Cigna 2008 Annual Report Download - page 106

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Notes to the Consolidated Financial Statements
Note 1 — Description of Business
CIGNA Corporation together with its subsidiaries (referred to collectively as “the Company”) constitutes one of the largest investor-
owned health service organizations in the United States. Its subsidiaries are major providers of health care and related benefits, the
majority of which are offered through the workplace, including health care products and services such as medical coverages,
pharmacy, behavioral health, dental benefits, and disease management; group disability, life and accident insurance; and disability and
workers’ compensation case management and related services. In addition, the Company has an international operation that offers
life, accident and supplemental health insurance products and international health care products and services to businesses and
individuals in selected markets. The Company also has certain inactive businesses, including a run-off reinsurance operation.
Note 2 — Summary of Significant Accounting Policies
A. Basis of Presentation
The consolidated financial statements include the accounts of CIGNA Corporation, its significant subsidiaries, and variable interest
entities of which CIGNA Corporation is the primary beneficiary. Intercompany transactions and accounts have been eliminated in
consolidation.
These consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United
States of America (GAAP). Amounts recorded in the consolidated financial statements reflect management’s estimates and
assumptions about medical costs, investment valuation, interest rates and other factors. Significant estimates are discussed throughout
these Notes; however, actual results could differ from those estimates.
Certain reclassifications have been made to prior period amounts to conform to the presentation of 2008 amounts.
Discontinued operations. Summarized financial data for discontinued operations in 2008 primarily represents a gain of $3 million
after-tax from the settlement of certain issues related to a past divestiture.
For 2007 and 2006, discontinued operations primarily reflects:
• impairment losses related to the dispositions in 2007 and 2006 of several Latin American insurance operations as discussed in
Note 3; and
• realized gains on the disposition of certain directly-owned real estate investments in 2007 and 2006 as discussed in Note 13.
Unless otherwise indicated, amounts in these Notes exclude the effects of discontinued operations.
(In millions) 2008 2007 2006
Income before income (taxes) benefits $ 3 $ 25 $ 19
Income (taxes) benefits 1 (7) (6)
Income from operations 4 18 13
Impairment loss, net of tax - (23) (17)
Income (loss) from discontinued operations, net of taxes $ 4 $(5) $(4)
Variable interest entities. As of December 31, 2008 the Company is no longer a primary beneficiary in any variable interest entities.
As of 2007, the Company consolidated $5 million in assets and $5 million in liabilities as the primary beneficiary of one real estate
joint venture.
B. Recent Accounting Pronouncements
Fair value measurements. Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards No. (SFAS
No.) 157, “Fair Value Measurements.” This standard expands disclosures about fair value measurements and clarifies how to measure
fair value by focusing on the price that would be received when selling an asset or paid to transfer a liability (exit price). In addition,
the Financial Accounting Standards Board (FASB) amended SFAS No. 157 to provide additional guidance for determining the fair
value of a financial asset when the market for that instrument is not active. See Note 11 for information on the Company’s fair value
measurements including new required disclosures.