Use these links to rapidly review the document
TABLE OF CONTENTS
TABLE OF CONTENTS 2
TABLE OF CONTENTS 3
TABLE OF CONTENTS 4
TABLE OF CONTENTS 5
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
þ ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2018
OR
o 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 001-38769
CIGNA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 82-4991898 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
900 Cottage Grove Road, Bloomfield, Connecticut | 06002 | |
(Address of principal executive offices) | (Zip Code) | |
(860) 226-6000 | ||
Registrant's telephone number, including area code | ||
(860) 226-6741 or 215-761-5511 | ||
Registrant's facsimile number, including area code |
| | | | | | | | |
| SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: | | ||||||
| | | | | | | | |
Title of each class | Name of each exchange on which registered | |||||||
| | | | | | | | |
Common Stock, Par Value $0.01 | New York Stock Exchange, Inc. | |||||||
| | | | | | | | |
| | | | | | | | |
| SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: | | ||||||
| | | | | | | | |
NONE | ||||||||
| | | | | | | | |
| | | | | | | | | | | | |
| Indicate by check mark | | Yes | | No | | ||||||
| | | | | | | | | | | | |
• if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. |
þ | o | ||||||||||
| | | | | | | | | | | | |
• if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act |
o | þ | ||||||||||
| | | | | | | | | | | | |
• whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days |
þ | o | ||||||||||
| | | | | | | | | | | | |
• whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) |
þ | o | ||||||||||
| | | | | | | | | | | | |
• if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K |
o | |||||||||||
| | | | | | | | | | | | |
• whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer, " "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. |
||||||||||||
| | | | | | | | | | | | |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||||||||||||
| | | | | | | | | | | | | | | | |
Emerging growth company o | ||||||||||||||||
| | | | | | | | | | | | | | | | |
• If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
o | |||||||||||
| | | | | | | | | | | | |
• whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). |
o | þ | ||||||||||
| | | | | | | | | | | | |
The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2018 was approximately $41.2 billion. As of January 31, 2019, 380,058,967 shares of the registrant's Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form 10-K incorporates by reference information from the registrant's definitive proxy statement related to the 2019 annual meeting of shareholders.
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS |
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on 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 and innovative solutions for our customers and clients; future growth, business strategy, strategic or operational initiatives; economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas; financing or capital deployment plans and amounts available for future deployment; our prospects for growth in the coming years; the merger ("Merger") with Express Scripts Holding Company; and other statements regarding Cigna's future beliefs, expectations, plans, intentions, 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" or other words or expressions of similar meaning, although not all forward-looking statements contain such terms.
Forward-looking statements are subject to risks and uncertainties, both known and unknown, that could cause actual results to differ materially from those expressed or implied in forward-looking statements. Such risks and uncertainties include, but are not limited to: our ability to achieve our financial, strategic and operational plans or initiatives; our ability to predict and manage medical and pharmacy costs and price effectively; our ability to adapt to changes or trends in an evolving and rapidly changing industry; our ability to effectively differentiate our products and services from those of our competitors and maintain or increase market share; our ability to develop and maintain good relationships with physicians, hospitals, other health care providers and pharmaceutical manufacturers; changes in drug pricing; the impact of modifications to our operations and processes; our ability to identify potential strategic acquisitions or transactions and realize the expected benefits (including anticipated synergies) of such transactions in full or within the anticipated time frame, including with respect to the Merger, as well as our ability to integrate operations, resources and systems; the substantial level of government regulation over our business and the potential effects of new laws or regulations or changes in existing laws or regulations; the outcome of litigation, regulatory audits, investigations, actions and/or guaranty fund assessments; uncertainties surrounding participation in government-sponsored programs such as Medicare; the effectiveness and security of our information technology and other business systems; the impact of our debt service obligations on the availability to funds for other business purposes; unfavorable industry, economic or political conditions, including foreign currency movements; acts of war, terrorism, natural disasters or pandemics; as well as more specific risks and uncertainties discussed in Part I, Item 1A—Risk Factors and Part II, Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K and as described from time to time in our future reports filed with the Securities and Exchange Commission (the "SEC").
You should not place undue reliance on forward-looking statements that 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.
PART
I
ITEM 1. Business
PART I |
ITEM 1. Business |
Overview |
Cigna Corporation, together with its subsidiaries (either individually or collectively referred to as "Cigna," the "Company," "we," "our" or "us") is a global health service organization.
Our revenues are derived principally from premiums on insured products, fees for products and services provided to self-insured plans, pharmacy sales, and investment income. In 2018, our revenues were $48.7 billion and shareholders' net income was $2.6 billion. As described more fully in Note 3 to the Consolidated Financial Statements on page 80 of this Annual Report on Form 10-K ("Form 10-K"), on March 8, 2018, we entered into a merger agreement with Express Scripts Holding Company ("Express Scripts"). The results of Express Scripts have been included in the Company's Consolidated Financial Statements from the date of acquisition. As of December 31, 2018, total assets were $153.2 billion and shareholders' equity was $41.0 billion.
Our combination with Express Scripts creates an enterprise uniquely capable of transforming health care. We now have broader and deeper capabilities, along with meaningful synergies, that accelerate our "Go" strategy to achieve our mission of improving the health, well-being and peace of mind of those we serve. Cigna's employees are champions of the people we serve and over the past decade, our focus has shifted to helping people thrive by offering solutions to prevent and better manage health challenges. When sickness or disability do occur, we support our customers' ability to have broad choices in how they best access high quality, affordable care. We maximize use of evidence-based care,
| | CIGNA CORPORATION - 2018 Form 10-K 1 |
PART
I
ITEM 1. Business
while delivering best-in-class quality of care for our customers with acute and chronic conditions through enhanced real time data across an expanded platform with industry-leading solutions to support care decisions.
