Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS


The Cigna Group Consolidated Statements of Income
	Unaudited				Unaudited


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per share amounts)	2023		2022 (1)		2023		2022 (1)
Revenues
Pharmacy revenues	$	33,964	$	31,972	$	66,108	$	62,669
Premiums	11,039		10,426		22,064		20,782
Fees and other revenues	3,305		2,755		6,376		5,294
Net investment income	278		325		555		739
TOTAL REVENUES	48,586		45,478		95,103		89,484
Benefits and expenses
Pharmacy and other service costs	33,442		31,150		64,901		60,963
Medical costs and other benefit expenses	9,034		8,192		18,080		16,464
Selling, general and administrative expenses	3,434		3,264		6,972		6,539
Amortization of acquired intangible assets	455		501		914		959
TOTAL BENEFITS AND EXPENSES	46,365		43,107		90,867		84,925
Income from operations	2,221		2,371		4,236		4,559
Interest expense and other	(363)		(301)		(721)		(600)


Net realized investment gains (losses)	26		(89)		(30)		(411)
Income before income taxes	1,884		1,981		3,485		3,548
TOTAL INCOME TAXES	374		411		669		766
Net income	1,510		1,570		2,816		2,782
Less: Net income attributable to noncontrolling interests	50		13		89		28
SHAREHOLDERS' NET INCOME	$	1,460	$	1,557	$	2,727	$	2,754
Shareholders' net income per share
Basic	$	4.96	$	4.94	$	9.24	$	8.69
Diluted	$	4.92	$	4.89	$	9.15	$	8.61

(1) Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023. See Note 2 to the Consolidated Financial Statements for further information.

The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.


The Cigna Group Consolidated Statements of Comprehensive Income
	Unaudited				Unaudited
	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2023		2022 (1)		2023		2022 (1)
Net income	$	1,510	$	1,570	$	2,816	$	2,782
Other comprehensive income (loss), net of tax
Net unrealized appreciation (depreciation) on securities and derivatives	20		(670)		214		(1,513)
Net long-duration insurance and contractholder liabilities measurement adjustments	(117)		6		(448)		465
Net translation losses on foreign currencies	(19)		(207)		(3)		(270)
Postretirement benefits liability adjustment	7		27		17		40
Other comprehensive loss, net of tax	(109)		(844)		(220)		(1,278)
Total comprehensive income	1,401		726		2,596		1,504

Comprehensive income (loss) attributable to noncontrolling interests
Net income attributable to redeemable noncontrolling interests	45		2		79		5
Net income attributable to other noncontrolling interests	5		11		10		23
Other comprehensive loss attributable to redeemable noncontrolling interests	—		(1)		—		(3)
Total comprehensive income attributable to noncontrolling interests	50		12		89		25
SHAREHOLDERS' COMPREHENSIVE INCOME	$	1,351	$	714	$	2,507	$	1,479

The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.


The Cigna Group Consolidated Balance Sheets

	Unaudited
	As of June 30,		As of December 31,

(In millions)	2023		2022 (1)
Assets
Cash and cash equivalents	$	9,585	$	5,924
Investments	872		905
Accounts receivable, net	18,333		17,218
Inventories	4,514		4,777
Other current assets	1,407		1,298

Total current assets	34,711		30,122
Long-term investments	18,967		16,288
Reinsurance recoverables	5,143		5,416

Property and equipment	3,884		3,774
Goodwill	45,811		45,811
Other intangible assets	31,713		32,492
Other assets	2,501		2,704
Separate account assets	7,324		7,278
TOTAL ASSETS	$	150,054	$	143,885
Liabilities
Current insurance and contractholder liabilities	$	7,539	$	5,409
Pharmacy and other service costs payable	18,617		17,070
Accounts payable	8,072		7,775
Accrued expenses and other liabilities	8,499		7,978
Short-term debt	4,618		2,993

Total current liabilities	47,345		41,225
Non-current insurance and contractholder liabilities	11,575		11,976
Deferred tax liabilities, net	7,594		7,786
Other non-current liabilities	2,575		2,766
Long-term debt	28,115		28,100
Separate account liabilities	7,324		7,278
TOTAL LIABILITIES	104,528		99,131
Contingencies — Note 16
Redeemable noncontrolling interests	62		66
Shareholders' equity
Common stock (2)	4		4
Additional paid-in capital	30,436		30,233
Accumulated other comprehensive loss	(1,878)		(1,658)
Retained earnings	39,936		37,940
Less: Treasury stock, at cost	(23,053)		(21,844)
TOTAL SHAREHOLDERS' EQUITY	45,445		44,675
Other noncontrolling interests	19		13
Total equity	45,464		44,688
Total liabilities and equity	$	150,054	$	143,885

*(1)*Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023. See Note 2 to the Consolidated Financial Statements for further information.

*(2)*Par value per share, $0.01; shares issued, 399 million as of June 30, 2023 and 398 million as of December 31, 2022; authorized shares, 600 million.

The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.


The Cigna Group
Consolidated Statements of Changes in Total Equity
Unaudited
Three Months Ended June 30, 2023
(In millions)	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive (Loss)		Retained Earnings		Treasury Stock		Shareholders' Equity		Other Non- controlling Interests		Total Equity		Redeemable Noncontrolling Interests
Balance at March 31, 2023	$	4	$	30,332	$	(1,769)	$	38,841	$	(22,906)	$	44,502	$	16	$	44,518	$	78

Effects of issuing stock for employee benefits plans			106						(1)		105				105
Other comprehensive loss					(109)						(109)				(109)		—
Net income							1,460				1,460		5		1,465		45
Common dividends declared (per share: $1.23)							(365)				(365)				(365)
Repurchase of common stock			—						(146)		(146)				(146)
Other transactions impacting noncontrolling interests			(2)								(2)		(2)		(4)		(61)
Balance at June 30, 2023	$	4	$	30,436	$	(1,878)	$	39,936	$	(23,053)	$	45,445	$	19	$	45,464	$	62


Three Months Ended June 30, 2022 (1)
(In millions)	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive (Loss)		Retained Earnings		Treasury Stock		Shareholders' Equity		Other Non- controlling Interests		Total Equity		Redeemable Noncontrolling Interests


Balance at March 31, 2022, as retrospectively restated (1)	4		29,736		(1,500)		33,464		(15,581)		46,123		22		46,145		55
Effect of issuing stock for employee benefit plans			194						(1)		193				193
Other comprehensive loss					(843)						(843)				(843)		(1)
Net income							1,557				1,557		11		1,568		2
Common dividends declared (per share: $1.12)							(353)				(353)				(353)
Repurchase of common stock			—						(1,006)		(1,006)				(1,006)
Other transactions impacting noncontrolling interests			—								—		(3)		(3)		(11)
Balance at June 30, 2022	$	4	$	29,930	$	(2,343)	$	34,668	$	(16,588)	$	45,671	$	30	$	45,701	$	45

The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.


The Cigna Group
Consolidated Statements of Changes in Total Equity
Unaudited
Six Months Ended June 30, 2023
(In millions)	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive (Loss)		Retained Earnings		Treasury Stock		Shareholders' Equity		Other Non- controlling Interests		Total Equity		Redeemable Noncontrolling Interests


Balance at December 31, 2022, as retrospectively restated (1)	$	4	$	30,233	$	(1,658)	$	37,940	$	(21,844)	$	44,675	$	13	$	44,688	$	66
Effect of issuing stock for employee benefit plans			205						(105)		100				100
Other comprehensive loss					(220)						(220)				(220)		—
Net income							2,727				2,727		10		2,737		79
Common dividends declared (per share: $2.46)							(731)				(731)				(731)
Repurchase of common stock			—						(1,104)		(1,104)				(1,104)
Other transactions impacting noncontrolling interests			(2)								(2)		(4)		(6)		(83)
Balance at June 30, 2023	$	4	$	30,436	$	(1,878)	$	39,936	$	(23,053)	$	45,445	$	19	$	45,464	$	62

Six Months Ended June 30, 2022 (1)
(In millions)	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive (Loss)		Retained Earnings		Treasury Stock		Shareholders' Equity		Other Non- controlling Interests		Total Equity		Redeemable Noncontrolling Interests


Balance at December 31, 2021, as retrospectively restated (1)	4		29,574		(1,068)		32,623		(14,175)		46,958		18		46,976		54
Effect of issuing stock for employee benefit plans			356						(73)		283				283
Other comprehensive loss					(1,275)						(1,275)				(1,275)		(3)
Net income							2,754				2,754		23		2,777		5
Common dividends declared (per share: $2.24)							(709)				(709)				(709)
Repurchase of common stock			—						(2,340)		(2,340)				(2,340)
Other transactions impacting noncontrolling interests			—								—		(11)		(11)		(11)
Balance at June 30, 2022	$	4	$	29,930	$	(2,343)	$	34,668	$	(16,588)	$	45,671	$	30	$	45,701	$	45

The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.

The Cigna Group

Consolidated Statements of Cash Flows


	Unaudited
	Six Months Ended June 30,

(In millions)	2023		2022 (1)
Cash Flows from Operating Activities
Net income	$	2,816	$	2,782
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,504		1,476
Realized investment losses, net	30		411
Deferred income tax benefit	(207)		(164)


Net changes in assets and liabilities, net of non-operating effects:
Accounts receivable, net	(1,144)		(2,769)
Inventories	263		(59)
Reinsurance recoverable and Other assets	109		530
Insurance liabilities	1,727		(8)
Pharmacy and other service costs payable	1,547		1,124
Accounts payable and Accrued expenses and other liabilities	638		(34)
Other, net	237		(15)
NET CASH PROVIDED BY OPERATING ACTIVITIES	7,520		3,274
Cash Flows from Investing Activities
Proceeds from investments sold:
Debt securities and equity securities	646		1,239
Investment maturities and repayments:
Debt securities and equity securities	502		863
Commercial mortgage loans	82		69
Other sales, maturities and repayments (primarily short-term and other long-term investments)	313		745
Investments purchased or originated:
Debt securities and equity securities	(3,339)		(2,024)
Commercial mortgage loans	(59)		(84)
Other (primarily short-term and other long-term investments)	(685)		(849)
Property and equipment purchases, net	(805)		(612)

Divestitures, net of cash sold	27		(57)
Other, net	(79)		(22)
NET CASH USED IN INVESTING ACTIVITIES	(3,397)		(732)
Cash Flows from Financing Activities
Deposits and interest credited to contractholder deposit funds	96		84
Withdrawals and benefit payments from contractholder deposit funds	(100)		(94)
Net change in short-term debt	183		(244)



Repayment of long-term debt	(80)		—
Net proceeds on issuance of long-term debt	1,491		—
Repurchase of common stock	(1,116)		(2,374)
Issuance of common stock	59		217
Common stock dividend paid	(730)		(709)
Other, net	(275)		33
NET CASH USED IN FINANCING ACTIVITIES	(472)		(3,087)
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash	9		(80)
Net increase (decrease) in cash, cash equivalents and restricted cash	3,660		(625)
Cash, cash equivalents and restricted cash January 1, (2)	5,976		5,548
Cash, cash equivalents and restricted cash, June 30,	9,636		4,923
Cash and cash equivalents reclassified to Assets of businesses held for sale	—		(455)
Cash, cash equivalents and restricted cash June 30, per Consolidated Balance Sheets (3)	$	9,636	$	4,468
Supplemental Disclosure of Cash Information:
Income taxes paid, net of refunds	$	926	$	911
Interest paid	$	632	$	615

*(2)*Includes $425 million reported in Assets of businesses held for sale as of January 1, 2022.

