Cigna 2011 Annual Report Download - page 35

13CIGNA CORPORATION2011 Form10K
PARTI
ITEM 1 Business
F. International
Cigna’s International segment (“Cigna International”) oers supplemental
health, life and accident insurance products as well as international health
care products and services. ese products and services are provided by
subsidiaries of Cigna Corporation, including foreign operating entities.
Cigna International provides employers, anity groups and individuals
with quality local and global health care and related nancial protection
programs. With local licenses and partnerships in 30countries and
jurisdictions, Cigna International oers products and services to both
local citizens and globally mobile individuals. Cigna International
services its globally mobile customers virtually everywhere in the world.
Principal Products and Services
Supplemental Health, Life and Accident Insurance
As measured by 2011 premiums and fees, supplemental health, life
and accident insurance constituted approximately 51% of Cigna
International’s business. ese insurance products generally provide
simple, aordable coverage of risks for the health and nancial security of
individuals. Supplemental health products provide specied payments for
a variety of health risks and include personal accident, accidental death,
critical illness, hospitalization, travel (through the 2011 acquisition of
FirstAssist), dental, cancer and other dread disease coverages. Term life
as well as variable universal life insurance and other savings products are
also included in the product portfolio. Cigna International’s supplemental
health, life and accident insurance products are oered in South Korea,
Taiwan, Indonesia, Hong Kong, the European Union, China, New
Zealand, ailand and Turkey. In China, Cigna International owns
a 50% interest in a joint venture through which its products and
services are oered.
International Health Care
As measured by 2011 premiums and fees, International Health Care
constituted approximately 49% of Cigna International’s business. Cigna
International’s health care businesses primarily consist of products
and services to meet the needs of local and multinational companies
and organizations and their local and globally mobile employees
and dependents. ese products and services include insurance and
administrative services for medical, dental, vision, life, accidental death
and dismemberment, and disability risks. ese global health benets
products and services are oered through guaranteed cost, experience-
rated, administrative services only, and minimum premium funding
arrangements. For denitions of funding arrangements, see “Funding
Arrangements” in SectionD (Health Care) beginning on page3 of
this Form10-K. e customers of Cigna International’s global health
benets business are multinational companies and intergovernmental and
non-governmental organizations, headquartered in the UnitedStates,
Canada, Europe, the Middle East, Hong Kong, China and other
international locations. e acquisition of Vanbreda International, in
2010, further strengthened Cigna International’s position in this market.
In addition, Cigna International’s health care businesses include
products and services which are primarily provided through group
benets programs to employees of businesses and other organizations
in the United Kingdom and Spain. ese products and services include
medical indemnity insurance coverage, with some oerings having
managed care or administrative service aspects. ese products and
services generally provide an alternative or supplement to government
provided national health care programs.
Cigna International oers individual private medical insurance to local
citizens in Spain as well as to individual globally mobile high net worth
individuals. Cigna International has expanded its individual oerings
into China and Hong Kong. Local, regional or global coverage is
available to these groups, adapted to local market conditions.
Financial information, including premiums and fees, is presented in
the International section of the MD&A beginning on page49 and in
Note22 to Cigna’s Consolidated Financial Statements beginning on
page116 of this Form10-K.
Customer Service
With over 8.5million customer relationships across the globe, Cigna
International continues to be a leader in providing quality customer
service. Its globally mobile customers have access to medical professionals,
case management experts and claims specialists 24 hours a day, 365days
a year, through service centers dedicated to their unique needs. Cigna
International uses a wide range of measurement tools to gain better
understanding of customers’ needs– ranging from quick 5-minute
surveys of a customer’s call-center experience to more elaborate tracking
of loyalty as measured by customers’ likelihood to refer Cigna to a friend.
Cigna International has recently improved customer service representative
training and hiring practices, enhanced customer communication
methods based on customers’ preferences and expanded its basic
telephone oering to also include a choice of email or text messaging
channels. Additionally, Cigna International began oering opt-in
choices for customers who choose to go paperless for their statements
and explanations of benets, and has improved the online claims
process by simplifying the interface and providing worldwide access.
Pricing, Reserves and Reinsurance
Premium rates for Cigna International’s supplemental health, life
and accident insurance products are based on assumptions about
mortality, morbidity, customer acquisition and retention, expenses
and target prot margins, as well as interest rates. e protability of
these products is primarily driven by the adequacy of mortality and
morbidity assumptions used, and customer retention.
Fees for variable universal life insurance products consist of mortality,
administrative, asset management and surrender charges assessed
against the contractholder’s fund balance. Mortality charges on variable
universal life may be adjusted prospectively to reect expected mortality
experience.
Premium rates and fees for Cigna International’s health care products
reect assumptions about future claims, expenses, customer demographics,
investment returns, and prot margins. For products using networks
of contracted health care professionals and facilities, premiums reect
assumptions about the impact of these contracts and utilization
management on future claims. Most of the premium volume for
the medical indemnity business is on a guaranteed cost basis. Other
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