Cigna offers a differentiated set of medical, pharmacy, behavioral, dental, disability, life and accident insurance and related products and services. By combining with Express Scripts, Cigna's expanded capabilities now include: 1) a broader portfolio of specialty services, some of which can be offered on a stand-alone basis; 2) integrated behavioral, medical and pharmacy management services; 3) leading specialty pharmacy expertise; and 4) advanced analytics that help us engage more meaningfully with individuals, plan sponsors we serve, and our provider partners. These capabilities accelerate Cigna's ability to drive improved cost affordability, quality of care and predictability.
Following entry into the merger agreement and throughout the pendency of the transaction, Cigna and Express Scripts designed integration plans to implement a new management and business reporting structure for the combined company upon closing. On December 20, 2018, Cigna completed the acquisition of Express Scripts. As a result, effective in the fourth quarter of 2018 our segments have changed to the following: 1) Integrated Medical, consisting of both a Commercial operating segment that includes our employer-sponsored medical coverage and a Government operating segment that includes Medicare offerings for seniors and individual insurance offerings to non-seniors both on and off the public health insurance exchanges; 2) Health Services, consisting primarily of Cigna's legacy home delivery pharmacy business and Express Scripts' pharmacy benefit management ("PBM") business beginning December 21, 2018; and 3) International Markets, that offers global supplemental benefits and global medical solutions. The remainder of our business is reported in Group Disability and Other, consisting of our group disability and life business together with our corporate owned life insurance ("COLI") business and run-off operations. See Note 1 to the Consolidated Financial Statements on page 72 of this Form 10-K for additional description of our segments. Among our segments, Cigna has four core growth platforms: Commercial, Government, Health Services and International Markets.
As individuals become increasingly involved in their health care purchasing decisions, Cigna continues to focus on delivering affordable and personalized products and services to customers through employer-based, government-sponsored, health plan client and individual coverage arrangements. In our Integrated Medical business, we collaborate with health care providers to accelerate the transition from volume-based, fee-for-service reimbursement arrangements to a value-based reimbursement model that delivers higher quality of care, lower costs and better health outcomes. We have worked toward achieving better health, affordability, localization and an improved patient experience through increased collaborative care and delivery arrangements with health care providers across the care delivery spectrum, including physician groups of all sizes, specialist groups and hospitals. We have also developed innovative tools and flexible provider arrangements that provide a truly personalized customer experience. These arrangements and tools are discussed in more detail in the "Integrated Medical" section of this Form 10-K that begins on page 3.
Our Health Services business puts medicine within reach for patients, and helps providers improve access to prescription drugs by making them more affordable. We improve patient outcomes and better manage the cost of the pharmacy benefit by:
We also work with key stakeholders across the health care system to improve health outcomes and patient satisfaction, increase efficiency in drug distribution and manage costs of the pharmacy benefit. We believe plan sponsors and participants can achieve the best health and financial outcomes when they use our comprehensive set of solutions to manage drug spend.
The ACA and Health Care Reform |
The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (collectively referred to throughout this Form 10-K as the "ACA" or "PPACA") continues to have a significant impact on our business operations. The future of the ACA is uncertain due to recent court decisions, congressional efforts to repeal and replace the ACA, various executive actions of the current administration, and repeal of the individual mandate as part of H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (referred to throughout this Form 10-K as the "Tax Cuts and Jobs Act" or "U.S. tax reform legislation"). The effects of the ACA, and efforts to repeal and replace it, are discussed throughout this Form 10-K where appropriate, including in the Integrated Medical business description, Regulation, Risk Factors, Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), and the Notes to the Consolidated Financial Statements.
Other Information |
The financial information included in this Form 10-K for the fiscal year ended December 31, 2018 is in conformity with accounting principles generally accepted in the United States of America ("GAAP") unless otherwise indicated. In the segment discussions that follow, we use the terms "adjusted revenues" and "pre-tax adjusted income from operations" to describe segment results. See the introduction to the MD&A on page 42 of this Form 10-K for definitions of those terms. Industry rankings and percentages set forth herein are for the year ended December 31, 2018 unless otherwise indicated. In addition, statements set forth in this document concerning our rank or position in an industry or particular line of business have been developed internally based on publicly available information unless otherwise noted.
Cigna Holding Company (formerly Cigna Corporation) was incorporated in Delaware in 1981. Halfmoon Parent, Inc. was incorporated in Delaware in March 2018. Halfmoon Parent, Inc. was renamed Cigna Corporation concurrently with the consummation of the combination with Express Scripts. Our annual, quarterly and current reports, proxy statements and other filings, and any amendments to these filings, are made available free of charge on our website (http://www.cigna.com, under the "Investors – Quarterly Reports and SEC Filings" captions) as soon as
2 CIGNA CORPORATION - 2018 Form 10-K | | |
PART
I
ITEM 1. Business
reasonably practicable after we electronically file these materials with, or furnish them to, the Securities and Exchange Commission (the "SEC"). We use our website as a channel of distribution for material company information. Important information, including news releases, analyst presentations and financial information regarding Cigna is routinely posted on and accessible at http://www.cigna.com. See "Code of Ethics and Other Corporate Governance Disclosures" in Part III, Item 10 beginning on page 131 of this Form 10-K for additional information available on our website.
