UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

OR

[ ] 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 1-08323

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

Delaware
06-1059331
(State or other jurisdiction
(I.R.S. Employer
of incorporation or organization)
Identification No.)
 
Two Liberty Place, 1601 Chestnut Street
Philadelphia, Pennsylvania 19192
(Address of principal executive offices)      (Zip Code)

Registrant's telephone number, including area code (215) 761-1000

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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   No _

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one):

Large Accelerated Filer x
Accelerated Filer __
Non-Accelerated Filer __

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

           As of October 26, 2007, 279,163,023 shares of the issuer's common stock were outstanding.
 
 

 


CIGNA CORPORATION

INDEX


   
Page No.
PART I.
FINANCIAL INFORMATION
 
 
 
Item 1.   Consolidated Financial Statements
 
 
 
 
 
 
 
 
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
Item 3.   Quantitative and Qualitative Disclosures About Market Risk
 
 
Item 4.   Controls and Procedures
     
PART II.
 
OTHER INFORMATION
 
 
Item 1.   Legal Proceedings
 
 
Item 1A. Risk Factors
 
 
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds
 
 
Item 6.   Exhibits
 
SIGNATURE
 
EXHIBIT INDEX

As used herein, the Company refers to one or more of CIGNA Corporation and its consolidated subsidiaries.
 
 

 
                       
Consolidated Statements of Income
                       
   
Three Months Ended
   
Nine Months Ended
 
   
September 30,   
   
September 30,   
 
(In millions, except per share amounts)
 
2007
   
2006
   
2007
   
2006
 
Revenues
                       
Premiums and fees
  $
3,744
    $
3,433
    $
11,209
    $
10,070
 
Net investment income
   
281
     
296
     
840
     
924
 
Other revenues
   
361
     
360
     
1,082
     
1,150
 
Realized investment gains
   
27
     
48
     
37
     
198
 
   Total revenues
   
4,413
     
4,137
     
13,168
     
12,342
 
Benefits and Expenses
                               
Health Care medical claims expense
   
1,659
     
1,595
     
5,107
     
4,536
 
Other benefit expenses
   
837
     
743
     
2,507
     
2,356
 
Other operating expenses
   
1,415
     
1,353
     
4,311
     
4,068
 
   Total benefits and expenses
   
3,911
     
3,691
     
11,925
     
10,960
 
Income from Continuing Operations
                               
   before Income Taxes
   
502
     
446
     
1,243
     
1,382
 
Income taxes (benefits):
                               
Current
   
125
     
158
     
420
     
477
 
Deferred
   
14
      (14 )     (34 )     (22 )
   Total taxes
   
139
     
144
     
386
     
455
 
Income from Continuing Operations
   
363
     
302
     
857
     
927
 
Income (loss) from Discontinued Operations, Net of Taxes
   
2
      (4 )     (5 )     (4 )
Net Income
  $
365
    $
298
    $
852
    $
923
 
Earnings Per Share - Basic:
                               
   Income from continuing operations
  $
1.30
    $
0.94
    $
3.01
    $
2.71
 
   Income (loss) from discontinued operations
   
-
      (0.01 )     (0.02 )     (0.01 )
Net income
  $
1.30
    $
0.93
    $
2.99
    $
2.70
 
Earnings Per Share - Diluted:
                               
   Income from continuing operations
  $
1.28
    $
0.93
    $
2.95
    $
2.67
 
   Income (loss) from discontinued operations
   
-
      (0.01 )     (0.01 )     (0.01 )
Net income
  $
1.28
    $
0.92
    $
2.94
    $
2.66
 
Dividends Declared Per Share
  $
0.010
    $
0.008
    $
0.028
    $
0.025
 
                                 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.         
       
 
 
1

                       
Consolidated Balance Sheets
                       
(In millions, except per share amounts)
   
  As of
September 30, 
     
 As of
December 31, 
         
2007
         
2006
 
Assets
                       
Investments:
                       
   Fixed maturities, at fair value (amortized cost, $11,655; $11,202)
        $
12,234
          $
11,955
 
   Equity securities, at fair value (cost, $112; $112)
         
122
           
131
 
   Mortgage loans
         
3,292
           
3,988
 
   Policy loans
         
1,449
           
1,405
 
   Real estate
         
48
           
117
 
   Other long-term investments
         
527
           
418
 
   Short-term investments
         
21
           
89
 
      Total investments
         
17,693
           
18,103
 
Cash and cash equivalents
         
1,421
           
1,392
 
Accrued investment income
         
230
           
223
 
Premiums, accounts and notes receivable
         
1,603
           
1,459
 
Reinsurance recoverables
         
7,446
           
8,045
 
Deferred policy acquisition costs
         
787
           
707
 
Property and equipment
         
601
           
632
 
Deferred income taxes, net
         
942
           
926
 
Goodwill
         
1,774
           
1,736
 
Other assets, including other intangibles
         
524
           
611
 
Separate account assets
         
6,779
           
8,565
 
   Total assets
        $
39,800
          $
42,399
 
Liabilities
                           
Contractholder deposit funds
        $
8,754
          $
9,164
 
Future policy benefits
         
8,092
           
8,245
 
Unpaid claims and claim expenses
         
4,164
           
4,271
 
Health Care medical claims payable
         
1,011
           
960
 
Unearned premiums and fees
         
487
           
499
 
   Total insurance and contractholder liabilities
         
22,508
           
23,139
 
Accounts payable, accrued expenses and other liabilities
         
4,468
           
4,602
 
Short-term debt
         
-
           
382
 
Long-term debt
         
1,793
           
1,294
 
Nonrecourse obligations
         
16
           
87
 
Separate account liabilities
         
6,779
           
8,565
 
   Total liabilities
         
35,564
           
38,069
 
Contingencies — Note 15
                           
Shareholders’ Equity
                           
Common stock (par value per share, $0.25; shares issued, 351; 160)
         
