Cigna 2013 Annual Report Download - page 50

PART I
ITEM 1A. Risk Factors
increasing operating costs through the imposition of new or
increased taxes and other financial assessments,;
Risk Factors
restricting our ability to increase premium rates to meet costs
As a large company operating in a complex industry, we encounter a
(including denial or delays in approval and implementation of those
variety of risks and uncertainties that could have a material adverse effect
rates);
on our business, liquidity, results of operations or financial condition. You
should carefully consider each of the risks and uncertainties discussed limiting the level of margin we can earn on premiums through
below, in Management’s Discussion and Analysis of Results of Operations mandated minimum medical loss ratios; and
and Financial Condition and information contained elsewhere in this
significantly reducing the level of Medicare program payments.
Annual Report on Form 10-K. These risks and uncertainties are not the
only ones we face. Additional risks and uncertainties not presently known Specifically, in the United States, significant changes are occurring in
to us or that we currently believe to be immaterial may also adversely affect the health care system as a result of Health Care Reform. Certain of
us. Health Care Reform’s provisions have already become effective and
other significant provisions become effective in 2014. While federal
agencies have published interim and final regulations with respect to
Our business is subject to substantial government
certain requirements, many issues remain uncertain. It is difficult to
regulation, as well as new laws or regulations or
predict the impact of Health Care Reform on our business due to the
changes in existing laws or regulations that could
law’s complexity, the political environment, the continuing
have a material adverse effect on our business, results
development of implementing regulations and interpretive guidance
of operations, financial condition and liquidity.
and possible future legislative changes. We are unable to predict how
these events will develop and what impact they will have on Health
Our business is regulated at the federal, state, local and international Care Reform, and in turn, on our business including, but not limited
levels. The laws and rules governing our business and related to, our relationships with current and future customers, producers and
interpretations, including, among others, those associated with health care providers, products, services, processes and technology.
Health Care Reform, are increasing in number and complexity, are Further, if we fail to effectively implement or adjust our strategic and
subject to frequent change and can be inconsistent or in conflict with operational initiatives, such as by reducing operating costs, adjusting
each other. As a public company with global operations, we are subject premium pricing or benefit design or transforming our business
to the laws of multiple jurisdictions and the rules and regulations of model, in response to Health Care Reform and any other future
various governing bodies, such as those related to financial and other legislative or regulatory changes, this failure may have a material
disclosures, corporate governance, privacy, data protection, labor and adverse effect on our results of operations, financial condition and
employment, consumer protection, tax and anti-corruption. cash flows, including our ability to maintain the value of our goodwill
We must identify, assess and respond to new trends in the legislative and other intangible assets.
and regulatory environment, as well as comply with the various In addition to the regulation discussed above, we are required to
existing regulations applicable to our business. Existing or future laws, obtain and maintain insurance and other regulatory approvals to
rules, regulatory interpretations or judgments could force us to change market many of our products, increase prices for certain regulated
how we conduct our business, restrict revenue and enrollment growth, products and consummate some of our acquisitions and divestitures.
increase health care, technology and administrative costs, including Delays in obtaining or failure to obtain or maintain these approvals
capital requirements, and require enhancements to our compliance could reduce our revenue or increase our costs.
infrastructure and internal controls environment. Existing or future
laws and rules also could require us to take other actions such as For further information on regulation, see ‘‘Business – Regulation’’ in
changing our business practices, thereby increasing our liability in Part I, Item 1 of this Form 10-K. See also the description of Health
federal and state courts for coverage determinations, contract Care Reform’s minimum medical loss ratio and customer rebate
interpretation and other actions. requirements in the ‘‘Business – Global Health Care’’ section
beginning on page 2 of this Form 10-K.
In the foreseeable future, the impact of existing regulations and future
regulatory and legislative changes could materially adversely affect our
business, results of operations, financial condition and cash flows by,
We face risks related to litigation, regulatory audits
among other things:
and investigations.
reducing the potential for growth in revenues and customers by We are routinely involved in numerous claims, lawsuits, regulatory
disrupting the employer-based market (currently the primary audits, investigations and other legal matters arising in the ordinary
market for our Commercial operating segment) if employers cease course of business, including that of administering and insuring
to offer health care coverage for their employees; employee benefit programs. These could include benefit claims,
restricting revenue, premium and customer growth in certain breach of contract actions, tort claims, disputes regarding reinsurance
products and markets or expansion into new markets; arrangements, employment and employment discrimination-related
suits, employee benefit claims, wage and hour claims, tax, privacy, and
increasing health care or other benefit costs through enhanced or intellectual property and real estate related disputes. In addition, we
guaranteed coverage requirements; have incurred and likely will continue to incur liability for claims
18 CIGNA CORPORATION - 2013 Form 10-K
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Item 1A.
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