UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2021~~2022

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission ~~file number~~File Number ~~1-38769~~001-38769

Cigna Corporation

(Exact name of registrant as specified in its charter)


Delaware			82-4991898
(State or other jurisdiction			~~(I.R.S. Employer~~
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)226-6000~~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:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.01	CI	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~~ x☒ 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~~ x☒ 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~~"large accelerated filer,~~” “accelerated~~" "accelerated filer,~~” “smaller~~" "smaller reporting company,”" and ~~“emerging~~"emerging growth ~~company”~~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. ☐

~~Yes _~~

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 ~~October~~July 29, ~~2021, 331,427,775~~2022, 305,116,202 shares of the issuer’s common stock were outstanding.

Cigna Corporation

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

subsidiaries.

Part I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS


Cigna Corporation Consolidated Statements of Income	Cigna Corporation Consolidated Statements of Income									Cigna Corporation Consolidated Statements of Income
		Unaudited				Unaudited					Unaudited				Unaudited
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per share amounts)	(In millions, except per share amounts)	2021		2020		2021		2020				(In millions, except per share amounts)	2022		2021		2022		2021
Revenues	Revenues											Revenues
Pharmacy revenues	Pharmacy revenues	$	31,013	$	27,802	$	89,085	$	79,464			Pharmacy revenues	$	31,972	$	30,047	$	62,669	$	58,072
Premiums	Premiums	10,275		10,682		30,812		31,928				Premiums	10,426		10,323		20,782		20,537
Fees and other revenues	Fees and other revenues	2,532		2,174		7,324		6,424				Fees and other revenues	2,757		2,451		5,295		4,792
Net investment income	Net investment income	468		297		1,169		873				Net investment income	325		310		739		701
TOTAL REVENUES	TOTAL REVENUES	44,288		40,955		128,390		118,689				TOTAL REVENUES	45,480		43,131		89,485		84,102
Benefits and expenses	Benefits and expenses											Benefits and expenses
Pharmacy and other service costs	Pharmacy and other service costs	30,070		26,624		86,306		76,425				Pharmacy and other service costs	31,150		29,001		60,963		56,236
Medical costs and other benefit expenses	Medical costs and other benefit expenses	8,330		8,429		24,819		23,863				Medical costs and other benefit expenses	8,192		8,484		16,460		16,489
Selling, general and administrative expenses	Selling, general and administrative expenses	3,093		3,301		9,368		10,106				Selling, general and administrative expenses	3,256		2,996		6,555		6,275
Amortization of acquired intangible assets	Amortization of acquired intangible assets	501		493		1,499		1,487				Amortization of acquired intangible assets	501		503		959		998
TOTAL BENEFITS AND EXPENSES	TOTAL BENEFITS AND EXPENSES	41,994		38,847		121,992		111,881				TOTAL BENEFITS AND EXPENSES	43,099		40,984		84,937		79,998
Income from operations	Income from operations	2,294		2,108		6,398		6,808				Income from operations	2,381		2,147		4,548		4,104
Interest expense and other	Interest expense and other	(303)		(336)		(915)		(1,101)				Interest expense and other	(301)		(298)		(600)		(612)
Debt extinguishment costs	Debt extinguishment costs	—		—		(141)		(199)				Debt extinguishment costs	—		(10)		—		(141)

Net realized investment gains (losses)	Net realized investment gains (losses)	68		32		128		(18)				Net realized investment gains (losses)	(95)		59		(414)		60
Income before income taxes	Income before income taxes	2,059		1,804		5,470		5,490				Income before income taxes	1,985		1,898		3,534		3,411
TOTAL INCOME TAXES	TOTAL INCOME TAXES	424		406		1,188		1,143				TOTAL INCOME TAXES	413		422		764		764
Net income	Net income	1,635		1,398		4,282		4,347				Net income	1,572		1,476		2,770		2,647
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	14		10		33		24				Less: Net income attributable to noncontrolling interests	13		9		28		19
SHAREHOLDERS' NET INCOME	SHAREHOLDERS' NET INCOME	$	1,621	$	1,388	$	4,249	$	4,323			SHAREHOLDERS' NET INCOME	$	1,559	$	1,467	$	2,742	$	2,628
Shareholders’ net income per share
Shareholders' net income per share												Shareholders' net income per share
Basic	Basic	$	4.84	$	3.81	$	12.44	$	11.77			Basic	$	4.95	$	4.30	$	8.66	$	7.62
Diluted	Diluted	$	4.80	$	3.78	$	12.32	$	11.66			Diluted	$	4.90	$	4.25	$	8.57	$	7.54

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


Cigna Corporation Consolidated Statements of Comprehensive Income	Cigna Corporation Consolidated Statements of Comprehensive Income										Cigna Corporation Consolidated Statements of Comprehensive Income
		Unaudited				Unaudited						Unaudited				Unaudited
		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	(In millions)	2021		2020		2021		2020			(In millions)	2022		2021		2022		2021
Net income	Net income	$	1,635	$	1,398	$	4,282	$	4,347		Net income	$	1,572	$	1,476	$	2,770	$	2,647
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax										Other comprehensive income (loss), net of tax
Net unrealized appreciation (depreciation) on securities and derivatives	Net unrealized appreciation (depreciation) on securities and derivatives	32		120		(119)		401			Net unrealized appreciation (depreciation) on securities and derivatives	(410)		122		(970)		(151)
Net translation gains (losses) on foreign currencies	Net translation gains (losses) on foreign currencies	(125)		109		(228)		4			Net translation gains (losses) on foreign currencies	(206)		16		(269)		(103)
Postretirement benefits liability adjustment	Postretirement benefits liability adjustment	16		14		49		(15)			Postretirement benefits liability adjustment	27		15		40		33
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(77)		243		(298)		390			Other comprehensive income (loss), net of tax	(589)		153		(1,199)		(221)
Total comprehensive income	Total comprehensive income	1,558		1,641		3,984		4,737			Total comprehensive income	983		1,629		1,571		2,426

Comprehensive income (loss) attributable to noncontrolling interests	Comprehensive income (loss) attributable to noncontrolling interests										Comprehensive income (loss) attributable to noncontrolling interests
Net income attributable to redeemable noncontrolling interest		4		4		12		12
Net income attributable to redeemable noncontrolling interests											Net income attributable to redeemable noncontrolling interests	2		3		5		8
Net income attributable to other noncontrolling interests	Net income attributable to other noncontrolling interests	10		6		21		12			Net income attributable to other noncontrolling interests	11		6		23		11
Other comprehensive (loss) attributable to redeemable noncontrolling interest		(1)		(4)		(6)		(10)
Other comprehensive loss attributable to redeemable noncontrolling interests											Other comprehensive loss attributable to redeemable noncontrolling interests	(1)		(1)		(3)		(5)
Total comprehensive income attributable to noncontrolling interests	Total comprehensive income attributable to noncontrolling interests	13		6		27		14			Total comprehensive income attributable to noncontrolling interests	12		8		25		14
SHAREHOLDERS' COMPREHENSIVE INCOME	SHAREHOLDERS' COMPREHENSIVE INCOME	$	1,545	$	1,635	$	3,957	$	4,723		SHAREHOLDERS' COMPREHENSIVE INCOME	$	971	$	1,621	$	1,546	$	2,412

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


Cigna Corporation Consolidated Balance Sheets	Cigna Corporation Consolidated Balance Sheets					Cigna Corporation Consolidated Balance Sheets
		Unaudited					Unaudited
		As of September 30,		As of December 31,			As of June 30,		As of December 31,

(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	3,483	$	10,182	Cash and cash equivalents	$	4,421	$	5,081
Investments	Investments	1,374		1,331		Investments	754		920
Accounts receivable, net	Accounts receivable, net	16,250		12,191		Accounts receivable, net	18,290		15,071
Inventories	Inventories	3,020		3,165		Inventories	3,781		3,722
Other current assets	Other current assets	1,360		930		Other current assets	1,124		1,283
Assets of businesses held for sale						Assets of businesses held for sale	9,052		10,057
Total current assets	Total current assets	25,487		27,799		Total current assets	37,422		36,134
Long-term investments	Long-term investments	23,756		23,262		Long-term investments	16,724		18,438
Reinsurance recoverables	Reinsurance recoverables	5,035		5,200		Reinsurance recoverables	4,874		4,970
Deferred policy acquisition costs	Deferred policy acquisition costs	3,367		3,385		Deferred policy acquisition costs	742		677
Property and equipment	Property and equipment	4,070		4,205		Property and equipment	3,659		3,692
Goodwill	Goodwill	46,056		44,648		Goodwill	45,810		45,811
Other intangible assets	Other intangible assets	34,615		35,179		Other intangible assets	33,276		34,102
Other assets	Other assets	2,715		2,687		Other assets	2,628		2,728
Separate account assets	Separate account assets	9,150		9,086		Separate account assets	7,495		8,337
TOTAL ASSETS	TOTAL ASSETS	$	154,251	$	155,451	TOTAL ASSETS	$	152,630	$	154,889
Liabilities	Liabilities					Liabilities
Current insurance and contractholder liabilities	Current insurance and contractholder liabilities	$	5,917	$	5,308	Current insurance and contractholder liabilities	$	5,654	$	5,318
Pharmacy and other service costs payable	Pharmacy and other service costs payable	14,705		13,347		Pharmacy and other service costs payable	16,432		15,309
Accounts payable	Accounts payable	5,659		5,478		Accounts payable	7,142		6,655
Accrued expenses and other liabilities	Accrued expenses and other liabilities	7,356		8,515		Accrued expenses and other liabilities	7,742		7,322
Short-term debt	Short-term debt	2,703		3,374		Short-term debt	2,397		2,545
Liabilities of businesses held for sale						Liabilities of businesses held for sale	5,851		6,423
Total current liabilities	Total current liabilities	36,340		36,022		Total current liabilities	45,218		43,572
Non-current insurance and contractholder liabilities	Non-current insurance and contractholder liabilities	16,576		16,844		Non-current insurance and contractholder liabilities	11,777		12,563
Deferred tax liabilities, net	Deferred tax liabilities, net	8,832		8,939		Deferred tax liabilities, net	8,014		8,346
Other non-current liabilities	Other non-current liabilities	4,261		4,629		Other non-current liabilities	3,175		3,762
Long-term debt	Long-term debt	31,609		29,545		Long-term debt	30,984		31,125
Separate account liabilities	Separate account liabilities	9,150		9,086		Separate account liabilities	7,495		8,337
TOTAL LIABILITIES	TOTAL LIABILITIES	106,768		105,065		TOTAL LIABILITIES	106,663		107,705
Contingencies — Note 15		0		0
Contingencies — Note 18						Contingencies — Note 18	0		0
Redeemable noncontrolling interests	Redeemable noncontrolling interests	56		58		Redeemable noncontrolling interests	45		54
Shareholders’ equity
Shareholders' equity						Shareholders' equity
Common stock (1)	Common stock (1)	4		4		Common stock (1)	4		4
Additional paid-in capital	Additional paid-in capital	29,077		28,975		Additional paid-in capital	29,930		29,574
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,153)		(861)		Accumulated other comprehensive loss	(2,080)		(884)
Retained earnings	Retained earnings	31,803		28,575		Retained earnings	34,626		32,593
Less: Treasury stock, at cost	Less: Treasury stock, at cost	(12,316)		(6,372)		Less: Treasury stock, at cost	(16,588)		(14,175)
TOTAL SHAREHOLDERS’ EQUITY		47,415		50,321
TOTAL SHAREHOLDERS' EQUITY						TOTAL SHAREHOLDERS' EQUITY	45,892		47,112
Other noncontrolling interests	Other noncontrolling interests	12		7		Other noncontrolling interests	30		18
Total equity	Total equity	47,427		50,328		Total equity	45,922		47,130
Total liabilities and equity	Total liabilities and equity	$	154,251	$	155,451	Total liabilities and equity	$	152,630	$	154,889

(1)Par value per share, $0.01; shares issued, ~~394~~397 million as of ~~September~~June 30, ~~2021~~2022 and ~~390~~394 million as of December 31, ~~2020;~~2021; authorized shares, 600 million.

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


Cigna Corporation	Cigna Corporation																			Cigna Corporation
Consolidated Statements of Changes in Total Equity	Consolidated Statements of Changes in Total Equity																			Consolidated Statements of Changes in Total Equity
Unaudited	Unaudited																			Unaudited
Three Months Ended September 30, 2021
Three Months Ended June 30, 2022																				Three Months Ended June 30, 2022
(In millions)	(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		(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 June 30, 2021		$	4	$	29,403	$	(1,077)	$	30,513	$	(10,134)	$	48,709	$	7	$	48,716	$	51
Balance at March 31, 2022																				Balance at March 31, 2022	$	4	$	29,736	$	(1,492)	$	33,420	$	(15,581)	$	46,087	$	22	$	46,109	$	55
Effects of issuing stock for employee benefits plans	Effects of issuing stock for employee benefits plans			76						(1)		75				75				Effects of issuing stock for employee benefits plans			194						(1)		193				193
Other comprehensive (loss)						(76)						(76)				(76)		(1)
Other comprehensive loss																				Other comprehensive loss					(588)						(588)				(588)		(1)
Net income																				Net income							1,559				1,559		11		1,570		2
Common dividends declared (per share: $1.12)																				Common dividends declared (per share: $1.12)							(353)				(353)				(353)
Repurchase of common stock																				Repurchase of common stock			—						(1,006)		(1,006)				(1,006)
Other transactions impacting noncontrolling interests																				Other transactions impacting noncontrolling interests			—								—		(3)		(3)		(11)
Balance at June 30, 2022																				Balance at June 30, 2022	$	4	$	29,930	$	(2,080)	$	34,626	$	(16,588)	$	45,892	$	30	$	45,922	$	45

Three Months Ended June 30, 2021																				Three Months Ended June 30, 2021
(In millions)																				(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, 2021																				Balance at March 31, 2021	$	4	$	29,254	$	(1,231)	$	29,389	$	(9,267)	$	48,149	$	6	$	48,155	$	59

Effect of issuing stock for employee benefit plans																				Effect of issuing stock for employee benefit plans			152						(2)		150				150
Other comprehensive income (loss)																				Other comprehensive income (loss)					154						154				154		(1)
Net income	Net income							1,621				1,621		10		1,631		4		Net income							1,467				1,467		6		1,473		3
Common dividends declared (per share: $1.00)	Common dividends declared (per share: $1.00)							(331)				(331)				(331)				Common dividends declared (per share: $1.00)							(343)				(343)				(343)
Repurchase of common stock	Repurchase of common stock			(400)						(2,181)		(2,581)				(2,581)				Repurchase of common stock			—						(865)		(865)				(865)
Other transactions impacting noncontrolling interests	Other transactions impacting noncontrolling interests			(2)								(2)		(5)		(7)		2		Other transactions impacting noncontrolling interests			(3)								(3)		(5)		(8)		(10)
Balance at September 30, 2021		$	4	$	29,077	$	(1,153)	$	31,803	$	(12,316)	$	47,415	$	12	$	47,427	$	56

Three Months Ended September 30, 2020
(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 June 30, 2020		$	4	$	28,699	$	(788)	$	23,052	$	(3,601)	$	47,366	$	5	$	47,371	$	34

Effect of issuing stock for employee benefit plans				78						(2)		76				76
Other comprehensive income (loss)						247						247				247		(4)
Net income								1,388				1,388		6		1,394		4

Repurchase of common stock										(1,045)		(1,045)				(1,045)
Other transactions impacting noncontrolling interests														(4)		(4)		25
Balance at September 30, 2020		$	4	$	28,777	$	(541)	$	24,440	$	(4,648)	$	48,032	$	7	$	48,039	$	59
Balance at June 30, 2021																				Balance at June 30, 2021	$	4	$	29,403	$	(1,077)	$	30,513	$	(10,134)	$	48,709	$	7	$	48,716	$	51

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

Cigna Corporation
Consolidated Statements of Changes in Total Equity
Unaudited
Nine Months Ended September 30, 2021
(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, 2020 $ 4 $ 28,975 $ (861) $ 28,575 $ (6,372) $ 50,321 $ 7 $ 50,328 $ 58
Effect of issuing stock for employee benefit plans 507 (90) 417 417
Other comprehensive (loss) (292) (292) (292) (6)
Net income 4,249 4,249 21 4,270 12
Common dividends declared (per share: $3.00) (1,021) (1,021) (1,021)
Repurchase of common stock (400) (5,854) (6,254) (6,254)
Other transactions impacting noncontrolling interests (5) (5) (16) (21) (8)
Balance at September 30, 2021 $ 4 $ 29,077 $ (1,153) $ 31,803 $ (12,316) $ 47,415 $ 12 $ 47,427 $ 56
Nine Months Ended September 30, 2020
(In millions) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Retained Earnings Treasury Stock Shareholders’ Equity Other Non- controlling Interests Total
Equity Redeemable Noncontrolling Interests
Balance at December 31, 2019 $ 4 $ 28,306 $ (941) $ 20,162 $ (2,193) $ 45,338 $ 6 $ 45,344 $ 35
Cumulative effect of adopting new credit loss guidance (ASU 2016-13)
(30) (30) (30)
Effect of issuing stock for employee benefit plans 471 (86) 385 385
Other comprehensive income (loss) 400 400 400 (10)
Net income 4,323 4,323 12 4,335 12
Common dividends declared (per share: $0.04) (15) (15) (15)
Repurchase of common stock (2,369) (2,369) (2,369)
Other transactions impacting noncontrolling interests (11) (11) 22
Balance at September 30, 2020 $ 4 $ 28,777 $ (541) $ 24,440 $ (4,648) $ 48,032 $ 7 $ 48,039 $ 59


Cigna Corporation
Consolidated Statements of Changes in Total Equity
Unaudited
Six Months Ended June 30, 2022
(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	$	4	$	29,574	$	(884)	$	32,593	$	(14,175)	$	47,112	$	18	$	47,130	$	54

Effect of issuing stock for employee benefit plans			356						(73)		283				283
Other comprehensive loss					(1,196)						(1,196)				(1,196)		(3)
Net income							2,742				2,742		23		2,765		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	$	(2,080)	$	34,626	$	(16,588)	$	45,892	$	30	$	45,922	$	45

Six Months Ended June 30, 2021
(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, 2020	$	4	$	28,975	$	(861)	$	28,575	$	(6,372)	$	50,321	$	7	$	50,328	$	58

Effect of issuing stock for employee benefit plans			431						(89)		342				342
Other comprehensive loss					(216)						(216)				(216)		(5)
Net income							2,628				2,628		11		2,639		8
Common dividends declared (per share: $2.00)							(690)				(690)				(690)
Repurchase of common stock			—						(3,673)		(3,673)				(3,673)
Other transactions impacting noncontrolling interests			(3)								(3)		(11)		(14)		(10)
Balance at June 30, 2021	$	4	$	29,403	$	(1,077)	$	30,513	$	(10,134)	$	48,709	$	7	$	48,716	$	51

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

Cigna Corporation

Consolidated Statements of Cash Flows


				Unaudited
		Unaudited					Six Months Ended June 30,
		Nine Months Ended September 30, 2021
(In millions)	(In millions)	2021			2020			(In millions)	2022		2021
Cash Flows from Operating Activities	Cash Flows from Operating Activities							Cash Flows from Operating Activities
Net income	Net income	$	4,282		$	4,347		Net income	$	2,770	$	2,647
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	2,180			2,089			Depreciation and amortization	1,476		1,446
Realized investment (gains) losses, net	Realized investment (gains) losses, net	(128)			18			Realized investment (gains) losses, net	414		(60)
Deferred income tax (benefit)	Deferred income tax (benefit)	(104)			(340)			Deferred income tax (benefit)	(167)		(80)

Debt extinguishment costs	Debt extinguishment costs	141			199			Debt extinguishment costs	—		141
Net changes in assets and liabilities, net of non-operating effects:	Net changes in assets and liabilities, net of non-operating effects:							Net changes in assets and liabilities, net of non-operating effects:
Accounts receivable	Accounts receivable	(4,039)			(2,810)			Accounts receivable	(2,769)		(3,233)
Inventories	Inventories	145			5			Inventories	(59)		124
Deferred policy acquisition costs	Deferred policy acquisition costs	(182)			(244)			Deferred policy acquisition costs	(105)		(117)
Reinsurance recoverable and Other assets	Reinsurance recoverable and Other assets	(281)			(468)			Reinsurance recoverable and Other assets	265		(416)
Insurance liabilities	Insurance liabilities	863			740			Insurance liabilities	474		677
Pharmacy and other service costs payable	Pharmacy and other service costs payable	1,357			2,084			Pharmacy and other service costs payable	1,124		1,123
Accounts payable and Accrued expenses and other liabilities	Accounts payable and Accrued expenses and other liabilities	(1,411)			(32)			Accounts payable and Accrued expenses and other liabilities	(134)		(1,643)
Other, net	Other, net	93			468			Other, net	(15)		188
NET CASH PROVIDED BY OPERATING ACTIVITIES	NET CASH PROVIDED BY OPERATING ACTIVITIES	2,916			6,056			NET CASH PROVIDED BY OPERATING ACTIVITIES	3,274		797
Cash Flows from Investing Activities	Cash Flows from Investing Activities							Cash Flows from Investing Activities
Proceeds from investments sold:	Proceeds from investments sold:							Proceeds from investments sold:
Debt securities and equity securities	Debt securities and equity securities	1,052			2,038			Debt securities and equity securities	1,239		852
Investment maturities and repayments:	Investment maturities and repayments:							Investment maturities and repayments:
Debt securities and equity securities	Debt securities and equity securities	1,265			1,097			Debt securities and equity securities	863		672
Commercial mortgage loans	Commercial mortgage loans	127			14			Commercial mortgage loans	69		96
Other sales, maturities and repayments (primarily short-term and other long-term investments)	Other sales, maturities and repayments (primarily short-term and other long-term investments)	1,261			1,086			Other sales, maturities and repayments (primarily short-term and other long-term investments)	745		897
Investments purchased or originated:	Investments purchased or originated:							Investments purchased or originated:
Debt securities and equity securities	Debt securities and equity securities	(2,742)			(3,317)			Debt securities and equity securities	(2,024)		(1,999)
Commercial mortgage loans	Commercial mortgage loans	(233)			(55)			Commercial mortgage loans	(84)		(129)
Other (primarily short-term and other long-term investments)	Other (primarily short-term and other long-term investments)	(1,768)			(1,434)			Other (primarily short-term and other long-term investments)	(849)		(1,136)
Property and equipment purchases, net	Property and equipment purchases, net	(850)			(775)			Property and equipment purchases, net	(612)		(500)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(1,836)			(135)			Acquisitions, net of cash acquired	—		(1,836)
Divestiture, net of cash sold	Divestiture, net of cash sold	(61)			—			Divestiture, net of cash sold	(57)		—
Other, net	Other, net	51			37			Other, net	(22)		59
NET CASH (USED IN) INVESTING ACTIVITIES	NET CASH (USED IN) INVESTING ACTIVITIES	(3,734)			(1,444)			NET CASH (USED IN) INVESTING ACTIVITIES	(732)		(3,024)
Cash Flows from Financing Activities	Cash Flows from Financing Activities							Cash Flows from Financing Activities
Deposits and interest credited to contractholder deposit funds	Deposits and interest credited to contractholder deposit funds	132			769			Deposits and interest credited to contractholder deposit funds	84		96
Withdrawals and benefit payments from contractholder deposit funds	Withdrawals and benefit payments from contractholder deposit funds	(139)			(736)			Withdrawals and benefit payments from contractholder deposit funds	(94)		(96)
Net change in short-term debt	Net change in short-term debt	1,633			592			Net change in short-term debt	(244)		472
Net proceeds on issuance of term loan		—			1,398

Payments for debt extinguishment	Payments for debt extinguishment	(136)			(212)			Payments for debt extinguishment	—		(136)
Repayment of long-term debt	Repayment of long-term debt	(4,578)			(6,897)			Repayment of long-term debt	—		(4,578)
Net proceeds on issuance of long-term debt	Net proceeds on issuance of long-term debt	4,260			3,465			Net proceeds on issuance of long-term debt	—		4,260
Repurchase of common stock	Repurchase of common stock	(6,321)			(2,352)			Repurchase of common stock	(2,374)		(3,710)
Issuance of common stock	Issuance of common stock	301			239			Issuance of common stock	217		290
Common stock dividend paid	Common stock dividend paid	(1,017)			(15)			Common stock dividend paid	(709)		(687)
Other, net	Other, net	24			(63)			Other, net	33		(24)
NET CASH (USED IN) FINANCING ACTIVITIES	NET CASH (USED IN) FINANCING ACTIVITIES	(5,841)			(3,812)			NET CASH (USED IN) FINANCING ACTIVITIES	(3,087)		(4,113)
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash	Effect of foreign currency rate changes on cash, cash equivalents and restricted cash	(46)			(7)			Effect of foreign currency rate changes on cash, cash equivalents and restricted cash	(80)		(27)
Net (decrease) increase in cash, cash equivalents and restricted cash		(6,705)			793
Net (decrease) in cash, cash equivalents and restricted cash								Net (decrease) in cash, cash equivalents and restricted cash	(625)		(6,367)
Cash, cash equivalents and restricted cash January 1, (1)	Cash, cash equivalents and restricted cash January 1, (1)	10,245			5,411			Cash, cash equivalents and restricted cash January 1, (1)	5,548		10,245
Cash, cash equivalents and restricted cash, September 30,		3,540			6,204
Cash reclassified to assets of business held for sale		—			(798)
Cash, cash equivalents and restricted cash September 30, per Consolidated Balance Sheets (2)		$	3,540		$	5,406
Cash, cash equivalents and restricted cash, June 30,								Cash, cash equivalents and restricted cash, June 30,	4,923		3,878
Cash and cash equivalents reclassified to Assets of businesses held for sale								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 (2)								Cash, cash equivalents and restricted cash June 30, per Consolidated Balance Sheets (2)	$	4,468	$	3,878
Supplemental Disclosure of Cash Information:	Supplemental Disclosure of Cash Information:							Supplemental Disclosure of Cash Information:
Income taxes paid, net of refunds	Income taxes paid, net of refunds	$	1,916		$	1,408		Income taxes paid, net of refunds	$	911	$	1,473
Interest paid	Interest paid	$	950		$	1,112		Interest paid	$	615	$	639

(1)Includes ~~$743~~$425 million reported in Assets of ~~business~~businesses held for sale as of January 1, ~~2020.~~2022.

(2)Restricted cash and cash equivalents were reported in ~~other~~Other long-term investments as of ~~September~~June 30, ~~2021, December 31, 2020~~2022 and ~~September~~June 30, ~~2020. Restricted cash and cash equivalents were reported in other long-term investments and other assets as of December 31, 2019.~~

2021.

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

CIGNA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

TABLE OF CONTENTS


Note Number	Note Number	Footnote	Page	Note Number	Footnote	Page

BUSINESS AND CAPITAL STRUCTURE	BUSINESS AND CAPITAL STRUCTURE			BUSINESS AND CAPITAL STRUCTURE
1	1	Description of Business	10	1	Description of Business	10
2	2	Summary of Significant Accounting Policies	11	2	Summary of Significant Accounting Policies	11
3	3	Accounts Receivable, Net	11	3	Accounts Receivable, Net	11
4	4	Mergers , Acquisitions and Divestitures	12	4	Mergers, Acquisitions and Divestitures	12
5	5	Earnings Per Share	13	5	Assets and Liabilities of Businesses Held for Sale	12
6	6	Debt	14	6	Earnings Per Share	13

INSURANCE INFORMATION
7	7	Insurance and Contractholder Liabilities	16	7	Debt	14
8	8	Reinsurance	18	8	Common and Preferred Stock	15
INVESTMENTS
INSURANCE INFORMATION				INSURANCE INFORMATION
9	9	Investments	20	9	Insurance and Contractholder Liabilities	16
10	10	Fair Value Measurements	24	10	Reinsurance	19
INVESTMENTS				INVESTMENTS
11	11	Variable Interest Entities	28	11	Investments	20
12	12	Accumulated Other Comprehensive Income (Loss)	29	12	Fair Value Measurements	24

13				13	Variable Interest Entities	28
14				14	Accumulated Other Comprehensive Income (Loss)	29
PROPERTY, LEASES AND OTHER ASSET BALANCES	PROPERTY, LEASES AND OTHER ASSET BALANCES			PROPERTY, LEASES AND OTHER ASSET BALANCES

13		Leases	30
15				15	Organizational Efficiency Plan	29
16				16	Leases	30
COMPLIANCE, REGULATION AND CONTINGENCIES	COMPLIANCE, REGULATION AND CONTINGENCIES			COMPLIANCE, REGULATION AND CONTINGENCIES

14		Income Taxes	30
15		Contingencies and Other Matters	30
17				17	Income Taxes	30
18				18	Contingencies and Other Matters	30
RESULTS DETAILS	RESULTS DETAILS			RESULTS DETAILS
16		Segment Information	32
19				19	Segment Information	32

Note 1 – Description of Business

Cigna Corporation, together with its subsidiaries (either individually or collectively referred to as ~~“Cigna,”~~"Cigna," the ~~“Company,” “we,” “our”~~"Company," "we," "our" or ~~“us”~~"us") is a global health services organization with a mission of helping those we serve improve their health, well-being and peace of mind by making health care ~~simple,~~ affordable, predictable and ~~predictable.~~simple. Our subsidiaries offer a differentiated set of pharmacy, medical, behavioral, dental and ~~related~~supplemental products and services.

