Cigna 2009 Annual Report Download - page 35

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The profitability of this segment’s products depends on the adequacy of premiums charged and investment returns relative to
claims and expenses. The effectiveness of return to work programs and mortality levels also impact the profitability of disability
insurance products. CIGNA Disability and Life’s previous 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 impact of the current adverse economic conditions is not clear. For life insurance products, the degree to which future experience
deviates from mortality, morbidity and expense assumptions also affects profitability.
In order to reduce its exposure to large individual and catastrophic losses under group life, disability and accidental death policies,
CIGNA Disability and Life purchases reinsurance from unaffiliated reinsurers.
Markets and Distribution
CIGNA Disability and Life markets the group insurance products and services described above to employers, employees,
professional and other associations and groups. In marketing these products, CIGNA Disability and Life employs a sales force to
target customers with 50 or more employees and the products and services of this segment are primarily distributed through insurance
brokers and consultants, along with some direct sales. As of December 31, 2009, the field sales force for the products and services of
this segment consisted of approximately 200 sales professionals in 27 office locations.
Competition
The principal competitive factors that affect the CIGNA 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, and the quality of customer service. The Company
believes that CIGNA Disability and Life’s claims management capabilities and integration with CIGNA HealthCare’s benefits provide
a competitive advantage in this marketplace.
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. For more information concerning
insurance ratings, see “Ratings” in Section K beginning on page 32 of this Form 10-K.
The principal competitors of CIGNA’s group disability, life and accident businesses are other large and regional insurance
companies that market and distribute these or similar types of products.
As of December 31, 2009, CIGNA is one of the top five providers of group disability, life and accident insurance in the United
States, based on premiums.