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, 2008

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, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [X]
  
Accelerated filer [   ]
  
Non-accelerated filer [   ]
  
Smaller Reporting  Company [   ]
  

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 17, 2008, 271,723,618 shares of the issuer's common stock were outstanding.
 
 
CIGNA CORPORATION

INDEX


   
Page No.
PART I.
FINANCIAL INFORMATION
 
  
 
Item 1. Financial Statements
  
 
Consolidated Statements of Income
 
Consolidated Balance Sheets
 
Consolidated Statements of Comprehensive Income and Changes in Shareholders' Equity
 
Consolidated Statements of Cash Flows
 
Notes to the 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, “CIGNA” or the “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
                        
   
Unaudited
    
Unaudited
  
   
Three Months Ended
    
Nine Months Ended
  
   
September 30,
    
September 30,
  
(In millions, except per share amounts)
  
2008
    
2007
    
2008
    
2007
  
Revenues
                        
Premiums and fees
   $ 4,112     $ 3,744     $ 12,165     $ 11,209  
Net investment income
     272       281       802       840  
Mail order pharmacy revenues
     300       278       882       826  
Other revenues
     191       83       463       256  
Realized investment gains (losses)
     (23 )     27       (28 )     37  
   Total revenues
     4,852       4,413       14,284       13,168  
Benefits and Expenses
                                
Health Care medical claims expense
     1,806       1,659       5,450       5,107  
Other benefit expenses
     1,062       837       2,907       2,507  
Mail order pharmacy cost of goods sold
     238       225       704       669  
Guaranteed minimum income benefits expense
     98       -       353       120  
Other operating expenses
     1,416       1,190       4,152       3,522  
   Total benefits and expenses
     4,620       3,911       13,566       11,925  
Income from Continuing Operations
                                
   before Income Taxes
     232       502       718       1,243  
Income taxes (benefits):
                                
Current
     65       125       274       420  
Deferred
     (3 )     14       (54 )     (34 )
   Total taxes
     62       139       220       386  
Income from Continuing Operations
     170       363       498       857  
Income (Loss) from Discontinued Operations, Net of Taxes
     1       2       3       (5 )
Net Income
   $ 171     $ 365     $ 501     $ 852  
Earnings Per Share - Basic:
                                
   Income from continuing operations
   $ 0.62     $ 1.30     $ 1.80     $ 3.01  
   Income (loss) from discontinued operations
     0.01       -       0.01       (0.02 )
Net income
   $ 0.63     $ 1.30     $ 1.81     $ 2.99  
Earnings Per Share - Diluted:
                                
   Income from continuing operations
   $ 0.62     $ 1.28     $ 1.78     $ 2.95  
   Income (loss) from discontinued operations
     -       -       0.02       (0.01 )
Net income
   $ 0.62     $ 1.28     $ 1.80     $ 2.94  
Dividends Declared Per Share
   $ -     $ 0.010     $ 0.040     $ 0.028  
                                 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
                  
 
 
1
 
CIGNA Corporation
                        
Consolidated Balance Sheets
                        
         
Unaudited
              
         
As of
September 30,
          
As of
December 31,
  
(In millions, except per share amounts)
        
2008
          
2007
  
Assets
                        
Investments:
                        
   Fixed maturities, at fair value (amortized cost, $11,777; $11,409)
         $ 11,892           $ 12,081  
   Equity securities, at fair value (cost, $140; $127)
           127             132  
   Commercial mortgage loans
           3,558             3,277  
   Policy loans
           1,553             1,450  
   Real estate
           51             49  
   Other long-term investments
           576             520  
   Short-term investments
           64             21  
      Total investments
           17,821             17,530  
Cash and cash equivalents
           1,078             1,970  
Accrued investment income
           251             233  
Premiums, accounts and notes receivable
           1,627             1,405  
Reinsurance recoverables
           7,048             7,331  
Deferred policy acquisition costs
           816             816  
Property and equipment
           791             625  
Deferred income taxes, net
           1,010             794  
Goodwill
           2,859             1,783  
Other assets, including other intangibles
           1,089             536  
Separate account assets
           6,386             7,042  
   Total assets
         $ 40,776           $ 40,065  
Liabilities
                            
Contractholder deposit funds
         $ 8,555           $ 8,594  
Future policy benefits
           8,069             8,147  
Unpaid claims and claim expenses
           4,089             4,127  
Health Care medical claims payable
           1,054             975  
Unearned premiums and fees
           457             496  
   Total insurance and contractholder liabilities
           22,224             22,339  
Accounts payable, accrued expenses and other liabilities
           5,105             4,127  
Short-term debt
           315             3  
Long-term debt
           2,090             1,790  
Nonrecourse obligations
           14             16  
Separate account liabilities
           6,386             7,042  
   Total liabilities
           36,134             35,317  
Contingencies — Note 15
                            
Shareholders’ Equity
                            
Common stock (par value per share, $0.25; shares issued, 351)
           88             88  
Additional paid-in capital
           2,498             2,474  
Net unrealized appreciation (depreciation), fixed maturities
   $ (107 )           $ 140          
Net unrealized appreciation, equity securities
     9               7          
Net unrealized depreciation, derivatives
     (16 )             (19 )        
Net translation of foreign currencies
     (18 )             61          
Postretirement benefits liability adjustment
     (122 )             (138 )        
   Accumulated other comprehensive income (loss)
             (254 )             51  
Retained earnings
             7,582               7,113  
Less treasury stock, at cost
             (5,272 )             (4,978 )
   Total shareholders’ equity
             4,642               4,748  
   Total liabilities and shareholders’ equity
           $ 40,776             $ 40,065  
Shareholders’ Equity Per Share
           $ 17.05             $ 16.98  
                                 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
                  
