,

3,855

2,972

Cash and cash equivalents, March 31,

$
4,976

$
2,771

Supplemental Disclosure of Cash Information:

     Income taxes paid, net of refunds

$
29

$
31

     Interest paid

$
377

$
46

for further information.

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

The Cigna Group
Consolidated Statements of Cash Flows
Unaudited
Six Months Ended June 30,
(In millions) 2023
2022 (1)
Cash Flows from Operating Activities
Net income $ 2,816 $ 2,782
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,504 1,476
Realized investment losses, net 30 411
Deferred income tax benefit (207) (164)
Net changes in assets and liabilities, net of non-operating effects:
Accounts receivable, net (1,144) (2,769)
Inventories 263 (59)
Reinsurance recoverable and Other assets 109 530
Insurance liabilities 1,727 (8)
Pharmacy and other service costs payable 1,547 1,124
Accounts payable and Accrued expenses and other liabilities 638 (34)
Other, net 237 (15)
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,520 3,274
Cash Flows from Investing Activities
Proceeds from investments sold:
Debt securities and equity securities 646 1,239
Investment maturities and repayments:
Debt securities and equity securities 502 863
Commercial mortgage loans 82 69
Other sales, maturities and repayments (primarily short-term and other long-term investments) 313 745
Investments purchased or originated:
Debt securities and equity securities (3,339) (2,024)
Commercial mortgage loans (59) (84)
Other (primarily short-term and other long-term investments) (685) (849)
Property and equipment purchases, net (805) (612)
Divestitures, net of cash sold 27 (57)
Other, net (79) (22)
NET CASH USED IN INVESTING ACTIVITIES (3,397) (732)
Cash Flows from Financing Activities
Deposits and interest credited to contractholder deposit funds 96 84
Withdrawals and benefit payments from contractholder deposit funds (100) (94)
Net change in short-term debt 183 (244)
Repayment of long-term debt (80) —
Net proceeds on issuance of long-term debt 1,491 —
Repurchase of common stock (1,116) (2,374)
Issuance of common stock 59 217
Common stock dividend paid (730) (709)
Other, net (275) 33
NET CASH USED IN FINANCING ACTIVITIES (472) (3,087)
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash 9 (80)
Net increase (decrease) in cash, cash equivalents and restricted cash 3,660 (625)
Cash, cash equivalents and restricted cash January 1, (2)
5,976 5,548
Cash, cash equivalents and restricted cash, June 30, 9,636 4,923
Cash and cash equivalents reclassified to Assets of businesses held for sale — (455)
Cash, cash equivalents and restricted cash June 30, per Consolidated Balance Sheets (3)
$ 9,636 $ 4,468
Supplemental Disclosure of Cash Information:
Income taxes paid, net of refunds $ 926 $ 911
Interest paid $ 632 $ 615
(1)Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023. See Note 2 to the Consolidated Financial Statements for further information.
(2)Includes $425 million reported in Assets of businesses held for sale as of January 1, 2022.
(3)Restricted cash and cash equivalents were reported in other long-term investments.
The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.
8

THE CIGNA ~~CORPORATION~~

GROUP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

TABLE OF CONTENTS

Note
Number
Footnote
Page

BUSINESS AND CAPITAL STRUCTURE

1
Description of Business
7
2
Summary of Significant Accounting Policies
8
3
Accounts Receivable, Net
9
4
Mergers and Acquisitions
9
5
Earnings Per Share
10
6
Debt
11
INSURANCE INFORMATION

7
Insurance and Contractholder Liabilities
12
8
Reinsurance
15
INVESTMENTS

9
Investments
17
10
Fair Value Measurements
21
11
Variable Interest Entities
27
12
Accumulated Other Comprehensive Income (Loss)
28
WORKFORCE MANAGEMENT AND COMPENSATION

13
Pension and Other Postretirement Benefit Plans
28
PROPERTY, LEASES AND OTHER ASSET BALANCES

14
Leases
29
COMPLIANCE, REGULATION AND CONTINGENCIES

15
Income Taxes
31
16
Contingencies and Other Matters
31
17
Condensed Consolidating Financial Information
34
RESULTS DETAILS

18
Segment Information
41

Note Number Footnote Page
BUSINESS AND CAPITAL STRUCTURE
1
Description of Business
10
2
Summary of Significant Accounting Policies
10
3
Accounts Receivable, Net
12
4
Supplier Finance Program
12
5
Mergers, Acquisitions and Divestitures
12
6
Earnings Per Share
13
7
Debt
14
8
Common and Preferred Stock
16
INSURANCE INFORMATION
9
Insurance and Contractholder Liabilities
16
10
Reinsurance
21
INVESTMENTS
11
Investments
23
12
Fair Value Measurements
26
13
Variable Interest Entities
30
14
Accumulated Other Comprehensive Income (Loss)
30
COMPLIANCE, REGULATION AND CONTINGENCIES
15
Income Taxes
32
16
Contingencies and Other Matters
32
RESULTS DETAILS
17
Segment Information
34

Note 1 — – Description of Business

The Cigna ~~Corporation,~~Group, together with its subsidiaries (either individually or collectively referred to as ~~“Cigna,”~~ the ~~“Company,” “we,” “our”~~"Company," "we," "us" or ~~“us”~~"our"), is a global health ~~service organization dedicated to~~company with a mission of helping those we serve improve their health ~~well-being~~ and ~~peace of mind.~~vitality. Our ~~evolved strategy in support of our mission is~~ ~~Go Deeper, Go Local, Go Beyond~~ ~~using~~subsidiaries offer a differentiated set of pharmacy, medical, behavioral, dental ~~disability, life and accident insurance~~ and related products and ~~services offered by our subsidiaries.~~

services.

The majority of these products are offered through employers and other groups such as governmental and non-governmental organizations, unions and associations. Cigna Healthcare also offers commercial health and dental insurance and Medicare ~~and Medicaid~~ products ~~and health, life and accident insurance coverages~~ to individuals in the United States and selected international markets. In addition to these ongoing operations, The Cigna Group also has certain run-off operations.

~~As described more fully in Note 4, on December 20, 2018, Cigna completed the acquisition~~

A full description of ~~Express Scripts Holding Company (“Express Scripts”).~~ ~~As a result,~~ our segments ~~have changed~~follows:

Evernorth Health Services includes a broad range of coordinated and point solution health services and capabilities, as ~~described below, effective~~well as those from partners across the health care system, in Pharmacy Benefits, Home Delivery Pharmacy, Specialty Pharmacy, Distribution and Care Delivery and Management Solutions, which are provided to health plans, employers, government organizations and health care providers.

Cigna Healthcare includes the ~~fourth quarter of 2018. Prior year financial data presented in this Form 10-Q has been restated~~U.S. Commercial, U.S. Government and International Health operating segments which provide comprehensive medical and coordinated solutions to ~~reflect this new segment presentation.~~

~~Health Services~~ ~~includes~~clients and customers. U.S. Commercial products and services include medical, pharmacy, ~~benefits management, pharmacy home delivery~~behavioral health, dental and ~~certain medical management services. This segment includes Express Scripts’ business from the date of acquisition with the exception of Express Scripts’~~other products and services for insured and self-insured clients. U.S. Government solutions include Medicare Advantage, Medicare Supplement and Medicare Part D ~~business that is reported in the Government operating segment.~~

~~Integrated Medical~~ ~~offers a variety of medical~~plans for seniors and individual health insurance plans. International Health solutions ~~to employers and individuals.~~

·	~~The~~ *~~Commercial~~* operating segment serves employers (also referred to as “clients”) and their employees (also referred to as “customers”) and other groups. This segment provides deeply integrated medical and specialty offerings including medical, pharmacy, dental, behavioral health and vision, health advocacy programs and other products and services to insured and self-insured clients.

·	~~The~~ *~~Government~~* operating segment offers Medicare Advantage, Medicare Supplement, and Medicare Part D plans to Medicare-eligible beneficiaries as well as Medicaid plans. This operating segment also offers health insurance coverage to individual customers both on and off public exchanges. This segment includes the acquired Express Scripts’ Medicare Part D business.

~~International Markets~~ ~~includes supplemental health, life and accident insurance products and~~include health care coverage in our international markets, as well as health care benefits tofor globally mobile individuals and employees of multinational organizations.

~~The~~

Other Operations comprises the remainder of our business operations, ~~are reported~~which includes ongoing businesses and exited businesses. Our ongoing businesses include continuing business (corporate-owned life insurance ("COLI")) and our run-off businesses. Our run-off businesses include (i) variable annuity reinsurance business (also referred to as guaranteed minimum death benefit ("GMDB") and guaranteed minimum income benefit ("GMIB") business) that was effectively exited through reinsurance with Berkshire Hathaway Life Insurance Company of Nebraska ("Berkshire") in ~~Group Disability~~2013, (ii) settlement annuity business, and ~~Other,~~ ~~consisting~~(iii) individual life insurance and annuity and retirement benefits businesses comprised of deferred gains from the ~~following:~~

·	*~~Group Disability and Life~~* ~~provides group long-term and short-term disability, group life, accident, voluntary and specialty insurance products and related services.~~

·	*~~Corporate-Owned Life Insurance (“COLI”)~~* ~~offers permanent insurance contracts sold to corporations to provide coverage on the lives of certain employees for the purpose of financing employer-paid future benefit obligations.~~

·	*~~Run-off businesses:~~*

	·	*~~Reinsurance:~~* predominantly comprised of guaranteed minimum death benefit (“GMDB”) and guaranteed minimum income benefit (“GMIB”) business effectively exited through reinsurance with Berkshire Hathaway Life Insurance Company of Nebraska (“Berkshire”) in 2013.

	·	*~~Settlement Annuity~~* ~~business in run-off.~~

	·	*~~Individual Life Insurance and Annuity and Retirement Benefits Businesses:~~* ~~deferred gains from the sales of these businesses.~~

	·	*~~Certain international run-off businesses~~*

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

Corporatereflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate debt less net investment income on investments not supporting segment and other ~~operations, interest on uncertain tax positions,~~operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, operating severance, certain overhead and enterprise-wide ~~projects~~project costs and intersegment eliminations for products and services sold between segments. ~~Prior to 2019, compensation cost for stock options was also included in Corporate. Beginning in the first quarter of 2019, this cost is recorded by the segments.~~

Note 2 — – Summary of Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements include the accounts of The Cigna ~~Corporation~~ Group and its consolidated subsidiaries. Intercompany transactions and accounts have been eliminated in consolidation. These Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the United States of America ~~(“GAAP”~~("GAAP"). ~~The Company adopted Article 5 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”) effective December 31, 2018~~Certain amounts in conjunction with the acquisition of Express Scripts. As a result, the Company now presents current assets and liabilities on its balance sheet. The Company reclassified realized investment gains (losses) from revenue and now reports them below income from operations with interest expense in our Consolidated Statements of Income, in conformity with Article 5. Prior years’ information wasprior years have been reclassified to conform to ~~this new~~the current year presentation.

Amounts recorded in the Consolidated Financial Statements necessarily reflect ~~management’s~~management's estimates and assumptions about medical costs, investment and receivable valuations, interest rates and other factors. Significant estimates are discussed throughout these Notes; however, actual results could differ from those estimates. The impact of a change in estimate is generally included in earnings in the period of adjustment.

These interim Consolidated Financial Statements are unaudited but include all adjustments (including normal recurring adjustments) necessary, in the opinion of management, for a fair statement of financial position and results of operations for the periods reported. The interim Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes included in the ~~2018~~2022 Annual Report on Form 10-K ~~(“2018~~("2022 Form ~~10-K”~~10-K"). The preparation of interim Consolidated Financial Statements necessarily relies heavily on estimates. This and ~~certain~~ other factors, including the seasonal nature of portions of the health care and related benefits business, as well as competitive and other market conditions, call for caution in estimating full-year results based on interim results of operations.

Recent Accounting Pronouncements

The ~~2018~~Company's 2022 Form 10-K includes discussion of significant recent accounting pronouncements that either have impacted or may impact our financial statements in the future. The following information provides updates on recently adopted ~~or recently issued~~ accounting pronouncements that have occurred since the Company filed its ~~2018~~2022 Form 10-K.

~~Recently Adopted~~ There are no significant accounting pronouncements not yet adopted as of June 30, 2023.

Targeted Improvements to the Accounting ~~Guidance~~

~~The Company adopted~~for Long-Duration Contracts ("LDTI"), Accounting Standards Update ~~(“ASU”~~("ASU") ~~2016-02,~~ ~~Leases¸~~ ~~as of~~2018-12 and related amendments

The Cigna Group adopted LDTI January 1, ~~2019 (the~~2023, which includes the following key provisions:

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

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

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

•Deferred policy acquisition costs ("DAC") related to long-duration insurance contracts are amortized on a constant-level basis over the expected term of the related contracts. Other related deferred or capitalized balances (such as unearned revenue liability and value of business acquired) may use this simplified amortization method.

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

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

•The transition methods applied at adoption ~~date) on~~were:

•The liability for future policy benefits was remeasured using a modified retrospective ~~basis for leases in effect~~approach applied to all outstanding contracts as of the beginning of the earliest period presented and ~~after~~was recognized in the ~~adoption date. This new guidance requires~~opening balance ~~sheet recognition~~ of assets and liabilities arising from leases, as well as additional disclosures regarding the amount, timing and uncertainty of cash flows from leases. The Company implemented a new lease system and corresponding internal controls to administer our leases and facilitate compliance with this new standard.

The Company elected the practical expedient package, allowing the Company to carry forward the assessment of 1) whether our contracts contain or are leases, 2) lease classification and 3) whether previously capitalized costs continue to qualify as initial direct costs. Upon adoption, the Company recognized new right-of-use assets and lease liabilities related to our operating leases, because finance (capital) leases were already reflected on the Company’s Consolidated Balance Sheets.retained earnings. The impact of ~~adoption on~~remeasuring the ~~Company’s net assets~~future policy benefits liability for the discount rate was recorded through accumulated other comprehensive income.

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

•Market risk benefits were remeasured at fair value at the beginning of the earliest period presented. The difference between this fair value and carrying value was recognized in the opening balance of retained earnings, excluding the effect of the Company's change in nonperformance risk (own credit risk), which is recognized in accumulated other comprehensive income.

Effects of adoption:

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

•The cumulative effects of adopting the new standard were immaterial. The impacts were a decrease to January 1, 2021 Shareholders' equity of $139 million and an increase to Shareholders' net income for the year ended December 31, 2022 and December 31, 2021 of $36 million and $5 million, respectively. The corresponding impact to diluted earnings per share was ~~not material, nor was there a material impact on~~an increase of $0.11 and $0.02 for the year ended December 31, 2022 and December 31, 2021, respectively.

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

•Prior period balances in the Company's footnote disclosures have been updated to reflect adjustments resulting from the adoption of this standard. Refer to Note 9 to the Consolidated Financial Statements for the Company's updated accounting policies.

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

•Applying periodic assumption updates, versus the locked-in model, may change our timing of profit or ~~Cash Flows. See Note 14~~loss recognition.

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

Additionally, in December 2022, the Financial Accounting Standards Board ("FASB") published ASU 2022-05, which simplified the retrospective adoption of LDTI by permitting companies to make an accounting policy election to exclude contracts that are sold and removed from the balance sheet prior to the effective date of the standard from the retrospective adoption of LDTI. The Cigna Group made this policy election for ~~additional disclosures about~~ the ~~Company’s leases.~~

~~Accounting Guidance Not Yet Adopted~~

~~Accounting Standard and~~
~~Effective Date~~

~~Requirements and Expected Effects of New Guidance Not Yet Adopted~~

~~Measurement of Credit Losses on Financial Instruments (ASU 2016-13)~~

~~Required as of January 1, 2020~~

~~Requires:~~

· A new approach using expected credit losses to estimate and recognize credit losses for certain financial instruments (such as mortgage loans, reinsurance recoverables and other receivables) when such instruments are first originated or acquired.

· ~~Changes in the criteria for impairment of available-for-sale debt securities~~

· ~~Adoption using a modified retrospective approach with a cumulative-effect adjustment recorded in retained earnings~~

~~Expected effects:~~

· ~~The Company is continuing to evaluate this new standard and its expected effects on our financial statements and disclosures. We will adopt the standard as of January 1, 2020.~~

· ~~An additional allowance for future expected credit losses for certain financial instruments will be required at adoption.~~

contracts sold in the Chubb transaction and our divested interest in a joint venture in Türkiye.

Note 3 — – Accounts Receivable, Net

The following amounts were included within ~~accounts~~Accounts receivable, net:


(In millions)	June 30, 2023		December 31, 2022
Pharmaceutical manufacturers receivables	$	7,922	$	7,108
Noninsurance customer receivables	7,799		6,899
Insurance customer receivables	2,360		2,963
Other receivables	252		248


Total	$	18,333	$	17,218

These receivables are reported net of our allowances of $2.8 billion as of June 30, 2023 and $1.9 billion as of December 31, 2022. These allowances include contractual allowances for certain rebates receivable with pharmaceutical manufacturers and certain receivables from third-party payors, discounts and claims adjustments issued to customers in the form of client credits, an allowance for ~~doubtful accounts, customer~~current expected credit ~~allowances~~losses and ~~contractual allowances that, in the aggregate, were $456~~other non-credit adjustments.

The Company's allowance for current expected credit losses was $99 million as of ~~March 31, 2019~~June 30, 2023 and ~~$217~~$86 million as of December 31, ~~2018:~~

(In millions)

March 31, 2019

December 31, 2018

Insurance customer receivables

$
2,261

$
1,888

Noninsurance customer receivables

4,635

4,988

Pharmaceutical manufacturers receivable(1)

3,682

3,321

Other receivables

363

276

Total accounts receivable, net

$
10,941

$
10,473

~~(1)~~ ~~Includes $624 million~~2022.

Note 4 – Supplier Finance Program

The Company facilitates a voluntary supplier finance program (the "program") that provides suppliers the opportunity to sell their receivables due from us (i.e., our payment obligations to the suppliers) to a financial institution, on a non-recourse basis, in order to be paid earlier than our payment terms require. The Cigna Group is not a party to the program and agrees to commercial terms with its suppliers independently of their participation in the program. Amounts due to suppliers that participate in the program are generally paid within one month following the invoice date. A supplier's participation in the program has no impact on the Company's payment terms and the Company has no economic interest in a supplier's decision to participate in the program. The suppliers, at ~~March 31, 2019~~their sole discretion, determine which invoices, if any, to sell to the financial institution. No guarantees or pledged assets are provided by the Company or any of our subsidiaries under the program.

As of June 30, 2023 and ~~$406 million at~~ December 31, ~~2018~~2022, $1.6 billion and $1.3 billion, respectively, of ~~receivables~~the Company's outstanding payment obligations were confirmed as valid within the program by the financial institution and reflected in Accounts payable in the Consolidated Balance Sheets. The amounts confirmed as valid for both periods are predominately associated with one supplier. We have been informed by the financial institution that $263 million as of June 30, 2023 of the Company's outstanding payment obligations were voluntarily elected by suppliers to be sold to the financial institution under ~~noninsurance customer contracts.~~

the program.

Note 4 —5 – Mergers, Acquisitions and ~~Acquisitions~~

Divestitures

A.~~Acquisition of Express Scripts~~

~~On December 20, 2018, Cigna acquired Express Scripts~~Investment in CarepathRx Health Systems Solutions

In July 2023, Evernorth Health, Inc. became a minority owner in CarepathRx Health Systems Solutions ("CHSS"), through a ~~series~~$437 million equity method investment in CHSS JV LLC (a holding company for the CHSS business and a CarepathRx company). CarepathRx provides integrated hospital pharmacy solutions to support patients across their complete health care journey. By pairing Evernorth Health Services' diverse specialty and care expertise with CHSS' robust pharmacy and infusion management capabilities, technology solutions and health system relationships, we can further improve, expand and accelerate pharmacy care delivery for the growing number of ~~mergers (collectively,~~patients with chronic and complex care needs.

B.Divestiture of International Businesses

In July 2022, the ~~“Merger”). Cigna Holding~~ Company ~~(formerly named Cigna Corporation~~completed the sale of its life, accident and ~~referred to as “Old Cigna”~~supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) (the "Chubb transaction") for approximately $5.4 billion in cash. The Company recognized a gain of $1.7 billion pre-tax ($1.4 billion after-tax), which includes recognition of previously unrealized capital losses on investments sold and ~~Express Scripts each merged with and into~~translation loss on foreign currencies. In December 2022, the Company also divested its ownership interest in a wholly-owned subsidiary of Cigna. As a result of these transactions, Cigna became the parent of the combined company. Our 2018 Form 10-K includes detailed disclosures of merger consideration, purchase price allocation and intangible assets identifiedjoint venture in this transaction. The purchase price allocation was based on management’s preliminary estimates of their fair values and may change as additional information becomes available. For the three months ended March 31, 2019, there were no changes to the purchase price allocation.

B. Türkiye.

C.Integration and Transaction-related Costs

~~The~~

In the first six months of 2023 and 2022, the Company incurred ~~integration and transaction~~net costs related to ~~Express Scripts,~~ the ~~terminated merger with Anthem,~~Chubb transaction and continued strategic realignment. In 2022, the Company also incurred net costs related to the sale of the Group Disability and Life business and acquisition of MDLIVE, Inc. ~~(“Anthem”) and other transactions of $136~~These net costs were $6 million pre-tax ($~~108~~5 million after-tax) for the three months ended ~~March 31, 2019,~~and $7 million pre-tax ($6 million after-tax) for the six months ended June 30, 2023, compared with ~~$60~~$36 million pre-tax ($5026 million after-tax) for the three months ended ~~March 31, 2018.~~and $88 million pre-tax ($63 million after-tax) for the six months ended June 30, 2022. These costs consisted

primarily of certain projects to separate or integrate the Company's systems, products and services, fees for legal, advisory and other professional services and certain employment-related ~~costs and, in 2018, amortization of Bridge Facility fees.~~

costs.

Note 5 —6 – Earnings Per Share ~~(“EPS”)~~

Basic and diluted earnings per share were computed as follows:

Three Months Ended

March 31, 2019

March 31, 2018

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

Basic

Effect of
Dilution

Diluted

Basic

Effect of
Dilution

Diluted

Shareholders’ net income

$
1,368

$
1,368

$
915

$
915

Shares:

Weighted average

379,387

379,387

242,179

242,179

Common stock equivalents

4,637

4,637

3,609

3,609

Total shares

379,387

4,637

384,024

242,179

3,609

245,788

EPS

$
3.61

$
(0.05)

$
3.56

$
3.78

$
(0.06)

$
3.72


	Three Months Ended
	June 30, 2023						June 30, 2022
(Shares in thousands, dollars in millions, except per share amounts)	Basic		Effect of Dilution		Diluted		Basic		Effect of Dilution		Diluted
Shareholders' net income	$	1,460			$	1,460	$	1,557			$	1,557
Shares:
Weighted average	294,512				294,512		315,122				315,122
Common stock equivalents			2,367		2,367				3,182		3,182
Total shares	294,512		2,367		296,879		315,122		3,182		318,304
Earnings per share	$	4.96	$	(0.04)	$	4.92	$	4.94	$	(0.05)	$	4.89


	Six Months Ended
	June 30, 2023						June 30, 2022


(Shares in thousands, dollars in millions, except per share amounts)	Basic		Effect of Dilution		Diluted		Basic		Effect of Dilution		Diluted
Shareholders' net income	$	2,727			$	2,727	$	2,754			$	2,754
Shares:
Weighted average	295,105				295,105		316,795				316,795
Common stock equivalents			2,831		2,831				2,989		2,989
Total shares	295,105		2,831		297,936		316,795		2,989		319,784
Earnings per share	$	9.24	$	(0.09)	$	9.15	$	8.69	$	(0.08)	$	8.61

Amounts reflected above for the three and six months ended June 30, 2022 have been restated to reflect the impact of adopting amended accounting guidance for long-duration insurance contracts (discussed in Note 2 to the Consolidated Financial Statements).

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
March 31,

(In millions)

2019

2018

Anti-dilutive options

2.8

0.9

anti-dilutive:

Three Months Ended June 30, Six Months Ended June 30,
(In millions) 2023 2022 2023 2022
Anti-dilutive options 0.9 1.3 0.9 2.0

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

Note 6—7 – Debt

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

March 31,

December 31,

(In millions)

Issuer

2019

2018

Short-term debt

Current maturities: $1,000 million, 2.25% Senior Notes

Express Scripts

$
998

$
995

Current maturities: $337 million, 7.25% Senior Notes

ESI

340

343

Current maturities: $1,000 million, Floating Rate Notes due 2020

Cigna

998

-

Commercial paper

Old Cigna/Cigna

558

1,500

Other, including finance leases

Other

21

117

Total short-term debt

$
2,915

$
2,955

Long-term uncollateralized debt

Cigna debt (issued to finance acquisition)

$1,000 million, Floating Rate Notes due 2020

Cigna

$
-

$
997

$1,750 million, 3.2% Notes due 2020

Cigna

1,744

1,743

$1,000 million, Floating Rate Notes due 2021

Cigna

997

996

$1,250 million, 3.4% Notes due 2021

Cigna

1,246

1,245

$2,000 million, Floating Rate Term Loan due 2021

Cigna

1,998

2,997

$700 million, Floating Rate Notes due 2023

Cigna

697

697

$3,100 million, 3.75% Notes due 2023

Cigna

3,085

3,085

$2,200 million, 4.125% Notes due 2025

Cigna

2,187

2,187

$3,800 million, 4.375% Notes due 2028

Cigna

3,774

3,774

$2,200 million, 4.8% Notes due 2038

Cigna

2,178

2,178

$3,000 million, 4.9% Notes due 2048

Cigna

2,964

2,964

Express Scripts debt (assumed in acquisition)

$500 million, 4.125% Senior Notes due 2020

Medco

505

506

$500 million, 2.600% Senior Notes due 2020

Express Scripts

493

493

$400 million, Floating Rate Senior Notes due 2020

Express Scripts

400

399

$500 million, 3.300% Senior Notes due 2021

Express Scripts

499

499

$1,250 million, 4.750% Senior Notes due 2021

Express Scripts

1,282

1,285

$1,000 million, 3.900% Senior Notes due 2022

Express Scripts

998

998

$500 million, 3.050% Senior Notes due 2022

Express Scripts

482

481

$1,000 million, 3.000% Senior Notes due 2023

Express Scripts

961

959

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

Express Scripts

968

966

$1,500 million, 4.500% Senior Notes due 2026

Express Scripts

1,507

1,508

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

Express Scripts

1,390

1,386

$449 million, 6.125% Senior Notes due 2041

Express Scripts

493

493

$1,500 million, 4.800% Senior Notes due 2046

Express Scripts

1,465

1,465

Old Cigna debt (pre-acquisition)

$250 million, 4.375% Notes due 2020

Old Cigna

248

248

$300 million, 5.125% Notes due 2020

Old Cigna

298

298

$78 million, 6.37% Notes due 2021

CGC

78

78

$300 million, 4.5% Notes due 2021

Old Cigna

297

297

$750 million, 4% Notes due 2022

Old Cigna

746

746

$100 million, 7.65% Notes due 2023

Old Cigna

100

100

$17 million, 8.3% Notes due 2023

Old Cigna

17

17

$900 million, 3.25% Notes due 2025

Old Cigna

895

895

$600 million, 3.05% Notes due 2027

Old Cigna

595

595

$259 million, 7.875% Debentures due 2027

Old Cigna

259

259

$45 million, 8.3% Step Down Notes due 2033

Old Cigna

45

45

$191 million, 6.15% Notes due 2036

Old Cigna

190

190

$121 million, 5.875% Notes due 2041

Old Cigna

119

119

$317 million, 5.375% Notes due 2042

Old Cigna

315

315

$1,000 million, 3.875% Notes due 2047

Old Cigna

988

988

Other, including finance leases

Other

68

32

Total long-term debt

$
37,571

$
39,523

~~Notes issued to fund the Express Scripts acquisition.~~ ~~As presented~~


(In millions)	June 30, 2023		December 31, 2022
Short-term debt
Commercial paper	$	200	$	—
$17 million, 8.300% Notes due January 2023	—		17
$63 million, 7.650% Notes due March 2023	—		63
$700 million, Floating Rate Notes due July 2023	700		700
$1,000 million, 3.000% Notes due July 2023	1,000		994
$1,187 million, 3.750% Notes due July 2023	1,187		1,186
$500 million, 0.613% Notes due March 2024	499		—
$1,000 million, 3.500% Notes due June 2024	993		—
Other, including finance leases	39		33
Total short-term debt	$	4,618	$	2,993
Long-term debt





$500 million, 0.613% Notes due March 2024	—		499
$1,000 million, 3.500% Notes due June 2024	—		990
$900 million, 3.250% Notes due April 2025 (1)	870		872
$2,200 million, 4.125% Notes due November 2025	2,196		2,195
$1,500 million, 4.500% Notes due February 2026	1,503		1,503
$800 million, 1.250% Notes due March 2026	798		797
$700 million, 5.685% Notes due March 2026	697		—
$1,500 million, 3.400% Notes due March 2027	1,444		1,436
$259 million, 7.875% Debentures due May 2027	259		259
$600 million, 3.050% Notes due October 2027	597		597
$3,800 million, 4.375% Notes due October 2028	3,786		3,785
$1,500 million, 2.400% Notes due March 2030	1,492		1,492
$1,500 million, 2.375% Notes due March 2031 (1)	1,383		1,380
$45 million, 8.080% Step Down Notes due January 2033 (2)	45		45
$800 million, 5.400% Notes due March 2033	794		—
$190 million, 6.150% Notes due November 2036	190		190
$2,200 million, 4.800% Notes due August 2038	2,192		2,192
$750 million, 3.200% Notes due March 2040	743		743
$121 million, 5.875% Notes due March 2041	119		119
$448 million, 6.125% Notes due November 2041	488		488
$317 million, 5.375% Notes due February 2042	315		315
$1,500 million, 4.800% Notes due July 2046	1,466		1,466
$1,000 million, 3.875% Notes due October 2047	989		989
$3,000 million, 4.900% Notes due December 2048	2,969		2,968
$1,250 million, 3.400% Notes due March 2050	1,236		1,236
$1,500 million, 3.400% Notes due March 2051	1,478		1,478
Other, including finance leases	66		66
Total long-term debt	$	28,115	$	28,100

(1)The Company has entered into interest rate swap contracts hedging a portion of these fixed-rate debt instruments. See Note 11 in the ~~table above,~~Company's 2022 Form 10-K for further information about the Company's interest rate risk management and these derivative instruments.

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

Long-term debt

Debt Issuance. On March 7, 2023, the Company issued ~~private placement Notes with registration rights in the third quarter~~$1.5 billion of ~~2018 to finance the Express Scripts acquisition. Total~~new senior notes. The proceeds ~~were approximately $20.0 billion.~~of this issuance will be used for general corporate purposes, and may include repayment of outstanding debt securities. Interest on this debt is ~~generally~~ paid ~~semi-annually except~~semi-annually.

Principal

Maturity Date

Interest Rate

Net Proceeds

$700 million (1)

March 15, 2026

5.685%

$698 million

$800 million (2)

March 15, 2033

5.400%

$796 million

(1) Redeemable at any time discounted at the U.S. Treasury rate plus 20 basis points. Redeemable at par on or after March 15, 2024.

(2) Redeemable at any time discounted at the U.S. Treasury rate plus 25 basis points. Redeemable at par on or after December 15, 2032.

Short-term and Credit Facilities Debt

Revolving Credit Agreements. Our revolving credit agreements provide us with the ability to borrow amounts for ~~quarterly interest payments on~~general corporate purposes, including providing liquidity support if necessary under our commercial paper program discussed below. As of June 30, 2023, there were no outstanding balances under these revolving credit agreements.

In April 2023, The Cigna Group entered into the ~~floating rate notes.~~

~~Term Loan Credit Agreement.~~ ~~Cigna borrowed $3.0~~following revolving credit agreements (the "Credit Agreements"):

•a $4.0 billion ~~under its Term Loan Credit Agreement (the “Term Loan Credit Agreement”)~~five-year revolving credit and letter of credit agreement that will mature in April 2028 with an option to ~~finance~~extend the ~~Merger and~~maturity date for additional one-year periods, subject to ~~pay fees and expenses~~consent of the ~~Merger.~~banks. The Term Loan Credit Agreement contains customary covenants and restrictions, including a financial covenant that Cigna’s leverage ratio may not exceed 60%. There is no remaining amount available for borrowing under this agreement. In the first quarter of 2019, the Company ~~repaid $1 billion principal of the term loan. The remaining $2 billion term loan principal is diversified among 23 banks.~~

~~Revolving Credit Agreement.~~ ~~Cigna has a Revolving Credit and Letter of Credit Agreement (the “Revolving Credit Agreement”) that matures on April 6, 2023 and is diversified among 23 banks.~~

~~Cigna~~ can borrow up to ~~$3.25~~$4.0 billion under the credit agreement for general corporate purposes, with up to $500 million available for issuance of letters of credit.

•a $1.0 billion 364-day revolving credit ~~decreased by $22 million of letters of credit~~agreement that will mature in April 2024. The Company can borrow up to $1.0 billion under the ~~Revolving~~credit agreement for general corporate purposes. This agreement includes the option to "term out" any revolving loans that are outstanding at maturity by converting them into a term loan maturing on the one-year anniversary of conversion.

Each of the Credit ~~Agreement as of March 31, 2019. The Revolving Credit Agreement also includes~~Agreements include an option to increase ~~the facility~~commitments in an aggregate amount of up to ~~$500 million and~~$1.5 billion across both facilities for a maximum total commitment of $6.5 billion. The Credit Agreements allow for borrowings at either a base rate or an ~~option to extend~~adjusted term Secured Overnight Funding Rate ("SOFR") plus, in each case, an applicable margin based on the ~~termination date for additional one-year periods, subject to consent~~Company's senior unsecured credit ratings.

Each of the ~~banks.~~

~~The Revolving Credit Agreement~~two facilities is diversified among 21 large commercial banks, all of which had an A- equivalent or higher rating by at least one Nationally Recognized Statistical Rating Organization as of June 30, 2023. Each facility also contains customary covenants and restrictions, including a financial covenant that the ~~Company’s~~Company's leverage ratio, as defined in the Credit Agreements, may not exceed 60%.

~~Cigna is~~ subject to certain exceptions upon the ~~borrower under the Revolving~~consummation of an acquisition.

The Credit ~~Agreement~~Agreements replaced a prior $3.0 billion five-year revolving credit and ~~the Term Loan Credit Agreement~~letter of credit agreement maturing in April 2027; a $1.0 billion three-year revolving credit agreement maturing in April 2025; and ~~certain subsidiaries of Cigna may be required to guarantee these obligations under certain circumstances.~~

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

Commercial ~~Paper~~~~. The~~Paper. Under our commercial paper program, ~~had approximately $560 million outstanding~~we may issue short-term, unsecured commercial paper notes privately placed on a discounted basis through certain broker-dealers at ~~March 31, 2019 at~~any time not to exceed an aggregate amount of $5.0 billion. 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 average interest rate of ~~2.90%.~~

our commercial paper was 5.41% at June 30, 2023.

Debt Covenants. The Company was in compliance with its debt covenants as of ~~March 31, 2019.~~

June 30, 2023.

Interest Expense

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

Note 7—8 – Common and Preferred Stock

Dividends

In the first six months of 2023, The Cigna Group declared quarterly cash dividends of $1.23 per share of the Company's common stock. In the first six months of 2022, The Cigna Group declared quarterly cash dividends of $1.12 per share of the Company's common stock.

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

Record Date Payment Date Amount per Share
Total Amount Paid (in millions)
2023
March 8, 2023 March 23, 2023 $1.23 $368
June 7, 2023 June 22, 2023 $1.23 $362
2022
March 9, 2022 March 24, 2022 $1.12 $357
June 8, 2022 June 23, 2022 $1.12 $352

On July 26, 2023, the Board of Directors declared the third quarter cash dividend of $1.23 per share of The Cigna Group common stock to be paid on September 21, 2023 to shareholders of record on September 6, 2023. The Company currently intends to pay regular quarterly dividends, with future declarations subject to approval by its Board of Directors and the Board's determination that the declaration of dividends remains in the best interests of The Cigna Group and its shareholders. The decision of whether to pay future dividends and the amount of any such dividends will be based on the Company's financial position, results of operations, cash flows, capital requirements, the requirements of applicable law and any other factors the Board may deem relevant.

Note 9 – Insurance and Contractholder Liabilities

A.Account Balances —– Insurance and Contractholder Liabilities

~~As of March 31, 2019, December 31, 2018 and March 31, 2018, the Company’s~~

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

March 31, 2019

December 31, 2018

March 31, 2018

(In millions)

Current

Non-
current

Total

Current

Non-
current

Total

Total

Contractholder deposit funds

$
621

$
7,326

$
7,947

$
641

$
7,365

$
8,006

$
8,153

Future policy benefits

643

9,048

9,691

740

8,981

9,721

9,934

Unpaid claims and claim expenses

Integrated Medical

2,943

18

2,961

2,678

19

2,697

2,638

Other segments

2,421

3,304

5,725

2,394

3,230

5,624

5,502

Unearned premiums

432

347

779

348

379

727

1,291

Total insurance and contractholder liabilities

$
7,060

$
20,043

$
27,103

$
6,801

$
19,974

$
26,775

$
27,518


	June 30, 2023						December 31, 2022						June 30, 2022
(In millions)	Current		Non-current		Total		Current		Non-current		Total		Total
Unpaid claims and claim expenses
Cigna Healthcare	$	5,257	$	79	$	5,336	$	4,117	$	59	$	4,176	$	4,490
Other Operations	110		187		297		107		177		284		709
Future policy benefits
Cigna Healthcare	60		535		595		43		544		587		634
Other Operations	297		3,290		3,587		150		3,442		3,592		7,512
Contractholder deposit funds
Cigna Healthcare	13		145		158		14		157		171		185
Other Operations	364		6,283		6,647		351		6,358		6,709		6,801
Market risk benefits	35		1,034		1,069		51		1,217		1,268		1,403
Unearned premiums	1,403		22		1,425		576		22		598		985
Total													22,719
Insurance and contractholder liabilities classified as Liabilities of businesses held for sale (1)													(4,427)
Total insurance and contractholder liabilities	$	7,539	$	11,575	$	19,114	$	5,409	$	11,976	$	17,385	$	18,292

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

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

The Company adopted amended accounting guidance for long-duration insurance contracts on January 1, 2023, discussed further in Note 2 to the Consolidated Financial Statements, which resulted in restatement of prior period amounts. Additionally, see below updated accounting policies and incremental disclosures associated with future policy benefits (Note 9C), contractholder deposit funds (Note 9D), and market risk benefits (Note 9E).