Integrated Medical |
Integrated Medical consists of a Commercial operating segment that includes our employer-sponsored medical coverage and a Government operating segment that includes Medicare offerings for seniors and individual insurance offerings to non-seniors both on and off the public health insurance exchanges. In 2018, Integrated Medical reported adjusted revenues of $32.8 billion and pre-tax adjusted income from operations of $3.5 billion.
| | | | | |
| How We Win | | |||
| | | | | |
• Broad and deep portfolio of solutions across Commercial and Government operating segments |
|||||
• Commitment to highest quality health outcomes and customer experiences |
|||||
|
• Collaborative physician engagement models emphasizing value over volume of services |
||||
|
• Integrated benefit solutions that deliver value for our customers, clients and partners |
||||
|
• Technology and data analytics powering actionable insights and affordable, personalized solutions |
||||
|
• Talented and caring people embracing change and putting customers at the center of all we do |
||||
| | | | | |
We differentiate ourselves by providing innovative, personalized, and affordable health care benefit solutions based on the unique needs of the individuals and clients we serve. We increase value through our integrated approach and use of technology and data analytics to enhance patient engagement and health care outcomes, underscoring our strategic focus on delivering an industry-leading customer experience. We continue to strengthen our partnerships with providers as we accelerate our transition to a value-based reimbursement system.
We offer a mix of core health insurance products and services to employers, other groups and individuals along with specialty products and services designed to improve the quality of care, lower cost and help customers achieve better health outcomes. Many of these products are available on a standalone basis, but we believe they are most valuable when integrated with a Cigna-administered health plan. Our products are available through several distribution channels including brokers, direct sales, and public and private exchanges. Our three funding solutions (i.e., insured – experience-rated, insured – guaranteed cost, and administrative services only ("ASO") arrangements) enable us to customize the amount of risk taken by, and lower costs for, our customers and clients.
| | CIGNA CORPORATION - 2018 Form 10-K 3 |
PART
I
ITEM 1. Business
The following chart depicts a high level summary of our principal products and services in this segment as of year-end, with definitions on subsequent pages.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Principal Products & Services | | | Major Brand(s) | | | Geography | | | Funding Solution(s) | | | Market Segment(s) | | | Primary Distribution Channel(s) | | | Primary Competitors | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial Medical | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Managed Care | | | Cigna HealthCare | | | Nationwide | | | Insured | | | | | | | National Insurers, Local Healthplans, Third-Party Administrators ("TPAs") | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred Provider ("PPO") | | | Cigna | | | Nationwide | | | (experience-rated ("ER"), guaranteed cost ("GC")) and |
| | Commercial | | | Brokers, Private Exchanges, Direct | | | National Insurers, TPAs | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Consumer-Driven | | | Cigna | | | Nationwide | | | ASO | | | | | | | National Insurers, Local Health Maintenance Organizations ("HMOs") | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Government Medical | | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Individual and Family Plans | | | Cigna Connect | | | 10 states | | | GC | | | Individual | | | Public and Private Exchanges | | | Local Healthplans, Start-ups, National Insurers | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Medicare Advantage | | | Cigna-HealthSpring | | | 17 states | | | GC | | | Government | | | Direct, Brokers | | | National Insurers, Local Healthplans | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Medicare Part D | | | Cigna-HealthSpring, Express Scripts | | | Nationwide | | | GC | | | Government | | | Direct, Brokers | | | National Insurers | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Medicaid | | | Cigna-HealthSpring | | | Texas | | | GC | | | Government | | | Direct, Brokers | | | National Insurers | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Medicare Supplement | | | Cigna | | | 48 states & District of Columbia | | | GC | | | Government | | | Brokers, Direct, Private Exchanges | | | National Insurers | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Specialty Products and Services | | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stop-Loss | | | Cigna | | | Nationwide | | | GC | | | Commercial | | | Brokers, Direct | | | National Insurers, Specialty Companies | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cost-Containment | | | Cigna | | | Nationwide | | | GC, ER, ASO | | | Commercial | | | Direct | | | National Insurers, Specialty Companies | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Consumer Health Engagement | | | Cigna | | | Nationwide | | | GC, ER, ASO | | | Commercial, Government | | | Brokers, Direct | | | National Insurers, Specialty Companies | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pharmacy Management | | | Cigna | | | Nationwide | | | GC, ER, ASO | | | Commercial, Government | | | Brokers, Direct | | | National PBMs | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Behavioral Health | | | Cigna Behavioral Health | | | Nationwide | | | GC, ER, ASO | | | Commercial | | | Brokers, Direct | | | National Insurers, Specialty Companies | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dental | | | Cigna Dental HealthCare | | | Nationwide | | | GC, ER, ASO | | | Commercial, Individual | | | Brokers, Direct | | | Dental Insurers, National Insurers | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Vision | | | Cigna Vision | | | Nationwide | | | GC, ER, ASO | | | Commercial, Individual | | | Brokers, Direct | | | National Insurers, Specialty Companies | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
4 CIGNA CORPORATION - 2018 Form 10-K | | |
PART
I
ITEM 1. Business
Principal Products & Services |
Commercial Medical
Government Medical
Specialty Solutions
| | CIGNA CORPORATION - 2018 Form 10-K 5 |
PART
I
ITEM 1. Business
Funding Solutions
In most states, individual and group insurance premium rates must be approved by the applicable state regulatory agency (typically department of insurance) and state or federal laws may restrict or limit the use of rating methods. Premium rates for groups and individuals are subject to state review to determine whether they are adequate, not excessive and not unfairly discriminatory. In addition, the ACA subjects individual and small group policy rate increases above an identified threshold to review by the United States Department of Health and Human Services ("HHS") and requires payment of premium refunds on individual and group medical insurance products if minimum medical loss ratio ("MLR") requirements are not met. The MLR represents the percentage of premiums used to pay medical claims and expenses for activities that improve the quality of care. In our individual business, premiums may also be adjusted as a result of the government risk adjustment program that accounts for the relative health status of our customers. See the "Regulation" section of this Form 10-K for additional information about commercial MLR requirements and risk mitigation programs of the ACA.
