filings.toolsItem 16. FORM 10-K SUMMARY
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Item 16. FORM 10-K SUMMARY
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 27, 2020
| CIGNA CORPORATION | |||
|---|---|---|---|
| By: | |||
| Eric P. Palmer | |||
| Executive Vice President and Chief Financial Officer | |||
| (Principal Financial Officer) | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated as of February 27, 2020.
| Signature | Title | |
|---|---|---|
| David M. Cordani | Chief Executive Officer and Director (Principal Executive Officer) | |
| Eric P. Palmer | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |
| Mary T. Agoglia Hoeltzel | Senior Vice President, Tax and Chief Accounting Officer (Principal Accounting Officer) | |
| William J. DeLaney | Director | |
| Eric J. Foss | Director | |
| Elder Granger, M.D. | Director | |
| Isaiah Harris, Jr. | Chairman of the Board |
| Mark McClellan, M.D. | Director | |
| Roman Martinez IV | Director | |
| Kathleen M. Mazzarella | Director | |
| John M. Partridge | Director | |
| William L. Roper, M.D. | Director | |
| Eric C. Wiseman | Director | |
| Donna F. Zarcone | Director | |
CIGNA CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedules other than those listed above are omitted because they are not required or are not applicable, or the required information is shown in the financial statements or notes thereto.
FS-1
Report of Independent Registered Public Accounting Firm on
Financial Statement Schedules
To the Board of Directors and Shareholders of Cigna Corporation
Our audits of the consolidated financial statements referred to in our report dated February 27, 2020 (which report and consolidated financial statements are included under Item 8 in this Annual Report on Form 10-K) also included an audit of the financial statement schedules listed on page FS-1 in Item 15 of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
Hartford, Connecticut
February 27, 2020
FS-2
CIGNA CORPORATION AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION
(REGISTRANT)
STATEMENTS OF INCOME
| For the years ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, | |||||||||
| Cigna* | Cigna* | Old Cigna* | |||||||
| (in millions) | 2019 | 2018 | 2017 | ||||||
| Revenues | |||||||||
| Net investment income | $ | - | $ | 123 | $ | - | |||
| Intercompany interest income | 6 | - | - | ||||||
| Total revenues | 6 | 123 | - | ||||||
| Operating expenses | |||||||||
| Selling, general and administrative expenses | **(**85) | 200 | 195 | ||||||
| Total operating expenses | **(**85) | 200 | 195 | ||||||
| Income (loss) from operations | 91 | (77) | (195) | ||||||
| Interest and other (expense) | **(**1,032) | (244) | (246) | ||||||
| Intercompany interest (expense) | **(**127) | (5) | (18) | ||||||
| Debt extinguishment costs | - | - | (321) | ||||||
| Realized investment (loss) | - | (1) | - | ||||||
| Loss before taxes | **(**1,068) | (327) | (780) | ||||||
| Income tax (benefit) | **(**251) | (74) | (194) | ||||||
| Loss of Parent Company | **(**817) | (253) | (586) | ||||||
| Equity in income of subsidiaries | 5,921 | 2,890 | 2,823 | ||||||
| Shareholders' net income | 5,104 | 2,637 | 2,237 | ||||||
| Shareholders' other comprehensive income (loss), net of tax | |||||||||
| Net unrealized appreciation (depreciation) on securities and derivatives | 957 | (365) | (37) | ||||||
| Net translation (losses) gains of foreign currencies | **(**54) | (152) | 304 | ||||||
| Postretirement benefits liability adjustment | **(**133) | 127 | 33 | ||||||
| Shareholders' other comprehensive income (loss), net of tax | 770 | (390) | 300 | ||||||
| Shareholders' comprehensive income | $ | 5,874 | $ | 2,247 | $ | 2,537 | |||
| ** As described in Note 4 to the Consolidated Financial Statements, on December 20, 2018, Old Cigna became a wholly-owned subsidiary of Cigna, and Cigna became the Registrant.* |
See Notes to Financial Statements on the following pages.