88
           
40
 
Additional paid-in capital
         
2,465
           
2,451
 
Net unrealized appreciation, fixed maturities
  $
114
            $
187
         
Net unrealized appreciation, equity securities
   
7
             
22
         
Net unrealized depreciation, derivatives
    (26 )             (15 )        
Net translation of foreign currencies
   
56
             
33
         
Postretirement benefits liability adjustment
    (327 )             (396 )        
   Accumulated other comprehensive loss
            (176 )             (169 )
Retained earnings
           
6,865
             
6,177
 
Less treasury stock, at cost
            (5,006 )             (4,169 )
   Total shareholders’ equity
           
4,236
             
4,330
 
   Total liabilities and shareholders’ equity
          $
39,800
            $
42,399
 
Shareholders’ Equity Per Share
          $
15.17
            $
14.63
 
                                 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
                 
 
2

 
                       
Consolidated Statements of Comprehensive Income and Changes in Shareholders’ Equity           
 
(In millions, except per share amounts)
                       
Three Months Ended September 30,
 
2007
   
2006
 
   
Compre-
   
Share-
   
Compre-
   
Share-
 
   
hensive
   
holders’
   
hensive
   
holders’
 
   
Income
   
Equity
   
Income
   
Equity
 
Common Stock, September 30
        $
88
          $
40
 
Additional Paid-In Capital, July 1
         
2,460
           
2,428
 
Effect of issuance of stock for employee benefit plans
         
5
           
12
 
Additional Paid-In Capital, September 30
         
2,465
           
2,440
 
Accumulated Other Comprehensive Loss, July 1
          (257 )           (682 )
Net unrealized appreciation, fixed maturities
  $
51
     
51
    $
152
     
152
 
Net unrealized appreciation (depreciation), equity securities
    (3 )     (3 )    
4
     
4
 
 Net unrealized appreciation on securities
   
48
             
156
         
Net unrealized appreciation (depreciation), derivatives
    (1 )     (1 )    
10
     
10
 
Net translation of foreign currencies
   
18
     
18
     
13
     
13
 
Postretirement benefits liability adjustment
   
16
     
16
     
-
     
-
 
 Other comprehensive income
   
81
             
179
         
Accumulated Other Comprehensive Loss, September 30
            (176 )             (503 )
Retained Earnings, July 1
           
6,513
             
5,686
 
Net income
   
365
     
365
     
298
     
298
 
Effects of issuance of stock for employee benefit plans
            (10 )             (7 )
Common dividends declared
            (3 )             (3 )
Retained Earnings, September 30
           
6,865
             
5,974
 
Treasury Stock, July 1
            (4,795 )             (2,778 )
Repurchase of common stock
            (236 )             (931 )
Other, primarily issuance of treasury stock for employee
                               
   benefit plans
           
25
             
15
 
Treasury Stock, September 30
            (5,006 )             (3,694 )
Total Comprehensive Income and Shareholders’ Equity
  $
446
    $
4,236
    $
477
    $
4,257
 
                                 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.             
     
 
 
3

 
                       
Consolidated Statements of Comprehensive Income and Changes in Shareholders’ Equity           
 
(In millions, except per share amounts)
                       
Nine Months Ended September 30,
 
2007
   
2006
 
   
Compre-
   
Share-
   
Compre-
   
Share-
 
   
hensive
   
holders’
   
hensive
   
holders’
 
   
Income
   
Equity
   
Income
   
Equity
 
Common Stock, January 1
        $
40
          $
40
 
Effect of issuance of stock for stock split
         
48
           
-
 
Common Stock, September 30
         
88
           
40
 
Additional Paid-In Capital, January 1
         
2,451
           
2,385
 
Effect of issuance of stock for employee benefit plans
         
62
           
55
 
Effect of issuance of stock for stock split
          (48 )          
-
 
Additional Paid-In Capital, September 30
         
2,465
           
2,440
 
Accumulated Other Comprehensive Loss, January 1
                           
   prior to implementation effect
          (169 )           (509 )
Implementation effect of SFAS No.155 (see Note 2)
          (12 )          
-
 
Accumulated Other Comprehensive Loss,
                           
   January 1 as adjusted
          (181 )           (509 )
Net unrealized depreciation, fixed maturities
  $ (73 )     (73 )   $ (10 )     (10 )
Net unrealized depreciation, equity securities
    (3 )     (3 )     (1 )     (1 )
 Net unrealized depreciation on securities
    (76 )             (11 )        
Net unrealized appreciation (depreciation), derivatives
    (11 )     (11 )    
1
     
1
 
Net translation of foreign currencies
   
23
     
23
     
25
     
25
 
Postretirement benefits liability adjustment
   
69
     
69
     
-
     
-
 
Minimum pension liability
   
-
     
-
      (9 )     (9 )
 Other comprehensive income
   
5
             
6
         
Accumulated Other Comprehensive Loss, September 30
            (176 )             (503 )
Retained Earnings, January 1 prior to
                               
    implementation effects
           
6,177
             
5,162
 
Implementation effect of SFAS No. 155 (see Note 2)
           
12
             
-
 
Implementation effect of FIN 48 (see Note 2)
            (29 )            
-
 
Retained Earnings, January 1 as adjusted
           
6,160
             
5,162
 
Net income
   
852
     
852
     
923
     
923
 
Effects of issuance of stock for employee benefit plans
            (139 )             (102 )
Common dividends declared
            (8 )             (9 )
Retained Earnings, September 30
           
6,865
             
5,974
 
Treasury Stock, January 1
            (4,169 )             (1,718 )
Repurchase of common stock
            (1,158 )             (2,226 )