*(3)*Restricted cash and cash equivalents were reported in other long-term investments.

The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.

THE CIGNA GROUP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

TABLE OF CONTENTS



Note Number	Footnote	Page

BUSINESS AND CAPITAL STRUCTURE
1	Description of Business	10
2	Summary of Significant Accounting Policies	10
3	Accounts Receivable, Net	12
4	Supplier Finance Program	12
5	Mergers, Acquisitions and Divestitures	12

6	Earnings Per Share	13
7	Debt	14
8	Common and Preferred Stock	16
INSURANCE INFORMATION
9	Insurance and Contractholder Liabilities	16
10	Reinsurance	21
INVESTMENTS
11	Investments	23
12	Fair Value Measurements	26
13	Variable Interest Entities	30
14	Accumulated Other Comprehensive Income (Loss)	30


COMPLIANCE, REGULATION AND CONTINGENCIES
15	Income Taxes	32
16	Contingencies and Other Matters	32
RESULTS DETAILS
17	Segment Information	34

Note 1 – Description of Business

The Cigna Group, together with its subsidiaries (either individually or collectively referred to as the "Company," "we," "us" or "our"), is a global health company with a mission of helping those we serve improve their health and vitality. Our subsidiaries offer a differentiated set of pharmacy, medical, behavioral, dental and related products and services.

The majority of these products are offered through employers and other groups such as governmental and non-governmental organizations, unions and associations. Cigna Healthcare also offers commercial health and dental insurance and Medicare products to individuals in the United States and selected international markets. In addition to these ongoing operations, The Cigna Group also has certain run-off operations.

A full description of our segments follows:

Evernorth Health Services includes a broad range of coordinated and point solution health services and capabilities, as well as those from partners across the health care system, in Pharmacy Benefits, Home Delivery Pharmacy, Specialty Pharmacy, Distribution and Care Delivery and Management Solutions, which are provided to health plans, employers, government organizations and health care providers.

Cigna Healthcare includes the U.S. Commercial, U.S. Government and International Health operating segments which provide comprehensive medical and coordinated solutions to clients and customers. U.S. Commercial products and services include medical, pharmacy, behavioral health, dental and other products and services for insured and self-insured clients. U.S. Government solutions include Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors and individual health insurance plans. International Health solutions include health care coverage in our international markets, as well as health care benefits for globally mobile individuals and employees of multinational organizations.

Other Operations comprises the remainder of our business operations, which includes ongoing businesses and exited businesses. Our ongoing businesses include continuing business (corporate-owned life insurance ("COLI")) and our run-off businesses. Our run-off businesses include (i) variable annuity reinsurance business (also referred to as guaranteed minimum death benefit ("GMDB") and guaranteed minimum income benefit ("GMIB") business) that was effectively exited through reinsurance with Berkshire Hathaway Life Insurance Company of Nebraska ("Berkshire") in 2013, (ii) settlement annuity business, and (iii) individual life insurance and annuity and retirement benefits businesses comprised of deferred gains from the sales of these businesses. Our exited businesses include our interest in a joint venture in Türkiye, which was sold in December 2022 and the international life, accident and supplemental benefits businesses sold in July 2022 (the "Chubb transaction").

Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate debt less net investment income on investments not supporting segment and other operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, operating severance, certain overhead and enterprise-wide project costs and intersegment eliminations for products and services sold between segments.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements include the accounts of The Cigna Group and its consolidated subsidiaries. Intercompany transactions and accounts have been eliminated in consolidation. These Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Certain amounts in prior years have been reclassified to conform to the current year presentation.

Amounts recorded in the Consolidated Financial Statements necessarily reflect management's estimates and assumptions about medical costs, investment and receivable valuations, interest rates and other factors. Significant estimates are discussed throughout these Notes; however, actual results could differ from those estimates. The impact of a change in estimate is generally included in earnings in the period of adjustment.

These interim Consolidated Financial Statements are unaudited but include all adjustments (including normal recurring adjustments) necessary, in the opinion of management, for a fair statement of financial position and results of operations for the periods reported. The interim Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes included in the 2022 Annual Report on Form 10-K ("2022 Form 10-K"). The preparation of interim Consolidated Financial Statements necessarily relies heavily on estimates. This and other factors, including the seasonal nature of portions of the health care and related benefits business, as well as competitive and other market conditions, call for caution in estimating full-year results based on interim results of operations.

Recent Accounting Pronouncements

The Company's 2022 Form 10-K includes discussion of significant recent accounting pronouncements that either have impacted or may impact our financial statements in the future. The following information provides updates on recently adopted accounting pronouncements that have occurred since the Company filed its 2022 Form 10-K. There are no significant accounting pronouncements not yet adopted as of June 30, 2023.

Targeted Improvements to the Accounting for Long-Duration Contracts ("LDTI"), Accounting Standards Update ("ASU") 2018-12 and related amendments

The Cigna Group adopted LDTI January 1, 2023, which includes the following key provisions:

Changes to the measurement of the future policy benefits liability for traditional and limited-pay insurance contracts:
Assumptions used to measure cash flows (such as mortality, morbidity and lapse assumptions) are updated at least annually with the effect of changes in those assumptions remeasured retrospectively and reflected in current period net income.
Discount rate assumptions are updated quarterly based on market-level yields for low credit risk fixed income instruments ("upper-medium grade fixed income instrument"), with any changes reflected in other comprehensive income. The upper-medium grade fixed income instrument yield is interpreted to mean A-rated.
Deferred policy acquisition costs ("DAC") related to long-duration insurance contracts are amortized on a constant-level basis over the expected term of the related contracts. Other related deferred or capitalized balances (such as unearned revenue liability and value of business acquired) may use this simplified amortization method.
Market risk benefits ("MRB"), defined as protecting the contractholder from other-than-nominal capital market risk and exposing the insurer to that risk, are measured at fair value, with changes in fair value recognized in net income each period, except for the effect of the Company's change in nonperformance risk (own credit risk), which is recognized in other comprehensive income.
Additional disclosures, including disaggregated roll forwards for the liability for future policy benefits, market risk benefits, separate account liabilities and DAC, as well as information about significant inputs, judgments, assumptions and methods used in measurement.
The transition methods applied at adoption were:
The liability for future policy benefits was remeasured using a modified retrospective approach applied to all outstanding contracts as of the beginning of the earliest period presented and was recognized in the opening balance of retained earnings. The impact of remeasuring the future policy benefits liability for the discount rate was recorded through accumulated other comprehensive income.
DAC followed the transition method used for future policyholder benefits.
Market risk benefits were remeasured at fair value at the beginning of the earliest period presented. The difference between this fair value and carrying value was recognized in the opening balance of retained earnings, excluding the effect of the Company's change in nonperformance risk (own credit risk), which is recognized in accumulated other comprehensive income.

Effects of adoption:

The new guidance applies to our long-duration insurance products predominantly within the Cigna Healthcare segment and Other Operations.
The cumulative effects of adopting the new standard were immaterial. The impacts were a decrease to January 1, 2021 Shareholders' equity of $139 million and an increase to Shareholders' net income for the year ended December 31, 2022 and December 31, 2021 of $36 million and $5 million, respectively. The corresponding impact to diluted earnings per share was an increase of $0.11 and $0.02 for the year ended December 31, 2022 and December 31, 2021, respectively.
The prior periods within our Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Changes in Total Equity and Consolidated Statements of Cash Flows were restated to conform to the current presentation.
Prior period balances in the Company's footnote disclosures have been updated to reflect adjustments resulting from the adoption of this standard. Refer to Note 9 to the Consolidated Financial Statements for the Company's updated accounting policies.
It is possible that our income recognition pattern could change on a prospective basis for several reasons:
Applying periodic assumption updates, versus the locked-in model, may change our timing of profit or loss recognition.
DAC amortization is on a constant level basis over the expected term of the related contracts and no longer tied to the emergence of profit on such contracts.

Additionally, in December 2022, the Financial Accounting Standards Board ("FASB") published ASU 2022-05, which simplified the retrospective adoption of LDTI by permitting companies to make an accounting policy election to exclude contracts that are sold and removed from the balance sheet prior to the effective date of the standard from the retrospective adoption of LDTI. The Cigna Group made this policy election for the contracts sold in the Chubb transaction and our divested interest in a joint venture in Türkiye.

Note 3 – Accounts Receivable, Net

The following amounts were included within Accounts receivable, net:


(In millions)	June 30, 2023		December 31, 2022
Pharmaceutical manufacturers receivables	$	7,922	$	7,108
Noninsurance customer receivables	7,799		6,899
Insurance customer receivables	2,360		2,963
Other receivables	252		248


Total	$	18,333	$	17,218

These receivables are reported net of our allowances of $2.8 billion as of June 30, 2023 and $1.9 billion as of December 31, 2022. These allowances include contractual allowances for certain rebates receivable with pharmaceutical manufacturers and certain receivables from third-party payors, discounts and claims adjustments issued to customers in the form of client credits, an allowance for current expected credit losses and other non-credit adjustments.

The Company's allowance for current expected credit losses was $99 million as of June 30, 2023 and $86 million as of December 31, 2022.

Note 4 – Supplier Finance Program

The Company facilitates a voluntary supplier finance program (the "program") that provides suppliers the opportunity to sell their receivables due from us (i.e., our payment obligations to the suppliers) to a financial institution, on a non-recourse basis, in order to be paid earlier than our payment terms require. The Cigna Group is not a party to the program and agrees to commercial terms with its suppliers independently of their participation in the program. Amounts due to suppliers that participate in the program are generally paid within one month following the invoice date. A supplier's participation in the program has no impact on the Company's payment terms and the Company has no economic interest in a supplier's decision to participate in the program. The suppliers, at their sole discretion, determine which invoices, if any, to sell to the financial institution. No guarantees or pledged assets are provided by the Company or any of our subsidiaries under the program.

As of June 30, 2023 and December 31, 2022, $1.6 billion and $1.3 billion, respectively, of the Company's outstanding payment obligations were confirmed as valid within the program by the financial institution and reflected in Accounts payable in the Consolidated Balance Sheets. The amounts confirmed as valid for both periods are predominately associated with one supplier. We have been informed by the financial institution that $263 million as of June 30, 2023 of the Company's outstanding payment obligations were voluntarily elected by suppliers to be sold to the financial institution under the program.