B.Unpaid Claims and Claim Expenses ~~— Integrated Medical~~

– Cigna Healthcare

This liability reflects estimates of the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process), and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities. This liability no longer includes amounts from the international health care business now reported in International Markets following our change in segment reporting in the fourth quarter of 2018. The prior year presentation has been updated to reflect this segment change.

The total of incurred but not reported liabilities plus expected development on reported claims, including reported claims in process, was ~~$2.7~~$5.0 billion at ~~March 31, 2019~~June 30, 2023 and ~~$2.5~~$4.1 billion at ~~March 31, 2018.~~

June 30, 2022.

Activity, net of intercompany transactions, in the unpaid claims liability for the ~~Integrated Medical~~Cigna Healthcare segment ~~for the three months ended March 31~~ was as follows:

Three Months Ended

March 31,

March 31,

(In millions)

2019

2018

Beginning balance

$
2,697

$
2,420

Less: Reinsurance and other amounts recoverable

264

262

Beginning balance, net

2,433

2,158

Incurred costs related to:

Current year

6,095

5,284

Prior years

(117)

(115)

Total incurred

5,978

5,169

Paid costs related to:

Current year

3,786

3,382

Prior years

1,908

1,540

Total paid

5,694

4,922

Ending balance, net

2,717

2,405

Add: Reinsurance and other amounts recoverable

244

233

Ending balance

$
2,961

$
2,638


	Six Months Ended
(In millions)	June 30, 2023		June 30, 2022


Beginning balance	$	4,176	$	4,261
Less: Reinsurance and other amounts recoverable	221		261
Beginning balance, net	3,955		4,000

Incurred costs related to:
Current year	17,974		15,751
Prior years	(202)		(268)
Total incurred	17,772		15,483
Paid costs related to:
Current year	13,408		11,900
Prior years	3,199		3,290
Total paid	16,607		15,190

Ending balance, net	5,120		4,293
Add: Reinsurance and other amounts recoverable	216		197
Ending balance	$	5,336	$	4,490

Reinsurance and other amounts recoverable reflect amounts due from reinsurers and policyholders to cover incurred but not reported and pending claims ~~for~~of certain business ~~where~~for which the Company administers the plan benefits ~~but the~~without any right of ~~offset does not exist.~~offset. See Note 810 to the Consolidated Financial Statements for additional information on reinsurance.

Variances in incurred costs related to prior ~~years’~~years' unpaid claims and ~~claims~~claim expenses that resulted from the differences between actual experience and the ~~Company’s~~Company's key assumptions were as ~~follows for the three months ended March 31:~~

Three Months Ended

(Dollars in millions)

March 31, 2019

March 31, 2018

$

%(1)

$

%(2)

Actual completion factors

$
55

0.2
  %
$
52

0.3
  %
Medical cost trend

62

0.3

54

0.3

Other

-

-

9

-

Total favorable variance

$
117

0.5
  %
$
115

0.6
  %

follows:

Six Months Ended
June 30, 2023 June 30, 2022
(Dollars in millions) $
% (1)
$
% (2)
Actual completion factors $ 29 0.1 % $ 84 0.2 %
Medical cost trend 173 0.5 184 0.6
Total favorable variance $ 202 0.6 % $ 268 0.8 %

(1)Percentage of current year incurred costs as reported for the year ended December 31, ~~2018.~~

2022.

(2)Percentage of current year incurred costs as reported for the year ended December 31, ~~2017.~~

~~Incurred costs related to prior years in the table above, although adjusted through shareholders’ net income, do not directly correspond to an increase or~~ ~~decrease to shareholders’~~ ~~net income~~. ~~The primary~~ ~~reason for this difference~~ is that decreases to prior year incurred costs pertaining to the portion of the liability established for moderately adverse conditions are not considered as impacting shareholders’ net income if they are offset by increases in the current year provision for moderately adverse conditions.

~~Prior year development increased shareholders’ net income by $~~39 ~~million ($~~50 ~~million before tax) for the three months ended March 31, 2019, compared with $~~40 ~~million ($~~51 ~~million before tax) for the three months ended March 31, 2018. Favorable~~2021.

Favorable prior year development in both ~~periods~~years reflects lower than expected utilization of medical ~~services.~~

services as compared to our assumptions.

C.~~Unpaid Claims~~Future Policy Benefits

Accounting Policy. Future policy benefits represent the present value of estimated future obligations, estimated using actuarial methods, for long-duration insurance policies and ~~Claim Expenses — International Markets~~annuity products currently in force, consisting primarily of reserves for annuity contracts, life insurance benefits, and ~~Group Disability~~certain supplemental health products that are guaranteed renewable beyond one year.

Contracts are grouped at a level no higher than issue year, based on the original contract issue date, and ~~Other~~

~~This~~at lower levels of disaggregation within each issue year for certain businesses to reflect factors including product type, plan type and currency. Management estimates these obligations based on assumptions for premiums, interest rates, mortality or morbidity, future claim adjudication expenses and surrenders. Mortality, morbidity and surrender assumptions are based on the Company's own experience and published actuarial tables, and are updated at least annually, to the extent changes in circumstances require. Interest rate

assumptions are based onmarket-level yields for low credit risk fixed income instruments ("upper-medium grade fixed income instrument"). For interest accretion purposes, interest rates are fixed at the year of the cohort's inception, however for purposes of liability ~~now~~measurement, are updated to the current rate quarterly, with all changes in the interest rate from inception to current period reported through Accumulated other comprehensive loss. For contracts issued domestically, we use observable inputs from a published spot rate curve for terms up to 30 years and extrapolate for longer terms using a constant forward rate approach. For contracts issued by foreign operating entities with functional currencies other than the U.S. dollar, we use observable inputs to approximate a risk free rate and add a credit spread adjustment to align with a low credit risk fixed income instrument. For terms beyond the last observable risk free rates, which vary by international market, we extrapolate to the ultimate forward rate assuming a constant credit spread.

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

Cigna Healthcare

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


	As of
	June 30, 2023		June 30, 2022
Interest accretion rate	2.20	%	2.72	%
Current discount rate	5.36	%	4.87	%
Weighted average duration	7.8 years		7.2 years

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


	Six Months Ended
(In millions)	June 30, 2023		June 30, 2022


Present value of expected net premiums
Beginning balance	$	8,557	$	9,314
Reversal of effect of beginning of period discount rate assumptions	1,537		(367)
Effect of assumption changes and actual variances from expected experience	51		—
Issuances and lapses	570		434
Net premiums collected	(658)		(623)
Interest and other (1)	106		89
Ending balance at original discount rate	10,163		8,847
Effect of end of period discount rate assumptions	(1,491)		(923)
Ending balance (2)	$	8,672	$	7,924

Present value of expected policy benefits
Beginning balance	$	8,945	$	9,794
Reversal of effect of discount rate assumptions	1,611		(379)
Effect of assumption changes and actual variances from expected experience	54		—
Issuances and lapses	558		565
Benefit payments	(661)		(768)
Interest and other (1)	121		105
Ending balance at original discount rate	10,628		9,317
Effect of discount rate assumptions	(1,565)		(958)
Ending balance (3)	$	9,063	$	8,359

Liability for future policy benefits	$	391	$	435
Other (4)	204		199
Total liability for future policy benefits (5)	$	595	$	634

(1)Includes the foreign exchange rate impact of translating from transactional and functional currency to United States dollar and the impact of flooring the liability at zero. The flooring impact is calculated at the cohort level after discounting the reserves at the current discount rate.

(2)As of June 30, 2023 and June 30, 2022, respectively, undiscounted expected future gross premiums were $17.7 billion and $13.7 billion. As of June 30, 2023 and June 30, 2022, respectively, discounted expected future gross premiums were $12.3 billion and $10.2 billion.

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

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

(5)$154 million and $150 million of reinsurance recoverable asset reported in the Consolidated Balance Sheets as of June 30, 2023 and June 30, 2022, respectively, relate to the liability for future policy benefits.

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:


	As of
	June 30, 2023		June 30, 2022
Interest accretion rate	5.64	%	5.64	%
Current discount rate	5.02	%	4.52	%
Weighted average duration	11.7 years		12.4 years

Obligations for annuities represent discounted periodic benefits to be paid to an individual or groups of individuals over their remaining lives. Other Operations' traditional insurance contracts, which are in run-off, have no premium remaining to be collected; therefore, future policy benefit reserves represent the present value of expected future policy benefits, discounted using the current discount rate and the remaining amortizable DPL.

Future policy benefits for Other Operations includes DPL of $386 million as of June 30, 2023 and $380 million as of June 30, 2022. Future policy benefits excluding DPL were $3.2 billion as of both June 30, 2023 and December 31, 2022 and $3.5 billion and

$4.3 billion as of June 30, 2022 and December 31, 2021, respectively. These balances exclude amounts ~~from international health care following our~~classified as Liabilities of businesses held for sale of $3.6 billion as of June 30, 2022 and $3.8 billion as of December 31, 2021. The change in ~~segment reporting~~future policy benefits reserves year-to-date was primarily driven by changes in ~~2018~~the current discount rate.

Undiscounted expected future policy benefits were $4.5 billion as ~~discussed~~of June 30, 2023 and $4.7 billion as of June 30, 2022. As of June 30, 2023 and June 30, 2022, $1.0 billion and $1.1 billion of the future policy benefit reserve was recoverable through treaties with external reinsurers.

D.Contractholder Deposit Funds

Accounting Policy. Liabilities for contractholder deposit funds primarily include deposits received from customers for investment-related and universal life products as well as investment earnings on their fund balances in ~~Note 1. The prior year presentation has been updated~~Other Operations. These liabilities are adjusted to reflect ~~this segment change.~~

~~Liability~~administrative charges and, for universal life fund balances, mortality charges. Interest credited on these funds is accrued ratably over the contract period.

Contractholder deposit fund liabilities within Other Operations were $6.6 billion as of June 30, 2023 and $6.7 billion as of December 31, 2022 and $6.8 billion and $6.9 billion as of June 30, 2022 and December 31, 2021, respectively. Approximately 38% of the balance ~~details.~~ ~~The liability details for unpaid claims and claim expenses are as follows:~~

(In millions)

March 31, 2019

March 31, 2018

Group Disability and Other

Group Disability and Life

$
4,786

$
4,549

Other Operations

194

175

Total Group Disability and Other

4,980

4,724

International Markets

745

778

Unpaid claims and claim expenses Group Disability and Other and International Markets

$
5,725

$
5,502

~~Interest~~ is ~~accreted and recognized~~reinsured externally. Activity in ~~medical costs and other benefit expenses~~these liabilities is presented net of reinsurance in the Consolidated Statements of ~~Income.~~

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

As of June 30, 2023, the weighted average crediting rate, net amount at risk and cash surrender value for contractholder deposit fund liabilities not externally reinsured were 3.26%, $3.2 billion and $2.8 billion, respectively. The comparative amounts as of June 30, 2022 were 3.20%, $3.4 billion and $2.8 billion, respectively. As of both June 30, 2023 and June 30, 2022, more than 99% of the $4.1 billion liability not reinsured externally is for contracts with guaranteed interest rates of 3% - 4%, and approximately $1.2 billion represented contracts with policies at the guarantee. At both of these same period ends, $1.2 billion was 50-150 basis points ("bps") above the guarantee and the remaining $1.7 billion represented contracts above the guarantee that pay the policyholder based on the greater of a guaranteed minimum cash value or the actual cash value. More than 90% of these contracts have actual cash values of at least 110% of the guaranteed cash value.

E.Market Risk Benefits

Liabilities for market risk benefits consist of variable annuity reinsurance contracts (also referred to as GMDB and GMIB contracts) in Other Operations. These liabilities arise under annuities and riders to annuities written by ceding companies that guarantee the benefit received at death and, for a subset of policies, also provide contractholders the option, within 30 days of a policy anniversary after the appropriate waiting period, to elect minimum income payments. The Company's capital market risk exposure on variable annuity reinsurance contracts arises when the reinsured guaranteed minimum benefit exceeds the contractholder's account value in the ~~Company’s~~related underlying mutual funds at the time the insurance benefit is payable under the respective contract. The Company receives and pays premium periodically based on the terms of the reinsurance agreements.

Accounting Policy. Variable annuity reinsurance liabilities ~~for unpaid claims and claim~~are measured as MRBs at fair value, net of nonperformance risk, with fluctuations in value gross of reinsurer nonperformance risk reported in benefit expenses ~~excluding Other Operations, are presented~~while fluctuations in the ~~following table.~~ ~~Liabilities associated with Other Operations~~Company's own nonperformance risk (own credit risk) are ~~excluded~~reported in Accumulated other comprehensive loss. Nonperformance risk reflects risk that a party might default and therefore not fulfill its obligations (i.e. nonpayment risk). The nonperformance risk adjustment reflects a market participant's view of nonpayment risk by adding an additional spread to the discount rate in the calculation of both (a) the variable annuity reinsurance liabilities to be paid by the Company and (b) the variable annuity reinsurance assets to be paid by the reinsurers, after considering collateral. The Company classifies variable annuity assets and liabilities in Level 3 of the fair value hierarchy described in Note 12 to the Consolidated Financial Statements because ~~they pertain~~assumptions related to ~~obligations for long-duration insurance contracts or, if short-duration,~~future annuitant behavior are largely unobservable. As discussed further in Note 10 to the Consolidated Financial Statements, due to the reinsurance agreements covering these liabilities, the liabilities ~~have been fully reinsured.~~

Three Months Ended

(In millions)

March 31, 2019

March 31, 2018

Beginning balance

$
5,432

$
5,274

Less: Reinsurance

156

140

Beginning balance, net

5,276

5,134

Incurred claims related to:

Current year

1,428

1,393

Prior years:

Interest accretion

38

38

All other incurred

(32)

(61)

Total incurred

1,434

1,370

Paid claims related to:

Current year

474

471

Prior years

856

853

Total paid

1,330

1,324

Foreign currency

(7)

2

Ending balance, net

5,373

5,182

Add: Reinsurance

158

145

Ending balance

$
5,531

$
5,327

~~Reinsurance~~do not generally impact net income except for the change in nonperformance risk on the ~~table above reflects amounts due from reinsurers~~reinsurance recoverable, which is reported in benefit expenses and does not offset the nonperformance risk valuation on the liability. Variable annuity liabilities are established using capital market assumptions and assumptions related to ~~unpaid claims liabilities.~~ future annuitant behavior (including mortality, lapse and annuity election rates).

Market risk benefits activity was as follows:


	Six Months Ended
(In millions)	June 30, 2023		June 30, 2022


Balance, beginning of year	$	1,268	$	1,824
Balance, beginning of year, before the effect of nonperformance risk (own credit risk)	1,379		1,949
Changes due to expected run-off	(14)		(33)
Changes due to capital markets versus expected	(194)		(441)
Changes due to policyholder behavior versus expected	8		(8)
Assumption changes	(32)		39
Balance, end of period, before the effect of changes in nonperformance risk (own credit risk)	1,147		1,506
Nonperformance risk (own credit risk), end of period	(78)		(103)
Balance, end of period	$	1,069	$	1,403
Reinsured market risk benefit, end of period	$	1,143	$	1,500

The ~~Company’s~~following table presents the net amount at risk and the average attained age of contractholders (weighted by exposure) for contracts assumed by the Company. The net amount at risk is the amount the Company would have to pay to contractholders if all deaths or annuitizations occurred as of the earliest possible date in accordance with the insurance contract. The Company should be reimbursed in full for these payments unless the Berkshire reinsurance limit is exceeded, as discussed further in Note 10 to the Consolidated Financial Statements.


(Dollars in millions, excludes impact of reinsurance ceded)	June 30, 2023		June 30, 2022
Net amount at risk	$	1,871	$	2,728
Average attained age of contractholders (weighted by exposure)	76.3 years		74.2 years

Note 10 – Reinsurance

The Company's insurance subsidiaries enter into agreements with other insurance companies ~~primarily~~ to limit losses from large exposures and to permit recovery of a portion of incurred losses. ~~See Note 8 for additional information on reinsurance.~~

The majority of the liability for unpaid claims and claim expenses is related to disability claims with long-tailed payouts. Interest earned on assets backing these liabilities is an integral part of pricing and reserving. Therefore, interest accreted on prior year balances is shown as a separate component of prior year incurred claims. This interest is calculated by applying the average discount rate used in determining the liability balance to the average liability balance over the period. The remaining prior year incurred claims amount primarily reflects updates to the Company’s liability estimates and variances between actual experience during the period relative to the assumptions and expectations reflected in determining the liability. Assumptions reflect the Company’s expectations over the life of the book of business and will vary from actual experience in any period, both favorably and unfavorably, with variation in resolution rates being the most significant driver for the long-term disability business. Favorable prior year incurred claims for the three months ended March 31, 2019 primarily reflect favorable life loss ratio experience, partially offset by unfavorable long-term disability resolution rate experience. Favorable prior year incurred claims reported for the three months ended March 31, 2018 primarily reflected favorable life loss ratio experience.

~~Note 8~~ — ~~Reinsurance~~

~~The Company’s insurance subsidiaries enter into agreements with other insurance companies to assume~~ ~~and cede reinsurance.~~ Reinsurance is ceded primarily in acquisition and disposition transactions when the underwriting company is not being acquired. ~~Reinsurance is also used to limit losses from large exposures and to permit recovery of a portion of direct or assumed losses.~~ Reinsurance does not relieve the originating insurer of liability. Therefore, reinsured liabilities must continue to be reported along with the related reinsurance recoverables. The Company regularly evaluates the financial condition of its reinsurers and monitors concentrations of its credit risk.

A.Reinsurance Recoverables

The majority of the ~~Company’s~~Company's reinsurance recoverables resulted from acquisition and disposition transactions in which the underwriting company was not acquired. Components of the Company’s reinsurance recoverables are presented in the following table. The table below includes $280 million as of March 31, 2019 and $297 million as of December 31, 2018 of current reinsurance recoverables that are reported in other current assets.

(Dollars in millions)
Line of Business

Reinsurer(s)

March 31,
2019

December 31,
2018

Collateral and Other Terms at March 31, 2019

Ongoing Operations

Integrated Medical, International Markets, Group Disability, COLI

Various

$
470

$
464

Balances range from less than $1 million up to $65 million. Over 70% of the balance is from companies rated as investment grade by Standard & Poor’s.

Total recoverables related to ongoing operations

470

464

Acquisition, disposition or runoff activities

Individual Life and Annuity (sold in 1998)

Lincoln National Life and Lincoln Life & Annuity of New York

3,254

3,312

Both companies’ ratings were well above the level that would trigger a contractual obligation to fully secure the outstanding balance.

GMDB (effectively exited in 2013)

Berkshire

844

893

100% secured by assets in a trust.

Retirement Benefits Business (sold in 2004)

Prudential Retirement Insurance and Annuity

761

787

100% secured by assets in a trust.

Supplemental Benefits Business (2012 acquisition)

Great American Life

254

261

100% secured by assets in a trust.

Other

Various

82

87

100% secured by assets in a trust or other deposits.

Total recoverables related to acquisition, disposition or runoff activities

5,195

5,340

Total reinsurance recoverables

$
5,665

$
5,804

The Company bears the risk of loss if its reinsurers and retrocessionaires do not meet or are unable to meet their reinsurance obligations to the Company. The Company reviews its reinsurance arrangements and establishes reserves against the recoverables ~~if recovery is not considered probable.~~

B. ~~Effects~~primarily for expected credit losses.

The Company's reinsurance recoverables as of ~~Reinsurance~~

~~The~~June 30, 2023 are presented at amount due by range of external credit rating and collateral level in the following table, ~~presents direct, assumed~~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		Collateral provisions exist that may mitigate risk of credit loss (3)		No collateral		Total
Ongoing Operations
A- equivalent and higher current ratings (1)	$	—	$	—	$	95	$	95
BBB- to BBB+ equivalent current credit ratings (1)	—		—		59		59
Not rated	150		1		90		241
Total recoverables related to ongoing operations (2)	150		1		244		395
Acquisition, disposition or run-off activities
BBB+ equivalent and higher current ratings (1)
Lincoln National Life and Lincoln Life & Annuity of New York	—		2,750		—		2,750
Empower Annuity Insurance Company	—		—		130		130
Prudential Insurance Company of America	364		—		—		364
Life Insurance Company of North America	—		382		—		382
Other	179		29		15		223

Not rated	—		8		4		12
Total recoverables related to acquisition, disposition or run-off activities	543		3,169		149		3,861
Total reinsurance recoverables before market risk benefits	$	693	$	3,170	$	393	$	4,256
Allowance for uncollectible reinsurance							(35)
Market risk benefits (4)							1,143
Total reinsurance recoverables (2)							$	5,364

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

(2)Includes $221 million of current reinsurance recoverables that are reported in Other current assets.

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

(4)Total Berkshire and ~~ceded premiums for both short-duration and long-duration insurance contracts. It also presents reinsurance recoveries that have been netted against benefit expenses~~certain Other recoverables reflected under acquisition, disposition or run-off activities in the ~~Company’s~~Company's 2022 Form 10-K that relate to the Company's variable annuity reinsurance products discussed in section B below are now reported at fair market value as MRBs, as further discussed in Note 9 to the Consolidated ~~Statements~~Financial Statements. At December 31, 2022, we reported $711 million of ~~Income.~~

Three Months Ended

(In millions)

March 31,
2019

March 31,
2018

Ceded Premiums

Individual life insurance and annuity business sold

$
34

$
37

Other

96

98

Total ceded premiums

130

135

Reinsurance recoveries

Individual life insurance and annuity business sold

55

57

Other

4

47

Total reinsurance recoveries

$
59

$
104

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

Collateral levels are defined internally based on the fair value of the collateral relative to the carrying amount of the reinsurance ~~on written premiums~~recoverable, the frequency at which collateral is required to be replenished and the potential for ~~short-duration contracts were not materially different from the recognized premium amounts shown~~volatility in the ~~table above.~~

C. collateral's fair value.

B.Effective Exit of ~~GMDB and GMIB~~Variable Annuity Reinsurance Business

The Company entered into an agreement with Berkshire to effectively exit the ~~GMDB and GMIB~~variable annuity reinsurance business via a reinsurance transaction in 2013. Variable annuity contracts are accounted for as assumed and ceded reinsurance and categorized as market risk benefits as discussed in Note 9 to the Consolidated Financial Statements. Berkshire reinsured 100% of the ~~Company’s~~Company's future ~~claim payments~~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 ~~$3.3~~$3.1 billion remaining at ~~March 31, 2019.~~

GMDB is accounted for as reinsurance and GMIB assets and liabilities are reported as derivatives at fair value as discussed below. GMIB assets are reported in other current assets and other assets, and GMIB liabilities are reported in accrued expenses and other liabilities and other non-current liabilities.

~~GMDB~~

The GMDB exposure arises under annuities written by ceding companies that guarantee the benefit received at death. The Company’s exposure arises when the guaranteed minimum death benefit exceeds the fair valueJune 30, 2023. As a result of the ~~related mutual fund investments~~reinsurance transaction, amounts payable are offset by a corresponding reinsurance recoverable, provided the increased recoverable remains within the overall Berkshire limit.


(In millions)
Reinsurer (1)	June 30, 2023		December 31, 2022		Collateral and Other Terms at June 30, 2023
Berkshire	$	917	$	1,116	95% were secured by assets in a trust.
Sun Life Assurance Company of Canada	105		115
Liberty Re (Bermuda) Ltd.	115		128		100% were secured by assets in a trust.
SCOR SE	31		39		75% were secured by a letter of credit.
Market risk benefits (2)	$	1,168	$	1,398

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

(2)Includes IBNR and outstanding claims of $28 million offset by premium due of $3 million. These amounts are excluded from market risk benefits at ~~the time of a contractholder’s death.~~

The following table presents the account value, net amount at risk and the number of contractholders for guarantees assumed by the Company in the event of death. The net amount at risk is the amount that the Company would have to pay if all contractholders died as of the specified date. Unless the Berkshire reinsurance limit is exceeded, the Company should be reimbursed in full for these payments.

(Dollars in millions, excludes impact of reinsurance ceded)

March 31, 2019

December 31, 2018

Account value

$
8,996

$
8,402

Net amount at risk

$
1,943

$
2,466

Number of contractholders (estimated)

215,000

220,000

~~GMIB~~

The Company reinsured contracts with issuers of GMIB products. The Company’s exposure represents the excess of a contractually guaranteed amount over the level of variable annuity account values. Payment by the Company depends on the actual account value in the underlying mutual funds and the level of interest rates when the contractholders elect to receive minimum income payments that can only occur withinJune 30, days of a policy anniversary after the appropriate waiting period. The Company has purchased retrocessional coverage (“GMIB assets”), including retrocessional coverage from Berkshire, for these contracts.

~~Assumptions used in fair value measurement.~~ GMIB assets and liabilities are established using capital market assumptions and assumptions related to future annuitant behavior (including mortality, lapse, and annuity election rates). The Company classifies GMIB assets and liabilities in Level 3 of the fair value hierarchy described2023 in Note ~~10 because assumptions related to future annuitant~~ ~~behavior~~ ~~are largely unobservable.~~

~~The only assumption expected to impact future shareholders’ net income is non-performance risk.~~ ~~The non-performance risk adjustment reflects a market participant’s view of nonpayment risk by adding an additional spread~~9 and Note 10A to the ~~discount rate in~~Consolidated Financial Statements. At December 31, 2022, IBNR and outstanding claims of $27 million offset by premium due of $3 million were excluded from the ~~calculation~~market risk benefits as restated due to the adoption of ~~both (a) the GMIB liabilities to be paid by the Company, and (b) the GMIB assets to be paid by the reinsurers, after considering collateral.~~ LDTI.

The impact of ~~non-performance~~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 ~~March 31, 2019~~June 30, 2023 and ~~2018.~~

GMIB liabilities totaling $700 million as of March 31, 2019 and $706 million as of December 31, 2018 were reported in accrued expenses and other liabilities and other non-current liabilities. There were three reinsurers covering 100% of the GMIB exposures as of March 31, 2019 and December 31, 2018 as follows:

(In millions)
Line of Business

Reinsurer

March 31,
2019

December 31,
2018

Collateral and Other Terms at March 31, 2019

GMIB

Berkshire

  $
339

  $
341

100% were secured by assets in a trust.

Sun Life Assurance Company of Canada

206

208

Liberty Re (Bermuda) Ltd.

183

184

94% were secured by assets in a trust.

Total GMIB recoverables reported in other current assets and other assets

  $
728

  $
733

~~Amounts included in shareholders net income for GMIB assets and liabilities were not material for the three months ended March 31, 2019 or 2018.~~

June 30, 2022.

Note 9 —11 – Investments

~~Cigna’s~~

The Cigna Group's investment portfolio consists of a broad range of investments including debt ~~and~~securities, equity securities, commercial mortgage loans, policy loans, other long-term investments, short-term investments and derivative financial instruments. The sections below provide more detail regarding our investment balances ~~net investment income~~ and realized investment gains and losses. See Note 1012 to the Consolidated Financial Statements for information about the valuation of the ~~Company’s~~Company's investment portfolio.

March 31, 2019

December 31, 2018

(In millions)

Current

Long-term

Total

Current

Long-term

Total

Debt securities

   $
1,363

   $
21,806

   $
23,169

   $
1,320

   $
21,608

   $
22,928

Equity securities

-

210

210

377

171

548

Commercial mortgage loans

32

1,832

1,864

32

1,826

1,858

Policy loans

-

1,403

1,403

-

1,423

1,423

Other long-term investments

-

2,006

2,006

-

1,901

1,901

Short-term investments

267

-

267

316

-

316

Total

   $
1,662

   $
27,257

   $
28,919

   $
2,045

   $
26,929

   $
28,974

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

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

June 30, 2023 December 31, 2022
(In millions) Current Long-term Total Current Long-term Total
Debt securities $ 574 $ 8,894 $ 9,468 $ 654 $ 9,218 $ 9,872
Equity securities 42 3,320 3,362 45 577 622
Commercial mortgage loans 104 1,483 1,587 67 1,547 1,614
Policy loans — 1,232 1,232 — 1,218 1,218
Other long-term investments — 4,038 4,038 — 3,728 3,728
Short-term investments 152 — 152 139 — 139
Total $ 872 $ 18,967 $ 19,839 $ 905 $ 16,288 $ 17,193

A.Investment Portfolio

Debt Securities

Accounting policy. Our accounting policy for debt securities (including bonds, mortgage and other asset-backed securities and preferred stocks redeemable by the investor) remains materially consistent with the policy disclosed in the Company's 2022 Form 10-K. However, with the adoption of amended accounting guidance for long-duration insurance contracts on January 1, 2023 (discussed in Note 2 to the Consolidated Financial Statements), net unrealized appreciation on debt securities supporting the Company's run-off settlement annuity business is no longer reported in Non-current insurance and contractholder liabilities but rather is reported in Accumulated other comprehensive loss. See Note 14 to the Consolidated Financial Statements for the retrospectively restated Accumulated other comprehensive loss.

The amortized cost and fair value by contractual maturity periods for debt securities were as follows ~~at March 31, 2019:~~

Amortized

Fair

(In millions)

Cost

Value

Due in one year or less

     $
1,366

     $
1,370

Due after one year through five years

6,516

6,684

Due after five years through ten years

9,529

9,682

Due after ten years

4,231

4,925

Mortgage and other asset-backed securities

494

508

Total

     $
22,136

     $
23,169

as of June 30, 2023:



(In millions)	Amortized Cost		Fair Value
Due in one year or less	$	605	$	591
Due after one year through five years	3,892		3,649
Due after five years through ten years	3,069		2,732
Due after ten years	2,336		2,131
Mortgage and other asset-backed securities	406		365
Total	$	10,308	$	9,468

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

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

Amortized

Unrealized

Unrealized

Fair

(In millions)

Cost

Appreciation

Depreciation

Value

March 31, 2019

Federal government and agency

$
513

$
221

$
(1)

$
733

State and local government

851

77

-

928

Foreign government

2,126

183

(4)

2,305

Corporate

18,152

676

(133)

18,695

Mortgage and other asset-backed

494

21

(7)

508

Total

$
22,136

$
1,178

$
(145)

$
23,169

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

$
2,269

$
555

$
(13)

$
2,811

December 31, 2018

Federal government and agency

$
507

$
204

$
(1)

$
710

State and local government

920

66

(1)

985

Foreign government

2,214

155

(7)

2,362

Corporate

18,403

411

(453)

18,361

Mortgage and other asset-backed

506

16

(12)

510

Total

$
22,550

$
852

$
(474)

$
22,928

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

$
2,264

$
479

$
(40)

$
2,703

~~(1) Net unrealized appreciation for these investments is excluded from accumulated other comprehensive income.~~

below:

(In millions) Amortized
Cost Allowance for Credit Loss Unrealized
Appreciation Unrealized
Depreciation Fair
Value
June 30, 2023
Federal government and agency $ 276 $ — $ 26 $ (11) $ 291
State and local government 41 — — (2) 39
Foreign government 361 — 10 (20) 351
Corporate 9,224 (39) 99 (862) 8,422
Mortgage and other asset-backed 406 — 1 (42) 365
Total $ 10,308 $ (39) $ 136 $ (937) $ 9,468
December 31, 2022
Federal government and agency $ 292 $ — $ 32 $ (12) $ 312
State and local government 43 — — (2) 41
Foreign government 375 — 11 (21) 365
Corporate 9,742 (44) 89 (981) 8,806
Mortgage and other asset-backed 390 — 1 (43) 348
Total $ 10,842 $ (44) $ 133 $ (1,059) $ 9,872

Review of declines in fair value. Management reviews impaired debt securities ~~with~~to determine whether a ~~decline in fair value from cost for impairment~~credit loss allowance is needed based on criteria that include:

·~~length of time and~~

•severity of decline;

•financial health and specific ~~near term~~ prospects of the issuer;

· and

•changes in the regulatory, economic or general market environment of the ~~issuer’s~~issuer's industry or geographic ~~region; and~~

·~~the Company’s intent to sell or the likelihood of a required sale prior to recovery.~~

~~Management believes the unrealized depreciation below to be temporary based on this review, and therefore has not impaired these amounts.~~ region.

The table below summarizes debt securities with a decline in fair value from amortized cost for which an allowance for credit losses has not been recorded, by investment grade and the length of time these securities have been in an unrealized loss position.

March 31, 2019

December 31, 2018

Fair

Amortized

Unrealized

Number

Fair

Amortized

Unrealized

Number
(Dollars in millions)

Value

Cost

Depreciation

of Issues

Value

Cost

Depreciation

of Issues
One year or less

Investment grade

     $
715

     $
734

     $
(19)

190

     $
7,127

     $
7,367

     $
(240)

1,324
Below investment grade

     $
324

     $
328

     $
(4)

393

     $
1,185

     $
1,240

     $
(55)

1,190
More than one year

Investment grade

     $
4,431

     $
4,532

     $
(101)

919

     $
3,023

     $
3,181

     $
(158)

784
Below investment grade

     $
455

     $
476

     $
(21)

355

     $
249

     $
270

     $
(21)

245

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

June 30, 2023 December 31, 2022
(Dollars in millions) Fair
Value Amortized
Cost Unrealized
Depreciation Number
of Issues Fair
Value Amortized
Cost Unrealized
Depreciation Number
of Issues
One year or less
Investment grade $ 1,687 $ 1,751 $ (64) 706 $ 5,533 $ 6,127 $ (594) 1,659
Below investment grade 251 257 (6) 882 887 964 (77) 1,287
More than one year
Investment grade 4,768 5,538 (770) 1,443 1,151 1,487 (336) 462
Below investment grade 717 814 (97) 845 330 382 (52) 369
Total $ 7,423 $ 8,360 $ (937) 3,876 $ 7,901 $ 8,960 $ (1,059) 3,777

Equity Securities
The following table provides the values of the Company's equity security investments as of June 30, 2023 and December 31, 2022:
June 30, 2023 December 31, 2022
(In millions) Cost Carrying Value Cost Carrying Value
Equity securities with readily determinable fair values $ 671 $ 75 $ 673 $ 138
Equity securities with no readily determinable fair value 3,181 3,287 380 484
Total $ 3,852 $ 3,362 $ 1,053 $ 622
In 2023, we became a minority owner in VillageMD by investing $2.7 billion in VillageMD preferred equity. VillageMD is a provider of primary, multi-specialty and urgent care services that is majority-owned by Walgreens Boots Alliance, Inc. These securities are included in Equity securities with no readily determinable fair value in the above table. A dividend of 5.5% accrues annually on $2.2 billion of these shares. Consistent with our strategy to invest in targeted startup and growth-stage companies in the health care industry, approximately 95% of our investments in equity securities are in the health care sector.

Commercial Mortgage Loans

Mortgage loans held by the Company are made exclusively to commercial borrowers and are diversified by property type, location and borrower. Loans are generally issued at a fixed ~~rate~~rates of interest and are secured by high quality, primarily completed and substantially leased operating properties. ~~Commercial mortgage loans are classified as either current or long-term investments based on their contractual maturities.~~

~~Credit quality~~.

The Company regularly evaluates and monitors credit risk ~~beginning with~~from the initial ~~underwriting of a~~ mortgage loan underwriting and ~~continuing~~ throughout the investment holding period. ~~Mortgage origination professionals employ an internal credit quality rating system designed to evaluate~~For more information on the ~~relative risk of~~Company's accounting policies and methodologies regarding these investments, see Note 11 in the transaction at origination that is then updated each year as part of the annual portfolio loan review. The Company evaluates and monitors credit quality on a consistent and ongoing basis, classifying each loan as a loan in good standing, potential problem loan or problem loan.

Quality ratings are based on our evaluation of a number of key inputs related to the loan, including real estate market-related factors such as rental rates and vacancies, and property-specific inputs such as growth rate assumptions and lease rollover statistics. However, the two most significant contributors to the credit quality rating are the debt service coverage and loan-to-value ratios. The debt service coverage ratio measures the amount of property cash flow available to meet annual interest and principal payments on debt, with a ratio below 1.0 indicating that there is not enough cash flow to cover the required loan payments. The loan-to-value ratio, commonly expressed as a percentage, compares the amount of the loan to the fair value of the underlying property collateralizing the loan.

Company's 2022 Form 10-K.