Market Segments
Primary Distribution Channels
6 CIGNA CORPORATION - 2018 Form 10-K | | |
PART
I
ITEM 1. Business
Competition
The primary competitive factors affecting our business are quality and cost-effectiveness of service and provider networks; effectiveness of medical care management; products that meet the needs of employers and their employees; total cost management; technology; and effectiveness of marketing and sales. Financial strength, as indicated by ratings issued by nationally recognized rating agencies, is also a competitive factor. Our health advocacy capabilities, holistic approach to consumer engagement, breadth of product offerings, clinical care and medical management capabilities and array of product funding options are competitive advantages. We believe our focus on improving the health, well-being and peace of mind of the customers we serve will allow us to further differentiate ourselves from our competitors.
Delivering the Health Care Promise
Cigna's Connected Care strategy engages customers in their health, collaborates with providers to help them improve their performance, and connects customers and providers through aligned health goals, incentives and actionable information to enable better decisions and outcomes. Cigna is committed to developing innovative solutions that span the health care delivery system and can be applied to different types of providers. Currently we have numerous collaborative arrangements with our participating health care providers that reach over 3.6 million customers and are actively developing new arrangements to support our Connected Care strategy.
Technology
Cigna Information Technology supports our Go Deeper, Go Local, Go Beyond strategy by focusing first and foremost on strong foundational technology services, delivery of a business aligned technology project portfolio and prioritized strategic innovation that creates solutions that differentiate us in the market. Our technology innovation continues to focus on three strategic areas: insights and analytics; digital health; and care delivery and management. Our technology strategy ultimately improves the customer experience, increases engagement and advances population health using data driven insights, utilizing artificial intelligence and machine learning to provide key areas of competitive advantage. Innovation is core to the way we do business and will be a critical factor to our success in the highly dynamic health care industry. Cigna's innovative technology solutions continue to improve affordability and increase personalization: for example the Cigna One Guide® program combines a state-of-the-art digital experience with a human concierge service, and the Cigna SureFit® network allows individual family members to choose their personal care networks consistent with their health needs and provider preferences.
| | CIGNA CORPORATION - 2018 Form 10-K 7 |
PART
I
ITEM 1. Business
Our business strategy is based upon providing customers with differentiated, easy-to-use, seamless and secure products and solutions that utilize insights from advanced analytics to meet their expectations. We anticipate needs and meet customers where they are, from predicting and preventing chronic diseases, to mining data to reduce payment and claims fraud, to using the data from wearable devices to optimize population health status. In 2018, Cigna advanced its strategic technology leadership position by expanding our digital portfolio with the integration of the Brighter acquisition. Brighter's digital platform for connecting patients with a dental provider, allowing them to review their experience, gain insights to costs and see a dentist's history demonstrates the leadership in the digital engagement of health care customers. We also began the roadmap of leveraging Express Scripts technology value creators. Each of these companies contributes to our business model and strengthens the Cigna portfolio. Further, Cigna will apply the Express Scripts technology toolkit to advance the 360 degree view of the patient through flexible, open and connected solutions. With the combined strengths and capabilities of Cigna and Express Scripts, we see greater opportunities to create novel, highly-tailored customer insights as we mine data and use sophisticated artificial intelligence and machine learning techniques to build better models that help us find solutions to complex questions and improve health care outcomes. We will continue to develop leading data driven solutions such as applying propriety algorithms and machine learning to predict customers that could overdose on prescription opioids.
Data Analytics
Cigna has transformed substantial investments in analytics talent, data infrastructure and machine learning capabilities over the past several years into a closed-loop, self-learning insights system that guides our decision-making and allows us to execute on our strategy. Our "Insights That Matter" analytics process helps our business leaders identify the questions that matter most to our customers and partners while our data science experts focus on answering those questions with innovative methodologies and transform our insights into targeted business actions. We apply advanced analytics across our business and will continue to invest in expanding and strengthening our capabilities to better anticipate, meet and exceed our customers' and partners' expectations.
Health Services |
This segment consists of the Express Scripts PBM business beginning December 21, 2018 as well as Cigna's legacy home delivery operations that offer high quality, efficient, and cost-effective mail order, telephone, and on-line pharmaceutical fulfillment services. In 2018, Health Services reported adjusted revenues of $6.6 billion and pre-tax adjusted income from operations of $380 million, including 11 days of Express Scripts results.
| | | | |
| How We Win | | ||
| | | | |
|
• Identifying products and offering solutions that focus on improving patient outcomes and assist in controlling costs |
|||
• Evaluating medicines for efficacy, value and price to assist clients in selecting a cost-effective formulary |
||||
• Offering home delivery and specialty services that save clients money and provide better care |
||||
• Leveraging purchasing volume to deliver discounts |
||||
• Promoting the use of generics and lower cost brands |
||||
| | | | |
8 CIGNA CORPORATION - 2018 Form 10-K | | |
PART
I
ITEM 1. Business
The following chart depicts a high level summary of our principal products and services in this segment with definitions on subsequent pages.