Note 5 – Mergers, Acquisitions and Divestitures

**A.**Investment in CarepathRx Health Systems Solutions

In July 2023, Evernorth Health, Inc. became a minority owner in CarepathRx Health Systems Solutions ("CHSS"), through a $437 million equity method investment in CHSS JV LLC (a holding company for the CHSS business and a CarepathRx company). CarepathRx provides integrated hospital pharmacy solutions to support patients across their complete health care journey. By pairing Evernorth Health Services' diverse specialty and care expertise with CHSS' robust pharmacy and infusion management capabilities, technology solutions and health system relationships, we can further improve, expand and accelerate pharmacy care delivery for the growing number of patients with chronic and complex care needs.

**B.**Divestiture of International Businesses

In July 2022, the Company completed the sale of its life, accident and supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) (the "Chubb transaction") for approximately $5.4 billion in cash. The Company recognized a gain of $1.7 billion pre-tax ($1.4 billion after-tax), which includes recognition of previously unrealized capital losses on investments sold and translation loss on foreign currencies. In December 2022, the Company also divested its ownership interest in a joint venture in Türkiye.

**C.**Integration and Transaction-related Costs

In the first six months of 2023 and 2022, the Company incurred net costs related to the Chubb transaction and continued strategic realignment. In 2022, the Company also incurred net costs related to the sale of the Group Disability and Life business and acquisition of MDLIVE, Inc. These net costs were $6 million pre-tax ($5 million after-tax) for the three months ended and $7 million pre-tax ($6 million after-tax) for the six months ended June 30, 2023, compared with $36 million pre-tax ($26 million after-tax) for the three months ended and $88 million pre-tax ($63 million after-tax) for the six months ended June 30, 2022. These costs consisted primarily of certain projects to separate or integrate the Company's systems, products and services, fees for legal, advisory and other professional services and certain employment-related costs.

Note 6 – Earnings Per Share

Basic and diluted earnings per share were computed as follows:


	Three Months Ended
	June 30, 2023						June 30, 2022
(Shares in thousands, dollars in millions, except per share amounts)	Basic		Effect of Dilution		Diluted		Basic		Effect of Dilution		Diluted
Shareholders' net income	$	1,460			$	1,460	$	1,557			$	1,557
Shares:
Weighted average	294,512				294,512		315,122				315,122
Common stock equivalents			2,367		2,367				3,182		3,182
Total shares	294,512		2,367		296,879		315,122		3,182		318,304
Earnings per share	$	4.96	$	(0.04)	$	4.92	$	4.94	$	(0.05)	$	4.89


	Six Months Ended
	June 30, 2023						June 30, 2022


(Shares in thousands, dollars in millions, except per share amounts)	Basic		Effect of Dilution		Diluted		Basic		Effect of Dilution		Diluted
Shareholders' net income	$	2,727			$	2,727	$	2,754			$	2,754
Shares:
Weighted average	295,105				295,105		316,795				316,795
Common stock equivalents			2,831		2,831				2,989		2,989
Total shares	295,105		2,831		297,936		316,795		2,989		319,784
Earnings per share	$	9.24	$	(0.09)	$	9.15	$	8.69	$	(0.08)	$	8.61

Amounts reflected above for the three and six months ended June 30, 2022 have been restated to reflect the impact of adopting amended accounting guidance for long-duration insurance contracts (discussed in Note 2 to the Consolidated Financial Statements).

The following outstanding employee stock options were not included in the computation of diluted earnings per share because their effect was anti-dilutive:


	Three Months Ended June 30,		Six Months Ended June 30,

(In millions)	2023	2022	2023	2022
Anti-dilutive options	0.9	1.3	0.9	2.0

The Company held approximately 103.3 million shares of common stock in treasury at June 30, 2023, 99.1 million shares as of December 31, 2022 and 81.3 million shares as of June 30, 2022.

Note 7 – Debt

The outstanding amounts of debt, net of issuance costs, discounts or premiums, and finance leases were as follows:


(In millions)	June 30, 2023		December 31, 2022
Short-term debt
Commercial paper	$	200	$	—
$17 million, 8.300% Notes due January 2023	—		17
$63 million, 7.650% Notes due March 2023	—		63
$700 million, Floating Rate Notes due July 2023	700		700
$1,000 million, 3.000% Notes due July 2023	1,000		994
$1,187 million, 3.750% Notes due July 2023	1,187		1,186
$500 million, 0.613% Notes due March 2024	499		—
$1,000 million, 3.500% Notes due June 2024	993		—
Other, including finance leases	39		33
Total short-term debt	$	4,618	$	2,993
Long-term debt





$500 million, 0.613% Notes due March 2024	—		499
$1,000 million, 3.500% Notes due June 2024	—		990
$900 million, 3.250% Notes due April 2025 (1)	870		872
$2,200 million, 4.125% Notes due November 2025	2,196		2,195
$1,500 million, 4.500% Notes due February 2026	1,503		1,503
$800 million, 1.250% Notes due March 2026	798		797
$700 million, 5.685% Notes due March 2026	697		—
$1,500 million, 3.400% Notes due March 2027	1,444		1,436
$259 million, 7.875% Debentures due May 2027	259		259
$600 million, 3.050% Notes due October 2027	597		597
$3,800 million, 4.375% Notes due October 2028	3,786		3,785
$1,500 million, 2.400% Notes due March 2030	1,492		1,492
$1,500 million, 2.375% Notes due March 2031 (1)	1,383		1,380
$45 million, 8.080% Step Down Notes due January 2033 (2)	45		45
$800 million, 5.400% Notes due March 2033	794		—
$190 million, 6.150% Notes due November 2036	190		190
$2,200 million, 4.800% Notes due August 2038	2,192		2,192
$750 million, 3.200% Notes due March 2040	743		743
$121 million, 5.875% Notes due March 2041	119		119
$448 million, 6.125% Notes due November 2041	488		488
$317 million, 5.375% Notes due February 2042	315		315
$1,500 million, 4.800% Notes due July 2046	1,466		1,466
$1,000 million, 3.875% Notes due October 2047	989		989
$3,000 million, 4.900% Notes due December 2048	2,969		2,968
$1,250 million, 3.400% Notes due March 2050	1,236		1,236
$1,500 million, 3.400% Notes due March 2051	1,478		1,478
Other, including finance leases	66		66
Total long-term debt	$	28,115	$	28,100

*(1)*The Company has entered into interest rate swap contracts hedging a portion of these fixed-rate debt instruments. See Note 11 in the Company's 2022 Form 10-K for further information about the Company's interest rate risk management and these derivative instruments.

*(2)*Interest rate step down to 8.080% effective January 15, 2023.

Long-term debt

Debt Issuance. On March 7, 2023, the Company issued $1.5 billion of new senior notes. The proceeds of this issuance will be used for general corporate purposes, and may include repayment of outstanding debt securities. Interest on this debt is paid semi-annually.


Principal	Maturity Date	Interest Rate	Net Proceeds
$700 million (1)	March 15, 2026	5.685%	$698 million
$800 million (2)	March 15, 2033	5.400%	$796 million

(1) Redeemable at any time discounted at the U.S. Treasury rate plus 20 basis points. Redeemable at par on or after March 15, 2024.

(2) Redeemable at any time discounted at the U.S. Treasury rate plus 25 basis points. Redeemable at par on or after December 15, 2032.

Short-term and Credit Facilities Debt

Revolving Credit Agreements. Our revolving credit agreements provide us with the ability to borrow amounts for general corporate purposes, including providing liquidity support if necessary under our commercial paper program discussed below. As of June 30, 2023, there were no outstanding balances under these revolving credit agreements.

In April 2023, The Cigna Group entered into the following revolving credit agreements (the "Credit Agreements"):

a $4.0 billion five-year revolving credit and letter of credit agreement that will mature in April 2028 with an option to extend the maturity date for additional one-year periods, subject to consent of the banks. The Company can borrow up to $4.0 billion under the credit agreement for general corporate purposes, with up to $500 million available for issuance of letters of credit.
a $1.0 billion 364-day revolving credit agreement that will mature in April 2024. The Company can borrow up to $1.0 billion under the credit agreement for general corporate purposes. This agreement includes the option to "term out" any revolving loans that are outstanding at maturity by converting them into a term loan maturing on the one-year anniversary of conversion.

Each of the Credit Agreements include an option to increase commitments in an aggregate amount of up to $1.5 billion across both facilities for a maximum total commitment of $6.5 billion. The Credit Agreements allow for borrowings at either a base rate or an adjusted term Secured Overnight Funding Rate ("SOFR") plus, in each case, an applicable margin based on the Company's senior unsecured credit ratings.

Each of the two facilities is diversified among 21 large commercial banks, all of which had an A- equivalent or higher rating by at least one Nationally Recognized Statistical Rating Organization as of June 30, 2023. Each facility also contains customary covenants and restrictions, including a financial covenant that the Company's leverage ratio, as defined in the Credit Agreements, may not exceed 60% subject to certain exceptions upon the consummation of an acquisition.

The Credit Agreements replaced a prior $3.0 billion five-year revolving credit and letter of credit agreement maturing in April 2027; a $1.0 billion three-year revolving credit agreement maturing in April 2025; and a $1.0 billion 364-day revolving credit agreement maturing in April 2023.

Commercial Paper. Under our commercial paper program, we may issue short-term, unsecured commercial paper notes privately placed on a discounted basis through certain broker-dealers at any time not to exceed an aggregate amount of $5.0 billion. Amounts available under the program may be borrowed, repaid and re-borrowed from time to time. The net proceeds of issuances have been and are expected to be used for general corporate purposes. The average interest rate of our commercial paper was 5.41% at June 30, 2023.

Debt Covenants. The Company was in compliance with its debt covenants as of June 30, 2023.

Interest Expense

Interest expense on long-term and short-term debt was $350 million for the three months ended and $695 million for the six months ended June 30, 2023, compared with $316 million for the three months ended and $630 million for the six months ended June 30, 2022.

Note 8 – Common and Preferred Stock

Dividends

In the first six months of 2023, The Cigna Group declared quarterly cash dividends of $1.23 per share of the Company's common stock. In the first six months of 2022, The Cigna Group declared quarterly cash dividends of $1.12 per share of the Company's common stock.

The following table provides details of the Company's dividend payments:


Record Date	Payment Date	Amount per Share	Total Amount Paid (in millions)
2023
March 8, 2023	March 23, 2023	$1.23	$368
June 7, 2023	June 22, 2023	$1.23	$362


2022
March 9, 2022	March 24, 2022	$1.12	$357
June 8, 2022	June 23, 2022	$1.12	$352

On July 26, 2023, the Board of Directors declared the third quarter cash dividend of $1.23 per share of The Cigna Group common stock to be paid on September 21, 2023 to shareholders of record on September 6, 2023. The Company currently intends to pay regular quarterly dividends, with future declarations subject to approval by its Board of Directors and the Board's determination that the declaration of dividends remains in the best interests of The Cigna Group and its shareholders. The decision of whether to pay future dividends and the amount of any such dividends will be based on the Company's financial position, results of operations, cash flows, capital requirements, the requirements of applicable law and any other factors the Board may deem relevant.

