Cigna 2013 Annual Report Download - page 104

PART II
ITEM 8. Financial Statements and Supplementary Data
fair value is equal to the market price of the Company’s common stock carrying values of assets and liabilities. Deferred income taxes are
on the date of grant. Compensation expense for strategic performance established based upon enacted tax rates and laws. A valuation
shares is recorded over the performance period. For strategic allowance is recorded when the assessment of available evidence
performance shares with payment dependent on a market condition, indicates there is a less than 50% likelihood that a deferred tax asset
fair value is determined at the grant date using a Monte Carlo will be realized. Current income taxes generally represent amounts
simulation model and not subsequently adjusted regardless of the final owed to or due from taxing authorities as related to filed income tax
outcome. For strategic performance shares with payment dependent returns.
on performance conditions, expense is initially accrued based on the The Company records income taxes on the unremitted earnings of
most likely outcome, but evaluated for adjustment each period for certain foreign subsidiaries at the foreign jurisdiction tax rate which
updates in the expected outcome. At the end of the performance can be significantly lower than the U.S. statutory tax rate.
period, expense is adjusted to the actual outcome (number of shares
awarded times the share price at the grant date). Note 19 contains detailed information about the Company’s income
taxes.
The Company’s participating life insurance policies entitle
policyholders to earn dividends that represent a portion of the The Company computes basic earnings per share using the weighted-
earnings of the Company’s life insurance subsidiaries. Participating average number of unrestricted common and deferred shares
insurance accounted for approximately 1% of the Company’s total life outstanding. Diluted earnings per share also includes the dilutive
insurance in force at the end of 2013, 2012 and 2011. effect of outstanding employee stock options and unvested restricted
stock granted after 2009 using the treasury stock method and the
effect of strategic performance shares.
The Company generally recognizes deferred income taxes for
differences between the financial reporting and income tax reporting
Acquisitions and Dispositions
The Company may from time to time acquire or dispose of assets, allocated to the tangible and intangible net assets acquired based on
subsidiaries or lines of business. Significant transactions are described management’s estimates of their fair value. Accordingly,
below. approximately $113 million was allocated to identifiable intangible
assets, primarily a distribution relationship and the value of business
acquired (‘‘VOBA’’) that represents the present value of the estimated
A. Joint Venture Agreement with
net cash flows from the long duration contracts in force, with the
Finansbank
remaining $116 million allocated to goodwill. The identifiable
intangible assets will be amortized over an estimated useful life of
On November 9, 2012, the Company acquired 51% of the total approximately 10 years. Goodwill has been allocated to the Global
shares of Finans Emeklilik ve Hayat A.S. (‘‘Finans Emeklilik’’), a Supplemental Benefits segment and is not deductible for federal
Turkish insurance company, from Finansbank A.S. (‘‘Finansbank’’), a income tax purposes.
Turkish retail bank, for a cash purchase price of approximately
$116 million. Finansbank continues to hold 49% of the total shares. The redeemable noncontrolling interest is classified as temporary
Finans Emeklilik operates in life insurance, accident insurance and equity in the Company’s Consolidated Balance Sheet because
pension product markets. The acquisition provides Cigna Finansbank has the right to require the Company to purchase its 49%
opportunities to reach and serve the growing middle class market in interest for the value of its net assets and the inforce business in
Turkey through Finansbank’s network of retail banking branches. 15 years.
In accordance with GAAP, the total purchase price, including the
redeemable noncontrolling interest of $111 million, has been
72 CIGNA CORPORATION - 2013 Form 10-K
T. Participating Business V. Earnings Per Share
U. Income Taxes
NOTE 3