Cigna 2014 Annual Report Download - page 137

PART II
ITEM 8. Financial Statements and Supplementary Data
regulated by such statutory requirements. The statutory net income of the Company’s life insurance and HMO subsidiaries for the years ended,
and their statutory surplus as of December 31, were as follows:
(In millions) 2014 2013 2012
Net income $ 2,002 $ 1,631 $ 1,520
Surplus $ 7,487 $ 6,316 $ 6,109
The minimum statutory surplus required by regulators for the of insurance and other regulatory bodies with statutory carrying
Company’s life insurance and HMO company subsidiaries was values of approximately $0.4 billion. The Company’s life insurance
approximately $2.5 billion as of December 31, 2014. As of and HMO subsidiaries are also subject to regulatory restrictions that
December 31, 2014, statutory surplus for each of the Company’s life limit the amount of annual dividends or other distributions (such as
insurance and HMO subsidiaries is sufficient to meet the minimum loans or cash advances) insurance companies may extend to the parent
required by regulators. For one of the Company’s foreign insurance company without prior approval of regulatory authorities. The
subsidiaries, the regulatory authority has permitted deferral of certain maximum dividend distribution that the Company’s life insurance
policy acquisition costs that increased statutory capital and surplus by and HMO subsidiaries may make during 2015 without prior approval
approximately $0.2 billion as of December 31, 2014. There were no is approximately $1.0 billion. Restricted net assets of the Company as
other permitted practices for the Company’s insurance subsidiaries of December 31, 2014, were approximately $8.8 billion. Certain life
that significantly differed from prescribed regulatory accounting insurance subsidiaries of the Company are permitted to loan up to
practices. As of December 31, 2014, the Company’s life insurance and approximately $1.0 billion to the parent company without prior
HMO subsidiaries had investments on deposit with state departments approval.
Income Taxes
A. Income Tax Expense
The components of income taxes for the years ended December 31 were as follows:
(In millions) 2014 2013 2012
Current taxes
U.S. income taxes $ 1,068 $ 382 $ 604
Foreign income taxes 115 77 72
State income taxes 49 42 43
1,232 501 719
Deferred taxes (benefits)
U.S. income taxes 10 152 131
Foreign income taxes (22) 46 4
State income taxes (10) (1) (1)
(22) 197 134
TOTAL INCOME TAXES $ 1,210 $ 698 $ 853
Total income taxes for the years ended December 31 were different from the amount computed using the nominal federal income tax rate of 35%
for the following reasons:
(In millions) 2014 2013 2012
Tax expense at nominal rate $ 1,156 $ 761 $ 867
Effect of undistributed foreign earnings (74) (42) (37)
Health insurance industry tax 83 – –
State income tax (net of federal income tax benefit) 25 27 28
Other 20 (48) (5)
TOTAL INCOME TAXES $ 1,210 $ 698 $ 853
Consolidated pre-tax income from the Company’s foreign operations was approximately 10% in 2014, 12% in 2013 and 8% in 2012.
took effect in 2014 and that is not deductible for federal income tax
Effective Tax Rates
The consolidated effective tax rate of 36.6% in 2014 has increased
from historical levels due to the health insurance industry tax that
CIGNA CORPORATION - 2014 Form 10-K 105
NOTE 19