| | | | | | | | | | | | | | | | |
Principal Products & Services |
|
Brands/ Subsidiaries |
| Key Customer(s) | | Primary Competitors | | |||||||||
| | | | | | | | | | | | | | | | |
Clinical Solutions | RationalMed, ScreenRx, ExpressAlliance, Advanced Opioid Management |
Clients, Customers | Independent PBMs, Managed
Care PBMs |
|||||||||||||
| | | | | | | | | | | | | | | | |
Value Programs | SafeGuardRx | Clients, Customers, Pharmacies | Independent PBMs, Managed
Care PBMs |
|||||||||||||
| | | | | | | | | | | | | | | | |
Specialized Pharmacy Care | Therapeutic Resource Center | Customers | Independent PBMs, Managed
Care PBMs, Retail Pharmacies |
|||||||||||||
| | | | | | | | | | | | | | | | |
Home Delivery Pharmacy Services | Tel-Drug, Express Scripts, Therapeutic Resource Centers |
Customers | Independent PBMs, Managed
Care PBMs, Retail Pharmacies |
|||||||||||||
| | | | | | | | | | | | | | | | |
Specialty Pharmacy Services | Accredo, Freedom Fertility, Tel-Drug |
Clients, Customers, Pharmacies | Independent PBMs, Managed
Care PBMs, Retail Pharmacies |
|||||||||||||
| | | | | | | | | | | | | | | | |
Retail Network Pharmacy Administration | Express Scripts | Clients, Customers | Independent PBMs, Managed
Care PBMs |
|||||||||||||
| | | | | | | | | | | | | | | | |
Benefit Design Consultation | Express Scripts | Clients | Independent PBMs, Managed
Care PBMs, Third-Party Benefit Administrators |
|||||||||||||
| | | | | | | | | | | | | | | | |
Drug Utilization Review | Express Scripts | Clients, Customers | Independent PBMs, Managed
Care PBMs, Third-Party Benefit Administrators |
|||||||||||||
| | | | | | | | | | | | | | | | |
Drug Formulary Management | Express Scripts | Clients | Independent PBMs, Managed
Care PBMs |
|||||||||||||
| | | | | | | | | | | | | | | | |
Drug Claim Adjudication | Express Scripts | Clients | Independent PBMs, Managed
Care PBMs, Third-Party Benefit Administrators |
|||||||||||||
| | | | | | | | | | | | | | | | |
Administration of Group Purchasing Organizations ("GPO") | Econdisc, ValoremRx | Clients, Pharmacies | Group Purchasing Organizations | |||||||||||||
| | | | | | | | | | | | | | | | |
Prescription Card | Inside Rx | Customers | Retail Pharmacies, Discount Programs | |||||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Principal Products & Services |
|
Brands/ Subsidiaries |
| Key Customer(s) | | Primary Competitors | | |||||||||
| | | | | | | | | | | | | | | | |
Digital Consumer Health and Drug Information | Express Scripts | Customers | Independent PBMs, Managed Care PBMs, Retail Pharmacies | |||||||||||||
| | | | | | | | | | | | | | | | |
Provider Services | CuraScript Specialty Distribution | Healthcare Providers, Clinics, Hospitals | Specialty drug distributors | |||||||||||||
| | | | | | | | | | | | | | | | |
Medical Benefit Management Services | eviCore, CareContinuum | Health Plans, Commercial and Government Payors | Health Plans, Third-Party
Benefits Administrators, Clinical Solutions and Health Care Data Analytics Companies |
|||||||||||||
| | | | | | | | | | | | | | | | |
Principal Products & Services |
Pharmacy Benefit Management Services. Our PBM services drive high quality, cost-effective pharmaceutical care through prescription drug utilization and cost management. We consult with clients to assist in selecting plan design features that balance their requirements for cost control with customer choice and convenience. We focus our solutions to enable better decisions in four important, interrelated areas: benefit choices, drug choices, pharmacy choices and health choices. As a result, we believe we deliver better outcomes, higher customer satisfaction and a more affordable prescription drug benefit. As of December 31, 2018, we operated four high-volume automated dispensing home delivery pharmacies, five non-dispensing prescription processing centers, five customer contact centers, seven specialty home delivery pharmacies, 20 specialty branch pharmacies and eight specialty nursing offices.
| | CIGNA CORPORATION - 2018 Form 10-K 9 |
PART
I
ITEM 1. Business
Other solutions include Total Performance Management, Concurrent Drug Utilization Review, Advanced Utilization Management, Medication Therapy Management, Digital Report Monitoring and Fraud, Waste and Abuse.
10 CIGNA CORPORATION - 2018 Form 10-K | | |
PART
I
ITEM 1. Business
in establishing formularies that assist customers and physicians in choosing clinically appropriate, cost-effective drugs and prioritize access, safety and affordability. We administer specific formularies on behalf of our clients, including standard formularies developed and offered by Express Scripts and custom formularies in which we play a more limited role. Most of our clients select standard formularies, governed by our National Pharmacy & Therapeutics Committee (the "P&T Committee") that comprises a panel of independent physicians and pharmacists in active clinical practice representing a variety of specialties and practice settings, typically with major academic affiliations. In making formulary recommendations, the P&T Committee considers only the drug's safety and efficacy and not the cost of the drug, including any negotiated manufacturer discount or rebate arrangement. This process is designed to ensure the clinical recommendation is not affected by our financial arrangements. We fully comply with the P&T Committee's clinical recommendations regarding drugs that must be included or excluded from the formulary based on their assessment of safety and efficacy.
Customers
Our key customers include the United States Department of Defense ("DoD") and Anthem. The DoD's TRICARE Pharmacy Program is the military health care program serving active-duty service customers, National Guard and Reserve customers, and retirees, as well as their dependents. Under our DoD contract, we provide online claims adjudication, home delivery services, specialty pharmacy clinical services, claims processing and contact center support and other services critical to managing pharmacy trend.
