Cigna 2013 Annual Report Download - page 5

33
2013 Performance
How do you characterize Cigna’s 2013
performance from an investor perspective?
Cigna delivered strong, competitively dierentiated
results for our shareholders in 2013 – extending an
outstanding track record of financial performance over
the past four years. We generated a total shareholder
return of approximately 64% in 2013, which ranked as
the highest among our core managed care competitors.
We adapted to an environment of considerable market
disruption, most notably from Health Care Reform and
changes to Medicare Advantage in the United States.
In addition to solid performance from each of our operating
business segments, we strengthened our balance sheet
and generated significant free cash flow from our businesses,
enabling us to return approximately $1 billion in value to
shareholders in 2013 through share repurchases.
We delivered a full-year medical cost trend of below
5% for our U.S. Commercial business for 2013, which
was among the best in our industry and which directly
benefited the approximately 85% of Cigna’s U.S.
customers who are in self-funding arrangements.
In the following conversation, David Cordani discusses Cigna’s 2013 performance; the trends, opportunities
and challenges shaping Cigna’s go-forward strategies for 2014 and beyond; and the company’s approach
to bringing more personalized products and services to its customers and clients.
We also had many important strategic achievements
that made a tangible, positive impact on our performance.
To name just a few:
We entered a transaction with Berkshire Hathaway, Inc.
to eectively exit our run-o reinsurance business. This
transaction, completed during the first quarter, significantly
improved our financial flexibility and strengthened our
balance sheet.
We made further improvement to our Pharmacy Benefits
Management capabilities through a new strategic
arrangement. This further enhanced our pharmacy
oerings for our customers and clients, and it allows
us to leverage an enhanced technology platform and
streamlined operating capabilities – to drive greater
flexibility and aordability for our customers and clients.
And we continued to deepen our global footprint, with
meaningful progress in important growth markets such
as Turkey, India and China. Our capabilities outside of
the United States clearly give us a more diverse platform
for growth.
All of these results and actions helped us to deliver more
personalized products and services, which we view as
essential to excelling in a highly competitive marketplace,
and to meeting the individual needs of our customers.
A
Q
*Earnings refers to Adjusted Income from Operations which, along with Adjusted Income from Operations per share, are each non-GAAP measures used to describe the
Company’s financial results. Definitions of Adjusted Income from Operations on a consolidated and segment basis are contained in Management’s Discussion and Analysis
of Financial Condition and Results of Operations (MD&A) on page 31 and 43, respectively, of the Form 10-K included in this annual report. The MD&A also includes
reconciliations of Adjusted Income from Operations to the most directly comparable GAAP measures.