cigna10q9-07.htm

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

[ ] 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
	Consolidated Statements of Income	1
	Consolidated Balance Sheets	2
	Consolidated Statements of Comprehensive Income and Changes in Shareholders' Equity	3
	Consolidated Statements of Cash Flows	5
	Notes to the Consolidated Financial Statements	6
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	53
	Item 4. Controls and Procedures	54

PART II.	OTHER INFORMATION
	Item 1. Legal Proceedings	55
	Item 1A. Risk Factors	56
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	57
	Item 6. Exhibits	58
SIGNATURE		59
EXHIBIT INDEX		E-1

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

CIGNA Corporation
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.

CIGNA Corporation
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.

CIGNA Corporation
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.

CIGNA Corporation
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	)