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


(Dollars in millions)	June 30, 2023					December 31, 2022
Loan-to-Value Ratio	Carrying Value		Average Debt Service Coverage Ratio	Average Loan-to-Value Ratio		Carrying Value		Average Debt Service Coverage Ratio	Average Loan-to-Value Ratio
Below 60%	$	826	2.22			$	901	2.12
60% to 79%	595		1.78			564		1.73
80% to 100%	166		1.14			149		1.17



Total	$	1,587	1.93	62	%	$	1,614	1.89	60	%

Other Long-Term Investments

Other long-term investments include investments in unconsolidated entities, including certain limited partnerships and limited liability companies holding real estate, securities or loans. These investments are carried at cost plus the Company's ownership percentage of reporting income or loss, based on ~~loan-to-value and debt service coverage ratios as~~the financial statements of ~~March 31, 2019 and December 31, 2018:~~

(Dollars in millions)

March 31, 2019

December 31, 2018

Average Debt

Average Debt

Carrying

Service Coverage

Average Loan-

Carrying

Service Coverage

Average Loan-

Loan-to-Value Ratio

Value

Ratio

to-Value Ratio

Value

Ratio

to-Value Ratio

Below 60%

     $
1,167


2.12

     $
1,132

2.14

60% to 79%

621

1.92

650

1.93

80% to 100%

76

1.49

76

1.49

Total

     $
1,864


2.03

58%

     $
1,858

2.04

58%

~~The Company’s annual in-depth review of its commercial mortgage loan~~the underlying investments that are generally reported at fair value. Income or loss from these investments is reported on a one quarter lag due to the ~~primary mechanism for identifying emerging risks in the portfolio. The most recent review was completed by the Company’s investment professionals in the second quarter~~timing of ~~2018 and included an analysis of each underlying property’s most recent annual~~when financial statements, rent rolls, operating plans, budgets, a physical inspection of the property and other pertinent factors. Based on historical results, current leases, lease expirations and rental conditions in each market, the Company estimated the current year and future stabilized property income and fair value for each loan.

~~The Company re-evaluates a loan’s credit quality between annual reviews if new property~~ information is received from the general partner or ~~an event such as delinquency or a borrower’s request for restructure causes management~~manager of the investments.

Other long-term investments also include investment real estate carried at depreciated cost less any impairment write-downs to ~~believe~~fair value when cash flows indicate that the ~~Company’s estimate of financial performance,~~carrying value may not be recoverable. Additionally, statutory and other restricted deposits and foreign currency swaps carried at fair value orare reported in the ~~risk profile of the underlying property has been impacted.~~

~~Impaired commercial mortgage loans.~~ A commercial mortgage loan is considered impaired when it is probable that the Company will not collect all amounts due per the terms of the promissory note. Impaired loans are carried at the lower of the unpaid principal balance or fair value of the underlying collateral. Interest income on impaired mortgage loans is only recognized when a payment is received.

~~There were no impaired commercial mortgage loans as of March 31, 2019 or December 31, 2018~~.

~~Short-Term Investments and Cash Equivalents~~

~~Short-term investments and cash equivalents included the following types of issuers:~~

March 31,

December 31,
(In millions)

2019

2018
Corporate securities

    $
1,531

    $
581
Federal government securities

    $
127

    $
82
Foreign government securities

    $
162

    $
238
Money market funds

    $
855

    $
1,174

B.~~Realized Investment Gains and Losses~~

~~The following realized gains and losses on investments exclude amounts required to adjust future policy benefits for the run-off settlement annuity business,~~table below as ~~well as realized gains and losses attributed to the Company’s separate accounts because those gains and losses generally accrue directly to separate account policyholders.~~

Three Months Ended

March 31,
(In millions)

2019

2018
Net realized investment gains (losses), excluding investment asset write-downs

    $
11

    $
(16)
Write-downs on debt securities

(1)

(13)
Write-downs on other invested assets

-

(4)
Net realized investment (losses) gains, before income taxes

    $
10

    $
(33)

Net realized investment gains, excluding investment asset write-downs, for the three months ended March 31, 2019 represent primarily mark to market gains on equity securities. Net realized investment losses, excluding investment asset write-downs, for the three months ended March 31, 2018 represent primarily losses on sales of debt securities. Realized gains or losses on equity securities still held at March 31, 2019 and 2018 were not material.

Other. The following table ~~presents sales~~provides the carrying value information for ~~available-for-sale debt securities. Gross gains on sales and gross losses on sales exclude amounts required to adjust future policy benefits for the run-off settlement annuity business.~~

Three Months Ended

March 31,
(In millions)

2019

2018
Proceeds from sales

    $
1,086

    $
499
Gross gains on sales

    $
14

    $
5
Gross losses on sales

    $
(10)

    $
(22)

C.these investments:

Carrying Value as of
(In millions) June 30, 2023 December 31, 2022
Real estate investments $ 1,464 $ 1,319
Securities partnerships 2,351 2,166
Other 223 243
Total $ 4,038 $ 3,728

B.Derivative Financial Instruments

The Company uses derivative financial instruments to manage the characteristics of investment assets (such as duration, yield, currency and liquidity) to meet the varying demands of the related insurance and ~~contract holder~~contractholder liabilities. The Company also uses derivative financial instruments to hedge the risk of changes in the net assets of certain of its foreign subsidiaries due to changes in foreign currency exchange ~~rates. The Company has written~~rates and ~~purchased GMIB reinsurance contracts in its run-off reinsurance business that are accounted for as freestanding derivatives as discussed in Note 8. Derivatives in~~to hedge the ~~Company’s separate accounts are excluded from the following discussion because associated gains and losses generally accrue directly to separate account policyholders.~~

Derivative instruments used by the Company typically include foreign currency swap contracts and foreign currency forward contracts. Foreign currency swap contracts periodically exchange cash flows between two currencies for principal and interest. Foreign currency forward contracts require the Company to purchase a foreign currency in exchange for the functional currency of its operating unit at a future date, generally within three months from the contracts’ trade dates.

~~The Company manages the credit~~interest rate risk of ~~these~~certain long-term debt.

As of June 30, 2023, there have been no material changes to the Company's derivative ~~instruments by diversifying its portfolio among approved dealers~~financial instruments. The effects of high credit quality, and through routine monitoring of credit risk exposures. Certain of the Company’s over-the-counter derivative instruments require either the Company or the counterparty to post collateral or demand immediate payment depending on the amount of the net liability position of the derivative instrument and predefined financial strength or credit rating thresholds. These collateral posting requirements vary by counterparty and amounts posted were not significant as of March 31, 2019 or December 31, 2018.

~~The Company’s~~ derivative financial instruments ~~are presented~~used in our individual hedging strategies were not material to the Consolidated Financial Statements as ~~follows:~~

·~~Fair value hedges~~ of ~~the foreign exchange-related changes in fair values of certain foreign-denominated bonds:~~ ~~Swap fair values are reported in long-term investments or other non-current liabilities. Changes in fair values attributable to foreign exchange risk of the swap contracts~~June 30, 2023 and ~~the hedged bonds are reported in other realized investment gains and losses.~~December 31, 2022. The portion of the swap contracts’ changes in fair value excluded from the assessment of hedge effectiveness is recorded in accumulated other comprehensive income and recognized in net investment income as swap coupon payments are accrued, offsetting the foreign-denominated coupons received on the designated bonds.

·~~Net investment hedges of certain foreign subsidiaries that conduct their business principally in Euros:~~ The fair values of the swap contracts are reported in other assets or other non-current liabilities. The changes in fair values of these instruments are reported in other comprehensive income, specifically in translation of foreign currencies. The portion of the change in swap fair values relating to foreign exchange spot rates will be recognized in earnings upon deconsolidation of the hedged foreign subsidiaries. The remaining changes in swap fair value are excluded from our effectiveness assessment and recognized in interest expense as swap coupon payments are accrued. The notional value of hedging instruments matches the hedged amount of subsidiary net assets.

·~~Economic hedges for derivatives not designated as accounting hedges:~~ Fair values of derivative instruments are reported in current investments or accrued expenses and other liabilities. The changes in fair values are reported in net realized investment gains and losses.

~~Gross~~gross fair values of our derivative financial instruments are presented in Note ~~10. As of March 31, 2019 and December 31, 2018, and for the three months ended March 31, 2019 and 2018, the effects of derivative instruments on~~12 to the Consolidated Financial ~~Statements~~Statements.

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

C.Realized Investment Gains and Losses

Accounting policy. Realized investment gains and losses are based on specifically identified assets and result from sales, investment asset write-downs, change in the fair value of certain derivatives and equity securities and changes in allowances for credit losses on debt securities and commercial mortgage loan investments. With the adoption of amended accounting guidance for long-duration insurance contracts on January 1, 2023 (discussed in Note 2 to the Consolidated Financial Statements), realized investment gains and losses no longer exclude amounts that were ~~not material, including gains or~~previously required to adjust future policy benefits for the run-off settlement annuity business. Prior period net realized investment losses ~~reclassified from accumulated other comprehensive income into shareholders’ net income, as well as amounts excluded from~~have been updated to reflect the ~~assessment~~impact of ~~hedge effectiveness.~~ adopting LDTI.

The following ~~table summarizes~~realized gains and losses on investments exclude realized gains and losses attributed to the ~~types~~Company's separate accounts because those gains and ~~notional quantity of derivative instruments held by~~losses generally accrue directly to separate account policyholders:


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

(In millions)	2023		2022		2023		2022
Net realized investment gains (losses), excluding credit loss expense and asset write-downs	$	31	$	(65)	$	(20)	$	(387)
Credit loss (expense) recoveries	(1)		(24)		2		(24)
Other investment asset write-downs	(4)		—		(12)		—
Net realized investment gains (losses), before income taxes	$	26	$	(89)	$	(30)	$	(411)

Net realized investment losses for the ~~Company.~~

Notional Value as of

(In millions)

March 31,

December 31,

Type of Instrument

Purpose

2019

2018

Foreign currency swap contracts

Fair value hedge: To hedge the foreign exchange-related changes in fair values of certain foreign-denominated bonds. The notional value of these derivatives matches the amortized cost of the hedged bonds.

   $
593

   $
525

Foreign currency swap contracts

Net investment hedge: To reduce the risk of changes in net assets due to changes in foreign currency spot exchange rates for certain foreign subsidiaries that conduct their business principally in Euros. The notional value of hedging instruments matches the hedged amount of subsidiary net assets.

   $
439

   $
439

Foreign currency forward contracts

Economic hedge: To hedge the foreign exchange related changes in fair values of a U.S. dollar-denominated bond portfolio to reflect the local currency for the Company’s foreign subsidiary in South Korea. The notional value of hedging instruments generally aligns with the fair value of the hedged bond portfolio.

   $
309

   $
309

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

Note 10 —12 – Fair Value Measurements

The Company carries certain financial instruments at fair value in the financial statements including debt securities, certain equity securities, short-term investments and derivatives. Other financial instruments are measured at fair value only under certain conditions, such as when ~~impaired.~~

impaired or when there are observable price changes for equity securities with no readily determinable fair value.

Fair value is defined as the price at which an asset could be exchanged in an orderly transaction between market participants at the balance sheet date. A ~~liability’s~~liability's fair value is defined as the amount that would be paid to transfer the liability to a market participant, not the amount that would be paid to settle the liability with the creditor.

The ~~Company’s~~Company's financial assets and liabilities carried at fair value have been classified based upon a hierarchy defined by GAAP.

The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An ~~asset’s~~asset's or a ~~liability’s~~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~~instrument's fair value, even though the measurement may be derived using inputs that are both observable (Levels 1 and 2) and unobservable (Level 3).

~~The Company estimates fair values using prices from third parties or internal pricing methods. Fair value estimates received from third-party pricing services~~

For a description of the policies, methods and assumptions that are ~~based on reported trade activity and quoted market prices when available, and other market information that a market participant may use~~used to estimate fair value. The internal pricing methods are performed by the Company’s investment professionals and generally involve using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality as well as other qualitative factors. In instances where there is little or no market activity for the same or similar instruments, fair value is estimated using methods, models and assumptions that the Company believes a hypothetical market participant would use to determine a current transaction price. These valuation techniques involve some level of estimation and judgment that becomes significant with increasingly complex instruments or pricing models.

~~The Company is responsible for determining fair~~ value and ~~for assigning the appropriate level within~~determine the fair value hierarchy ~~based on~~for each class of financial instruments, see Note 12 in the significance of unobservable inputs. The Company reviews methodologies, processes and controls of third-party pricing services and compares prices on a test basis to those obtained from other external pricing sources or internal estimates. The Company performs ongoing analyses of both prices received from third-party pricing services and those developed internally to determine that they represent appropriate estimates of fair value. The controls executed by the Company include evaluating changes in prices and monitoring for potentially stale valuations. The Company also performs sample testing of sales values to confirm the accuracy of prior fair value estimates. The minimal exceptions identified during these processes indicate that adjustments to prices are infrequent and do not significantly impact valuations. We conduct an annual on-site visit of the most significant pricing service to review their processes, methodologies and controls. This on-site review includes a walk-through of inputs for a sample of securities held across various asset types to validate the documented pricing process.

Company's 2022 Form 10-K.

A.Financial Assets and Financial Liabilities Carried at Fair Value

The following table provides information ~~as of March 31, 2019 and December 31, 2018~~ about the ~~Company’s~~Company's financial assets and liabilities carried at fair value. Further information regarding insurance assets and liabilities carried at fair value is provided in Note 9E to the Consolidated Financial Statements. Separate account assets are also recorded at fair value on the ~~Company’s~~Company's Consolidated Balance Sheets and are reported separately in the Separate Accounts section below as gains and losses related to these assets generally accrue directly to ~~policyholders.~~

Quoted Prices in Active
Markets for Identical
Assets
(Level 1)

Significant Other Observable
Inputs
(Level 2)

Significant Unobservable
Inputs
(Level 3)

Total

As of

As of

As of

As of

As of

As of

As of

As of

March 31,

December 31,

March 31,

December 31,

March 31,

December 31,

March 31,

December 31,

(In millions)

2019

2018

2019

2018

2019

2018

2019

2018

Financial assets at fair value

Debt securities

Federal government and agency

$
212

$
209

$
521

$
501

$
-

$
-

$
733

$
710

State and local government

-

-

928

985

-

-

928

985

Foreign government

-

-

2,277

2,356

28

6

2,305

2,362

Corporate

-

-

18,458

18,127

237

234

18,695

18,361

Mortgage and other asset-backed

-

-

369

372

139

138

508

510

Total debt securities

212

209

22,553

22,341

404

378

23,169

22,928

Equity securities (1)

8

384

49

43

32

32

89

459

Short-term investments

-

-

267

316

-

-

267

316

Derivative assets

-

-

58

53

-

-

58

53

Real estate funds priced at NAV as a practical expedient (2)

230

239

Financial liabilities at fair value

Derivative liabilities

$
-

$
-

$
14

$
10

$
-

$
-

$
14

$
10

contractholders:

(In millions) Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) Total
June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022
Financial assets at fair value
Debt securities
Federal government and agency $ 147 $ 147 $ 144 $ 165 $ — $ — $ 291 $ 312
State and local government — — 39 41 — — 39 41
Foreign government — — 351 365 — — 351 365
Corporate — — 8,018 8,394 404 412 8,422 8,806
Mortgage and other asset-backed — — 315 313 50 35 365 348
Total debt securities 147 147 8,867 9,278 454 447 9,468 9,872
Equity securities (1)
5 6 70 132 — — 75 138
Short-term investments — — 152 139 — — 152 139
Derivative assets — — 192 230 — 1 192 231

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

(2) As a practical expedient, certain real estate funds are carried at fair value based on the Company’s ownership share of the equity of the investee (Net Asset Value (“NAV”)) including changes in the fair value of its underlying investments. The funds have a quarterly redemption frequency, 45-90 day redemption notice period and $58 million in unfunded commitments as of March 31, 2019.

~~Level 1 Financial Assets~~

Inputs for instruments classified in Level 1 include unadjusted quoted prices for identical assets in active markets accessible at the measurement date. Active markets provide pricing data for trades occurring at least weekly and include exchanges and dealer markets.

Assets in Level 1 include actively-traded U.S. government bonds and exchange-listed equity securities. A relatively small portion of the Company’s investment assets are classified in this category given the narrow definition of Level 1 and the Company’s investment asset strategy to maximize investment returns.

~~Level 2 Financial Assets and Financial Liabilities~~

Inputs for instruments classified in Level 2 include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active or other inputs that are market observable or can be corroborated by market data for the term of the instrument. Such other inputs include market interest rates and volatilities, spreads and yield curves. An instrument is classified in Level 2 if the Company determines that unobservable inputs are insignificant.

~~Debt and equity securities.~~ Approximately 97% of the Company’s investments in debt and equity securities are classified in Level 2 including most public and private corporate debt and hybrid equity securities, federal agency and municipal bonds, non-government mortgage-backed securities and preferred stocks. Third-party pricing services and internal methods often use recent trades of securities with similar features and characteristics because many debt securities do not trade daily. Pricing models are used to determine these prices when recent trades are not available. These models calculate fair values by discounting future cash flows at estimated market interest rates. Such market rates are derived by calculating the appropriate spreads over comparable U.S. Treasury securities, based on the credit quality, industry and structure of the asset. Typical inputs and assumptions to pricing models include, but are not limited to, a combination of benchmark yields, reported trades, issuer spreads, liquidity, benchmark securities, bids, offers, reference data and industry and economic events. For mortgage-backed securities, inputs and assumptions may also include characteristics of the issuer, collateral attributes, prepayment speeds and credit rating.

Nearly all of these instruments are valued using recent trades or pricing models. Less than 1% of the fair value of investments classified in Level 2 represents foreign bonds that are valued using a single, unadjusted market-observable input derived by averaging multiple broker-dealer quotes, consistent with local market practice.

~~Short-term investments~~ are carried at fair value that approximates cost. The Company compares market prices for these securities to recorded amounts on a regular basis to validate that current carrying amounts approximate exit prices. The short-term nature of the investments and corroboration of the reported amounts over the holding period support their classification in Level 2.

~~Derivative assets and liabilities~~ classified in Level 2 represent over-the-counter instruments such as foreign currency forward and swap contracts. Fair values for these instruments are determined using market observable inputs including forward currency and interest rate curves and widely published market observable indices. Credit risk related to the counterparty and the Company is considered when estimating the fair values of these derivatives. However, the Company is largely protected by collateral arrangements with counterparties and determined that no adjustment for credit risk was required as of March 31, 2019 or December 31, 2018. The nature and use of these derivative financial instruments are described in Note 9.

Level 3 Financial Assets and Financial Liabilities

Certain inputs for instruments classified in Level 3 are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement. Unobservable inputs reflect the ~~Company’s~~Company's best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date.

~~The~~ Additionally, as discussed in Note 9 to the Consolidated Financial Statements, the Company classifies ~~certain newly-issued, privately-placed, complex or illiquid securities~~variable annuity assets and liabilities in Level ~~3. Approximately 2%~~3 of ~~debt and equity securities are priced using significant unobservable inputs and classified in this category.~~

~~Fair values of mortgage and other asset-backed securities as well as corporate and government debt securities are primarily determined using pricing models that incorporate~~ the specific characteristics of each asset and related assumptions including the investment type and structure, credit quality, industry and maturity date in comparison to current market indices, spreads and liquidity of assets with similar characteristics. Inputs and assumptions for pricing may also include collateral attributes and prepayment speeds for mortgage and other asset-backed securities. Recent trades in the subject security or similar securities are assessed when available, and the Company may also review published research in its evaluation as well as the issuer’s financial statements.

fair value hierarchy.

Quantitative Information about Unobservable Inputs

The following table summarizes the fair value and significant unobservable inputs used in pricing the following debt securities that were developed directly by the Company as of March 31, 2019 and December 31, 2018. The range and weighted average basis point amounts (“bps”) for liquidity and credit spreads (adjustment to discount rates) reflect the Company’s best estimates of the unobservable adjustments a market participant would make to calculate these fair values.

~~Corporate and government debt securities.~~

The significant unobservable input used to value ~~the following~~our corporate and government debt securities and mortgage and other asset-backed securities is an adjustment for liquidity. AnThis adjustment is needed to reflect current market conditions and issuer circumstances when there is limited trading activity for the security.

~~Mortgage~~

The following table summarizes the fair value and ~~other asset-backed securities.~~ ~~The~~ significant unobservable inputs ~~used to value the following mortgage and other asset-backed securities are liquidity and weighting of credit spreads. An adjustment for liquidity is made as of the measurement date~~ that considers current market conditions, issuer circumstances and complexity of the security structure when there is limited trading activity for the security. An adjustment to weight credit spreads is needed to value a more complex bond structure with multiple underlying collateral and no standard market valuation technique. The weighting of credit spreads is primarily based on the underlying collateral’s characteristics and their proportional cash flows supporting the bond obligations.

Unobservable Adjustment

Fair Value as of

Unobservable Input

Range (Weighted Average) as of

(Fair value in millions)

March 31, 2019

December 31, 2018

March 31, 2019

March 31, 2019

December 31, 2018

Debt securities

Corporate and government debt securities

$
253

$
229

Liquidity

80 - 930 (230) bps

50 - 930 (230) bps

Mortgage and other asset-backed securities

139

138

Liquidity

60 - 360 (70) bps

60 - 340 (70) bps

Weighting of credit spreads

210 - 380 (280) bps

190 - 340 (260) bps

Securities not priced by the Company (1)

12

11

Total Level 3 debt securities

$
404

$
378

~~(1) The fair values for these securities use single, unadjusted non-binding broker quotes not~~were developed directly by the ~~Company.~~

~~Significant increases~~Company and used in pricing these debt securities. The range and weighted average basis point amounts for liquidity reflect the Company's best estimates of the unobservable adjustments a market participant would make to calculate these fair values.


	Fair Value as of					Unobservable Adjustment Range (Weighted Average by Quantity) as of
(Fair value in millions)	June 30, 2023		December 31, 2022		Unobservable Input June 30, 2023	June 30, 2023		December 31, 2022
Debt securities
Corporate	$	404	$	412	Liquidity	60 - 1060 (300)	bps	60 - 1060 (270)	bps
Mortgage and other asset-backed securities	50		35		Liquidity	100 - 595 (270)	bps	105 - 520 (310)	bps

Total Level 3 debt securities	$	454	$	447

A significant increase in liquidity ~~or credit spreads~~spread adjustments would result in a lower fair value ~~measurements~~measurement, while ~~decreases in these inputs~~a decrease would result in a higher fair value ~~measurements. The unobservable inputs are generally not interrelated and a change in the assumption used for one unobservable input is not accompanied by a change in the other unobservable input.~~

measurement.

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

The following table summarizes the changes in financial assets and financial liabilities classified in Level ~~3 for the three months ended March 31, 2019 and 2018.~~3. Gains and losses reported in ~~this~~the table may include net changes in fair value that are attributable to both observable and unobservable inputs.

Debt and Equity Securities
(In millions)

For the Three Months Ended
March 31,

2019

2018

Balance at January 1,

    $
410

    $
732

Total (losses) included in shareholders’ net income

(1)

(20)

Gains (losses) included in other comprehensive income

7

(5)

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

2

(4)

Purchases, sales, settlements

Purchases

-

10

Sales

-

(11)

Settlements

(1)

(2)

Total purchases, sales and settlements

(1)

(3)

Transfers into/(out of) Level 3

��

Transfers into Level 3

20

20

Transfers out of Level 3 (2)

(1)

(124)

Total transfers into/(out of) Level 3

19

(104)

Balance at March 31,

    $
436

    $
596

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

    $
(1)

    $
(7)

~~(1) Amounts do not accrue to shareholders.~~

(2) Beginning in 2018, certain private equity securities are no longer carried at fair value under the policy election of ASU 2016-01 (Recognition and Measurement of Financial Assets and Financial Liabilities). Private equity securities of $70 million as of December 31, 2017 are included in the 2018 Transfers out of Level 3 amount.


	For the Three Months Ended June 30,				For the Six Months Ended June 30,

(In millions)	2023		2022		2023		2022
Debt and Equity Securities
Beginning balance	$	471	$	686	$	447	$	796
(Losses) gains included in Shareholders' net income	(1)		(2)		—		10
Losses included in Other comprehensive loss	(5)		(24)		—		(51)

Purchases, sales and settlements
Purchases	—		27		4		76

Settlements	(18)		(71)		(27)		(152)
Total purchases, sales and settlements	(18)		(44)		(23)		(76)
Transfers into/(out of) Level 3
Transfers into Level 3	32		17		71		118
Transfers out of Level 3	(25)		(121)		(41)		(285)
Total transfers into/(out of) Level 3	7		(104)		30		(167)
Ending balance	$	454	$	512	$	454	$	512
Total losses included in Shareholders' net income attributable to instruments held at the reporting date	$	(1)	$	(3)	$	—	$	(2)
Change in unrealized gain or (loss) included in Other comprehensive loss for assets held at the end of the reporting period	$	(6)	$	(11)	$	(5)	$	(25)

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

Gains and losses included in ~~other~~Other comprehensive ~~income~~loss, net of tax in the tables above are reflected in ~~net~~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~~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 ~~2019~~2023 and ~~2018~~2022 primarily reflected changes in liquidity ~~and credit risk~~ estimates for certain private placement issuers across several sectors. ~~As noted~~See discussion under Quantitative Information about Unobservable Inputs above ~~transfers out of Level 3 during 2018 also include $70 million of private equity securities that are no longer carried at fair value.~~

for more information.

Separate Accounts

The investment income and fair value gains and losses of ~~separate~~Separate account assets generally accrue directly to the contractholders and, together with their deposits and withdrawals, are excluded from the ~~Company’s~~Company's Consolidated Statements of Income and Cash Flows. ~~See Note 10 to~~The separate account activity for the ~~Consolidated Financial Statements contained~~six months ended June 30, 2023 and 2022 was primarily driven by changes in the ~~2018 Form 10-K for additional policy information related to~~market values of the underlying separate ~~accounts.~~

account investments.

Fair values of ~~separate~~Separate account assets ~~at March 31, 2019~~were as follows:


	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
(In millions)	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Guaranteed separate accounts (See Note 16)	$	218	$	203	$	347	$	382	$	—	$	—	$	565	$	585
Non-guaranteed separate accounts (1)	210		211		5,623		5,522		224		203		6,057		5,936
Subtotal	$	428	$	414	$	5,970	$	5,904	$	224	$	203	6,622		6,521
Non-guaranteed separate accounts priced at net asset value ("NAV") as a practical expedient (1)													702		757
Total													$	7,324	$	7,278

(1)Non-guaranteed separate accounts include $4.0 billion as of June 30, 2023 and December 31, ~~2018 were as follows:~~

Quoted Prices in Active
Markets for Identical
Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant Unobservable
Inputs
(Level 3)

Total

March 31,

December 31,

March 31,

December 31,

March 31,

December 31,

March 31,

December 31,

(In millions)

2019

2018

2019

2018

2019

2018

2019

2018

Guaranteed separate accounts (See Note 16)

$
204

$
187

$
264

$
267

$
-

$
-

$
468

$
454

Non-guaranteed separate accounts (1)

1,328

1,204

5,346

5,216

244

233

6,918

6,653

Subtotal

$
1,532

$
1,391

$
5,610

$
5,483

$
244

$
233

7,386

7,107

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

693

732

Total separate account assets

$
8,079

$
7,839

~~(1) Non-guaranteed separate accounts included $3.9 billion as of March 31, 2019 and $3.8 billion as of December 31, 2018~~2022 in assets supporting the ~~Company’s~~Company's pension plans, including $0.2 billion classified in Level 3 as of ~~March 31, 2019~~June 30, 2023 and December 31, ~~2018.~~

~~Separate account assets in Level 1 primarily include exchange-listed equity securities. Level 2 assets primarily include:~~

·	~~corporate and structured bonds valued using recent trades of similar securities or pricing models that discount future cash flows at estimated market interest rates as described above; and~~

·	~~actively-traded institutional and retail mutual fund investments.~~

2022.

Separate account assets classified in Level 3 primarily support ~~Cigna’s~~the Company's pension plans and include ~~commercial mortgage loans as well as~~ certain newly-issued, privately-placed, complex or illiquid securities that are priced using methods discussed ~~above.~~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 ~~March 31, 2019 and 2018~~.

June 30, 2023 or 2022.

Separate account investments in securities partnerships, real estate and hedge funds are generally valued based on the separate ~~account’s~~account's ownership share of the equity of the investee (NAV as a practical expedient), including changes in the fair values of its underlying investments. Substantially all of these assets support the ~~Cigna Pension Plans.~~Company's pension plans. The following table provides additional information on these ~~investments.~~

Unfunded

Fair Value as of

Commitments as of

March 31,

Redemption Frequency

Redemption Notice

(In millions)

March 31, 2019

December 31, 2018

2019

(if currently eligible)

Period

Securities partnerships
$

464

$
477

$
351

Not applicable

Not applicable

Real estate funds

216

237

-

Quarterly

30-90 days

Hedge funds

13

18

-

Up to annually, varying by fund

30-90 days

Total
$

693

$
732

$
351

investments:

Fair Value as of Unfunded Commitment as of June 30, 2023 Redemption Frequency
(if currently eligible) Redemption Notice
Period
(In millions) June 30, 2023 December 31, 2022
Securities partnerships $ 425 $ 451 $ 211 Not applicable Not applicable
Real estate funds 273 302 — Quarterly 30 - 90 days
Hedge funds 4 4 — Up to annually, varying by fund 30 - 90 days
Total $ 702 $ 757 $ 211

As of June 30, 2023, the Company does not have plans to sell any of these assets at less than fair value. These investments are structured to satisfy longer-term investment objectives. Securities partnerships are contractually non-redeemable and the underlying investment assets are expected to be liquidated by the fund managers within ten years after inception.

B.Assets and Liabilities Measured at Fair Value under Certain Conditions

Some financial assets and liabilities are not carried at fair value, ~~each reporting period, but may be measured using fair value only under certain conditions~~ such as ~~investments when they become impaired, including~~commercial mortgage loans that are carried at unpaid principal, investment real estate that is carried at depreciated cost and ~~commercial mortgage loans, and certain~~ equity securities with no readily determinable fair ~~value. There were~~value when there are no observable market transactions. However, these financial assets and liabilities may be measured using fair value under certain conditions, such as when investments become impaired ~~investments~~and are written down to their fair ~~values~~value, or when there are observable price changes from orderly market transactions of equity securities that otherwise had no readily determinable fair value.

For the six months ended June 30, 2023 and 2022, impairments recognized requiring these assets to be measured at fair value were not material. Realized investment gains and losses from these observable price changes for the three and six months ended ~~March 31, 2019. Recorded values for these asset types representing less than 1% of total investments,~~June 30, 2023 and June 30, 2022 were ~~written down to their fair values, resulting in immaterial realized investment losses for the three months ended March 31, 2018.~~

not material.

C.Fair Value Disclosures for Financial Instruments Not Carried at Fair Value

The following table includes the ~~Company’s~~Company's financial instruments not recorded at fair value ~~that are subject to~~but for which fair value disclosure ~~requirements at March 31, 2019 and December 31, 2018.~~is required. In addition to universal life products and finance leases, financial instruments that are carried in the ~~Company’s~~Company's Consolidated ~~Financial Statements~~Balance Sheets at amounts that approximate fair value are excluded from the following ~~table.~~

Classification in

March 31, 2019

December 31, 2018

(In millions)

Fair Value
Hierarchy

Fair Value

Carrying
Value

Fair Value

Carrying
Value

Commercial mortgage loans

Level 3

$
1,875

$
1,864

$
1,832

$
1,858

Long-term debt, including current maturities, excluding finance leases

Level 2

$
41,027

$
39,840

$
40,819

$
40,829

~~Fair values of off-balance sheet financial instruments were not material as of March 31, 2019 and December 31, 2018.~~

table:

Classification in Fair Value Hierarchy June 30, 2023 December 31, 2022
(In millions) Fair Value Carrying Value Fair Value Carrying Value
Commercial mortgage loans Level 3 $ 1,460 $ 1,587 $ 1,491 $ 1,614
Long-term debt, including current maturities, excluding finance leases Level 2 $ 30,313 $ 32,428 $ 28,653 $ 30,994

Note 11 —13 – Variable Interest Entities

~~When the Company becomes involved~~

We perform ongoing qualitative analyses of our involvement with a variable interest ~~entity and when there is a change in the Company’s involvement with an entity, the Company must~~entities to determine if itconsolidation is ~~the primary beneficiary and must consolidate the entity.~~required. The Company ~~is considered the primary beneficiary if it has the power to direct the entity’s most significant economic activities or has the right to receive benefits or obligation to absorb losses~~determined that ~~could be significant to the entity. The Company evaluates the following criteria:~~

·	~~the structure and purpose of the entity;~~

·	~~the risks and rewards created by and shared through the entity; and~~

·	the Company’s ability to direct its activities, receive its benefits and absorb its losses relative to the other parties involved with the entity including its sponsors, equity holders, guarantors, creditors and servicers.

~~The Company determined~~ it was not a primary beneficiary in any material variable interest ~~entities~~entity as of ~~March 31, 2019~~June 30, 2023 or December 31, ~~2018. The Company’s involvement in~~2022. For details of our accounting policy for variable interest entities ~~where it is not the primary beneficiary is described below.~~

~~Securities limited partnerships and real estate limited partnerships~~. The Company owns interests in securities limited partnerships and real estate limited partnerships that are defined as variable interest entities. These partnerships invest in the equity or mezzanine debt of privately held companies and real estate properties. General partners unaffiliated with the Company control decisions that most significantly impact the partnership’s operations and the ~~limited partners do not have substantive kick-out or participating rights. The Company’s maximum exposure to these entities~~composition of $3.3 billion across approximately 140 limited partnerships as of March 31, 2019 includes $1.5 billion reported in long-term investments and commitments to contribute an additional $1.8 billion. The Company’s noncontrolling interest in each of these limited partnerships is generally less than 10% of the partnership ownership interests.

~~Other asset-backed and corporate securities.~~ ~~In the normal course of its investing activities, the Company also makes passive investments in certain asset-backed and corporate securities that are issued by~~ variable interest entities ~~whose sponsors or issuers are unaffiliated~~ with which the Company. The Company receives fixed-rate cash flows from these investments and the maximum potential exposure to loss is limited to the carrying amount of $0.6 billion as of March 31, 2019 that is reported in debt securities. The Company’s combined ownership interests are insignificant relative to the total principal amounts issued by these entities.

~~The~~ Company is ~~also~~ involved, refer to Note 13 in real estate joint ventures, independent physician associations and a joint venture in India that are variable interest entities. The carrying values and maximum exposures associated with these arrangements are immaterial.

the Company's 2022 Form 10-K. The Company has not provided, and does not intend to provide, financial support to any of ~~the above entities that it is not contractually required to provide. The Company performs ongoing qualitative analyses of its involvement with~~ these variable interest entities in excess of its maximum exposure. The Company's maximum exposure to ~~determine if consolidation~~loss from securities limited partnerships and real estate limited partnerships is ~~required.~~

$5.2 billion as of June 30, 2023 compared to $4.8 billion as of December 31, 2022 and the maximum exposure from real estate joint ventures is $0.8 billion as of June 30, 2023 compared to $0.6 billion as of December 31, 2022.

Note 12 —14 – Accumulated Other Comprehensive Income (Loss) ~~(“AOCI”~~("AOCI")

AOCI includes net unrealized (depreciation) appreciation on securities and derivatives, change in discount rate and instrument specific credit risk for certain long-duration insurance contractholder liabilities (Note 9 to the Consolidated Financial Statements), foreign currency translation and the net postretirement benefits liability adjustment. AOCI includes the ~~Company’s~~Company's share from unconsolidated entities ~~accounted for using~~reported on the equity method. AOCI excludes amounts required to adjust future policy benefits for the run-off settlement annuity business and a portion of deferred acquisition costs associated with the corporate-owned life insurance business. Generally, tax effects in AOCI are established at the currently enacted tax rate and reclassified to Shareholders' net income in the same period that the related pre-tax AOCI reclassifications are recognized.

