Cigna 2015 Annual Report Download - page 44

PART I
ITEM 1. Business
We manage our investment portfolios to reflect the underlying
Separate Accounts
characteristics of related insurance and contractholder liabilities and
Our subsidiaries or external advisors manage Separate Account assets
capital requirements, as well as regulatory and tax considerations
on behalf of contractholders. These assets are legally segregated from
pertaining to those liabilities and state investment laws. Insurance and
our other businesses and are not included in General Account
contractholder liabilities range from short duration health care
Invested Assets. Income, gains and losses generally accrue directly to
products to longer term obligations associated with disability and life
the contractholders. As of December 31, 2015, our Separate Account
insurance products and the run-off settlement annuity business.
assets consisted of:
Assets supporting these liabilities are managed in segregated
investment portfolios to facilitate matching of asset durations and $3.6 billion in separate account assets that constitute a portion of
cash flows to those of corresponding liabilities. Investment strategy the assets of the Cigna Pension Plan;
and results are affected by the amount and timing of cash available for
$3.3 billion in separate account assets that support Variable
investment, competition for investments, economic conditions,
Universal Life products sold as a part of our corporate-owned life
interest rates and asset allocation decisions. We routinely monitor and
insurance business, as well as through our Global Supplemental
evaluate the status of our investments, obtaining and analyzing
Benefits segment; and
relevant investment-specific information and assessing current
economic conditions, trends in capital markets and other factors such $900 million in separate account assets that support primarily
as industry sector, geographic and property-specific information. health care and other disability and life products.
Regulation
The laws and regulations governing our business continue to increase the operation of consumer-directed plans (including health savings
each year and are subject to frequent change. We are regulated by accounts, health reimbursement accounts, flexible spending
state, federal and international regulatory agencies that generally have accounts and debit cards).
discretion to issue regulations and interpret and enforce laws and The business of administering and insuring employee benefit
rules. These regulations can vary significantly from jurisdiction to programs in the United States, particularly health care programs, is
jurisdiction, and the interpretation of existing laws and rules also may heavily regulated by state and federal laws and administrative agencies,
change periodically. Domestic and international governments such as state departments of insurance, and federal agencies including
continue to enact and consider various legislative and regulatory HHS, CMS, the Internal Revenue Service (‘‘IRS’’) and the
proposals that could materially impact the health care system. Departments of Labor, Treasury and Justice, as well as the courts.
Our insurance and HMO subsidiaries must be licensed by the Health savings accounts, health reimbursement accounts and flexible
jurisdictions in which they conduct business. These subsidiaries are spending accounts also are regulated by the Department of the
subject to numerous state, federal and international regulations Treasury and the IRS.
related to their business operations, including, but not limited to: Our operations, accounts and other books and records are subject to
the form and content of customer contracts including benefit examination at regular intervals by regulatory agencies, including state
mandates (including special requirements for small groups); insurance and health and welfare departments, state boards of
pharmacy, CMS and comparable international regulators to assess
premium rates and medical loss ratios; compliance with applicable laws and regulations. In addition, our
current and past business practices are subject to review by, and from
the content of agreements with participating providers of covered
time to time we receive subpoenas and other requests of information
services;
from, various state insurance and health care regulatory authorities,
producer appointment and compensation; attorneys general, the Office of Inspector General (‘‘OIG’’), the
Department of Labor and other state, federal and international
claims processing, payment and appeals;
authorities, including inquiries by, and testimony before committees
underwriting practices; and subcommittees of the U.S. Congress regarding certain of our
business practices. These examinations, reviews, subpoenas and
reinsurance arrangements;
requests may result in changes to or clarifications of our business
solvency and financial reporting; practices, as well as fines, penalties or other sanctions.
unfair trade and claim practices; Our international subsidiaries are subject to regulations in
international jurisdictions where foreign insurers may be faced with
market conduct;
more onerous regulations than their domestic competitors. In
protecting the privacy and confidentiality of the information addition, the expansion of our operations into foreign countries
received from customers; increases our exposure to certain U.S. laws, such as the Foreign
Corrupt Practices Act of 1977 (‘‘FCPA’’). See page 18 for further
risk sharing arrangements with providers; discussion of international regulations.
reimbursement or payment levels for Medicare services;
advertising; and
14 CIGNA CORPORATION - 2015 Form 10-K
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