FS-3
CIGNA CORPORATION AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION
(REGISTRANT)
BALANCE SHEETS
| As of December 31, | |||||||
|---|---|---|---|---|---|---|---|
| (in millions) | 2019 | 2018 | |||||
| Assets | |||||||
| Cash and cash equivalents | $ | - | $ | 243 | |||
| Short-term investments | 30 | - | |||||
| Other current assets | 4 | 14 | |||||
| Total current assets | 34 | 257 | |||||
| Intercompany receivable | 4,111 | - | |||||
| Investments in subsidiaries | 77,380 | 68,969 | |||||
| Other noncurrent assets | 19 | 48 | |||||
| TOTAL ASSETS | $ | 81,544 | $ | 69,274 | |||
| Liabilities | |||||||
| Short-term debt | $ | 4,043 | $ | - | |||
| Other current liabilities | 457 | 418 | |||||
| Total current liabilities | 4,500 | 418 | |||||
| Intercompany payable | 2,341 | 4,965 | |||||
| Long-term debt | 29,365 | 22,863 | |||||
| TOTAL LIABILITIES | 36,206 | 28,246 | |||||
| Shareholders’ Equity | |||||||
| Common stock (shares issued, 386 and 381 ; authorized, 600 ) | 4 | 4 | |||||
| Additional paid-in capital | 28,306 | 27,751 | |||||
| Accumulated other comprehensive loss | **(**941) | (1,711) | |||||
| Retained earnings | 20,162 | 15,088 | |||||
| Less treasury stock, at cost | **(**2,193) | (104) | |||||
| TOTAL SHAREHOLDERS’ EQUITY | 45,338 | 41,028 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 81,544 | $ | 69,274 |
See Notes to Financial Statements on the following pages.
FS-4
CIGNA CORPORATION AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION
(REGISTRANT)
STATEMENTS OF CASH FLOWS
| For the years ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, | |||||||||
| Cigna* | Cigna* | Old Cigna* | |||||||
| (in millions) | 2019 | 2018 | 2017 | ||||||
| Cash Flows from Operating Activities | |||||||||
| Shareholders’ net income | $ | 5,104 | $ | 2,637 | $ | 2,237 | |||
| Adjustments to reconcile shareholders’ net income | |||||||||
| to net cash provided by operating activities | |||||||||
| Equity in income of subsidiaries | **(**5,921) | (2,890) | (2,823) | ||||||
| Dividends received from subsidiaries | 2,457 | - | 758 | ||||||
| Other liabilities | 43 | 412 | (224) | ||||||
| Debt extinguishment costs | - | - | 321 | ||||||
| Other, net | 20 | (14) | 333 | ||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 1,703 | 145 | 602 | ||||||
| Cash Flows from Investing Activities | |||||||||
| Short-term investment purchased, net | **(**30) | - | (6) | ||||||
| Other, net | - | (27,115) | (11) | ||||||
| NET CASH (USED IN) INVESTING ACTIVITIES | **(**30) | (27,115) | (17) | ||||||
| Cash Flows from Financing Activities | |||||||||
| Net change in amounts due to affiliates | 2,015 | 4,437 | 1,955 | ||||||
| Proceeds on issuance of commercial paper | 944 | - | 100 | ||||||
| Payments for debt extinguishment | - | - | (313) | ||||||
| Repayment of long-term debt | **(**3,002) | - | (1,250) | ||||||
| Net proceeds on issuance of long-term debt | - | 22,856 | 1,581 | ||||||
| Issuance of common stock | 224 | 1 | 131 | ||||||
| Common dividends paid | **(**15) | - | (10) | ||||||
| Repurchase of common stock | **(**1,987) | (32) | (2,725) | ||||||
| Tax withholding on stock compensation and other | **(**82) | (49) | (63) | ||||||
| Other | **(**13) | - | - | ||||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | **(**1,916) | 27,213 | (594) | ||||||
| Net (decrease) increase in cash and cash equivalents | **(**243) | 243 | (9) | ||||||
| Cash and cash equivalents, beginning of year | 243 | - | 18 | ||||||
| Cash and cash equivalents, end of year | $ | - | $ | 243 | $ | 9 | |||
| ** As described in Note 4 to the Consolidated Financial Statements, on December 20, 2018, Old Cigna became a wholly-owned subsidiary of Cigna, and Cigna became the Registrant.* |
See Notes to Financial Statements on the following pages.
FS-5
CIGNA CORPORATION AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION
(REGISTRANT)
NOTES TO CONDENSED FINANCIAL STATEMENTS
The accompanying condensed financial statements should be read in conjunction with the Consolidated Financial Statements and the accompanying notes thereto contained in this Annual Report on Form 10-K (“Form 10-K”).
Note 1 – For purposes of these condensed financial statements, Cigna Corporation’s (the “Company”) wholly-owned and majority-owned subsidiaries are recorded using the equity method of accounting.
Note 2 – See Note 7 – Debt included in Part II, Item 8 of this Form 10-K for a description of the short-term and long-term debt obligations of Cigna Corporation and its subsidiaries.
Debt repayment. During 2019, the Company repaid the $3.0 billion term loan.