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

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

Three Months Ended

March 31,
(In millions)

2019

2018

Securities and Derivatives

Beginning balance

$
18

$
328

Reclassification adjustment to retained earnings related to U.S. tax reform legislation(1)

-

65

Reclassification adjustment to retained earnings related to new financial instruments guidance(1)

-

(4)

Reclassification adjustment from retained earnings related to new hedging guidance

-

(6)

Adjusted beginning balance

18

383

Appreciation (depreciation) on securities and derivatives

565

(385)

Tax (expense) benefit

(122)

77

Net appreciation (depreciation) on securities and derivatives

443

(308)

Reclassification adjustment for (gains) losses included in shareholders’ net income (net realized investment gains)

(1)

30

Tax (expense)

-

(6)

Net (gains) losses reclassified from AOCI to net income

(1)

24

Other comprehensive income (loss), net of tax

442

(284)

Ending balance

$
460

$
99

Translation of foreign currencies

Beginning balance

$
(221)

$
(65)

Reclassification adjustment to retained earnings related to U.S. tax reform legislation(1)

-

(4)

Adjusted beginning balance

(221)

(69)

Translation of foreign currencies

(23)

46

Tax (expense)

(1)

(1)

Net translation of foreign currencies

(24)

45

Ending balance

$
(245)

$
(24)

Postretirement benefits liability

Beginning balance

$
(1,508)

$
(1,345)

Reclassification adjustment to retained earnings related to U.S. tax reform legislation(1)

(290)

Adjusted beginning balance

(1,508)

(1,635)

Reclassification adjustment for amortization of net losses from past experience and prior service costs (selling, general and administrative expenses)

15

17

Reclassification adjustment for settlement (selling, general and administrative expenses)

10

-

Tax (expense)

(14)

(4)

Other comprehensive income, net of tax

11

13

Ending balance

$
(1,497)

$
(1,622)

Three Months Ended June 30, Six Months Ended June 30,
(In millions) 2023 2022 2023 2022
Securities and Derivatives
Beginning balance, as retrospectively restated $ (138) $ 423 $ (332) $ 1,266
Unrealized appreciation (depreciation) on securities and derivatives 7 (869) 259 (1,934)
Tax (expense) benefit (12) 169 (66) 400
Net unrealized (depreciation) appreciation on securities and derivatives (5) (700) 193 (1,534)
Reclassification adjustment for losses included in Shareholders' net income (Net realized investment gains (losses)) 31 38 26 27
Reclassification adjustment for tax (benefit) included in Shareholders' net income (6) (8) (5) (6)
Net losses reclassified from AOCI to Shareholders' net income 25 30 21 21
Other comprehensive income (loss), net of tax 20 (670) 214 (1,513)
Ending balance $ (118) $ (247) $ (118) $ (247)
Net long-duration insurance and contractholder liabilities measurement adjustments (1)
Beginning balance $ (587) $ (306) $ (256) $ (765)
Current period change in discount rate for certain long duration liabilities (147) 20 (558) 604
Tax benefit (expense) 36 9 137 (121)
Net current period change in discount rate for certain long duration liabilities (111) 29 (421) 483
Current period change in instrument-specific credit risk for market risk benefits (7) (28) (33) (22)
Tax benefit 1 5 6 4
Net current period change in instrument-specific credit risk for market risk benefits (6) (23) (27) (18)
Other comprehensive (loss) income, net of tax (117) 6 (448) 465
Ending balance $ (704) $ (300) $ (704) $ (300)
Translation of foreign currencies
Beginning balance, as retrospectively restated $ (138) $ (294) $ (154) $ (233)
Translation of foreign currencies (20) (182) (5) (242)
Tax benefit (expense) 1 (25) 2 (28)
Net translation of foreign currencies (19) (207) (3) (270)
Less: Net translation (loss) on foreign currencies attributable to noncontrolling interests — (1) — (3)
Shareholders' other comprehensive (loss), net of tax (19) (206) (3) (267)
Ending balance $ (157) $ (500) $ (157) $ (500)
Postretirement benefits liability
Beginning balance $ (906) $ (1,323) $ (916) $ (1,336)
Reclassification adjustment for amortization of net prior actuarial losses and prior service costs (Interest expense and other) 11 17 24 33
Reclassification adjustment for tax (benefit) included in Shareholders' net income (3) (4) (6) (7)
Net adjustments reclassified from AOCI to Shareholders' net income 8 13 18 26
Valuation update (2) 18 (2) 18
Tax benefit (expense) 1 (4) 1 (4)
Net change due to valuation update (1) 14 (1) 14
Other comprehensive income, net of tax 7 27 17 40
Ending balance $ (899) $ (1,296) $ (899) $ (1,296)
Total Accumulated other comprehensive loss
Beginning balance, as retrospectively restated $ (1,769) $ (1,500) $ (1,658) $ (1,068)
Shareholders' other comprehensive (loss), net of tax (109) (843) (220) (1,275)
Ending balance $ (1,878) $ (2,343) $ (1,878) $ (2,343)

(1)Established upon the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023. See Note 2 ~~in Cigna’s 2018 Form 10-K for further information about the Company’s adoption of new accounting standards in 2018.~~

~~Note 13~~ ~~— Pension and Other Postretirement Benefit Plans~~

A.~~About our Plans~~

~~Pension plans~~. Future benefit accruals for the Company’s domestic defined benefit pension plans are frozen. The Company also has foreign pension and other postretirement benefit plans that are immaterial to our results of operations, liquidity and financial position.

~~Other postretirement benefit plans.~~ ~~The Company’s postretirement medical plan was frozen in 2013. The Company also offers certain postretirement life insurance benefits through various plans.~~

B.~~Cost of Our Plans~~

~~Net pension and other postretirement benefits cost was as follows for the three months ended March 31:~~

Pension Benefits

Other Postretirement Benefits

Three Months Ended

Three Months Ended

March 31,

March 31,
(In millions)

2019

2018

2019

2018
Service cost

   $
1

   $
1

   $
-

   $
-
Interest cost

49

42

2

2
Expected long-term return on plan assets

(56)

(64)

-

-
Amortization of:

Net loss from past experience

16

17

-

-
Prior service cost

-

-

(1)

-
Litigation settlement - plan amendment

142

-

-

-
Settlement loss

10

-

-

-
Net cost

   $
162

   $
(4)

   $
1

   $
2

~~As further discussed in Note 16, Old Cigna and the Cigna Pension Plan are defendants in a class action lawsuit related~~ to the Plan’s conversion of certain employees from an annuity to a cash balance benefit in 1997. In the first quarter of 2019, the Plan was amended to reflect the additional benefits required by the Court Order. In addition, class participants were notified of their increased benefits and payment of benefits commenced. This activity resulted in a one-time expense of $142 million representing the present value of the additional pension benefits under the Court Order. An offsetting expense credit was also recorded to reduce the litigation reserve held.

Pension and other postretirement benefits expense is reported in “interest expense and other” in the Consolidated Statements of Income. The Company did not make any contributions to the domestic qualified pension plans for the three months ended March 31, 2019. Contributions to these plans are expected to be immaterial for the remainder of 2019.

~~Note 14~~ ~~— Leases~~

~~As discussed in Note 2, the Company adopted ASU 2016-02,~~ ~~Leases,~~ ~~as of January 1, 2019. As permitted by the standard, the Company did not restate its~~ Consolidated Financial Statements for periods prior to the adoption date and the required disclosures presented below are prospective only. The Company’s operating leases are primarily for office space and certain computer and other equipment, and have terms ranging from one month to 18 years.

~~Accounting policy.~~ The Company determines if an arrangement is a lease and its lease classification (operating or finance) at inception. Beginning in the first quarter of 2019, both operating and finance leases result in (1) a right-of-use (“ROU”) asset that represents our right to use the underlying asset for the lease term, and (2) a lease liability that represents our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are reflected in the following lines in the Company’s Consolidated Balance Sheet:

	~~ROU Asset~~	~~Current Lease Liability~~	~~Non-Current Lease Liability~~
~~Operating lease~~	~~Other Assets~~	~~Accrued expenses and other liabilities (current)~~	~~Other liabilities (non-current)~~
~~Finance lease~~	~~Property and equipment~~	~~Short-term debt~~	~~Long-term debt~~

These lease assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. Most of the Company’s leases do not provide an implicit rate, so the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also includes any lease pre-payments made and excludes lease incentives for operating leases. The Company’s lease terms may include options to extend or terminate a lease when it is reasonably certain that the Company will exercise that option.

The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease component. Variable lease payments are expensed as incurred and represent amounts that are not fixed in nature, such as maintenance and other services provided by the lessor, and are not tied to an index or rate.

~~The components of lease expense were as follows:~~

~~(In millions)~~	~~Three Months Ended~~ ~~March 31, 2019~~
~~Operating lease cost~~	$	47
~~Finance lease cost:~~
~~Amortization of ROU assets~~		8
~~Interest on lease liabilities~~		1
~~Total finance lease cost~~		9
~~Variable lease cost~~		12
~~Total lease cost~~	$	68

~~Supplemental cash flow information related to leases was as follows:~~

~~(In millions)~~	~~Three Months Ended~~ ~~March 31, 2019~~
~~Cash paid for amounts included in the measurement of lease liabilities:~~
~~Operating cash outflows from operating leases~~	$	42
~~Operating cash outflows from finance leases~~	$	1
~~Financing cash outflows from finance leases~~	$	6

~~ROU assets obtained in exchange for lease obligations:~~
~~Operating leases~~	$	26
~~Finance leases~~	$	45

~~Operating and finance lease ROU assets and lease liabilities were as follows at the balance sheet date:~~

~~(In millions)~~	~~March 31, 2019~~
~~Operating leases:~~
~~Operating lease ROU assets~~	$	~~602~~

~~Accrued expenses and other current liabilities~~		~~160~~
~~Other non-current liabilities~~		~~524~~
~~Total operating lease liabilities~~	$	~~684~~

~~Finance leases:~~
~~Property and equipment, gross~~	$	99
~~Accumulated depreciation~~		~~(8)~~
~~Property and equipment, net~~	$	91

~~Short-term debt~~	$	21
~~Long-term debt~~		68
~~Total finance lease liabilities~~	$	89

The weighted average remaining lease term was 5 years for operating leases and 6 years for finance leases. The weighted average discount rate for operating leases was 3.88% and 3.86% for finance leases.

~~Maturities of lease liabilities were as follows:~~

(In millions)

Operating Leases

Finance Leases

2019

    $
129

    $
18

2020

169

23

2021

140

14

2022

121

14

2023

81

9

Thereafter

124

22

Total lease payments

764

100

Less: imputed interest

80

11

Total

    $
684

    $
89

~~Disclosures regarding minimum lease payments under previous lease accounting guidance can be found in the Company’s 2018 Form 10-K.~~

further information.

Note 15 — – Income Taxes

Income Tax Expense

The 19.9% effective tax rate for the three months ended ~~March 31, 2019 of 23.3% was~~June 30, 2023 and the 19.2% effective tax rate for the six months ended June 30, 2023 were each lower than the ~~24.7%~~20.7% rate ~~for the same period in 2018. The decline was due to suspension of the non-deductible health insurance industry tax.~~

The Company continues to retain a significant portion of its foreign earnings overseas, where they are generally subject to a higher tax rate than that imposed in the United States. Additional deferred tax liabilities of $137 million for foreign withholding taxes would have been recorded if these earnings were intended to be remitted domestically. A portion of these withholding taxes may be eligible for credit against the Company’s U.S. tax liability.

B. ~~Uncertain Tax Positions and Other Tax Matters~~

~~Changes in uncertain tax positions~~ for the three months ended ~~March 31, 2019~~June 30, 2022 and ~~2018 were immaterial. There were no significant updates~~the 21.6% rate for the six months ended June 30, 2022. These decreases are driven largely by favorable results relative to the Company's foreign operations and the release of uncertain tax ~~return audits~~positions resulting from favorable audit developments.

As of June 30, 2023, we had approximately $274 million in deferred tax assets ("DTAs") associated with unrealized investment losses that are partially recorded in Accumulated other comprehensive loss. We have determined that a valuation allowance against the DTAs is not currently required based on the Company's ability to carry back losses and our ability and intent to hold certain securities until recovery. We continue to monitor and evaluate the need for any valuation allowance in the ~~first quarter of 2019.~~

future.

Note 16 — – Contingencies and Other Matters

The Company, through its subsidiaries, is contingently liable for various guarantees provided in the ordinary course of business.

A.Financial Guarantees: Retiree and Life Insurance Benefits

The Company guarantees that separate account assets will be sufficient to pay certain life insurance or retiree benefits. For the majority of these benefits, the sponsoring employers are primarily responsible for ensuring that assets are sufficient to pay these benefits and are required to maintain assets that exceed a certain percentage of benefit obligations. If employers fail to do so, the Company or an affiliate of the buyer of the retirement benefits business ~~(Prudential Retirement Insurance and Annuity Company or “Prudential”)~~ has the right to redirect the management of the related assets to provide for benefit payments. As of ~~March 31, 2019,~~June 30, 2023, employers maintained assets that generally exceeded the benefit obligations under these arrangements of approximately ~~$455~~$420 million. ~~Approximately 11% of these are reinsured by Prudential. The remaining guarantees are provided by the Company with minimal reinsurance from third parties. The Company establishes an~~An additional liability is established if management believes that the Company will be required to make ~~payment~~payments under the guarantees; there were no additional liabilities required for these guarantees, net of reinsurance, as of ~~March 31, 2019.~~June 30, 2023. Separate account assets supporting these guarantees are classified in Levels 1 and 2 of the GAAP fair value ~~hierarchy (see~~ ~~Note 10~~).

hierarchy.

The Company does not expect that these financial guarantees will have a material effect on the ~~Company’s~~Company's consolidated results of operations, liquidity or financial condition.

B.Certain Other Guarantees

The Company had indemnification obligations as of ~~March 31, 2019~~June 30, 2023 in connection with acquisition and disposition transactions. These indemnification obligations are triggered by the breach of representations or covenants provided by the Company, such as representations for the presentation of financial statements, ~~the~~ filing of tax returns, compliance with law or ~~the~~ identification of

outstanding litigation. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential amount due is subject to contractual limitations based on a percentage of the transaction purchase price, while in other cases limitations are not specified or applicable. The Company does not believe that it is possible to determine the maximum potential amount due under these obligations because not all amounts due under these indemnification obligations are subject to limitation. There were no liabilities for these indemnification obligations as of ~~March 31, 2019.~~

June 30, 2023.

C.Guaranty Fund Assessments

The Company operates in a regulatory environment that may require its participation in assessments under state insurance guaranty association laws. The ~~Company’s~~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 ~~impacts related to~~charges or credits resulting from existing or new guaranty fund assessments for the ~~three~~six months ended ~~March 31, 2019.~~

June 30, 2023.

D.Legal and Regulatory Matters

The Company is routinely involved in numerous claims, lawsuits, regulatory inquiries and audits, government investigations, including under the federal False Claims Act and state false claims acts initiated by a government investigating body or by a qui tam ~~relator’s~~ relator's filing of a complaint under court seal, and other legal matters arising, for the most part, in the ordinary course of managing a global health ~~service~~services business. Additionally, the Company has received and is cooperating with subpoenas or similar processes from various governmental agencies requesting information, all arising in the normal course of its business. Disputed tax matters arising

from audits by the Internal Revenue Service or other state and foreign jurisdictions, including those resulting in litigation, are accounted for under GAAP guidance for uncertain tax positions. ~~Further information on income tax matters can be found in Note 15.~~

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. ~~When litigation and regulatory~~For those matters ~~present loss contingencies~~ that ~~are both probable and estimable,~~ the Company ~~accrues the estimated~~has identified with a reasonably possible material loss, by a charge to shareholders’ net income. The estimated loss is the Company’s best estimate of the probable loss at the time or an amount within a range of estimated losses reflecting the most likely outcome or the minimum amount of the range (if no amount is better than any other estimated amount in the range). For material pending litigation and legal or regulatory matters discussed below, the Company provides disclosure in the aggregate of accruals and range of loss, or a statement that such information cannot be estimated. ~~In light of the uncertainties involved in these matters, there is no assurance that their ultimate resolution will not exceed the amounts currently accrued by the Company.~~ The ~~Company’s~~Company's accruals for the matters discussed below under ~~“Litigation Matters”, as well as litigation related to certain of the Company’s claim operating practices~~"Litigation Matters" and ~~disputes around reimbursement rates to providers,~~"Regulatory Matters" are ~~immaterial.~~not material. Due to numerous uncertain factors presented in these cases, it is not possible to estimate an aggregate range of loss (if any) for these matters at this time. In light of the uncertainties involved in these matters, there is no assurance that their ultimate resolution will not exceed the amounts currently accrued by the Company. An adverse outcome in one or more of these matters could be material to the ~~Company’s~~Company's results of operations, financial condition or liquidity for any particular period. The outcomes of lawsuits are inherently unpredictable and we may be unsuccessful in these ongoing litigation matters or any future claims or litigation.

Litigation Matters

~~Amara cash balance pension plan litigation.~~ In December 2001, Janice Amara filed a class action lawsuit in the U.S. District Court for the District of Connecticut against Cigna Corporation (now Old Cigna) and the Cigna Pension Plan on behalf of herself and other similarly situated Plan participants affected by the 1998 conversion to a cash balance formula. The plaintiffs allege various violations of the Employee Retirement Income Security Act of 1974 (“ERISA”), including that the Plan’s cash balance formula discriminates against older employees; that the conversion resulted in a wear-away period (when the pre-conversion accrued benefit exceeded the post-conversion benefit); and that the Plan communications contained inaccurate or inadequate disclosures about these conditions.

In 2008, the District Court (1) affirmed the Company’s right to convert to a cash balance plan prospectively beginning in 1998; (2) found for plaintiffs on the disclosure claim only; and (3) required the Company to pay pre-1998 benefits under the pre-conversion traditional annuity formula and post-1997 benefits under the post-conversion cash balance formula. From 2008 through 2015, this case has undergone a series of court proceedings that resulted in the original District Court Order being largely upheld. In 2015, the Company submitted to the District Court its proposed method for calculating the additional pension benefits due to class members and plaintiffs responded in August 2015.

Since then, there has been continued litigation regarding the calculation of benefits, attorneys’ fees, and the administration of the remedy payments. On November 29, 2018, the Court ordered the Pension Plan to pay attorneys’ and incentive fees of $32 million, and to pay any past due lump sums and back benefits within 90 days of the Order. The attorneys’ fees were paid as ordered in December 2018. In the first quarter of 2019, the Company amended the Plan, notified class participants of their increased benefits and

~~commenced remedy benefit payments out of the Plan, including the past due lump sums and back benefits. See Note 13 for additional information.~~

~~In April 2019, plaintiffs challenged certain aspects of the methodology used to calculate and pay benefits. The Company and the Plan are vigorously opposing plaintiffs’ motion.~~

~~Cigna Litigation with Anthem~~. In February 2017, the Company delivered a notice to Anthem terminating the 2015 merger agreement, and notifying Anthem that it must pay the Company the $1.85 billion reverse termination fee pursuant to the terms of the merger agreement. Also in February 2017, the Company filed suit against Anthem in the Delaware Court of Chancery (the “Chancery Court”) seeking declaratory judgments that the Company’s termination of the merger agreement was valid and that Anthem was not permitted to extend the termination date. The complaint also sought payment of the reverse termination fee and additional damages in an amount exceeding $13 billion, including the lost premium value to the Company’s shareholders caused by Anthem’s willful breaches of the merger agreement. Anthem has countersued, alleging its own claims for damages.

On February 15, 2017, the Chancery Court granted Anthem’s motion for a temporary restraining order and temporarily enjoined the Company from terminating the merger agreement. In May 2017, the Chancery Court denied Anthem’s motion for a preliminary injunction to enjoin Cigna from terminating the merger agreement but stayed its ruling pending Anthem’s determination as to whether to seek an appeal. Anthem subsequently notified Cigna and the Chancery Court that it did not intend to appeal the Chancery Court’s decision. As a result, the merger agreement was terminated.

The litigation between the parties remains pending. A trial was held during the first quarter of 2019. Oral arguments on post-trial briefs have been set for September 2019 and we expect the judge to issue a decision before the end of the year. We believe in the merits of our claims and dispute Anthem’s claims, and we intend to vigorously defend ourselves and pursue our claims.

Express Scripts Litigation with ~~Anthem.~~Elevance. In March 2016, ~~Anthem~~Elevance filed a lawsuit in the United States District Court for the Southern District of New York alleging various breach of contract claims against Express Scripts relating to the ~~parties’~~parties' rights and obligations under the periodic pricing review section of the pharmacy benefit management agreement between the parties including allegations that Express Scripts failed to negotiate new pricing concessions in good faith, as well as various alleged service issues. ~~Anthem~~Elevance also requested that the court enter declaratory judgment that Express Scripts is required to provide ~~Anthem~~Elevance competitive benchmark pricing, that ~~Anthem~~Elevance can terminate the agreement and that Express Scripts is required to provide ~~Anthem~~Elevance with post-termination services at competitive benchmark pricing for one year following any termination by ~~Anthem. Anthem claims~~Elevance. Elevance claimed it is entitled to ~~$13.0~~$13 billion in additional pricing concessions over the remaining term of the agreement, as well as $1.8 billion for one year following any contract termination by ~~Anthem~~Elevance and $150 million in damages for service issues ~~(“Anthem’s Allegations”~~("Elevance's Allegations"). On April 19, 2016, in response to ~~Anthem’s~~Elevance's complaint, Express Scripts filed its answer denying ~~Anthem’s~~Elevance's Allegations in their entirety and asserting affirmative defenses and counterclaims against ~~Anthem.~~Elevance. The court subsequently granted ~~Anthem’s~~Elevance's motion to dismiss two of six counts of Express ~~Scripts’~~Scripts' amended counterclaims. ~~The current~~Express Scripts filed its Motion for Summary Judgment on August 27, 2021. Elevance completed filing of its Response to Express Scripts' Motion for Summary Judgment on October 16, 2021. Express Scripts filed its Reply in Support of its Motion for Summary Judgment on November 19, 2021. On March 31, 2022, the court granted summary judgment in favor of Express Scripts on all of Elevance's pricing claims for damages totaling $14.8 billion and on most of Elevance's claims relating to service issues. Elevance's only remaining service claims relate to the review or processing of prior authorizations. On June 10, 2022, Express Scripts filed a Motion for Partial Summary Judgment seeking to limit Elevance's remaining prior authorization claims and a Motion to Exclude certain opinions offered by its experts. Elevance filed its opposition to both motions, and a cross-motion to submit a supplemental expert report, on July 9, 2022. Express Scripts' pending Motions were fully briefed at the end of July 2022. On March 8, 2023, the Court granted Express Scripts' Motion for Partial Summary Judgment, excluding in full the testimony of four of Elevance's experts and in part the testimony of two additional experts, and granted Elevance leave to submit a supplemental expert report. On April 5, 2023, the Court entered a scheduling order ~~runs through~~setting a trial on Elevance's remaining prior authorization claims to commence on December 4, 2023.

Medicare Advantage. A qui tam action that was filed by a private individual (the "relator") on behalf of the ~~completion of summary judgment briefing in February 2020. There is no tentative trial date. We believe~~government in the ~~merits~~United States District Court for the Southern District of ~~our~~New York in 2017 was unsealed on August 6, 2020. The action asserts claims ~~and dispute Anthem’s claims, and we intend~~related to ~~vigorously defend ourselves and pursue our claims.~~

~~Regulatory Matters~~

~~Civil Investigative Demand.~~ ~~The~~risk adjustment practices arising from certain health exams conducted as part of the Company's Medicare Advantage business. In September 2021, the qui tam action was transferred to the United States District Court for the Middle District of Tennessee. On January 11, 2022, the U.S. Department of Justice ~~(“DOJ”~~("DOJ") (U.S. Attorney's Offices for the Southern District of New York and the Middle District of Tennessee) filed a motion to partially intervene, which was granted on August 2, 2022. On October 14, 2022, the DOJ filed its complaint-in-intervention alleging that certain diagnoses made during in-home exams were invalid for risk adjustment purposes, seeking unspecified damages and penalties under the federal False Claims Act. The Company's motion to dismiss the DOJ's complaint is fully briefed and pending before the court. The Company's motion to dismiss relator's complaint was denied as moot after relator asked for and was granted permission to amend his complaint. Relator filed an amended complaint on July 28, 2023. The Company's response to the complaint is due September 11, 2023.

Regulatory Matters

Civil Investigative Demand. The DOJ is conducting ~~an industry review~~industry-wide investigations of Medicare Advantage ~~organizations’~~organizations' risk adjustment ~~practices under~~practices. For certain Medicare ~~Parts C and D~~Advantage organizations, including ~~medical chart reviews and health exams.~~The Cigna Group, those investigations have resulted in litigation (see "Litigation Matters—Medicare Advantage" above). The Company ~~is currently responding~~has responded to information requests (civil investigative demands) ~~received~~ from the DOJ (U.S. ~~Attorney’s Offices~~Attorney's Office for the Eastern District of ~~Pennsylvania~~Pennsylvania) and ~~the Southern District of New York). We will continue~~is continuing to cooperate with the ~~DOJ’s investigation.~~

~~Disability claims regulatory matter.~~ The Company is subject to an agreement with the Departments of Insurance for Maine, Massachusetts, Pennsylvania, Connecticut and California (together, the “Lead States”), originally entered into in 2013, that relatesDOJ.

Note 17 – Segment Information

See Note 1 to the Company’s long-term disability claims handling practices. The agreement provides for enhanced procedures related to documentation and disposition. Cigna has cooperated fully with the Lead States and we believe we have addressed the requirements of the agreement. The Lead States recently initiated a re-examination of our practices. Accordingly, the Company may be subject to additional costs, penalties and requests to change its business practices that could negatively impact future earnings for this business.

~~Note 17~~ ~~— Condensed Consolidating~~Consolidated Financial ~~Information~~

Effective with the Merger that closed on December 20, 2018 (see Note 4 for further information) the senior notes issued by Cigna, Old Cigna, ESI, Medco, and Express Scripts became jointly and severally and fully and unconditionally (subject to certain customary release provisions, including sale, exchange, transfer or liquidation of the guarantor subsidiary) guaranteed by Cigna, Old Cigna, ESI, Medco and Express Scripts, as applicable. Details of these debt obligations are presented in Note 6. The following condensed consolidating financial information has been prepared in accordance with the requirements as prescribed by the SEC in Regulation S-X. The condensed consolidating financial information presented below is not indicative of what the financial position, results of operations or cash flows would have been had each of the entities operated as an independent company during the periods for various reasons, including, but not limited to, intercompany transactions and integration of systems.

~~The condensed consolidating financial information is presented separately for:~~

~~(i)~~		~~Cigna (the Parent Company), guarantor, the issuer of additional guaranteed obligations;~~
~~(ii)~~		~~Old Cigna (former Parent Company), guarantor, the issuer of additional guaranteed obligations;~~
~~(iii)~~		~~Express Scripts, guarantor, the issuer of additional guaranteed obligations;~~
~~(iv)~~		~~ESI, guarantor, the issuer of additional guaranteed obligations;~~
~~(v)~~		~~Medco, guarantor, the issuer of additional guaranteed obligations;~~
~~(vi)~~		~~Non-guarantor subsidiaries, on a combined basis;~~
~~(vii)~~		Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between or among Cigna, Old Cigna, Express Scripts, ESI, Medco and the non-guarantor subsidiaries, (b) eliminate the investments in our subsidiaries and (c) record consolidating entries; and
~~(viii)~~		~~Cigna and subsidiaries on a consolidated basis.~~

~~Condensed Consolidating~~ Statements ~~of Income~~

For the three months ended March 31, 2019
(In millions)

Cigna

Old Cigna

Express
Scripts
Holding
Company

Express
Scripts,
Inc.

Medco Health
Solutions, Inc.

Non-
Guarantors

Eliminations
and
Consolidation
Adjustments

Consolidated
Revenues

Pharmacy revenues

$
-

$
-

$
-

$
17,622

$
3,763

$
14,142

$
(10,348)

$
25,179
Premiums

-

-

-

-

-

9,971

-

9,971
Fees and other revenues

-

-

-

190

84

3,101

(925)

2,450
Net investment income (loss)

(9)

-

15

3

2

335

-

346
Total revenues

(9)

-

15

17,815

3,849

27,549

(11,273)

37,946
Benefits and expenses

Pharmacy and other service costs

-

-

-

16,363

3,689

14,346

(10,348)

24,050
Medical costs and other benefit expenses

-

-

-

-

-

7,620

-

7,620
Selling, general and administrative expenses

(99)

73

13

835

87

3,319

(925)

3,303
Amortization of acquired intangible assets

-

-

-

577

83

83

-

743
Total benefits and expenses

(99)

73

13

17,775

3,859

25,368

(11,273)

35,716
Income (loss) from operations

90

(73)

2

40

(10)

2,181

-

2,230
Interest and other income (expense)

(237)

(87)

(124)

(4)

(9)

9

-

(452)
Intercompany interest income (expense)

(31)

(3)

124

(62)

(39)

11

-

-
Net realized investment gains

-

-

-

-

-

10

-

10
Income (loss) before income taxes

(178)

(163)

2

(26)

(58)

2,211

-

1,788
Total income tax (benefit) expense

(37)

(31)

1

(17)

(17)

517

-

416
Income (loss) before equity in earnings of subsidiaries

(141)

(132)

1

(9)

(41)

1,694

-

1,372
Equity in earnings of subsidiaries

1,509

1,152

488

432

84

-

(3,665)

-
Net income

1,368

1,020

489

423

43

1,694

(3,665)

1,372
Less: Net income attributable to noncontrolling interests

-

-

-

-

-

4

-

4
Shareholders’ net income

$
1,368

$
1,020

$
489

$
423

$
43

$
1,690

$
(3,665)

$
1,368
Other comprehensive income, net of tax

429

429

1

1

-

412

(843)

429
Shareholders’ comprehensive income

$
1,797

$
1,449

$
490

$
424

$
43

$
2,102

$
(4,508)

$
1,797

~~Condensed Consolidating Statements of Income~~

For the three months ended March 31, 2018
(In millions)

Cigna

Old Cigna

Express
Scripts
Holding
Company

Express
Scripts,
Inc.

Medco Health
Solutions, Inc.

Non-
Guarantors

Eliminations
and
Consolidation
Adjustments

Consolidated
Revenues

Premiums

$
-

$
-

$
-

$
-

$
-

$
8,999

$
-

$
8,999
Fees and other revenues

-

-

-

-

-

1,368

-

1,368
Pharmacy revenues

-

-

-

-

-

717

-

717
Net investment income

-

-

-

-

-

329

-

329
Total revenues

-

-

-

-

-

11,413

-

11,413
Benefits and expenses

Medical costs and other benefit expenses

-

-

-

-

-

6,772

-

6,772
Pharmacy and other service costs

-

-

-

-

-

561

-

561
Selling, general and administrative expenses

-

64

-

-

-

2,681

-

2,745
Amortization of acquired intangible assets

-

-

-

-

-

27

-

27
Total benefits and expenses

-

64

-

-

-

10,041

-

10,105
Income (loss) from operations

-

(64)

-

-

-

1,372

-

1,308
Interest and other (expense)

-

(85)

-

-

-

28

-

(57)
Intercompany interest income (expense)

-

(16)

-

-

-

16

-

-
Net realized investment (losses)

-

-

-

-

-

(33)

-

(33)
Income (loss) before income taxes

-

(165)

-

-

-

1,383

-

1,218
Total income tax (benefit) expense

-

(39)

-

-

-

340

-

301
Income (loss) before equity in earnings of subsidiaries

-

(126)

-

-

-

1,043

-

917
Equity in earnings of subsidiaries

915

1,041

-

-

-

-

(1,956)

-
Net income

915

915

-

-

-

1,043

(1,956)

917
Less: net income attributable to noncontrolling interests

-

-

-

-

-

2

-

2
Shareholders’ net income

$
915

$
915

$
-

$
-

$
-

$
1,041

$
(1,956)

$
915
Other comprehensive (loss), net of tax

(226)

(226)

-

-

-

(237)

463

(226)
Shareholders’ comprehensive income

$
689

$
689

$
-

$
-

$
-

$
804

$
(1,493)

$
689

~~Condensed Consolidating Balance Sheets~~

As of March 31, 2019
(In millions)

Cigna

Old Cigna

Express
Scripts
Holding
Company

Express
Scripts,
Inc.

Medco Health
Solutions, Inc.

Non-
Guarantors

Eliminations
and
Consolidation
Adjustments

Consolidated
Assets

Cash and cash equivalents

$
-

$
-

$
1,596

$
44

$
-

$
3,336

$
-

$
4,976
Investments

417

6

-

-

-

1,239

-

1,662
Accounts receivable, net

-

2

-

4,670

626

5,643

-

10,941
Inventories

-

-

-

-

-

2,382

-

2,382
Other current assets

-

131

-

282

3

1,042

(283)

1,175
Total current assets

417

139

1,596

4,996

629

13,642

(283)

21,136
Long-term investments

-

10

-

-

-

27,247

-

27,257
Reinsurance recoverables

-

-

-

-

-

5,385

-

5,385
Deferred policy acquisition costs

-

-

-

-

-

2,817

-

2,817
Property and equipment

-

-

-

2,386

-

2,137

-

4,523
Investments in subsidiaries

70,036

28,174

52,560

17,551

8,205

-

(176,526)

-
Intercompany receivables, net

-

3,054

-

8,371

2,222

26,839

(40,486)

-
Goodwill

-

-

31,049

-

-

13,488

-

44,537
Other intangible assets

-

-

8,400

18,489

6,958

4,491

-

38,338
Other assets

27

227

-

152

78

2,001

(209)

2,276
Separate account assets

-

-

-

-

-

8,079

-

8,079
TOTAL ASSETS

$
70,480

$
31,604

$
93,605

$
51,945

$
18,092

$
106,126

$
(217,504)

$
154,348
Liabilities

Current insurance and contractholder liabilities

$
-

$
-

$
-

$
-

$
-

$
7,060

$
-

$
7,060
Pharmacy and service costs payable

-

-

-

9,245

1,291

609

-

11,145
Accounts payable

22

-

2

833

4

3,627

-

4,488
Accrued expenses and other liabilities

719

288

92

1,522

276

4,747

(283)

7,361
Short-term debt

1,556

-

998

352

-

9

-

2,915
Total current liabilities

2,297

288

1,092

11,952

1,571

16,052

(283)

32,969
Non-current insurance and contractholder liabilities

-

-

-

-

-

20,043

-

20,043
Deferred tax liabilities, net

-

-

1,999

4,898

1,664

1,051

(209)

9,403
Other non-current liabilities

-

715

-

577

241

2,299

-

3,832
Intercompany payables, net

4,904

4,477

30,552

-

-

553

(40,486)

-
Long-term debt

20,871

5,112

10,938

41

505

104

-

37,571
Separate account liabilities

-

-

-

-

-

8,079

-

8,079
TOTAL LIABILITIES

28,072

10,592

44,581

17,468

3,981

48,181

(40,978)

111,897
Redeemable noncontrolling interests

-

-

-

-

-

38

-

38
TOTAL SHAREHOLDERS’ EQUITY

42,408

21,012

49,024

34,477

14,111

57,902

(176,526)

42,408
Noncontrolling interests

-

-

-

-

-

5

-

5
TOTAL EQUITY

42,408

21,012

49,024

34,477

14,111

57,907

(176,526)

42,413
TOTAL LIABILITIES AND EQUITY

$
70,480

$
31,604

$
93,605

$
51,945

$
18,092

$
106,126

$
(217,504)

$
154,348

~~Condensed Consolidating Balance Sheets~~

As of December 31, 2018

(In millions)

Cigna

Old Cigna

Express
Scripts
Holding
Company

Express
Scripts,
Inc.

Medco Health
Solutions, Inc.

Non-
Guarantors

Eliminations
and
Consolidation
Adjustments

Consolidated

Assets

Cash and cash equivalents

$
243

$
-

$
633

$
43

$
-

$
2,936

$
-

$
3,855

Investments

-

-

-

-

-

2,045

-

2,045

Accounts receivable, net

-

-

-

4,206

748

5,519

-

10,473

Inventories

-

-

-

-

-

2,821

-

2,821

Other current assets

14

59

-

310

-

1,063

(210)

1,236

Total current assets

257

59

633

4,559

748

14,384

(210)

20,430

Long-term investments

-

10

-

-

-

26,919

-

26,929

Reinsurance recoverables

-

-

-

-

-

5,507

-

5,507

Deferred policy acquisition costs

-

-

-

-

-

2,821

-

2,821

Property and equipment

-

-

-

2,432

-

2,130

-

4,562

Investments in subsidiaries

68,969

27,544

52,035

17,115

8,117

-

(173,780)

-

Intercompany receivables, net

-

4,505

-

7,425

2,335

24,882

(39,147)

-

Goodwill

-

-

31,049

-

-

13,456

-

44,505

Other intangible assets

-

-

8,400

18,962

7,040

4,601

-

39,003

Other assets

48

198

-

68

74

1,488

(246)

1,630

Separate account assets

-

-

-

-

-

7,839

-

7,839

TOTAL ASSETS

$
69,274

$
32,316

$
92,117

$
50,561

$
18,314

$
104,027

$
(213,383)

$
153,226

Liabilities

Current insurance and contractholder liabilities

$
-

$
-

$
-

$
-

$
-

$
6,801

$
-

$
6,801

Pharmacy and service costs payable

-

-

-

8,422

1,579

701

-

10,702

Accounts payable

22

-

-

834

4

3,506

-

4,366

Accrued expenses and other liabilities

396

182

129

1,387

189

4,998

(210)

7,071

Short-term debt

-

1,500

995

353

-

107

-

2,955

Total current liabilities

418

1,682

1,124

10,996

1,772

16,113

(210)

31,895

Non-current insurance and contractholder liabilities

-

-

-

-

-

19,974

-

19,974

Deferred tax liabilities, net

-

-

2,001

5,012

1,685

1,001

(246)

9,453

Other non-current liabilities

-

685

-

497

290

1,998

-

3,470

Intercompany payables, net

4,965

4,361

29,569

-

-

252

(39,147)

-

Long-term debt

22,863

5,110

10,932

24

506

88

-

39,523

Separate account liabilities

-

-

-

-

-

7,839

-

7,839

TOTAL LIABILITIES

28,246

11,838

43,626

16,529

4,253

47,265

(39,603)

112,154

Redeemable noncontrolling interests

-

-

-

-

-
��
37

-

37

TOTAL SHAREHOLDERS’ EQUITY

41,028

20,478

48,491

34,032

14,061

56,718

(173,780)

41,028

Noncontrolling interest

-

-

-

-

-

7

-

7

TOTAL EQUITY

41,028

20,478

48,491

34,032

14,061

56,725

(173,780)

41,035

TOTAL LIABILITIES AND EQUITY

$
69,274

$
32,316

$
92,117

$
50,561

$
18,314

$
104,027

$
(213,383)

$
153,226

~~Condensed Consolidating Cash Flow Statements~~

For the Three Months Ended March 31, 2019

(In millions)

Cigna

Old Cigna

Express
Scripts
Holding
Company

Express
Scripts,
Inc.

Medco Health
Solutions, Inc.

