Cigna 2009 Annual Report Download - page 62

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CIGNA's business depends on the uninterrupted operation of its systems and business functions, including information technology
and other business systems.
CIGNA’s business is highly dependent upon its ability to perform, in an efficient and uninterrupted fashion, its necessary business
functions, such as: claims processing and payment; internet support and customer call centers; and the processing of new and renewal
business. A power outage, pandemic, or failure of one or more of information technology, telecommunications or other systems could
cause slower system response times resulting in claims not being processed as quickly as clients desire, decreased levels of client
service and client satisfaction, and harm to CIGNA's reputation. In addition, because CIGNA’s information technology and
telecommunications systems interface with and depend on third-party systems, CIGNA could experience service denials if demand for
such service exceeds capacity or a third-party system fails or experiences an interruption. If sustained or repeated, such a business
interruption, systems failure or service denial could result in a deterioration of CIGNA’s ability to pay claims in a timely manner,
provide customer service, write and process new and renewal business, or perform other necessary corporate functions. This could
result in a materially adverse effect on CIGNA’s business results and liquidity.
A security breach of CIGNA’s computer systems could also interrupt or damage CIGNA’s operations or harm CIGNA’s reputation.
In addition, CIGNA could be subject to liability if sensitive customer information is misappropriated from CIGNA’s computer
systems. These systems may be vulnerable to physical break-ins, computer viruses, programming errors, attacks by third parties or
similar disruptive problems. Any publicized compromise of security could result in a loss of customers or a reduction in the growth of
customers, increased operating expenses, financial losses, additional litigation or other claims, which could have a material adverse
effect on CIGNA’s business.
CIGNA is focused on further developing its business continuity program to address the continuation of core business operations.
While CIGNA continues to test and assess its business continuity program to satisfy the needs of CIGNA’s core business operations
and addresses multiple business interruption events, there is no assurance that core business operations could be performed upon the
occurrence of such an event.
Global market, economic and geopolitical conditions may cause fluctuations in equity market prices, interest rates and credit
spreads which could impact the Company’s ability to raise or deploy capital as well as affect the Company’s overall liquidity.
If the capital markets and credit market experience extreme volatility and disruption, there could be downward pressure on stock
prices and credit capacity for certain issuers without regard to those issuers’ underlying financial strength. Extreme disruption in the
credit markets could adversely impact the Company’s availability and cost of credit in the future. In addition, unpredictable or
unstable market conditions could result in reduced opportunities to find suitable opportunities to raise capital.
CIGNA is subject to potential changes in the political environment, which could adversely affect the markets for its products.
Policy changes on the local, state and federal level, such as the expansion of the government’s role in the health care arena and
alternative assessments and tax increases specific to the health care insurance industry or health care insurance products as part of
federal health care reform initiatives, could fundamentally change the dynamics of CIGNA’s industry.
CIGNA faces risks in successfully managing the integration of Great-West Healthcare (or any other acquisition).
CIGNA acquired Great-West Healthcare with the expectation that the acquisition will result in various benefits, including, among
others, a broader distribution and provider network in certain geographic areas, an expanded range of health benefits and products,
cost savings, increased profitability of the acquired business by improving its total medical cost position, and achievement of
operating efficiencies. Achieving the anticipated benefits of the acquisition is subject to a number of uncertainties, including whether
CIGNA integrates Great-West Healthcare in an efficient and effective manner, and general competitive factors in the marketplace.
Failure to achieve these anticipated benefits could limit CIGNA’s ability to grow membership, particularly in the “Select” market,
result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy.
CIGNA faces intense competition to attract and retain key people.
CIGNA would be adversely impacted if it failed to attract additional key people and retain current key people, as this could result in
the inability to effectively execute the Company’s key initiatives and business strategy.