Note 9 – Insurance and Contractholder Liabilities

**A.**Account Balances – Insurance and Contractholder Liabilities

The Company's insurance and contractholder liabilities were comprised of the following:


	June 30, 2023						December 31, 2022						June 30, 2022
(In millions)	Current		Non-current		Total		Current		Non-current		Total		Total
Unpaid claims and claim expenses
Cigna Healthcare	$	5,257	$	79	$	5,336	$	4,117	$	59	$	4,176	$	4,490
Other Operations	110		187		297		107		177		284		709
Future policy benefits
Cigna Healthcare	60		535		595		43		544		587		634
Other Operations	297		3,290		3,587		150		3,442		3,592		7,512
Contractholder deposit funds
Cigna Healthcare	13		145		158		14		157		171		185
Other Operations	364		6,283		6,647		351		6,358		6,709		6,801
Market risk benefits	35		1,034		1,069		51		1,217		1,268		1,403
Unearned premiums	1,403		22		1,425		576		22		598		985
Total													22,719
Insurance and contractholder liabilities classified as Liabilities of businesses held for sale (1)													(4,427)
Total insurance and contractholder liabilities	$	7,539	$	11,575	$	19,114	$	5,409	$	11,976	$	17,385	$	18,292

*(1)*Amounts classified as Liabilities of businesses held for sale primarily include $3.6 billion of Future policy benefits, $0.4 billion of Unpaid claims and $0.4 billion of Unearned premiums as of June 30, 2022.

Insurance and contractholder liabilities expected to be paid within one year are classified as current. The Company adopted amended accounting guidance for long-duration insurance contracts on January 1, 2023, discussed further in Note 2 to the Consolidated Financial Statements, which resulted in restatement of prior period amounts. Additionally, see below updated accounting policies and incremental disclosures associated with future policy benefits (Note 9C), contractholder deposit funds (Note 9D), and market risk benefits (Note 9E).

**B.**Unpaid Claims and Claim Expenses – Cigna Healthcare

This liability reflects estimates of the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process) and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities.

The total of incurred but not reported liabilities plus expected development on reported claims, including reported claims in process, was $5.0 billion at June 30, 2023 and $4.1 billion at June 30, 2022.

Activity, net of intercompany transactions, in the unpaid claims liability for the Cigna Healthcare segment was as follows:


	Six Months Ended
(In millions)	June 30, 2023		June 30, 2022


Beginning balance	$	4,176	$	4,261
Less: Reinsurance and other amounts recoverable	221		261
Beginning balance, net	3,955		4,000

Incurred costs related to:
Current year	17,974		15,751
Prior years	(202)		(268)
Total incurred	17,772		15,483
Paid costs related to:
Current year	13,408		11,900
Prior years	3,199		3,290
Total paid	16,607		15,190

Ending balance, net	5,120		4,293
Add: Reinsurance and other amounts recoverable	216		197
Ending balance	$	5,336	$	4,490

Reinsurance and other amounts recoverable reflect amounts due from reinsurers and policyholders to cover incurred but not reported and pending claims of certain business for which the Company administers the plan benefits without any right of offset. See Note 10 to the Consolidated Financial Statements for additional information on reinsurance.

Variances in incurred costs related to prior years' unpaid claims and claim expenses that resulted from the differences between actual experience and the Company's key assumptions were as follows:


	Six Months Ended
	June 30, 2023				June 30, 2022


(Dollars in millions)	$		% (1)		$		% (2)
Actual completion factors	$	29	0.1	%	$	84	0.2	%
Medical cost trend	173		0.5		184		0.6

Total favorable variance	$	202	0.6	%	$	268	0.8	%

*(1)*Percentage of current year incurred costs as reported for the year ended December 31, 2022.

*(2)*Percentage of current year incurred costs as reported for the year ended December 31, 2021.

Favorable prior year development in both years reflects lower than expected utilization of medical services as compared to our assumptions.

**C.**Future Policy Benefits

Accounting Policy. Future policy benefits represent the present value of estimated future obligations, estimated using actuarial methods, for long-duration insurance policies and annuity products currently in force, consisting primarily of reserves for annuity contracts, life insurance benefits, and certain supplemental health products that are guaranteed renewable beyond one year.

Contracts are grouped at a level no higher than issue year, based on the original contract issue date, and at lower levels of disaggregation within each issue year for certain businesses to reflect factors including product type, plan type and currency. Management estimates these obligations based on assumptions for premiums, interest rates, mortality or morbidity, future claim adjudication expenses and surrenders. Mortality, morbidity and surrender assumptions are based on the Company's own experience and published actuarial tables, and are updated at least annually, to the extent changes in circumstances require. Interest rate

assumptions are based on market-level yields for low credit risk fixed income instruments ("upper-medium grade fixed income instrument"). For interest accretion purposes, interest rates are fixed at the year of the cohort's inception, however for purposes of liability measurement, are updated to the current rate quarterly, with all changes in the interest rate from inception to current period reported through Accumulated other comprehensive loss. For contracts issued domestically, we use observable inputs from a published spot rate curve for terms up to 30 years and extrapolate for longer terms using a constant forward rate approach. For contracts issued by foreign operating entities with functional currencies other than the U.S. dollar, we use observable inputs to approximate a risk free rate and add a credit spread adjustment to align with a low credit risk fixed income instrument. For terms beyond the last observable risk free rates, which vary by international market, we extrapolate to the ultimate forward rate assuming a constant credit spread.

For the annuity business, the premium paying period is shorter than the benefit coverage period, and a deferred profit liability ("DPL") is reported in future policy benefits representing gross premium received in excess of net premiums. DPL is amortized based on expected future benefit payments.

Cigna Healthcare

The weighted average interest rates applied and duration for future policy benefits in the Cigna Healthcare segment, consisting primarily of supplemental health products including individual Medicare supplement, limited benefit health products and individual private medical insurance, were as follows:


	As of
	June 30, 2023		June 30, 2022
Interest accretion rate	2.20	%	2.72	%
Current discount rate	5.36	%	4.87	%
Weighted average duration	7.8 years		7.2 years

The net liability for future policy benefits for the segment's supplemental health products represents the present value of benefits expected to be paid to policyholders, net of the present value of expected net premiums, which is the portion of expected future gross premium expected to be collected from policyholders that is required to provide for all expected future benefits and expenses. The present values of expected net premiums and expected future policy benefits for the Cigna Healthcare segment are as follows:


	Six Months Ended
(In millions)	June 30, 2023		June 30, 2022


Present value of expected net premiums
Beginning balance	$	8,557	$	9,314
Reversal of effect of beginning of period discount rate assumptions	1,537		(367)
Effect of assumption changes and actual variances from expected experience	51		—
Issuances and lapses	570		434
Net premiums collected	(658)		(623)
Interest and other (1)	106		89
Ending balance at original discount rate	10,163		8,847
Effect of end of period discount rate assumptions	(1,491)		(923)
Ending balance (2)	$	8,672	$	7,924

Present value of expected policy benefits
Beginning balance	$	8,945	$	9,794
Reversal of effect of discount rate assumptions	1,611		(379)
Effect of assumption changes and actual variances from expected experience	54		—
Issuances and lapses	558		565
Benefit payments	(661)		(768)
Interest and other (1)	121		105
Ending balance at original discount rate	10,628		9,317
Effect of discount rate assumptions	(1,565)		(958)
Ending balance (3)	$	9,063	$	8,359

Liability for future policy benefits	$	391	$	435
Other (4)	204		199
Total liability for future policy benefits (5)	$	595	$	634

*(1)*Includes the foreign exchange rate impact of translating from transactional and functional currency to United States dollar and the impact of flooring the liability at zero. The flooring impact is calculated at the cohort level after discounting the reserves at the current discount rate.

*(2)*As of June 30, 2023 and June 30, 2022, respectively, undiscounted expected future gross premiums were $17.7 billion and $13.7 billion. As of June 30, 2023 and June 30, 2022, respectively, discounted expected future gross premiums were $12.3 billion and $10.2 billion.

*(3)*As of June 30, 2023 and June 30, 2022, respectively, undiscounted expected future policy benefits were $12.9 billion and $11.2 billion.

*(4)*The liability for future policyholder benefits includes immaterial businesses shown as reconciling items above, most of which are in run-off.

(5)**$154 million and $150 million of reinsurance recoverable asset reported in the Consolidated Balance Sheets as of June 30, 2023 and June 30, 2022, respectively, relate to the liability for future policy benefits.

Other Operations

The weighted average interest rates applied and duration for future policy benefits in Other Operations, consisting of annuity and life insurance products, were as follows:


	As of
	June 30, 2023		June 30, 2022
Interest accretion rate	5.64	%	5.64	%
Current discount rate	5.02	%	4.52	%
Weighted average duration	11.7 years		12.4 years

Obligations for annuities represent discounted periodic benefits to be paid to an individual or groups of individuals over their remaining lives. Other Operations' traditional insurance contracts, which are in run-off, have no premium remaining to be collected; therefore, future policy benefit reserves represent the present value of expected future policy benefits, discounted using the current discount rate and the remaining amortizable DPL.

Future policy benefits for Other Operations includes DPL of $386 million as of June 30, 2023 and $380 million as of June 30, 2022. Future policy benefits excluding DPL were $3.2 billion as of both June 30, 2023 and December 31, 2022 and $3.5 billion and

$4.3 billion as of June 30, 2022 and December 31, 2021, respectively. These balances exclude amounts classified as Liabilities of businesses held for sale of $3.6 billion as of June 30, 2022 and $3.8 billion as of December 31, 2021. The change in future policy benefits reserves year-to-date was primarily driven by changes in the current discount rate.

Undiscounted expected future policy benefits were $4.5 billion as of June 30, 2023 and $4.7 billion as of June 30, 2022. As of June 30, 2023 and June 30, 2022, $1.0 billion and $1.1 billion of the future policy benefit reserve was recoverable through treaties with external reinsurers.

**D.**Contractholder Deposit Funds

Accounting Policy. Liabilities for contractholder deposit funds primarily include deposits received from customers for investment-related and universal life products as well as investment earnings on their fund balances in Other Operations. These liabilities are adjusted to reflect administrative charges and, for universal life fund balances, mortality charges. Interest credited on these funds is accrued ratably over the contract period.

Contractholder deposit fund liabilities within Other Operations were $6.6 billion as of June 30, 2023 and $6.7 billion as of December 31, 2022 and $6.8 billion and $6.9 billion as of June 30, 2022 and December 31, 2021, respectively. Approximately 38% of the balance is reinsured externally. Activity in these liabilities is presented net of reinsurance in the Consolidated Statements of Cash Flows. The net year-to-date decrease in contractholder deposit fund liabilities generally relates to withdrawals and benefit payments from contractholder deposit funds, partially offset by deposits and interest credited to contractholder deposit funds.