 
 
2
 
CIGNA Corporation
                
Consolidated Statements of Comprehensive Income and Changes in Shareholders’ Equity
            
(In millions)
                
   
Unaudited
  
Three Months Ended September 30,
  
2008
    
2007
  
   
Compre-
    
Share-
    
Compre-
    
Share-
  
   
hensive
    
holders’
    
hensive
    
holders’
  
   
Income
    
Equity
    
Income
    
Equity
  
Common Stock, September 30
           $ 88             $ 88  
Additional Paid-In Capital, July 1
             2,493               2,460  
Effect of issuance of stock for employee benefit plans
             5               5  
Additional Paid-In Capital, September 30
             2,498               2,465  
Accumulated Other Comprehensive Loss, July 1
             (84 )             (257 )
Net unrealized appreciation (depreciation), fixed maturities
   $ (133 )     (133 )   $ 51       51  
Net unrealized appreciation (depreciation), equity securities
     2       2       (3 )     (3 )
  Net unrealized appreciation (depreciation) on securities
     (131 )             48          
Net unrealized appreciation (depreciation), derivatives
     14       14       (1 )     (1 )
Net translation of foreign currencies
     (56 )     (56 )     18       18  
Postretirement benefits liability adjustment
     3       3       16       16  
  Other comprehensive income (loss)
     (170 )             81          
Accumulated Other Comprehensive Loss, September 30
             (254 )             (176 )
Retained Earnings, July 1
             7,412               6,513  
Net income
     171       171       365       365  
Effects of issuance of stock for employee benefit plans
             (1 )             (10 )
Common dividends declared
             -               (3 )
Retained Earnings, September 30
             7,582               6,865  
Treasury Stock, July 1
             (5,155 )             (4,795 )
Repurchase of common stock
             (125 )             (236 )
Other, primarily issuance of treasury stock for employee
                                
   benefit plans
             8               25  
Treasury Stock, September 30
             (5,272 )             (5,006 )
Total Comprehensive Income and Shareholders’ Equity
   $ 1     $ 4,642     $ 446     $ 4,236  
                                 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
          
 
 
 
3
 
CIGNA Corporation
                        
Consolidated Statements of Comprehensive Income and Changes in Shareholders’ Equity
              
(In millions)
                        
   
Unaudited
  
Nine Months Ended September 30,
  
2008
    
2007
  
   
Compre-
    
Share-
    
Compre-
    
Share-
  
   
hensive
    
holders’
    
hensive
    
holders’
  
   
Income
    
Equity
    
Income
    
Equity
  
Common Stock, January 1
         $ 88           $ 40  
Effect of issuance of stock for stock split
           -             48  
Common Stock, September 30
           88             88  
Additional Paid-In Capital, January 1
           2,474             2,451  
Effect of issuance of stock for employee benefit plans
           24             62  
Effect of issuance of stock for stock split
           -             (48 )
Additional Paid-In Capital, September 30
           2,498             2,465  
Accumulated Other Comprehensive Income (Loss),
                            
   January 1 prior to implementation effect
           51             (169 )
Implementation effect of SFAS No.155
           -             (12 )
Accumulated Other Comprehensive Income (Loss),
                            
   January 1 as adjusted
           51             (181 )
Net unrealized depreciation, fixed maturities
   $ (247 )     (247 )   $ (73 )     (73 )
Net unrealized appreciation (depreciation), equity securities
     2       2       (3 )     (3 )
   Net unrealized depreciation on securities
     (245 )             (76 )        
Net unrealized appreciation (depreciation), derivatives
     3       3       (11 )     (11 )
Net translation of foreign currencies
     (79 )     (79 )     23       23  
Postretirement benefits liability adjustment
     16       16       69       69  
   Other comprehensive income (loss)
     (305 )             5          
Accumulated Other Comprehensive Loss, September 30
             (254 )             (176 )
Retained Earnings, January 1 prior to
                                
    implementation effects
             7,113               6,177  
Implementation effect of SFAS No. 155
             -               12  
Implementation effect of FIN 48
             -               (29 )
Retained Earnings, January 1 as adjusted
             7,113               6,160  
Net income
     501       501       852       852  
Effects of issuance of stock for employee benefit plans
             (21 )             (139 )
Common dividends declared
             (11 )             (8 )
Retained Earnings, September 30
             7,582               6,865  
Treasury Stock, January 1
             (4,978 )             (4,169 )
Repurchase of common stock
             (347 )             (1,158 )
Other, primarily issuance of treasury stock for employee
                                
   benefit plans
             53               321  
Treasury Stock, September 30
             (5,272 )             (5,006 )
Total Comprehensive Income and Shareholders’ Equity
   $ 196     $ 4,642     $ 857     $ 4,236  
                                 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
                  
 
 
 
4
 
CIGNA Corporation
            
Consolidated Statements of Cash Flows
            
   
Unaudited
  
(In millions)