On January 30, 2019, Anthem exercised its right to early terminate their pharmacy benefit management services agreement with us, effective March 1, 2019. There is a twelve-month transition period ending March 1, 2020. It is expected that the transition of Anthem's customers will occur at various dates, as informed by Anthem's technology platform migration schedule. Over the next twelve months, we will focus on an effective transition of this relationship and related services over Anthem's accelerated timeline. For further discussion of our Anthem relationship, see the "Executive Summary — Key Transactions and Developments" section of our MD&A located in Part II, Item 7 of the Form 10-K.
| | CIGNA CORPORATION - 2018 Form 10-K 11 |
PART
I
ITEM 1. Business
Competition
The health care industry has undergone periods of substantial consolidation and may continue to consolidate in the future. We believe the primary competitive factors in the industry include the ability to: negotiate with retail pharmacies to ensure our home delivery pharmacy and retail pharmacy networks meet the needs of our clients and customers; negotiate discounts and rebates on prescription drugs with drug manufacturers; navigate the complexities of government-reimbursed business including Medicare, Medicaid and the Public Exchanges; manage cost and quality of specialty drugs; use the information we obtain about drug utilization patterns and consumer behavior to reduce costs for our clients and customers; and the level of service we provide.
Quality
Technology
Our technology team supports the various management information systems essential to our operations including the pharmacy and medical benefit claims processing systems and specialty pharmacy systems, while seeking opportunities to optimize our technology solutions by consolidating and upgrading our technology platforms.
Uninterrupted point-of-sale electronic retail pharmacy claims processing is a significant operational requirement for our business. Claims in the United States are processed through systems managed and operated domestically by internal resources and an outsourced vendor. We believe we have substantial capacity for growth in our United States claims processing facilities.
We leverage outsourced vendor services to provide certain disaster recovery services for systems located at our data centers. For systems not covered by a third-party vendor arrangement, such as our specialty pharmacy data centers, our corporate disaster recovery organization manages internal recovery services.
Express Scripts is proud of its commitment to innovation in the field of health care. Express Scripts innovations improve patient outcomes while eliminating waste in the health care system. Express Scripts Holding Company and its affiliated companies (individually and/or collectively "Express Scripts") hold more than 170 United States patents. We use these patents to protect our proprietary technological advances.
12 CIGNA CORPORATION - 2018 Form 10-K | | |
PART
I
ITEM 1. Business
Our technology platform allows us to safely, rapidly, and accurately adjudicate 1.4 billion adjusted prescriptions annually. Our technology helps retail pharmacies focus on patient care, and our real-time safety checks help avoid hundreds of thousands of medication errors annually. Technology is the backbone to all of our solutions – from our provider-focused advances that improve e-prescribing and electronic prior authorization – to our patient-friendly app and website interfaces, and our continued investments provide an easier, more efficient experience with all of our partners.
Our formulary strategy and our SafeGuardRx program are also rooted in technology that applies our deep pharmacy expertise and data insights more rapidly and comprehensively to drive better clinical and financial outcomes for clients and patients.
Our Health Services business owns and has registered certain trade and service marks with the United States Patent and Trademark Office, including but not limited to the following marks: EXPRESS SCRIPTS®, MEDCO®, ACCREDO®, CURASCRIPTSD®, EVICORE HEALTHCARE®, FREEDOM FERTILITY PHARMACY®, RATIONALMED®, SCREENRX®, EXPRESSALLIANCE®, THERAPEUTIC RESOURCE CENTER®, ADVANCED OPIOID MANAGEMENTSM, SAFEGUARDRX®, CHOLESTEROL CARE VALUESM, HEPATITIS CURE VALUESM, MARKET EVENTS PROTECTIONSM, ONCOLOGY CARE VALUESSM, DIABETES CARE VALUESM, INFLAMMATORY CONDITIONS CARE VALUESM, INFLATION PROTECTIONSM, PULMONARY CARE VALUESM, MULTIPLE SCLEROSIS CARE VALUESM, and INSIDE RX®.
We also hold a portfolio of patents and pending patent applications. We are not substantially dependent on any single patent or group of related patents.
Suppliers
We maintain an inventory of brand name and generic pharmaceuticals in our home delivery and specialty pharmacies. Our specialty pharmacies also carry biopharmaceutical products to meet the needs of our customers, including pharmaceuticals for the treatment of rare or chronic diseases; if a drug is not in our inventory, we can generally obtain it from a supplier within one business day.
We purchase pharmaceuticals either directly from manufacturers or through authorized wholesalers. Express Scripts uses one wholesaler more than others in the industry, but holds contracts with other wholesalers if needs for an alternate source arise and believes alternative supply is readily available should it be needed. Generic pharmaceuticals are generally purchased directly from manufacturers.
Industry Developments
See the "Industry Developments" section of the MD&A in this Form 10-K beginning on page 47 for discussion of key industry developments impacting this segment.
International Markets |
Cigna's International Markets segment has operations in over 30 countries or jurisdictions providing a full range of comprehensive medical and supplemental health, life, and accident benefits to individuals and employers. Products and services include comprehensive health coverage, hospitalization, dental, critical illness, personal accident, term life, and variable universal life. In 2018, International Markets reported adjusted revenues of $5.4 billion and pre-tax adjusted income from operations of $735 million.
| | | | |
| How We Win | | ||
| | | | |
|
• Broad range of health and protection related solutions to meet the needs of the growing middle class and globally mobile |
|||
• Leveraging deep consumer insights to drive product and service innovation |
||||
• Leading innovative, direct to consumer distribution capabilities |
||||
• Access to quality, affordable care through one of the largest global provider networks |
||||
• Locally licensed and compliant solutions managed by strong, locally developed talent |
||||
| | | | |
Demand for our products and services is underpinned by the growing global middle class, aging populations, increasing prevalence of chronic conditions, and rising global health care costs. Our focus on product and service innovation means we continue to deliver solutions that meet the evolving needs of individual and group customers. Our distribution channels and funding sources range by product, customer, and geography.