Non-
Guarantors

Eliminations
and
Consolidation
Adjustments

Consolidated

Net cash (used in) provided by operating activities

$
1,102

$
947

$
(6)

$
1,802

$
(110)

$
1,295

$
(1,838)

$
3,192

Cash Flows from Investing Activities

Net change in loans due to (from) affiliates

-

1,600

(1,700)

-

-

141

(41)

-

Proceeds from investments sold:

Debt securities and equity securities

-

-

-

-

-

1,471

-

1,471

Investment maturities and repayments:

Debt securities and equity securities

-

-

-

-

-

319

-

319

Commercial mortgage loans

-

-

-

-

-

89

-

89

Other sales, maturities and repayments (primarily short-term and other long-term investments)

-

-

-

-

-

367

-

367

Investments purchased or originated:

Debt securities and equity securities

-

-

-

-

-

(1,088)

-

(1,088)

Commercial mortgage loans

-

-

-

-

-

(95)

-

(95)

Other sales, maturities and repayments (primarily short-term and other long-term investments)

(417)

(6)

-

-

-

35

-

(388)

Property and equipment purchases, net

-

-

-

(55)

-

(139)

-

(194)

Acquisitions, net of cash acquired

-

-

-

-

-

(6)

-

(6)

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

(417)

1,594

(1,700)

(55)

-

1,094

(41)

475

Cash Flows from Financing Activities

Net change in amounts due to (from) affiliates, net

-

(141)

2,669

(1,744)

110

(935)

41

-

Intercompany dividends paid

-

(900)

-

-

-

(922)

1,822

-

Deposits and interest credited to contractholder deposit funds

-

-

-

-

-

247

-

247

Withdrawals and benefit payments from contractholder deposit funds

-

-

-

-

-

(251)

-

(251)

Net change in short-term debt

558

(1,500)

-

-

-

(106)

-

(1,048)

Repayment of long-term debt

(1,000)

-

-

-

-

-

-

(1,000)

Repurchase of common stock

(462)

-

-

-

-

-

-

(462)

Issuance of common stock

53

-

-

-

-

-

-

53

Other, net

(77)

-

-

(2)

-

(10)

16

(73)

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

(928)

(2,541)

2,669

(1,746)

110

(1,977)

1,879

(2,534)

Effect of foreign currency rate changes on cash and cash equivalents

-

-

-

-

-

(12)

-

(12)

Net (decrease) increase in cash and cash equivalents

(243)

-

963

1

-

400

-

1,121

Cash and cash equivalents, January 1,

243

-

633

43

-

2,936

-

3,855

Cash and cash equivalents, March 31,

$
-

$
-

$
1,596

$
44

$
-

$
3,336

$
-

$
4,976

~~Condensed Consolidating Cash Flow Statements~~

For the Three Months Ended March 31, 2018

(In millions)

Cigna

Old Cigna

Express
Scripts
Holding
Company

Express
Scripts,
Inc.

Medco Health
Solutions, Inc.

Non-
Guarantors

Eliminations
and
Consolidation
Adjustments

Consolidated

Net cash provided by operating activities

$
-

$
641

$
-

$
-

$
-

$
1,833

$
(449)

$
2,025

Cash Flows from Investing Activities

Net change in loans due to affiliates

-

-

-

-

-

102

(102)

-

Proceeds from investments sold:

Debt securities and equity securities

-

-

-

-

-

499

-

499

Investment maturities and repayments:

Debt securities and equity securities

-

-

-

-

-

297

-

297

Commercial mortgage loans

-

-

-

-

-

28

-

28

Other sales, maturities and repayments (primarily short-term and other long-term investments)

-

-

-

-

-

112

-

112

Investments purchased or originated:

Debt securities and equity securities

-

-

-

-

-

(2,259)

-

(2,259)

Commercial mortgage loans

-

-

-

-

-

(68)

-

(68)

Other sales, maturities and repayments (primarily short-term and other long-term investments)

-

(2)

-

-

-

(204)

-

(206)

Property and equipment purchases, net

-

-

-

-

-

(103)

-

(103)

NET CASH (USED IN) INVESTING ACTIVITIES

-

(2)

-

-

-

(1,596)

(102)

(1,700)

Cash Flows from Financing Activities

Net change in amounts due (from) affiliates, net

-

(102)

-

-

-

-

102

-

Intercompany dividends paid

-

-

-

-

-

(449)

449

-

Deposits and interest credited to contractholder deposit funds

-

-

-

-

-

292

-

292

Withdrawals and benefit payments from contractholder deposit funds

-

-

-

-

-

(306)

-

(306)

Net change in short-term debt

-

-

-

-

-

(3)

-

(3)

Repayment of long-term debt

-

(131)

-

-

-

-

-

(131)

Repurchase of common stock

-

(310)

-

-

-

-

-

(310)

Issuance of common stock

-

20

-

-

-

-

-

20

Other, net

-

(125)

-

-

-

33

-

(92)

NET CASH (USED IN) FINANCING ACTIVITIES

-

(648)

-

-

-

(433)

551

(530)

Effect of foreign currency rate changes on cash and cash equivalents

-

-

-

-

-

4

-

4

Net (decrease) in cash and cash equivalents

-

(9)

-

-

-

(192)

-

(201)

Cash and cash equivalents, January 1,

-

9

-

-

-

2,963

-

2,972

Cash and cash equivalents, March 31,

$
-

$
-

$
-

$
-

$
-

$
2,771

$
-

$
2,771

~~Note 18~~ ~~— Segment Information~~

~~See Note 1~~ for a description of our segments that changed effective with the fourth quarter of 2018 along with one of our principal financial measures of segment operating performance, which is now pre-tax adjusted income from operations. Prior year segment information reported in this Form 10-Q has been adjusted to reflect these changes. In addition, effective with the first quarter of 2019, the Company began allocating compensation cost for stock options to the segments. ~~Prior year segment information was not restated for this change.~~ A description of our basis for reporting segment operating results is outlined below. Intersegment ~~transactions~~revenues primarily reflect pharmacy ~~sales to insured customers of~~and care services transactions between the ~~Integrated Medical segment. These transactions are eliminated in consolidation.~~

Evernorth Health Services and Cigna Healthcare segments.

The Company uses ~~“pre-tax~~"pre-tax adjusted income (loss) from ~~operations”~~operations" and ~~“adjusted revenues”~~"adjusted revenues" as its principal financial measures of segment operating performance because management believes ~~they~~these metrics best reflect the underlying results of business operations and permit analysis of trends in underlying revenue, expenses and profitability. ~~Pre-tax~~We define pre-tax adjusted income from operations ~~is defined~~ as income before income taxes excluding pre-tax income (loss) attributable to noncontrolling interests, net realized investment results, amortization of acquired intangible assets, ~~results of transitioning clients Anthem Inc. and Coventry Health Care, Inc. (the “transitioning clients”)~~ and special items. ~~Adjusted revenues is defined as revenues excluding: 1) revenue contributions from transitioning clients; 2) the Company’s~~The Cigna Group's share of certain realized investment results of its joint ventures reported in the ~~International Markets~~Cigna Healthcare segment using the equity method of ~~accounting; and 3) special items, if any. Income or expense amounts that~~accounting are ~~excluded from adjusted income from operations because they are not indicative of underlying performance or the responsibility of operating segment management include:~~

·~~Realized investment gains (losses) including changes in market values of certain financial instruments between balance sheet dates, as well as gains and losses associated with invested asset sales~~

·~~Amortization of acquired intangible assets because these relate to costs incurred for acquisitions~~

·~~Results of transitioning clients because those results are not indicative of ongoing results~~

·also excluded. Special items ~~if any,~~are matters that management believes are not representative of the underlying results of operations due to ~~the~~their nature or ~~size~~size. Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results.

The Company defines adjusted revenues as total revenues excluding the following adjustments: special items and The Cigna Group's share of ~~these matters. Further context about~~certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. We exclude these items from this measure because management believes they are not indicative of past or future underlying performance of the business.

The Company does not report total assets by segment because this is ~~provided in the footnotes listed in the table below.~~

not a metric used to allocate resources or evaluate segment performance.

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,

	2023				2022				2023				2022
(In millions)	Pre-tax		After-tax		Pre-tax		After-tax		Pre-tax		After-tax		Pre-tax		After-tax
Integration and transaction-related costs (Selling, general and administrative expenses)	$	6	$	5	$	36	$	26	$	7	$	6	$	88	$	63
Charge for organizational efficiency plan (Selling, general and administrative expenses)	—		—		22		17		—		—		22		17
(Benefits) associated with litigation matters (Selling, general and administrative expenses)	—		—		(28)		(20)		—		—		(28)		(20)





Total impact from special items	$	6	$	5	$	30	$	23	$	7	$	6	$	82	$	60

Effective January 1, 2023, we adopted amended accounting guidance for long-duration insurance contracts. See Note 2 to the ~~three months ended March 31, 2019 and 2018.~~

Three Months Ended
(In millions)

March 31, 2019

March 31, 2018
Description of Special Item Charges (Benefits) and Financial Statement Line Item(s)

After-tax

Before-tax

After-tax

Before-tax
Integration and transaction-related costs (selling, general and administrative expenses)

$
108

$
136

$
50

$
60

Consolidated Financial Statements for further information. Prior period summarized segment information has been retrospectively adjusted to conform to this new basis of accounting. Summarized segment financial information ~~for the three months ended March 31~~ was as follows:

(In millions)

Health
Services

Integrated
Medical

International
Markets

Group
Disability and
Other

Corporate and
Eliminations

Total
Three Months Ended March 31, 2019

Revenues from external customers (1)

$
26,197

$
8,910

$
1,384

$
1,109

$
-

$
37,600
Inter-segment revenues

737

162

-

7

(906)

-
Net investment income (loss)

15

123

38

180

(10)

346
Total revenues

26,949

9,195

1,422

1,296

(916)

37,946
Revenue contributions from transitioning clients

(4,489)

-

-

-

-

(4,489)
Net realized investment results from equity method subsidiaries (2)

-

-

(28)

-

-

(28)
Adjusted revenues

$
22,460

$
9,195

$
1,394

$
1,296

$
(916)

$
33,429
Income (loss) before taxes

$
942

$
1,157

$
222

$
93

$
(626)

$
1,788
Pre-tax adjustments to reconcile to adjusted income from operations

Adjustment for transitioning clients

(660)

-

-

-

-

(660)
(Income) attributable to noncontrolling interests

(1)

-

(4)

-

-

(5)
Net realized investment (gains) (2)

-

(5)

(23)

(10)

-

(38)
Amortization of acquired intangible assets

713

18

11

1

-

743
Special items

Integration and transaction-related costs

-

-

-

-

136

136
Pre-tax adjusted income (loss) from operations

$
994

$
1,170

$
206

$
84

$
(490)

$
1,964
(In millions)

Health Services

Integrated
Medical

International
Markets

Group
Disability and
Other

Corporate and
Eliminations

Total
Three Months Ended March 31, 2018

Revenues from external customers (1)

$
786

$
7,903

$
1,302

$
1,093

$
-

$
11,084
Inter-segment revenues

284

136

-

3

(423)

-
Net investment income

1

111

37

175

5

329
Total revenues

1,071

8,150

1,339

1,271

(418)

11,413
Net realized investment results from equity method subsidiaries (2)

-

-

2

-

-

2
Adjusted revenues

$
1,071

$
8,150

$
1,341

$
1,271

$
(418)

$
11,415
Income (loss) before taxes

$
83

$
972

$
213

$
103

$
(153)

$
1,218
Pre-tax adjustments to reconcile to adjusted income from operations

(Income) attributable to noncontrolling interests

-

-

(4)

-

-

(4)
Net realized investment losses (2)

-

18

4

12

1

35
Amortization of acquired intangible assets

-

22

4

1

-

27
Special items

Integration and transaction-related costs

-

-

-

-

60

60
Pre-tax adjusted income (loss) from operations

$
83

$
1,012

$
217

$
116

$
(92)

$
1,336

(In millions) Evernorth Health Services Cigna Healthcare Other Operations Corporate and Eliminations Total
Three months ended June 30, 2023
Revenues from external customers $ 36,721 $ 11,505 $ 82 $ — $ 48,308
Intersegment revenues 1,422 1,044 — (2,466)
Net investment income 62 135 76 5 278
Total revenues 38,205 12,684 158 (2,461) 48,586
Net realized investment results from certain equity method investments — 30 — — 30
Adjusted revenues $ 38,205 $ 12,714 $ 158 $ (2,461) $ 48,616
Income (loss) before income taxes $ 1,128 $ 1,156 $ 29 $ (429) $ 1,884
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests (54) (1) — — (55)
Net realized investment (gains) losses (1)
(1) 5 — — 4
Amortization of acquired intangible assets 443 12 — — 455
Special items
Integration and transaction-related costs — — — 6 6
Pre-tax adjusted income (loss) from operations $ 1,516 $ 1,172 $ 29 $ (423) $ 2,294
(In millions) Evernorth Health Services Cigna Healthcare Other Operations Corporate and Eliminations Total
Three months ended June 30, 2022
Revenues from external customers $ 33,716 $ 10,620 $ 817 $ — $ 45,153
Intersegment revenues 1,131 586 — (1,717)
Net investment income 16 178 131 — 325
Total revenues 34,863 11,384 948 (1,717) 45,478
Net realized investment results from certain equity method investments — (49) — — (49)
Adjusted revenues $ 34,863 $ 11,335 $ 948 $ (1,717) $ 45,429
Income (loss) before income taxes $ 1,044 $ 1,200 $ 168 $ (431) $ 1,981
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests (13) — (2) — (15)
Net realized investment (gains) losses (1)
— (22) 62 — 40
Amortization of acquired intangible assets 444 57 — — 501
Special items
Integration and transaction-related costs — — — 36 36
Charge for organizational efficiency plan — — — 22 22
(Benefits) associated with litigation matters — — — (28) (28)
Pre-tax adjusted income (loss) from operations $ 1,475 $ 1,235 $ 228 $ (401) $ 2,537

(1) Includes the ~~Company’s~~Company's share of ~~the earnings~~certain realized investment results of its joint ventures reported in the ~~International Markets~~Cigna Healthcare segment using the equity method of accounting.

~~(2)~~

(In millions) Evernorth Health Services Cigna Healthcare Other Operations Corporate and Eliminations Total
Six months ended June 30, 2023
Revenues from external customers $ 71,232 $ 23,155 $ 161 $ — $ 94,548
Intersegment revenues 3,040 2,007 — (5,047)
Net investment income 112 278 154 11 555
Total revenues 74,384 25,440 315 (5,036) 95,103
Net realized investment results from certain equity method investments
— (8) — — (8)
Adjusted revenues $ 74,384 $ 25,432 $ 315 $ (5,036) $ 95,095
Income (loss) before income taxes $ 2,046 $ 2,233 $ 50 $ (844) $ 3,485
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests (96) (2) — — (98)
Net realized investment (gains) losses (1)
(1) 29 (6) — 22
Amortization of acquired intangible assets 887 27 — — 914
Special items
Integration and transaction-related costs — — — 7 7
Pre-tax adjusted income (loss) from operations $ 2,836 $ 2,287 $ 44 $ (837) $ 4,330
(In millions) Evernorth Health Services Cigna Healthcare Other Operations Corporate and Eliminations Total
Six months ended June 30, 2022
Revenues from external customers
$ 66,005 $ 21,082 $ 1,658 $ — $ 88,745
Intersegment revenues 2,418 1,148 — (3,566)
Net investment income 26 444 269 — 739
Total revenues 68,449 22,674 1,927 (3,566) 89,484
Net realized investment results from certain equity method investments — 54 — — 54
Adjusted revenues $ 68,449 $ 22,728 $ 1,927 $ (3,566) $ 89,538
Income (loss) before income taxes $ 1,914 $ 2,077 $ 383 $ (826) $ 3,548
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests (24) (1) (7) — (32)
Net realized investment losses (1)
— 384 81 — 465
Amortization of acquired intangible assets 887 72 — — 959
Special items
Integration and transaction-related costs — — — 88 88
Charge for organizational efficiency plan — — — 22 22
(Benefits) associated with litigation matters — — — (28) (28)
Pre-tax adjusted income (loss) from operations $ 2,777 $ 2,532 $ 457 $ (744) $ 5,022

(1)Includes the ~~Company’s~~Company's share of certain realized investment ~~gains (losses)~~results of its joint ventures reported in the ~~International Markets~~Cigna Healthcare segment using the equity method of accounting.

Revenue from external customers includes ~~pharmacy~~Pharmacy revenues, ~~premiums,~~Premiums and ~~fees~~Fees and other revenues. Prior period amounts have been retrospectively adjusted to reflect adoption of amended accounting guidance for long-duration insurance contracts, as discussed in Note 2 to the Consolidated Financial Statements. The following table presents these revenues by product, premium and service type:


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

(In millions)	2023		2022		2023		2022
Products (Pharmacy revenues) (ASC 606)
Network revenues	$	16,406	$	16,107	$	32,154	$	31,638
Home delivery and specialty revenues	16,594		15,268		32,619		29,967
Other revenues	2,249		1,667		4,116		3,379
Intercompany eliminations	(1,285)		(1,070)		(2,781)		(2,315)
Total pharmacy revenues	33,964		31,972		66,108		62,669
Insurance premiums (ASC 944)
Cigna Healthcare
U.S. Commercial (1)
Insured	4,091		3,771		8,171		7,491
Stop loss	1,514		1,344		3,017		2,669
Other	365		352		733		712
U.S. Government (1)
Medicare Advantage	2,180		2,053		4,416		4,131
Medicare Part D	345		345		760		746
Other
Short-duration (Individual and family plans)	1,293		706		2,501		1,317
Long-duration(2) (Individual Medicare supplement and limited benefit health products)	337		332		671		661
International Health
Short-duration (Group medical insurance)	731		636		1,431		1,256
Long-duration(2) (Individual private medical insurance)	89		76		175		158
Total Cigna Healthcare	10,945		9,615		21,875		19,141
Divested International businesses	—		737		—		1,500

Other	76		74		155		143
Intercompany eliminations	18		—		34		(2)
Total premiums	11,039		10,426		22,064		20,782
Services (Fees) (ASC 606)

Evernorth Health Services	2,838		1,790		5,337		3,414
Cigna Healthcare	1,602		1,478		3,208		2,974
Other Operations	1		4		2		9
Other revenues	63		130		129		146
Intercompany eliminations	(1,199)		(647)		(2,300)		(1,249)
Total fees and other revenues	3,305		2,755		6,376		5,294
Total revenues from external customers	$	48,308	$	45,153	$	94,548	$	88,745

(1)Other than the long-duration products referenced in the table, U.S. Commercial and ~~product type for~~U.S. Government insurance contracts are short-duration.

(2)U.S. Government's and International Health's long-duration premium revenues are associated with contracts that provide coverage greater than one year or are guaranteed to be renewed at the ~~three months ended March 31:~~

Three Months Ended

March 31,

(In millions)

2019

2018

Products (Pharmacy revenues) (ASC 606)

Home delivery and specialty revenues

$
11,784

$
717

Network revenues

12,273

-

Other

1,122

-

Total pharmacy revenues

25,179

717

Insurance premiums

Integrated Medical premiums (ASC 944)

Commercial Premiums

Risk

3,039

2,611

Stop loss

1,069

980

Other

278

258

Government

Medicare Advantage

1,607

1,498

Medicare Part D

525

228

Other

1,065

1,101

Total Integrated Medical premiums

7,583

6,676

International Markets premiums

1,304

1,260

Domestic disability, life and accident premiums

1,047

998

Other premiums

37

65

Total premiums

9,971

8,999

Services (ASC 606)

Fees

2,390

1,352

Other external revenues

60

16

Total services

2,450

1,368

Total revenues from external customers

$
37,600

$
11,084

~~The~~option of the policyholder beyond one year.

Evernorth Health Services ~~segment~~ may also provide certain financial and performance guarantees, ~~in its pharmacy benefit management contracts~~ including a minimum level of discounts a client may receive, generic utilization rates and various service levels. Clients may be entitled to receive ~~performance penalties~~compensation if we fail to meet the guarantees. Actual performance is compared to the contractual guarantee for each measure throughout the period and the Company defers revenue for any estimated payouts within ~~accrued~~Accrued expenses and other

liabilities (current). These estimates are adjusted atand paid following the end of the annual guarantee period. Historically, adjustments to original estimates have not been material. ~~The balance~~This guarantee liability was ~~$1.0~~$1.2 billion as of ~~March 31, 2019~~June 30, 2023 and ~~$895 million~~$1.3 billion as of December 31, ~~2018.~~

The Company recognized revenues as follows from Anthem and the Department of Defense for the three months ended March 31, 2019. The Company did not recognize revenue from these two customers for the three months ended March 31, 2018. These revenues were reported in the Health Services segment.

		~~Three Months Ended~~
		~~March 31, 2019~~
~~Anthem~~		~~12%~~
~~Department of Defense~~		8%

2022.

Item 2.~~MANAGEMENT’S~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Management’s~~

Management's Discussion and Analysis of Financial Condition and Results of Operations (“("MD~~&A”~~&A") is intended to provide information to assist you in better understanding and evaluating our financial condition as of ~~March 31, 2019~~June 30, 2023, compared with December 31, ~~2018~~2022 and our results of operations for the three and six months ended ~~March 31, 2019~~June 30, 2023, compared with the same ~~period~~periods last ~~year.~~year and is intended to help you understand the ongoing trends in our business. We encourage you to read this MD&A in conjunction with our Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, ~~2018 (“2018~~2022 ("2022 Form ~~10-K”~~10-K")~~, in~~. In particular, we encourage you to refer to the ~~“Risk Factors”~~"Risk Factors" contained in Part I, Item 1A of ~~that form.~~

our 2022 Form 10-K.

Unless otherwise indicated, financial information in ~~the~~this MD&A is presented in accordance with accounting principles generally accepted in the United States of America ~~(“GAAP”~~("GAAP"). See Note 2 to the Consolidated Financial Statements in our ~~2018~~2022 Form 10-K for additional information regarding the ~~Company’s~~Company's significant accounting policies and ~~Note~~see Notes 2 and 9 to ~~these~~the Consolidated Financial Statements in ~~the~~this Form 10-Q for updates to those ~~accounting~~ policies resulting from adopting ~~new accounting guidance.~~Accounting Standards Update 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts ("LDTI"), and related amendments, effective January 1, 2023. The preparation of interim consolidated financial statements necessarily relies heavily on estimates. This and certain other factors ~~such as the seasonal nature of portions of the health care and related pharmacy and other benefits businesses, as well as competitive and other market conditions,~~ call for caution in estimating full-year results based on interim results of operations. In some of our financial tables in this MD&A, we present either percentage changes or ~~“N/M”~~"N/M" when those changes are so large as to become not meaningful. Changes in percentages are expressed in basis points ~~(“bps”~~("bps").

In this MD&A, our consolidated measures ~~“adjusted~~"adjusted income from operations,”" earnings per share on that same basis and ~~“adjusted revenues”~~"adjusted revenues" are not determined in accordance with GAAP and should not be viewed as substitutes for the most directly comparable GAAP measures ~~“shareholders’~~of "shareholders' net income,~~” “earnings~~" "earnings per ~~share”~~share" and ~~“total~~"total revenues.~~” As discussed in Note 18, we~~" We also use pre-tax adjusted income (loss) from operations and adjusted revenues to measure the results of our segments.

~~We use~~

The Company uses "pre-tax adjusted income (loss) from ~~operations~~operations" and "adjusted revenues" as ~~our~~its principal financial ~~measure~~measures of segment operating performance because management believes itthese metrics best ~~reflects~~reflect the underlying results of ~~our~~ business operations and ~~permits~~permit analysis of trends in underlying revenue, expenses and profitability. We define adjusted income from operations as ~~shareholders’~~shareholders' net income (or income before income taxes less pre-tax income (loss) attributable to noncontrolling interests for the segment metric) excluding net realized investment ~~gains and losses,~~results, amortization of acquired intangible assets, results of Anthem, Inc. and Coventry Health Care Inc. (“Coventry”) (collectively, the “transitioning clients”) (see the “Key Transactions and Developments” section of the MD&A for further discussion of transitioning clients) and special items. ~~Cigna’s~~The Cigna Group's share of certain realized investment results of its joint ventures reported in the ~~International Markets~~Cigna Healthcare segment using the equity method of accounting are also excluded. ~~Income or expense amounts excluded from adjusted income from operations because they are not indicative of underlying performance or the responsibility of operating segment management include:~~

·~~Amortization of acquired intangible assets because these relate to costs incurred for acquisitions.~~

·~~Results of transitioning clients because those results are not indicative of ongoing results~~.

·Special items ~~if any,~~are matters that management believes are not representative of the underlying results of operations due to ~~the~~their nature or ~~size~~size. Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results. Consolidated adjusted income (loss) from operations is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, shareholders' net income. See the below Financial Highlights section for a reconciliation of ~~these matters. See Note 18~~consolidated adjusted income from operations to ~~the Consolidated Financial Statements for descriptions of special items.~~

~~Adjusted~~shareholders' net income.

The Company defines adjusted revenues ~~is defined~~ as total revenues excluding the following adjustments: ~~revenue contributions from transitioning clients,~~ special items and ~~Cigna’s~~The Cigna Group's share of certain realized investment results of its joint ventures reported in the ~~International Markets~~Cigna Healthcare segment using the equity method of accounting.

Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. We exclude these items from this measure because management believes they are not indicative of past or future underlying performance of the business. Adjusted revenues is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, total revenues. See the below Financial Highlights section for a reconciliation of consolidated adjusted revenues to total revenues.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on ~~Cigna’s~~The Cigna Group'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 future financial or operating performance, including our ability to ~~deliver affordable, personalized~~improve the health and ~~innovative solutions for our customers and clients;~~vitality of those we serve; future growth, business strategy, and strategic or operational initiatives; economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these ~~areas;~~areas and the impact of developing inflationary and interest rate pressures; financing or capital deployment plans and amounts available for future deployment; our prospects for growth in the coming years; ~~the merger (“Merger”) with Express Scripts Holding Company;~~strategic transactions; expectations related to our Medicare Advantage Capitation Rates; and other statements regarding ~~Cigna’s~~The Cigna Group's future beliefs, expectations, plans, intentions, liquidity, cash flows, 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”~~"believe," "expect," "project," "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 and pharmacy costs and price effectively;~~ our ability to adapt to changes ~~or trends~~ in an evolving and rapidly changing industry; our ability to compete effectively, differentiate our products and services from those of our competitors and maintain or increase market share; price competition, inflation and other pressures that could compress our margins or result in premiums that are insufficient to cover the cost of services delivered to our customers; the potential for actual claims to exceed our estimates related to expected medical claims; our ability to develop and maintain ~~good~~satisfactory relationships with physicians, hospitals, other health ~~care~~service providers and with producers and consultants; our ability to maintain relationships with one or more key pharmaceutical ~~manufacturers;~~manufacturers or if payments made or discounts provided decline; changes in the pharmacy provider marketplace or pharmacy networks; changes in drug ~~pricing; the impact of modifications to our operations and processes;~~pricing or industry pricing benchmarks; our ability to ~~identify~~invest in and properly maintain our information technology and other business systems; our ability to prevent or contain effects of a potential cyberattack or other privacy or data security incident; political, legal, operational, regulatory, economic and other risks that could affect our multinational operations, including currency exchange rates; risks related to strategic ~~acquisitions or~~ transactions and ~~realize~~realization of the expected benefits ~~(including anticipated synergies)~~ of such transactions, ~~in full or within the anticipated time frame, including with respect to the Merger,~~ as well as integration or separation difficulties or underperformance relative to expectations; dependence on success of relationships with third parties; risk of significant disruption within our ~~ability to integrate~~ operations ~~resources~~or among key suppliers or third parties; potential liability in connection with managing medical practices and ~~systems;~~operating pharmacies, onsite clinics and other types of medical facilities; 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, investigations, actions and/or guaranty fund assessments;~~ uncertainties surrounding participation in government-sponsored programs such as Medicare; the ~~effectiveness~~outcome of litigation, regulatory audits and investigations; compliance with applicable privacy, security and data laws, regulations and standards; potential failure of our ~~information technology~~prevention, detection and control systems; unfavorable economic and market conditions, including recent events affecting the financial services industry, the risk of a recession or other ~~business systems;~~economic downturn and resulting impact on employment metrics, stock market or changes in interest rates and risks related to a downgrade in financial strength ratings of our insurance subsidiaries; the impact of our ~~debt service obligations on~~significant indebtedness and the ~~availability of funds~~potential for ~~other business purposes; unfavorable industry, economic or political conditions, including foreign currency movements; acts of war, terrorism, natural disasters or pandemics;~~further indebtedness in the future; credit risk related to our reinsurers; as well as more specific risks and uncertainties discussed in Part I, Item 1A – Risk Factors ~~and~~in our 2022 Form 10-K, Part II, Item 7 – ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations ofin our ~~2018~~2022 Form 10-K, and as described from time to time in our future reports filed with the Securities and Exchange ~~Commission (the “SEC”).~~

Commission.

You should not place undue reliance on forward-looking statements, ~~that~~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. The Cigna Group 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.

EXECUTIVE OVERVIEW

The Cigna ~~Corporation,~~Group, together with its subsidiaries (either individually or collectively referred to as ~~“Cigna,”~~ the ~~“Company,” “we,” “our”~~"Company," "we," "us" or ~~“us”~~"our") is a global health ~~service organization dedicated to~~company with a mission of helping those we serve improve their health ~~well-being~~ and ~~peace of mind.~~vitality. Our ~~evolved strategy in support of our mission is~~ ~~Go Deeper, Go Local, Go Beyond~~ ~~using~~subsidiaries offer a differentiated set of pharmacy, medical, behavioral, dental ~~disability, life and accident insurance~~ and related products and ~~services offered by our subsidiaries.~~services. For further information on our business and strategy, see Item 1, ~~“Business” in~~"Business" of our ~~2018~~2022 Form 10-K.

~~As described more fully in Note 4 to our Consolidated~~

Financial ~~Statements, on December 20, 2018, we completed the acquisition of Express Scripts Holding Company (“Express Scripts”) and changed our segments effective in the fourth quarter of 2018.~~ Highlights

See Note 1 to ~~our~~the Consolidated Financial Statements for a description of our segments. ~~As described further in Note 2 to the Consolidated Financial Statements,~~Effective January 1, 2023, we adopted ~~Article 5~~amended accounting guidance for long-duration insurance contracts. Prior period Financial highlights and Results of ~~Regulation S-X issued by the SEC effective December 31, 2018. Prior year information presented in~~operations have been retrospectively adjusted to conform to this ~~Form 10-Q has been restated to reflect these changes. In addition, as discussed in Note 18 to our Consolidated Financial Statements, effective in the first quarter~~new basis of 2019, compensation cost for stock options is now recorded by our segments. Prior year segment information has not been restated for this change. Results for the three months ended March 31, 2019 included the results of Express Scripts’ business, whereas results for the three months ended March 31, 2018 reflected Cigna’s stand-alone historical results. Unless otherwise specified, theaccounting. The commentary provided below describes our results for the

three and six months ended ~~March 31, 2019~~June 30, 2023 compared with the same ~~period~~periods in ~~2018.~~

2022. Unless specified otherwise, commentary applies to both the three and six month periods.

Summarized below are certain key measures of our performance by segment:


Financial highlights by segment
	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions, except per share amounts)	2023		2022		% Change		2023		2022		% Change


Revenues
Adjusted revenues by segment
Evernorth Health Services	$	38,205	$	34,863	10	%	$	74,384	$	68,449	9	%
Cigna Healthcare	12,714		11,335		12		25,432		22,728		12
Other Operations	158		948		(83)		315		1,927		(84)
Corporate, net of eliminations	(2,461)		(1,717)		(43)		(5,036)		(3,566)		(41)
Adjusted revenues	48,616		45,429		7		95,095		89,538		6
Net realized investment results from certain equity method investments	(30)		49		N/M		8		(54)		N/M

Total revenues	$	48,586	$	45,478	7	%	$	95,103	$	89,484	6	%
Shareholders' net income	$	1,460	$	1,557	(6)	%	$	2,727	$	2,754	(1)	%
Adjusted income from operations	$	1,820	$	1,973	(8)	%	$	3,438	$	3,921	(12)	%
Earnings per share (diluted)
Shareholders' net income	$	4.92	$	4.89	1	%	$	9.15	$	8.61	6	%
Adjusted income from operations	$	6.13	$	6.20	(1)	%	$	11.54	$	12.26	(6)	%
Pre-tax adjusted income (loss) from operations by segment
Evernorth Health Services	$	1,516	$	1,475	3	%	$	2,836	$	2,777	2	%
Cigna Healthcare	1,172		1,235		(5)		2,287		2,532		(10)
Other Operations	29		228		(87)		44		457		(90)
Corporate, net of eliminations	(423)		(401)		(5)		(837)		(744)		(13)
Consolidated pre-tax adjusted income from operations	2,294		2,537		(10)		4,330		5,022		(14)
Income attributable to noncontrolling interests	55		15		267		98		32		206
Net realized investment (losses) (1)	(4)		(40)		90		(22)		(465)		95
Amortization of acquired intangible assets	(455)		(501)		9		(914)		(959)		5
Special items	(6)		(30)		80		(7)		(82)		91
Income before income taxes	$	1,884	$	1,981	(5)	%	$	3,485	$	3,548	(2)	%

(1)Includes the Company's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment ~~for~~using the ~~three months ended March 31, 2019 and 2018:~~

~~Financial Highlights by Segment~~

Three Months Ended
March 31,

(Dollars in millions, except per share amounts)

2019

2018

% Change

Revenues

Adjusted revenues by segment

Health Services

$
22,460

$
1,071

N/M

Integrated Medical

9,195

8,150

13
%
International Markets

1,394

1,341

4

Group Disability and Other

1,296

1,271

2

Corporate, including eliminations

(916)

(418)

(119)

Adjusted revenues

33,429

11,415

193

Revenue contributions from transitioning clients

4,489

-

N/M

Net realized investment gains (losses) from equity method subsidiaries

28

(2)

N/M

Total revenues

$
37,946

$
11,413

232
%
Shareholders’ net income

$
1,368

$
915

50
%
Adjusted income from operations

$
1,498

$
1,010

48
%
Earnings per share (diluted)

Shareholders’ net income

$
3.56

$
3.72

(4)
%
Adjusted income from operations

$
3.90

$
4.11

(5)
%
Pre-tax adjusted income from operations by segment

Health Services

$
994

$
83

N/M

Integrated Medical

1,170

1,012

16
%
International Markets

206

217

(5)

Group Disability and Other

84

116

(28)

Corporate

(490)

(92)

N/M

Consolidated pre-tax adjusted income (loss) from operations

1,964

1,336

47

Adjustment for transitioning clients

660

-

N/M

Income attributable to noncontrolling interests

5

4

25

Realized investment gains (losses)

38

(35)

209

Amortization of acquired intangible assets

(743)

(27)

N/M

Special items

(136)

(60)

(127)

Income before income taxes

$
1,788

$
1,218

47
%

equity method of accounting.

For further analysis and explanation of ~~individual segment~~each segment's results, see the ~~“Segment Reporting”~~"Segment Reporting" section of this MD~~&A beginning on page 54.~~

~~Consolidated Results~~&A.

Consolidated Results of Operations (GAAP basis)
Three Months Ended June 30, Six Months Ended June 30,
(Dollars in millions) 2023 2022 % Change 2023 2022 % Change
Pharmacy revenues $ 33,964 $ 31,972 6 % $ 66,108 $ 62,669 5 %
Premiums 11,039 10,426 6 22,064 20,782 6
Fees and other revenues 3,305 2,755 20 6,376 5,294 20
Net investment income 278 325 (14) 555 739 (25)
Total revenues 48,586 45,478 7 95,103 89,484 6
Pharmacy and other service costs 33,442 31,150 7 64,901 60,963 6
Medical costs and other benefit expenses 9,034 8,192 10 18,080 16,464 10
Selling, general and administrative expenses 3,434 3,264 5 6,972 6,539 7
Amortization of acquired intangible assets 455 501 (9) 914 959 (5)
Total benefits and expenses 46,365 43,107 8 90,867 84,925 7
Income from operations 2,221 2,371 (6) 4,236 4,559 (7)
Interest expense and other (363) (301) (21) (721) (600) (20)
Net realized investment gains (losses) 26 (89) N/M (30) (411) 93
Income before income taxes 1,884 1,981 (5) 3,485 3,548 (2)
Total income taxes 374 411 (9) 669 766 (13)
Net income 1,510 1,570 (4) 2,816 2,782 1
Less: Net income attributable to noncontrolling interests 50 13 285 89 28 218
Shareholders' net income $ 1,460 $ 1,557 (6) % $ 2,727 $ 2,754 (1) %
Consolidated effective tax rate 19.9 % 20.7 % (80) bps 19.2 % 21.6 % (240) bps
Medical customers (in thousands) 19,506 17,806 10 %

Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(In millions) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax
Shareholders' net income $ 1,460 $ 1,557 $ 2,727 $ 2,754
Adjustments to reconcile to adjusted income from operations
Net realized investment losses (1)
$ 4 9 $ 40 10 $ 22 15 $ 465 368
Amortization of acquired intangible assets 455 346 501 383 914 690 959 739
Special items
Integration and transaction-related costs 6 5 36 26 7 6 88 63
Charge for organizational efficiency plan — — 22 17 — — 22 17
(Benefits) associated with litigation matters — — (28) (20) — — (28) (20)
Total special items $ 6 5 $ 30 23 $ 7 6 $ 82 60
Adjusted income from operations $ 1,820 $ 1,973 $ 3,438 $ 3,921

(1)Includes the Company's share of ~~Operations (GAAP basis)~~

Three Months Ended
March 31,

(Dollars in millions)

2019

2018

% Change

Pharmacy revenues

$
25,179

$
717

N/M

Premiums

9,971

8,999

11
%
Fees and other revenues

2,450

1,368

79

Net investment income

346

329

5

Total revenues

37,946

11,413

232

Pharmacy and other service costs

24,050

561

N/M

Medical costs and other benefit expenses

7,620

6,772

13

Selling, general and administrative expenses

3,303

2,745

20

Amortization of acquired intangible assets

743

27

N/M

Total benefits and expenses

35,716

10,105

253

Income from operations

2,230

1,308

70

Interest expense and other

(452)

(57)

N/M

Net realized investment gains (losses)

10

(33)

130

Income before income taxes

1,788

1,218

47

Income taxes

416

301

38

Net income

1,372

917

50

Less: net income attributable to noncontrolling interest

4

2

100

Shareholders’ net income

$
1,368

$
915

50
%
Consolidated effective tax rate

23.3
%
24.7
%

140
bps
Medical customers (in thousands)

Integrated Medical

15,421

15,214

1
%
International Markets

1,572

1,555

1

Total

16,993

16,769

1
%

~~Reconciliation~~certain realized investment results of ~~Shareholders’ Net Income to Adjusted Income from Operations~~

Diluted Earnings Per Share

Three Months Ended

Three Months Ended

March 31,

March 31,

(In millions, except per share amounts)

2019

2018

2019

2018

Shareholders’ net income

$
1,368

$
915

$
3.56

$
3.72

After-tax adjustments required to reconcile to adjusted income from operations

- Adjustment for transitioning clients

(504)

-

(1.31)

-

- Net realized investment (gains) losses

(38)

25

(0.10)

0.10

- Amortization of acquired intangible assets

564

20

1.47

0.08

Special items

- Integration and transaction-related costs

108

50

0.28

0.21

Adjusted income from operations

$
1,498

$
1,010

$
3.90

$
4.11

its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting.

Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(Diluted Earnings Per Share) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax
Shareholders' net income $ 4.92 $ 4.89 $ 9.15 $ 8.61
Adjustments to reconcile to adjusted income from operations
Net realized investment losses (1)
$ 0.01 0.03 $ 0.13 0.04 $ 0.07 0.05 $ 1.45 1.15
Amortization of acquired intangible assets 1.53 1.17 1.57 1.20 3.07 2.32 3.00 2.31
Special items
Integration and transaction-related costs 0.02 0.01 0.11 0.08 0.02 0.02 0.28 0.20
Charge for organizational efficiency plan — — 0.07 0.05 — — 0.07 0.05
(Benefits) associated with litigation matters — — (0.09) (0.06) — — (0.09) (0.06)
Total special items $ 0.02 0.01 $ 0.09 0.07 $ 0.02 0.02 $ 0.26 0.19
Adjusted income from operations $ 6.13 $ 6.20 $ 11.54 $ 12.26
(1)Includes the Company's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting.

Commentary: Three and Six Months Ended ~~March 31, 2019~~June 30, 2023 versus Three and Six Months Ended ~~March 31, 2018~~

~~Earnings~~June 30, 2022

The commentary presented below, and ~~Revenue~~

~~Shareholders’~~in the segment discussions that follow, compare results for the three and six months ended June 30, 2023 with results for the three and six months ended June 30, 2022. Unless specified otherwise, commentary applies to both the three and six month periods.

Shareholders' net income~~increased,~~ decreased 6% and 1%, respectively, due primarily ~~driven by the earnings contribution from Express Scripts and higher~~to lower adjusted income from operations in(see below). For the ~~Integrated Medical segment, partially~~six months ended June 30, 2023, the decline was substantially offset by ~~interest expense~~improved realized investment results reflecting lower mark-to-market losses on ~~debt issued to finance the Express Scripts acquisition. The decline on a per-share basis also reflects the dilution caused by shares issued in connection with the Express Scripts acquisition.~~

equity securities.

Adjusted income from operations ~~increased, reflecting~~ declined 8% and 12%, respectively, driven primarily by the absence of earnings from ~~Express Scripts’ pharmacy~~our life, accident and supplemental health benefits business in six countries sold in 2022 (the "Chubb transaction") and ~~medical management businesses reported~~lower net investment income (see below).

Medical customers increased 10%, reflecting growth in fee-based customers as well as in Individual and Medicare Advantage customers. See Part I, Item 1 of our 2022 Form 10-K for definitions of Cigna Healthcare's market segments.

Pharmacy revenues increased 6% and 5%, respectively, reflecting growth in specialty as well as inflation on branded drugs. See the "Segment Reporting - Evernorth Health Services segment. Improved results in Integrated Medical also contributed to the increase. These favorable results were partially offset by higher interest expense reported in Corporate from the debt issued to finance the acquisition and the debt assumed from Express Scripts. On a per-share basis, the decrease also reflects the dilution caused by shares issued in connection with the Express Scripts acquisition.

~~Medical customers~~ ~~increased, primarily attributable to growth in the select market segment. See the Integrated Medical segment section for additional discussion.~~

~~Revenue~~ ~~growth largely reflects the addition of Express Scripts and, to a lesser extent, business growth in the Integrated Medical segment. Detailed revenue items are discussed further below.~~

·~~Pharmacy revenues~~ ~~in 2019 reflect the Express Scripts pharmacy benefit management business. In 2018, Cigna’s home delivery business comprised the entire~~ ~~amount. See the Health Services~~Segment" section of this MD&A for further ~~discussion of pharmacy revenues.~~

·discussion.

Premiums ~~were higher, primarily resulting from: 1)~~ increased 6% in both periods, reflecting insured customer growth ~~across all segments, predominantly Integrated Medical: 2) a contribution from Express Scripts’ Medicare Part D business,~~ and ~~3) rate increases~~higher premium rates in ~~Integrated Medical in line with~~Cigna Healthcare due to anticipated underlying medical cost trend.

· See the "Segment Reporting - Cigna Healthcare Segment" section of this MD&A for further discussion. These favorable effects were partially offset by a decline in premiums due to the Chubb transaction.

Fees and other ~~revenues.~~ ~~The increase was~~revenues increased 20% in both periods, primarily ~~driven by contributions~~reflecting client growth from ~~Express Scripts’ medical management business reported in the~~our continued affordability services within Evernorth Health Services segment. To a lesser extent, higher fees in our Integrated Medical segment contributed to the increase. The increases in Integrated Medical were due to growth in our specialty businesses and an increased customer base for our administrative services only (“ASO”) business.

·Services.

Net investment income ~~was higher~~decreased 14% and 25%, respectively, primarily reflecting ~~growth in average assets.~~

~~Other Components~~lower returns on our partnership investments and the unfavorable impact of ~~Consolidated Results~~the Chubb transaction. See the "Investment Assets" section of ~~Operations~~

·this MD&A for further discussion.

Pharmacy and other service ~~costs.~~ ~~In 2019, this amount is largely comprised of Express Scripts’ pharmacy benefits~~costs increased 7% and ~~medical management~~ ~~businesses~~ ~~reported~~6%, respectively, reflecting growth in ~~the Health Services segment. In 2018, Cigna home delivery comprised the entire amount.~~

·specialty as well as inflation on branded drugs.

Medical costs and other benefit expensesincreased ~~largely~~ ~~attributable to the addition of Express Scripts’ Medicare Part D business along with~~10% for both periods, primarily reflecting insured customer growth and ~~medical cost inflation~~trend in ~~Integrated Medical.~~

·Cigna Healthcare, partially offset by the impact of the Chubb transaction.

Selling, general and administrative expensesincreased 5% and 7%, respectively, primarily ~~due to the addition of Express Scripts. To a lesser extent,~~driven by volume-related expenses in ~~Integrated Medical~~Cigna Healthcare and ~~increased integration~~Evernorth Health Services due to business growth, as well as strategic investments in technology to support business growth and ~~transaction-related costs (reported as a special item) also contributed to the expense growth.~~continued advancement of our capabilities and solutions in Evernorth Health Services and Cigna Healthcare. These increases were partially offset by ~~suspension of the health insurance industry tax in 2019.~~

·~~Amortization of acquired intangible assets~~ ~~in 2019 primarily reflects~~ the impact of the ~~Express Scripts acquisition.~~Chubb transaction.

Interest expense and other increased 21% and 20%, respectively, primarily reflecting higher interest rates on our indebtedness and increased pension costs.

Realized investment results were substantially improved in both periods, primarily due to lower mark-to-market losses on investments. See Note ~~3 in~~11 to the Consolidated Financial Statements for further discussion.

The effective tax rate decreased by 80 basis points and 240 basis points, respectively, driven by favorable results relative to the Company's foreign operations and the release of uncertain tax positions resulting from favorable audit developments.

Recent Events

Economic Conditions

We continue to monitor global economic conditions, including inflation, labor market dynamics and the recent events affecting the financial services industry. We did not have a material exposure to banks recently impacted by the financial environment. We continue to proactively address impacts to our ~~2018 Form 10-K for additional~~ ~~information~~pricing with third parties (including vendors, health care providers and drug providers), our investment portfolio and our workforce. We are also monitoring the potential impact on ~~the intangible assets identified in the Express Scripts acquisition.~~

·~~Interest expense~~client and ~~other~~ ~~increased significantly primarily due to interest incurred on debt issued in the third quarter~~customer health care needs.

Our results of ~~2018 to finance the Express Scripts acquisition along with Express~~ ~~Scripts’~~ ~~debt assumed upon closing of the acquisition.~~

·~~Realized investment gains (losses).~~ ~~We reported realized investment gains~~operations or cash flows for the three and six months ended June 30, 2023 were not materially impacted by inflation, labor market dynamics, or the recent events affecting the financial services industry. For further information regarding risks we encounter in our business due to economic conditions, see "Risk Factors" contained in Part I, Item 1A of our 2022 Form 10-K.

Developments

CarepathRx Health System Solutions

In July 2023, Evernorth Health, Inc. became a minority owner in CarepathRx Health Systems Solutions ("CHSS"), through a $437 million equity method investment in CHSS JV LLC (a holding company for the CHSS business and a CarepathRx company). CarepathRx provides integrated hospital pharmacy solutions to support patients across their complete health care journey. By pairing Evernorth Health Services' diverse specialty and care expertise with CHSS' robust pharmacy and infusion management capabilities, technology solutions and health system relationships, we can further improve, expand and accelerate pharmacy care delivery for the growing number of patients with chronic and complex care needs.

Medicare Advantage Rates

On March 31, ~~2019 compared with losses for the same period last year. The~~ ~~improvement~~ ~~largely results from favorable market value adjustments on equity securities and higher gains on sales of fixed maturities.~~

·~~The consolidated effective tax rate~~ ~~declined, due to suspension of the~~ ~~nondeductible~~ ~~health insurance industry tax in 2019.~~

~~Key Transactions and Developments~~

~~Acquisition of Express Scripts~~

As discussed in more detail in our 2018 Form 10-K, Cigna acquired Express Scripts on December 20, 2018 in a cash and stock transaction valued at $52.8 billion. The “Liquidity” section of this MD&A provides further discussion of the impact of the acquisition on our liquidity and capital resources.

We continue to incur costs related to this transaction. These costs are being reported in “integration and transaction-related costs” as a special item and excluded from adjusted income from operations. The results of the Express Scripts’ business were included in Cigna’s consolidated financial information for the three months ended March 31, 2019, whereas the three months ended March 31, 2018 reflected Cigna’s stand-alone historical results.

On January 30, 2019, Anthem exercised its early termination right and terminated the pharmacy benefit management services agreement with us, effective March 1, 2019. There is a twelve-month transition period ending March 1, 2020. The transition of Anthem’s customers is expected to occur at various dates, as informed by Anthem’s technology platform migration schedule. Over the next twelve months, we will focus on an effective transition of this relationship and related services over Anthem’s accelerated timeline. We exclude the results of Express Scripts’ contract with Anthem (and also Coventry) from our non-GAAP reporting metrics “adjusted revenues” and “adjusted income from operations.” We refer to these clients as “transitioning clients.”

~~Industry Developments and Other Matters Affecting Our Health Services and Integrated Medical Segments~~

Our 2018 Form 10-K provides a detailed description of The Patient Protection and Affordable Care Act (“ACA”) provisions and other legislative initiatives that impact our health care and pharmacy services businesses, including regulations issued by the2023, Centers for Medicare &and Medicaid Services ~~(“CMS”~~("CMS") released the final Calendar Year 2024 Medicare Advantage Program and ~~the Departments of the Treasury and Health and Human Services (“HHS”~~Part D Payment Policies (the "2024 Final Notice"). The health care and pharmacy services businesses continue to operate in a dynamic environment, and the laws and regulations applicable to these businesses, including the ACA, continue to be subject to legislative, regulatory and judicial challenges. The table presented below provides an update on the impact of these items and other matters affecting our Integrated Medical and Health Services segments as of March 31, 2019.


~~Item~~			~~Description~~

~~Medicare Advantage~~			~~Medicare Star Quality Ratings (“Star Ratings”):~~ Medicare Advantage (“MA”) plans must have a Star Rating of four Stars or greater to qualify for bonus payments. Approximately 73% of our Medicare Advantage customers are in a four Star or greater plan for bonus payments to be received in 2019. We expect this percentage to increase to 77% for bonus payments to be received in 2020. ~~MA Rates:~~2024 Final ~~MA reimbursement rates for 2020 were published by CMS in April 2019. We do not expect the new rates to have a material impact on our consolidated results of operations in 2020.~~
			~~Risk Adjustment Validation (“RADV”) Audits:~~ As discussed in the “Regulation” and “Risk Factors” sections of our 2018 Form 10-K, our MA business is subject to reviews, including RADV audits. In 2012, CMS released a payment methodology that provided for sample audit error rates to be extrapolated to the entire MA contract after comparing audit results to a similar audit of Medicare Fee for Service (the “FFS Adjuster”) and applying an FFS Adjuster to establish actuarial equivalency in payment rates as required by the Medicare statute. However, a methodology to calculate the FFS Adjuster was not finalized and CMS has, to date, not completed any RADV audits using extrapolation. In 2018, CMS issued a proposed rule that included, among other things, extrapolation of the error rate related to audit findings without applying the FFS Adjuster. This rule is discussed further in the Regulation section of our 2018 Form 10-K. If adopted in its current form, the rule could have a detrimental impact to all MA insurers and affect the ability of plans to deliver high quality health care for the population served. While it is uncertain that CMS will finalize the rule as proposed, if they did, it could have a material impact on the Company’s future results of operations.


~~Item~~			~~Description~~

~~Health Insurance Industry Tax~~			~~Health Insurance Industry Tax:~~ Federal legislation suspended the health insurance industry tax for 2019 and our premium rates for 2019 reflect this suspension. For the three months ended March 31, 2018 we recorded $97 million for the industry tax. Under current legislation, the tax is expected to return in 2020.
~~Public Health Exchanges~~			~~Market Participation:~~ For 2019, we expanded our individual coverage to Arizona while continuing to offer coverage on the public health insurance exchanges where we were represented in 2018: Colorado, Illinois, Missouri, North Carolina, Tennessee and Virginia. ~~Cost Sharing Reduction Subsidies:~~ The ACA provides for cost sharing reductions that offset the amount that qualifying customers pay for deductibles, copayments and coinsurance. The federal government stopped funding insurers for the cost sharing reduction subsidies in 2017. Certain insurers have sued the federal government for failure to pay cost sharing reduction subsidies and the matter remains unresolved. To date, judges in four of those actions have ruled in favor of the insurers. We will continue to monitor developments. Our premium rates for the 2019 plan year continue to reflect a lack of government funding for cost sharing reduction subsidies.
~~Prescription Drug Pricing~~			As discussed in the Regulation section of our 2018 Form 10-K, prescription drug pricing and the role of pharmacy benefit managers have been a focus of the current administration. In February 2019, HHS proposed changes to the federal anti-kickback safe harbor to exclude regulatory protection for rebates between drug manufacturers and Medicare Part D plans, Medicaid managed care organizations and pharmacy benefit managers in the context of these government programs. The proposed regulations in their current form apply solely to Medicare Part D and Medicaid programs that include our Government business in the Integrated Medical segment. The proposed regulations also seek to create new safe harbor protections for fixed fee services arrangements between drug manufacturers and pharmacy benefit managers, as well as protections for discounts offered at the point of sale. These proposed regulations, if adopted as written, could affect current industry practices. We do not expect them to have a material effect on our business or results of operations. This area continues to be the subject of legislative and regulatory activity.

~~Risk Mitigation Programs – Individual ACA Business~~

~~In April of 2019, CMS published the final~~ Notice ~~of Benefit and Payment Parameters for the 2020 plan year that addressed the 2017 benefit year risk adjustment data validation program. CMS intends to publish 2017 benefit year data validation error~~ rates ~~in May and preliminary adjustments to risk adjustment transfers in August. Based on the information currently available, the Company is not able to reasonably estimate a potential adjustment~~were improved from the ~~data validation program. The Company does~~advance notice rates (previously released on February 1, 2023). We do not expect the ~~adjustment~~final rates to have a material ~~adverse~~ impact ~~to the Company’s~~on our consolidated results of operations ~~financial condition or liquidity for any particular period.~~

~~See the MD&A~~ in our 2018 Form 10-K for background around legal actions related to the risk corridor and risk adjustment programs. During the first quarter of 2019, there have been no significant updates to these matters.

~~The following table presents our balances associated with the risk adjustment program as of March 31, 2019 and December 31, 2018.~~

Net Receivable (Payable) Balance

March 31,

December 31,
(In millions)

2019

2018
Risk Adjustment

Receivables (1)

$
43

$
32
Payables (2)

(239)

(187)
Total risk adjustment balance

$
(196)

$
(155)

~~(1) Receivables, net of allowances, are reported in accounts receivable in the Consolidated Balance Sheets.~~

~~(2) Payables are reported in accrued expenses and other liabilities (current) in the Consolidated Balance Sheets.~~

Charges for the risk adjustment program were $40 million pre-tax ($30 million after-tax) for the three months ended March 31, 2019 and $80 million pre-tax ($60 million after-tax) for the same period in 2018.

2024.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

We maintain liquidity at two levels: the subsidiary level and the parent company level.

~~Liquidity~~

Cash requirements at the subsidiary level generally consist of:

•pharmacy, medical costs ~~pharmacy~~ and other benefit payments;

•expense requirements, primarily for employee compensation and benefits, information technology and facilities costs;

•income taxes; and

·~~income taxes.~~

•debt service.

Our subsidiaries normally meet their ~~operating~~liquidity requirements by:

•maintaining appropriate levels of cash, cash equivalents and short-term investments;

•using cash flows from operating activities;

•matching investment durations to those estimated for the related insurance and contractholder liabilities;

•selling investments; and

•borrowing from affiliates, subject to applicable regulatory limits.

~~Liquidity~~

Cash requirements at the parent company level generally consist of:

•debt ~~service and dividend payments~~service;

•payment of declared dividends to shareholders;

•lending to subsidiaries as needed; and

•pension plan funding.

The parent company normally meets its liquidity requirements by:

•maintaining appropriate levels of cash and various types of marketable investments;

•collecting dividends from its subsidiaries;

•using proceeds from ~~issuance of~~issuing debt and common stock; and

•borrowing from its subsidiaries, subject to applicable regulatory limits.

Dividends from our insurance, Health Maintenance Organization ~~(“HMO”~~("HMO") and certain foreign subsidiaries are subject to regulatory restrictions. ~~Because most~~See Note 21 to the Consolidated Financial Statements in our 2022 Form 10-K for additional information regarding these restrictions. Most of ~~Express Scripts’ subsidiaries~~the Evernorth Health Services segment operations are not subject to regulatory restrictions ~~on paying~~regarding dividends ~~Express Scripts’ operations~~and therefore provide ~~significantly increased~~significant financial flexibility to ~~Cigna.~~

The Cigna Group.

With respect to our investment portfolio, we support the liquidity needs of our businesses by managing the duration of assets to be consistent with the duration of liabilities. We manage the portfolio to both optimize returns in the current economic environment and meet our liquidity needs.

Cash flows for the ~~three~~six months ended ~~March 31~~June 30 were as follows:

Three Months Ended March 31,
(In millions)

2019

2018

Operating activities

   $
3,192

$
2,025

Investing activities

   $
475

$
(1,700)

Financing activities

   $
(2,534)

$
(530)

Six Months Ended June 30,
(In millions) 2023 2022
Operating activities $ 7,520 $ 3,274
Investing activities $ (3,397) $ (732)
Financing activities $ (472) $ (3,087)

The following discussion explains variances in the various categories of cash flows for the ~~three~~six months ended ~~March 31, 2019~~June 30, 2023 compared with the same period in ~~2018.~~

2022.

Operating activities

Cash flows from operating activities consist principally of cash receipts and disbursements for pharmacy revenues and costs, premiums, fees, investment income, taxes, benefit costs and other expenses.

~~Cash~~

Operating cash flows for the six months ended June 30, 2023 included the benefits from the early receipt of July Medicare premiums from CMS and a higher CMS Medicare Part D annual settlement. The remaining increase was driven by timing of accounts receivable and higher insurance liabilities.

Investing activities

The Company invested $2.7 billion in VillageMD in 2023, which resulted in an increase in cash used in investing activities.

Financing activities

The Company issued new debt, had lower share repurchases and lower payments for commercial paper. These factors resulted in a decrease in cash used in financing activities in 2023.

Capital Resources

Our capital resources consist primarily of cash, cash equivalents and investments maintained at regulated subsidiaries required to underwrite insurance risks, cash flows from operating activities, ~~increased, primarily driven by higher net income adjusted for depreciation~~our commercial paper program, credit agreements and ~~amortization,~~ the issuance of long-term debt and equity securities. Our businesses generate significant cash flow from operations, some of which is subject to regulatory restrictions relative to the amount and timing of ~~pharmacy~~dividend payments to the parent company. Dividends from U.S. regulated subsidiaries were $518 million for the six months ended June 30, 2023 and ~~services costs payables~~$1.0 billion for the six months ended June 30, 2022. This decrease was due in part to lower statutory earnings in 2022 and ~~reduction~~additional capital held at subsidiaries to support business growth

which is in ~~inventories. These increases were partially offset~~line with our capital planning. Non-regulated subsidiaries also generate significant cash flow from operating activities, which is typically available immediately to the parent company for general corporate purposes.

We prioritize our use of capital resources to:

•invest in capital expenditures, primarily related to technology to support innovative solutions for our clients and customers, provide the capital necessary to maintain or improve the financial strength ratings of subsidiaries and to repay debt and fund pension obligations if necessary;

•pay dividends to shareholders;

•consider acquisitions and investments that are strategically and economically advantageous; and

•return capital to shareholders through share repurchases.

Funds Available

Commercial Paper Program. The Cigna Group maintains a commercial paper program and may issue short-term, unsecured commercial paper notes privately placed on a discount basis through certain broker-dealers at any time not to exceed an aggregate amount of $5.0 billion. The net proceeds of issuances have been and are expected to be used for general corporate purposes.

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

As of June 30, 2023, The Cigna Group's revolving credit agreements include: a $4.0 billion five-year revolving credit and letter of credit agreement that expires in April 2028; and a $1.0 billion 364-day revolving credit agreement that expires in April 2024.

As of June 30, 2023, we had $5.0 billion of undrawn committed capacity under our revolving credit agreements (these amounts are available for general corporate purposes, including providing liquidity support for our commercial paper program), $4.8 billion of remaining capacity under our commercial paper program and $9.7 billion in cash and short-term investments, approximately $1.1 billion of which was held by the ~~absence~~parent company or certain non-regulated subsidiaries.

See Note 7 to the Consolidated Financial Statements for further information on our credit agreements and commercial paper program.

Our debt-to-capitalization ratio was 41.9% at June 30, 2023 and 41.0% at December 31, 2022.

We actively monitor our debt obligations and engage in issuance or redemption activities as needed in accordance with our capital management strategy.

Subsidiary Borrowings. In addition to the sources of liquidity discussed above, the parent company can borrow an ~~early receipt~~additional $2.6 billion from its subsidiaries without further approvals as of ~~April payments~~June 30, 2023.

Use of Capital Resources

Long-term debt. In July 2023, we repaid $2.9 billion of senior notes, which were due in July 2023.

Capital expenditures. Capital expenditures for property, equipment and computer software were $0.8 billion in the six months ended June 30, 2023 compared to $0.6 billion in the six months ended June 30, 2022. This increase reflects our continued strategic investment in technology for future growth. Anticipated capital expenditures will be funded primarily from ~~CMS~~operating cash flow.

Dividends. In the first six months of 2023, The Cigna Group declared and paid quarterly cash dividends of $1.23 per share of its common stock, compared to quarterly cash dividends of $1.12 per share in ~~2018~~the first six months of ~~approximately $730 million.~~

~~Investing~~2022. See Note 8 to the Consolidated Financial Statements for further information on our dividend payments. On July 26, 2023, the Board of Directors declared the third quarter cash dividend of $1.23 per share of The Cigna Group common stock to be paid on September 21, 2023 to shareholders of record on September 6, 2023. The Cigna Group currently intends to pay regular quarterly dividends, with future declarations subject to approval by its Board of Directors and ~~Financing activities~~

~~Cash flows from investing activities increased, primarily due to higher proceeds from investment sales coupled with lower investment purchases.~~

~~Cash used~~the Board's determination that the declaration of dividends remains in ~~financing activities increased, primarily due to a partial repayment~~the best interests of the ~~term loan, net commercial paper activity~~Company and ~~stock repurchase.~~

its shareholders. The decision of whether to pay future dividends and the amount of any such dividends will be based on the Company's financial position, results of operations, cash flows, capital requirements, the requirements of applicable law and any other factors the Board may deem relevant.

Share repurchases.We maintain a share repurchase program authorized by our Board of ~~Directors. Under this program,~~Directors, under which we may repurchase shares of our common stock from time to ~~time, depending on market conditions and alternate uses of capital.~~time. The timing and actual number of shares repurchased will depend on a variety of factors including price, general business and market conditions and alternate uses of capital. The share repurchase program may be effected through open market purchases ~~or privately negotiated transactions~~ in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the

"Exchange Act"), including through Rule 10b5-1 trading ~~plans.~~plans or privately negotiated transactions. The program may be suspended or discontinued at any time.

~~For the three months ended March 31, 2019, we~~

We repurchased ~~2.5~~3.8 million shares for approximately ~~$460 million. From April 1, 2019 through May 1, 2019 we repurchased 0.6~~$1.1 billion during the six months ended June 30, 2023, compared to 9.7 million shares for approximately ~~$95 million. The remaining~~$2.3 billion during the six months ended June 30, 2022. There were no share repurchases from July 1, 2023, through August 2, 2023. Share repurchase authority was $2.5 billion as of ~~May 1, 2019 was $390 million.~~

~~Capital Resources~~

~~Our capital resources (primarily cash flows from operating activities~~August 2, 2023.

Strategic investments. In 2023, we became a minority owner in VillageMD by investing $2.7 billion in VillageMD preferred equity. VillageMD provides health care services for individuals and ~~proceeds from the issuance of debt and equity securities) provide protection for policyholders, furnish the financial strength to underwrite insurance risks and facilitate continued business growth.~~

~~Our acquisition of Express Scripts increased our debt and shareholders’ equity in 2018 as follows:~~

·~~Stock.~~ Express Scripts’ shareholders received 0.2434 of a share of common stock of Cigna for every one share of Express Scripts’ common stock. Cigna issued 137.6 million additional shares to Express Scripts’ shareholders.

·~~Debt.~~ ~~See Note 6 to the Consolidated Financial Statements for further description of the debt issued to finance the acquisition.~~

·~~Assumption of Express Scripts’ Senior Notes.~~ ~~See Note 6 to the Consolidated Financial Statements for further description of the notes assumed in the acquisition of Express Scripts.~~

At March 31, 2019, our debt-to-capitalization ratio was 48.8%, a decline from 50.9% at December 31, 2018. We expect to deleverage to the upper 30s within 18 to 24 months of closing of the Express Scripts acquisition using cash flows from operating activities.

Cigna entered into a new Revolving Credit Agreement and Term Loan Credit Agreement in financing the Express Scripts acquisition. A select number of subsidiaries guarantee Cigna obligations under the Revolving Credit Agreement and the Term Loan Credit Agreement. See Note 6 to the Consolidated Financial Statements for further information on these guarantees, as well as information on our Revolving Credit Agreement and the Term Loan Credit Agreement. Cigna had $22 million of letters of credit outstanding under the Revolving Credit Agreement as of March 31, 2019.

Management, guided by regulatory requirements and rating agency capital guidelines, determines the amount of capital resources that we maintain. Management allocates resources to new long-term business commitments when returns, considering the risks, look promising and when the resources available to support existing business are adequate.

~~We prioritize our use of capital resources to:~~

·~~provide the capital necessary to support growth and maintain or improve the financial strength ratings of subsidiaries and to fund pension obligations;~~

·~~consider acquisitions that are strategically and economically advantageous; and~~

·~~return capital to investors primarily through share repurchases.~~

~~We continue to maintain a capital management strategy to retain overseas a significant portion of the earnings from our foreign operations. These undistributed earnings are deployed outside of~~communities across the United States, ~~predominantly~~with primary, multi-specialty and urgent care providers serving patients in ~~support of~~traditional clinic settings, in patients' homes and online appointments.

In July 2023, Evernorth Health, Inc. became a minority owner in CarepathRx Health Systems Solutions ("CHSS"), through a $437 million equity method investment in CHSS JV LLC (a holding company for the ~~liquidity~~CHSS business and ~~regulatory capital requirements of our foreign operations as well as~~a CarepathRx company). CarepathRx provides integrated hospital pharmacy solutions to support ~~growth initiatives overseas. This strategy does not materially limit our ability~~patients across their complete health care journey. By pairing Evernorth Health Services' diverse specialty and care expertise with CHSS' robust pharmacy and infusion management capabilities, technology solutions and health system relationships, we can further improve, expand and accelerate pharmacy care delivery for the growing number of patients with chronic and complex care needs.

Risks to ~~meet~~ our liquidity and capital ~~needs in the United States.~~

~~Liquidity and Capital Resources Outlook~~

~~At March 31, 2019, there was approximately $5.2 billion in~~resources outlook include cash and short-term investments, $2.4 billion of which was held by the parent company or subsidiaries with no regulatory or other restrictions on transferring cash to the parent via dividend or loan. In 2019, we expect to have $6.2 billion of capital available for deployment including $2.1 billion of dividendsprojections that our regulated insurance companies may pay without prior regulatory approval. The parent company’s cash obligations for the remainder of 2019 are expected to approximate $2.6 billion primarily for repayment of debt, interest and anticipated dividends and excluding commercial paper maturities that we expect to re-issue as needed to manage our parent company liquidity requirements.

We expect to have sufficient liquidity to meet the obligations discussed above, based on the cash currently available to the parent and current projections for subsidiary dividends and cash flows from the newly acquired Express Scripts operations. In addition, we actively monitor our debt obligations and engage in issuance or redemption activities as needed in accordance with our capital management strategy.

During the first quarter of 2019, our unfunded pension liability increased by approximately $140 million due to the settlement of the Amara litigation. Our required contributions for 2019 under the Pension Protection Act of 2006 remain unchanged and are still expected to be immaterial. See Note 13 to our Consolidated Financial Statements for additional information regarding our pension plans.

~~Our cash projections~~ may not be realized and the demand for funds could exceed available cash if our ongoing businesses experience unexpected shortfalls in earnings or we experience material adverse effects from one or more risks or uncertainties described more fully in the ~~Risk Factors~~"Risk Factors" section of our ~~2018~~2022 Form 10-K. In those cases, we expect to have the flexibility to satisfy liquidity needs through a variety of measures including intercompany borrowings. The parent company can borrow an additional $760 million from its insurance subsidiaries without additional state approval. We have additional liquidity available through short-term commercial paper borrowing capacity and the $3.25 billion revolving credit agreement discussed in Note 6 to the Consolidated Financial Statements.

Though we believe we have adequate sources of liquidity, significant disruption or volatility in the capital and credit markets could affect our ability to access those markets for additional borrowings or increase ~~costs associated with borrowing funds.~~

costs.

Guarantees and Contractual Obligations

We are contingently liable for various contractual obligations and financial and other guarantees entered into in the ordinary course of business. See Note 16 to the Consolidated Financial Statements for discussion of various guarantees.

~~We have updated~~

The Company adopted amended accounting guidance for long-duration insurance contracts effective January 1, 2023, which impacted the amounts presented in our Consolidated Balance Sheets. Within our Consolidated Financial Statements, see Note 2 to the Consolidated Financial Statements for a summary of this accounting change and Note 9 to the Consolidated Financial Statements for a summary of the insurance liabilities in our Consolidated Balance Sheets as well as future expected cash flow information. With the adoption of amended accounting guidance for long-duration insurance contracts and enhanced disclosure within Note 9 to the Consolidated Financial Statements, we will no longer present additional information regarding insurance liabilities within this section.

Our long-term debt ~~and purchase~~ obligations previously provided in our ~~2018~~2022 Form ~~10-K.~~

Less than 1

1-3

4-5

After 5

(In millions, on an undiscounted basis)

Total

year(1)

years

years

years

On-Balance Sheet

Long-term debt

54,750

1,211

13,025

9,389

31,125

Off-Balance Sheet

Purchase obligations

2,708

938

1,281

392

97

~~(1) Amounts reflect cash obligations~~10-K have been updated as of June 30, 2023 due to the issuance of $700 million in aggregate principal amount of our 5.685% senior notes due March 2026 and $800 million in aggregate principal amount of our 5.400% senior notes due March 2033. See Note 7 to the Consolidated Financial Statements for a discussion of the debt issuance.

•Total scheduled payments on long-term debt are $48.2 billion through March 2051, which include scheduled interest payments and maturities of long-term debt.

•We expect $3.6 billion of long-term debt payments (including scheduled interest payments) to be paid for the remainder of ~~2019.~~

2023.

As of June 30, 2023, we had a commitment to become a minority owner in CarepathRx Health Systems Solutions ("CHSS"). In July 2023, we invested $437 million in CHSS JV LLC (a holding company for the CHSS business and a CarepathRx company).

There have been no other material changes to other information presented in guarantees and contractual obligations set forth in our 2022 Form 10-K.

CRITICAL ACCOUNTING ESTIMATES

The preparation of Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures in the Consolidated Financial Statements. Management considers an accounting estimate to be critical if:

•it requires assumptions to be made that were uncertain at the time the estimate was made; and

•changes in the estimate or different estimates that could have been selected could have a material effect on our consolidated results of operations or financial condition.

Management has discussed how critical accounting estimates are developed and selected with the Audit Committee of our Board of Directors and the Audit Committee has reviewed the disclosures presented in our ~~2018~~2022 Form 10-K. We regularly evaluate items that may impact critical accounting estimates.

Our most critical accounting estimates, as well as the effect of hypothetical changes in material assumptions used to develop each estimate, are described in ~~the 2018~~our 2022 Form 10-K. As of ~~March 31, 2019,~~June 30, 2023, there were no significant changes to the critical accounting estimates from what was reported in our ~~2018~~2022 Form 10-K.

SEGMENT REPORTING

The following section of this MD&A discusses the results of each of our segments. As a result of the Express Scripts acquisition, during the fourth quarter of 2018, we changed our segment reporting to reflect the new management and business reporting structure of the combined company. Prior year segment information presented in this Form 10-Q has been restated to conform to the new segment presentation.

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

In segment discussions, we present ~~adjusted revenues~~"adjusted revenues" and ~~“pre-tax~~"pre-tax adjusted income (loss) from operations,”" defined as income (loss) before income taxes excluding pre-tax income (loss) attributable to noncontrolling interests, net realized investment ~~gains (losses),~~results, amortization of acquired intangible assets ~~results of transitioning clients~~ and special items. The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. Ratios presented in this segment discussion exclude the same items as adjusted revenues and pre-tax adjusted income (loss) from operations. See Note 1817 to ~~our~~the Consolidated Financial Statements for additional discussion of these metrics and a reconciliation of ~~income~~Income before income taxes to pre-tax adjusted income from operations, as well as a reconciliation of ~~total~~Total revenues to adjusted revenues. Note 1817 to ~~our~~the Consolidated Financial Statements also explains ~~two additional items~~ that ~~are important in understanding our segment results: 1)~~ segment revenues include both external revenues and sales between segments that are eliminated in Corporate; and 2) beginning in the first quarter of 2019, compensation cost for stock options is recorded by the segments. Prior year segment information has not been restated for the change in stock option reporting.

Corporate.

In these segment discussions, we also present ~~“pre-tax~~"pre-tax adjusted margin,”" defined as pre-tax adjusted income (loss) from operations ~~before taxes~~ divided by adjusted revenues.

~~See the MD&A Executive Overview beginning on page 46 for summarized financial results of each of our segments.~~

Evernorth Health Services Segment

~~The~~

Evernorth Health Services ~~segment~~ includes a broad range of coordinated and point solution health services and capabilities, as well as those from partners across the ~~pharmacy benefit management, pharmacy home delivery~~health care system, in Pharmacy Benefits, Home Delivery Pharmacy, Specialty Pharmacy, Distribution and certain medical management services. This segment includes Express Scripts’ business from the December 20, 2018 date of acquisition with the exception of Express Scripts’ Medicare Part D business ~~that is reported in the Government operating segment. This segment also includes Cigna’s legacy mail order pharmacy business.~~ ~~Due to the timing of the acquisition, first quarter 2018 results of operations~~Care Delivery and select financial information did not include results from the Express Scripts’ business. The main driver of period over period increases in the financial information presented below is the inclusion of results from the Express Scripts’ business in first quarter of 2019.Management Solutions. As described in the introduction to Segment Reporting, ~~on page 54,~~Evernorth Health Services' performance ~~of the Health Services segment~~ is measured using adjusted revenues and pre-tax adjusted income (loss) from operations.

The key factors that impact Evernorth Health ~~Services~~Services' Pharmacy revenues, Fees and other revenues and Pharmacy and other service costs ~~of revenues~~ are volume, mix of claims and price. These key factors are discussed further below. See Note 2 to the Consolidated Financial Statements included in our ~~2018~~2022 Form 10-K for additional information on revenue and cost recognition policies for this segment.

•As our ~~clients’~~clients' claim volumes increase or decrease, our resulting revenues and cost of revenues correspondingly increase or decrease. Our gross profit, defined as Total revenues less Pharmacy and other service costs, could also increase or decrease as a result of changes in purchasing discounts.