The majority of these products are offered through employers and other groups such as governmental and non-governmental organizations, unions and associations. Cigna 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, Cigna also has certain run-off operations.

~~The Company provides details~~Details of ~~its~~the Company's reporting segments and recent changes are provided below:

InOn July 1, 2022, the Company completed the sale of its life, accident and supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) to Chubb INA Holdings, Inc. ("Chubb") for approximately $5.4 billion in cash (the "Chubb Transaction"); as previously agreed, we excluded our interest in a joint venture in Türkiye from the Chubb Transaction. The Company aggregated and classified the assets and liabilities of these businesses as held for sale in our Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (see Note 5). During the fourth quarter of 2021, in connection with the ~~sale of~~Chubb Transaction, we revised our business reporting structure and adjusted our segment reporting accordingly. Segment results for the ~~U.S. Group Disability~~three and ~~Life business on December 31, 2020,~~six months ended June 30, 2021 have been restated to conform to the ~~remainder~~new segment presentation (see Note 19).

A full description of our operations previously referred to as "Group Disability and Other" in our 2020 Form 10-K is now referred to as "Other Operations". There were no changes to the underlying business included in this category. Our business that offers group voluntary products and services was not sold to New York Life Insurance Company ("New York Life") and results of this business are reported in the U.S. Medical segment.segments follows:

Evernorth includes a broad range of coordinated and point solution health services and capabilities, as well as those from partners across the health care system, in pharmacy ~~solutions,~~ benefits ~~management solutions,~~services, specialty pharmacy and care ~~solutions and intelligence solutions,~~services, which are provided to health plans, employers, government organizations, and health care providers.

~~U.S. Medical~~Cigna Healthcare includes U.S. Commercial, ~~and~~ U.S. Government ~~businesses~~and International Health operating segments that provide comprehensive medical and coordinated solutions to clients and customers. U.S. Commercial products and services include medical, pharmacy, behavioral health, dental, vision, health advocacy programs and other products and services for insured and ~~administrative services only ("ASO") clients.~~self-insured customers. U.S. Government solutions include Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors ~~Medicaid plans~~ and individual health insurance plans both on and off the public exchanges.

International ~~Markets~~ ~~includes supplemental health, life and accident insurance products and~~Health solutions include health care coverage in our international markets, as well as health care benefits for globally mobile individuals and employees of multinational organizations. Cigna entered into a definitive agreement in October 2021 to sell its life, accident and supplemental benefits businesses in seven countries to Chubb INA Holdings, Inc. ("Chubb") for $5.75 billion cash. Subject to applicable regulatory approvals and customary closing conditions, we expect to complete the sale of our life, accident and supplemental benefits businesses in Hong Kong, Indonesia, New Zealand, South Korea, Taiwan, Thailand and our interest in a joint venture in Turkey in 2022.

~~The~~Other Operations contains the remainder of our business operations, ~~are reported in~~ ~~Other Operations,~~ consisting of the following:

•~~Group Disability and Life~~. Prior to the sale of the U.S. Group Disability and Life business on December 31, 2020, this segment provided group long-term and short-term disability, group life, accident, voluntary and specialty insurance products and related services.Ongoing business:

•Corporate-Owned Life Insurance ~~(“COLI”~~("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.

•Our interest in a joint venture in Türkiye.

•Exiting businesses:

•International Life, Accident and Supplemental Benefits Businesses in six countries sold on July 1, 2022 pursuant to the Chubb Transaction.

•Run-off businesses:

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

•Settlement Annuity ~~business~~and other businesses in run-off.

•Individual Life Insurance and Annuity and Retirement Benefits businesses: deferred gains from the sales of these businesses.

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, severance, certain overhead and ~~enterprise wide~~enterprise-wide project costs and intersegment eliminations for products and services sold between segments.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements include the accounts of Cigna Corporation 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").

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 ~~2020~~2021 Annual Report on Form 10-K ~~(“2020~~("2021 Form ~~10-K”~~10-K"). The preparation of interim Consolidated Financial Statements necessarily relies heavily on estimates. This and other factors, including the seasonal nature of portions of the health care and related benefits business, competitive and other market conditions, as well as COVID-19 related impacts, call for caution in estimating full-year results based on interim results of operations.

Recent Accounting Pronouncements

The Company's 2020 Form 10-K includes discussion of significant recent accounting pronouncements that either have impacted our financial statements or may impact them in the future. There have been no updates to accounting guidance not yet adopted or recently issued accounting pronouncements that have occurred since the Company filed its 2020 Form 10-K that would have a material impact to our financial statements. There were no new accounting standards adopted as of ~~September~~June 30, ~~2021~~2022 that had a material impact toon our financial statements. There are no accounting pronouncements not yet adopted, with the exception of Accounting Standards Update 2018-12, Targeted Improvements to the Accounting for Long-Duration Insurance Contracts ("LDTI") that are expected to impact Cigna's operations or our financial statements. Refer to the Company's 2021 Form 10-K for discussion of the LDTI standard and related expected effects to Cigna. We continue to make progress on our LDTI implementation plan and are on track for the January 1, 2023 adoption date.

In July 2022, the Financial Accounting Standards Board ("FASB") issued a proposed standard for comment that would simplify the retrospective adoption of LDTI. The proposal would permit 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. If the FASB approves the proposed standard, Cigna expects to make this policy election for the contracts sold in the Chubb Transaction.

Note 3 – Accounts Receivable, Net

The following amounts were included within Accounts receivable, net:


(In millions)	(In millions)	September 30, 2021		December 31, 2020		(In millions)	June 30, 2022		December 31, 2021
Noninsurance customer receivables	Noninsurance customer receivables	$	6,797	$	5,534	Noninsurance customer receivables	$	7,578	$	6,274
Pharmaceutical manufacturers receivable		6,526		4,676
Pharmaceutical manufacturers receivables						Pharmaceutical manufacturers receivables	7,006		5,463
Insurance customer receivables	Insurance customer receivables	2,567		1,789		Insurance customer receivables	2,790		2,932
Other receivables	Other receivables	360		192		Other receivables	952		456
Total	Total	$	16,250	$	12,191	Total	18,326		15,125
Accounts receivable, net classified as Assets of businesses held for sale						Accounts receivable, net classified as Assets of businesses held for sale	(36)		(54)
Accounts receivable, net per Consolidated Balance Sheets						Accounts receivable, net per Consolidated Balance Sheets	$	18,290	$	15,071

These receivables are reported net of our allowances of ~~$1.5~~$1.9 billion as of ~~September~~June 30, ~~2021~~2022 and ~~$1.2~~$1.4 billion as of December 31, ~~2020.~~2021. These allowances include contractual allowances for certain rebates receivable with pharmaceutical manufacturers and certain receivables from third-party payors, discounts and claims adjustments issued to customers in the form of client credits, an allowance for current expected credit losses and other non-credit adjustments.

The Company's allowance for current expected credit losses was ~~$57~~$75 million as of ~~September~~June 30, ~~2021~~2022 and ~~$65~~$60 million as of December 31, ~~2020.~~2021.

Note 4 – Mergers, Acquisitions and Divestitures

A.Acquisition of MDLIVE

On April 19, 2021, Cigna acquired 97% of MDLIVE, Inc. ("MDLIVE"), a 24/7 virtual care platform. Combined with Cigna's previously held equity investment, Cigna now owns 100% of MDLIVE. The ~~acquisition~~Company's 2021 Form 10-K includes detailed disclosures of ~~MDLIVE will enable Cigna's Evernorth segment to continue expanding access to virtual care and delivering a more affordable, convenient and connected care experience for consumers.~~

~~The~~merger consideration, purchase price ~~of $2.0 billion consisted of cash consideration.~~allocation and intangible assets identified in this transaction. In accordance with GAAP, the total consideration transferred has been allocated to the tangible and intangible net assets acquired based on management's ~~preliminary~~ estimates of their fair values and ~~may change~~was finalized as ~~additional information becomes available over the next several months. During the three months ended September 30, 2021, the Company made~~of March 31, 2022 with immaterial ~~measurement period adjustments~~changes to the purchase price allocation. ~~The estimated fair values of assets acquired and liabilities assumed as of the closing date were as follows:~~


~~(In millions)~~
~~Goodwill~~	$	~~1,438~~
~~Acquired intangible assets~~	~~627~~
~~Tangible assets acquired net of liabilities assumed~~	17
~~Total consideration transferred~~	~~2,082~~
~~Less: Fair value to Cigna's previously held equity interest~~	~~(55)~~
~~Total purchase price~~	$	~~2,027~~

Most of the goodwill is assigned to the Evernorth segment ($1.3 billion). Goodwill is not deductible for federal income tax purposes. The acquired intangible assets primarily consist of customer relationships ($577 million) as well as internal-use software, provider networks and a trade name. The fair value of the customer relationships and the amortization period were determined using an income approach that relies heavily on projected future net cash flows including key assumptions for customer attrition, margins and discount rates. The customer relationship intangible asset is amortized over a period of 17 years in a pattern that reflects when Cigna expects to receive the benefits of the related cash flows.

The results of MDLIVE have been included in the Company's Consolidated Financial Statements from the date of the acquisition. Revenues from MDLIVE and their results of operations were not material to Cigna's consolidated results of operations for the three ~~or nine~~and six months ended ~~September~~June 30, 2021. The pro forma effects of this acquisition for ~~current and~~ prior periods were not material to our consolidated results of operations.

B.~~Divestiture of U.S. Group Disability and Life business~~

On December 31, 2020, Cigna completed the sale of its U.S. Group Disability and Life business to New York Life Insurance Company for cash proceeds of $6.2 billion. The Company recognized a gain of $4.2 billion pre-tax ($3.2 billion after-tax), which included recognition of previously unrealized capital gains on investments sold.

C.Integration and Transaction-related Costs

In the first ~~nine~~six months of 2022 and 2021, the Company incurred costs related to the acquisition of MDLIVE, the ~~terminated merger with Anthem, Inc. (“Anthem”) and the~~ sale of the U.S. Group Disability and Life ~~business.~~business and the terminated merger with Elevance Health, Inc. ("Elevance"), formerly known as Anthem, Inc. In the first ~~nine~~six months of ~~2020,~~2022, the Company also incurred costs related to the acquisition and integration of Express Scripts Holding Company ("Express Scripts"), the terminated merger with Anthem, the sale of the U.S. Group Disability and Life insurance business and other transactions.Chubb Transaction (see Note 5 for further information). These costs were ~~$13~~$36 million pre-tax ($~~(35)~~26 million after-tax) for the three months ended and ~~$58~~$88 million pre-tax ($163 million after-tax) for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared with ~~$112~~$16 million pre-tax ($8314 million after-tax) for the three months ended and ~~$339~~$45 million pre-tax ($~~256~~36 million after-tax) for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. These costs consisted primarily of certain projects to separate or integrate ~~or separate~~ the ~~Company’s~~Company's systems, products and services, fees for legal, advisory and other professional services and certain employment-related costs. ~~After-tax costs~~

Note 5 – Assets and Liabilities of Businesses Held for Sale

On July 1, 2022, the ~~three~~Company completed the sale of its life, accident and ~~nine months ended September~~supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) to Chubb for approximately $5.4 billion in cash. The Company aggregated and classified the assets and liabilities of these businesses as held for sale in our Consolidated Balance Sheets as of June 30, ~~2021 included~~2022 and December 31, 2021. The assets and liabilities of our interest in a ~~tax benefit~~joint venture in Türkiye were classified as held for sale in our Consolidated Balance Sheet as of December 31, 2021; however, we subsequently agreed to exclude this business from the ~~resolution~~Chubb Transaction and the assets and liabilities are no longer classified as held for sale.

The assets and liabilities of ~~a tax matter related to the sold Group Disability~~businesses held for sale were as follows:


(In millions)	June 30, 2022		December 31, 2021
Cash and cash equivalents	$	455	$	406
Investments	4,518		5,109
Deferred policy acquisition costs	2,598		2,755
Separate account assets	648		878
Goodwill, other intangible assets and all other assets	833		909
Total assets of businesses held for sale	9,052		10,057
Insurance and contractholder liabilities	4,427		4,644
Accounts payable, accrued expenses and other liabilities	420		452
Deferred tax liabilities, net	356		449
Separate account liabilities	648		878
Total liabilities of businesses held for sale	$	5,851	$	6,423

The held for sale businesses reported Gross unrealized appreciation (depreciation) on securities and ~~Life business.~~derivatives of $(208) million and $137 million and Gross cumulative translation losses on foreign currencies of $366 million and $209 million in our Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, respectively.

Note 56 – Earnings Per Share ~~(“EPS”~~("EPS")

Basic and diluted earnings per share were computed as follows:

Three Months Ended
September 30, 2021 September 30, 2020
(Shares in thousands, dollars in millions, except per share amounts) Basic Effect of
Dilution Diluted Basic Effect of
Dilution Diluted
Shareholders’ net income $ 1,621 $ 1,621 $ 1,388 $ 1,388
Shares:
Weighted average 335,166 335,166 364,427 364,427
Common stock equivalents 2,413 2,413 2,763 2,763
Total shares 335,166 2,413 337,579 364,427 2,763 367,190
EPS $ 4.84 $ (0.04) $ 4.80 $ 3.81 $ (0.03) $ 3.78


		Nine Months Ended														Three Months Ended
		September 30, 2021						September 30, 2020						June 30, 2022				June 30, 2021
(Shares in thousands, dollars in millions, except per share amounts)	(Shares in thousands, dollars in millions, except per share amounts)	Basic		Effect of Dilution		Diluted		Basic		Effect of Dilution		Diluted			(Shares in thousands, dollars in millions, except per share amounts)	Basic		Effect of Dilution		Diluted		Basic		Effect of Dilution		Diluted
Shareholders’ net income		$	4,249			$	4,249	$	4,323			$	4,323
Shareholders' net income															Shareholders' net income	$	1,559			$	1,559	$	1,467			$	1,467
Shares:	Shares:														Shares:
Weighted average	Weighted average	341,583				341,583		367,410				367,410			Weighted average	315,122				315,122		341,479				341,479
Common stock equivalents	Common stock equivalents			3,197		3,197				3,421		3,421			Common stock equivalents			3,182		3,182				3,450		3,450
Total shares	Total shares	341,583		3,197		344,780		367,410		3,421		370,831			Total shares	315,122		3,182		318,304		341,479		3,450		344,929
EPS	EPS	$	12.44	$	(0.12)	$	12.32	$	11.77	$	(0.11)	$	11.66		EPS	$	4.95	$	(0.05)	$	4.90	$	4.30	$	(0.05)	$	4.25


	Six Months Ended
	June 30, 2022						June 30, 2021

(Shares in thousands, dollars in millions, except per share amounts)	Basic		Effect of Dilution		Diluted		Basic		Effect of Dilution		Diluted
Shareholders' net income	$	2,742			$	2,742	$	2,628			$	2,628
Shares:
Weighted average	316,795				316,795		344,845				344,845
Common stock equivalents			2,989		2,989				3,589		3,589
Total shares	316,795		2,989		319,784		344,845		3,589		348,434
EPS	$	8.66	$	(0.09)	$	8.57	$	7.62	$	(0.08)	$	7.54

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 September 30,		Nine Months Ended September 30,			Three Months Ended June 30,		Six Months Ended June 30,
(In millions)	(In millions)	2021	2020	2021	2020	(In millions)	2022	2021	2022	2021
Anti-dilutive options	Anti-dilutive options	1.5	4.6	1.5	4.2	Anti-dilutive options	1.3	1.5	2.0	1.5

The Company held approximately ~~62.6~~81.3 million shares of common stock in treasury at ~~September~~June 30, ~~2021, 35.5~~2022, 71.2 million shares as of December 31, ~~2020~~2021 and ~~26.7~~52.2 million shares as of ~~September~~June 30, ~~2020.~~2021.

Note 7 – Debt

The outstanding amounts of debt and finance leases were as follows:


(In millions)	June 30, 2022		December 31, 2021
Short-term debt
Commercial paper	$	1,797	$	2,027
$500 million, 3.05% Notes due 11/2022	497		495
$17 million, 8.3% Notes due 1/2023	17		—
$63 million, 7.65% Notes due 3/2023	63		—
Other, including finance leases	23		23





Total short-term debt	$	2,397	$	2,545
Long-term debt



$17 million, 8.3% Notes due 2023	$	—	$	17
$63 million, 7.65% Notes due 2023	—		63
$700 million, Floating Rate Notes due 2023	699		699
$1,000 million, 3% Notes due 2023	989		985
$1,187 million, 3.75% Notes due 2023	1,186		1,185
$500 million, 0.613% Notes due 2024	499		498
$1,000 million, 3.5% Notes due 2024	987		983
$900 million, 3.25% Notes due 2025 (1)	895		897
$2,200 million, 4.125% Notes due 2025	2,194		2,193
$1,500 million, 4.5% Notes due 2026	1,503		1,504
$800 million, 1.25% Notes due 2026	797		796
$1,500 million, 3.4% Notes due 2027	1,429		1,423
$259 million, 7.875% Debentures due 2027	259		259
$600 million, 3.05% Notes due 2027	596		596
$3,800 million, 4.375% Notes due 2028	3,783		3,782
$1,500 million, 2.4% Notes due 2030	1,491		1,490
$1,500 million, 2.375% Notes due 2031 (1)	1,414		1,500
$45 million, 8.3% Step Down Notes due 2033	45		45
$190 million, 6.15% Notes due 2036	190		190
$2,200 million, 4.8% Notes due 2038	2,192		2,192
$750 million, 3.2% Notes due 2040	743		743
$121 million, 5.875% Notes due 2041	119		119
$448 million, 6.125% Notes due 2041	489		490
$317 million, 5.375% Notes due 2042	315		315
$1,500 million, 4.8% Notes due 2046	1,466		1,465
$1,000 million, 3.875% Notes due 2047	989		988
$3,000 million, 4.9% Notes due 2048	2,968		2,967
$1,250 million, 3.4% Notes due 2050	1,236		1,236
$1,500 million, 3.4% Notes due 2051	1,476		1,477
Other, including finance leases	35		28
Total long-term debt	$	30,984	$	31,125

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

Revolving Credit Agreements. Our revolving credit agreements provide us with the ability to borrow amounts for general corporate purposes, including for the purpose of providing liquidity support if necessary under our commercial paper program discussed below. As of June 30, 2022, there were no outstanding balances under these revolving credit agreements.

In April 2022, Cigna entered into the following revolving credit agreements (the "Credit Agreements"):

•a $3.0 billion five-year revolving credit and letter of credit agreement that will mature in April 2027 with an option to extend the maturity date for additional one-year periods, subject to consent of the banks. Cigna can borrow up to $3.0 billion under the credit agreement for general corporate purposes, with up to $500 million available for issuance of letters of credit.

•a $1.0 billion three-year revolving credit agreement that will mature in April 2025 with an option to extend the maturity date for additional one-year periods, subject to consent of the banks. Cigna can borrow up to $1.0 billion under the credit agreement for general corporate purposes.

•a $1.0 billion 364-day revolving credit agreement that will mature in April 2023. Cigna can borrow up to $1.0 billion under the 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 Agreements include an option to increase commitments in an aggregate amount of up to $1.5 billion across all three facilities for a maximum total commitment of $6.5 billion. The Credit Agreements allow for borrowings at either a base rate or an adjusted term Secured Overnight Funding Rate ("SOFR") plus, in each case, an applicable margin based on Cigna's senior unsecured credit ratings.

Each of the three facilities is diversified among 22 banks. Each facility also contains customary covenants and restrictions, including a financial covenant that the Company's leverage ratio, as defined in the Credit Agreements, may not exceed 60%, subject to certain exceptions upon the consummation of an acquisition.

The Credit Agreements replaced a prior $3.0 billion five-year revolving credit and letter of credit agreement maturing on April 2026; a $1.0 billion three-year revolving credit agreement maturing on April 2024; and a $1.0 billion 364-day revolving credit agreement maturing in April 2022.

Commercial Paper. Under our commercial paper program we may issue short-term, unsecured commercial paper notes privately placed on a discounted basis through certain broker-dealers at any time not to exceed an aggregate amount of $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 commercial paper average interest rate was 1.60% at June 30, 2022.

The Company was in compliance with its debt covenants as of June 30, 2022.

Interest expense on long-term and short-term debt was $316 million for the three months ended and $630 million for the six months ended June 30, 2022, compared with $311 million for the three months ended and $636 million for the six months ended June 30, 2021.

Note 8 – Common and Preferred Stock

Dividends

In the first and second quarters of 2022, Cigna declared quarterly cash dividends of $1.12 per share of Cigna common stock. In 2021, Cigna initiated and declared quarterly cash dividends of $1.00 per share of Cigna common stock.

The following table provides details of Cigna's dividend payments for the six months ended June 30:


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


2021
March 10, 2021	March 25, 2021	$1.00	$345
June 8, 2021	June 23, 2021	$1.00	$342

On ~~August 23, 2021,~~July 27, 2022, the Board of Directors declared the third quarter cash dividend of $1.12 per share of Cigna common stock to be paid on September 22, 2022 to shareholders of record on September 7, 2022. Cigna 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 Cigna 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 of Directors may deem relevant.

Accelerated Share Repurchase Agreements

On June 15, 2022, as part of our existing share repurchase program, we entered into separate accelerated share repurchase agreements (“("ASR ~~agreements”~~agreements") with Mizuho Markets Americas LLC and Morgan Stanley & Co. LLC ~~and JP Morgan Chase Bank, N.A.~~ (collectively, the ~~“Counterparties”~~"Counterparties") to repurchase ~~$2.0~~$3.5 billion of common stock in aggregate. ~~On August 24, 2021,~~The ASR agreements provided that if the public announcement of the first closing of the Chubb Transaction did not occur on or before July 1, 2022, the ASR Agreements would be cancelled in whole.

In July 2022, in accordance with the ASR agreements, we remitted ~~$2.0~~$3.5 billion to the Counterparties and received an initial delivery of ~~7.7~~10.4 million shares of our common stock. The final number of shares to be received under the ASR agreements will be determined based on the daily volume-weighted average share price of our common stock over the term of the agreements, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements. We expect final settlement under the ASR agreements to occur in the fourth quarter of ~~2021.~~2022. At final settlement, we may be entitled to receive additional shares of our common stock from the Counterparties or we may be required to make a payment. If we are obligated to make a payment, we may elect to satisfy such obligation in cash or shares of our common stock. We recorded the payments to the Counterparties as a reduction to stockholders’ equity, consisting of a $1.6 billion increase in treasury stock, which reflects the value of the initial 7.7 million shares received upon initial settlement, and a $400 million decrease in capital in excess of par value or Additional paid-in capital, which reflects the value of the stock held back by the Counterparties pending final settlement of the agreements. The $400 million recorded in Additional paid-in capital will be reclassified to treasury stock upon settlement of the ASR agreements. The initial delivery of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted net income per share on the effective date of the ASR agreements.

~~Note 6 – Debt~~

~~The outstanding amounts of debt and finance leases were as follows:~~

(In millions) September 30, 2021 December 31, 2020
Short-term debt
$78 million, 6.37% Notes due 6/2021 $ — $ 78
$1,000 million, Floating Rate Notes due 9/2021 — 999
$1,250 million, 3.4% Notes due 9/2021 — 1,249
Commercial paper 2,680 1,030
Other, including finance leases 23 18
Total short-term debt $ 2,703 $ 3,374
Long-term debt
$277 million, 4% Notes due 2022 $ — $ 276
$973 million, 3.9% Notes due 2022 — 972
$500 million, 3.05% Notes due 2022 494 490
$17 million, 8.3% Notes due 2023 17 17
$63 million, 7.65% Notes due 2023 63 63
$700 million, Floating Rate Notes due 2023 699 698
$1,000 million, 3% Notes due 2023 982 975
$1,187 million, 3.75% Notes due 2023 1,185 2,181
$500 million, 0.613% Notes due 2024 498 —
$1,000 million, 3.5% Notes due 2024 982 977
$900 million, 3.25% Notes due 2025 897 896
$2,200 million, 4.125% Notes due 2025 2,192 2,191
$1,500 million, 4.5% Notes due 2026 1,504 1,505
$800 million, 1.25% Notes due 2026 796 —
$1,500 million, 3.4% Notes due 2027 1,419 1,410
$259 million, 7.875% Debentures due 2027 259 259
$600 million, 3.05% Notes due 2027 596 595
$3,800 million, 4.375% Notes due 2028 3,781 3,780
$1,500 million, 2.4% Notes due 2030 1,490 1,489
$1,500 million, 2.375% Notes due 2031 (1)
1,500 —
$45 million, 8.3% Step Down Notes due 2033 45 45
$190 million, 6.15% Notes due 2036 190 190
$2,200 million, 4.8% Notes due 2038 (1)
2,192 2,180
$750 million, 3.2% Notes due 2040 743 742
$121 million, 5.875% Notes due 2041 119 119
$448 million, 6.125% Notes due 2041 490 490
$317 million, 5.375% Notes due 2042 315 315
$1,500 million, 4.8% Notes due 2046 1,465 1,465
$1,000 million, 3.875% Notes due 2047 988 988
$3,000 million, 4.9% Notes due 2048 2,967 2,966
$1,250 million, 3.4% Notes due 2050 1,235 1,235
$1,500 million , 3.4% Notes due 2051 1,476 —
Other, including finance leases 30 36
Total long-term debt $ 31,609 $ 29,545

~~(1)~~The Company has entered into interest rate swap contracts hedging a portion of these fixed-rate debt instruments. See Note 9 for further information about the Company's interest rate risk management and these derivative instruments.

~~Debt Issuance and Redemption.~~ In order to decrease future interest expense, mitigate future refinancing risk and raise proceeds for general corporate purposes, the Company entered into the following transactions during the nine months ended September 30, 2021:

•Debt issuance: On March 3, 2021, the Company issued $4.3 billion of new senior notes. The proceeds of this issuance were mainly used to redeem outstanding debt securities. The remaining proceeds are available for general corporate purposes. Interest on this debt is paid semi-annually.

~~Principal~~

~~Maturity Date~~

~~Interest Rate~~

~~Net Proceeds~~

~~$500 million~~

~~March 15, 2024~~

~~0.613%~~

~~$499 million~~

~~$800 million~~

~~March 15, 2026~~

~~1.250%~~

~~$797 million~~

~~$1,500 million~~

~~March 15, 2031~~

~~2.375%~~

~~$1,492 million~~

~~$1,500 million~~

~~March 15, 2051~~

~~3.400%~~

~~$1,479 million~~

•Debt redemption: During the first nine months of 2021, the Company completed the redemption of a total of $4.5 billion in aggregate principal amount of certain of its outstanding debt securities. The Company recorded a pre-tax loss of $141 million ($110 million after-tax), consisting primarily of premium payments.

~~Revolving Credit Agreements.~~ Our revolving credit agreements provide us with the ability to borrow amounts for general corporate purposes, including for the purpose of providing liquidity support if necessary under our commercial paper program discussed below. As of September 30, 2021, there were no outstanding balances under these revolving credit agreements.

In April 2021, Cigna entered into a $3.0 billion five-year revolving credit and letter of credit agreement that matures in April 2026 and a $1.0 billion three-year revolving credit agreement that matures in April 2024, which are diversified among 23 banks and replaced the five-year revolving credit and letter of credit agreement that was scheduled to mature in April 2023. Under the current agreements, Cigna can borrow up to $3.0 billion and $1.0 billion, respectively, for general corporate purposes, with up to $500 million available under the five-year facility for issuance of letters of credit. The revolving credit agreements also include an option to extend the termination date for an additional one-year period, subject to consent of the banks.

Additionally, in April 2021, Cigna entered into a $1.0 billion 364-day revolving credit agreement that will mature in April 2022 and is diversified among 23 banks. This agreement replaced the prior $1.0 billion 364-day revolving credit agreement that was scheduled to expire in October 2021. Pursuant to this revolving credit agreement, Cigna can borrow up to $1.0 billion for general corporate purposes. The 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 five-year facility, the three-year facility and the 364-day facility include an option to increase commitments in an aggregate amount of up to $1.5 billion across all three facilities. Each of the three facilities also contain customary covenants and restrictions including a financial covenant that the Company’s leverage ratio may not exceed 60%, subject to certain exceptions upon the consummation of an acquisition.

