Cigna 2014 Annual Report Download - page 44

PART I
ITEM 1. Business
Individual Life Insurance and Annuity and Run-off Settlement Annuity Business
Retirement Benefits Businesses
Our settlement annuity business is a closed, run-off block of single
premium annuity contracts. These contracts are primarily liability
This business includes deferred gains recognized from the 1998 sale of settlements with approximately 23% of the liabilities associated with
the individual life insurance and annuity business and the 2004 sale of payments that are guaranteed and not contingent on survivorship. For
the retirement benefits business. For more information regarding the contracts that involve non-guaranteed payments, such payments are
sale of these businesses and the arrangements that secure our contingent on the survival of one or more parties involved in the
reinsurance recoverables for the retirement benefits business, see settlement.
Note 7 of the Consolidated Financial Statements.
Investments and Investment Income
cash flows to those of corresponding liabilities. Investment strategy
General Accounts
and results are affected by the amount and timing of cash available for
Our investment operations provide investment management and investment, competition for investments, economic conditions,
related services for our corporate invested assets and the insurance- interest rates and asset allocation decisions. We routinely monitor and
related invested assets in our General Account (‘‘General Account evaluate the status of our investments, obtaining and analyzing
Invested Assets’’). We acquire or originate, directly or through relevant investment-specific information and assessing current
intermediaries, a broad range of investments including private economic conditions, trends in capital markets and other factors such
placement and public securities, commercial mortgage loans, real as industry sector, geographic and/or property-specific information.
estate, mezzanine, private equity partnerships and short-term
investments. Invested assets also include policy loans that are fully
Separate Accounts
collateralized by insurance policy cash values. Invested Assets are
managed primarily by our subsidiaries and, to a lesser extent, external Our subsidiaries or external advisors manage Separate Account assets
managers with whom our subsidiaries contract. Net investment on behalf of contractholders. These assets are legally segregated from
income is included as a component of segment earnings for each of our other businesses and are not included in General Account
our reporting segments and Corporate. Realized investment gains Invested Assets. Income, gains and losses generally accrue directly to
(losses) are reported by segment but excluded from segment earnings. the contractholders. As of December 31, 2014, our Separate Account
For additional information about invested assets, see the ‘‘Investment assets consisted of:
Assets’’ section of the MD&A beginning on page 55 and Notes 10 to $3.8 billion in separate account assets that constitute a portion of
14 of our Consolidated Financial Statements. the assets of the Cigna Pension Plan;
We manage our investment portfolios to reflect the underlying $3.5 billion in separate account assets that support Variable
characteristics of related insurance and contractholder liabilities and Universal Life products sold as a part of our corporate-owned life
capital requirements, as well as regulatory and tax considerations insurance business, as well as through our Global Supplemental
pertaining to those liabilities and state investment laws. Insurance and Benefits segment; and
contractholder liabilities range from short duration health care
products to longer term obligations associated with disability and life $1.0 billion in separate account assets that support primarily health
insurance products and the run-off settlement annuity business. care and other disability and life products.
Assets supporting these liabilities are managed in segregated
investment portfolios to facilitate matching of asset durations and
Regulation
The laws and regulations governing our business continue to increase subject to numerous state, federal and international regulations
each year and are subject to frequent change. We are regulated by related to their business operations, including, but not limited to:
state, federal and international regulatory agencies that generally have the form and content of customer contracts including benefit
discretion to issue regulations and interpret and enforce laws and mandates (including special requirements for small groups);
rules. These regulations can vary significantly from jurisdiction to
premium rates and medical loss ratios;
jurisdiction, and the interpretation of existing laws and rules also may
change periodically. Domestic and international governments the content of agreements with participating providers of covered
continue to enact and consider various legislative and regulatory services;
proposals that could materially impact the health care system. See producer appointment and compensation;
‘‘Regulatory and Legislative Developments’’ on page 13.
claims processing and appeals;
Our insurance and HMO subsidiaries must be licensed by the
jurisdictions in which they conduct business. These subsidiaries are underwriting practices;
12 CIGNA CORPORATION - 2014 Form 10-K
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