Cigna 2008 Annual Report Download - page 65

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45
Initiatives to Lower Operating Expenses
The Company has undertaken several initiatives to realign its organization and consolidate support functions in an effort to increase
efficiency and responsiveness to customers and to reduce costs.
In 2008, the Company conducted a comprehensive review of its ongoing businesses with an emphasis on reducing operating expenses
in the Health Care segment. As a result of the review, during the fourth quarter of 2008, the Company committed to a plan to reduce
operating costs in order to meet the challenges and opportunities presented by the current economic environment. The Company
anticipates the plan will be substantially complete by the end of 2009. As a result, the Company recognized in other operating
expenses a total charge of $55 million pre-tax ($35 million after-tax), which included $44 million pre-tax ($28 million after-tax) for
severance and other related costs resulting from reductions of approximately 1,100 positions in its workforce and $11 million pre-tax
($7 million after-tax) resulting from consolidation of facilities. The Company expects to pay $53 million in cash related to this
charge, most of which will occur in 2009. The Health Care segment reported $44 million pre-tax ($27 million after-tax) of the total
charge. The remainder was reported as follows: Disability and Life: $3 million pre-tax ($2 million after-tax), and International: $8
million pre-tax ($6 million after-tax). As a result of these actions, the Company expects annualized after-tax savings of approximately
$70 million, a portion of which is expected to be realized in 2009.