As of June 30, 2023, the weighted average crediting rate, net amount at risk and cash surrender value for contractholder deposit fund liabilities not externally reinsured were 3.26%, $3.2 billion and $2.8 billion, respectively. The comparative amounts as of June 30, 2022 were 3.20%, $3.4 billion and $2.8 billion, respectively. As of both June 30, 2023 and June 30, 2022, more than 99% of the $4.1 billion liability not reinsured externally is for contracts with guaranteed interest rates of 3% - 4%, and approximately $1.2 billion represented contracts with policies at the guarantee. At both of these same period ends, $1.2 billion was 50-150 basis points ("bps") above the guarantee and the remaining $1.7 billion represented contracts above the guarantee that pay the policyholder based on the greater of a guaranteed minimum cash value or the actual cash value. More than 90% of these contracts have actual cash values of at least 110% of the guaranteed cash value.

**E.**Market Risk Benefits

Liabilities for market risk benefits consist of variable annuity reinsurance contracts (also referred to as GMDB and GMIB contracts) in Other Operations. These liabilities arise under annuities and riders to annuities written by ceding companies that guarantee the benefit received at death and, for a subset of policies, also provide contractholders the option, within 30 days of a policy anniversary after the appropriate waiting period, to elect minimum income payments. The Company's capital market risk exposure on variable annuity reinsurance contracts arises when the reinsured guaranteed minimum benefit exceeds the contractholder's account value in the related underlying mutual funds at the time the insurance benefit is payable under the respective contract. The Company receives and pays premium periodically based on the terms of the reinsurance agreements.

Accounting Policy. Variable annuity reinsurance liabilities are measured as MRBs at fair value, net of nonperformance risk, with fluctuations in value gross of reinsurer nonperformance risk reported in benefit expenses while fluctuations in the Company's own nonperformance risk (own credit risk) are reported in Accumulated other comprehensive loss. Nonperformance risk reflects risk that a party might default and therefore not fulfill its obligations (i.e. nonpayment risk). The nonperformance risk adjustment reflects a market participant's view of nonpayment risk by adding an additional spread to the discount rate in the calculation of both (a) the variable annuity reinsurance liabilities to be paid by the Company and (b) the variable annuity reinsurance assets to be paid by the reinsurers, after considering collateral. The Company classifies variable annuity assets and liabilities in Level 3 of the fair value hierarchy described in Note 12 to the Consolidated Financial Statements because assumptions related to future annuitant behavior are largely unobservable. As discussed further in Note 10 to the Consolidated Financial Statements, due to the reinsurance agreements covering these liabilities, the liabilities do not generally impact net income except for the change in nonperformance risk on the reinsurance recoverable, which is reported in benefit expenses and does not offset the nonperformance risk valuation on the liability. Variable annuity liabilities are established using capital market assumptions and assumptions related to future annuitant behavior (including mortality, lapse and annuity election rates).

Market risk benefits activity was as follows:


	Six Months Ended
(In millions)	June 30, 2023		June 30, 2022


Balance, beginning of year	$	1,268	$	1,824
Balance, beginning of year, before the effect of nonperformance risk (own credit risk)	1,379		1,949
Changes due to expected run-off	(14)		(33)
Changes due to capital markets versus expected	(194)		(441)
Changes due to policyholder behavior versus expected	8		(8)
Assumption changes	(32)		39
Balance, end of period, before the effect of changes in nonperformance risk (own credit risk)	1,147		1,506
Nonperformance risk (own credit risk), end of period	(78)		(103)
Balance, end of period	$	1,069	$	1,403
Reinsured market risk benefit, end of period	$	1,143	$	1,500

The following table presents the net amount at risk and the average attained age of contractholders (weighted by exposure) for contracts assumed by the Company. The net amount at risk is the amount the Company would have to pay to contractholders if all deaths or annuitizations occurred as of the earliest possible date in accordance with the insurance contract. The Company should be reimbursed in full for these payments unless the Berkshire reinsurance limit is exceeded, as discussed further in Note 10 to the Consolidated Financial Statements.


(Dollars in millions, excludes impact of reinsurance ceded)	June 30, 2023		June 30, 2022
Net amount at risk	$	1,871	$	2,728
Average attained age of contractholders (weighted by exposure)	76.3 years		74.2 years

Note 10 – Reinsurance

The Company's insurance subsidiaries enter into agreements with other insurance companies to limit losses from large exposures and to permit recovery of a portion of incurred losses. Reinsurance is ceded primarily in acquisition and disposition transactions when the underwriting company is not being acquired. Reinsurance does not relieve the originating insurer of liability. Therefore, reinsured liabilities must continue to be reported along with the related reinsurance recoverables. The Company regularly evaluates the financial condition of its reinsurers and monitors concentrations of its credit risk.

**A.**Reinsurance Recoverables

The majority of the Company's reinsurance recoverables resulted from acquisition and disposition transactions in which the underwriting company was not acquired. The Company bears the risk of loss if its reinsurers and retrocessionaires do not meet or are unable to meet their reinsurance obligations to the Company. The Company reviews its reinsurance arrangements and establishes reserves against the recoverables primarily for expected credit losses.

The Company's reinsurance recoverables as of June 30, 2023 are presented at amount due by range of external credit rating and collateral level in the following table, with reinsurance recoverables that are market risk benefits separately presented at fair value:


(In millions)	Fair value of collateral contractually required to meet or exceed carrying value of recoverable		Collateral provisions exist that may mitigate risk of credit loss (3)		No collateral		Total
Ongoing Operations
A- equivalent and higher current ratings (1)	$	—	$	—	$	95	$	95
BBB- to BBB+ equivalent current credit ratings (1)	—		—		59		59
Not rated	150		1		90		241
Total recoverables related to ongoing operations (2)	150		1		244		395
Acquisition, disposition or run-off activities
BBB+ equivalent and higher current ratings (1)
Lincoln National Life and Lincoln Life & Annuity of New York	—		2,750		—		2,750
Empower Annuity Insurance Company	—		—		130		130
Prudential Insurance Company of America	364		—		—		364
Life Insurance Company of North America	—		382		—		382
Other	179		29		15		223

Not rated	—		8		4		12
Total recoverables related to acquisition, disposition or run-off activities	543		3,169		149		3,861
Total reinsurance recoverables before market risk benefits	$	693	$	3,170	$	393	$	4,256
Allowance for uncollectible reinsurance							(35)
Market risk benefits (4)							1,143
Total reinsurance recoverables (2)							$	5,364

*(1)*Certified by a Nationally Recognized Statistical Rating Organization ("NRSRO").

*(2)*Includes $221 million of current reinsurance recoverables that are reported in Other current assets.

*(3)*Includes collateral provisions requiring the reinsurer to fully collateralize its obligation if its external credit rating is downgraded to a specified level.

*(4)*Total Berkshire and certain Other recoverables reflected under acquisition, disposition or run-off activities in the Company's 2022 Form 10-K that relate to the Company's variable annuity reinsurance products discussed in section B below are now reported at fair market value as MRBs, as further discussed in Note 9 to the Consolidated Financial Statements. At December 31, 2022, we reported $711 million of recoverables related to the GMDB variable annuity reinsurance product. The restated December 31, 2022 variable annuity reinsurance recoverable balance is $1.4 billion, which also includes the GMIB variable annuity reinsurance product that was classified in Other assets prior to the adoption of LDTI.

Collateral levels are defined internally based on the fair value of the collateral relative to the carrying amount of the reinsurance recoverable, the frequency at which collateral is required to be replenished and the potential for volatility in the collateral's fair value.

**B.**Effective Exit of Variable Annuity Reinsurance Business

The Company entered into an agreement with Berkshire to effectively exit the variable annuity reinsurance business via a reinsurance transaction in 2013. Variable annuity contracts are accounted for as assumed and ceded reinsurance and categorized as market risk benefits as discussed in Note 9 to the Consolidated Financial Statements. Berkshire reinsured 100% of the Company's future cash flows in this business, net of other reinsurance arrangements existing at that time. The reinsurance agreement is subject to an overall limit with approximately $3.1 billion remaining at June 30, 2023. As a result of the reinsurance transaction, amounts payable are offset by a corresponding reinsurance recoverable, provided the increased recoverable remains within the overall Berkshire limit.


(In millions)
Reinsurer (1)	June 30, 2023		December 31, 2022		Collateral and Other Terms at June 30, 2023
Berkshire	$	917	$	1,116	95% were secured by assets in a trust.
Sun Life Assurance Company of Canada	105		115
Liberty Re (Bermuda) Ltd.	115		128		100% were secured by assets in a trust.
SCOR SE	31		39		75% were secured by a letter of credit.
Market risk benefits (2)	$	1,168	$	1,398

*(1)*All reinsurers are rated A- equivalent and higher by an NRSRO.

*(2)*Includes IBNR and outstanding claims of $28 million offset by premium due of $3 million. These amounts are excluded from market risk benefits at June 30, 2023 in Note 9 and Note 10A to the Consolidated Financial Statements. At December 31, 2022, IBNR and outstanding claims of $27 million offset by premium due of $3 million were excluded from the market risk benefits as restated due to the adoption of LDTI.

The impact of nonperformance risk (i.e. the risk that a counterparty might default) on the variable annuity reinsurance asset was immaterial for the three and six months ended June 30, 2023 and June 30, 2022.

Note 11 – Investments

The Cigna Group's investment portfolio consists of a broad range of investments including debt securities, equity securities, commercial mortgage loans, policy loans, other long-term investments, short-term investments and derivative financial instruments. The sections below provide more detail regarding our investment balances and realized investment gains and losses. See Note 12 to the Consolidated Financial Statements for information about the valuation of the Company's investment portfolio. Further information about our accounting policies for investment assets can be found in Note 11 in the Company's 2022 Form 10-K.

The following table summarizes the Company's investments by category and current or long-term classification:


	June 30, 2023						December 31, 2022
(In millions)	Current		Long-term		Total		Current		Long-term		Total
Debt securities	$	574	$	8,894	$	9,468	$	654	$	9,218	$	9,872
Equity securities	42		3,320		3,362		45		577		622
Commercial mortgage loans	104		1,483		1,587		67		1,547		1,614
Policy loans	—		1,232		1,232		—		1,218		1,218
Other long-term investments	—		4,038		4,038		—		3,728		3,728
Short-term investments	152		—		152		139		—		139
Total	$	872	$	18,967	$	19,839	$	905	$	16,288	$	17,193

**A.**Investment Portfolio

Debt Securities

Accounting policy. Our accounting policy for debt securities (including bonds, mortgage and other asset-backed securities and preferred stocks redeemable by the investor) remains materially consistent with the policy disclosed in the Company's 2022 Form 10-K. However, with the adoption of amended accounting guidance for long-duration insurance contracts on January 1, 2023 (discussed in Note 2 to the Consolidated Financial Statements), net unrealized appreciation on debt securities supporting the Company's run-off settlement annuity business is no longer reported in Non-current insurance and contractholder liabilities but rather is reported in Accumulated other comprehensive loss. See Note 14 to the Consolidated Financial Statements for the retrospectively restated Accumulated other comprehensive loss.