~~Commercial Paper.~~ Under our commercial paper program we may issue short-term, unsecured commercial paper notes privately placed on a discounted basis through certain broker dealers at any time not to exceed an aggregate amount of $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 Company was in compliance with its debt covenants as of September 30, 2021.~~

Note 79 – Insurance and Contractholder Liabilities

A.Account Balances – Insurance and Contractholder Liabilities

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


		September 30, 2021						December 31, 2020						September 30, 2020			June 30, 2022						December 31, 2021						June 30, 2021
(In millions)	(In millions)	Current		Non-current		Total		Current		Non-current		Total		Total		(In millions)	Current		Non-current		Total		Current		Non-current		Total		Total
Contractholder deposit funds	Contractholder deposit funds	$	362	$	6,717	$	7,079	$	350	$	6,823	$	7,173	$	7,662	Contractholder deposit funds	$	371	$	6,606	$	6,977	$	352	$	6,702	$	7,054	$	7,122
Future policy benefits	Future policy benefits	307		9,183		9,490		327		9,317		9,644		10,102		Future policy benefits	246		8,454		8,700		312		9,194		9,506		9,531
Unearned premiums	Unearned premiums	494		408		902		485		394		879		828		Unearned premiums	575		415		990		558		418		976		912
Unpaid claims and claim expenses	Unpaid claims and claim expenses															Unpaid claims and claim expenses
U.S. Medical		3,825		21		3,846		3,166		18		3,184		3,200
Other segments		929		247		1,176		980		292		1,272		6,235
Cigna Healthcare																Cigna Healthcare	4,432		58		4,490		4,159		102		4,261		4,228
Other Operations																Other Operations	506		195		701		548		180		728		722
Total	Total													28,027		Total	6,130		15,728		21,858		5,929		16,596		22,525
Insurance and contractholder liabilities classified as Liabilities of business held for sale (1)														(6,591)
Insurance and contractholder liabilities classified as Liabilities of businesses held for sale (1)																Insurance and contractholder liabilities classified as Liabilities of businesses held for sale (1)	(476)		(3,951)		(4,427)		(611)		(4,033)		(4,644)
Total insurance and contractholder liabilities	Total insurance and contractholder liabilities	$	5,917	$	16,576	$	22,493	$	5,308	$	16,844	$	22,152	$	21,436	Total insurance and contractholder liabilities	$	5,654	$	11,777	$	17,431	$	5,318	$	12,563	$	17,881	$	22,515

(1)Amounts classified as Liabilities of ~~business~~businesses held for sale primarily include ~~$5.2~~$3.6 billion of ~~unpaid claims, $759 million of contractholder deposit funds and $646 million of future~~Future policy benefits, $0.4 billion of Unpaid claims and $0.4 billion of Unearned premiums as of ~~September~~June 30, ~~2020.~~2022 and $3.8 billion of Future policy benefits, $0.4 billion of Unpaid claims and $0.4 billion of Unearned premiums as of December 31, 2021.

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

B.Unpaid Claims and Claim Expenses – ~~U.S. 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 includes amounts from the International Health businesses now reported in Cigna Healthcare following our change in segment reporting in 2021. The prior year roll forward 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 ~~$3.6~~$4.1 billion at ~~September~~June 30, ~~2021~~2022 and ~~$3.0~~$3.9 billion at ~~September~~June 30, ~~2020.~~2021.

Activity, net of intercompany transactions, in the unpaid claims liability for the ~~U.S. Medical~~Cigna Healthcare segment for the ~~nine~~six months ended ~~September~~June 30 was as follows:


		Nine Months Ended					Six Months Ended
(In millions)	(In millions)	September 30, 2021		September 30, 2020		(In millions)	June 30, 2022		June 30, 2021
Beginning balance	Beginning balance	$	3,184	$	2,892	Beginning balance	$	4,261	$	3,695
Less: Reinsurance and other amounts recoverable	Less: Reinsurance and other amounts recoverable	224		303		Less: Reinsurance and other amounts recoverable	261		237
Beginning balance, net	Beginning balance, net	2,960		2,589		Beginning balance, net	4,000		3,458

Incurred costs related to:	Incurred costs related to:					Incurred costs related to:
Current year	Current year	22,167		18,935		Current year	15,751		15,716
Prior years	Prior years	(180)		(126)		Prior years	(268)		(228)
Total incurred	Total incurred	21,987		18,809		Total incurred	15,483		15,488
Paid costs related to:	Paid costs related to:					Paid costs related to:
Current year	Current year	18,701		16,061		Current year	11,900		12,065
Prior years	Prior years	2,665		2,363		Prior years	3,290		2,858
Total paid	Total paid	21,366		18,424		Total paid	15,190		14,923

Ending balance, net	Ending balance, net	3,581		2,974		Ending balance, net	4,293		4,023
Add: Reinsurance and other amounts recoverable	Add: Reinsurance and other amounts recoverable	265		226		Add: Reinsurance and other amounts recoverable	197		205
Ending balance	Ending balance	$	3,846	$	3,200	Ending balance	$	4,490	$	4,228

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

Variances in incurred costs related to prior ~~years’~~years' unpaid claims and claim expenses that resulted from the differences between actual experience and the ~~Company’s~~Company's key assumptions for the ~~nine~~six months ended ~~September~~June 30 were as follows:


		Nine Months Ended									Six Months Ended
(Dollars in millions)	(Dollars in millions)	September 30, 2021				September 30, 2020				(Dollars in millions)	June 30, 2022				June 30, 2021
		$		%(1)		$		%(2)			$		% (1)		$		% (2)
Actual completion factors	Actual completion factors	$	56	0.2	%	$	47	0.2	%	Actual completion factors	$	84	0.2	%	$	92	0.3	%
Medical cost trend	Medical cost trend	124		0.5		79		0.3		Medical cost trend	184		0.6		136		0.5

Total favorable variance	Total favorable variance	$	180	0.7	%	$	126	0.5	%	Total favorable variance	$	268	0.8	%	$	228	0.8	%

(1) Percentage of current year incurred costs as reported for the year ended December 31, 2021.

(2)Percentage of current year incurred costs as reported for the year ended December 31, 2020.

~~(2)Percentage of current year incurred costs as reported for the year ended December 31, 2019.~~

Favorable prior year development in both years reflects lower than expected utilization of medical services ~~that is lower than~~as compared to our ~~estimates used to establish prior year reserves.~~assumptions.

C.Unpaid Claims and Claim Expenses – ~~International Markets and~~ Other Operations

Liability balance details. The liability details for unpaid claims and claim expenses are as ~~follows:~~follows. The liability balance no longer includes the International Health businesses now reported in Cigna Healthcare following our change in segment reporting. The prior year roll forward has been updated to reflect the segment change.

(In millions) September 30, 2021 September 30, 2020
Other Operations
Group Disability and Life $ — $ 5,206
Other Operations 267 162
Total Other Operations 267 5,368
International Markets 909 867
Unpaid claims and claim expenses Other Operations and International Markets $ 1,176 $ 6,235


(In millions)	June 30, 2022		June 30, 2021
Other Operations
International businesses held for sale and our interest in a joint venture in Türkiye	$	412	$	438
Other Operations	289		284
Unpaid claims and claim expenses - Other Operations	$	701	$	722

Activity ~~net of intercompany transactions,~~ in the unpaid claims and claim expenses for ~~International Markets~~international businesses held for sale and ~~prior to the sale, Group Disability and Life (see Note 4 for further information)~~our interest in a joint venture in Türkiye is presented in the following table. Prior to the sale, the majority of the liability related to disability claims with long tailed payouts. See Note 9C to the Consolidated Financial Statements included in our 2020 Form 10-K for additional discussion of these disability reserves that are now sold. Liabilities associated with Other Operations are excluded because they pertain to obligations for long-duration insurance contracts or, if short-duration, the liabilities have been ~~fully~~largely reinsured.


		Nine Months Ended					Six Months Ended
(In millions)	(In millions)	September 30, 2021		September 30, 2020 (1)		(In millions)	June 30, 2022 (1)		June 30, 2021

Beginning balance	Beginning balance	$	963	$	5,816	Beginning balance	$	447	$	452
Less: Reinsurance	Less: Reinsurance	59		184		Less: Reinsurance	46		45
Beginning balance, net	Beginning balance, net	904		5,632		Beginning balance, net	401		407
Incurred claims related to:	Incurred claims related to:					Incurred claims related to:
Current year	Current year	2,110		4,277		Current year	490		501
Prior years:
Interest accretion		—		118
All other incurred		(38)		(12)
Prior years						Prior years	4		(4)

Total incurred	Total incurred	2,072		4,383		Total incurred	494		497
Paid claims related to:	Paid claims related to:					Paid claims related to:
Current year	Current year	1,549		2,435		Current year	306		314
Prior years	Prior years	532		1,702		Prior years	187		181
Total paid	Total paid	2,081		4,137		Total paid	493		495

Foreign currency	Foreign currency	(43)		5		Foreign currency	(28)		(16)

Ending balance, net	Ending balance, net	852		5,883		Ending balance, net	374		393
Add: Reinsurance	Add: Reinsurance	57		190		Add: Reinsurance	38		45
Ending balance	Ending balance	$	909	$	6,073	Ending balance	$	412	$	438

(1)Includes unpaid claims amounts classified as Liabilities of ~~business~~businesses held for sale.

Reinsurance in the table above reflects amounts due from reinsurers related to unpaid claims liabilities. See Note 10 for additional information on reinsurance.

Note 10 – Reinsurance

The ~~Company’s~~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.~~

~~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. ~~Included in~~The Company bears the ~~table below~~risk of loss if its reinsurers and retrocessionaires do not meet or are ~~$214 million of current~~unable to meet their reinsurance ~~recoverables that are reported in Other current assets as of September 30, 2021; as of December 31, 2020 there was $217 million of current~~obligations to the Company. The Company reviews its reinsurance ~~recoverables reported in Other current assets.~~arrangements and establishes reserves against the recoverables. The ~~Company’s~~Company's reinsurance recoverables as of ~~September~~June 30, ~~2021~~2022 are presented in the following table by range of external credit rating and collateral level:


(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
(In millions)										(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	Ongoing Operations									Ongoing Operations
Upper-medium grade and higher (1)		$	—	$	—	$	178	$	178
Lower-medium grade (2)		—		—		63		63
A- equivalent and higher current ratings (1)										A- equivalent and higher current ratings (1)	$	—	$	—	$	173	$	173
BBB- to BBB+ equivalent current credit ratings (1)										BBB- to BBB+ equivalent current credit ratings (1)	—		—		61		61
Not rated	Not rated	99		—		24		123		Not rated	125		4		43		172
Total recoverables related to ongoing operations(2)	Total recoverables related to ongoing operations(2)	99		—		265		364		Total recoverables related to ongoing operations(2)	125		4		277		406
Acquisition, disposition or runoff activities
Upper-medium grade and higher (1)
Acquisition, disposition or run-off activities										Acquisition, disposition or run-off activities
A- equivalent and higher current ratings (1)										A- equivalent and higher current ratings (1)
Lincoln National Life and Lincoln Life & Annuity of New York	Lincoln National Life and Lincoln Life & Annuity of New York	—		2,942		—		2,942		Lincoln National Life and Lincoln Life & Annuity of New York	—		2,870		—		2,870
Berkshire Hathaway Life Insurance Company of Nebraska	Berkshire Hathaway Life Insurance Company of Nebraska	284		384		—		668		Berkshire Hathaway Life Insurance Company of Nebraska	260		428		—		688
Prudential Retirement Insurance and Annuity		583		—		—		583
Prudential Retirement Insurance and Annuity (marketed under Empower brand)										Prudential Retirement Insurance and Annuity (marketed under Empower brand)	140		—		—		140
Prudential Insurance Company of America										Prudential Insurance Company of America	394		—		—		394
Life Insurance Company of North America	Life Insurance Company of North America	—		451		—		451		Life Insurance Company of North America	—		401		—		401
Other	Other	223		16		17		256		Other	208		19		16		243

Not rated	Not rated	—		12		3		15		Not rated	—		13		3		16
Total recoverables related to acquisition, disposition or runoff activities		1,090		3,805		20		4,915
Total recoverables related to acquisition, disposition or run-off activities										Total recoverables related to acquisition, disposition or run-off activities	1,002		3,731		19		4,752
Total	Total	$	1,189	$	3,805	$	285	$	5,279	Total	$	1,127	$	3,735	$	296	$	5,158
Allowance for uncollectible reinsurance	Allowance for uncollectible reinsurance							(30)		Allowance for uncollectible reinsurance							(30)
Total reinsurance recoverables								$	5,249
Total reinsurance recoverables (2)										Total reinsurance recoverables (2)							$	5,128

(1)~~Includes A- equivalent and higher current ratings certified~~ Certified by a ~~nationally recognized statistical rating organization~~Nationally Recognized Statistical Rating Organization ("NRSRO").

(2)Includes ~~BBB- to BBB+ equivalent~~$164 million of current ~~credit ratings certified by an NRSRO~~reinsurance recoverables that are reported in Other current assets and $90 million of recoverables classified as Assets of businesses held for sale as of June 30, 2022.

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

Collateral levels are defined internally based on the fair value of the collateral relative to the carrying amount of the reinsurance recoverable, the frequency at which collateral is required to be replenished and the potential for volatility in the ~~collateral’s~~collateral's fair value.

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.

B.~~Effects of Reinsurance~~

In the Company’s Consolidated Statements of Income, Premiums were reported net of amounts ceded to reinsurers and Medical costs and other benefit expenses were reported net of reinsurance recoveries in the following amounts:

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2021 2020 2021 2020
Total ceded premiums $ 134 $ 122 $ 418 $ 367
Total reinsurance recoveries $ 138 $ 117 $ 419 $ 397

C.B.Effective Exit of GMDB and GMIB Business

The Company entered into an agreement with Berkshire to effectively exit the GMDB and GMIB business via a reinsurance transaction in 2013. Berkshire reinsured 100% of the ~~Company’s~~Company's future claim payments in this business, net of other reinsurance arrangements existing at that time. The reinsurance agreement is subject to an overall limit with approximately ~~$3.2~~$3.1 billion remaining at ~~September~~June 30, ~~2021.~~2022.

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

expenses and other liabilities and Other non-current liabilities. Assumptions used in fair value measurement for these assets and liabilities are discussed in Note 10 of the Company's ~~2020~~2021 Form 10-K.

GMDB

The GMDB exposure arises under annuities written by ceding companies that guarantee the benefit received at death. The ~~Company’s~~Company's exposure arises when the guaranteed minimum death benefit exceeds the fair value of the related mutual fund investments at the time of a ~~contractholder’s~~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. The Company should be reimbursed in full for these payments unless the Berkshire reinsurance limit is exceeded.


(Dollars in millions, excludes impact of reinsurance ceded)	(Dollars in millions, excludes impact of reinsurance ceded)	September 30, 2021		December 31, 2020		(Dollars in millions, excludes impact of reinsurance ceded)	June 30, 2022		December 31, 2021
Account value	Account value	$	9,552	$	9,523	Account value	$	7,626	$	9,795
Net amount at risk	Net amount at risk	$	1,467	$	1,570	Net amount at risk	$	2,264	$	1,392

Number of contractholders (estimated)	Number of contractholders (estimated)	170,000		185,000		Number of contractholders (estimated)	160,000		170,000

GMIB

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

GMIB liabilities totaling ~~$610~~$463 million as of ~~September~~June 30, ~~2021~~2022 and ~~$729~~$572 million as of December 31, ~~2020~~2021 are classified as Level 3 because fair value inputs are largely unobservable. The GMIB liabilities reflect the Company's credit risk, while the reinsurance recoverable reflects the credit risk of the reinsurers. There were 3 reinsurers covering 100% of the GMIB exposures as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 as follows:


(In millions)	(In millions)							(In millions)
Line of Business	Line of Business	Reinsurer	September 30, 2021		December 31, 2020		Collateral and Other Terms at September 30, 2021	Line of Business	Reinsurer	June 30, 2022		December 31, 2021		Collateral and Other Terms at June 30, 2022
GMIB	GMIB	Berkshire	$	298	$	353	100% were secured by assets in a trust.	GMIB	Berkshire	$	230	$	283	100% were secured by assets in a trust.
		Sun Life Assurance Company of Canada	179		215				Sun Life Assurance Company of Canada	136		167
		Liberty Re (Bermuda) Ltd.	160		190		100% were secured by assets in a trust.		Liberty Re (Bermuda) Ltd.	123		151		100% were secured by assets in a trust.
Total GMIB recoverables reported in Other current assets and Other assets	Total GMIB recoverables reported in Other current assets and Other assets		$	637	$	758		Total GMIB recoverables reported in Other current assets and Other assets		$	489	$	601

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

Note 911 – Investments

~~Cigna’s~~Cigna's investment portfolio consists of a broad range of investments including debt 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 and realized investment gains and losses. See Note 1012 for information about the valuation of the ~~Company’s~~Company's investment portfolio. Further information about our accounting policies for investment assets can be found in Note 11 of the Company's ~~2020~~2021 Form 10-K.

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


		September 30, 2021						December 31, 2020							June 30, 2022						December 31, 2021
(In millions)	(In millions)	Current		Long-term		Total		Current		Long-term		Total		(In millions)	Current		Long-term		Total		Current		Long-term		Total
Debt securities	Debt securities	$	895	$	16,962	$	17,857	$	959	$	17,172	$	18,131	Debt securities	$	784	$	13,166	$	13,950	$	796	$	16,162	$	16,958
Equity securities	Equity securities	—		551		551		—		501		501		Equity securities	69		767		836		—		603		603
Commercial mortgage loans	Commercial mortgage loans	40		1,485		1,525		13		1,406		1,419		Commercial mortgage loans	13		1,566		1,579		40		1,526		1,566
Policy loans	Policy loans	—		1,329		1,329		—		1,351		1,351		Policy loans	—		1,325		1,325		—		1,338		1,338
Other long-term investments	Other long-term investments	—		3,429		3,429		—		2,832		2,832		Other long-term investments	—		4,107		4,107		—		3,574		3,574
Short-term investments	Short-term investments	439		—		439		359		—		359		Short-term investments	199		—		199		428		—		428
Total	Total	$	1,374	$	23,756	$	25,130	$	1,331	$	23,262	$	24,593	Total	1,065		20,931		21,996		1,264		23,203		24,467
Investments classified as assets of businesses held for sale (1)														Investments classified as assets of businesses held for sale (1)	(311)		(4,207)		(4,518)		(344)		(4,765)		(5,109)
Investments per Consolidated Balance Sheets														Investments per Consolidated Balance Sheets	$	754	$	16,724	$	17,478	$	920	$	18,438	$	19,358

(1) Investments related to the international life, accident and supplemental benefits businesses that are held for sale. These investments are primarily comprised of debt securities and other long-term investments, and to a lesser extent, equity securities and short-term investments. See Note 5 to the Consolidated Financial Statements for additional information.

A.Investment Portfolio

Debt Securities

The amortized cost and fair value by contractual maturity periods for debt securities were as follows at ~~September~~June 30, ~~2021:~~2022:


(In millions)	(In millions)	Amortized Cost		Fair Value		(In millions)	Amortized Cost		Fair Value
Due in one year or less	Due in one year or less	$	914	$	920	Due in one year or less	$	820	$	813
Due after one year through five years	Due after one year through five years	5,316		5,543		Due after one year through five years	4,655		4,454
Due after five years through ten years	Due after five years through ten years	5,799		6,161		Due after five years through ten years	4,844		4,407
Due after ten years	Due after ten years	3,975		4,759		Due after ten years	4,206		3,909
Mortgage and other asset-backed securities	Mortgage and other asset-backed securities	457		474		Mortgage and other asset-backed securities	399		367
Total	Total	$	16,461	$	17,857	Total	$	14,924	$	13,950

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

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


(In millions)	(In millions)	Amortized Cost		Allowance for Credit Loss		Unrealized Appreciation		Unrealized Depreciation		Fair Value		(In millions)	Amortized Cost		Allowance for Credit Loss		Unrealized Appreciation		Unrealized Depreciation		Fair Value
September 30, 2021
June 30, 2022												June 30, 2022
Federal government and agency	Federal government and agency	$	277	$	—	$	105	$	—	$	382	Federal government and agency	$	303	$	—	$	56	$	(6)	$	353
State and local government	State and local government	153		—		16		—		169		State and local government	157		—		—		(12)		145
Foreign government	Foreign government	2,317		—		235		(33)		2,519		Foreign government	2,471		—		63		(203)		2,331
Corporate	Corporate	13,257		(11)		1,136		(69)		14,313		Corporate	11,594		(45)		151		(946)		10,754
Mortgage and other asset-backed	Mortgage and other asset-backed	457		—		21		(4)		474		Mortgage and other asset-backed	399		—		2		(34)		367
Total	Total	$	16,461	$	(11)	$	1,513	$	(106)	$	17,857	Total	$	14,924	$	(45)	$	272	$	(1,201)	$	13,950
Investments supporting liabilities of the Company’s run-off settlement annuity business (included in total above) (1)		$	2,282	$	(3)	$	721	$	(9)	$	2,991
December 31, 2020
Investments supporting liabilities of the Company's run-off settlement annuity business (included in total above) (1)												Investments supporting liabilities of the Company's run-off settlement annuity business (included in total above) (1)	$	2,266	$	(5)	$	220	$	(185)	$	2,296
December 31, 2021												December 31, 2021
Federal government and agency	Federal government and agency	$	334	$	—	$	122	$	—	$	456	Federal government and agency	$	287	$	—	$	101	$	(1)	$	387
State and local government	State and local government	150		—		17		—		167		State and local government	154		—		17		—		171
Foreign government	Foreign government	2,201		—		318		(8)		2,511		Foreign government	2,468		—		194		(46)		2,616
Corporate	Corporate	13,108		(19)		1,506		(33)		14,562		Corporate	12,361		(23)		1,008		(80)		13,266
Mortgage and other asset-backed	Mortgage and other asset-backed	427		(7)		27		(12)		435		Mortgage and other asset-backed	505		—		17		(4)		518
Total	Total	$	16,220	$	(26)	$	1,990	$	(53)	$	18,131	Total	$	15,775	$	(23)	$	1,337	$	(131)	$	16,958
Investments supporting liabilities of the Company’s run-off settlement annuity business (included in total above) (1)		$	2,282	$	(5)	$	838	$	(3)	$	3,112
Investments supporting liabilities of the Company's run-off settlement annuity business (included in total above) (1)												Investments supporting liabilities of the Company's run-off settlement annuity business (included in total above) (1)	$	2,262	$	(5)	$	720	$	(10)	$	2,967

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

Review of declines in fair value. Management reviews impaired debt securities to determine whether a credit loss allowance is needed based on criteria that include:

•severity of decline;

•financial health and specific prospects of the issuer; and

•changes in the regulatory, economic or general market environment of the ~~issuer’s~~issuer's industry or geographic 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. These debt securities are primarily corporate securities with a decline in fair value that reflects an increase in market yields since purchase. Our allowance for credit losses on debt securities was not material as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.


		September 30, 2021							December 31, 2020								June 30, 2022							December 31, 2021
(Dollars in millions)	(Dollars in millions)	Fair Value		Amortized Cost		Unrealized Depreciation		Number of Issues	Fair Value		Amortized Cost		Unrealized Depreciation		Number of Issues	(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	One year or less															One year or less
Investment grade	Investment grade	$	2,583	$	2,660	$	(77)	799	$	1,026	$	1,045	$	(19)	300	Investment grade	$	8,378	$	9,258	$	(880)	2,695	$	2,785	$	2,861	$	(76)	909
Below investment grade	Below investment grade	558		571		(13)		695	381		405		(24)		232	Below investment grade	1,124		1,252		(128)		1,405	561		578		(17)		781
More than one year	More than one year															More than one year
Investment grade	Investment grade	115		123		(8)		67	18		18		—		6	Investment grade	750		916		(166)		355	382		412		(30)		143
Below investment grade	Below investment grade	201		209		(8)		45	90		100		(10)		33	Below investment grade	191		218		(27)		134	162		170		(8)		53
Total	Total	$	3,457	$	3,563	$	(106)	1,606	$	1,515	$	1,568	$	(53)	571	Total	$	10,443	$	11,644	$	(1,201)	4,589	$	3,890	$	4,021	$	(131)	1,886

Equity Securities

The following table provides the values of the Company's equity security investments as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020. The amount~~2021:


	June 30, 2022				December 31, 2021
(In millions)	Cost		Carrying Value		Cost		Carrying Value
Equity securities with readily determinable fair values	$	831	$	426	$	257	$	207
Equity securities with no readily determinable fair value	283		410		270		396
Total	$	1,114	$	836	$	527	$	603

Approximately 65% of ~~impairments or value changes resulting from observable price changes on~~our investments in equity securities ~~still held was not material~~are in the health care sector, consistent with our strategy to invest in targeted startup and growth-stage companies in the ~~financial statements as of September 30, 2021 or December 31, 2020.~~

September 30, 2021 December 31, 2020
(In millions) Cost Carrying Value Cost Carrying Value
Equity securities with readily determinable fair values $ 203 $ 180 $ 180 $ 202
Equity securities with no readily determinable fair value 227 332 225 255
Hybrid equity securities 57 39 58 44
Total $ 487 $ 551 $ 463 $ 501
health care industry.

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 fixed 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.~~

The Company regularly evaluates and monitors credit risk from the initial mortgage loan underwriting and throughout the investment holding period. For more information on the Company's accounting policies and methodologies regarding these investments, see Note 11 to the Company's ~~Annual Report on~~2021 Form 10-K for the year ended December 31, ~~2020.~~2021.

Loan-to-value and debt service coverage ratio are the two most significant contributors to the credit quality ratings that the Company uses to evaluate and monitor credit risk in its commercial mortgage loan portfolio.

The following table summarizes the credit risk profile of the ~~Company’s~~Company's commercial mortgage loan portfolio as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

(Dollars in millions) September 30, 2021 December 31, 2020
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% $ 563 2.18 $ 533 2.28
60% to 79% 839 1.84 751 2.08
80% to 100% 129 1.47 141 1.33
Allowance for credit losses (6) (6)
Total $ 1,525 1.93 61 % $ 1,419 2.08 61 %

~~All commercial mortgage loans in the Company's portfolio are current as of September 30, 2021 and December 31, 2020.~~


(Dollars in millions)	June 30, 2022					December 31, 2021
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%	$	850	2.21			$	560	2.18
60% to 79%	567		1.49			883		1.89
80% to 100%	108		1.21			129		1.47
Greater than 100%	63		1.04			—		—

Allowance for credit losses	(9)					(6)
Total	$	1,579	1.84	59	%	$	1,566	1.96	61	%

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 the financial statements of 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 timing of when financial information is received from the general partner or manager of the investments.

Other long-term investments also include investment real estate carried at depreciated cost less any impairment write-downs to fair value when cash flows indicate that the carrying value may not be recoverable. Additionally, statutory and other restricted deposits and foreign currency swaps carried at fair value are reported in the table below as Other. The following table provides the carrying value information for these investments:


		Carrying value as of					Carrying value as of
(In millions)	(In millions)	September 30, 2021		December 31, 2020		(In millions)	June 30, 2022		December 31, 2021
Real estate investments	Real estate investments	$	1,161	$	951	Real estate investments	$	1,356	$	1,152
Securities partnerships	Securities partnerships	2,098		1,737		Securities partnerships	2,499		2,272
Other	Other	170		144		Other	252		150
Total	Total	$	3,429	$	2,832	Total	$	4,107	$	3,574

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 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 and to hedge the interest rate risk of ~~its~~certain long-term debt. The Company has written and purchased GMIB reinsurance contracts in its run-off reinsurance business that are accounted for as freestanding derivatives as discussed in Note 8.10. Derivatives in the ~~Company’s~~Company's separate accounts are excluded from the following discussion because associated gains and losses generally accrue directly to separate account policyholders.

The gross fair values of our derivative financial instruments are presented in Note ~~10.~~12. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the effects of derivative financial instruments used in these individual hedging strategies were not material to the Consolidated Financial Statements, including gains or losses reclassified from Accumulated other comprehensive ~~income~~loss into Shareholders' net income, amounts excluded from the assessment of hedge effectiveness and fair values of assets posted or held as collateral supporting the fair values of these ~~fair values.~~derivative financial instruments. The following table summarizes the types and notional quantity of derivative instruments held by the Company:

Notional Value as of
(In millions) September 30, 2021 December 31, 2020
Purpose Type of Instrument
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.
Foreign currency swap contracts $ 1,070 $ 925
Fair value hedge: To convert a portion of the interest rate exposure on the Company's long-term debt from fixed to variable rates. This more closely aligns the Company's interest expense with the interest income received on its cash equivalent and short-term investment balances. The variable rates are benchmarked to SOFR.
Interest rate swap contracts $ 750 $ —
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, Korean Won and Taiwan Dollar. The notional value of hedging instruments matches the hedged amount of subsidiary net assets.
Foreign currency swap contracts $ 526 $ 526
Foreign currency forward contracts $ 697 $ 636
Economic hedge: To hedge the foreign exchange-related changes in fair value of U.S. dollar-denominated investment assets 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 investments.
Foreign currency forward contracts $ 671 $ 538
Economic hedge: To hedge against the foreign exchange depreciation of certain foreign subsidiary earnings denominated in South Korean Won. The notional value of hedging instruments aligns with the U.S. dollar equivalent of hedged foreign-denominated earnings.
Average rate option contracts $ 120 $ —


		Notional Value as of
(In millions)		June 30, 2022		December 31, 2021
Purpose	Type of Instrument
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. A majority of these instruments are denominated in Euros, with the remaining instruments denominated in British Pounds Sterling and Australian Dollars.	Foreign currency swap contracts	$	1,073	$	1,081
Fair value hedge: To convert a portion of the interest rate exposure on the Company's long-term debt from fixed to variable rates. This more closely aligns the Company's interest expense with the interest income received on its cash equivalent and short-term investment balances. The variable rates are benchmarked to SOFR.	Interest rate swap contracts	$	1,500	$	750
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 currencies other than the U.S. Dollar. The notional value of hedging instruments matches the hedged amount of subsidiary net assets. Foreign currency swap contracts are denominated in Euros, while foreign currency forward contracts are primarily denominated in Korean Won, with the remaining instruments denominated in New Zealand Dollars and Taiwan Dollars. As of June 30, 2022 there were no forward contracts denominated in the Taiwan Dollar.	Foreign currency swap contracts	$	526	$	526
	Foreign currency forward contracts (1)	$	720	$	1,380
Economic hedge: To hedge the foreign exchange-related changes in fair value of U.S. dollar-denominated investment assets 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 investments.	Foreign currency forward contracts (1)	$	730	$	720

~~The Company implemented two new hedging strategies during~~(1) These instruments are associated with the ~~second quarter of 2021~~international life, accident and supplemental benefits businesses that are ~~described~~held for sale and will be unwound, terminated, or otherwise disposed in conjunction with the ~~above table and are accounted for as follows:~~

• Chubb Transaction.~~Fair value hedges of the interest rate exposure on the Company’s long-term debt:~~ Using fair value hedge accounting, the fair values of the swap contracts are reported in Other assets or Other liabilities. The critical terms of these swaps match those of the long-term debt being hedged. As a result, the carrying value of the hedged debt is adjusted to reflect changes in its fair value driven by the Secured Overnight Financing Rate ("SOFR"). The effects of those adjustments on interest expense are offset by the effects of corresponding changes in the swaps' fair value. The net impact from the hedge reported in Interest

~~expense and other reflects interest expense on the hedged debt at the variable interest rate. Cash flows relating to these contracts are reported in Operating activities.~~

• ~~Economic hedge against the depreciation of foreign subsidiary earnings due to changes in the quarterly average exchange rate:~~ Fair values of average rate option contracts are reported in Other assets. Because hedge accounting is not applied, changes in fair value are reported currently in earnings in Fees and other revenues. Cash flows relating to these contracts are reported in Operating activities.

As there have been no ~~other~~ changes to the types of derivative financial instruments the Company uses, refer to the ~~Company’s 2020~~Company's 2021 Form 10-K for further discussion on our accounting policy.

C.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 (consistent with accounting for a premium deficiency), as well as realized gains and losses attributed to the ~~Company’s~~Company's separate accounts because those gains and losses generally accrue directly to separate account policyholders:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)	2022		2021		2022		2021
Net realized investment gains (losses), excluding credit loss expense and asset write-downs	Net realized investment gains (losses), excluding credit loss expense and asset write-downs	$	44	$	24	$	114	$	33	Net realized investment gains (losses), excluding credit loss expense and asset write-downs	$	(71)	$	60	$	(390)	$	70
Credit loss (expense) recoveries	Credit loss (expense) recoveries	24		8		14		(41)		Credit loss (expense) recoveries	(24)		(1)		(24)		(10)
Other investment asset write-downs		—		—		—		(10)

Net realized investment gains (losses), before income taxes	Net realized investment gains (losses), before income taxes	$	68	$	32	$	128	$	(18)	Net realized investment gains (losses), before income taxes	$	(95)	$	59	$	(414)	$	60

Net realized investment ~~gains, excluding credit loss expense and asset write-downs~~losses for the ~~nine~~six months ended ~~September~~June 30, ~~2021 was~~2022 were primarily ~~driven by mark-to-market gains on equity securities and gains on the sales of real estate partnerships, partially offset by~~due to mark-to-market losses on ~~derivatives. This activity for the nine months ended September 30, 2020 primarily represent gains on sales of debt securities, partially offset by mark-to-market losses on~~a strategic health care equity securities ~~and derivatives. Credit loss (expense) recoveries on invested assets~~reflect credit losses incurred on debt securities primarily relating to issuers in certain industries that have been impacted by the global COVID-19 pandemic. Realized gains and losses on equity securities still held at September 30, 2021 and 2020 were not material.investment.

Note 1012 – 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 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).

For a description of the policies, methods and assumptions that are used to estimate fair value and determine the fair value hierarchy for each class of financial instruments, see Note 12 "Fair Value Measurements" to the Company's ~~2020~~2021 Form 10-K.

A.Financial Assets and Financial Liabilities Carried at Fair Value

The following table provides information as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 about the ~~Company’s~~Company's financial assets and liabilities carried at fair value. 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.


(In millions)	(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total				(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
		As of September 30, 2021		As of December 31, 2020		As of September 30, 2021		As of December 31, 2020		As of September 30, 2021		As of December 31, 2020		As of September 30, 2021		As of December 31, 2020			As of June 30, 2022		As of December 31, 2021		As of June 30, 2022		As of December 31, 2021		As of June 30, 2022		As of December 31, 2021		As of June 30, 2022		As of December 31, 2021
Financial assets at fair value	Financial assets at fair value																	Financial assets at fair value
Debt securities	Debt securities																	Debt securities
Federal government and agency	Federal government and agency	$	141	$	207	$	241	$	249	$	—	$	—	$	382	$	456	Federal government and agency	$	148	$	147	$	205	$	240	$	—	$	—	$	353	$	387
State and local government	State and local government	—		—		169		167		—		—		169		167		State and local government	—		—		145		171		—		—		145		171
Foreign government	Foreign government	—		—		2,505		2,498		14		13		2,519		2,511		Foreign government	—		—		2,331		2,611		—		5		2,331		2,616
Corporate	Corporate	—		—		13,600		13,878		713		684		14,313		14,562		Corporate	—		—		10,327		12,606		427		660		10,754		13,266
Mortgage and other asset-backed	Mortgage and other asset-backed	—		—		333		309		141		126		474		435		Mortgage and other asset-backed	—		—		282		418		85		100		367		518
Total debt securities	Total debt securities	141		207		16,848		17,101		868		823		17,857		18,131		Total debt securities	148		147		13,290		16,046		512		765		13,950		16,958
Equity securities (1)	Equity securities (1)	23		50		165		165		31		31		219		246		Equity securities (1)	9		16		417		160		—		31		426		207
Short-term investments	Short-term investments	—		—		439		325		—		—		439		325		Short-term investments	—		—		199		428		—		—		199		428
Derivative assets ~~(2)~~	Derivative assets ~~(2)~~	—		—		126		72		—		—		126		72		Derivative assets ~~(2)~~	—		—		258		143		—		—		258		143

Financial liabilities at fair value	Financial liabilities at fair value																	Financial liabilities at fair value
Derivative liabilities	Derivative liabilities	$	—	$	—	$	49	$	108	$	—	$	—	$	49	$	108	Derivative liabilities	$	—	$	—	$	54	$	33	$	—	$	—	$	54	$	33

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

~~(2)~~Derivative assets above include an immaterial amount as of September 30, 2021 and $34 million as of December 31, 2020 that are presented in the Short-term investments category disclosed in Note 9. See Note 9 for more information on our Derivative Financial Instruments.

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.

Quantitative Information about Unobservable Inputs

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

The following table summarizes the fair value and significant unobservable inputs that were developed directly by the Company and used in pricing these debt securities as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. The range and weighted average basis point ~~(“bps”~~("bps") amounts for liquidity reflect the ~~Company’s~~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 as of					Unobservable Adjustment Range (Weighted Average by Quantity) as of
(Fair value in millions )	(Fair value in millions )	September 30, 2021		December 31, 2020		Unobservable input September 30, 2021	September 30, 2021		December 31, 2020		(Fair value in millions )	June 30, 2022		December 31, 2021		Unobservable input June 30, 2022	June 30, 2022		December 31, 2021
Debt securities	Debt securities										Debt securities
Corporate and government debt securities	Corporate and government debt securities	$	727	$	696	Liquidity	60 - 2300 (460)	bps	60 - 1370 (470)	bps	Corporate and government debt securities	$	426	$	664	Liquidity	60 - 1200 (320)	bps	60 - 1060 (410)	bps
Mortgage and other asset-backed securities	Mortgage and other asset-backed securities	141		126		Liquidity	60 - 390 (90)	bps	60 - 380 (80)	bps	Mortgage and other asset-backed securities	85		100		Liquidity	60 - 500 (180)	bps	60 - 390 (100)	bps

Securities not priced by the Company (1)		—		1
Other debt securities											Other debt securities	1		1
Total Level 3 debt securities	Total Level 3 debt securities	$	868	$	823						Total Level 3 debt securities	$	512	$	765

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

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

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 and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021. Gains and losses reported in the table may include net changes in fair value that are attributable to both observable and unobservable inputs.


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)	2022		2021		2022		2021
Debt and Equity Securities	Debt and Equity Securities									Debt and Equity Securities
Beginning balance	Beginning balance	$	854	$	860	$	854	$	555	Beginning balance	$	686	$	903	$	796	$	854
Total gains (losses) included in shareholders’ net income		3		(1)		(8)		4
Total gains (losses) included in shareholders' net income										Total gains (losses) included in shareholders' net income	(2)		(1)		10		(11)
Gains (losses) included in other comprehensive income	Gains (losses) included in other comprehensive income	2		17		(7)		(42)		Gains (losses) included in other comprehensive income	(13)		7		(28)		(9)
Gains (losses) required to adjust future policy benefits for settlement annuities (1)	Gains (losses) required to adjust future policy benefits for settlement annuities (1)	1		7		(6)		4		Gains (losses) required to adjust future policy benefits for settlement annuities (1)	(11)		1		(23)		(7)
Purchases, sales and settlements	Purchases, sales and settlements									Purchases, sales and settlements
Purchases	Purchases	37		3		108		67		Purchases	27		42		76		71
Sales		(36)		(1)		(36)		(13)

Settlements	Settlements	(1)		(8)		(26)		(15)		Settlements	(71)		(9)		(152)		(25)
Total purchases, sales and settlements	Total purchases, sales and settlements	—		(6)		46		39		Total purchases, sales and settlements	(44)		33		(76)		46
Transfers into/(out of) Level 3	Transfers into/(out of) Level 3									Transfers into/(out of) Level 3
Transfers into Level 3	Transfers into Level 3	58		102		181		629		Transfers into Level 3	17		37		118		123
Transfers out of Level 3	Transfers out of Level 3	(19)		(33)		(161)		(243)		Transfers out of Level 3	(121)		(126)		(285)		(142)
Total transfers into/(out of) Level 3	Total transfers into/(out of) Level 3	39		69		20		386		Total transfers into/(out of) Level 3	(104)		(89)		(167)		(19)
Ending balance	Ending balance	$	899	$	946	$	899	$	946	Ending balance	$	512	$	854	$	512	$	854
Total gains (losses) included in Shareholders’ net income attributable to instruments held at the reporting date		$	(3)	$	—	$	(3)	$	(2)
Change in unrealized gains or losses included in Other comprehensive income for assets held at the end of the reporting period		$	2	$	17	$	(8)	$	(37)
Total gains (losses) included in Shareholders' net income attributable to instruments held at the reporting date										Total gains (losses) included in Shareholders' net income attributable to instruments held at the reporting date	$	(3)	$	(1)	$	(2)	$	(12)
Change in unrealized gains or losses included in Other comprehensive income (loss), net of tax for assets held at the end of the reporting period										Change in unrealized gains or losses included in Other comprehensive income (loss), net of tax for assets held at the end of the reporting period	$	(11)	$	7	$	(25)	$	(9)

(1)Amounts do not accrue to shareholders.

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

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

Transfers into or out of the Level 3 category occur when unobservable inputs, such as the ~~Company’s~~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 ~~2021~~2022 and ~~2020~~2021 primarily reflected changes in liquidity estimates for certain private placement issuers across several sectors. ~~Transfers into and out of Level 3 were higher in 2020 due to significant fluctuations in unobservable inputs experienced as a result of the uncertainty over the economic impacts related to COVID-19.~~ See discussion under Quantitative Information about Unobservable Inputs above 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.

Fair values of Separate account assets at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:


(In millions)	(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total				(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
		September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Guaranteed separate accounts (See Note 15)		$	223	$	226	$	290	$	297	$	—	$	—	$	513	$	523
Guaranteed separate accounts (See Note 18)																		Guaranteed separate accounts (See Note 18)	$	208	$	227	$	228	$	276	$	—	$	—	$	436	$	503
Non-guaranteed separate accounts (1)	Non-guaranteed separate accounts (1)	1,982		1,925		5,463		5,600		345		355		7,790		7,880		Non-guaranteed separate accounts (1)	212		1,130		6,326		6,406		249		334		6,787		7,870
Subtotal	Subtotal	$	2,205	$	2,151	$	5,753	$	5,897	$	345	$	355	8,303		8,403		Subtotal	$	420	$	1,357	$	6,554	$	6,682	$	249	$	334	7,223		8,373
Non-guaranteed separate accounts priced at NAV as a practical expedient (1)														847		683

Non-guaranteed separate accounts priced at net asset value ("NAV") as a practical expedient (1)																		Non-guaranteed separate accounts priced at net asset value ("NAV") as a practical expedient (1)													920		842
Total																		Total													8,143		9,215
Separate account assets of businesses classified as held for sale (2)																		Separate account assets of businesses classified as held for sale (2)													(648)		(878)
Separate account assets per Consolidated Balance Sheets	Separate account assets per Consolidated Balance Sheets													$	9,150	$	9,086	Separate account assets per Consolidated Balance Sheets													$	7,495	$	8,337

(1)Non-guaranteed separate accounts ~~included $4.4~~include $4.2 billion as of ~~September~~June 30, ~~2021~~2022 and ~~$4.2~~$4.5 billion as of December 31, ~~2020~~2021 in assets supporting the ~~Company’s~~Company's pension plans, including ~~$0.3~~$0.2 billion classified in Level 3 as of ~~September~~June 30, ~~2021~~2022 and $0.3 billion as of December 31, ~~2020.~~2021.

(2)Investments related to the international life, accident and supplemental benefits businesses that are held for sale. See Note 5 to the Consolidated Financial Statements for additional information.

Separate account assets classified in Level 3 primarily support ~~Cigna’s~~Cigna's pension plans and include certain newly-issued, privately-placed, complex or illiquid securities that are priced using methods discussed above, as well as commercial mortgage loans. Activity, including transfers into and out of Level 3, was not material for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 or ~~2020.~~2021.

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.~~pension plans. The following table provides additional information on these investments:


		Fair Value as of				Unfunded Commitment as of September 30, 2021				Redemption Frequency (if currently eligible)		Redemption Notice Period			Fair Value as of						Unfunded Commitment as of June 30, 2022		Redemption Frequency (if currently eligible)		Redemption Notice Period
(In millions)	(In millions)	September 30, 2021		December 31, 2020							(In millions)		June 30, 2022			December 31, 2021
Securities partnerships	Securities partnerships	$	534	$	463			$	253		Not applicable			Not applicable	Securities partnerships		$	540		$		513	$	252	Not applicable	Not applicable
Real estate funds	Real estate funds	309		215		—				Quarterly		30 - 90 days	Real estate funds		376			325			—		Quarterly		30 - 90 days
Hedge funds	Hedge funds	4		5		—				Up to annually, varying by fund		30 - 90 days	Hedge funds		4			4			—		Up to annually, varying by fund		30 - 90 days
Total	Total	$	847	$	683	$	253						Total		$	920		$	842		$	252

As of ~~September~~June 30, ~~2021,~~2022, 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, such as commercial mortgage loans that are carried at unpaid principal, investment real estate that is carried at depreciated cost and equity securities with no readily determinable fair 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 and are written down to their fair value, or when there are observable price changes from orderly market transactions of equity securities that otherwise had no readily determinable fair value.

For the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, no impairments were recognized requiring these assets to be measured at fair value. Realized investment gains and losses from these observable price changes for the ~~nine~~three and six months ended ~~September~~June 30, ~~2021~~2022 and ~~September~~June 30, ~~2020~~2021 were 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~~however fair value disclosure ~~requirements~~is required at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. In addition to universal life products and finance leases, financial instruments that are carried in the ~~Company’s~~Company's Consolidated Financial Statements at amounts that approximate fair value are excluded from the following table:


		Classification in Fair Value Hierarchy		September 30, 2021								December 31, 2020									Classification in Fair Value Hierarchy		June 30, 2022								December 31, 2021
(In millions)	(In millions)		Fair Value			Carrying Value				Fair Value				Carrying Value		(In millions)						Fair Value			Carrying Value				Fair Value				Carrying Value
Commercial mortgage loans	Commercial mortgage loans		Level 3			$	1,563			$	1,525			$	1,456			$	1,419	Commercial mortgage loans		Level 3			$	1,499			$	1,579			$	1,598			$	1,566
Long-term debt, including current maturities, excluding finance leases	Long-term debt, including current maturities, excluding finance leases	Level 2		$	35,794			$	31,579			$	37,676			$	31,835	Long-term debt, including current maturities, excluding finance leases			Level 2		$	30,062			$	31,526			$	35,621			$	31,593

Note 1113 – Variable Interest Entities

We perform ongoing qualitative analyses of our involvement with variable interest entities to determine if consolidation is required. The Company determined that it was not a primary beneficiary in any material variable interest entity as of ~~September~~June 30, ~~2021~~2022 or December 31, ~~2020.~~2021. The Company’s involvement with variable interest entities for which it is not the primary beneficiary has not changed materially from December 31, ~~2020.~~2021. For details of our accounting policy for variable interest entities and the composition of variable interest entities with which the Company is involved, refer to Note 13 in the Company's ~~2020~~2021 Form 10-K. The Company has not provided, and does not intend to provide, financial support to any of these variable interest entities in excess of its maximum exposure.

Note 1214 – Accumulated Other Comprehensive Income (Loss) ~~(“AOCI”~~("AOCI")

AOCI includes net unrealized appreciation (depreciation) on securities and derivatives (excluding appreciation on investments supporting future policy benefit liabilities of the run-off settlement annuity business) ~~(See~~(see Note 9)11), foreign currency translation and the net postretirement benefits liability adjustment. AOCI includes the ~~Company’s~~Company's share from unconsolidated entities reported on the equity method. Generally, tax effects in AOCI are established at the currently enacted tax rate and reclassified to Shareholders' net income in the same period that the related pre-tax AOCI reclassifications are recognized. Changes in the components of AOCI were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	(In millions)	2021		2020		2021		2020			(In millions)	2022		2021		2022		2021
Securities and Derivatives	Securities and Derivatives										Securities and Derivatives
Beginning balance	Beginning balance	$	749	$	1,256	$	900	$	975		Beginning balance	$	125	$	627	$	685	$	900
Appreciation (depreciation) on securities and derivatives	Appreciation (depreciation) on securities and derivatives	59		159		(113)		499			Appreciation (depreciation) on securities and derivatives	(541)		170		(1,246)		(172)
Tax (expense) benefit	Tax (expense) benefit	(16)		(27)		9		(96)			Tax (expense) benefit	101		(40)		255		25
Net appreciation (depreciation) on securities and derivatives		43		132		(104)		403
Net Appreciation (depreciation) on securities and derivatives											Net Appreciation (depreciation) on securities and derivatives	(440)		130		(991)		(147)

Reclassification adjustment for (gains) losses included in Shareholders' net income (Net realized investment (gains) losses)	Reclassification adjustment for (gains) losses included in Shareholders' net income (Net realized investment (gains) losses)	(14)		(16)		(20)		(3)			Reclassification adjustment for (gains) losses included in Shareholders' net income (Net realized investment (gains) losses)	38		(11)		27		(6)
Reclassification adjustment for tax expense included in Shareholders’ net income		3		4		5		1
Reclassification adjustment for tax expense (benefit) included in Shareholders' net income											Reclassification adjustment for tax expense (benefit) included in Shareholders' net income	(8)		3		(6)		2
Net (gains) losses reclassified from AOCI to Shareholders' net income	Net (gains) losses reclassified from AOCI to Shareholders' net income	(11)		(12)		(15)		(2)			Net (gains) losses reclassified from AOCI to Shareholders' net income	30		(8)		21		(4)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	32		120		(119)		401			Other comprehensive income (loss), net of tax	(410)		122		(970)		(151)
Ending balance	Ending balance	$	781	$	1,376	$	781	$	1,376		Ending balance	$	(285)	$	749	$	(285)	$	749

Translation of foreign currencies	Translation of foreign currencies										Translation of foreign currencies
Beginning balance	Beginning balance	$	(113)	$	(374)	$	(15)	$	(275)		Beginning balance	$	(294)	$	(130)	$	(233)	$	(15)
Translation of foreign currencies		(118)		102		(216)		7
Tax (expense) benefit		(7)		7		(12)		(3)

Translation of foreign currencies											Translation of foreign currencies	(180)		16		(240)		(98)
Tax (expense)											Tax (expense)	(26)		—		(29)		(5)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(125)		109		(228)		4			Other comprehensive income (loss), net of tax	(206)		16		(269)		(103)
Less: Net translation gain (loss) on foreign currencies attributable to noncontrolling interests	Less: Net translation gain (loss) on foreign currencies attributable to noncontrolling interests	(1)		(4)		(6)		(10)			Less: Net translation gain (loss) on foreign currencies attributable to noncontrolling interests	(1)		(1)		(3)		(5)
Shareholders' other comprehensive income (loss), net of tax	Shareholders' other comprehensive income (loss), net of tax	(124)		113		(222)		14			Shareholders' other comprehensive income (loss), net of tax	(205)		17		(266)		(98)
Ending balance	Ending balance	$	(237)	$	(261)	$	(237)	$	(261)		Ending balance	$	(499)	$	(113)	$	(499)	$	(113)

Postretirement benefits liability	Postretirement benefits liability										Postretirement benefits liability
Beginning balance	Beginning balance	$	(1,713)	$	(1,670)	$	(1,746)	$	(1,641)		Beginning balance	$	(1,323)	$	(1,728)	$	(1,336)	$	(1,746)
Reclassification adjustment for amortization of net prior actuarial losses and prior service costs (Interest expense and other)	Reclassification adjustment for amortization of net prior actuarial losses and prior service costs (Interest expense and other)	21		18		60		54			Reclassification adjustment for amortization of net prior actuarial losses and prior service costs (Interest expense and other)	17		19		33		39
Reclassification adjustment for settlement (Interest expense and other)	Reclassification adjustment for settlement (Interest expense and other)	—		—		4		—			Reclassification adjustment for settlement (Interest expense and other)	—		1		—		4
Reclassification adjustment for tax (benefit) included in Shareholders’ net income		(5)		(4)		(15)		(13)
Reclassification adjustment for tax (benefit) included in Shareholders' net income											Reclassification adjustment for tax (benefit) included in Shareholders' net income	(4)		(5)		(7)		(10)
Net adjustments reclassified from AOCI to Shareholders' net income	Net adjustments reclassified from AOCI to Shareholders' net income	16		14		49		41			Net adjustments reclassified from AOCI to Shareholders' net income	13		15		26		33
Valuation update	Valuation update	—		—		—		(73)			Valuation update	18		—		18		—
Tax benefit		—		—		—		17
Tax (expense)											Tax (expense)	(4)		—		(4)		—
Net change due to valuation update	Net change due to valuation update	—		—		—		(56)			Net change due to valuation update	14		—		14		—
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	16		14		49		(15)			Other comprehensive income (loss), net of tax	27		15		40		33
Ending balance	Ending balance	$	(1,697)	$	(1,656)	$	(1,697)	$	(1,656)		Ending balance	$	(1,296)	$	(1,713)	$	(1,296)	$	(1,713)

Note 15 –Organizational Efficiency Plan

During the fourth quarter of 2021, the Company approved a strategic plan to further leverage its ongoing growth to drive operational efficiency through enhancements to organizational structure and increased use of automation and shared services. As a result, during the fourth quarter of 2021, we recognized a charge in Selling, general and administrative expenses of $168 million, pre-tax ($119 million, after-tax) that included $59 million of one-time expenses related to abandonment of leased assets and impairment of property and equipment as well as $109 million of accrued expenses primarily for severance costs related to headcount reductions.

As previously anticipated, during the second quarter of 2022, the Company updated our strategic plan and recognized an additional charge in Selling, general and administrative expenses of $22 million, pre-tax ($17 million, after-tax) related to accrued expenses primarily for severance costs.

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


(In millions)
Balance, December 31, 2021	$	103
2022 payments	(37)
Second quarter 2022 charge	22
Balance, June 30, 2022	$	88

We expect most of the accrued liability to be paid by the end of 2023.

Note 1316 – Leases

Operating and finance lease ~~Right-of-Use (“ROU”~~right-of-use ("ROU") assets and lease liabilities were as follows:


(In millions)	(In millions)	September 30, 2021		December 31, 2020		(In millions)	June 30, 2022		December 31, 2021
Operating leases:(1)	Operating leases:(1)					Operating leases:(1)
Operating lease ROU assets		$	519	$	552
Operating lease ROU assets in Other assets						Operating lease ROU assets in Other assets	$	445	$	478

Accrued expenses and other liabilities	Accrued expenses and other liabilities	$	145	$	152	Accrued expenses and other liabilities	$	151	$	159
Other non-current liabilities	Other non-current liabilities	460		491		Other non-current liabilities	391		436
Total operating lease liabilities	Total operating lease liabilities	$	605	$	643	Total operating lease liabilities	$	542	$	595

Finance leases:	Finance leases:					Finance leases:
Property and equipment, gross	Property and equipment, gross	$	96	$	98	Property and equipment, gross	$	118	$	101
Accumulated depreciation	Accumulated depreciation	(45)		(46)		Accumulated depreciation	(63)		(51)
Property and equipment, net	Property and equipment, net	$	51	$	52	Property and equipment, net	$	55	$	50

Short-term debt	Short-term debt	$	23	$	18	Short-term debt	$	23	$	23
Long-term debt	Long-term debt	30		36		Long-term debt	35		28
Total finance lease liabilities	Total finance lease liabilities	$	53	$	54	Total finance lease liabilities	$	58	$	51

(1) Operating leases include $28 million as of June 30, 2022 and $27 million as of December 31, 2021 classified as Assets of businesses held for sale and $22 million as of June 30, 2022, and $28 million as of December 31, 2021 classified as Liabilities of businesses held for sale.

Note 1417 – Income Taxes

Income Tax Expense

The ~~21.7%~~20.8% effective tax rate for the ~~nine~~three months ended ~~September~~June 30, ~~2021 was higher than~~2022 and the ~~20.8%~~21.6% effective tax rate for the ~~same period in 2020. This increase is~~six months ended June 30, 2022 were lower than the 22.2% rate for the three months ended June 30, 2021 and the 22.4% rate for the six months ended June 30, 2021. These decreases are primarily attributable to favorable results relative to our foreign operations and for the ~~absence~~six months ended June 30, 2022 the favorable impact of ~~favorable items which reduced the rate in 2020, including settlements of uncertain tax positions and~~ the remeasurement of deferred ~~state income~~ taxes, ~~due to changes in statutory rates and adjustments in apportionment factors,~~ partially offset by the ~~elimination~~absence of the ~~nondeductible health insurance industry tax~~favorable impact of non-recurring items recorded in 2021.

Note 1518 – 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 has the right to redirect the management of the related assets to provide for benefit payments. As of ~~September~~June 30, ~~2021,~~2022, employers maintained assets that generally exceeded the benefit obligations under these arrangements of approximately ~~$440~~$430 million. An additional liability is established if management believes that the Company will be required to make payments under the guarantees; there were no additional liabilities required for these guarantees,

net of reinsurance, as of ~~September~~June 30, ~~2021.~~2022. Separate account assets supporting these guarantees are classified in Levels 1 and 2 of the GAAP fair value 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 ~~September~~June 30, ~~2021~~2022 in connection with acquisition and disposition transactions. These indemnification obligations are triggered by the breach of representations or covenants provided by the Company, such as representations for the presentation of financial statements, filing of tax returns, compliance with law or identification of outstanding litigation. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential amount due is subject to contractual limitations based on a percentage of

the transaction purchase price, while in other cases limitations are not specified or applicable. The Company does not believe that it is possible to determine the maximum potential amount due under these obligations because not all amounts due under these indemnification obligations are subject to limitation. There were no liabilities for these indemnification obligations as of ~~September~~June 30, ~~2021.~~2022.

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 charges or credits resulting from existing or new guaranty fund assessments for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

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.

Pending litigation and legal or regulatory matters that the Company has identified with a reasonably possible material loss and certain other material litigation matters are described below. For those matters that the Company has identified with a reasonably possible material loss, the Company provides disclosure in the aggregate of accruals and range of loss, or a statement that such information cannot be estimated. The ~~Company’s~~Company's accruals for the matters discussed below under ~~“Litigation Matters”~~"Litigation Matters" and ~~“Regulatory Matters”~~"Regulatory Matters" are not material. Due to numerous uncertain factors presented in these cases, it is not possible to estimate an aggregate range of loss (if any) for these matters at this time. In light of the uncertainties involved in these matters, there is no assurance that their ultimate resolution will not exceed the amounts currently accrued by the Company. An adverse outcome in one or more of these matters could be material to the ~~Company’s~~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

~~Risk Corridors and CSR Litigation with the Federal Government~~. As a result of a Supreme Court decision in April 2020, the Company filed suit in early May 2020 against the United States in the U.S. Court of Federal Claims seeking to recover two types of payments the Federal Government owes Cigna under the risk corridors and cost-sharing reduction (“CSR”) programs of The Patient Protection and Affordable Care Act. In aggregate, the complaint sought to recover more than $315 million: $120 million in risk corridors payments and more than $195 million in CSR payments. We received $120 million in payments in September 2020, which resolved our risk corridors claim. Our claim seeking recovery for CSR payments remains pending.

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~~Elevance. Elevance claims it is entitled to $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 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 2 of 6 counts of Express ~~Scripts’~~Scripts' amended counterclaims. Express Scripts filed its Motion for Summary Judgment on August 27, 2021. ~~Anthem’s~~Elevance completed filing of its Response to Express ~~Scripts’~~Scripts' Motion for Summary Judgment on October 16, 2021. Express ~~Scripts’~~Scripts filed its Reply in Support of its Motion for Summary Judgment ~~is due~~on November 19, 2021. ~~There is no tentative trial date.~~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 by the end of July 2022.

~~Regulatory Matters~~

~~Civil Investigative Demand~~Medicare Advantage. . The U.S. Department of Justice (“DOJ”) is conducting industry-wide investigations of Medicare Advantage organizations’ risk adjustment practices under Medicare Parts C and D including medical chart reviews and health exams. For certain Medicare Advantage organizations, those investigations have resulted in litigation. The Company has received information requests (civil investigative demands) from the DOJ (U.S. Attorney’s Offices for the Eastern District of Pennsylvania and the Southern District of New York ("SDNY")). We are continuing to cooperate with the DOJ and have responded and continue to respond to its requests. Additionally, in relation to the SDNY’s investigation, aA qui tam action that was filed by a ~~relator~~private individual on behalf of the government in the United States District Court for the Southern District of New York in 2017 was unsealed on August 6, 2020. The action asserts claims related to risk adjustment practices arising from certain health exams conducted as part of ~~Cigna’s~~the Company's Medicare Advantage business. ~~The DOJ has not intervened in the case at this time. On~~In September ~~29,~~ 2021, the qui tamaction 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") (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 is pending before the court. The Company has opposed the DOJ's motion to intervene and the government filed its reply brief on February 1, 2022. The motion has been fully briefed and is under the court's review.

Regulatory Matters

Civil Investigative Demand. The DOJ is conducting industry-wide investigations of Medicare Advantage organizations' risk adjustment practices. For certain Medicare Advantage organizations, including Cigna, those investigations have resulted in litigation (see "Litigation Matters—Medicare Advantage" above). The Company is currently responding to information requests (civil investigative demands) from the DOJ (U.S. Attorney's Office for the Eastern District of Pennsylvania). The Company is cooperating with the DOJ and has responded and continues to respond to its requests.

Note 1619 – Segment Information

See Note 1 for a description of our ~~segments. A~~segments, including the segment change effective in the fourth quarter of 2021. Prior year segment information has been adjusted to reflect the segment change and a description of our basis ~~for~~of reporting segment operating results is outlined below. Intersegment revenues primarily reflect ~~pharmacy related~~pharmacy-related transactions between the Evernorth and ~~U.S. Medical~~Cigna Healthcare segments.

The Company uses "pre-tax adjusted income (loss) from operations" and "adjusted revenues" as its principal financial measures of segment operating performance because management believes ~~they~~these metrics best reflect the underlying results of business operations and permit analysis of trends in underlying revenue, expenses and profitability. We define pre-tax adjusted income from operations as income before income taxes excluding pre-tax income/loss attributable to noncontrolling interests, net realized investment results, amortization of acquired intangible assets, and special items. ~~Cigna’s~~Cigna'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. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results.

The Company ~~does not report total assets by segment because this is not a metric used to allocate resources or evaluate segment performance.~~

~~The Company~~ defines adjusted revenues as total revenues excluding the following adjustments: special items and Cigna'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.

The Company does not report total assets by segment because this is not a metric used to allocate resources or evaluate segment performance.

The following tables present the special items recorded by the Company for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended								Nine Months Ended								Three Months Ended								Six Months Ended
(In millions)	(In millions)	September 30, 2021				September 30, 2020				September 30, 2021				September 30, 2020					(In millions)	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
Description of Special Item Charges (Benefits) and Financial Statement Line Item(s)	Description of Special Item Charges (Benefits) and Financial Statement Line Item(s)	After-tax		Before-tax		After-tax		Before-tax		After-tax		Before-tax		After-tax		Before-tax					Description of Special Item Charges (Benefits) and Financial Statement Line Item(s)	After-tax		Before-tax		After-tax		Before-tax		After-tax		Before-tax		After-tax		Before-tax
Integration and transaction-related costs (Selling, general and administrative expenses)																					Integration and transaction-related costs (Selling, general and administrative expenses)	$	26	$	36	$	14	$	16	$	63	$	88	$	36	$	45
Charge for organizational efficiency plan (Selling, general and administrative expenses)																					Charge for organizational efficiency plan (Selling, general and administrative expenses)	17		22		—		—		17		22		—		—
Charges (benefits) associated with litigation matters (Selling, general and administrative expenses)																					Charges (benefits) associated with litigation matters (Selling, general and administrative expenses)	(20)		(28)		—		—		(20)		(28)		(21)		(27)
Debt extinguishment costs	Debt extinguishment costs	$	—	$	—	$	—	$	—	$	110	$	141	$	151	$	199				Debt extinguishment costs	—		—		9		10		—		—		110		141
Integration and transaction-related (benefits) costs (Selling, general and administrative expenses)		(35)		13		83		112		1		58		256		339
(Benefits) charges associated with litigation matters (Selling, general and administrative expenses)		—		—		—		—		(21)		(27)		19		25
Charge for organizational efficiency plan (Selling, general and administrative expenses)		—		—		—		—		—		—		24		31
Risk corridors recovery (Selling, general and administrative expenses)		—		—		(76)		(101)		—		—		(76)		(101)
Contractual adjustment for a former client (Pharmacy revenues)		—		—		(89)		(117)		—		—		(155)		(204)

Total impact from special items	Total impact from special items	$	(35)	$	13	$	(82)	$	(106)	$	90	$	172	$	219	$	289				Total impact from special items	$	23	$	30	$	23	$	26	$	60	$	82	$	125	$	159

3233

Summarized segment financial information was as follows:

(In millions) Evernorth U.S. Medical International Markets Other Operations Corporate and Eliminations Total
Three months ended September 30, 2021
Revenues from external customers $ 32,668 $ 9,588 $ 1,500 $ 63 $ 1 $ 43,820
Inter-segment revenues 942 587 — — (1,529)
Net investment income 4 322 66 77 (1) 468
Total revenues 33,614 10,497 1,566 140 (1,529) 44,288
Net realized investment results from certain equity method investments — — 22 — — 22
Adjusted revenues $ 33,614 $ 10,497 $ 1,588 $ 140 $ (1,529) $ 44,310
Income (loss) before taxes $ 1,074 $ 1,075 $ 199 $ 32 $ (321) $ 2,059
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests (10) — (6) — — (16)
Net realized investment (gains) losses — (93) 46 1 — (46)
Amortization of acquired intangible assets 484 6 11 — — 501
Special items
Integration and transaction-related (benefits) costs — — — — 13 13
Pre-tax adjusted income (loss) from operations $ 1,548 $ 988 $ 250 $ 33 $ (308) $ 2,511
(In millions) Evernorth U.S. Medical International Markets Other Operations Corporate and Eliminations Total
Three months ended September 30, 2020
Revenues from external customers $ 29,016 $ 9,047 $ 1,439 $ 1,156 $ — $ 40,658
Inter-segment revenues 926 478 — 6 (1,410)
Net investment income 2 104 38 152 1 297
Total revenues 29,944 9,629 1,477 1,314 (1,409) 40,955
Net realized investment results from certain equity method investments — — (37) — — (37)
Special item related to contractual adjustment for a former client (117) — — — — (117)
Adjusted revenues $ 29,827 $ 9,629 $ 1,440 $ 1,314 $ (1,409) $ 40,801
Income (loss) before taxes $ 1,086 $ 846 $ 253 $ 97 $ (478) $ 1,804
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests (5) — (5) — — (10)
Net realized investment (gains) losses — 6 (48) (27) — (69)
Amortization of acquired intangible assets 479 6 8 — — 493
Special items
Integration and transaction-related (benefits) costs — — — — 112 112
Risk corridors recovery — (101) — — — (101)
Contractual adjustment for a former client (117) — — — — (117)
Pre-tax adjusted income (loss) from operations $ 1,443 $ 757 $ 208 $ 70 $ (366) $ 2,112


(In millions)	(In millions)	Evernorth		U.S. Medical		International Markets		Other Operations		Corporate and Eliminations		Total		(In millions)	Evernorth		Cigna Healthcare		Other Operations		Corporate and Eliminations		Total
Nine months ended September 30, 2021
Three months ended June 30, 2022														Three months ended June 30, 2022
Revenues from external customers	Revenues from external customers	$	93,640	$	28,879	$	4,526	$	175	$	1	$	127,221	Revenues from external customers	$	33,716	$	10,622	$	817	$	—	$	45,155
Inter-segment revenues		3,174		1,692		—		—		(4,866)
Intersegment revenues														Intersegment revenues	1,131		586		—		(1,717)
Net investment income	Net investment income	12		744		180		233		—		1,169		Net investment income	16		178		131		—		325
Total revenues	Total revenues	96,826		31,315		4,706		408		(4,865)		128,390		Total revenues	34,863		11,386		948		(1,717)		45,480

Net realized investment results from certain equity method investments	Net realized investment results from certain equity method investments	—		—		12		—		—		12		Net realized investment results from certain equity method investments	—		(49)		—		—		(49)

Adjusted revenues	Adjusted revenues	$	96,826	$	31,315	$	4,718	$	408	$	(4,865)	$	128,402	Adjusted revenues	$	34,863	$	11,337	$	948	$	(1,717)	$	45,431
Income (loss) before income taxes														Income (loss) before income taxes	$	1,044	$	1,205	$	167	$	(431)	$	1,985
Pre-tax adjustments to reconcile to adjusted income from operations														Pre-tax adjustments to reconcile to adjusted income from operations

Income (loss) before taxes		$	2,752	$	3,144	$	685	$	67	$	(1,178)	$	5,470
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests	(Income) attributable to noncontrolling interests	(21)		—		(18)		—		—		(39)		(Income) attributable to noncontrolling interests	(13)		—		(2)		—		(15)
Net realized investment (gains) losses (1)	Net realized investment (gains) losses (1)	4		(172)		49		3		—		(116)		Net realized investment (gains) losses (1)	—		(22)		68		—		46
Amortization of acquired intangible assets	Amortization of acquired intangible assets	1,449		20		30		—		—		1,499		Amortization of acquired intangible assets	444		57		—		—		501
Special items	Special items													Special items
Debt extinguishment costs		—		—		—		—		141		141
Integration and transaction-related (benefits) costs		—		—		—		—		58		58
(Benefits) charges associated with litigation matters		—		—		—		—		(27)		(27)
Integration and transaction-related costs														Integration and transaction-related costs	—		—		—		36		36
Charge for organizational efficiency plan														Charge for organizational efficiency plan	—		—		—		22		22
Charges (benefits) associated with litigation matters														Charges (benefits) associated with litigation matters	—		—		—		(28)		(28)

Pre-tax adjusted income (loss) from operations	Pre-tax adjusted income (loss) from operations	$	4,184	$	2,992	$	746	$	70	$	(1,006)	$	6,986	Pre-tax adjusted income (loss) from operations	$	1,475	$	1,240	$	233	$	(401)	$	2,547

(In millions)	(In millions)	Evernorth		U.S. Medical		International Markets		Other Operations		Corporate and Eliminations		Total		(In millions)	Evernorth		Cigna Healthcare		Other Operations		Corporate and Eliminations		Total
Nine months ended September 30, 2020
Three months ended June 30, 2021														Three months ended June 30, 2021
Revenues from external customers	Revenues from external customers	$	82,986	$	26,999	$	4,325	$	3,506	$	—	$	117,816	Revenues from external customers	$	31,553	$	10,403	$	865	$	—	$	42,821
Inter-segment revenues		2,785		1,448		—		17		(4,250)
Intersegment revenues														Intersegment revenues	1,034		590		—		(1,624)
Net investment income	Net investment income	30		279		104		458		2		873		Net investment income	5		180		125		—		310
Total revenues	Total revenues	85,801		28,726		4,429		3,981		(4,248)		118,689		Total revenues	32,592		11,173		990		(1,624)		43,131
Net realized investment results from certain equity method investments														Net realized investment results from certain equity method investments	—		(24)		—		—		(24)

Net realized investment results from certain equity method investments		—		—		(87)		—		—		(87)
Special item related to contractual adjustment for a former client		(204)		—		—		—		—		(204)
Adjusted revenues	Adjusted revenues	$	85,597	$	28,726	$	4,342	$	3,981	$	(4,248)	$	118,398	Adjusted revenues	$	32,592	$	11,149	$	990	$	(1,624)	$	43,107

Income (loss) before taxes		$	2,551	$	3,529	$	877	$	298	$	(1,765)	$	5,490
Income (loss) before income taxes														Income (loss) before income taxes	$	929	$	1,111	$	228	$	(370)	$	1,898
Pre-tax adjustments to reconcile to adjusted income from operations	Pre-tax adjustments to reconcile to adjusted income from operations													Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests	(Income) attributable to noncontrolling interests	(12)		—		(15)		—		—		(27)		(Income) attributable to noncontrolling interests	(6)		—		(5)		—		(11)
Net realized investment (gains) losses (1)	Net realized investment (gains) losses (1)	—		28		(75)		(22)		—		(69)		Net realized investment (gains) losses (1)	2		(74)		(11)		—		(83)
Amortization of acquired intangible assets	Amortization of acquired intangible assets	1,439		23		22		3		—		1,487		Amortization of acquired intangible assets	488		12		3		—		503
Special items	Special items													Special items
Integration and transaction-related costs														Integration and transaction-related costs	—		—		—		16		16

Debt extinguishment costs	Debt extinguishment costs	—		—		—		—		199		199		Debt extinguishment costs	—		—		—		10		10
Integration and transaction-related (benefits) costs		—		—		—		—		339		339
(Benefits) charges associated with litigation matters		—		—		—		—		25		25
Charge for organizational efficiency plan		—		—		—		—		31		31
Risk corridors recovery		—		(101)		—		—		—		(101)
Contractual adjustment for a former client		(204)		—		—		—		—		(204)

Pre-tax adjusted income (loss) from operations	Pre-tax adjusted income (loss) from operations	$	3,774	$	3,479	$	809	$	279	$	(1,171)	$	7,170	Pre-tax adjusted income (loss) from operations	$	1,413	$	1,049	$	215	$	(344)	$	2,333

(1)Includes the Company'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.


(In millions)	Evernorth		Cigna Healthcare		Other Operations		Corporate and Eliminations		Total
Six months ended June 30, 2022
Revenues from external customers	$	66,005	$	21,083	$	1,658	$	—	$	88,746
Intersegment revenues	2,418		1,148		—		(3,566)
Net investment income	26		444		269		—		739
Total revenues	68,449		22,675		1,927		(3,566)		89,485
Net realized investment results from certain equity method investments	—		54		—		—		54

Adjusted revenues	$	68,449	$	22,729	$	1,927	$	(3,566)	$	89,539

Income (loss) before income taxes	$	1,914	$	2,064	$	382	$	(826)	$	3,534
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests	(24)		(1)		(7)		—		(32)
Net realized investment (gains) losses (1)	—		384		84		—		468
Amortization of acquired intangible assets	887		72		—		—		959
Special items
Integration and transaction-related costs	—		—		—		88		88
Charge for organizational efficiency plan	—		—		—		22		22
Charges (benefits) associated with litigation matters	—		—		—		(28)		(28)





Pre-tax adjusted income (loss) from operations	$	2,777	$	2,519	$	459	$	(744)	$	5,011

(In millions)	Evernorth		Cigna Healthcare		Other Operations		Corporate and Eliminations		Total
Six months ended June 30, 2021
Revenues from external customers	$	60,972	$	20,688	$	1,741	$	—	$	83,401
Intersegment revenues	2,232		1,099		—		(3,331)
Net investment income	8		439		254		—		701
Total revenues	63,212		22,226		1,995		(3,331)		84,102

Net realized investment results from certain equity method investments	—		(10)		—		—		(10)

Adjusted revenues	$	63,212	$	22,216	$	1,995	$	(3,331)	$	84,092

Income (loss) before income taxes	$	1,678	$	2,156	$	434	$	(857)	$	3,411
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests	(11)		(1)		(11)		—		(23)
Net realized investment (gains) losses (1)	4		(90)		16		—		(70)
Amortization of acquired intangible assets	965		26		7		—		998
Special items
Integration and transaction-related costs	—		—		—		45		45

Charges (benefits) associated with litigation matters	—		—		—		(27)		(27)
Debt extinguishment costs	—		—		—		141		141




Pre-tax adjusted income (loss) from operations	$	2,636	$	2,091	$	446	$	(698)	$	4,475

(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.

Revenue from external customers includes Pharmacy revenues, Premiums and Fees and other revenues. The following table presents these revenues by product, premium and service type for the three and ~~nine~~six months ended ~~September 30:~~June 30, 2022 and 2021:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)	2022		2021		2022		2021
Products (Pharmacy revenues) (ASC 606)	Products (Pharmacy revenues) (ASC 606)									Products (Pharmacy revenues) (ASC 606)
Network revenues	Network revenues	$	15,797	$	13,968	$	45,390	$	39,200	Network revenues	$	16,107	$	16,166	$	31,638	$	31,304
Home delivery and specialty revenues	Home delivery and specialty revenues	13,515		12,422		38,987		36,319		Home delivery and specialty revenues	15,268		13,341		29,967		26,115
Other		1,701		1,412		4,708		3,945
Other revenues										Other revenues	1,667		1,619		3,379		3,007
Intercompany eliminations										Intercompany eliminations	(1,070)		(1,079)		(2,315)		(2,354)
Total pharmacy revenues	Total pharmacy revenues	31,013		27,802		89,085		79,464		Total pharmacy revenues	31,972		30,047		62,669		58,072
Insurance premiums (ASC 944)	Insurance premiums (ASC 944)									Insurance premiums (ASC 944)
U.S. Medical premiums
Cigna Healthcare										Cigna Healthcare
U.S. Commercial	U.S. Commercial									U.S. Commercial
Health Insurance		3,591		3,397		10,692		9,948
Insured										Insured	3,771		3,578		7,491		7,101
Stop loss	Stop loss	1,225		1,146		3,613		3,459		Stop loss	1,344		1,194		2,669		2,388
Other	Other	320		281		938		853		Other	352		308		712		618
U.S. Government	U.S. Government									U.S. Government
Medicare Advantage	Medicare Advantage	2,079		1,895		6,287		5,680		Medicare Advantage	2,053		2,116		4,131		4,208
Medicare Part D	Medicare Part D	315		360		1,175		1,242		Medicare Part D	345		410		746		860
Other	Other	1,241		1,117		3,606		3,246		Other	1,038		1,227		1,978		2,365
Total U.S. Medical premiums		8,771		8,196		26,311		24,428
International Markets premiums		1,446		1,360		4,338		4,079
Domestic disability, life and accident premiums		—		1,106		—		3,346
Other premiums		58		20		163		75
International Health										International Health	712		633		1,414		1,274
Total Cigna Healthcare										Total Cigna Healthcare	9,615		9,466		19,141		18,814
International businesses held for sale										International businesses held for sale	737		809		1,500		1,618

Other										Other	74		50		143		108
Intercompany eliminations										Intercompany eliminations	—		(2)		(2)		(3)
Total premiums	Total premiums	10,275		10,682		30,812		31,928		Total premiums	10,426		10,323		20,782		20,537
Services (ASC 606)
Fees		2,513		2,120		7,185		6,253
Other external revenues		19		54		139		171
Total services		2,532		2,174		7,324		6,424
Services (Fees) (ASC 606)										Services (Fees) (ASC 606)

Evernorth										Evernorth	1,790		1,456		3,414		2,770
Cigna Healthcare										Cigna Healthcare	1,478		1,425		2,974		2,859
Other Operations										Other Operations	4		5		9		10
Other revenues										Other revenues	132		108		147		127
Intercompany eliminations										Intercompany eliminations	(647)		(543)		(1,249)		(974)
Total fees and other revenues										Total fees and other revenues	2,757		2,451		5,295		4,792
Total revenues from external customers	Total revenues from external customers	$	43,820	$	40,658	$	127,221	$	117,816	Total revenues from external customers	$	45,155	$	42,821	$	88,746	$	83,401

Evernorth may also provide certain financial and performance guarantees, including a minimum level of discounts a client may receive, generic utilization rates and various service levels. Clients may be entitled to receive 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 expenses and other liabilities (current). These estimates are adjusted atand paid following the end of the annual guarantee period. ~~The performance~~Historically, adjustments to original estimates have not been material. This guarantee liability was $1.0 billion as of ~~September~~June 30, ~~2021~~2022 and $1.1 billion as of December 31, ~~2020.~~2021.

3536

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 ~~September~~June 30, ~~2021~~2022, compared with December 31, ~~2020~~2021 and our results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared with the same periods last 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, ~~2020~~2021 ("2021 Form 10-K"). In particular, we encourage you to refer to the ~~“Risk Factors”~~"Risk Factors" contained in Part I, Item 1A of the ~~2020~~2021 Form 10-K.

Unless otherwise indicated, financial information in 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 ~~2020~~2021 Form 10-K for additional information regarding the Company's significant accounting policies and see Note 2 to the Consolidated Financial Statements in this Form 10-Q for updates to those policies resulting from adopting new accounting guidance, if any. The preparation of interim consolidated financial statements necessarily relies heavily on estimates. This and certain other factors 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 of ~~“shareholders’~~"shareholders' net income,~~” “earnings~~" "earnings per ~~share”~~share" and ~~“total~~"total revenues.”" We also use pre-tax adjusted income (loss) from operations and adjusted revenues to measure the results of our segments.

The Company uses "pre-tax adjusted income (loss) from operations" and "adjusted revenues" as its principal financial measures of segment operating performance because management believes ~~they~~these metrics best reflect the underlying results of business operations and 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 results, amortization of acquired intangible assets, and special items. ~~Cigna’s~~Cigna'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. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results. 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’~~shareholders' net income. See the below Financial Highlights section for a reconciliation of consolidated adjusted income from operations to ~~shareholders’~~shareholders' net income.

The Company defines adjusted revenues as total revenues excluding the following adjustments: special items and Cigna'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~~Cigna's current expectations and projections about future trends, events and uncertainties. These statements are not historical facts. Forward-looking statements may include, among others, statements concerning future financial or operating performance, including our ability to deliver affordable, ~~personalized~~predictable and ~~innovative~~simple solutions for our customers and clients, including in light of the challenges presented by the COVID-19 pandemic; 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 pressures; the ongoing Russia-Ukraine conflict; financing or capital deployment plans and amounts available for future deployment; our prospects for growth in the coming years; strategic transactions, including the sale of our international life, accident and supplemental benefits ~~business;~~businesses; and other statements regarding ~~Cigna’s~~Cigna'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 strategic and operational initiatives; our ability to adapt to changes in an evolving and rapidly changing industry; ~~the scale, scope and duration of the COVID-19 pandemic and its potential impact on our business, operating results, cash flows or financial condition;~~ 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 satisfactory relationships with physicians, hospitals, other health service providers and with producers and consultants; our ability to maintain relationships with one or more key pharmaceutical manufacturers or if payments made or discounts provided decline; changes in the pharmacy provider marketplace or pharmacy networks; changes in drug pricing or industry pricing benchmarks; political, legal, operational, regulatory, economic and other risks that could affect our multinational operations; the scale, scope and duration of the COVID-19 pandemic and its potential impact on our business, operating results, cash flows or financial condition; risks related to strategic transactions and realization of the expected benefits of such transactions, including with respect to the sale of our international life, accident and supplemental benefits ~~business,~~businesses, 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 operations or among key suppliers or third parties; our ability to 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; potential liability in connection with managing medical practices and 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; uncertainties surrounding participation in government-sponsored programs such as Medicare; the outcome of litigation, regulatory audits and investigations; compliance with applicable privacy, security and data laws, regulations and standards; potential failure of our prevention, detection and control systems; unfavorable economic and market conditions, including the risk of a recession or other economic downturn and resulting impact on employment metrics, stock market or interest rate declines and risks related to a downgrade in financial strength ratings of our insurance subsidiaries; the impact of our significant indebtedness and the potential for further indebtedness in the future; unfavorable industry, economic or political conditions; credit risk related to our reinsurers; as well as more specific risks and uncertainties discussed in Part I, Item 1A – Risk Factors of our ~~2020~~2021 Form 10-K, Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of our ~~2020~~2021 Form 10-K, ~~this MD&A~~ 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, which speak only as of the date they are made, are not guarantees of future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Cigna undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.

EXECUTIVE OVERVIEW

Cigna Corporation, together with its subsidiaries (either individually or collectively referred to as ~~“Cigna,”~~"Cigna," the ~~“Company,” “we,” “our”~~"Company," "we," "our" or ~~“us”~~"us") is a global health services organization with a mission of helping those we serve improve their health, well-being and peace of mind by making health care ~~simple,~~ affordable, predictable and ~~predictable.~~simple. Our subsidiaries offer a differentiated set of pharmacy, medical, dental and related products and services. For further information on our business and strategy, see Item 1, "Business" in our ~~2020~~2021 Form 10-K.

Financial Highlights

See Note 1 to the Consolidated Financial Statements for a description of our segments. The commentary provided below describes our results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared with the same periods in ~~2020.~~2021. Unless specified otherwise, commentary applies to both the three and ~~nine~~six month periods.

Summarized below are certain key measures of our performance by segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020:~~2021:


Financial highlights by segment	Financial highlights by segment													Financial highlights by segment
		Three Months Ended September 30,						Nine Months Ended September 30,								Three Months Ended June 30,							Six Months Ended June 30,
(Dollars in millions, except per share amounts)	(Dollars in millions, except per share amounts)	2021		2020		% Change		2021		2020		% Change			(Dollars in millions, except per share amounts)		2022		2021		% Change			2022		2021		% Change

Revenues	Revenues														Revenues
Adjusted revenues by segment	Adjusted revenues by segment														Adjusted revenues by segment
Evernorth	Evernorth	$	33,614	$	29,827	13	%	$	96,826	$	85,597	13	%		Evernorth		$	34,863	$	32,592	7	%		$	68,449	$	63,212	8	%
U.S. Medical		10,497		9,629		9		31,315		28,726		9
International Markets		1,588		1,440		10		4,718		4,342		9
Cigna Healthcare															Cigna Healthcare		11,337		11,149		2			22,729		22,216		2
Other Operations	Other Operations	140		1,314		(89)		408		3,981		(90)			Other Operations		948		990		(4)			1,927		1,995		(3)
Corporate, net of eliminations	Corporate, net of eliminations	(1,529)		(1,409)		(9)		(4,865)		(4,248)		(15)			Corporate, net of eliminations		(1,717)		(1,624)		(6)			(3,566)		(3,331)		(7)
Adjusted revenues	Adjusted revenues	44,310		40,801		9		128,402		118,398		8			Adjusted revenues		45,431		43,107		5			89,539		84,092		6

Net realized investment results from certain equity method investments	Net realized investment results from certain equity method investments	(22)		37		N/M		(12)		87		N/M			Net realized investment results from certain equity method investments		49		24		104			(54)		10		N/M
Special items		—		117		N/M		—		204		N/M

Total revenues	Total revenues	$	44,288	$	40,955	8	%	$	128,390	$	118,689	8	%		Total revenues		$	45,480	$	43,131	5	%		$	89,485	$	84,102	6	%
Shareholders’ net income		$	1,621	$	1,388	17	%	$	4,249	$	4,323	(2)	%
Shareholders' net income															Shareholders' net income		$	1,559	$	1,467	6	%		$	2,742	$	2,628	4	%
Adjusted income from operations	Adjusted income from operations	$	1,936	$	1,618	20	%	$	5,408	$	5,528	(2)	%		Adjusted income from operations		$	1,981	$	1,808	10	%		$	3,912	$	3,472	13	%
Earnings per share (diluted)	Earnings per share (diluted)														Earnings per share (diluted)
Shareholders’ net income		$	4.80	$	3.78	27	%	$	12.32	$	11.66	6	%
Shareholders' net income															Shareholders' net income		$	4.90	$	4.25	15	%		$	8.57	$	7.54	14	%
Adjusted income from operations	Adjusted income from operations	$	5.73	$	4.41	30	%	$	15.69	$	14.91	5	%		Adjusted income from operations		$	6.22	$	5.24	19	%		$	12.23	$	9.96	23	%
Pre-tax adjusted income (loss) from operations by segment	Pre-tax adjusted income (loss) from operations by segment													Pre-tax adjusted income (loss) from operations by segment
Evernorth	Evernorth	$	1,548	$	1,443	7	%	$	4,184	$	3,774	11	%		Evernorth		$	1,475	$	1,413	4	%		$	2,777	$	2,636	5	%
U.S. Medical		988		757		31		2,992		3,479		(14)
International Markets		250		208		20		746		809		(8)
Cigna Healthcare															Cigna Healthcare		1,240		1,049		18			2,519		2,091		20
Other Operations	Other Operations	33		70		(53)		70		279		(75)			Other Operations		233		215		8			459		446		3
Corporate, net of eliminations	Corporate, net of eliminations	(308)		(366)		16		(1,006)		(1,171)		14			Corporate, net of eliminations		(401)		(344)		(17)			(744)		(698)		(7)
Consolidated pre-tax adjusted income from operations	Consolidated pre-tax adjusted income from operations	2,511		2,112		19		6,986		7,170		(3)			Consolidated pre-tax adjusted income from operations		2,547		2,333		9			5,011		4,475		12

Income attributable to noncontrolling interests	Income attributable to noncontrolling interests	16		10		60		39		27		44			Income attributable to noncontrolling interests		15		11		36			32		23		39
Net realized investment gains (losses) (1)	Net realized investment gains (losses) (1)	46		69		(33)		116		69		68			Net realized investment gains (losses) (1)		(46)		83		N/M			(468)		70		N/M
Amortization of acquired intangible assets	Amortization of acquired intangible assets	(501)		(493)		(2)		(1,499)		(1,487)		(1)			Amortization of acquired intangible assets		(501)		(503)		—			(959)		(998)		4
Special items	Special items	(13)		106		N/M		(172)		(289)		40			Special items		(30)		(26)		(15)			(82)		(159)		48
Income before income taxes	Income before income taxes	$	2,059	$	1,804	14	%	$	5,470	$	5,490	—	%		Income before income taxes		$	1,985	$	1,898	5	%		$	3,534	$	3,411	4	%

(1)Includes the Company'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.

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

3839


Consolidated Results of Operations (GAAP basis)	Consolidated Results of Operations (GAAP basis)																		Consolidated Results of Operations (GAAP basis)
		Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended June 30,							Six Months Ended June 30,
(Dollars in millions)	(Dollars in millions)	2021			2020			% Change		2021			2020			% Change			(Dollars in millions)	2022			2021			% Change		2022			2021			% Change

Pharmacy revenues	Pharmacy revenues	$	31,013		$	27,802		12	%	$	89,085		$	79,464		12	%		Pharmacy revenues	$	31,972		$	30,047		6	%	$	62,669		$	58,072		8	%
Premiums	Premiums	10,275			10,682			(4)		30,812			31,928			(3)			Premiums	10,426			10,323			1		20,782			20,537			1
Fees and other revenues	Fees and other revenues	2,532			2,174			16		7,324			6,424			14			Fees and other revenues	2,757			2,451			12		5,295			4,792			10
Net investment income	Net investment income	468			297			58		1,169			873			34			Net investment income	325			310			5		739			701			5
Total revenues	Total revenues	44,288			40,955			8		128,390			118,689			8			Total revenues	45,480			43,131			5		89,485			84,102			6
Pharmacy and other service costs	Pharmacy and other service costs	30,070			26,624			13		86,306			76,425			13			Pharmacy and other service costs	31,150			29,001			7		60,963			56,236			8
Medical costs and other benefit expenses	Medical costs and other benefit expenses	8,330			8,429			(1)		24,819			23,863			4			Medical costs and other benefit expenses	8,192			8,484			(3)		16,460			16,489			—
Selling, general and administrative expenses	Selling, general and administrative expenses	3,093			3,301			(6)		9,368			10,106			(7)			Selling, general and administrative expenses	3,256			2,996			9		6,555			6,275			4
Amortization of acquired intangible assets	Amortization of acquired intangible assets	501			493			2		1,499			1,487			1			Amortization of acquired intangible assets	501			503			—		959			998			(4)
Total benefits and expenses	Total benefits and expenses	41,994			38,847			8		121,992			111,881			9			Total benefits and expenses	43,099			40,984			5		84,937			79,998			6
Income from operations	Income from operations	2,294			2,108			9		6,398			6,808			(6)			Income from operations	2,381			2,147			11		4,548			4,104			11
Interest expense and other	Interest expense and other	(303)			(336)			10		(915)			(1,101)			17			Interest expense and other	(301)			(298)			(1)		(600)			(612)			2
Debt extinguishment costs	Debt extinguishment costs	—			—			N/M		(141)			(199)			29			Debt extinguishment costs	—			(10)			N/M		—			(141)			N/M

Net realized investment gains (losses)	Net realized investment gains (losses)	68			32			113		128			(18)			N/M			Net realized investment gains (losses)	(95)			59			N/M		(414)			60			N/M
Income before income taxes	Income before income taxes	2,059			1,804			14		5,470			5,490			—			Income before income taxes	1,985			1,898			5		3,534			3,411			4
Total income taxes	Total income taxes	424			406			4		1,188			1,143			4			Total income taxes	413			422			(2)		764			764			—
Net income	Net income	1,635			1,398			17		4,282			4,347			(1)			Net income	1,572			1,476			7		2,770			2,647			5
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	14			10			40		33			24			38			Less: Net income attributable to noncontrolling interests	13			9			44		28			19			47
Shareholders' net income	Shareholders' net income	$	1,621		$	1,388		17	%	$	4,249		$	4,323		(2)	%		Shareholders' net income	$	1,559		$	1,467		6	%	$	2,742		$	2,628		4	%
Consolidated effective tax rate	Consolidated effective tax rate	20.6		%	22.5		%	(190)	bps	21.7		%	20.8		%	90	bps		Consolidated effective tax rate	20.8		%	22.2		%	(140)	bps	21.6		%	22.4		%	(80)	bps
Medical customers (in thousands)	Medical customers (in thousands)																		Medical customers (in thousands)									17,806			16,921			5	%
U.S. Medical										15,305			15,314			—	%
International Markets										1,736			1,668			4
Total										17,041			16,982			—	%


Reconciliation of Shareholders’ Net Income (GAAP) to Adjusted Income from Operations
Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations																					Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations
		Dollars in Millions								Diluted Earnings Per Share									Dollars in Millions							Diluted Earnings Per Share
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,

		2021		2020		2021		2020			2021		2020		2021		2020					2022		2021		2022		2021		2022		2021		2022		2021
Shareholders’ net income		$	1,621	$	1,388	$	4,249	$	4,323		$	4.80	$	3.78	$	12.32	$	11.66
Shareholders' net income																					Shareholders' net income	$	1,559	$	1,467	$	2,742	$	2,628	$	4.90	$	4.25	$	8.57	$	7.54
After-tax adjustments required to reconcile to adjusted income from operations	After-tax adjustments required to reconcile to adjusted income from operations																			After-tax adjustments required to reconcile to adjusted income from operations
Net realized investment (gains) losses (1)	Net realized investment (gains) losses (1)	(42)		(64)		(99)		(75)			(0.12)		(0.17)		(0.29)		(0.20)				Net realized investment (gains) losses (1)	16		(70)		371		(57)		0.05		(0.20)		1.16		(0.16)
Amortization of acquired intangible assets	Amortization of acquired intangible assets	392		376		1,168		1,061			1.15		1.02		3.40		2.86				Amortization of acquired intangible assets	383		388		739		776		1.20		1.12		2.31		2.22

Special items	Special items																				Special items
Integration and transaction-related costs																					Integration and transaction-related costs	26		14		63		36		0.08		0.04		0.20		0.10
Charge for organizational efficiency plan																					Charge for organizational efficiency plan	17		—		17		—		0.05		—		0.05		—
Charges (benefits) associated with litigation matters																					Charges (benefits) associated with litigation matters	(20)		—		(20)		(21)		(0.06)		—		(0.06)		(0.06)
Debt extinguishment costs	Debt extinguishment costs	—		—		110		151			—		—		0.32		0.41				Debt extinguishment costs	—		9		—		110		—		0.03		—		0.32
Integration and transaction-related (benefits) costs		(35)		83		1		256			(0.10)		0.23		—		0.69
(Benefits) charges associated with litigation matters		—		—		(21)		19			—		—		(0.06)		0.05
Charge for organizational efficiency plan		—		—		—		24			—		—		—		0.06
Risk corridors recovery		—		(76)		—		(76)			—		(0.21)		—		(0.20)
Contractual adjustment for a former client		—		(89)		—		(155)			—		(0.24)		—		(0.42)

Total special items	Total special items	(35)		(82)		90		219			(0.10)		(0.22)		0.26		0.59				Total special items	23		23		60		125		0.07		0.07		0.19		0.36
Adjusted income from operations	Adjusted income from operations	$	1,936	$	1,618	$	5,408	$	5,528		$	5.73	$	4.41	$	15.69	$	14.91			Adjusted income from operations	$	1,981	$	1,808	$	3,912	$	3,472	$	6.22	$	5.24	$	12.23	$	9.96

(1)Includes the Company'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.

3940

~~COVID-19 Update~~Recent Events

Inflation

The United States economy continues to be impacted by rising inflation. We have not experienced material impacts from inflation on our results of operations or cash flows for the three and six months ended June 30, 2022. We continue to monitor our operations, including vendor costs, health care provider costs and drug pricing for any inflationary impacts, and believe we are prepared to respond to inflationary pressures. For further information regarding risks we encounter in our business due to economic conditions including inflationary pressures, see "Risk Factors" contained in Part I, Item 1A of our 2021 Form 10-K.

Russian Invasion of Ukraine

The war in Ukraine has significantly affected individuals, economic activity and financial markets on a global scale. Cigna ~~closely monitors the evolving dynamics~~does not have operations or employees in Ukraine or Russia and serves a limited number of customers and clients in these countries. We have not experienced significant impacts to date on our investment portfolio, financial position, or results of operations. For a more complete discussion of the risks we encounter in our business, see "Risk Factors" contained in Part I, Item 1A of our 2021 Form 10-K.

COVID-19 ~~pandemic, the Company’s~~

Cigna's commitment to the health, well-being and ~~safety~~peace of ~~its~~mind of our employees ~~customers~~ and ~~clients~~the people we serve remains our primary focus. Cigna firmly believes COVID-19 vaccinations help control the spread of the virus, limit the severity of the disease and save lives. The Company continues its work to increase vaccinations by enabling, educating and encouraging vaccine acceptance across all eligible populations. Cigna continues to provide access to care and supportive resources to help everyone it serves knowledgeably navigatefocus as the pandemic ~~and take care of their physical and mental health during this time.~~

For the third quarter of 2021, COVID-19 impacts are most notable in our U.S. Medical segment as net unfavorable COVID-19 related impacts increased as compared with the same period in 2020. The unfavorable COVID-19 related impacts include increased direct costs of COVID-19 testing, treatment and vaccines as well as lower risk adjustment revenues in our Medicare Advantage business. For the nine months ended September 30, 2021 compared with the same period in 2020 the net unfavorable impacts reflect increased direct costs of COVID-19 testing, treatment and vaccines, the significant deferral of care by our customers in 2020, lower risk adjustment revenues in our Medicare Advantage business and increased disenrollment resulting from the economic effects of the pandemic. These impacts were partially offset by the absence of the premium relief programs implemented in the second quarter of 2020.

environment evolves. We continue to ~~execute~~leverage our ~~business continuity plans over our operations such as optimizing purchasing volume across the pharmaceutical supply chain in order~~resources, expertise, data and actionable intelligence to ~~mitigate risk of disruption with prescription drug supply due to ongoing global supply disruptions.~~assist customers, clients and care providers throughout this time.

The situation surrounding COVID-19 remains fluid with continued uncertainty and a wide range of potential outcomes. We continue to actively manage our response and assess impacts to our financial position and operating results, as well as mitigate adverse developments in our business. There continues to be uncertainty surrounding the pace, duration and extent of the COVID-19 pandemic and its related impacts — including the vaccination efforts and new COVID-19 variants — on our results for the remainder of 2021 and beyond. We believe that such financial results may continue to be impacted by, among other things, vaccine related costs, higher medical costs to treat those affected by the virus, lower customer volumes due to a disrupted employment market, lower risk adjustment revenue due to disrupted care impeding appropriate documentation of customer risk profiles in our Medicare Advantage business, the pace at which costs return as well as the severity of costs for those who had previously deferred care, the potential for future deferral of care, or volatility in the economic markets.

For further information regarding the potential impact of COVID-19 on the Company, see ~~“Risk Factors”~~"Risk Factors" contained in Part I, Item 1A of our ~~2020~~2021 Form 10-K.

Commentary: Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 versus Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

The commentary presented below, and in the segment discussions that follow, compare results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 with results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020. Unless otherwise specified, commentary applies to both the three and nine month periods.~~2021.

~~Shareholders’~~Shareholders' net income increased, for the three months ended September 30, 2021 compared with the same period last year, primarily driven by higher adjusted income from operations (see below). For the nine months ended September 30, 2021, shareholders' net income decreased slightly compared with the same period last year, reflecting ~~a decline~~strong growth in adjusted income from operations ~~(see~~(as discussed below)~~. For~~ and, for the ~~nine months ended September 30, 2021 shareholders' net income increased on a per-share basis compared with~~six month period, the ~~same period last year~~absence in 2022 of debt extinguishment costs incurred in 2021. These favorable effects were partially offset by higher realized investment losses primarily due to ~~the favorable effect of the share repurchase program.~~unfavorable mark-to-market adjustments on investments in 2022.

Adjusted income from operations increased, for the three months ended September 30, 2021 compared with the same period last year, primarily resulting from higher earnings across our reporting segments, partially offset by the absence of earnings from the sold Group Disability and Life business. The increase in earnings in the Evernorth segment was primarily attributable to effective management of supply chain and business growth; in the U.S. Medical and International segments, earnings growth largely reflected significantly higher net investment income (see net investment income discussion below). For the nine months ended September 30, 2021, adjusted income from operations declined compared with the same period last year, primarily due to improved results in Cigna Healthcare, primarily reflecting lower ~~earnings~~medical care ratios and increased specialty contributions, and in ~~U.S. Medical~~Evernorth, primarily reflecting ~~the unfavorable impacts of COVID-19~~continued contract affordability improvements and the absence of earnings from the sold Group Disability and Life business. These unfavorable effects were partially offset by increased earnings in the Evernorth segment. For the nine months ended September 30, 2021, adjusted income from operations increased on a per-share basis compared with the same period last year due to the favorable effect of the share repurchase program.business growth.

Medical customers ~~were flat,~~increased, reflecting growth in our Middle Market, Select ~~Individual,~~and International ~~Markets and Medicare Advantage businesses, offset by a lower customer base in our National Accounts and Middle Markets segments including disenrollment resulting from~~Health market segments. See "Cigna Healthcare segment" section of this MD&A for discussion of an update to the ~~economic impacts~~definitions of ~~the COVID-19 pandemic.~~U.S. Commercial's market segments.

Pharmacy revenues increased, reflecting higher specialty claims volume due in part to Evernorth's collaboration with Prime Therapeutics, as well as increased prices, primarily due to inflation on branded ~~drugs and higher claim volume, primarily due to our collaboration with Prime Therapeutics.~~drugs. See the "Evernorth segment" section of this MD&A for further ~~discussion of Pharmacy revenues.~~discussion.

Premiums were ~~lower,~~higher, reflecting ~~the sale of the Group Disability~~increased specialty contributions and ~~Life business. This effect was partially offset by an increase in U.S. Medical premiums resulting from increased customers in our insured businesses,~~ higher premium rates due to anticipated underlying medical cost trend, ~~and,~~partially offset by the disposition of the Medicaid business. See "Cigna Healthcare segment" section of this MD&A for ~~the nine months ended September 30,2021 the absence of premium relief programs implemented in the second quarter of 2020 in response to deferred care due to the COVID-19 pandemic.~~further discussion.

Fees and other revenues increased, primarily ~~driven by~~reflecting customer growth ~~in Evernorth's pharmacy services business.~~from our Pharmacy Rebate Program services. See "Evernorth segment" section of this MD&A for further discussion.

Net investment income increased primarily due to strong returns on our ~~securities limited~~ partnership ~~investments, partially offset by lower average assets due to the sale of the Group Disability and Life business.~~investments. See the "Investment Assets" section of this MD&A for further discussion.

Pharmacy and other service costs increased, reflecting higher specialty claims volume due in part to Evernorth's collaboration with Prime Therapeutics, as well as increased prices, primarily due to inflation on branded ~~drugs and higher claim volume, primarily due to our collaboration with Prime Therapeutics.~~drugs.

Medical costs and other benefit expenses decreased ~~slightly~~ for the three and six months ended ~~September~~June 30, ~~2021 compared with~~2022, reflecting reduced customers in our U.S. Government business, primarily resulting from the ~~same period last year, reflecting the sale~~disposition of the ~~Group Disability~~Medicaid business. Decreases also reflect lower direct COVID-19 costs and Life business, largely offset by an increase in U.S. Medical due to higher costs of COVID-19 treatment, testing and vaccines and customer growth in our insured businesses. For the nine months ended September 30, 2021, the increase compared with the same period last year was due to higher medical costs in U.S. Medical for the reasons cited above and a significant reduction in deferred care in 2021 as compared to 2020. Most care was deferred in the second quarter of 2020, with claims returning to more normal levels beginning in the third quarter of 2020. These unfavorable effects wereare partially offset by ~~the sale~~medical cost trend. See "Cigna Healthcare segment" section of ~~the Group Disability and Life business.~~this MD&A for further discussion.

Selling, general and administrative expenses ~~decreased,~~increased for the three months ended June 30, 2022, compared with the same period last year, primarily ~~resulting from~~due to the ~~sale~~absence of favorable litigation developments recorded in the ~~Group Disability~~second quarter of 2021 and, ~~Life~~to a lesser extent, an increase in expenses associated with business ~~and~~growth. For the ~~elimination of~~six months ended June 30, 2022, the ~~health insurance industry tax. These favorable effects were partially offset~~increase was primarily driven by ~~expense growth in Evernorth and U.S. Medical reflecting~~expenses associated with business growth.

Interest expense and other ~~decreased due to lower levels of average outstanding debt resulting from debt repayments.~~was essentially flat.

Debt extinguishment costs ~~were lower for~~declined as no debt was retired early in the ~~nine~~first six months ~~ended September 30, 2021 compared with the same period last year because the debt repaid in 2021 had lower interest rates than the debt repaid in 2020.~~of 2022.

Realized investment results ~~significantly improved,~~were lower, primarily due to ~~favorable market value~~unfavorable mark-to-market adjustments on ~~equity securities~~investments in ~~2021 compared with 2020 and lower credit loss reserves on debt securities.~~2022. See Note 11 to the Consolidated Financial Statements for further discussion.

~~Effective tax rate.~~ The decrease for the three months ended September 30, 2021 compared with the same period last year primarily reflects the repeal of the nondeductible health insurance industry tax in 2021. For the nine months ended September 30, 2021, the effective tax rate ~~was higher than the same period last year,~~ decreased, driven by ~~recognition~~favorable results relative to our foreign operations and for the six months ended June 30, 2022 the favorable impact of ~~certain incremental federal and state tax benefits in~~ the ~~first quarter~~remeasurement of ~~2020,~~deferred taxes, partially offset by the ~~repeal~~absence of the ~~nondeductible health insurance industry tax~~favorable impact of non-recurring items recorded in 2021.

Developments

Kaiser Permanente

In April 2022, we entered into a five-year agreement with Kaiser Permanente aimed at delivering increased convenience, affordability and expanded access to high-quality care for Kaiser Permanente members. Initially, the agreement will focus on providing Kaiser Permanente and its members access to:

•Cigna's Preferred Provider Organization ("PPO") provider network for Kaiser Permanente members who need urgent or emergency care and are traveling outside of Kaiser Permanente's service areas, and

•specialty pharmacy services through Evernorth's Accredo specialty pharmacy and Evernorth's CuraScript SD.

The agreement has the potential to extend in additional areas.

Organizational Efficiency Plan

As discussed in Note 15 to the Consolidated Financial Statements, during the fourth quarter of 2021, the Company approved a strategic plan to drive operational efficiencies. We believe this plan, coupled with the divestiture of the international life, accident and supplemental health benefits businesses (described below), will further leverage the Company's ongoing growth to drive operational efficiency through enhancements to organizational structure and increased use of automation and shared services. In connection with these plans, Cigna updated its reporting segments to align with the new business reporting structure and recognized a charge in the fourth quarter of 2021 in the amount of $168 million, pre-tax ($119 million, after-tax).

As previously anticipated, during the second quarter of 2022, the Company updated its strategic plan, primarily for severance costs, and recognized a charge in the amount of $22 million, pre-tax ($17 million, after-tax).

As a result of our Organizational Efficiency Plan, we expect to realize annualized after-tax savings of $184 million. A substantial amount of the savings is expected to be realized in 2022. See Note 15 to the Consolidated Financial Statements for further information regarding our organizational efficiency charge.

Sale of International Life, Accident and Supplemental Benefits Businesses in Six Countries

On July 1, 2022, we completed the sale of our life, accident and supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) to Chubb INA Holdings, Inc. ("Chubb") for approximately $5.4 billion in cash (the "Chubb Transaction"); as previously agreed, we excluded our interest in a joint venture in Türkiye from the Chubb Transaction. We aggregated and classified the assets and liabilities of these businesses as held for sale in our Consolidated Balance

~~Developments~~Sheets as of June 30, 2022 and December 31, 2021. See Note 5 to the Consolidated Financial Statements for further information on the classification of these businesses as held for sale. The "Liquidity and Capital Resources" section of this MD&A provides further information on the impact of this transaction to liquidity. See "Other Operations" section of this MD&A for further information on the results of these businesses.

Purchase of MDLIVE

As discussed in Note 4 to the Consolidated Financial Statements, on April 19, 2021, Cigna's Evernorth segment completed the acquisition of MDLIVE, Inc. ("MDLIVE"), a 24/7 virtual care platform (the "MDLIVE Acquisition") for $2.0 billion cash consideration. The acquisition of MDLIVE enables Evernorth to continue expanding access to virtual care and delivering a more affordable, convenient and connected care experience for consumers.

Medicare Star Quality Ratings (“("Star ~~Ratings”~~Ratings")

The Centers for Medicare & Medicaid Services ("CMS") uses a Star Rating system to measure how well Medicare Advantage ~~(“MA”~~("MA") plans perform, scoring how well plans perform in several categories, including quality of care and customer service. Star Ratings range from one to five stars. CMS recognizes plans with Star Ratings of four stars or greater with quality bonus payments and the ability to offer enhanced benefits. Approximately 87% of our MA customers were in four star or greater plans for bonus payments received in 2021 and approximately ~~88%~~89% were in four star or greater plans for bonus payments to be received in 2022; we expect this percentage to ~~increase~~decrease to ~~89%~~85% for bonus payments to be received in ~~2023.~~2023 based upon the mix of new and existing MA plans.

~~Agreement~~Medicare Advantage Rates

On April 4, 2022, CMS released the final Calendar Year 2023 Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (the "2023 Final Notice"). While the 2023 Final Notice rates are modestly higher than the advance notice rates (previously released on February 2, 2022), we do not expect the final rates to ~~sell International Markets life, accident and supplemental benefits businesses~~

Cigna entered into a definitive agreement in October 2021 to sell its life, accident and supplemental benefits businesses in seven countries to Chubb INA Holdings, Inc. ("Chubb") for $5.75 billion cash. Subject to applicable regulatory approvals and customary closing conditions, we expect to complete the sale of our life, accident and supplemental benefits businesses in Hong Kong, Indonesia, New Zealand, South Korea, Taiwan, Thailand and our interest in a joint venture in Turkey in 2022. The “Liquidity and Capital Resources” section of this MD&A provides discussion of the expected impact of this transaction to liquidity.

~~Purchase of MDLIVE~~

As discussed in Note 4 to the Consolidated Financial Statements, on April 19, 2021 Cigna's Evernorth segment completed the acquisition of MDLIVE, Inc., a 24/7 virtual care platform. The acquisition of MDLIVE will enable Evernorth to continue expanding access to virtual care and delivering a more affordable, convenient and connected care experience for consumers. The “Liquidity and Capital Resources” section of this MD&A provides discussion of the impact of this transaction on liquidity.

~~Sale of Group Disability and Life Business~~

As discussed in Note 4 to the Consolidated Financial Statements, Cigna sold its U.S. Group Disability and Life business to New York Life Insurance Company for $6.2 billion on December 31, 2020. The “Liquidity and Capital Resources” section of this MD&A provides discussion of the use of proceeds from this divestiture.

~~Regulation~~

The "Business - Regulation" section of our 2020 Form 10-K provides a detailed description of The Patient Protection and Affordable Care Act (“ACA”) provisions and other legislative initiatives that impact our businesses, including regulations issued by the Centers for Medicare & Medicaid Services (“CMS”) and the Departments of the Treasury and Health and Human Services. Our businesses continue to operate in a dynamic environment, and the laws and regulations applicable to us, including the ACA, continue to be subject to legislative, regulatory and judicial challenges.

~~The Patient Protection and Affordable Care Act ("ACA")~~

~~ACA Litigation:~~ As described in the “Business - Regulation” section of our 2020 Form 10-K, a federal district court ruled that the “individual mandate” in the ACA is unconstitutional and that the entire law must be struck down. On appeal, the Court of Appeals for the Fifth Circuit agreed that the “individual mandate” is unconstitutional but ordered the district court to reexamine whether the other provisions of the ACA can remain in effect, thereby leaving in doubt whether the entire ACA is unconstitutional until there is a final judicial determination on appeal. The California-led states and the U.S. House of Representatives filed petitions seeking to appeal the Fifth Circuit's ruling to the U.S. Supreme Court. The case was argued before the Supreme Court on November 10, 2020. On June 17, 2021, the Supreme Court issued its decision, upholding the ACA in its entirety. There are no changes to our business as a result of the decision.

~~Cost-Sharing Reduction Subsidies:~~ The ACA provides for cost-sharing reductions that offset the amount that qualifying customers pay for deductibles, copays and coinsurance. The federal government stopped funding insurers for the cost-sharing reduction ("CSR”) subsidies in 2017. Certain insurers have sued the federal government for failure to pay cost-sharing reduction subsidies. In the first set of consolidated appeals, the Court of Appeals for the Federal Circuit issued a decision on August 14, 2020, finding that (i) the CSR reimbursement provision of the ACA imposes an obligation on the government to pay, but (ii) the insurers' damages must be reduced by the amount of additional premium tax credit payments that each insurer received as a result of the government’s termination of CSR payments. On February 19, 2021 two insurers filed a petition seeking Supreme Court review. On June 21, 2021, the Supreme Court declined the insurers’ petitions, which means the decision from the Court of Appeals for the Federal Circuit stands and will not

be modified further. As described in Note 15 to the Consolidated Financial Statements, we filed a lawsuit in May 2020 against the federal government seeking payment of these subsidies. Our case remains pending. Our premium rates for the 2018, 2019, 2020 and 2021 plan years reflected a lack of government funding for cost-sharing reduction subsidies.

~~Corporate Tax Reform.~~ ~~Recent proposals related to corporate tax reform propose raising corporate taxes, among other things. Some proposed reforms could~~ have a material impact on our ~~future results of operations. We will continue to monitor developments.~~

~~Medicare Part D Rebate Rule~~. As disclosed in the “Regulation” section of our 2020 Form 10-K, the United States Department of Health and Human Services (“HHS”) and the HHS Office of Inspector General (“HHS-OIG”) released a final rule in November 2020 which eliminated an anti-kickback regulatory safe harbor protection for price concessions, including rebates, that are offered by pharmaceutical manufacturers to plan sponsors or pharmacy benefit managers under the Medicare Part D program and created two new safe harbors. The two new safe harbors cover (i) price reductions by manufacturers to plan sponsors under Medicare Part D and Medicaid managed care organizations that are reflected at the time of dispense and (ii) fixed-fee service arrangements between manufacturers and pharmacy benefit managers. HHS previously delayed the elimination of the aforementioned regulatory safe harbor to January 1, 2023 and, in March 2021, HHS-OIG delayed the effective date for the two new safe harbors to January 1, 2023.

~~Transparency in Coverage.~~ As previously disclosed in our 2020 Form 10-K, in October 2020, the Departments of Health and Human Services, Labor and the Treasury issued a final rule that requires most group health plans and health insurance issuers in the individual and group markets to disclose price and cost-sharing information for all items and services to participants and enrollees (the “Rule”). On August 20, 2021, the agencies jointly released guidance regarding the implementation of the Rule. Importantly, the guidance announced that the agencies will (i) indefinitely defer enforcement of the Rule’s requirement that plans and issuers publish machine-readable files relating to prescription drug pricing pending further rulemaking and (ii) defer enforcement of the Rule’s requirement to publish the remaining machine-readable files until July 1, 2022.

~~Risk Adjustment.~~ As discussed in the “Regulation” and “Risk Factors” sections of our 2020 Form 10-K, our MA business is subject to reviews, including risk adjustment data validation (“RADV”) audits by CMS and the Office of the Inspector General (“OIG”). We expect that CMS, OIG and other federal agencies will continue to closely scrutinize components of the Medicare program.

The “Regulation” section of our 2020 Form 10-K also discusses a proposed rule issued by CMS in 2018 for RADV audits of contract year 2011 and all subsequent years that included, among other things, extrapolation of the error rate related to RADV audit findings without applying the adjustment for underlying fee-for-service data errors as currently contemplated by CMS’ RADV audit methodology. RADV audits for our contract years 2011 through 2015 are currently in process. CMS has announced its intent to use third-party auditors to audit all MA contracts by either a comprehensive or a targeted RADV review for each contract year. If the proposed rule is adopted in its current form, it could result in some combination of degraded plan benefits, higher monthly premiums and reduced choice for the population served by all MA insurers. The Company, along with other MA organizations and additional interested parties, submitted comments to CMS on the proposed rule as part of the notice-and-comment rulemaking process. The comment period concluded on August 28, 2019 and CMS issued guidance on October 20, 2021 extending the timeline to finalize the proposed rule until November 2022. If CMS adopts the rule as proposed, there could be a material impact on the Company’s futureconsolidated results of operations ~~though we expect the rule would be subject to legal challenges. In addition, the Company is subject to OIG RADV audits that are~~ in ~~process.~~

Also, as described in Note 15 to the Consolidated Financial Statements, the U.S. Department of Justice is currently conducting an industry-wide investigation of risk adjustment data submission practices and business processes, which in the case of certain other MA organizations has resulted in litigation.

2023.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

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

Cash requirements at the subsidiary level generally consist of:

•pharmacy, medical costs and other benefit payments;

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

•income taxes; and

•debt service.

Our subsidiaries normally meet their 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.

Cash requirements at the parent company level generally consist of:

•debt 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 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. See Note 1920 to the Consolidated Financial Statements in our ~~2020~~2021 Form 10-K for additional information regarding these restrictions. Most of ~~Evernorth's subsidiaries~~the Evernorth segment operations are not subject to regulatory restrictions regarding dividends and therefore provide significant financial flexibility to Cigna.

Cash flows for the ~~nine~~six months ended ~~September~~June 30 were as follows:


		Nine Months Ended September 30,					Six Months Ended June 30,
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Operating activities	Operating activities	$	2,916	$	6,056	Operating activities	$	3,274	$	797
Investing activities	Investing activities	$	(3,734)	$	(1,444)	Investing activities	$	(732)	$	(3,024)
Financing activities	Financing activities	$	(5,841)	$	(3,812)	Financing activities	$	(3,087)	$	(4,113)

The following discussion explains variances in the various categories of cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared with the same period in ~~2020.~~2021.

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 flows from operating activities decreased, driven by increases in accounts receivable due to higher pharmacy claim volume~~As a result of the receipt of the delayed 2021 CMS Part D settlement, lower income tax payments and ~~business growth, the~~ timing of payments in accounts payable and accrued liabilities ~~and approximately $800 million of tax payments related~~in 2022 compared to ~~the gain on sale of the Group Disability and Life business, partially offset~~2021, cash provided by ~~absence of the health insurance industry tax payment.~~operating activities increased.

Investing and Financing activities

~~Cash flows~~The Company acquired MDLIVE and had higher net purchases of investments in 2021. These activities resulted in lower cash used in investing activities ~~increased, primarily due to the acquisition of MDLIVE~~in 2022.

The Company repurchased less stock and ~~lower investment sale activity.~~

~~Cash~~repaid less debt, which resulted in a reduction in cash used in financing activities ~~increased, primarily due to higher stock repurchases including shares purchased pursuant to the ASR agreements (described below) and an increase~~ in ~~dividends paid, partially offset by lower debt repayments.~~

We maintain a share repurchase program authorized by our Board of Directors, under which we may repurchase shares of our common stock from time to 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 in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, including through Rule 10b5-1 trading plans or privately negotiated transactions. The program may be suspended or discontinued at any time.

On August 23, 2021, as part of our existing share repurchase program, we entered into separate accelerated share repurchase agreements (“ASR agreements”) with Morgan Stanley & Co. LLC and JP Morgan Chase Bank, N.A. (collectively, the “Counterparties”) to repurchase $2.0 billion of common stock in aggregate. On August 24, 2021, in accordance with the ASR agreements we remitted $2.0 billion to the Counterparties and received an initial delivery of 7.7 million shares of our common stock. The final number of shares to be received under the ASR agreements will be determined based on the daily volume-weighted average share price of our common stock over the term of the agreements, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements. We expect final settlement under the ASR agreements to occur in the fourth quarter of 2021. At final settlement, we may be entitled to receive additional shares of our common stock from the Counterparties or we may be required to make a payment. If we are obligated to make a payment, we may elect to satisfy such obligation in cash or shares of our common stock.

For the nine months ended September 30, 2021, we repurchased 26.5 million shares for approximately $6.3 billion including the $2.0 billion paid under the ASR agreements. Share repurchase authority was $6.6 billion as of November 3, 2021.2022.

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, our commercial paper program, credit agreements and 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 dividend payments to the parent company. Dividends from U.S. regulated subsidiaries were ~~$2.1 billion and $1.6~~$1.0 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020, respectively.~~$1.3 billion for the six months ended June 30, 2021. 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~~invest in capital expenditures, primarily related to technology to support innovative solutions for our 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 that are strategically and economically advantageous; and

•return capital to shareholders through share repurchases.

At September 30, 2021, our debt-to-capitalization ratio was 42.0%, an increase from 39.5% at December 31, 2020, reflecting an increase in short term debt levels in conjunction with the execution of the ASR agreements.

~~Sale of life, accident and supplemental benefits businesses in seven countries.~~ Cigna entered into a definitive agreement in October 2021 to sell its life, accident and supplemental benefits businesses in seven countries to Chubb INA Holdings, Inc. ("Chubb") for $5.75 billion cash. Subject to applicable regulatory approvals and customary closing conditions, we expect to complete the sale of our life, accident and supplemental benefits businesses in Hong Kong, Indonesia, New Zealand, South Korea, Taiwan, Thailand and our interest in a joint venture in Turkey in 2022. Cigna estimates it will receive approximately $5.4 billion of net after-tax proceeds from this transaction and expects to utilize the after-tax proceeds from the transaction primarily for share repurchases.

~~MDLIVE Acquisition. In April 2021, Cigna completed its acquisition of MDLIVE, Inc. We funded this acquisition with cash on hand and commercial paper borrowings.~~

~~Group Disability and Life Sale~~. In connection with the sale of this business that closed on December 31, 2020, we deployed approximately $3.0 billion to debt repayment by: (i) repaying in full our $1.4 billion 364-Day Term Loan Credit Agreement entered into on April 1, 2020, on December 31, 2020; (ii) redeeming in full the $1.0 billion aggregate principal amount of Cigna’s Senior Floating Rate Notes due 2021 on January 15, 2021 at a redemption price calculated in accordance with the terms and conditions of the indenture governing the Notes; and (iii) repaying certain balances of our outstanding commercial paper in January 2021.Funds Available

Commercial Paper Program. Cigna maintains a commercial paper program and may issue short-term, unsecured commercial paper notes privately placed on a discount basis through certain ~~broker dealers~~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.

As of June 30, 2022, Cigna's revolving credit agreements ~~include~~include: a $3.0 billion five-year revolving credit and letter of credit agreement that expires in April ~~2026;~~2027; a $1.0 billion three-year revolving credit agreement that expires in April ~~2024;~~2025; and a $1.0 billion 364-day revolving credit agreement that ~~will expire~~expires in April ~~2022.~~2023.

~~See Note 6 to the Consolidated Financial Statements for further information on our credit agreements and commercial paper program.~~

Our capital management strategy to support the liquidity and regulatory capital requirements of our foreign operations and certain international growth initiatives is to retain overseas a significant portion of the earnings generated by our foreign operations. This strategy does not materially limit our ability to meet our liquidity and capital needs in the United States.

~~Liquidity and Capital Resources Outlook~~

We maintain sufficient liquidity to meet our cash needs through our cash and cash equivalents balances, cash flows from operations, commercial paper program, credit agreements and the issuance of long-term debt and equity securities. As of ~~September~~June 30, ~~2021,~~2022, 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), ~~$2.3~~$3.2 billion of remaining capacity under our commercial paper program and ~~$3.9~~$4.6 billion in cash and short-term investments, approximately ~~$810 million~~$0.7 billion of which was held by the 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 42.1% at June 30, 2022 and 41.7% at December 31, 2021.

We actively monitor our debt obligations and engage in issuance or redemption activities as needed in accordance with our capital management strategy. ~~A description of our outstanding debt can be found in Note 6~~

Subsidiary Borrowings. In addition to the ~~Consolidated Financial Statements.~~sources of liquidity discussed above, the parent company can borrow an additional $2.5 billion from its subsidiaries without further approvals as of June 30, 2022.

~~For~~Use of Capital Resources

Capital Expenditures. Capital expenditures for property, equipment and computer software were $612 million in the six months ended June 30, 2022 compared to $500 million in the six months ended June 30, 2021. We expect to continue to invest in technology that we believe will drive future growth. Anticipated capital expenditures will be funded primarily from operating cash flow.

Dividends. During the first ~~nine~~six months of ~~2021,~~2022, Cigna declared and paid quarterly cash dividends of ~~$1.00~~$1.12 per share of Cigna common stock. See Note 8 to the Consolidated Financial Statements for further information on our dividend payments. On ~~October~~July 27, ~~2021~~2022, the

Board of Directors declared ~~a quarterly~~the third quarter cash dividend of ~~$1.00~~$1.12 per share of Cigna common stock to be paid on ~~December~~September 22, ~~2021~~2022 to shareholders of record on ~~December~~September 7, ~~2021.~~2022. Cigna 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 Cigna 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 of Directors may deem relevant.

Share repurchases. We maintain a share repurchase program authorized by our Board of Directors, under which we may repurchase shares of our common stock from time to 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 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 or privately negotiated transactions. The program may be suspended or discontinued at any time. In February 2022, the Board increased repurchase authority by an additional $6.0 billion.

We repurchased 9.7 million shares for approximately $2.3 billion during the six months ended June 30, 2022, compared to 16.3 million shares for approximately $3.7 billion during the six months ended June 30, 2021. From July 1, 2022 through August 3, 2022, we repurchased 10.4 million shares through the initial delivery under the accelerated share repurchase agreements ("ASR agreements") discussed below. Share repurchase authority was $5.3 billion as of August 3, 2022.

On June 15, 2022, as part of our existing share repurchase program, we entered into separate ASR agreements with Mizuho Markets Americas LLC and Morgan Stanley & Co. LLC (collectively, the "Counterparties") to repurchase $3.5 billion of common stock in aggregate. In July 2022, in accordance with the ASR agreements we remitted $3.5 billion to the Counterparties and received an initial delivery of 10.4 million shares of our common stock. We expect final settlement under the ASR agreements to occur in the fourth quarter of 2022. See Note 8 to the Consolidated Financial Statements for further information on our ASR agreements.

Strategic investments. In 2022, we committed an additional $450 million (which in aggregate represents a $700 million commitment) to Cigna Ventures, our strategic corporate venture fund. Cigna Ventures will use this funding to drive continuous health care transformation, innovation and growth.

Sale of international life, accident and supplemental benefits businesses in six countries. On July 1, 2022, we completed the sale of our life, accident and supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) to Chubb for approximately $5.4 billion in cash. Cigna estimates it will receive approximately $5.1 billion of net after-tax proceeds from this transaction and expects to utilize the after-tax proceeds primarily for share repurchases, with $3.5 billion used to fund the purchases of our common stock pursuant to the ASR agreements (as described above).

Risks to our liquidity and capital resources outlook include cash projections that 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" section of our ~~2020~~2021 Form 10-K. 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. ~~In addition~~

Supply Chain Financing Program

We facilitate a voluntary supply chain finance program (the "program") that provides suppliers the opportunity to sell their receivables due from us (i.e., our payment obligations to the ~~sources~~suppliers) to a financial institution, on a non-recourse basis in order to be paid earlier than our payment terms provide. Cigna is not a party to the program and agrees to commercial terms with its suppliers independently of ~~liquidity discussed above,~~their participation in the ~~parent company can borrow an additional $875~~program. A supplier's participation in the program has no impact on our payment terms and Cigna has no economic interest in a supplier’s decision to participate in the program. The suppliers, at their sole discretion, determine which invoices, if any, to sell to the financial institution. No guarantees are provided by Cigna or any of our subsidiaries under the program. We have been informed by the financial institution that $133 million ~~from its subsidiaries without further approvals~~ as of ~~September~~June 30, ~~2021.~~2022 and $331 million as of December 31, 2021 of our outstanding payment obligations were voluntarily elected by suppliers to be sold to the financial institution under the program. These amounts are reflected in Accounts payable in Cigna's Consolidated Balance Sheets.

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 1518 to the Consolidated Financial Statements for discussion of various guarantees.

~~We have updated long-term debt~~ During the six months ended June 30, 2022, there was no material change to the contractual obligations ~~and purchase obligations as of September 30, 2021 which were previously provided~~reported in our ~~2020~~2021 Form 10-K. Investment commitments are described in Note 9 to the Consolidated Financial Statements. There have been no material changes to other information presented in our table of guarantees and contractual obligations set forth in our 2020 Form 10-K.
(In millions, on an undiscounted basis) Total 2021 2022 to 2023 2024 to 2025 Thereafter
On-Balance Sheet
Long-term debt (1)
$ 48,499 $ 319 $ 5,876 $ 6,735 $ 35,569
Off-Balance Sheet
Purchase Obligations $ 3,428 $ 918 $ 1,628 $ 563 $ 319

~~(1)Amounts include scheduled interest payments, current maturities of long-term debt and finance leases.~~

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 ~~the 2020~~our 2021 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 ~~2020~~2021 Form 10-K. As of ~~September~~June 30, ~~2021,~~2022, there were no significant changes to the critical accounting estimates from what was reported in our ~~2020~~2021 Form 10-K.

~~Goodwill and Other Intangible Assets~~

Our annual evaluations of goodwill and other intangible assets for impairments were completed during the third quarter of 2021. These evaluations were performed at the reporting unit level, based on discounted cash flow analyses or market data. The estimated fair value of each of our reporting units exceeded their carrying values by significant margins.

Management believes the current assumptions used to estimate amounts reflected in our Consolidated Financial Statements are appropriate. However, if actual experience significantly differs from the assumptions used in estimating amounts reflected in our Consolidated Financial Statements, the resulting changes could have a material adverse effect on our consolidated results of operations and in certain situations, could have a material adverse effect on liquidity and our financial condition.

SEGMENT REPORTING

The following section of this MD&A discusses the results of each of our segments.

On July 1, 2022, we completed the sale of our life, accident and supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) to Chubb for approximately $5.4 billion in cash. During the fourth quarter of 2021, in connection with the Chubb Transaction, we revised our business reporting structure and adjusted our segment reporting accordingly. Segment results for the three and six months ended June 30, 2021 have been restated to conform to the new segment presentation.

See Note 1 to 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 and special items. Cigna'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 1619 to 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 revenues~~Total Revenues to adjusted revenues. Note 1619 to the Consolidated Financial Statements also explains that segment revenues include both external revenues and sales between segments that are eliminated in Corporate.

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

Evernorth Segment

Evernorth includes a broad range of coordinated and point solution health services ~~including~~and capabilities, as well as those from partners across the health care system, in pharmacy ~~solutions,~~ benefits ~~management solutions,~~services, specialty pharmacy and care ~~solutions and intelligence solutions.~~services. As described in the introduction to Segment Reporting, ~~Evernorth~~Evernorth's performance is measured using ~~the below metrics:~~

•~~Adjusted gross profit~~adjusted revenues and pre-tax adjusted income (loss) from ~~operations, which exclude~~operations.

The key factors that impact Evernorth's Pharmacy revenues and Pharmacy and other service costs are volume, mix of claims and price. These key factors are discussed further below. See Note 2 to the ~~impact~~Consolidated Financial Statements included in our 2021 Form 10-K for additional information on revenue and cost recognition policies for this segment.

•As our clients' claim volumes increase or decrease, our resulting revenues and cost of ~~special items.~~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.

•~~Adjusted~~The mix of claims generally considers the type of drug and distribution method used for dispensing and fulfilling. Types of drugs can have an impact on our pharmacy ~~script volume is calculated by multiplying~~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 ~~total non-specialty network scripts filled through 90-day programs and home delivery scripts by three and counting all other network and specialty scripts as one script.~~

•~~Generic fill rate is defined as~~types of drugs, the ~~total number~~mix of generic ~~scripts divided by the total overall scripts filled.~~claims (i.e., generic fill 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.

The key factors that impact Evernorth revenues and costs of revenues are volume, mix of claims and price. These key factors are discussed further below. See Note 3 to the Consolidated Financial Statements included in our 2020 Form 10-K for additional information on revenue and cost recognition policies for this segment.

•As our clients’ claim volumes increase or decrease, our resulting revenues and cost of revenues correspondingly increase or decrease. Our gross profit 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. Types 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 generic claims (i.e., generic fill rate) also impacts our gross profit. 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 ~~supply chain~~favorable contracts for pharmacy network, pharmaceutical and wholesaler purchasing and manufacturer rebates. As we seek to improve the effectiveness of our integrated solutions for the benefit of our clients, we are continuously innovating and ~~optimizing the supply chain.~~improving affordability. Our gross profit could also increase or decrease as a result of ~~supply chain~~drug purchasing contract initiatives implemented. 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 adjusted gross profit, consistent with our segment reporting metrics, which exclude special items.

Results of Operations


Financial Summary	Financial Summary	Three Months Ended September 30,						Change Favorable (Unfavorable)		Nine Months Ended September 30,						Change Favorable (Unfavorable)						Financial Summary		Three Months Ended June 30,										Change Favorable (Unfavorable)					Six Months Ended June 30,											Change Favorable (Unfavorable)
(Dollars in millions)	(Dollars in millions)	2021			2020					2021			2020							(Dollars in millions)	2022			2021					2022										2021

Total revenues	Total revenues	$	33,614		$	29,944		12	%	$	96,826		$	85,801				13	%						Total revenues				$	34,863				$	32,592				7			%		$	68,449			$	63,212						8	%

Less: Contractual adjustment for a former client		—			(117)			N/M		—			(204)			N/M

Adjusted revenues(1)	Adjusted revenues(1)	$	33,614		$	29,827		13	%	$	96,826		$	85,597		13	%					Adjusted revenues (1)		$	34,863				$	32,592				7			%		$	68,449				$	63,212							8		%
Gross profit	Gross profit	$	2,161		$	2,107		3	%	$	6,079		$	5,589		9	%					Gross profit		$	2,151				$	2,075				4			%		$	4,162				$	3,918							6		%
Adjusted gross profit(1)	Adjusted gross profit(1)	$	2,161		$	1,990		9	%	$	6,079		$	5,385		13	%					Adjusted gross profit (1)		$	2,151				$	2,075				4			%		$	4,162				$	3,918							6		%

Pre-tax adjusted income from operations	Pre-tax adjusted income from operations	$	1,548		$	1,443		7	%	$	4,184		$	3,774		11	%					Pre-tax adjusted income from operations		$	1,475				$	1,413				4			%		$	2,777				$	2,636							5		%
Pre-tax adjusted margin	Pre-tax adjusted margin	4.6		%	4.8		%	(20)	bps	4.3		%	4.4		%	(10)	bps					Pre-tax adjusted margin		4.2			%		4.3			%		(10)			bps		4.1			%		4.2			%					(10)		bps
Adjusted expense ratio (2)																					Adjusted expense ratio (2)		1.9			%		2.0			%		(10)			bps		2.0			%		2.0			%					—		bps

Three Months Ended September 30, Change Favorable
(Unfavorable) Nine Months Ended September 30, Change Favorable
(Unfavorable)
(Dollars and adjusted scripts in millions) 2021 2020 2021 2020
Selected Financial Information(1)
Pharmacy revenue by distribution channel
Adjusted network revenues $ 16,488 $ 14,522 14 % $ 47,792 $ 41,179 16 %
Adjusted home delivery and specialty revenues 13,796 12,699 9 39,911 37,111 8
Other revenues 1,701 1,412 20 4,708 3,946 19
Total adjusted pharmacy revenues $ 31,985 $ 28,633 12 % $ 92,411 $ 82,236 12 %
Pharmacy script volume
Adjusted network scripts(2)
340 309 10 % 1,002 890 13 %
Adjusted home delivery and specialty scripts(2)
71 72 (1) 212 215 (1)
Total adjusted scripts(2)
411 381 8 % 1,214 1,105 10 %
Generic fill rate
Network 86.3 % 87.0 % (70) bps 86.3 % 87.9 % (160) bps
Home delivery 85.9 % 85.3 % 60 bps 85.8 % 85.1 % 70 bps
Overall generic fill rate 86.3 % 86.9 % (60) bps 86.3 % 87.6 % (130) bps


	Three Months Ended June 30,						Change Favorable (Unfavorable)		Six Months Ended June 30,						Change Favorable (Unfavorable)
(Dollars and adjusted scripts in millions)	2022			2021					2022			2021


Selected Financial Information
Pharmacy revenue by distribution channel
Adjusted network revenues (1)	$	16,107		$	16,166		—	%	$	31,638		$	31,304		1	%
Adjusted home delivery and specialty revenues (1)	15,268			13,341			14		29,967			26,115			15
Other pharmacy revenues	1,667			1,619			3		3,379			3,007			12
Total adjusted pharmacy revenues (1)	$	33,042		$	31,126		6	%	$	64,984		$	60,426		8	%
Adjusted fees and other revenues (1)	1,805			1,461			24		3,439			2,778			24
Net investment income	16			5			220		26			8			225
Adjusted revenues (1)	$	34,863		$	32,592		7	%	$	68,449		$	63,212		8	%
Pharmacy script volume (3)
Adjusted network scripts	323			339			(5)	%	638			662			(4)	%
Adjusted home delivery and specialty scripts	69			71			(3)		139			141			(1)
Total adjusted scripts	392			410			(4)	%	777			803			(3)	%
Generic fill rate (4)
Network	87.6		%	85.3		%	230	bps	87.4		%	86.3		%	110	bps
Home delivery	85.8		%	85.7		%	10	bps	85.6		%	85.8		%	(20)	bps
Overall generic fill rate	87.5		%	85.4		%	210	bps	87.2		%	86.2		%	100	bps

(1)~~Amounts exclude~~Total revenues and gross profit were equal to adjusted revenues and adjusted gross profit as there were no special ~~items.~~items in the periods presented.

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

(3)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.

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

Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 versus Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

Adjusted network ~~revenues.~~revenues ~~The increases reflected~~increased for the six months ended June 30, 2022, reflecting increased prices ~~primarily~~ due to inflation on branded ~~drugs and higher claims volume, primarily due to our collaboration with Prime Therapeutics. These increases were~~drugs; partially offset by lower claims volume and a slight change in claims mix ~~primarily~~ due to an increase in the generic fill ~~rate when excluding~~rate. Adjusted network revenues decreased for the ~~impact of COVID-19 vaccines.~~three months ended, reflecting lower claims volume and a slight change in claims mix due to an increase in the generic fill rate; partially offset by increased prices due to inflation on branded drugs.

Adjusted home delivery and specialty ~~revenues.~~revenues ~~The increases reflected~~ increased, ~~prices, primarily due to inflation on branded drugs, as well as~~reflecting higher specialty claims volume due in part to our collaboration with Prime ~~Therapeutics.~~Therapeutics, as well as increased prices, primarily due to inflation on branded drugs. These increases were partially offset by slightly lower home delivery claims ~~volume and claims mix due to an increase in the generic fill rate.~~volume.

Other ~~revenues.~~pharmacy revenues ~~The increases reflected~~increased, reflecting higher volume from our CuraScript ~~Specialty Distribution~~SD business.

Adjusted fees and other revenues increased, reflecting customer growth from our Pharmacy Rebate Program services and the acquisition and subsequent growth of the MDLIVE business.

Adjusted gross ~~profit.~~profit and ~~For the three~~pre-tax adjusted income from operations increased, reflecting continued contract affordability improvements and ~~nine months ended September 30, 2021, the~~business growth. The increase ~~reflected benefits~~was partially offset by strategic investments in expanding our services portfolio and digital capabilities as well as lower volume in our network and home delivery businesses. Pre-tax adjusted income from ~~the effective management of supply chain, customer growth and higher adjusted pharmacy script volumes, primarily~~operations also increased due to ~~our collaboration with Prime Therapeutics. For the nine months ended September 30, 2021, the increase also reflected an increase in specialty pharmacy services.~~expense favorability.

~~Pre-tax~~ The adjusted ~~income from operations.~~ ~~For the three~~expense ratio was flat, reflecting higher revenues as well as increased strategic investments in expanding our services portfolio and nine months ended September 30, 2021, the increase reflected benefits from the effective management of supply chain, customer growth and higher adjusted pharmacy script volumes, primarily due to our collaboration with Prime Therapeutics, partially offset by strategic investments. For the nine months ended September 30, 2021, the increase also reflected an increase in specialty pharmacy services.digital capabilities.

~~U.S. Medical~~Cigna Healthcare Segment

~~U.S. Medical~~Cigna Healthcare includes ~~Cigna’s~~Cigna's U.S. Commercial, ~~and~~ U.S. Government and International Health businesses, ~~that~~which provide comprehensive medical and coordinated solutions to clients and customers to support whole-person health needs. U.S. Commercial products and services include medical, pharmacy, behavioral health, dental, vision, health advocacy programs and other products and services for insured and ~~administrative services only ("ASO") clients.~~self-insured customers. U.S. Government solutions include Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors ~~Medicaid plans~~ and individual health insurance plans both on and off the public exchanges. International Health solutions include health care coverage in our international markets, as well as health care benefits for globally mobile individuals and employees of multinational organizations. As described in the introduction to Segment Reporting, performance of the ~~U.S. 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).

Results of Operations
Financial Summary Three Months Ended September 30, Change Favorable
(Unfavorable) Nine Months Ended September 30, Change Favorable
(Unfavorable)
(Dollars in millions) 2021 2020 2021 2020
Adjusted revenues $ 10,497 $ 9,629 9 % $ 31,315 $ 28,726 9 %
Pre-tax adjusted income from operations $ 988 $ 757 31 % $ 2,992 $ 3,479 (14) %
Pre-tax adjusted margin 9.4 % 7.9 % 150 bps 9.6 % 12.1 % (250) bps
Medical care ratio 84.4 % 82.6 % (180) bps 83.9 % 77.2 % (670) bps
Expense ratio 20.1 % 21.8 % 170 bps 20.0 % 22.2 % 220 bps


Financial Summary	Three Months Ended June 30,						Change Favorable (Unfavorable)		Six Months Ended June 30,						Change Favorable (Unfavorable)
(Dollars in millions)	2022			2021					2022			2021


Adjusted revenues	$	11,337		$	11,149		2	%	$	22,729		$	22,216		2	%
Pre-tax adjusted income from operations	$	1,240		$	1,049		18	%	$	2,519		$	2,091		20	%
Pre-tax adjusted margin	10.9		%	9.4		%	150	bps	11.1		%	9.4		%	170	bps
Medical care ratio	80.7		%	84.4		%	370	bps	81.1		%	82.7		%	160	bps
Adjusted expense ratio	20.6		%	18.9		%	(170)	bps	20.6		%	20.6		%	—	bps

Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 versus Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

Adjusted revenues increased for the three months and ~~nine~~six months ended ~~September~~June 30, ~~2021 compared with the same periods~~2022, reflecting increases in ~~2020 reflecting customer growth~~U.S. Commercial partially offset by decreases in ~~our Medicare Advantage and Individual businesses,~~U.S. Government. The increases in U.S. Commercial adjusted revenues reflects increased specialty contributions, higher premium rates due to anticipated underlying medical cost trend ~~and higher net investment income.~~as well as customer growth. The ~~nine months ended increase also~~decreases in U.S. Government adjusted revenues reflects the ~~absence~~disposition of the ~~premium relief programs for clients implemented in the second quarter of 2020 in response to significantly lower than historical utilization as individuals deferred care due to the COVID-19 pandemic.~~Medicaid business.

Pre-tax adjusted income from operations increased for the three months and six months ended ~~September~~June 30, ~~2021 compared with the same period in 2020. The increase is~~2022, reflecting increased contributions from U.S. Commercial, U.S. Government and International Health. These increases were primarily due to ~~higher net investment income,~~lower medical care ratios and increased specialty contributions and the repeal of the health insurance industry tax; partially offset by net unfavorable COVID-19 related impacts. The unfavorable COVID-19 related impacts include increased direct costs of COVID-19 testing, treatment and vaccines as well as lower risk adjustment revenues in our Medicare Advantage business. Pre-tax adjusted income from operations decreased for the nine months ended September 30, 2021 compared with the same period in 2020. The decrease is due to net unfavorable COVID-19 related impacts; partially offset by higher net investment income, increased specialty contributions and the repeal of the health insurance industry tax. The unfavorable COVID-19 related impacts include increased direct costs of COVID-19 testing, treatment and vaccines, the significant deferral of care by our customers in 2020, lower risk adjustment revenues in our Medicare Advantage business and increased disenrollment resulting from the economic effects of the pandemic. These impacts wereU.S. Commercial; partially offset by the absence of ~~the premium relief programs implemented~~favorable non-recurring items recorded in ~~the second quarter of 2020. COVID-19 impacts for the remainder of 2021 and beyond may vary as discussed in the "COVID-19 Update" section of this MD&A.~~2021.

The medical care ratio increased for the three months and nine months ended September 30, 2021 compared with the same periods in 2020, reflecting COVID-19 related impacts and the repeal of the health insurance industry tax. The unfavorable COVID-19 related impacts primarily reflect higher direct COVID-19 testing, treatment and vaccine costs. The nine months ended September 30, 2021 increase also reflects the impact of the COVID-19 related deferred utilization experienced in the second quarter of 2020; partially offset by the absence of the premium relief programs.

~~The~~ ~~expense ratio~~ decreased for the three months and ~~nine~~six months ended ~~September~~June 30, 2022, primarily due to medical costs that have moderated since 2021, ~~compared with~~including lower direct COVID-19 costs and effective execution in pricing and affordability initiatives, in U.S. Commercial as well as improved Medicare Advantage risk adjustment revenues. The decrease for the ~~same periods~~six months ended June 30, 2022 was partially offset by U.S. Government risk adjustment updates related to prior years that were recognized in ~~2020,~~the first quarter of 2022.

The adjusted expense ratio increased for the three months ended June 30, 2022, primarily reflecting the ~~repeal~~absence of favorable litigation developments recorded in 2021. The adjusted expense ratio was flat for the ~~health insurance industry tax and increased revenue.~~six months ended June 30, 2022.