International Markets is well-positioned to address the growing demand for access to quality, affordable care and supplemental health and life protection that fill gaps in public and private care. We distinguish ourselves through differentiated direct-to-consumer distribution, customer insights, product innovation, a leading provider network, and compliant solutions. We identify and pursue attractive market opportunities to bring health and protection solutions and tailor those solutions to the market and customer needs. Over the past several years, we have
| | CIGNA CORPORATION - 2018 Form 10-K 13 |
PART
I
ITEM 1. Business
extended our product offerings and geographic reach. The chart below provides a high-level summary of our Principal Products and Services in this segment as of year-end, with definitions on subsequent pages.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Principal Products & Services |
| Major Brand(s) | | Geography | |
Funding Solution(s) |
|
Key Customer(s) |
|
Primary Distribution Channel(s) |
|
Primary Competitors |
| |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Global Health Care | Cigna Global Health
Benefits Cigna Global IPMI |
Worldwide | Experience-rated, Guaranteed Cost, ASO | Multinational Companies,
Inter-governmental and Non-governmental Organizations Globally mobile individuals |
Brokers, Agents, Direct-to-Consumer | Global insurers | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Local Health Care | Cigna CignaTTK CignaCMB | United Kingdom, Spain, Hong Kong, India, China | Experience-rated, Guaranteed Cost, ASO | Employer Groups Individuals |
Brokers, Agents, Direct-to-Consumer | Global insurers | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Supplemental Health, Life, & Accident | Cigna LINA Korea CignaCMB CignaTTK CignaFinans |
Asia Pacific, India, Turkey | Guaranteed Cost | Individuals | Affinity, Bancassurance, Brokers, Agents, Direct-to-Consumer | Global and local foreign insurers | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Principal Products & Services |
Global Health Care products and services include insurance and administrative services for medical, dental, pharmacy, vision, and life, accidental death and dismemberment, and disability risks. We are leading providers of products and services that meet the needs of multi-national employers, intergovernmental and non-governmental organizations and globally mobile individuals with a focus on keeping employees healthy and productive. The employer benefits products and services are offered through guaranteed cost, experience-rated, and administrative services only funding solutions, while individuals purchase guaranteed cost (insured) coverage. For definitions of funding solutions, see "Funding Solutions" in the "Integrated Medical" description of business section on page 6 of this Form 10-K.
Local Health Care products and services include medical, dental, pharmacy, and vision as well as life coverage. The customers of local health care businesses are employers and individuals located in specific countries where the products and services are purchased. These employer services can similarly be funded through a range of options and individuals purchase on a guaranteed cost basis.
Supplemental Health, Life and Accident Insurance products and services generally provide simple, affordable coverage of risks for the health and financial security of individuals. Supplemental health products provide specified payments for a variety of health risks and include personal accident, accidental death, critical illness, hospitalization, travel, dental, cancer and other dread disease coverages. We also offer customers term and variable universal life insurance and certain savings products in select markets.
Competition
We anticipate that the competitive environment will intensify as insurance and financial services providers more aggressively pursue expansion opportunities across geographies, particularly Asia. We believe competitive factors will include speed-to-market, customer insights, branding, product, distribution and service innovation, underwriting and pricing, efficient management of marketing and operating processes, commission levels paid to distribution partners, the quality of claims, network coverage and medical cost management, and talent acquisition and retention. Additionally, in most overseas markets, perception of commitment to the market and financial strength will likely be an important competitive factor.
Pricing and Reinsurance
Premium rates and fees for our global and local health care products reflect assumptions about future claims, expenses, customer demographics, investment returns, and profit margins. For products using networks of contracted health care professionals and facilities, premiums reflect assumptions about the impact of these contracts and utilization management on future claims. Most contracts permit rate changes at least annually.
The profitability of health care products is dependent upon the accuracy of projections for health care inflation (unit cost, location of delivery of care, currency of incurral and utilization), customer demographics, the adequacy of fees charged for administration and effective medical cost management.
Premium rates for our supplemental benefits products are based on assumptions about mortality, morbidity, customer acquisition and retention, customer demographics, expenses and capital requirements, as well as interest rates. Variable universal life insurance products fees consist of mortality, administrative, asset management and surrender charges assessed against the contract holder's fund balance. Mortality charges on variable universal life may be adjusted prospectively to reflect expected mortality experience. Most contracts permit premium rate changes at least annually.
A global approach to underwriting risk management allows each local business to underwrite and accept risk within specified limits. Retentions are centrally managed through cost effective use of external reinsurance to limit our liability on per life, per risk and per event (catastrophe) bases.
14 CIGNA CORPORATION - 2018 Form 10-K | | |
PART
I
ITEM 1. Business
Industry Developments and Other Items Affecting International Markets
South Korea represents our single largest geographic market for International Markets. For information on this concentration of risk for the International Markets segment's business in South Korea. see "Other Items Affecting Results of International Markets" in the International Markets section of the MD&A beginning on page 59 of this Form 10-K.
Pressure on social health care systems, a rapidly aging population and increased wealth and education in developing insurance markets are leading to higher demand for health insurance and financial security products. In the supplemental health, life and accident business, direct marketing channels continue to grow and attract new competitors with industry consolidation among financial institutions and other affinity partners.