The amortized cost and fair value by contractual maturity periods for debt securities were as follows as of June 30, 2023:



(In millions)	Amortized Cost		Fair Value
Due in one year or less	$	605	$	591
Due after one year through five years	3,892		3,649
Due after five years through ten years	3,069		2,732
Due after ten years	2,336		2,131
Mortgage and other asset-backed securities	406		365
Total	$	10,308	$	9,468

Actual maturities of these securities could differ from their contractual maturities used in the table above because issuers may have the right to call or prepay obligations, with or without penalties.

Gross unrealized appreciation (depreciation) on debt securities by type of issuer is shown below:


(In millions)	Amortized Cost		Allowance for Credit Loss		Unrealized Appreciation		Unrealized Depreciation		Fair Value
June 30, 2023
Federal government and agency	$	276	$	—	$	26	$	(11)	$	291
State and local government	41		—		—		(2)		39
Foreign government	361		—		10		(20)		351
Corporate	9,224		(39)		99		(862)		8,422
Mortgage and other asset-backed	406		—		1		(42)		365
Total	$	10,308	$	(39)	$	136	$	(937)	$	9,468


December 31, 2022
Federal government and agency	$	292	$	—	$	32	$	(12)	$	312
State and local government	43		—		—		(2)		41
Foreign government	375		—		11		(21)		365
Corporate	9,742		(44)		89		(981)		8,806
Mortgage and other asset-backed	390		—		1		(43)		348
Total	$	10,842	$	(44)	$	133	$	(1,059)	$	9,872

Review of declines in fair value. Management reviews impaired debt securities to determine whether a credit loss allowance is needed based on criteria that include:

severity of decline;
financial health and specific prospects of the issuer; and
changes in the regulatory, economic or general market environment of the issuer's industry or geographic region.

The table below summarizes debt securities with a decline in fair value from amortized cost for which an allowance for credit losses has not been recorded, by investment grade and the length of time these securities have been in an unrealized loss position. Unrealized depreciation on these debt securities is primarily due to declines in fair value resulting from increasing interest rates since these securities were purchased.


	June 30, 2023							December 31, 2022
(Dollars in millions)	Fair Value		Amortized Cost		Unrealized Depreciation		Number of Issues	Fair Value		Amortized Cost		Unrealized Depreciation		Number of Issues
One year or less
Investment grade	$	1,687	$	1,751	$	(64)	706	$	5,533	$	6,127	$	(594)	1,659
Below investment grade	251		257		(6)		882	887		964		(77)		1,287
More than one year
Investment grade	4,768		5,538		(770)		1,443	1,151		1,487		(336)		462
Below investment grade	717		814		(97)		845	330		382		(52)		369
Total	$	7,423	$	8,360	$	(937)	3,876	$	7,901	$	8,960	$	(1,059)	3,777

Equity Securities

The following table provides the values of the Company's equity security investments as of June 30, 2023 and December 31, 2022:


	June 30, 2023				December 31, 2022
(In millions)	Cost		Carrying Value		Cost		Carrying Value
Equity securities with readily determinable fair values	$	671	$	75	$	673	$	138
Equity securities with no readily determinable fair value	3,181		3,287		380		484
Total	$	3,852	$	3,362	$	1,053	$	622

In 2023, we became a minority owner in VillageMD by investing $2.7 billion in VillageMD preferred equity. VillageMD is a provider of primary, multi-specialty and urgent care services that is majority-owned by Walgreens Boots Alliance, Inc. These securities are included in Equity securities with no readily determinable fair value in the above table. A dividend of 5.5% accrues annually on $2.2 billion of these shares. Consistent with our strategy to invest in targeted startup and growth-stage companies in the health care industry, approximately 95% of our investments in equity securities are in the health care sector.

Commercial Mortgage Loans

Mortgage loans held by the Company are made exclusively to commercial borrowers and are diversified by property type, location and borrower. Loans are generally issued at fixed rates of interest and are secured by high quality, primarily completed and substantially leased operating properties.

The Company regularly evaluates and monitors credit risk from the initial mortgage loan underwriting and throughout the investment holding period. For more information on the Company's accounting policies and methodologies regarding these investments, see Note 11 in the Company's 2022 Form 10-K.

The following table summarizes the credit risk profile of the Company's commercial mortgage loan portfolio:


(Dollars in millions)	June 30, 2023					December 31, 2022
Loan-to-Value Ratio	Carrying Value		Average Debt Service Coverage Ratio	Average Loan-to-Value Ratio		Carrying Value		Average Debt Service Coverage Ratio	Average Loan-to-Value Ratio
Below 60%	$	826	2.22			$	901	2.12
60% to 79%	595		1.78			564		1.73
80% to 100%	166		1.14			149		1.17



Total	$	1,587	1.93	62	%	$	1,614	1.89	60	%

Other Long-Term Investments

Other long-term investments include investments in unconsolidated entities, including certain limited partnerships and limited liability companies holding real estate, securities or loans. These investments are carried at cost plus the Company's ownership percentage of reporting income or loss, based on the financial statements of the underlying investments that are generally reported at fair value. Income or loss from these investments is reported on a one quarter lag due to the timing of when financial information is received from the general partner or manager of the investments.

Other long-term investments also include investment real estate carried at depreciated cost less any impairment write-downs to fair value when cash flows indicate that the carrying value may not be recoverable. Additionally, statutory and other restricted deposits and foreign currency swaps carried at fair value are reported in the table below as Other. The following table provides the carrying value information for these investments:


	Carrying Value as of
(In millions)	June 30, 2023		December 31, 2022
Real estate investments	$	1,464	$	1,319
Securities partnerships	2,351		2,166
Other	223		243
Total	$	4,038	$	3,728

**B.**Derivative Financial Instruments

The Company uses derivative financial instruments to manage the characteristics of investment assets (such as duration, yield, currency and liquidity) to meet the varying demands of the related insurance and contractholder liabilities. The Company also uses derivative financial instruments to hedge the risk of changes in the net assets of certain of its foreign subsidiaries due to changes in foreign currency exchange rates and to hedge the interest rate risk of certain long-term debt.

As of June 30, 2023, there have been no material changes to the Company's derivative financial instruments. The effects of derivative financial instruments used in our individual hedging strategies were not material to the Consolidated Financial Statements as of June 30, 2023 and December 31, 2022. The gross fair values of our derivative financial instruments are presented in Note 12 to the Consolidated Financial Statements.

Please refer to the Company's 2022 Form 10-K for further discussion of the types of derivative financial instruments and associated accounting policies.

**C.**Realized Investment Gains and Losses

Accounting policy. Realized investment gains and losses are based on specifically identified assets and result from sales, investment asset write-downs, change in the fair value of certain derivatives and equity securities and changes in allowances for credit losses on debt securities and commercial mortgage loan investments. With the adoption of amended accounting guidance for long-duration insurance contracts on January 1, 2023 (discussed in Note 2 to the Consolidated Financial Statements), realized investment gains and losses no longer exclude amounts that were previously required to adjust future policy benefits for the run-off settlement annuity business. Prior period net realized investment losses have been updated to reflect the impact of adopting LDTI.

The following realized gains and losses on investments exclude realized gains and losses attributed to the Company's separate accounts because those gains and losses generally accrue directly to separate account policyholders:


	Three Months Ended June 30,				Six Months Ended June 30,

(In millions)	2023		2022		2023		2022
Net realized investment gains (losses), excluding credit loss expense and asset write-downs	$	31	$	(65)	$	(20)	$	(387)
Credit loss (expense) recoveries	(1)		(24)		2		(24)
Other investment asset write-downs	(4)		—		(12)		—
Net realized investment gains (losses), before income taxes	$	26	$	(89)	$	(30)	$	(411)

Net realized investment losses for the six months ended June 30, 2023 and June 30, 2022 were primarily due to mark-to-market losses on a strategic health care equity securities investment.

Note 12 – Fair Value Measurements

The Company carries certain financial instruments at fair value in the financial statements including debt securities, certain equity securities, short-term investments and derivatives. Other financial instruments are measured at fair value only under certain conditions, such as when impaired or when there are observable price changes for equity securities with no readily determinable fair value.

Fair value is defined as the price at which an asset could be exchanged in an orderly transaction between market participants at the balance sheet date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a market participant, not the amount that would be paid to settle the liability with the creditor.

The Company's financial assets and liabilities carried at fair value have been classified based upon a hierarchy defined by GAAP. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset's or a liability's classification is based on the lowest level of input that is significant to its measurement. For example, a financial asset or liability carried at fair value would be classified in Level 3 if unobservable inputs were significant to the instrument's fair value, even though the measurement may be derived using inputs that are both observable (Levels 1 and 2) and unobservable (Level 3).

For a description of the policies, methods and assumptions that are used to estimate fair value and determine the fair value hierarchy for each class of financial instruments, see Note 12 in the Company's 2022 Form 10-K.

**A.**Financial Assets and Financial Liabilities Carried at Fair Value

The following table provides information about the Company's financial assets and liabilities carried at fair value. Further information regarding insurance assets and liabilities carried at fair value is provided in Note 9E to the Consolidated Financial Statements. Separate account assets are also recorded at fair value on the Company's Consolidated Balance Sheets and are reported separately in the Separate Accounts section below as gains and losses related to these assets generally accrue directly to contractholders:


(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Financial assets at fair value
Debt securities
Federal government and agency	$	147	$	147	$	144	$	165	$	—	$	—	$	291	$	312
State and local government	—		—		39		41		—		—		39		41
Foreign government	—		—		351		365		—		—		351		365
Corporate	—		—		8,018		8,394		404		412		8,422		8,806
Mortgage and other asset-backed	—		—		315		313		50		35		365		348
Total debt securities	147		147		8,867		9,278		454		447		9,468		9,872
Equity securities (1)	5		6		70		132		—		—		75		138
Short-term investments	—		—		152		139		—		—		152		139
Derivative assets	—		—		192		230		—		1		192		231

*(1)*Excludes certain equity securities that have no readily determinable fair value.

Level 3 Financial Assets and Financial Liabilities

Certain inputs for instruments classified in Level 3 are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement. Unobservable inputs reflect the Company's best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date. Additionally, as discussed in Note 9 to the Consolidated Financial Statements, the Company classifies variable annuity assets and liabilities in Level 3 of the fair value hierarchy.

Quantitative Information about Unobservable Inputs

The significant unobservable input used to value our corporate and government debt securities and mortgage and other asset-backed securities is an adjustment for liquidity. This adjustment is needed to reflect current market conditions and issuer circumstances when there is limited trading activity for the security.

The following table summarizes the fair value and significant unobservable inputs that were developed directly by the Company and used in pricing these debt securities. The range and weighted average basis point amounts for liquidity reflect the Company's best estimates of the unobservable adjustments a market participant would make to calculate these fair values.


	Fair Value as of					Unobservable Adjustment Range (Weighted Average by Quantity) as of
(Fair value in millions)	June 30, 2023		December 31, 2022		Unobservable Input June 30, 2023	June 30, 2023		December 31, 2022
Debt securities
Corporate	$	404	$	412	Liquidity	60 - 1060 (300)	bps	60 - 1060 (270)	bps
Mortgage and other asset-backed securities	50		35		Liquidity	100 - 595 (270)	bps	105 - 520 (310)	bps

Total Level 3 debt securities	$	454	$	447

A significant increase in liquidity spread adjustments would result in a lower fair value measurement, while a decrease would result in a higher fair value measurement.

Changes in Level 3 Financial Assets and Financial Liabilities Carried at Fair Value

The following table summarizes the changes in financial assets and financial liabilities classified in Level 3. Gains and losses reported in the table may include net changes in fair value that are attributable to both observable and unobservable inputs.


	For the Three Months Ended June 30,				For the Six Months Ended June 30,

(In millions)	2023		2022		2023		2022
Debt and Equity Securities
Beginning balance	$	471	$	686	$	447	$	796
(Losses) gains included in Shareholders' net income	(1)		(2)		—		10
Losses included in Other comprehensive loss	(5)		(24)		—		(51)

Purchases, sales and settlements
Purchases	—		27		4		76

Settlements	(18)		(71)		(27)		(152)
Total purchases, sales and settlements	(18)		(44)		(23)		(76)
Transfers into/(out of) Level 3
Transfers into Level 3	32		17		71		118
Transfers out of Level 3	(25)		(121)		(41)		(285)
Total transfers into/(out of) Level 3	7		(104)		30		(167)
Ending balance	$	454	$	512	$	454	$	512
Total losses included in Shareholders' net income attributable to instruments held at the reporting date	$	(1)	$	(3)	$	—	$	(2)
Change in unrealized gain or (loss) included in Other comprehensive loss for assets held at the end of the reporting period	$	(6)	$	(11)	$	(5)	$	(25)

Total gains and losses included in Shareholders' net income in the tables above are reflected in the Consolidated Statements of Income as Net realized investment gains (losses) and Net investment income.

Gains and losses included in Other comprehensive loss, net of tax in the tables above are reflected in Net unrealized appreciation (depreciation) on securities and derivatives in the Consolidated Statements of Comprehensive Income.

Transfers into or out of the Level 3 category occur when unobservable inputs, such as the Company's best estimate of what a market participant would use to determine a current transaction price, become more or less significant to the fair value measurement. Market activity typically decreases during periods of economic uncertainty and this decrease in activity reduces the availability of market observable data. As a result, the level of unobservable judgment that must be applied to the pricing of certain instruments increases and is typically observed through the widening of liquidity spreads. Transfers between Level 2 and Level 3 during 2023 and 2022 primarily reflected changes in liquidity estimates for certain private placement issuers across several sectors. See discussion under Quantitative Information about Unobservable Inputs above for more information.

Separate Accounts

The investment income and fair value gains and losses of Separate account assets generally accrue directly to the contractholders and, together with their deposits and withdrawals, are excluded from the Company's Consolidated Statements of Income and Cash Flows. The separate account activity for the six months ended June 30, 2023 and 2022 was primarily driven by changes in the market values of the underlying separate account investments.

Fair values of Separate account assets were as follows:


	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
(In millions)	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Guaranteed separate accounts (See Note 16)	$	218	$	203	$	347	$	382	$	—	$	—	$	565	$	585
Non-guaranteed separate accounts (1)	210		211		5,623		5,522		224		203		6,057		5,936
Subtotal	$	428	$	414	$	5,970	$	5,904	$	224	$	203	6,622		6,521
Non-guaranteed separate accounts priced at net asset value ("NAV") as a practical expedient (1)													702		757
Total													$	7,324	$	7,278

*(1)*Non-guaranteed separate accounts include $4.0 billion as of June 30, 2023 and December 31, 2022 in assets supporting the Company's pension plans, including $0.2 billion classified in Level 3 as of June 30, 2023 and December 31, 2022.

Separate account assets classified in Level 3 primarily support the Company's pension plans and include certain newly-issued, privately-placed, complex or illiquid securities that are priced using methods discussed above, as well as commercial mortgage loans. Activity, including transfers into and out of Level 3, was not material for the three and six months ended June 30, 2023 or 2022.

Separate account investments in securities partnerships, real estate and hedge funds are generally valued based on the separate account's ownership share of the equity of the investee (NAV as a practical expedient), including changes in the fair values of its underlying investments. Substantially all of these assets support the Company's pension plans. The following table provides additional information on these investments:


	Fair Value as of				Unfunded Commitment as of June 30, 2023		Redemption Frequency (if currently eligible)	Redemption Notice Period
(In millions)	June 30, 2023		December 31, 2022
Securities partnerships	$	425	$	451	$	211	Not applicable	Not applicable
Real estate funds	273		302		—		Quarterly	30 - 90 days
Hedge funds	4		4		—		Up to annually, varying by fund	30 - 90 days
Total	$	702	$	757	$	211

As of June 30, 2023, the Company does not have plans to sell any of these assets at less than fair value. These investments are structured to satisfy longer-term investment objectives. Securities partnerships are contractually non-redeemable and the underlying investment assets are expected to be liquidated by the fund managers within ten years after inception.

**B.**Assets and Liabilities Measured at Fair Value under Certain Conditions

Some financial assets and liabilities are not carried at fair value, such as commercial mortgage loans that are carried at unpaid principal, investment real estate that is carried at depreciated cost and equity securities with no readily determinable fair value when there are no observable market transactions. However, these financial assets and liabilities may be measured using fair value under certain conditions, such as when investments become impaired and are written down to their fair value, or when there are observable price changes from orderly market transactions of equity securities that otherwise had no readily determinable fair value.

For the six months ended June 30, 2023 and 2022, impairments recognized requiring these assets to be measured at fair value were not material. Realized investment gains and losses from these observable price changes for the three and six months ended June 30, 2023 and June 30, 2022 were not material.

**C.**Fair Value Disclosures for Financial Instruments Not Carried at Fair Value

The following table includes the Company's financial instruments not recorded at fair value but for which fair value disclosure is required. In addition to universal life products and finance leases, financial instruments that are carried in the Company's Consolidated Balance Sheets at amounts that approximate fair value are excluded from the following table:


	Classification in Fair Value Hierarchy		June 30, 2023						December 31, 2022
(In millions)		Fair Value			Carrying Value			Fair Value			Carrying Value
Commercial mortgage loans	Level 3		$	1,460		$	1,587		$	1,491		$	1,614
Long-term debt, including current maturities, excluding finance leases	Level 2		$	30,313		$	32,428		$	28,653		$	30,994

Note 13 – Variable Interest Entities

We perform ongoing qualitative analyses of our involvement with variable interest entities to determine if consolidation is required. The Company determined that it was not a primary beneficiary in any material variable interest entity as of June 30, 2023 or December 31, 2022. For details of our accounting policy for variable interest entities and the composition of variable interest entities with which the Company is involved, refer to Note 13 in the Company's 2022 Form 10-K. The Company has not provided, and does not intend to provide, financial support to any of these variable interest entities in excess of its maximum exposure. The Company's maximum exposure to loss from securities limited partnerships and real estate limited partnerships is $5.2 billion as of June 30, 2023 compared to $4.8 billion as of December 31, 2022 and the maximum exposure from real estate joint ventures is $0.8 billion as of June 30, 2023 compared to $0.6 billion as of December 31, 2022.

Note 14 – Accumulated Other Comprehensive Income (Loss) ("AOCI")

AOCI includes net unrealized (depreciation) appreciation on securities and derivatives, change in discount rate and instrument specific credit risk for certain long-duration insurance contractholder liabilities (Note 9 to the Consolidated Financial Statements), foreign currency translation and the net postretirement benefits liability adjustment. AOCI includes the Company's share from unconsolidated entities reported on the equity method. Generally, tax effects in AOCI are established at the currently enacted tax rate and reclassified to Shareholders' net income in the same period that the related pre-tax AOCI reclassifications are recognized.

Shareholders' other comprehensive (loss), net of tax, for both the three and six months ended June 30, 2023 and June 30, 2022, is primarily driven by the change in discount rates for certain long duration liabilities and unrealized changes in the market values of securities and derivatives, including the impacts from unconsolidated entities reported on the equity method.

Changes in the components of AOCI, including the restatement for amended accounting guidance for long-duration insurance contracts (discussed in Note 2 to the Consolidated Financial Statements), are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2023		2022		2023		2022
Securities and Derivatives


Beginning balance, as retrospectively restated	$	(138)	$	423	$	(332)	$	1,266
Unrealized appreciation (depreciation) on securities and derivatives	7		(869)		259		(1,934)
Tax (expense) benefit	(12)		169		(66)		400
Net unrealized (depreciation) appreciation on securities and derivatives	(5)		(700)		193		(1,534)

Reclassification adjustment for losses included in Shareholders' net income (Net realized investment gains (losses))	31		38		26		27

Reclassification adjustment for tax (benefit) included in Shareholders' net income	(6)		(8)		(5)		(6)
Net losses reclassified from AOCI to Shareholders' net income	25		30		21		21
Other comprehensive income (loss), net of tax	20		(670)		214		(1,513)
Ending balance	$	(118)	$	(247)	$	(118)	$	(247)
Net long-duration insurance and contractholder liabilities measurement adjustments (1)


Beginning balance	$	(587)	$	(306)	$	(256)	$	(765)
Current period change in discount rate for certain long duration liabilities	(147)		20		(558)		604
Tax benefit (expense)	36		9		137		(121)
Net current period change in discount rate for certain long duration liabilities	(111)		29		(421)		483
Current period change in instrument-specific credit risk for market risk benefits	(7)		(28)		(33)		(22)
Tax benefit	1		5		6		4
Net current period change in instrument-specific credit risk for market risk benefits	(6)		(23)		(27)		(18)
Other comprehensive (loss) income, net of tax	(117)		6		(448)		465
Ending balance	$	(704)	$	(300)	$	(704)	$	(300)
Translation of foreign currencies


Beginning balance, as retrospectively restated	$	(138)	$	(294)	$	(154)	$	(233)
Translation of foreign currencies	(20)		(182)		(5)		(242)
Tax benefit (expense)	1		(25)		2		(28)
Net translation of foreign currencies	(19)		(207)		(3)		(270)






Less: Net translation (loss) on foreign currencies attributable to noncontrolling interests	—		(1)		—		(3)
Shareholders' other comprehensive (loss), net of tax	(19)		(206)		(3)		(267)
Ending balance	$	(157)	$	(500)	$	(157)	$	(500)
Postretirement benefits liability
Beginning balance	$	(906)	$	(1,323)	$	(916)	$	(1,336)
Reclassification adjustment for amortization of net prior actuarial losses and prior service costs (Interest expense and other)	11		17		24		33


Reclassification adjustment for tax (benefit) included in Shareholders' net income	(3)		(4)		(6)		(7)
Net adjustments reclassified from AOCI to Shareholders' net income	8		13		18		26
Valuation update	(2)		18		(2)		18
Tax benefit (expense)	1		(4)		1		(4)
Net change due to valuation update	(1)		14		(1)		14
Other comprehensive income, net of tax	7		27		17		40
Ending balance	$	(899)	$	(1,296)	$	(899)	$	(1,296)
Total Accumulated other comprehensive loss


Beginning balance, as retrospectively restated	$	(1,769)	$	(1,500)	$	(1,658)	$	(1,068)
Shareholders' other comprehensive (loss), net of tax	(109)		(843)		(220)		(1,275)
Ending balance	$	(1,878)	$	(2,343)	$	(1,878)	$	(2,343)

*(1)*Established upon the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023. See Note 2 to the Consolidated Financial Statements for further information.