Medical Customers
As of September 30,
(In thousands) 2021 2020 % Change
U.S. Commercial 2,135 2,120 1 %
U.S. Government 1,517 1,413 7 %
Insured 3,652 3,533 3 %
Service 11,653 11,781 (1) %
Total 15,305 15,314 — %

Our medical customer base was flat at September 30, 2021 compared with the same period in 2020, reflecting a lower customer base in our National Accounts and Middle Markets segments including disenrollment resulting from the economic impacts of the COVID-19 pandemic; partially offset by growth in our Select segment as well as our Individual and Medicare Advantage businesses.

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.

Effective in the second quarter of 2022, the Company updated its U.S. Commercial market segments as follows: the National segment comprises employers with 3,000 or more eligible employees, and the Middle Market segment comprises employers with 500 to 2,999 eligible employees, Taft-Hartley plans, and other groups. Previously, the National segment comprised multi-state employers with 5,000 or more eligible employees and the Middle Market segment comprised employers with 500 to 4,999 eligible employees, single-site employers with more than 5,000 employees, Taft-Hartley plans and other groups. There have been no updates to the Select (employers generally with 51 to 499 eligible employees) or Small Group (employers generally with 2 to 50 eligible employees) market segments.


	As of June 30,
(In thousands)	2022	2021	% Change


Cigna Healthcare Medical Customers

Insured	4,705	4,664	1	%
U.S. Commercial	2,187	2,128	3	%
U.S. Government	1,374	1,484	(7)	%
International Health (1)	1,144	1,052	9	%

Services only	13,101	12,257	7	%
U.S. Commercial	12,465	11,632	7	%
U.S. Government	5	—	N/M	%
International Health (1)	631	625	1	%

Total	17,806	16,921	5	%

(1)International Health excludes medical customers served by less than 100% owned subsidiaries and customers that are part of the businesses sold pursuant to the Chubb Transaction.

Our medical customer base increased at June 30, 2022, reflecting growth in our Middle Market, Select and International Health market segments; partially offset by the disposition of the Medicaid business.

Unpaid Claims and Claim Expenses
(In millions) As of September 30, 2021 As of December 31, 2020 % Change
Unpaid claims and claim expenses – U.S. Medical $ 3,846 $ 3,184 21 %


(In millions)	As of June 30, 2022		As of December 31, 2021		% Change


Unpaid claims and claim expenses – Cigna Healthcare	$	4,490	$	4,261	5	%

Our unpaid claims and claim expenses liability was higher as of ~~September~~June 30, ~~2021 compared with December 31, 2020,~~2022, primarily due to stop loss ~~seasonality,~~seasonality; partially offset by Medicare Part D invoice cycle timing and ~~customer growth in our Individual~~the disposition of the Medicaid business.

~~International Markets Segment~~

As described in the introduction to Segment Reporting, 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 as a percentage of revenues (expense ratio and acquisition cost ratio); and~~

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

~~Results of Operations~~
Financial Summary Three Months Ended September 30, Change
Favorable
(Unfavorable) Nine Months Ended September 30, Change
Favorable
(Unfavorable)
(Dollars in millions) 2021 2020 2021 2020
Adjusted revenues $ 1,588 $ 1,440 10 % $ 4,718 $ 4,342 9 %
Pre-tax adjusted income from operations $ 250 $ 208 20 % $ 746 $ 809 (8) %
Pre-tax adjusted margin 15.7 % 14.4 % 130 bps 15.8 % 18.6 % (280) bps
Loss ratio 60.9 % 57.4 % (350) bps 60.0 % 55.1 % (490) bps
Acquisition cost ratio 11.2 % 11.8 % 60 bps 11.1 % 10.9 % (20) bps
Expense ratio (excluding acquisition costs) 17.4 % 19.5 % 210 bps 17.8 % 18.7 % 90 bps

~~Three and Nine Months Ended September 30, 2021 versus Three and Nine Months Ended September 30, 2020~~

~~Adjusted revenues~~ increased primarily due to business growth, higher net investment income, and the absence of COVID-19 related premium relief programs for the three months ended September 30, 2021. For the nine months ended September 30, 2021, adjusted revenues increased primarily due to favorable foreign currency movements, business growth, higher net investment income, and the absence of COVID-19 related premium relief programs.

~~Pre-tax adjusted income from operations~~ increased reflecting higher net investment income and lower expense ratios, partially offset by higher loss ratios for the three months ended September 30, 2021. For the nine months ended September 30, 2021, pre-tax adjusted income from operations decreased reflecting higher loss and acquisition ratios, partially offset by higher net investment income, favorable foreign currency movements, lower expense ratios, and business growth. The loss, acquisition and expense ratios for both the three and nine months ended September 30, 2020 reflected the unfavorable impact of COVID-19 related premium relief programs.

~~The segment’s~~ ~~loss ratio~~ increased reflecting higher claims largely due to the impact of the COVID-19 pandemic, including the absence of the favorable impact of lower medical utilization in 2020 and the direct costs of COVID-19 testing and treatment.

~~The~~ ~~acquisition costratio~~ decreased reflecting lower amortization expenses in Asia and the absence of the unfavorable impact of COVID-19 related premium relief programs for the three months ended September 30, 2021. For the nine months ended September 30, 2021, the acquisition cost ratio increased reflecting the absence of the favorable impact from a refinement to the accounting for acquisition costs, largely offset by lower amortization expenses in Asia.

~~The~~ ~~expense ratio~~ ~~(excluding acquisition costs) decreased mainly driven by lower spend across markets.~~

Other ~~Items Related to International Markets Results~~

South Korea is the single largest geographic market for our International Markets segment. For the nine months ended September 30, 2021, South Korea generated 38% of the segment’s adjusted revenues and 63% of the segment’s pre-tax adjusted income from operations.

Operations

Other Operations

~~Prior~~ includes the International businesses sold to ~~the sale of the Group Disability and Life business~~Chubb on December 31, 2020, Other Operations included Cigna’s Group Disability and Life business which offered group long-term and short-term disability and group life, accident, voluntary and specialty insurance products and services. Additionally, for 2021 and 2020, this segment includesJuly 1, 2022, Corporate Owned Life Insurance ~~(“COLI”~~("COLI"), our interest in a joint venture in Türkiye and the ~~Company’s~~Company's run-off operations. As described in the introduction of Segment Reporting, performance of Other Operations is measured using ~~pre-tax~~ adjusted ~~income from operations. Key factors affecting pre-tax adjusted income from operations are:~~

•~~premiums;~~

•~~net investment income;~~

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

•~~selling, general and administrative expense as a percentage of revenues excluding net investment income (expense ratio).~~

~~Three and Nine Months Ended September 30, 2021 versus Three and Nine Months Ended September 30, 2020~~

~~Adjusted~~ revenues and pre-tax adjusted income from operations.

Results of Operations


Financial Summary	Three Months Ended June 30,						Change Favorable (Unfavorable)		Six Months Ended June 30,						Change Favorable (Unfavorable)
(Dollars in millions)	2022			2021					2022			2021


Adjusted revenues	$	948		$	990		(4)	%	$	1,927		$	1,995		(3)	%
Pre-tax adjusted income from operations	$	233		$	215		8	%	$	459		$	446		3	%
Pre-tax adjusted margin	24.6		%	21.7		%	290	bps	23.8		%	22.4		%	140	bps

Three and Six Months Ended June 30, 2022 versus Three and Six Months Ended June 30, 2021

Adjusted revenues decreased primarily due to unfavorable foreign currency movements, largely offset by business growth and higher net investment income in the International businesses.

Pre-tax adjusted income from operations ~~decreased~~increased primarily due to higher earnings in the ~~sale~~Run-off businesses and COLI.

Other Items Related to International Businesses Sold to Chubb

For the three months ended June 30, 2022, 84% of ~~the Group Disability and Life business on December 31, 2020. Because the sold business constituted the vast majority of the segment's operations, we experienced a substantial decline in~~Other Operations' adjusted revenues and 85% of its pre-tax adjusted income from operations was associated with International businesses sold to Chubb on July 1, 2022. For the six months ended June 30, 2022, 84% of Other Operations' adjusted revenues and 88% of its pre-tax adjusted income from operations was associated with sold International businesses; as a result of the sale, Other Operations' adjusted revenues and pre-tax adjusted income from operations will decrease in ~~this segment in 2021 as compared to 2020.~~future periods.

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, severance, certain overhead and enterprise-wide project costs and intersegment eliminations

for products and services sold between segments.


Financial Summary	Financial Summary	Three Months Ended September 30,				Change Favorable (Unfavorable)			Nine Months Ended September 30,					Change Favorable (Unfavorable)				Financial Summary			Three Months Ended June 30,						Change Favorable (Unfavorable)			Six Months Ended June 30,					Change Favorable (Unfavorable)
(In millions)	(In millions)	2021		2020				2021		2020						(In millions)	2022			2021				2022					2021

Pre-tax adjusted (loss) from operations		$	(308)	$	(366)		16	%		$	(1,006)	$	(1,171)		14	%
Pre-tax adjusted loss from operations																	Pre-tax adjusted loss from operations		$	(401)		$	(344)		(17)	%		$	(744)		$	(698)	(7)	%

Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 versus Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

Pre-tax adjusted loss from operations ~~was lower,~~increased, reflecting ~~lower interest expense.~~an increase in operating expenses for enterprise-wide initiatives.

INVESTMENT ASSETS

The following table presents our investment asset portfolio excluding separate account assets as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. Additional information regarding our investment assets is included in Notes ~~9, 10,~~ 11, 12, 13 and 1214 to the Consolidated Financial Statements.


(In millions)	(In millions)	September 30, 2021		December 31, 2020		(In millions)	June 30, 2022		December 31, 2021
Debt securities	Debt securities	$	17,857	$	18,131	Debt securities	$	13,950	$	16,958
Equity securities	Equity securities	551		501		Equity securities	836		603
Commercial mortgage loans	Commercial mortgage loans	1,525		1,419		Commercial mortgage loans	1,579		1,566
Policy loans	Policy loans	1,329		1,351		Policy loans	1,325		1,338
Other long-term investments	Other long-term investments	3,429		2,832		Other long-term investments	4,107		3,574
Short-term investments	Short-term investments	439		359		Short-term investments	199		428
Total	Total	$	25,130	$	24,593	Total	21,996		24,467
Investments classified as assets of businesses held for sale (1)						Investments classified as assets of businesses held for sale (1)	(4,518)		(5,109)
Investments per Consolidated Balance Sheets						Investments per Consolidated Balance Sheets	$	17,478	$	19,358

~~Investment Assets~~(1) Investments related to the international life, accident and supplemental benefits businesses ~~subject~~that are held for sale. See Note 5 to the ~~recently announced divestiture (described~~Consolidated Financial Statements for additional information.

Investment Outlook

We continue to actively monitor current economic conditions driven by the pace of the pandemic recovery, recent geopolitical events and fiscal and monetary policy responses (including the resulting supply chain and labor market dynamics), and the portfolio impact of recent higher levels of both interest rates and inflation. 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. Based on our 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. The below discussion addresses the strategies and risks associated with our various classes of investment assets. Although future declines in investment fair values resulting from interest rate movements and credit deterioration due to both investment-specific and the global economic uncertainties in the ~~Developments section of this MD&A) were approximately $4.9 billion as of September 30, 2021.~~following discussion remain possible, 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 on our balance sheet. Additional information regarding valuation methodologies, key inputs and controls is included in Note 1012 to the Consolidated Financial Statements. More detailed information about debt securities by type of issuer and maturity dates is included in Note 911 to the Consolidated Financial Statements.

The following table reflects our portfolio of debt securities by type of issuer as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


(In millions)	(In millions)	September 30, 2021		December 31, 2020		(In millions)	June 30, 2022		December 31, 2021
Federal government and agency	Federal government and agency	$	382	$	456	Federal government and agency	$	353	$	387
State and local government	State and local government	169		167		State and local government	145		171
Foreign government	Foreign government	2,519		2,511		Foreign government	2,331		2,616
Corporate	Corporate	14,313		14,562		Corporate	10,754		13,266
Mortgage and other asset-backed	Mortgage and other asset-backed	474		435		Mortgage and other asset-backed	367		518
Total	Total	$	17,857	$	18,131	Total	$	13,950	$	16,958

Our debt securities portfolio decreased ~~slightly~~ during the ~~first nine~~six months ~~of 2021~~ended June 30, 2022, reflecting a decrease in valuations ~~due to increasing yields, offset~~driven by a significant rise in treasury rates and credit spreads, and net ~~purchase~~sales activity.

As of ~~September~~June 30, ~~2021, $15.3~~2022, $12.0 billion, or 86% of the debt securities in our investment portfolio were investment grade (Baa and above, or equivalent) and the remaining ~~$2.6~~$1.9 billion were below investment grade. The majority of the bonds that are below investment grade are rated at the higher end of the non-investment grade spectrum. These quality characteristics have not materially changed since the prior year and remain consistent with our investment strategy.

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 investment expectations. However, due to the economic impacts of the COVID-19 pandemic, there are certain issuers, particularly within the aviation, energy and hospitality sectors, that are showing signs of distress, primarily in the form of requests for temporary covenant relief. There were no material unrealized losses in any of these sectors as of the reporting date. 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 9 to the Consolidated Financial Statements.~~

Foreign government obligations are concentrated in Asia, primarily South Korea and Taiwan, consistent with our risk management practice and local regulatory requirements of our international business operations. We expect the amount of these foreign government obligations to decrease significantly during 2022 upon the close of our sale of certain International Markets businesses as discussed in the "Developments" section of this MD&A. Debt securities include private placement assets of ~~$6.0~~$4.3 billion. These investments are generally less marketable than publicly-traded bonds; however, yields on these investments tend to be higher than yields on 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.

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 investment expectations. Elevated global inflation rates experienced during 2022, as well as continuing supply chain disruptions have displaced the ongoing impacts of the COVID-19 pandemic as 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 Financial Statements.

Commercial Mortgage Loans

As of ~~September~~June 30, ~~2021,~~2022, the ~~$1.5~~$1.6 billion commercial mortgage loan portfolio consisted of approximately 50 ~~loans that are in good standing. Our commercial mortgage loans are~~ fixed rate loans, diversified by property type, location and borrower. 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 911 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 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.

~~Our annual in-depth review~~We assess the credit quality of our commercial mortgage loan ~~investments is the primary mechanism for monitoring the overall quality rating of the mortgage portfolio. We completed the annual in-depth~~portfolio annually by reviewing each holding’s most recent financial statements, rent rolls, budgets, and relevant market reports. The review performed in the second quarter of 2021 that included an analysis of each underlying property’s most recent annual financial statements, rent rolls, operating plans, a physical inspection of the property and a review of applicable market reports. The results of this annual review2022 confirmed ~~that the~~ongoing strong overall credit quality ~~of our portfolio remains strong and was generally~~ in line with the previous year’s results.

COVID-19 has negatively impacted commercial real estate fundamentals and capital market activity with concentrated weakness in hotels and regional malls. Our mortgage loan portfolio is well diversified by property type and geography with no material exposure to hotels and no exposure to regional shopping malls. We continue to monitor the long-term impacts of COVID-19 on ~~the~~ office sector fundamentals due to ~~growing headwinds:~~multiple headwinds that may impact future valuations: expanded ~~remote working~~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., office and regional shopping malls). Our commercial mortgage ~~loans secured by~~loan portfolio has no exposure to regional shopping malls and less than 30% exposure to office ~~properties are in good standing.~~properties.

Other Long-term Investments

Other long-term investments of ~~$3.4~~$4.1 billion as of ~~September~~June 30, ~~2021~~2022 included investments in securities limited partnerships and real estate limited partnerships, direct investments in real estate joint ventures and other deposit activity that is required to support various insurance and health services businesses. The increase in other long-term investments of $0.5 billion since December 31, 2021 is primarily driven by net additional funding activity and value creation in the underlying ~~funds.~~investments. These limited partnership entities typically invest in mezzanine debt or equity of privately-held companies 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 200 separate partnerships and ~~approximately~~ 100 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%3% of our securities and real estate limited partnership portfolio.

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 manager of the investments. ~~Our~~Accordingly, our net investment income ~~increased significantly versus the first nine months of 2020 driven by the strong performance of assets underlying our limited partnership investments. The broad recovery has resulted~~ in ~~strong corporate earnings and higher public and private asset valuations and valuation recovery through~~ the second quarter ~~of 2021 is generally reflected in third quarter results consistent with~~largely reflects the underlying financial information ~~reporting lag.~~from the first quarter of 2022. We expect continued volatility in private equity and real estate fund performance going forward as fair market valuations are adjusted to reflect market and portfolio transactions.

We participate in an insurance joint venture in China with a 50% ownership interest. We account for this joint venture onunder the equity method of accounting and report our share of the net assets of ~~$0.9~~$1.0 billion in Other assets. Our 50% share of the investment portfolio supporting the joint venture's ~~business~~liabilities is approximately ~~$7.4~~$9.0 billion ~~primarily invested in Chinese~~as of June 30, 2022. These investments were comprised of approximately 75% debt securities, including government and corporate ~~and government~~ debt

~~securities~~ diversified by issuer, industry and ~~geography, as appropriate. To a lesser extent and consistent with its investment strategy, the joint venture is invested in Chinese equity investments comprised of approximately 50% equity~~geography; 15% equities, including mutual funds, ~~with the remainder invested in~~ equity securities and private equity ~~partnerships.~~ partnerships; and 10% long-term deposits and policy loans. Approximately 1% of the joint venture's investment assets are exposed to private real estate property developers in the China market.We participate in the approval of the joint venture's investment strategy and continuously review its execution. There were no investments with a material unrealized loss as of ~~September~~June 30, ~~2021.~~

~~Investment Outlook~~

The general optimism globally fueled by business re-opening combined with unprecedented monetary and fiscal support from the U.S. government supports expectations for continued economic growth. U.S. treasury rates have increased from their historic lows during 2020, but they remain well below long-term historical averages. In addition, the wider market credit spreads experienced during 2020 have narrowed meaningfully, resulting in yields for investment grade assets that also remain well below historical averages. While this continues to pressure the income we earn on our fixed income investments, it has been more than offset by our limited partnership results, which are reflecting improved growth prospects. We continue to actively monitor the economic impact of the pandemic, including supply chain, labor market and inflation dynamics, as well as fiscal and monetary responses and their potential impact on the portfolio. Over the balance of 2021, we expect net investment income and investment valuations will reflect the optimism within public and private markets for the continued economic recovery, along with the potential for increasing market volatility with resulting net investment income and asset valuation impacts. 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 majority of our investments will continue to perform under their contractual terms. Based on our 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 declines in investment fair values 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 have a material adverse effect on our financial condition or liquidity.2022.

MARKET RISK

Financial Instruments

Our assets and liabilities include financial instruments subject to the risk of potential losses from adverse changes in market rates and prices. Our primary market risk exposures are 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 ~~2020~~2021 Form 10-K. AsDue primarily to decreases in the fair value of ~~September~~our debt securities and long-term debt since December 31, 2021, the effect of hypothetical changes in market rates or prices on the fair value of certain financial instruments has changed. In the event of a hypothetical 100 basis point increase in interest rates, the fair value of certain non-insurance financial instruments would decrease approximately $1.1 billion at June 30, ~~2021 there were no material changes~~2022 compared to $1.4 billion at December 31, 2021. Further, under the same hypothetical 100 basis point increase in interest rates scenario, the fair value of the Company's long-term debt would decrease approximately $2.0 billion at June 30, 2022 compared to approximately $2.9 billion at December 31, 2021. Changes in the fair value of our long-term debt do not impact our financial position or operating results.

After the Chubb Transaction we expect reductions in our risk exposures ~~from those reported~~to interest rates and foreign currency exchange rates. The impact of a hypothetical 100 basis point increase in ~~our 2020 Form 10-K.~~interest rates on the fair value of certain non-insurance financial instruments of a $1.1 billion decrease cited above would decline to a $0.8 billion decrease excluding the businesses held for sale as of June 30, 2022. The impact of a hypothetical 10% strengthening in the U.S. dollar to foreign currencies excluding the businesses held for sale would be an insignificant amount as of June 30, 2022 as compared to a decrease of approximately $0.3 billion as of December 31, 2021.

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 Discussion and Analysis of Financial Condition and Results of Operations and is incorporated herein by reference.

Item 4. CONTROLS AND PROCEDURES

Based on an evaluation of the effectiveness of ~~Cigna’s~~Cigna's disclosure controls and procedures conducted under the supervision and with the participation of ~~Cigna’s~~Cigna's management (including ~~Cigna’s~~Cigna's Chief Executive Officer and Chief Financial Officer), Cigna's Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, ~~Cigna’s~~Cigna's disclosure controls and procedures are effective to ensure that information required to be disclosed by Cigna 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~~Cigna's management, including ~~Cigna’s~~Cigna's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Change in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, Cigna's internal 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 1518 to the Consolidated Financial Statements is incorporated herein by reference. For information regarding legal proceedings terminated during the quarter ended June 30, 2021, refer to Note 15 to the Consolidated Financial Statements contained in Part I of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.

Item 1A. RISK FACTORS

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”~~"Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

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

Issuer Purchases of Equity Securities

The following table provides information about ~~Cigna’s~~Cigna's share repurchase activity for the quarter ended ~~September~~June 30, ~~2021:~~2022:
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)
July 1-31, 2021 1,538,889 $ 232.43 1,536,623 $ 3,842,810,336
August 1-31, 2021 8,747,861 (1) 8,745,737 $ 1,619,335,337
September 1-30, 2021 1,854 $ 208.07 — $ 1,619,335,337
Total 10,288,604 (1) 10,282,360 N/A


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)
April 1-30, 2022	1,519,764	$	253.80	1,517,385	$	9,444,290,632
May 1-31, 2022	1,605,175	$	260.50	1,604,582	$	9,026,293,505
June 1-30, 2022	793,253	$	256.02	792,733	$	8,823,335,866
Total	3,918,192	$	256.99	3,914,700	N/A

(1)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 ~~2,266~~2,379 shares in ~~July, 2,124~~April, 593 shares in ~~August~~May and ~~1,854~~520 shares in September 2021. Amount purchased in August 2021 also reflects the initial delivery of 7.7 million shares pursuant to the ASR agreements discussed in the Liquidity and Capital Resources section of Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2. Such repurchase was made pursuant to the Company's share repurchase program described in note (2) below. Average price paid per share for the period August 1-31, 2021 for shares not purchased pursuant to the ASR agreements was $214.11.June 2022.

(2)Additionally, the Company maintains a share repurchase program authorized by the Board of Directors. 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, each in compliance with Rule 10b-18 under the Exchange Act, or privately negotiated transactions. The program may be suspended or discontinued at any time and does not have an expiration date. ~~In October 2021,~~From July 1, 2022 through August 3, 2022, we repurchased 10.4 million shares through the ~~Board increased~~initial delivery under the ASR agreements discussed in the Liquidity and Capital Resources section of Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2. Such repurchases were made pursuant to the Company's share repurchase ~~authority by an additional $5 billion.~~program described above. Share repurchase authority was ~~$6.6~~$5.3 billion as of ~~November~~August 3, ~~2021.~~2022.

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

~~Item 5.~~ ~~OTHER INFORMATION~~

~~Amended and Restated By-laws~~

Effective as of November 2, 2021, as a result of its annual review of its corporate governance practices, the Board of Directors of the Company adopted restated by-laws (the “By-Laws”) in order to, among other things: (1) provide that shareholder meetings may be held by means of remote communication; (2) eliminate the default date for the annual meeting of shareholders; (3) clarify that the Board may postpone, reschedule or cancel any shareholder meeting; (4) clarify the rules of conduct for a shareholder meeting; (5) update the procedural and information requirements for shareholders to submit director nominations and shareholder proposals; (6) provide procedures for shareholder nominations at special meetings of shareholders where directors are to be elected; (7) permit special meetings of the Board to be called on less than 12 hours’ notice if the person calling the meeting deems it to be necessary or appropriate under the circumstances; (8) add provisions allowing the Board to operate with reduced procedural requirements and take other actions during an emergency, disaster or catastrophe; and (9) make certain other updates, clarifications and ministerial and conforming changes.

The foregoing summary does not purport to be a complete description of the By-Laws and is qualified in its entirety by reference to the complete text of the By-Laws, a copy of which is filed herewith as Exhibit 3.1 to this Quarterly Report on Form 10-Q and is incorporated by reference in this Item 5.

~~Executive Officer Retirements~~

On September 23, 2021, the Company filed a Form 8-K disclosing the retirements of Matthew G. Manders, President, Government & Solutions, and Timothy C. Wentworth, Chief Executive Officer, Evernorth. On November 3, 2021, the Company and Mr. Manders executed a Retirement Agreement (the “Manders Retirement Agreement”) and agreed to extend Mr. Manders’ retirement date to December 17, 2021. On November 3, 2021, the Company and Mr. Wentworth executed a Retirement Agreement (the “Wentworth Retirement Agreement”) and agreed to extend Mr. Wentworth’s retirement date to February 4, 2022. Effective January 1, 2022, Mr. Wentworth will transition to a non-executive officer role and will continue to provide services on ongoing projects through his retirement date.

Each of the Retirement Agreements include customary confidentiality, non-solicitation, non-competition and non-disparagement provisions. In addition, the agreements provide for benefits, subject to the execution of a Release Agreement, consisting of: (1) the payment of an annual cash incentive for service in 2021 at 100% of their respective annual target; (2) consistent with the terms governing treatment of equity awards upon retirement under the Cigna Long-Term Incentive Plan at the time such awards were made (a) for awards granted prior to December 2020, unexercised and unvested stock options and unvested restricted stock awards will become vested and exercisable upon retirement; (b) for awards granted in February 2021, unvested stock options and unvested restricted stock awards will continue to vest and become exercisable on the originally scheduled vesting dates for those awards; and (c) the payout of previously awarded Strategic Performance Shares (“SPSs”) for the 2019 – 2021, 2020 – 2022, and 2021– 2023 performance periods, prorated based on the number of months that each of Mr. Manders and Mr. Wentworth would have been employed during each 36-month performance period as if their employment continued through December 31, 2021. The estimated aggregate value of these benefits is approximately $8.7 million with respect to Mr. Manders and approximately $13.7 million with respect to Mr. Wentworth, based on a stock price of $218.25 per share, the closing price of Cigna’s common stock on November 3, 2021.

The percentage of actual shares earned and timing of the payment of the SPS awards will be determined by the People Resources Committee of the Board of Directors in accordance with the terms of the Cigna Long-Term Incentive Plan. Stock options awarded under the Cigna Long-Term Incentive Plan will expire at their original term.

Mr. Manders and Mr. Wentworth have each also entered into an Advisory Services Agreement (each, an “Advisory Services Agreement”) with the Company, pursuant to which each will provide advice and counsel to senior management on business planning and strategy. Each will be paid $10,000 per day for each day during which he performs advisory services. The Advisory Services Agreements expire on December 31, 2022.

Item 6. EXHIBITS

INDEX TO EXHIBITS


Number	Description	Method of Filing
~~3.1~~10.1	~~Amended~~Revolving Credit and ~~Restated By-Laws~~Letter of ~~Cigna Corporation~~Credit Agreement, dated as ~~last amended~~ of April 28, 2022 ~~November~~ 2 , ~~2021.~~with the banks named therein, JPMorgan Chase Bank, N.A., as administrative agent, BofA Securities, Inc., Citibank, N.A., Morgan Stanley Senior Funding, Inc., MUFG Bank, LTD and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners	Filed ~~herewith.~~by the registrant as Exhibit 10.1 to the Current Report on Form 8-K on April 29, 2022 and incorporated herein by reference.
31.1	Certification of Chief Executive Officer of Cigna Corporation 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 Cigna Corporation 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 Cigna Corporation 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 Cigna Corporation pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350	Furnished herewith.
101	The following materials from Cigna Corporation's Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2021,~~2022, 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 Flows; and (vi) the Notes to the Consolidated Financial Statements	Filed herewith.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)	Filed herewith.

5857

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: ~~November~~August 4, ~~2021~~2022


CIGNA CORPORATION


			/s/ Brian C. Evanko
			Brian C. Evanko
			Executive Vice President and
			Chief Financial Officer
			(Principal Financial Officer and Authorized Signatory)

5958


		Page
PART I	FINANCIAL INFORMATION

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

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3637

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	55

	Item 4. Controls and Procedures	55

PART II	OTHER INFORMATION

	Item 1. Legal Proceedings	55

	Item ~~1.A.~~1A. Risk Factors	5655

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	56

	~~Item 5. Other Information~~	56

	Item 6. Exhibits	5857
SIGNATURE		5958



			~~PAGE~~
			PAGE
Executive Overview			3738
Liquidity and Capital Resources			44
Critical Accounting Estimates			47
Segment Reporting			4847
Evernorth			4847
~~U.S. Medical~~Cigna Healthcare			50
~~International Markets~~			5149
Other Operations			52
Corporate			52
Investment Assets			53


(In millions, on an undiscounted basis)	Total		2021		2022 to 2023		2024 to 2025		Thereafter
On-Balance Sheet






Long-term debt (1)	$	48,499	$	319	$	5,876	$	6,735	$	35,569


Off-Balance Sheet
Purchase Obligations	$	3,428	$	918	$	1,628	$	563	$	319


	As of September 30,
(In thousands)	2021	2020	% Change



U.S. Commercial	2,135	2,120	1	%
U.S. Government	1,517	1,413	7	%
Insured	3,652	3,533	3	%
Service	11,653	11,781	(1)	%
Total	15,305	15,314	—	%