•The mix of claims generally considers the type of drug and distribution method used for dispensing and fulfilling. AsTypes of drugs can have an impact on our Pharmacy revenues, Pharmacy and other service costs and gross profit, including amounts payable under certain financial and performance guarantees with our clients. In addition to the types of drugs, the mix of ~~drugs changes, our resulting pharmacy revenues and cost of revenues correspondingly may increase or decrease. The primary driver of fluctuations within our mix of~~generic claims ~~is the~~(i.e., generic fill ~~rate.~~rate) also impacts our gross profit. Generally, higher generic fill rates reduce revenues, as generic drugs are typically priced lower than the branded drugs they replace. However, as ingredient cost paid to pharmacies on generic drugs is incrementally lower than the price charged to our clients, higher generic fill rates generally have a favorable impact on our gross profit. The home delivery generic fill rate is currently lower than the network generic fill rate as fewer generic substitutions are available among maintenance medications (such as therapies for chronic conditions) commonly dispensed from home delivery pharmacies as compared to acute medications that are primarily dispensed by pharmacies in our retail networks.

· Furthermore, our gross profit differs among network, home delivery and specialty distribution methods and can impact our profitability.

•Our client contract pricing is impacted by our ongoing ability to negotiate favorable contracts for pharmacy network, pharmaceutical and wholesaler purchasing and manufacturer ~~rebates. We are able~~rebates on our clients' behalf. Through these affordability services, we seek to ~~reduce~~improve the ~~rate~~effectiveness of ~~drug price increases and, in some cases, lower our clients’ prescription drug spend through~~ our integrated ~~set~~solutions for the benefit of ~~solutions, including sharing significant amounts~~our clients by continuously innovating, improving affordability and implementing drug purchasing contract initiatives. Our revenues, cost of ~~pharmaceutical~~revenues

and gross profit could increase or decrease as a result of these affordability services. Pharmaceutical manufacturer ~~rebates with our clients. We refer to this as “management of the supply chain.” Inflation~~inflation also impacts our pricing because most of our contracts provide that we bill clients and pay pharmacies based on a generally recognized price index for pharmaceuticals. Therefore, the rate of inflation for prescription drugs and our efforts to manage this inflation for our clients ~~can affect~~continues to be a significant driver of our revenues and cost of ~~revenues.~~

revenues in the current environment.

In this MD&A, we present revenues and gross profit, as well as adjusted revenues and ~~pre-tax~~ adjusted ~~income from operations “excluding transitioning clients” in addition to those~~gross profit, consistent with our segment reporting metrics, ~~including transitioning clients. See the “Key Transactions and Developments” section on page 49 of this MD&A for further discussion of transitioning clients and why we present this information.~~

which exclude special items.

Results of Operations

Financial Summary
Three Months Ended March 31,
(In millions)

2019

2018

Total revenues

$
26,949

$
1,071

Less: revenue contributions from transitioning clients

(4,489)

-

Adjusted revenues

$
22,460

$
1,071

Gross profit

$
2,114

$
103

Gross profit excluding transitioning clients

$
1,396

$
103

Pre-tax adjusted income from operations

$
994

$
83

Pre-tax adjusted margin

4.4
%

7.7
%

(Dollars and adjusted scripts in millions)

Three Months
Ended March 31,
2019

Selected Financial Information(1)

Pharmacy revenue by distribution channel

Network revenues

$
9,268

Home delivery and specialty revenues

11,041

Other revenues

1,122

Total pharmacy revenues

$
21,431

Pharmacy script volume

Adjusted network scripts(2)

222

Adjusted home delivery and specialty scripts(2)

70

Total adjusted scripts(2)

292

Generic fill rate

Network

87.8
%
Home delivery

84.4
%
Overall generic fill rate

87.4
%

Financial Summary
Three Months Ended
June 30, Change Favorable
(Unfavorable) Six Months Ended
June 30, Change Favorable
(Unfavorable)
(Dollars in millions) 2023 2022 2023 2022
Total revenues $ 38,205 $ 34,863 10 % $ 74,384 $ 68,449 9 %
Adjusted revenues (1)
$ 38,205 $ 34,863 10 % $ 74,384 $ 68,449 9 %
Pharmacy and other service costs $ 35,846 $ 32,712 10 % $ 69,819 $ 64,287 9 %
Gross profit (2)
$ 2,359 $ 2,151 10 % $ 4,565 $ 4,162 10 %
Adjusted gross profit (1),(2)
$ 2,359 $ 2,151 10 % $ 4,565 $ 4,162 10 %
Pre-tax adjusted income from operations $ 1,516 $ 1,475 3 % $ 2,836 $ 2,777 2 %
Pre-tax adjusted margin 4.0 % 4.2 % (20) bps 3.8 % 4.1 % (30) bps
Adjusted expense ratio (3)
2.1 % 1.9 % (20) bps 2.2 % 2.0 % (20) bps

Selected Financial Information
Three Months Ended
June 30, Change Favorable
(Unfavorable) Six Months Ended
June 30, Change Favorable
(Unfavorable)
(Dollars and adjusted scripts in millions) 2023 2022 2023 2022
Pharmacy revenue by distribution channel
Adjusted network revenues (1)
$ 16,406 $ 16,107 2 % $ 32,154 $ 31,638 2 %
Adjusted home delivery and specialty revenues (1)
16,594 15,268 9 32,619 29,967 9
Other pharmacy revenues 2,249 1,667 35 4,116 3,379 22
Total adjusted pharmacy revenues (1)
$ 35,249 $ 33,042 7 % $ 68,889 $ 64,984 6 %
Adjusted fees and other revenues (1)
2,894 1,805 60 5,383 3,439 57
Net investment income 62 16 288 112 26 N/M
Adjusted revenues (1)
$ 38,205 $ 34,863 10 % $ 74,384 $ 68,449 9 %
Pharmacy script volume (4)
Adjusted network scripts 332 323 3 % 647 638 1 %
Adjusted home delivery and specialty scripts 64 69 (7) 130 139 (6)
Total adjusted scripts 396 392 1 % 777 777 — %
Generic fill rate (5)
Network 88.2 % 87.6 % 60 bps 88.2 % 87.4 % 80 bps
Home delivery 85.3 % 85.8 % (50) bps 84.7 % 85.6 % (90) bps
Overall generic fill rate 87.9 % 87.5 % 40 bps 87.8 % 87.2 % 60 bps

(1)~~Amounts exclude contributions from transitioning clients.~~

Total revenues and gross profit were equal to adjusted revenues and adjusted gross profit as there were no special items in the periods presented.

(2)Gross profit and adjusted gross profit are calculated as total revenues or adjusted revenues less pharmacy and other service costs.

(3)Adjusted expense ratio is calculated as selling, general and administrative expenses as a percentage of adjusted revenues.

(4)Non-specialty network scripts filled through 90-day programs and home delivery scripts are multiplied by three. All other network and specialty scripts are counted as one script.

(5)Generic fill rate is defined as the total number of generic scripts divided by the total overall scripts filled.

Three and Six Months Ended ~~March 31, 2019~~June 30, 2023 versus Three and Six Months Ended ~~March 31, 2018~~

~~This segment includes Express Scripts’ business from the date of acquisition with the exception of Express Scripts’ Medicare Part D business that is reported~~June 30, 2022

Adjusted network revenues increased 2% in both periods, reflecting inflation on branded drugs, partially offset by a decrease in mix and an increase in the ~~Government operating segment. The Company acquired Express Scripts on December 20, 2018. First quarter 2018 results of operations~~generic fill rate.

Adjusted home delivery and ~~select financial information reflect only Cigna’s legacy mail order pharmacy business.~~

~~The main driver of period over period increases~~specialty revenues increased 9% in the financial information is the inclusion of results from the Express Scripts’ business in first quarter 2019. The Health Services segment reflects strong performance, including customer growth, adjusted pharmacy scriptboth periods, reflecting higher specialty claims volume and ~~specialty~~inflation on branded drugs, partially offset by lower home delivery claims volume.

Other pharmacy ~~care.~~

~~Total pharmacy customers for the first quarter 2019 reflect strong new customer sales, retention~~revenues increased 35% and ~~organic customer growth.~~

~~Integrated~~ ~~Medical~~22%, respectively, reflecting higher volume from our CuraScript Specialty Distribution business.

Adjusted fees and other revenues increased 60% and 57%, respectively, reflecting client growth of our Care Delivery and Management Solutions, including cross-enterprise leverage, and client growth from our continued affordability services.

Adjusted gross profit increased 10% in both periodsandpre-tax adjusted income from operations increased 3% and 2%, respectively, reflecting growth in Specialty Pharmacy and continued affordability improvements, partially offset by increased strategic investments in technology to support business growth and continued advancement of our capabilities and solutions.

Theadjusted expense ratio increased 20 bps in both periods, reflecting increased strategic investments in technology to support business growth and continued advancement of our capabilities and solutions.

Cigna Healthcare Segment

~~The Integrated Medical segment~~

Cigna Healthcare includes the U.S. Commercial, U.S. Government and International Health businesses, previously reported in “Global Health Care” except as follows: 1) international health care products are now reported in the International Markets segment; 2) mail order pharmacy business is now reported in the Health Services segment;which provide comprehensive medical and ~~3) Medicare supplement business previously reported in “Global Supplemental Benefits” is now reported in Integrated Medical.~~

~~The business section of our 2018 Form 10-K (see the “Integrated Medical” section beginning on page 3) describes the various products~~coordinated solutions to clients and ~~funding solutions offered by this segment, including the various revenue sources.~~customers. As described in the introduction to Segment Reporting, ~~on page 54,~~ performance of the ~~Integrated Medical~~Cigna Healthcare segment is measured using adjusted revenues and pre-tax adjusted income from operations. Key factors affecting ~~profitability~~results for this segment include:

•customer growth;

·~~revenues from integrated specialty products, including pharmacy services, sold to clients and customers across all funding solutions;~~

•revenue growth;

•percentage of Medicare Advantage customers in plans eligible for quality bonus payments;

·~~benefit expenses~~

•medical costs as a percentage of premiums (medical care ratio or ~~“MCR”~~"MCR") for our insured ~~commercial and government~~ businesses; and

•selling, general and administrative ~~expense~~expenses as a percentage of adjusted revenues ~~(expense~~(adjusted expense ratio).

Effective January 1, 2023, we adopted amended accounting guidance for long-duration insurance contracts. For the Cigna Healthcare segment, prior period results of operations have been retrospectively adjusted to conform to this new basis of accounting. For the three and six months ended June 30, 2023, the impact of this amended guidance is immaterial. See Note 2 to the Consolidated Financial Statements for additional information.

Results of Operations

Financial Summary

Three Months Ended March 31,

Change
Favorable

(In millions)

2019

2018

(Unfavorable)

Adjusted revenues

  $
9,195

  $
8,150

13
%
Pre-tax adjusted income from operations

  $
1,170

  $
1,012

16
%
Adjusted pre-tax margin

12.7
%
12.4
%
30
bps
Medical care ratio

78.9
%
77.5
%
(140)
bps
Expense ratio

22.2
%
24.1
%
190
bps

As of

As of

(In millions)

March 31, 2019

December 31, 2018

% Change

Unpaid claims and claim expenses – Integrated Medical

  $
2,961

  $
2,697

10
%

As of March 31,

(In thousands)

2019

2018

% Change

Integrated Medical Customers

Commercial risk

1,991

1,844

8
%
Government

1,405

1,389

1
%
Total risk

3,396

3,233

5
%
Service

12,025

11,981

-
%
Total

15,421

15,214

1
%

Financial Summary
Three Months Ended
June 30, Change Favorable
(Unfavorable) Six Months Ended
June 30, Change Favorable
(Unfavorable)
(Dollars in millions) 2023 2022 2023 2022
Adjusted revenues $ 12,714 $ 11,335 12 % $ 25,432 $ 22,728 12 %
Pre-tax adjusted income from operations $ 1,172 $ 1,235 (5) % $ 2,287 $ 2,532 (10) %
Pre-tax adjusted margin 9.2 % 10.9 % (170) bps 9.0 % 11.1 % (210) bps
Medical care ratio 81.2 % 80.7 % (50) bps 81.2 % 81.1 % (10) bps
Adjusted expense ratio 20.9 % 20.7 % (20) bps 21.1 % 20.6 % (50) bps

Three and Six Months Ended ~~March 31, 2019~~June 30, 2023 versus Three and Six Months Ended ~~March 31, 2018~~

June 30, 2022

Adjusted revenuesincreased ~~reflecting higher revenues~~12% in both ~~our Commercial and Government operating segments. The increase in the Commercial segment reflected~~periods, reflecting customer growth ~~in our risk businesses as well as~~and higher premium rates due to anticipated underlying medical cost trend. ~~The increase in the Government segment reflected the addition of Express Scripts’ Medicare Part D business.~~

Pre-tax adjusted income from operations ~~increased, reflecting strong ongoing performance in our Commercial segment including increased contributions from our commercial risk business~~ decreased 5% and ~~specialty products.~~

~~Medical care ratio.~~ ~~As expected, the~~10%, respectively, primarily due to lower net investment income, a higher adjusted expense ratio and a higher medical care ratio, partially offset by increased ~~for the three months ended March 31, 2019 compared with the same period~~specialty contributions in ~~2018, primarily reflecting the addition of Express Scripts’ Medicare Part D business with a seasonally higher loss~~U.S. Commercial.

The medical care ratio ~~as well as the pricing impact of suspension of the health insurance industry tax in 2019.~~

~~Expense ratio.~~ ~~The expense ratio decreased for the three months ended March 31, 2019 compared to the same period in 2018, primarily reflecting higher risk revenues~~increased 50 bps and ~~suspension of the health insurance industry tax in 2019.~~

~~Other Items Affecting Integrated Medical Results~~

~~Unpaid Claims and Claim Expenses~~

~~Unpaid claims and claim expenses were higher as of March 31, 2019 compared with December 31, 2018,~~10 bps, respectively, primarily due to ~~seasonality~~an increased risk adjustment payable in our ~~stop loss products.~~

Individual business, partially offset by a lower U.S. Commercial medical care ratio reflecting effective pricing execution and affordability initiatives. The six months ended June 30, 2023 also reflects lower COVID-19 costs.

The adjusted expense ratio increased 20 bps and 50 bps, respectively, primarily due to volume-related expenses and higher spend on strategic investments in technology to support growth, partially offset by revenue growth across all segments.

Medical Customers

~~Our~~ ~~medical customer base was higher at March 31, 2019 compared with the same period in 2018, primarily reflecting growth in our Select market segment.~~

A medical customer is defined as a person meeting any one of the following criteria:

•is covered under a medical insurance policy, managed care arrangement or service agreement issued by us;

•has access to our provider network for covered services under their medical plan; or

•has medical claims that are administered by us.

Cigna Healthcare Medical Customers
As of June 30,
(In thousands) 2023 2022 % Change
Insured 5,273 4,705 12 %
U.S. Commercial 2,215 2,187 1
U.S. Government 1,878 1,374 37
International Health (1)
1,180 1,144 3
Services only 14,233 13,101 9
U.S. Commercial 13,784 12,465 11
U.S. Government 5 5 —
International Health (1)
444 631 (30)
Total 19,506 17,806 10 %

(1)International ~~Markets Segment~~

~~As described in~~Health excludes medical customers served by less than 100% owned subsidiaries, as well as certain customers served by our third-party administrator. International Health customers as of June 30, 2023 reflect the transition of certain run-off business section of our 2018 Form 10-K, the International Markets segment includes supplemental health, life and accident business previously reported in the “Global Supplemental Benefits” segment, except for Medicare Supplement business that is now reported in the Integrated Medical segment and certain international businesses in run-off that are now reported in Group Disability and Other. International Markets also includes health care products previously reported in the former “Global Health Care” segment.

~~As described in the introduction~~ to Segment Reporting on page 54, performance of the International Markets segment is measured using pre-tax adjusted income from operations. Key factors affecting pre-tax adjusted income from operations for this segment are:

·~~premium growth, including new business and customer retention;~~

·~~benefit expenses as a percentage of premiums (loss ratio);~~

·~~selling, general and administrative expense and acquisition expense as a percentage of revenues (expense ratio and acquisition cost ratio); and~~

·~~the impact of foreign currency movements.~~

~~Results of~~Other Operations

Financial Summary
Three Months Ended March 31,

Change
Favorable

(In millions)

2019

2018

(Unfavorable)

Adjusted revenues

  $
1,394

  $
1,341

4
%
Pre-tax adjusted income from operations

  $
206

  $
217

(5)
%
Pre-tax adjusted margin

14.8
%
16.2
%

(140)
bps
Loss ratio

57.2
%
56.3
%

(90)
bps
Acquisition cost ratio

12.3
%
12.9
%

60
bps
Expense ratio (excluding acquisition costs)

19.1
%
17.7
%

(140)
bps

~~Three Months Ended March 31, 2019 versus Three Months Ended March 31, 2018~~

~~Adjusted revenues~~ beginning January 1, 2023.

Total medical customers increased mainly due to the acquisition of OnePath Life in New Zealand in the fourth quarter of 2018 and business growth in South Korea, the Middle East and China. These increases are partially offset by unfavorable foreign currency movements.

~~Pre-tax adjusted income from operations~~ ~~decreased~~10%, primarily driven by growth in fee-based customers as well as in Individual and Medicare Advantage customers. See Part I, Item 1 of our 2022 Form 10-K for definitions of Cigna Healthcare's market segments.

Unpaid Claims and Claim Expenses


(In millions)	As of June 30, 2023		As of December 31, 2022		% Change


Unpaid claims and claim expenses – Cigna Healthcare	$	5,336	$	4,176	28	%

Our unpaid claims and claim expenses liability increased 28%, driven by stop loss seasonality and higher ~~operating expense~~volumes in our Individual and ~~loss ratios and unfavorable foreign currency movements, partially offset by the acquisition of OnePath Life and business growth largely in China and South Korea.~~

~~The segment’s~~ ~~loss ratio~~ ~~was less favorable, largely resulting from higher benefit expense in Europe and South Korea.~~

~~The~~ ~~acquisition cost~~ ~~ratio~~ ~~was lower due to lower spending in certain markets~~Medicare Advantage businesses.

Other Operations

Other Operations includes corporate owned life insurance ("COLI") and the ~~acquisition of OnePath Life.~~

~~The increase~~Company's run-off operations. See Note 1 to the Consolidated Financial Statements for additional information regarding these operations. In the prior periods, Other Operations also included the International businesses sold in ~~the~~ ~~expense ratio~~ ~~(excluding acquisition costs) was driven by strategic investments for long-term growth~~July 2022 and ~~integration of OnePath Life.~~

~~Other Items Affecting International Markets Results~~

~~South Korea is the single largest geographic market for~~ our ~~International Markets segment. South Korea generated 38% of the segment’s revenues and 58% of the segment’s first quarter 2019 pre-tax adjusted income from operations.~~ ~~For the three months ended March 31, 2019, our International Markets segment operations~~interest in ~~South Korea represented 2% of our consolidated revenues and 6% of consolidated pre-tax adjusted income from operations.~~

~~Group Disability and Other~~

~~Group Disability and Other includes the results of the business previously reported~~a joint venture in the “Group Disability and Life” segment and “Other Operations” comprising the corporate-owned life insurance (“COLI”) business along with run-off of the following businesses: 1) reinsurance; 2) settlement annuity; and 3) theTürkiye sold ~~individual life insurance and annuity and retirement benefits businesses. In addition, certain international run-off business previously reported~~ in ~~the “Global Supplemental Benefits” segment is now reported in Group Disability and Other.~~

December 2022. As described in the introduction of Segment Reporting, ~~on page 54,~~ performance of ~~Group Disability and~~ Other Operations is measured using adjusted revenues and pre-tax adjusted income from operations. ~~Key factors affecting~~

Effective January 1, 2023, we adopted amended accounting guidance for long-duration insurance contracts. For the Other Operations segment, prior period results of operations have been retrospectively adjusted to conform to this new basis of accounting. For the three and six months ended June 30, 2023, the impact of this amended guidance is immaterial. Prior period results related to long-duration contracts sold in the Chubb transaction and our divested interest in a joint venture in Türkiye were not adjusted (as permitted by ASU 2022-05). See Note 9 to the Consolidated Financial Statements for additional disclosure of our long-duration insurance contracts and Note 2 to the Consolidated Financial Statements for additional information regarding the adoption of this amended guidance.

Results of Operations



Financial Summary	Three Months Ended June 30,						Change Favorable (Unfavorable)		Six Months Ended June 30,						Change Favorable (Unfavorable)
(Dollars in millions)	2023			2022					2023			2022


Adjusted revenues	$	158		$	948		(83)	%	$	315		$	1,927		(84)	%
Pre-tax adjusted income from operations	$	29		$	228		(87)	%	$	44		$	457		(90)	%
Pre-tax adjusted margin	18.4		%	24.1		%	(570)	bps	14.0		%	23.7		%	(970)	bps

Three and Six Months Ended June 30, 2023 versus Three and Six Months Ended June 30, 2022

Adjusted revenues and pre-tax adjusted income from operations ~~are:~~

·~~premium growth, including new business and customer retention;~~

·~~net investment income;~~

·~~benefit expenses as a percentage of premiums (loss ratio); and~~

·~~selling, general and administrative expense as a percentage~~decreased for both periods primarily due to the absence of revenues ~~excluding net investment income (expense ratio).~~

~~Results of Operations~~

Financial Summary

Three Months Ended
March 31,

Change
Favorable

(In millions)

2019

2018

(Unfavorable)

Adjusted revenues

  $
1,296

  $
1,271

2
%
Pre-tax adjusted income from operations

  $
84

  $
116

(28)
%
Pre-tax adjusted margin

6.5
%
9.1
%

(260)
bps

~~Three Months Ended March 31, 2019 versus Three Months Ended March 31, 2018~~

~~Adjusted revenues~~ ~~increased, due to business growth~~and earnings from the businesses divested in the ~~group disability, life and voluntary businesses, partially offset by the continued run-off of international business.~~

~~Pre-tax adjusted income from operations and margin~~ ~~decreased, reflecting unfavorable disability claims experience, partially offset by favorable life claims experience.~~

Chubb transaction.

Corporate

Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate debt less net investment income on investments not supporting segment and other operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, operating severance, certain overhead and enterprise-wide project costs and intersegment eliminations for products and services sold between segments. ~~As discussed in the introduction to Segment Reporting on page~~ ~~54, beginning in the first quarter of 2019, compensation cost for stock options is now recorded by the segments. Prior year results for Corporate were not restated to reflect this change.~~

Financial Summary

Three Months Ended
March 31,

Change
Favorable

(In millions)

2019

2018

(Unfavorable)

Pre-tax adjusted loss from operations

$
(490)

$
(92)

(433)
%

Financial Summary Three Months Ended
June 30, Change Favorable (Unfavorable) Six Months Ended
June 30, Change Favorable (Unfavorable)
(In millions) 2023 2022 2023 2022
Pre-tax adjusted loss from operations $ (423) $ (401) (5) % $ (837) $ (744) (13) %

Three and Six Months Ended ~~March 31, 2019~~June 30, 2023 versus Three and Six Months Ended ~~March 31, 2018~~

June 30, 2022

Pre-tax adjusted loss from operations~~was~~ increased 5% and 13% respectively, primarily due to higher ~~reflecting~~ interest rates on our indebtedness and increased pension costs due to lower expected asset returns and a higher discount rate. These increases were partially offset by lower operating expenses. While our pension expense ~~on debt issued in~~has increased year-over-year, we continue to expect the ~~third quarter of 2018~~required contributions for 2023 to ~~finance the Express Scripts acquisition and debt assumed from Express Scripts.~~

be immaterial.

INVESTMENT ASSETS

The following table presents our investment asset portfolio excluding separate account ~~assets as of March 31, 2019 and December 31, 2018.~~assets. Additional information regarding our investment assets is included in Notes ~~9, 10,~~ 11, 12, 13 and 1214 to ~~our~~the Consolidated Financial Statements.

March 31,

December 31,

(In millions)

2019

2018

Debt securities

$
23,169

$
22,928

Equity securities

210

548

Commercial mortgage loans

1,864

1,858

Policy loans

1,403

1,423

Other long-term investments

2,006

1,901

Short-term investments

267

316

Total

$
28,919

$
28,974

(In millions) June 30,
2023 December 31,
2022
Debt securities $ 9,468 $ 9,872
Equity securities 3,362 622
Commercial mortgage loans 1,587 1,614
Policy loans 1,232 1,218
Other long-term investments 4,038 3,728
Short-term investments 152 139
Total $ 19,839 $ 17,193

Investment Outlook

We continue to actively monitor economic conditions including the impact of inflation, higher interest rates and the potential for a recession on the investment portfolio. Although there has been very limited impact to date on our investment portfolio as a result of the banking system stress that emerged in early 2023, we are also monitoring the ongoing developments of this situation and any potential impacts on our investments. Future realized and unrealized investment results will be driven largely by market conditions and these future conditions are not reasonably predictable. We believe that the vast majority of our investments will continue to perform under their contractual terms. We manage the portfolio for long-term economics and therefore we expect to hold a significant portion of these assets for the long term. The following discussion addresses the strategies and risks associated with our various classes of investment assets. Although future declines in investment fair values remain possible due to interest rate movements and credit deterioration due to both investment-specific uncertainties and global economic uncertainties as discussed below, we do not expect these losses to have a material adverse effect on our financial condition or liquidity.

Debt Securities

Investments in debt securities include publicly traded and privately placed bonds, mortgage and other asset-backed securities and preferred stocks redeemable by the investor. These investments are classified as available for sale and are carried at fair value onin our ~~balance sheet.~~Consolidated Balance Sheets. Additional information regarding valuation methodologies, key inputs and controls is included in Note 1012 to ~~our~~the Consolidated Financial Statements. ~~More detailed information about debt securities by type of issuer and maturity dates is included in Note 9 to our Consolidated Financial Statements.~~

The following table reflects our portfolio of debt securities by type of ~~issuer as of March 31, 2019 and December 31, 2018.~~

March 31,

December 31,

(In millions)

2019

2018

Federal government and agency

$
733

$
710

State and local government

928

985

Foreign government

2,305

2,362

Corporate

18,695

18,361

Mortgage and other asset-backed

508

510

Total

$
23,169

$
22,928

issuer:
(In millions) June 30,
2023 December 31,
2022
Federal government and agency $ 291 $ 312
State and local government 39 41
Foreign government 351 365
Corporate 8,422 8,806
Mortgage and other asset-backed 365 348
Total $ 9,468 $ 9,872

Our debt securities portfolio ~~increased~~decreased during the ~~first quarter of 2019 reflecting increased valuations~~six months ended June 30, 2023 primarily due to ~~decreases in market yields, partially offset by~~ net sales activity. Our portfolio remains in a net unrealized depreciation position due to generally increasing interest rates over the last several quarters. More detailed information about debt securities by type of issuer, maturity dates and ~~maturities.~~ net unrealized position is included in Note 11 to the Consolidated Financial Statements.

As of ~~March 31, 2019, $20.7~~June 30, 2023, $7.8 billion, or ~~89%~~82%, of the debt securities in our investment portfolio were investment grade (Baa and above, or equivalent) and the remaining ~~$2.5~~$1.7 billion were below investment grade. The majority of the bonds that are below investment grade ~~are~~were rated at the higher end of the non-investment grade spectrum. These quality characteristics have not materially changed ~~from~~since the prior year and ~~are~~remain consistent with our investment strategy. ~~Investments in debt securities are diversified by issuer, geography and industry as appropriate.~~

Foreign government obligations are concentrated in Asia, primarily South Korea, consistent with our risk management practice and local regulatory requirements of our international business operations. Corporate debt

Debt securities include private placement assets of ~~$7.0~~$3.9 billion. These investments are generally less marketable than ~~publicly-traded~~publicly traded bonds; however, yields on these investments tend to be higher than yields on ~~publicly-traded~~publicly traded bonds with comparable credit risk. We perform a credit analysis of each issuer and require financial and other covenants that allow us to monitor issuers for deteriorating financial strength and pursue remedial actions, if warranted.

~~In addition to amounts classified~~

Investments in debt securities are diversified by issuer, geography and industry. On an aggregate basis, the debt securities portfolio continues to perform according to original expectations, which includes a long-term economic investment strategy. Elevated global inflation, higher interest rates, continuing supply chain disruptions and potential fallout from the current stress in the banking system are the primary risks that many of the issuers in our portfolio are facing. To date, most issuers have been successful in managing the cost escalation and product shortages without undue margin pressure. We continue to monitor the economic environment and its effect on our portfolio and consider the impact of various factors in determining the allowance for credit losses on debt securities, which is discussed in Note 11 to the Consolidated Balance Sheets, we participate in an insurance joint venture in China with a 50% ownership interest. We account for this joint venture on the equity basis of accounting and report it in other assets. This entity had an investment portfolio of approximately $6.7 billion supporting its business that is primarily invested in Chinese corporate and government debt securities. There were no investments with a material unrealized loss as of March 31, 2019.

Financial Statements.

Commercial Mortgage Loans

~~Our~~

As of June 30, 2023, our $1.6 billion commercial mortgage ~~loans are fixed rate~~loan portfolio consisted of approximately 50 fixed-rate loans, diversified by property type, location and borrower. These loans are carried in our Consolidated Balance Sheets at their unpaid principal balance, net of an allowance for expected credit losses. As a result of increasing market interest rates since the majority of these loans were made, the carrying value exceeds the market value of these loans as of June 30, 2023. See Note 12 to the Consolidated Financial Statements for further details. Given the quality and diversity of the underlying real estate, positive debt service coverage and significant borrower cash invested in the property generally ranging between 30 and 40%, we remain confident that the vast majority of borrowers will continue to perform as expected under their contract terms. For further discussion of the results and changes in key loan metrics, see Note 11 to the Consolidated Financial Statements.

Loans are secured by high quality commercial properties, located in strong institutional markets and are generally made at less than ~~70%~~65% of the ~~property’s~~property's value at origination of the loan. Property value, debt service coverage, quality, building tenancy and stability of cash flows are all important financial underwriting considerations. We hold no direct residential mortgage loans and do not originate or service securitized mortgage loans.

~~Commercial real estate capital markets remain very active for well-leased,~~

We assess the credit quality ~~commercial real estate located in strong institutional investment markets. The vast majority~~ of ~~properties securing the mortgages in~~ our ~~mortgage loan portfolio possess these characteristics.~~

~~As of March 31, 2019, the $1.9 billion~~ commercial mortgage loan portfolio ~~consisted of approximately 65 loans that are~~annually, generally in ~~good standing. Given~~ the second quarter by reviewing each holding's most recent financial statements, rent rolls, budgets and relevant market reports. The review performed in the second quarter of 2023 confirmed ongoing strong overall credit quality ~~and diversity of~~in line with the ~~underlying real estate, positive debt service coverage~~previous year's results. See Note 11 to the Consolidated Financial Statements for further information regarding our key credit quality indicators for commercial mortgage loans. Office sector

fundamentals have been and ~~significant borrower cash investment generally ranging between 30 and 40%, we remain confident that borrowers will~~ continue to ~~perform as expected under their contract terms.~~

be weak and values are experiencing stress due to multiple headwinds: expanded work from home flexibility, shorter term leases, elevated tenant improvement allowances and corporate migration to lower cost states. Additionally, the current macroeconomic headwinds are impacting capital markets and reducing investor appetite for capital intensive assets (e.g., offices and regional shopping malls). Our commercial mortgage loan portfolio has no exposure to regional shopping malls and less than 30% exposure to office properties.

Other Long-term Investments

Other long-term investments of ~~$2.0~~$4.0 billion as of June 30, 2023 included investments in securities limited partnerships and real estate limited partnerships, ~~as well as~~ direct investments in real estate joint ~~ventures.~~ventures and other deposit activity that is required to support various insurance and health services businesses. Accounting policies for these investments are discussed in Note 11 to the Consolidated Financial Statements. The increase in other long-term investments of $0.3 billion since December 31, 2022 is primarily driven by net additional funding activity. These limited partnership entities typically invest in mezzanine debt or equity of ~~privately held~~privately-held companies ~~(securities partnerships)~~ and equity real estate. Given our subordinate position in the capital structure of these underlying entities, we assume a higher level of risk for higher expected returns. To mitigate risk, these investments are diversified across approximately ~~140~~200 separate partnerships and ~~approximately 70~~90 general partners who manage one or more of these partnerships. Also, the underlying investments are diversified by industry sector or property type and geographic region. No single partnership investment exceeded 4% of our securities and real estate limited partnership portfolio.

~~Problem and Potential Problem Investments~~

~~“Problem” bonds and commercial mortgage loans are either delinquent by 60 days~~

Income from our limited partnership investments is generally reported on a one quarter lag due to the timing of when financial information is received from the general partner or ~~more or have been restructured as to terms, including concessions by us for modification~~manager of interest rate, principal payment or maturity date. “Potential problem” bonds and commercial mortgage loans are considered current (no payment is more than 59 days past due), but management believes they have certain characteristics that increase the ~~likelihood that they may become problems.~~

~~The amounts of problem or potential problem investments as of March 31, 2019 and December 31, 2018 were not material.~~

~~Investment Outlook~~

~~Public equity markets rebounded~~investments. Accordingly, our net investment income in the second quarter largely reflects the underlying financial information from the first quarter of 2019, reflecting the continued strength of the U.S. economy. However, concerns related to trade and tariffs continue to contribute to financial market volatility. We continue to closely monitor global macroeconomic conditions and trends, including uncertainty caused by the United Kingdom’s process of exiting the European Union, and their potential impact on our investment portfolio.2023. We expect continued volatility in ~~certain sectors, such~~private equity and real estate fund performance going forward as ~~retail, energy~~fair market valuations are adjusted to reflect market and natural gas. Future realized and unrealized investment results will be driven largely by market conditions that exist when a transaction occurs or at the reporting date. These future conditions are not reasonably predictable; however, we believe that the vast majorityportfolio transactions. Less than 5% of our other long-term investments ~~will continue~~are exposed to ~~perform~~real estate in the office sector.

We participate in an insurance joint venture in China with a 50% ownership interest. We account for this joint venture under ~~their contractual terms. Based on~~the equity method of accounting and report our share of the net assets of $0.4 billion in Other assets. Our 50% share of the investment portfolio supporting the joint venture's liabilities is approximately $10.5 billion as of June 30, 2023. These investments were comprised of approximately 75% debt securities, including government and corporate debt diversified by issuer, industry and geography; 15% equities, including mutual funds, equity securities and private equity partnerships; and 10% long-term deposits and policy loans. We participate in the approval of the joint venture's investment strategy ~~to match the duration of invested assets to the duration of insurance~~ and contractholder liabilities, we expect to hold a significant portion of these assets for the long term. Although future impairment losses resulting from interest rate movements and credit deterioration due to both investment-specific and the global economic uncertainties discussed above remain possible, we do not expect these losses to havecontinuously review its execution. There were no investments with a material ~~adverse effect on our financial condition or liquidity.~~

unrealized loss as of June 30, 2023.

MARKET RISK

Financial Instruments

Our assets and liabilities include ~~certain~~ financial instruments subject to the risk of potential losses from adverse changes in market rates and prices. Our primary market risk ~~exposures are~~exposure is interest ~~rate risk and foreign currency exchange~~ rate risk. We encourage you to read this in conjunction with ~~“Market~~"Market Risk – Financial ~~Instruments”~~Instruments" included in the MD&A section of our ~~2018~~2022 Form 10-K. As of ~~March 31, 2019,~~June 30, 2023, there were no material changes in our risk exposures ~~from that~~as reported in our ~~2018~~2022 Form ~~10-K.~~

10-K; however, following increased investments in equity securities in 2023, we have increased risk regarding market prices for equity securities. If the market price for all equity securities declined by 10%, Cigna would recognize a loss of approximately $340 million as of June 30, 2023 compared to an insignificant exposure as of December 31, 2022. See Note 11 to the Consolidated Financial Statements for more information about our investments in equity securities.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information responsive to this item is contained under the caption ~~“Market Risk”~~"Market Risk" in Item 2 above, ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of ~~Operations.~~

Operations and is incorporated herein by reference.

Item 4. CONTROLS AND PROCEDURES

Based on an evaluation of the effectiveness of ~~Cigna’s~~The Cigna Group's disclosure controls and procedures conducted under the supervision and with the participation of ~~Cigna’s~~The Cigna Group's management ~~Cigna’s~~(including The Cigna Group's Chief Executive Officer and Chief Financial Officer), The Cigna Group's Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, ~~Cigna’s~~The Cigna Group's disclosure controls and procedures are effective to ensure that information required to be disclosed by The Cigna Group in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange ~~Commission’s~~Commission's rules and forms and is accumulated and communicated to ~~Cigna’s~~The Cigna Group's management, including ~~Cigna’s~~The Cigna Group's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

~~On December 20, 2018, Cigna acquired Express Scripts (see Note 4 to the accompanying Consolidated~~

Change in Internal Control over Financial Statements for additional information). As of March 31, 2019, management is in the process of evaluating and integrating the internal controls of the acquired Express Scripts business into the Company’s existing operations. Other than the controls enhanced or implemented to integrate the Express Scripts business, thereReporting

There have been no changes in ~~Cigna’s~~our internal ~~controls~~control over financial reporting during the ~~period covered by this report~~quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, ~~Cigna’s~~The Cigna Group's internal ~~controls~~control over financial reporting.

Part II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The information contained under ~~“Litigation Matters”~~"Legal and ~~“Regulatory Matters”~~Regulatory Matters" in Note 16 to the Consolidated Financial Statements is incorporated herein by reference.

Item 1A.RISK FACTORS

~~Cigna’s~~

For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~ ~~includes a detailed description of its risk factors.~~

~~ITEM~~2022.