Exchange of Legacy Notes for Cigna Notes and Redemption of Medco Notes. In the fourth quarter of 2019, the Company completed an exchange of $12.7 billion of legacy Notes issued by Express Scripts, Medco and Old Cigna for new Notes issued by the Company with the same interest rates, maturities and other comparable terms. The exchange is reflected as a non-cash investing and financing activity. The Company entered into this exchange primarily to simplify its capital structure and reporting obligations. Additionally, in the fourth quarter of 2019, Medco, a subsidiary of the Company, fully redeemed all of the remaining outstanding Medco Notes. As a result of the exchange and redemption, guarantees of obligations under the remaining legacy Notes not exchanged, as well as under Notes issued by the Company in September 2018 to finance its acquisition of Express Scripts, were released and we are no longer required to separately present Condensed Consolidated Financial Information under Rule 3-10 of Regulation S-X.
Term Loan Credit Agreement. The Company borrowed $3.0 billion under its Term Loan Credit Agreement to finance the Merger and to pay fees and expenses of the Merger. As of December 31, 2019, the Company repaid the term loan in full and the agreement was terminated.
Notes issued to fund the Express Scripts acquisition. In the third quarter of 2018, the Company issued private placement Notes with registration rights to finance the Express Scripts acquisition. Total proceeds were approximately $20.0 billion. Interest on this debt is generally paid semi-annually except for quarterly interest payments on the floating rate notes. The Company completed an exchange offer to register such debt in the third quarter of 2019.
Maturity of the Company’s long-term debt is as follows:
| (In millions) | ||||
|---|---|---|---|---|
| 2020 | $ | 3,099 | ||
| 2021 | $ | 3,812 | ||
| 2022 | $ | 1,770 | ||
| 2023 | $ | 4,699 | ||
| 2024 | $ | 714 | ||
| Maturities after 2024 | $ | 18,638 | ||
Note 3 — Intercompany liabilities of the Company consist primarily of payables to Old Cigna of $2.3 billion as of December 31, 2019 and $4.3 billion as of and December 31, 2018. Interest was accrued at an average monthly rate of 2.58% for 2019 and 2.33% for 2018. Intercompany receivables of the Company consist primarily of net amounts due from Express Scripts Holdings of $3.9 billion (consisting of an $8.2 billion receivable offset by a $4.3 billion payable) as of December 31, 2019. Interest income on the receivable was accrued at an annual fixed rate of 5.5%. Interest expense on the payable was accrued at an average rate of 2.58%.
Note 4 — The Company had guarantees of approximately $48 million as of December 31, 2019. These guarantees are primarily related to outstanding letters of credit. In 2019, no payments have been made on these guarantees.
FS-6
CIGNA CORPORATION AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
| Charged | Charged | |||||||||||||
| Balance at | (Credited) to | (Credited) | Balance at | |||||||||||
| (in millions) | beginning | costs and | to other | Other | end | |||||||||
| Description | of year | expenses | accounts | deductions | of year | |||||||||
| 2019 | ||||||||||||||
| Allowance for doubtful accounts | ||||||||||||||
| Accounts receivable, net | $ | 217 | $ | 51 | $ | - | $ | **(**16) | $ | 252 | ||||
| Deferred tax asset valuation allowance | $ | 199 | $ | **(**6) | $ | 3 | $ | - | $ | 196 | ||||
| Reinsurance recoverables | $ | 2 | $ | - | $ | - | $ | - | $ | 2 | ||||
| 2018 | ||||||||||||||
| Allowance for doubtful accounts | ||||||||||||||
| Accounts receivable, net | $ | 207 | $ | 18 | $ | (3) | $ | (5) | $ | 217 | ||||
| Deferred tax asset valuation allowance (1) | $ | 72 | $ | (5) | $ | 132 | $ | - | $ | 199 | ||||
| Reinsurance recoverables | $ | 3 | $ | (1) | $ | - | $ | - | $ | 2 | ||||
| 2017 | ||||||||||||||
| Investment asset valuation reserves | ||||||||||||||
| Commercial mortgage loans | $ | 5 | $ | 1 | $ | - | $ | (6) | $ | - | ||||
| Allowance for doubtful accounts | ||||||||||||||
| Accounts receivable, net | $ | 200 | $ | 19 | $ | (11) | $ | (1) | $ | 207 | ||||
| Deferred tax asset valuation allowance | $ | 87 | $ | 11 | $ | (26) | $ | - | $ | 72 | ||||
| Reinsurance recoverables | $ | 3 | $ | - | $ | - | $ | - | $ | 3 | ||||
| (1) Deferred tax valuation allowance amount includes amount assumed from Express Scripts in 2018. | ||||||||||||||
FS-7
Previous: Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES