Cigna 2009 Annual Report Download - page 47

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While the businesses and products supported are described elsewhere in this Form 10-K, the Invested Assets supporting the
insurance and contractholder liabilities of each of the Company’s segments are as follows:
x assets supporting CIGNA’s Health Care segment are structured to emphasize investment income, and provide the necessary
liquidity to meet cash flow requirements.
x assets supporting CIGNA’s Disability and Life segment are also structured to emphasize investment income, and provide
necessary liquidity to meet cash flow requirements. Invested Assets supporting longer-term group disability insurance benefits
and group life waiver of premium benefits are generally managed to an aggregate duration similar to that of the related benefit
cash flows.
x assets supporting the Run-off Reinsurance segment with respect to reinsurance provided for guaranteed minimum death benefit
contracts and guaranteed minimum income benefit contracts are structured to emphasize investment income, and provide the
necessary liquidity to meet cash flow requirements. For information about CIGNA’s use of derivative financial instruments in the
Run-off Reinsurance segment, see Notes 7 and 11 to CIGNA’s Consolidated Financial Statements beginning on pages 117 and
132 of this Form 10-K.
x assets supporting CIGNA’s Other Operations segment are associated primarily with fully guaranteed annuities (primarily
settlement annuities) and interest-sensitive life insurance (primarily corporate-owned life insurance products). Because settlement
annuities generally do not permit withdrawal by policyholders prior to maturity, the amount and timing of future benefit cash
flows can be reasonably estimated so funds supporting these products are invested in fixed income investments whose aggregate
duration generally matches the cashflows of the related benefits. As of December 31, 2009, the duration of assets that supported
these liabilities was approximately 11.2 years. Invested Assets supporting interest-sensitive life insurance products are primarily
fixed income investments and policy loans. Fixed income investments emphasize investment yield while meeting the liquidity
requirements of the related liabilities.
Investment strategy and results are affected by the amount and timing of cash available for investment, competition for
investments, economic conditions, interest rates and asset allocation decisions. CIGNA routinely monitors and evaluates the status of
its investments in light of current economic conditions, trends in capital markets and other factors. Such factors include industry
sector considerations for fixed maturity investments and mezzanine and private equity partnership investments, and geographic and
property-type considerations for commercial mortgage loan and real estate investments.
International Portfolios – Investment Strategy
As of December 31, 2009 the International Portfolios had $1.5 billion in Invested Assets, allocated among fixed maturity
investments (93%), short-term investments (5%) and other investments (2%). The International Portfolios are primarily managed by
external managers with whom CIGNA’s subsidiaries contract.
The characteristics of these assets are generally managed to reflect the underlying characteristics of related insurance and
contractholder liabilities, as well as regulatory and tax considerations in the countries where CIGNA’s subsidiaries operate. CIGNA
International’s Invested Assets are generally invested in the currency of related liabilities, typically the currency in which the
subsidiaries operate and with an aggregate duration generally matching the duration of insurance liabilities and surplus. CIGNA’s
investment policy allows the investment of subsidiary assets in U.S. dollars to the extent permitted by applicable regulation. CIGNA
International’s Invested Assets as of December 31, 2009 were held primarily in support of statutory surplus and liabilities associated
with the life, accident and supplemental health and healthcare products described in Section F on page 17 of this Form 10-K.