Item 2.UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS

~~(c)~~ AND ISSUER PURCHASES OF EQUITY SECURITIES

Issuer Purchases of Equity Securities ~~by the Issuer and Affiliated Purchasers~~

The following table provides information about ~~Cigna’s~~The Cigna Group's share repurchase activity for the quarter ended ~~March 31, 2019:~~

Period
Total # of
shares
purchased (1)

Average price
paid per
share

Total # of shares purchased as part
of publicly announced program (2)

Approximate dollar value of
shares that may yet be purchased
as part of publicly announced
program (3)

January 1-31, 2019
1,112,800

$     192.92

1,081,686

$                         737,655,827

February 1-28, 2019
1,092,282

$     187.16

777,100

$                         590,002,891

March 1-31, 2019
827,489

$     167.46

639,570

$                         484,835,777

Total
3,032,571

$     183.90

2,498,356

N/A

June 30, 2023:
Period
Total # of shares purchased (1)
Average price paid per share (1)
Total # of shares purchased as part of
publicly announced program (2)
Approximate dollar value of shares
that may yet be purchased as part
of publicly announced program (3) (in millions)
April 1-30, 2023 407,751 $ 259.29 406,810 $ 2,514
May 1-31, 2023 159,123 $ 251.29 157,752 $ 2,474
June 1-30, 2023 5,557 $ 272.90 — $ 2,474
Total 572,431 $ 257.20 564,562 N/A

(1) ~~Represents~~Includes shares tendered by employees under the ~~Company’s~~Company's equity compensation plans as follows: 1) payment of taxes on vesting of restricted stock (grants and units) and strategic performance shares and 2) payment of the exercise price and taxes for certain stock options exercised. Employees tendered ~~31,114~~941 shares in ~~January, 315,182~~April, 1,371 shares in ~~February~~May and ~~187,919~~5,557 shares in ~~March 2019.~~

June 2023.

(2)Additionally, the Company maintains a share repurchase program authorized by the ~~Board of Directors.~~Board. Under this program, the Company may repurchase shares from time to time, depending on market conditions and alternate uses of capital. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions and alternate uses of capital. The share repurchase program may be effected through Rule 10b5-1 plans, open market purchases, ~~or privately negotiated transactions,~~ each in compliance with Rule 10b-18 under the ~~Securities~~ Exchange Act, ~~of 1934, as amended.~~or privately negotiated transactions. The program may be suspended or discontinued at any ~~time. From April~~time and does not have an expiration date. There were no share repurchases from July 1, ~~2019~~2023 through ~~May 1, 2019, the Company repurchased 0.6 million shares for approximately $95 million,~~August 2, 2023, leaving ~~the remaining~~ repurchase authority at ~~$390 million~~$2.5 billion as of ~~May 1, 2019.~~

August 2, 2023.

(3)Approximate dollar value of shares is as of the last date of the applicable ~~month.~~

~~ITEM~~month and excludes the impact of excise tax.

Item 5. OTHER INFORMATION

Rule 10b5-1 Plan Elections

During the quarter ended June 30, 2023, the following 10b5-1 director and officer trading plan arrangement changes occurred:

1.On May 15, 2023, David Cordani, Chairman and Chief Executive Officer, adopted a 10b5-1 sales plan. Mr. Cordani's plan provides for the sale of up to 33,911 shares of The Cigna Group common stock and the exercise of vested stock options and the associated sale of up to 142,801 shares of The Cigna Group common stock through May 10, 2024.

2.On May 23, 2023, Nicole Jones, Executive Vice President and General Counsel, adopted a 10b5-1 plan. Ms. Jones' plan provides for the sale of up to 15,619 shares of The Cigna Group common stock through May 10, 2024.

3.On May 26, 2023, Cynthia Ryan, Executive Vice President and Chief Human Resources Officer, adopted a 10b5-1 plan. Ms. Ryan's plan provides for the sale of up to 3,187 shares of The Cigna Group common stock and the exercise of vested stock options and the associated sale of up to 10,040 shares of The Cigna Group common stock through May 10, 2024.

These trading plans were entered into during an open insider trading window and are intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934 and the Company's policies regarding insider transactions.

Item 6.EXHIBITS

INDEX TO EXHIBITS

~~Number~~	~~Description~~
Number		Description	Method of Filing
10.1* 3.1		Restated Certificate of Incorporation of The Cigna Group	~~Form of Cigna Long-Term Incentive Plan: Strategic Performance Share Grant Agreement~~		Filed herewith.
10.2* 3.2		Amended and Restated By-laws of The Cigna Group	Filed by the registrant as Exhibit 3.3 to the Current Report on Form ~~of Cigna Long-Term Incentive Plan: Nonqualified Stock Option Grant Agreement~~		~~Filed herewith.~~ 8-K on February 13, 2023.
10.3* 10.1		Revolving Credit and Letter of Credit Agreement, dated as of April 27, 2023, with the banks named therein, JPMorgan Chase Bank, N.A., as administrative agent, BofA Securities, Inc., Citibank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners.	Filed by the registrant as Exhibit 10.1 to the Current Report on Form ~~of Cigna Long-Term Incentive Plan: Restricted Stock Grant Agreement~~		~~Filed herewith.~~ 8-K on April 28, 2023.
10.4* 31.1			~~Form of Cigna Long-Term Incentive Plan: Restricted Stock Unit Grant Agreement~~	~~Filed herewith.~~
~~31.1~~	Certification of Chief Executive Officer of The Cigna ~~Corporation~~Group pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934		Filed herewith.
31.2			Certification of Chief Financial Officer of The Cigna ~~Corporation~~Group pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934		Filed herewith.
32.1			Certification of Chief Executive Officer of The Cigna ~~Corporation~~Group pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350		Furnished herewith.
32.2			Certification of Chief Financial Officer of The Cigna ~~Corporation~~Group pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350		Furnished herewith.
101			~~Financial statements~~ The following materials from ~~the quarterly report~~The Cigna Group's Quarterly Report on Form 10-Q ~~of Cigna Corporation~~ for the quarter ended ~~March 31, 2019~~June 30, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of Comprehensive Income; (iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Total Equity; (v) the Consolidated Statements of Cash ~~Flow;~~Flows; and (vi) the Notes to the Consolidated Financial Statements		Filed herewith.
104		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)	Filed herewith.

* Management contracts and compensatory plans or arrangements.

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 thereunto duly authorized.

Date: August 3, 2023

~~CIGNA CORPORATION~~
THE CIGNA GROUP
~~Date:~~			~~May 2, 2019~~
~~By:~~			~~/s/ Eric P. Palmer~~
			/s/ Brian C. Evanko
			~~Eric P. Palmer~~ Brian C. Evanko
			Executive Vice President and
			Chief Financial Officer
			(Principal Financial ~~Officer)~~ Officer and Authorized Signatory)

	Unaudited
	Three Months Ended
	March 31,
(In millions, except per share amounts)	2019		2018
Revenues
Pharmacy revenues	$	25,179	$	717
Premiums	9,971		8,999
Fees and other revenues	2,450		1,368
Net investment income	346		329
TOTAL REVENUES	37,946		11,413
Benefits and expenses
Pharmacy and other service costs	24,050		561
Medical costs and other benefit expenses	7,620		6,772
Selling, general and administrative expenses	3,303		2,745
Amortization of acquired intangible assets	743		27
TOTAL BENEFITS AND EXPENSES	35,716		10,105
Income from operations	2,230		1,308
Interest expense and other	(452)		(57)
Net realized investment gains (losses)	10		(33)
Income before income taxes	1,788		1,218
TOTAL INCOME TAXES	416		301
Net income	1,372		917
Less: net income attributable to noncontrolling interests	4		2
SHAREHOLDERS’ NET INCOME	$	1,368	$	915
Shareholders’ net income per share
Basic	$	3.61	$	3.78
Diluted	$	3.56	$	3.72


The Cigna Group Consolidated Balance Sheets

	Unaudited
	As of June 30,		As of December 31,

(In millions)	2023		2022 (1)
Assets
Cash and cash equivalents	$	9,585	$	5,924
Investments	872		905
Accounts receivable, net	18,333		17,218
Inventories	4,514		4,777
Other current assets	1,407		1,298

Total current assets	34,711		30,122
Long-term investments	18,967		16,288
Reinsurance recoverables	5,143		5,416

Property and equipment	3,884		3,774
Goodwill	45,811		45,811
Other intangible assets	31,713		32,492
Other assets	2,501		2,704
Separate account assets	7,324		7,278
TOTAL ASSETS	$	150,054	$	143,885
Liabilities
Current insurance and contractholder liabilities	$	7,539	$	5,409
Pharmacy and other service costs payable	18,617		17,070
Accounts payable	8,072		7,775
Accrued expenses and other liabilities	8,499		7,978
Short-term debt	4,618		2,993

Total current liabilities	47,345		41,225
Non-current insurance and contractholder liabilities	11,575		11,976
Deferred tax liabilities, net	7,594		7,786
Other non-current liabilities	2,575		2,766
Long-term debt	28,115		28,100
Separate account liabilities	7,324		7,278
TOTAL LIABILITIES	104,528		99,131
Contingencies — Note 16
Redeemable noncontrolling interests	62		66
Shareholders' equity
Common stock (2)	4		4
Additional paid-in capital	30,436		30,233
Accumulated other comprehensive loss	(1,878)		(1,658)
Retained earnings	39,936		37,940
Less: Treasury stock, at cost	(23,053)		(21,844)
TOTAL SHAREHOLDERS' EQUITY	45,445		44,675
Other noncontrolling interests	19		13
Total equity	45,464		44,688
Total liabilities and equity	$	150,054	$	143,885

	Unaudited
	As of			As of
	March 31,			December 31,
(In millions, except per share amounts)	2019			2018
Assets
Cash and cash equivalents	$	4,976		$		3,855
Investments	1,662			2,045
Accounts receivable, net	10,941			10,473
Inventories	2,382			2,821
Other current assets	1,175			1,236
Total current assets	21,136			20,430
Long-term investments	27,257			26,929
Reinsurance recoverables	5,385			5,507
Deferred policy acquisition costs	2,817			2,821
Property and equipment	4,523			4,562
Goodwill	44,537			44,505
Other intangible assets	38,338			39,003
Other assets	2,276			1,630
Separate account assets	8,079			7,839
TOTAL ASSETS	$		154,348	$	153,226
Liabilities
Current insurance and contractholder liabilities	$		7,060	$	6,801
Pharmacy and service costs payable	11,145			10,702
Accounts payable	4,488			4,366
Accrued expenses and other liabilities	7,361			7,071
Short-term debt	2,915			2,955
Total current liabilities	32,969			31,895
Non-current insurance and contractholder liabilities	20,043			19,974
Deferred tax liabilities, net	9,403			9,453
Other non-current liabilities	3,832			3,470
Long-term debt	37,571			39,523
Separate account liabilities	8,079			7,839
TOTAL LIABILITIES	111,897			112,154
Contingencies — Note 16
Redeemable noncontrolling interests	38			37
Shareholders’ equity
Common stock (1)	4			4
Additional paid-in capital	27,855			27,751
Accumulated other comprehensive loss	(1,282)			(1,711)
Retained earnings	16,426			15,088
Less: treasury stock, at cost	(595)			(104)
TOTAL SHAREHOLDERS’ EQUITY	42,408			41,028
Other noncontrolling interests	5			7
Total equity	42,413			41,035
Total liabilities and equity	$	154,348		$		153,226
SHAREHOLDERS’ EQUITY PER SHARE	$	111.52		$		107.71

Unaudited Three Months Ended March 31, 2019 (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 Non- controlling Interests

Balance at December 31, 2018	$	4	$	27,751	$	(1,711)	$	15,088	$	(104)	$	41,028	$	7	$	41,035	$	37
Cumulative effect of adopting new lease accounting guidance (ASU 2016-02) (1)							(15)				(15)				(15)
Effect of issuing stock for employee benefit plans			104						(29)		75				75
Other comprehensive income (loss)					429						429				429		(2)
Net income							1,368				1,368		1		1,369		3
Common dividends declared (per share: $0.04)							(15)				(15)				(15)
Repurchase of common stock									(462)		(462)				(462)
Other transactions impacting noncontrolling interests											-		(3)		(3)		-
Balance at March 31, 2019	$	4	$	27,855	$	(1,282)	$	16,426	$	(595)	$	42,408	$	5	$	42,413	$	38

Three Months Ended March 31, 2018 (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 Non- controlling Interests

Balance at December 31, 2017	$	74	$	2,940	$	(1,082)	$	15,800	$	(4,021)	$	13,711	$	-	$	13,711	$	49
Cumulative effect of accounting for financial instruments and hedging					(10)		68				58				58
Reclassification adjustment related to U.S. tax reform legislation					(229)		229				-				-
Effect of issuing stock for employee benefit plans			23				(69)		68		22				22
Other comprehensive (loss)					(226)						(226)				(226)		(2)
Net income							915				915				915		2
Common dividends declared (per share: $0.04)							(10)				(10)				(10)
Repurchase of common stock									(275)		(275)				(275)
Other transactions impacting noncontrolling interests											-				-
Balance at March 31, 2018	$	74	$	2,963	$	(1,547)	$	16,933	$	(4,228)	$	14,195	$	-	$	14,195	$	49

	Unaudited
	Three Months Ended March 31,
(In millions)	2019		2018
Cash Flows from Operating Activities
Net income	$	1,372	$	917
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	897		140
Realized investment (gains) losses, net	(10)		33
Deferred income tax (benefit) expense	(162)		9
Net changes in assets and liabilities, net of non-operating effects:
Accounts receivable	(396)		(53)
Inventories	440		94
Deferred policy acquisition costs	(51)		(76)
Reinsurance recoverable and other assets	124		51
Insurance liabilities	360		849
Pharmacy and service costs payable	444		(124)
Accounts payable and accrued expenses and other liabilities	91		193
Other, net	83		(8)
NET CASH PROVIDED BY OPERATING ACTIVITIES	3,192		2,025
Cash Flows from Investing Activities
Proceeds from investments sold:
Debt and equity securities	1,471		499
Investment maturities and repayments:
Debt and equity securities	319		297
Commercial mortgage loans	89		28
Other sales, maturities and repayments (primarily short-term and other long-term investments)	367		112
Investments purchased or originated:
Debt and equity securities	(1,088)		(2,259)
Commercial mortgage loans	(95)		(68)
Other (primarily short-term and other long-term investments)	(388)		(206)
Property and equipment purchases, net	(194)		(103)
Acquisitions, net of cash acquired	(6)		-
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	475		(1,700)
Cash Flows from Financing Activities
Deposits and interest credited to contractholder deposit funds	247		292
Withdrawals and benefit payments from contractholder deposit funds	(251)		(306)
Net change in short-term debt	(1,048)		(3)
Repayment of long-term debt	(1,000)		(131)
Repurchase of common stock	(462)		(310)
Issuance of common stock	53		20
Other, net	(73)		(92)
NET CASH (USED IN) FINANCING ACTIVITIES	(2,534)		(530)
Effect of foreign currency rate changes on cash and cash equivalents	(12)		4
Net increase (decrease) in cash and cash equivalents	1,121		(201)
Cash and cash equivalents, January 1,	3,855		2,972
Cash and cash equivalents, March 31,	$	4,976	$	2,771
Supplemental Disclosure of Cash Information:
Income taxes paid, net of refunds	$	29	$	31
Interest paid	$	377	$	46

Note Number	Footnote	Page

BUSINESS AND CAPITAL STRUCTURE
1	Description of Business	7
2	Summary of Significant Accounting Policies	8
3	Accounts Receivable, Net	9
4	Mergers and Acquisitions	9
5	Earnings Per Share	10
6	Debt	11
INSURANCE INFORMATION
7	Insurance and Contractholder Liabilities	12
8	Reinsurance	15
INVESTMENTS
9	Investments	17
10	Fair Value Measurements	21
11	Variable Interest Entities	27
12	Accumulated Other Comprehensive Income (Loss)	28
WORKFORCE MANAGEMENT AND COMPENSATION
13	Pension and Other Postretirement Benefit Plans	28
PROPERTY, LEASES AND OTHER ASSET BALANCES
14	Leases	29
COMPLIANCE, REGULATION AND CONTINGENCIES
15	Income Taxes	31
16	Contingencies and Other Matters	31
17	Condensed Consolidating Financial Information	34
RESULTS DETAILS
18	Segment Information	41



Note Number	Footnote	Page

BUSINESS AND CAPITAL STRUCTURE
1	Description of Business	10
2	Summary of Significant Accounting Policies	10
3	Accounts Receivable, Net	12
4	Supplier Finance Program	12
5	Mergers, Acquisitions and Divestitures	12

6	Earnings Per Share	13
7	Debt	14
8	Common and Preferred Stock	16
INSURANCE INFORMATION
9	Insurance and Contractholder Liabilities	16
10	Reinsurance	21
INVESTMENTS
11	Investments	23
12	Fair Value Measurements	26
13	Variable Interest Entities	30
14	Accumulated Other Comprehensive Income (Loss)	30


COMPLIANCE, REGULATION AND CONTINGENCIES
15	Income Taxes	32
16	Contingencies and Other Matters	32
RESULTS DETAILS
17	Segment Information	34

(In millions)	March 31, 2019		December 31, 2018
Insurance customer receivables	$	2,261	$	1,888
Noninsurance customer receivables	4,635		4,988
Pharmaceutical manufacturers receivable(1)	3,682		3,321
Other receivables	363		276
Total accounts receivable, net	$	10,941	$	10,473

	Three Months Ended
	March 31, 2019						March 31, 2018
(Shares in thousands, dollars in millions, except per share amounts)	Basic		Effect of Dilution		Diluted		Basic		Effect of Dilution		Diluted
Shareholders’ net income	$	1,368			$	1,368	$	915			$	915
Shares:
Weighted average	379,387				379,387		242,179				242,179
Common stock equivalents			4,637		4,637				3,609		3,609
Total shares	379,387		4,637		384,024		242,179		3,609		245,788
EPS	$	3.61	$	(0.05)	$	3.56	$	3.78	$	(0.06)	$	3.72

	Three Months Ended March 31,
(In millions)	2019	2018
Anti-dilutive options	2.8	0.9


Record Date	Payment Date	Amount per Share	Total Amount Paid (in millions)
2023
March 8, 2023	March 23, 2023	$1.23	$368
June 7, 2023	June 22, 2023	$1.23	$362


2022
March 9, 2022	March 24, 2022	$1.12	$357
June 8, 2022	June 23, 2022	$1.12	$352

	Three Months Ended
(Dollars in millions)	March 31, 2019				March 31, 2018
	$		%(1)		$		%(2)
Actual completion factors	$	55	0.2	%	$	52	0.3	%
Medical cost trend	62		0.3		54		0.3
Other	-		-		9		-
Total favorable variance	$	117	0.5	%	$	115	0.6	%

(Dollars in millions) Line of Business	Reinsurer(s)	March 31, 2019		December 31, 2018		Collateral and Other Terms at March 31, 2019
Ongoing Operations
Integrated Medical, International Markets, Group Disability, COLI	Various	$	470	$	464	Balances range from less than $1 million up to $65 million. Over 70% of the balance is from companies rated as investment grade by Standard & Poor’s.
Total recoverables related to ongoing operations		470		464
Acquisition, disposition or runoff activities
Individual Life and Annuity (sold in 1998)	Lincoln National Life and Lincoln Life & Annuity of New York	3,254		3,312		Both companies’ ratings were well above the level that would trigger a contractual obligation to fully secure the outstanding balance.
GMDB (effectively exited in 2013)	Berkshire	844		893		100% secured by assets in a trust.
Retirement Benefits Business (sold in 2004)	Prudential Retirement Insurance and Annuity	761		787		100% secured by assets in a trust.
Supplemental Benefits Business (2012 acquisition)	Great American Life	254		261		100% secured by assets in a trust.
Other	Various	82		87		100% secured by assets in a trust or other deposits.
Total recoverables related to acquisition, disposition or runoff activities		5,195		5,340
Total reinsurance recoverables		$	5,665	$	5,804

	Amortized		Fair
(In millions)	Cost		Value
Due in one year or less	$	1,366	$	1,370
Due after one year through five years	6,516		6,684
Due after five years through ten years	9,529		9,682
Due after ten years	4,231		4,925
Mortgage and other asset-backed securities	494		508
Total	$	22,136	$	23,169

	Amortized		Unrealized		Unrealized		Fair
(In millions)	Cost		Appreciation		Depreciation		Value
March 31, 2019
Federal government and agency	$	513	$	221	$	(1)	$	733
State and local government	851		77		-		928
Foreign government	2,126		183		(4)		2,305
Corporate	18,152		676		(133)		18,695
Mortgage and other asset-backed	494		21		(7)		508
Total	$	22,136	$	1,178	$	(145)	$	23,169
Investments supporting liabilities of the Company’s run-off settlement annuity business (included in total above) (1)	$	2,269	$	555	$	(13)	$	2,811
December 31, 2018
Federal government and agency	$	507	$	204	$	(1)	$	710
State and local government	920		66		(1)		985
Foreign government	2,214		155		(7)		2,362
Corporate	18,403		411		(453)		18,361
Mortgage and other asset-backed	506		16		(12)		510
Total	$	22,550	$	852	$	(474)	$	22,928
Investments supporting liabilities of the Company’s run-off settlement annuity business (included in total above) (1)	$	2,264	$	479	$	(40)	$	2,703


(In millions)	Amortized Cost		Allowance for Credit Loss		Unrealized Appreciation		Unrealized Depreciation		Fair Value
June 30, 2023
Federal government and agency	$	276	$	—	$	26	$	(11)	$	291
State and local government	41		—		—		(2)		39
Foreign government	361		—		10		(20)		351
Corporate	9,224		(39)		99		(862)		8,422
Mortgage and other asset-backed	406		—		1		(42)		365
Total	$	10,308	$	(39)	$	136	$	(937)	$	9,468


December 31, 2022
Federal government and agency	$	292	$	—	$	32	$	(12)	$	312
State and local government	43		—		—		(2)		41
Foreign government	375		—		11		(21)		365
Corporate	9,742		(44)		89		(981)		8,806
Mortgage and other asset-backed	390		—		1		(43)		348
Total	$	10,842	$	(44)	$	133	$	(1,059)	$	9,872


	Carrying Value as of
(In millions)	June 30, 2023		December 31, 2022
Real estate investments	$	1,464	$	1,319
Securities partnerships	2,351		2,166
Other	223		243
Total	$	4,038	$	3,728

		Notional Value as of
(In millions)		March 31,		December 31,
Type of Instrument	Purpose	2019		2018
Foreign currency swap contracts	Fair value hedge: To hedge the foreign exchange-related changes in fair values of certain foreign-denominated bonds. The notional value of these derivatives matches the amortized cost of the hedged bonds.	$	593	$	525
Foreign currency swap contracts	Net investment hedge: To reduce the risk of changes in net assets due to changes in foreign currency spot exchange rates for certain foreign subsidiaries that conduct their business principally in Euros. The notional value of hedging instruments matches the hedged amount of subsidiary net assets.	$	439	$	439
Foreign currency forward contracts	Economic hedge: To hedge the foreign exchange related changes in fair values of a U.S. dollar-denominated bond portfolio to reflect the local currency for the Company’s foreign subsidiary in South Korea. The notional value of hedging instruments generally aligns with the fair value of the hedged bond portfolio.	$	309	$	309

	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
	As of		As of		As of		As of		As of		As of		As of		As of
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
(In millions)	2019		2018		2019		2018		2019		2018		2019		2018
Financial assets at fair value
Debt securities
Federal government and agency	$	212	$	209	$	521	$	501	$	-	$	-	$	733	$	710
State and local government	-		-		928		985		-		-		928		985
Foreign government	-		-		2,277		2,356		28		6		2,305		2,362
Corporate	-		-		18,458		18,127		237		234		18,695		18,361
Mortgage and other asset-backed	-		-		369		372		139		138		508		510
Total debt securities	212		209		22,553		22,341		404		378		23,169		22,928
Equity securities (1)	8		384		49		43		32		32		89		459
Short-term investments	-		-		267		316		-		-		267		316
Derivative assets	-		-		58		53		-		-		58		53
Real estate funds priced at NAV as a practical expedient (2)													230		239
Financial liabilities at fair value
Derivative liabilities	$	-	$	-	$	14	$	10	$	-	$	-	$	14	$	10

Debt and Equity Securities (In millions)	For the Three Months Ended March 31,
Debt and Equity Securities (In millions)	2019		2018
Balance at January 1,	$	410	$	732
Total (losses) included in shareholders’ net income	(1)		(20)
Gains (losses) included in other comprehensive income	7		(5)
Gains (losses) required to adjust future policy benefits for settlement annuities (1)	2		(4)
Purchases, sales, settlements
Purchases	-		10
Sales	-		(11)
Settlements	(1)		(2)
Total purchases, sales and settlements	(1)		(3)
Transfers into/(out of) Level 3			��
Transfers into Level 3	20		20
Transfers out of Level 3 (2)	(1)		(124)
Total transfers into/(out of) Level 3	19		(104)
Balance at March 31,	$	436	$	596
Total (losses) included in shareholders’ net income attributable to instruments held at the reporting date	$	(1)	$	(7)

	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
(In millions)	2019		2018		2019		2018		2019		2018		2019		2018
Guaranteed separate accounts (See Note 16)	$	204	$	187	$	264	$	267	$	-	$	-	$	468	$	454
Non-guaranteed separate accounts (1)	1,328		1,204		5,346		5,216		244		233		6,918		6,653
Subtotal	$	1,532	$	1,391	$	5,610	$	5,483	$	244	$	233	7,386		7,107
Non-guaranteed separate accounts priced at NAV as a practical expedient (1)													693		732
Total separate account assets													$	8,079	$	7,839


	Fair Value as of				Unfunded Commitment as of June 30, 2023		Redemption Frequency (if currently eligible)	Redemption Notice Period
(In millions)	June 30, 2023		December 31, 2022
Securities partnerships	$	425	$	451	$	211	Not applicable	Not applicable
Real estate funds	273		302		—		Quarterly	30 - 90 days
Hedge funds	4		4		—		Up to annually, varying by fund	30 - 90 days
Total	$	702	$	757	$	211

	Classification in	March 31, 2019				December 31, 2018
(In millions)	Fair Value Hierarchy	Fair Value		Carrying Value		Fair Value		Carrying Value
Commercial mortgage loans	Level 3	$	1,875	$	1,864	$	1,832	$	1,858
Long-term debt, including current maturities, excluding finance leases	Level 2	$	41,027	$	39,840	$	40,819	$	40,829


	Classification in Fair Value Hierarchy	June 30, 2023				December 31, 2022
(In millions)		Fair Value		Carrying Value		Fair Value		Carrying Value
Commercial mortgage loans	Level 3	$	1,460	$	1,587	$	1,491	$	1,614
Long-term debt, including current maturities, excluding finance leases	Level 2	$	30,313	$	32,428	$	28,653	$	30,994

	Pension Benefits				Other Postretirement Benefits
	Three Months Ended				Three Months Ended
	March 31,				March 31,
(In millions)	2019		2018		2019		2018
Service cost	$	1	$	1	$	-	$	-
Interest cost	49		42		2		2
Expected long-term return on plan assets	(56)		(64)		-		-
Amortization of:
Net loss from past experience	16		17		-		-
Prior service cost	-		-		(1)		-
Litigation settlement - plan amendment	142		-		-		-
Settlement loss	10		-		-		-
Net cost	$	162	$	(4)	$	1	$	2

(In millions)	Operating Leases		Finance Leases
2019	$	129	$	18
2020	169		23
2021	140		14
2022	121		14
2023	81		9
Thereafter	124		22
Total lease payments	764		100
Less: imputed interest	80		11
Total	$	684	$	89

	For the three months ended March 31, 2019
(In millions)	Cigna		Old Cigna		Express Scripts Holding Company		Express Scripts, Inc.		Medco Health Solutions, Inc.		Non- Guarantors		Eliminations and Consolidation Adjustments		Consolidated
Revenues
Pharmacy revenues	$	-	$	-	$	-	$	17,622	$	3,763	$	14,142	$	(10,348)	$	25,179
Premiums	-		-		-		-		-		9,971		-		9,971
Fees and other revenues	-		-		-		190		84		3,101		(925)		2,450
Net investment income (loss)	(9)		-		15		3		2		335		-		346
Total revenues	(9)		-		15		17,815		3,849		27,549		(11,273)		37,946
Benefits and expenses
Pharmacy and other service costs	-		-		-		16,363		3,689		14,346		(10,348)		24,050
Medical costs and other benefit expenses	-		-		-		-		-		7,620		-		7,620
Selling, general and administrative expenses	(99)		73		13		835		87		3,319		(925)		3,303
Amortization of acquired intangible assets	-		-		-		577		83		83		-		743
Total benefits and expenses	(99)		73		13		17,775		3,859		25,368		(11,273)		35,716
Income (loss) from operations	90		(73)		2		40		(10)		2,181		-		2,230
Interest and other income (expense)	(237)		(87)		(124)		(4)		(9)		9		-		(452)
Intercompany interest income (expense)	(31)		(3)		124		(62)		(39)		11		-		-
Net realized investment gains	-		-		-		-		-		10		-		10
Income (loss) before income taxes	(178)		(163)		2		(26)		(58)		2,211		-		1,788
Total income tax (benefit) expense	(37)		(31)		1		(17)		(17)		517		-		416
Income (loss) before equity in earnings of subsidiaries	(141)		(132)		1		(9)		(41)		1,694		-		1,372
Equity in earnings of subsidiaries	1,509		1,152		488		432		84		-		(3,665)		-
Net income	1,368		1,020		489		423		43		1,694		(3,665)		1,372
Less: Net income attributable to noncontrolling interests	-		-		-		-		-		4		-		4
Shareholders’ net income	$	1,368	$	1,020	$	489	$	423	$	43	$	1,690	$	(3,665)	$	1,368
Other comprehensive income, net of tax	429		429		1		1		-		412		(843)		429
Shareholders’ comprehensive income	$	1,797	$	1,449	$	490	$	424	$	43	$	2,102	$	(4,508)	$	1,797

	As of March 31, 2019
(In millions)	Cigna		Old Cigna		Express Scripts Holding Company		Express Scripts, Inc.		Medco Health Solutions, Inc.		Non- Guarantors		Eliminations and Consolidation Adjustments		Consolidated
Assets
Cash and cash equivalents	$	-	$	-	$	1,596	$	44	$	-	$	3,336	$	-	$	4,976
Investments	417		6		-		-		-		1,239		-		1,662
Accounts receivable, net	-		2		-		4,670		626		5,643		-		10,941
Inventories	-		-		-		-		-		2,382		-		2,382
Other current assets	-		131		-		282		3		1,042		(283)		1,175
Total current assets	417		139		1,596		4,996		629		13,642		(283)		21,136
Long-term investments	-		10		-		-		-		27,247		-		27,257
Reinsurance recoverables	-		-		-		-		-		5,385		-		5,385
Deferred policy acquisition costs	-		-		-		-		-		2,817		-		2,817
Property and equipment	-		-		-		2,386		-		2,137		-		4,523
Investments in subsidiaries	70,036		28,174		52,560		17,551		8,205		-		(176,526)		-
Intercompany receivables, net	-		3,054		-		8,371		2,222		26,839		(40,486)		-
Goodwill	-		-		31,049		-		-		13,488		-		44,537
Other intangible assets	-		-		8,400		18,489		6,958		4,491		-		38,338
Other assets	27		227		-		152		78		2,001		(209)		2,276
Separate account assets	-		-		-		-		-		8,079		-		8,079
TOTAL ASSETS	$	70,480	$	31,604	$	93,605	$	51,945	$	18,092	$	106,126	$	(217,504)	$	154,348
Liabilities
Current insurance and contractholder liabilities	$	-	$	-	$	-	$	-	$	-	$	7,060	$	-	$	7,060
Pharmacy and service costs payable	-		-		-		9,245		1,291		609		-		11,145
Accounts payable	22		-		2		833		4		3,627		-		4,488
Accrued expenses and other liabilities	719		288		92		1,522		276		4,747		(283)		7,361
Short-term debt	1,556		-		998		352		-		9		-		2,915
Total current liabilities	2,297		288		1,092		11,952		1,571		16,052		(283)		32,969
Non-current insurance and contractholder liabilities	-		-		-		-		-		20,043		-		20,043
Deferred tax liabilities, net	-		-		1,999		4,898		1,664		1,051		(209)		9,403
Other non-current liabilities	-		715		-		577		241		2,299		-		3,832
Intercompany payables, net	4,904		4,477		30,552		-		-		553		(40,486)		-
Long-term debt	20,871		5,112		10,938		41		505		104		-		37,571
Separate account liabilities	-		-		-		-		-		8,079		-		8,079
TOTAL LIABILITIES	28,072		10,592		44,581		17,468		3,981		48,181		(40,978)		111,897
Redeemable noncontrolling interests	-		-		-		-		-		38		-		38
TOTAL SHAREHOLDERS’ EQUITY	42,408		21,012		49,024		34,477		14,111		57,902		(176,526)		42,408
Noncontrolling interests	-		-		-		-		-		5		-		5
TOTAL EQUITY	42,408		21,012		49,024		34,477		14,111		57,907		(176,526)		42,413
TOTAL LIABILITIES AND EQUITY	$	70,480	$	31,604	$	93,605	$	51,945	$	18,092	$	106,126	$	(217,504)	$	154,348

	As of December 31, 2018
(In millions)	Cigna		Old Cigna		Express Scripts Holding Company		Express Scripts, Inc.		Medco Health Solutions, Inc.			Non- Guarantors		Eliminations and Consolidation Adjustments		Consolidated
Assets
Cash and cash equivalents	$	243	$	-	$	633	$	43	$	-		$	2,936	$	-	$	3,855
Investments	-		-		-		-		-			2,045		-		2,045
Accounts receivable, net	-		-		-		4,206		748			5,519		-		10,473
Inventories	-		-		-		-		-			2,821		-		2,821
Other current assets	14		59		-		310		-			1,063		(210)		1,236
Total current assets	257		59		633		4,559		748			14,384		(210)		20,430
Long-term investments	-		10		-		-		-			26,919		-		26,929
Reinsurance recoverables	-		-		-		-		-			5,507		-		5,507
Deferred policy acquisition costs	-		-		-		-		-			2,821		-		2,821
Property and equipment	-		-		-		2,432		-			2,130		-		4,562
Investments in subsidiaries	68,969		27,544		52,035		17,115		8,117			-		(173,780)		-
Intercompany receivables, net	-		4,505		-		7,425		2,335			24,882		(39,147)		-
Goodwill	-		-		31,049		-		-			13,456		-		44,505
Other intangible assets	-		-		8,400		18,962		7,040			4,601		-		39,003
Other assets	48		198		-		68		74			1,488		(246)		1,630
Separate account assets	-		-		-		-		-			7,839		-		7,839
TOTAL ASSETS	$	69,274	$	32,316	$	92,117	$	50,561	$	18,314		$	104,027	$	(213,383)	$	153,226
Liabilities
Current insurance and contractholder liabilities	$	-	$	-	$	-	$	-	$	-		$	6,801	$	-	$	6,801
Pharmacy and service costs payable	-		-		-		8,422		1,579			701		-		10,702
Accounts payable	22		-		-		834		4			3,506		-		4,366
Accrued expenses and other liabilities	396		182		129		1,387		189			4,998		(210)		7,071
Short-term debt	-		1,500		995		353		-			107		-		2,955
Total current liabilities	418		1,682		1,124		10,996		1,772			16,113		(210)		31,895
Non-current insurance and contractholder liabilities	-		-		-		-		-			19,974		-		19,974
Deferred tax liabilities, net	-		-		2,001		5,012		1,685			1,001		(246)		9,453
Other non-current liabilities	-		685		-		497		290			1,998		-		3,470
Intercompany payables, net	4,965		4,361		29,569		-		-			252		(39,147)		-
Long-term debt	22,863		5,110		10,932		24		506			88		-		39,523
Separate account liabilities	-		-		-		-		-			7,839		-		7,839
TOTAL LIABILITIES	28,246		11,838		43,626		16,529		4,253			47,265		(39,603)		112,154
Redeemable noncontrolling interests	-		-		-		-		-		��	37		-		37
TOTAL SHAREHOLDERS’ EQUITY	41,028		20,478		48,491		34,032		14,061			56,718		(173,780)		41,028
Noncontrolling interest	-		-		-		-		-			7		-		7
TOTAL EQUITY	41,028		20,478		48,491		34,032		14,061			56,725		(173,780)		41,035
TOTAL LIABILITIES AND EQUITY	$	69,274	$	32,316	$	92,117	$	50,561	$	18,314		$	104,027	$	(213,383)	$	153,226

(In millions)	Health Services		Integrated Medical		International Markets		Group Disability and Other		Corporate and Eliminations		Total
Three Months Ended March 31, 2019
Revenues from external customers (1)	$	26,197	$	8,910	$	1,384	$	1,109	$	-	$	37,600
Inter-segment revenues	737		162		-		7		(906)		-
Net investment income (loss)	15		123		38		180		(10)		346
Total revenues	26,949		9,195		1,422		1,296		(916)		37,946
Revenue contributions from transitioning clients	(4,489)		-		-		-		-		(4,489)
Net realized investment results from equity method subsidiaries (2)	-		-		(28)		-		-		(28)
Adjusted revenues	$	22,460	$	9,195	$	1,394	$	1,296	$	(916)	$	33,429
Income (loss) before taxes	$	942	$	1,157	$	222	$	93	$	(626)	$	1,788
Pre-tax adjustments to reconcile to adjusted income from operations
Adjustment for transitioning clients	(660)		-		-		-		-		(660)
(Income) attributable to noncontrolling interests	(1)		-		(4)		-		-		(5)
Net realized investment (gains) (2)	-		(5)		(23)		(10)		-		(38)
Amortization of acquired intangible assets	713		18		11		1		-		743
Special items
Integration and transaction-related costs	-		-		-		-		136		136
Pre-tax adjusted income (loss) from operations	$	994	$	1,170	$	206	$	84	$	(490)	$	1,964