Data privacy regulation has tightened in all markets in the wake of data privacy news scandals, impacting affinity partner and customer attitudes toward direct marketing of insurance and other financial services.
Group Disability and Other |
As explained further in the introduction to this Form 10-K, Group Disability and Other consists of our Group Disability and Life operating segment, along with COLI and certain run-off businesses reported together in Other Operations. In 2018, Group Disability and Other reported adjusted revenues of $5.1 billion and pre-tax adjusted income from operations of $529 million.
| | | | |
How We Win |
| |||
| | | | |
|
• Disability absence management model that reduces overall costs to employers |
|||
|
• Integration of disability products with medical and specialty offerings, promoting health and wellness and optimizing employee productivity |
|||
|
• Complementary portfolio of group disability, life and accident offerings |
|||
|
• Disciplined underwriting, pricing and investment strategies supporting profitable long-term growth |
|||
| | | | |
Group Disability and Life |
Our Group Disability and Life operating segment includes our commercial long- and short-term disability products, and our term life and universal life group insurance products. We also offer personal accident insurance and voluntary products and services. These products and services are distributed through brokers and direct sales and are available in fully-insured, experience-rated and ASO arrangements. The following chart depicts a high-level summary of our Principal Products and Services in this segment as of year-end, with definitions on subsequent pages.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Principal Products & Services |
| Payee | | Premium Rates | | Funding Solution(s) | |
Market Segment(s) |
|
Primary Distribution Channel(s) |
|
Primary Competitors |
| |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Group Disability | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Long-term Disability | Employer, Employee | Preset, guaranteed | Experience-rated Insured, Guaranteed Cost Insured, ASO | Commercial | Brokers, Direct | National Insurers, Regional Insurers | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Short-term Disability | Employer, Employee | Preset, guaranteed | Experience-rated Insured, Guaranteed Cost Insured, ASO | Commercial | Brokers, Direct | National Insurers, Regional Insurers | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Group Life | | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Term Life | Employer, Employee | Preset, guaranteed | Experience-rated Insured, Guaranteed Cost Insured | Commercial | Brokers, Direct | National Insurers, Regional Insurers | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Universal Life | Employee | Preset, guaranteed | Experience-rated Insured, Guaranteed Cost Insured | Commercial | Brokers, Direct | National Insurers, Regional Insurers | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Group Accident and Voluntary | | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Personal Accident Insurance | Employer, Employee | Preset, guaranteed | Experience-rated Insured, Guaranteed Cost Insured | Commercial | Brokers, Direct | National Insurers, Regional Insurers | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Voluntary Products and Services | Employee | Preset, guaranteed | Guaranteed Cost Insured | Commercial | Brokers, Direct | National Insurers, Regional Insurers | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Principal Products & Services |
Group Disability
| | CIGNA CORPORATION - 2018 Form 10-K 15 |
PART
I
ITEM 1. Business
resources to manage the cost of employee disability. We are an industry leader in helping employees return to work quickly, enabling higher productivity and lower cost for employers and a better quality of life for employees. While we offer this coverage in all three funding arrangements, most of our coverages are guaranteed cost.
Group Life Insurance
Other Products and Services
Pricing and Reinsurance |
Premiums charged for disability and term life insurance products are usually established in advance of the policy period, are generally guaranteed for one to three years, but selectively guaranteed for up to five years. Policies are generally subject to termination by the policyholder or by the insurance company annually. Premium rates reflect assumptions about future claims, expenses, credit risk, investment returns and profit margins. These assumptions may be based in whole or in part on prior experience of the account or on a pool of accounts, depending on the group size and the statistical credibility of the experience that varies by product.
Premiums for group universal life insurance products consist of mortality and administrative charges assessed against the policyholder's fund balance. Interest credited and mortality charges for group universal life may be adjusted prospectively to reflect expected interest and mortality experience. Mortality charges are subject to maximum guaranteed rates and interest credited on cash values is subject to minimum guaranteed rates as stated in the policy.
The premiums for these products are typically collected within the coverage year and then invested in assets that match the duration of the expected benefit payments that occur over many future years (primarily for disability benefits). With significant investments in longer-duration securities, net investment income is a critical element of profitability for this segment.
The effectiveness of return-to-work programs and morbidity levels will impact the profitability of disability insurance products. Our claim experience and industry data indicate a correlation between disability claim incidence levels and economic conditions, with submitted claims rising under adverse economic conditions, although the extent of this impact is unclear. For life insurance products, the degree to which future experience deviates from mortality and expense assumptions also affects profitability.
To reduce our exposure to large individual and catastrophic losses under group life, disability and accidental death policies, as well as our more recent accidental injury and critical illness policies, we purchase reinsurance from a diverse group of unaffiliated reinsurers. Our comprehensive reinsurance program consists of excess of loss treaties and catastrophe coverage designed to mitigate earnings volatility and provide surplus protection.
Market Segments |
Primary Distribution Channels |
16 CIGNA CORPORATION - 2018 Form 10-K | | |
PART
I
ITEM 1. Business
Competition |
The principal competitive factors that affect the Group Disability and Life segment are underwriting and pricing, the quality and effectiveness of claims management, relative operating efficiency, investment and risk management, distribution methodologies and producer relations, the breadth and variety of products and services offered, the quality of customer service and, more importantly, the state of the tools and technology available for customers, clients, consultants and producers. For certain products with longer-term liabilities, such as group long-term disability insurance, the financial strength of the insurer, as indicated by ratings issued by nationally recognized rating agencies, is also a competitive factor.
Ind |