Cigna 2012 Annual Report Download - page 35

PART I
ITEM 1 Business
Other Operations
Cigna’s Other Operations segment includes the following businesses: mortality charges on variable universal life may be adjusted
prospectively to reflect expected interest and mortality experience. In
corporate owned life insurance; order to reduce its exposure to large individual and catastrophe losses,
deferred gains recognized from the 1998 sale of the individual life Cigna purchases reinsurance from unaffiliated reinsurers.
insurance and annuity business and the 2004 sale of the retirement
benefits business; and
Individual Life Insurance & Annuity and
run-off settlement annuity business.
Retirement Benefits Businesses
The products and services related to these operations are offered by
For more information regarding the sale of these businesses and the
subsidiaries of Cigna Corporation.
arrangements which secure Cigna’s reinsurance recoverables, see
Note 8 of the Consolidated Financial Statements.
Corporate-owned Life Insurance (‘‘COLI’’)
The principal products of the COLI business are permanent insurance
Settlement Annuity Business
contracts sold to corporations to provide coverage on the lives of
Cigna’s settlement annuity business is a closed run-off block of single
certain employees for the purpose of funding employer-paid future
premium annuity contracts. These contracts are primarily liability
benefit obligations. Permanent life insurance provides coverage that,
settlements with approximately 28% of the liabilities associated with
when adequately funded, does not expire after a term of years. The
payments that are guaranteed and not contingent on survivorship. In
contracts are primarily non-participating universal life policies. Fees
the case of the contracts that involve non-guaranteed payments, such
for universal life insurance products consist primarily of mortality and
payments are contingent on the survival of one or more parties
administrative charges assessed against the policyholder’s fund
involved in the settlement.
balance. Interest credited and mortality charges for universal life and
Investments and Investment Income
cash flows to those of corresponding liabilities. Investment strategy
General Accounts
and results are affected by the amount and timing of cash available for
Cigna’s investment operations provide investment management and investment, competition for investments, economic conditions,
related services for Cigna’s corporate invested assets and the insurance- interest rates and asset allocation decisions. Cigna routinely monitors
related invested assets in its General Account (‘‘General Account Invested and evaluates the status of its investments, obtaining and analyzing
Assets’’). Cigna acquires or originates, directly or through intermediaries, relevant investment-specific information as well as assessing current
a broad range of investments including private placements and public economic conditions, trends in capital markets and other factors.
securities, commercial mortgage loans, real estate, mezzanine, private Such factors include industry sector considerations for fixed maturity
equity partnerships and short-term investments. Invested assets also investments and mezzanine and private equity partnership
include policy loans, that are fully collateralized by insurance policy cash investments, and geographic and property-type considerations for
values. Invested Assets are managed primarily by Cigna subsidiaries and, commercial mortgage loan and real estate investments.
to a lesser extent, external managers with whom Cigna’s subsidiaries
contract. Net investment income and realized investment gains (losses)
Separate Accounts
are included as a component of earnings for each of Cigna’s operating
segments (Global Health Care, Group Disability and Life, Global Cigna subsidiaries or external managers manage Separate Account
Supplemental Benefits, Run-off Reinsurance, and Other Operations) and assets on behalf of contractholders. These assets are legally segregated
Corporate. For additional information about invested assets, see the from the Company’s other businesses and are not included in the
‘‘Investment Assets’’ section of the MD&A beginning on page 56 and General Account Invested Assets. Income, gains and losses generally
Notes 11, 12, 13, 14 and 15 to Cigna’s Consolidated Financial accrue directly to the contractholders.
Statements. As of December 31, 2012, Cigna’s Separate Account assets consisted
Cigna’s investment strategy is to maximize risk-adjusted yields for the of:
portfolios. Cigna manages the investment portfolios to reflect the $3.4 billion in separate account assets that constitute a portion of
underlying characteristics of related insurance and contractholder the assets of the Cigna Pension Plan;
liabilities and capital requirements, as well as regulatory and tax $3.4 billion in separate account assets that support Variable
considerations pertaining to those liabilities and state investment laws. Universal Life products sold as a part of the Company’s corporate-
Insurance and contractholder liabilities range from short duration owned life insurance business, as well as through the Company’s
health care products to longer term obligations associated with Global Supplemental Benefits segment; and
disability and life products, and the run-off settlement annuity
business. Assets supporting these liabilities are managed in segregated $1.0 billion in separate account assets that support primarily health
investment portfolios to facilitate matching of asset durations and care and other disability and life products.
CIGNA CORPORATION - 2012 Form 10-K 13
F.
•
•
•
G.
•
•
•