Note 15 – Income Taxes

Income Tax Expense

The 19.9% effective tax rate for the three months ended June 30, 2023 and the 19.2% effective tax rate for the six months ended June 30, 2023 were each lower than the 20.7% rate for the three months ended June 30, 2022 and the 21.6% rate for the six months ended June 30, 2022. These decreases are driven largely by favorable results relative to the Company's foreign operations and the release of uncertain tax positions resulting from favorable audit developments.

As of June 30, 2023, we had approximately $274 million in deferred tax assets ("DTAs") associated with unrealized investment losses that are partially recorded in Accumulated other comprehensive loss. We have determined that a valuation allowance against the DTAs is not currently required based on the Company's ability to carry back losses and our ability and intent to hold certain securities until recovery. We continue to monitor and evaluate the need for any valuation allowance in the future.

Note 16 – Contingencies and Other Matters

The Company, through its subsidiaries, is contingently liable for various guarantees provided in the ordinary course of business.

**A.**Financial Guarantees: Retiree and Life Insurance Benefits

The Company guarantees that separate account assets will be sufficient to pay certain life insurance or retiree benefits. For the majority of these benefits, the sponsoring employers are primarily responsible for ensuring that assets are sufficient to pay these benefits and are required to maintain assets that exceed a certain percentage of benefit obligations. If employers fail to do so, the Company or an affiliate of the buyer of the retirement benefits business has the right to redirect the management of the related assets to provide for benefit payments. As of June 30, 2023, employers maintained assets that generally exceeded the benefit obligations under these arrangements of approximately $420 million. An additional liability is established if management believes that the Company will be required to make payments under the guarantees; there were no additional liabilities required for these guarantees, net of reinsurance, as of June 30, 2023. Separate account assets supporting these guarantees are classified in Levels 1 and 2 of the GAAP fair value hierarchy.

The Company does not expect that these financial guarantees will have a material effect on the Company's consolidated results of operations, liquidity or financial condition.

**B.**Certain Other Guarantees

The Company had indemnification obligations as of June 30, 2023 in connection with acquisition and disposition transactions. These indemnification obligations are triggered by the breach of representations or covenants provided by the Company, such as representations for the presentation of financial statements, filing of tax returns, compliance with law or identification of outstanding litigation. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential amount due is subject to contractual limitations based on a percentage of the transaction purchase price, while in other cases limitations are not specified or applicable. The Company does not believe that it is possible to determine the maximum potential amount due under these obligations because not all amounts due under these indemnification obligations are subject to limitation. There were no liabilities for these indemnification obligations as of June 30, 2023.

**C.**Guaranty Fund Assessments

The Company operates in a regulatory environment that may require its participation in assessments under state insurance guaranty association laws. The Company's exposure to assessments for certain obligations of insolvent insurance companies to policyholders and claimants is based on its share of business written in the relevant jurisdictions.

There were no material charges or credits resulting from existing or new guaranty fund assessments for the six months ended June 30, 2023.

**D.**Legal and Regulatory Matters

The Company is routinely involved in numerous claims, lawsuits, regulatory inquiries and audits, government investigations, including under the federal False Claims Act and state false claims acts initiated by a government investigating body or by a qui tam relator's filing of a complaint under court seal, and other legal matters arising, for the most part, in the ordinary course of managing a global health services business. Additionally, the Company has received and is cooperating with subpoenas or similar processes from various governmental agencies requesting information, all arising in the normal course of its business. Disputed tax matters arising

from audits by the Internal Revenue Service or other state and foreign jurisdictions, including those resulting in litigation, are accounted for under GAAP guidance for uncertain tax positions.

Pending litigation and legal or regulatory matters that the Company has identified with a reasonably possible material loss and certain other material litigation matters are described below. For those matters that the Company has identified with a reasonably possible material loss, the Company provides disclosure in the aggregate of accruals and range of loss, or a statement that such information cannot be estimated. The Company's accruals for the matters discussed below under "Litigation Matters" and "Regulatory Matters" are not material. Due to numerous uncertain factors presented in these cases, it is not possible to estimate an aggregate range of loss (if any) for these matters at this time. In light of the uncertainties involved in these matters, there is no assurance that their ultimate resolution will not exceed the amounts currently accrued by the Company. An adverse outcome in one or more of these matters could be material to the Company's results of operations, financial condition or liquidity for any particular period. The outcomes of lawsuits are inherently unpredictable and we may be unsuccessful in these ongoing litigation matters or any future claims or litigation.

Litigation Matters

Express Scripts Litigation with Elevance. In March 2016, Elevance filed a lawsuit in the United States District Court for the Southern District of New York alleging various breach of contract claims against Express Scripts relating to the parties' rights and obligations under the periodic pricing review section of the pharmacy benefit management agreement between the parties including allegations that Express Scripts failed to negotiate new pricing concessions in good faith, as well as various alleged service issues. Elevance also requested that the court enter declaratory judgment that Express Scripts is required to provide Elevance competitive benchmark pricing, that Elevance can terminate the agreement and that Express Scripts is required to provide Elevance with post-termination services at competitive benchmark pricing for one year following any termination by Elevance. Elevance claimed it is entitled to $13 billion in additional pricing concessions over the remaining term of the agreement, as well as $1.8 billion for one year following any contract termination by Elevance and $150 million damages for service issues ("Elevance's Allegations"). On April 19, 2016, in response to Elevance's complaint, Express Scripts filed its answer denying Elevance's Allegations in their entirety and asserting affirmative defenses and counterclaims against Elevance. The court subsequently granted Elevance's motion to dismiss two of six counts of Express Scripts' amended counterclaims. Express Scripts filed its Motion for Summary Judgment on August 27, 2021. Elevance completed filing of its Response to Express Scripts' Motion for Summary Judgment on October 16, 2021. Express Scripts filed its Reply in Support of its Motion for Summary Judgment on November 19, 2021. On March 31, 2022, the court granted summary judgment in favor of Express Scripts on all of Elevance's pricing claims for damages totaling $14.8 billion and on most of Elevance's claims relating to service issues. Elevance's only remaining service claims relate to the review or processing of prior authorizations. On June 10, 2022, Express Scripts filed a Motion for Partial Summary Judgment seeking to limit Elevance's remaining prior authorization claims and a Motion to Exclude certain opinions offered by its experts. Elevance filed its opposition to both motions, and a cross-motion to submit a supplemental expert report, on July 9, 2022. Express Scripts' pending Motions were fully briefed at the end of July 2022. On March 8, 2023, the Court granted Express Scripts' Motion for Partial Summary Judgment, excluding in full the testimony of four of Elevance's experts and in part the testimony of two additional experts, and granted Elevance leave to submit a supplemental expert report. On April 5, 2023, the Court entered a scheduling order setting a trial on Elevance's remaining prior authorization claims to commence on December 4, 2023.

Medicare Advantage. A qui tam action that was filed by a private individual (the "relator") on behalf of the government in the United States District Court for the Southern District of New York in 2017 was unsealed on August 6, 2020. The action asserts claims related to risk adjustment practices arising from certain health exams conducted as part of the Company's Medicare Advantage business. In September 2021, the qui tam action was transferred to the United States District Court for the Middle District of Tennessee. On January 11, 2022, the U.S. Department of Justice ("DOJ") (U.S. Attorney's Offices for the Southern District of New York and the Middle District of Tennessee) filed a motion to partially intervene, which was granted on August 2, 2022. On October 14, 2022, the DOJ filed its complaint-in-intervention alleging that certain diagnoses made during in-home exams were invalid for risk adjustment purposes, seeking unspecified damages and penalties under the federal False Claims Act. The Company's motion to dismiss the DOJ's complaint is fully briefed and pending before the court. The Company's motion to dismiss relator's complaint was denied as moot after relator asked for and was granted permission to amend his complaint. Relator filed an amended complaint on July 28, 2023. The Company's response to the complaint is due September 11, 2023.

Regulatory Matters

Civil Investigative Demand. The DOJ is conducting industry-wide investigations of Medicare Advantage organizations' risk adjustment practices. For certain Medicare Advantage organizations, including The Cigna Group, those investigations have resulted in litigation (see "Litigation Matters—Medicare Advantage" above). The Company has responded to information requests (civil investigative demands) from the DOJ (U.S. Attorney's Office for the Eastern District of Pennsylvania) and is continuing to cooperate with the DOJ.

Note 17 – Segment Information

See Note 1 to the Consolidated Financial Statements for a description of our segments. A description of our basis for reporting segment operating results is outlined below. Intersegment revenues primarily reflect pharmacy and care services transactions between the Evernorth Health Services and Cigna Healthcare segments.

The Company uses "pre-tax adjusted income (loss) from operations" and "adjusted revenues" as its principal financial measures of segment operating performance because management believes these metrics best reflect the underlying results of business operations and permit analysis of trends in underlying revenue, expenses and profitability. We define pre-tax adjusted income from operations as income before income taxes excluding pre-tax income (loss) attributable to noncontrolling interests, net realized investment results, amortization of acquired intangible assets, and special items. The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results.

The Company defines adjusted revenues as total revenues excluding the following adjustments: special items and The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. We exclude these items from this measure because management believes they are not indicative of past or future underlying performance of the business.

The Company does not report total assets by segment because this is not a metric used to allocate resources or evaluate segment performance.

The following table presents the special items charges (benefits) recorded by the Company, as well as the respective financial statement line items impacted:


	Three Months Ended June 30,								Six Months Ended June 30,

	2023				2022				2023				2022
(In millions)	Pre-tax		After-tax		Pre-tax		After-tax		Pre-tax		After-tax		Pre-tax		After-tax
Integration and transaction-related costs (Selling, general and administrative expenses)	$	6	$	5	$	36	$	26	$	7	$	6	$	88	$	63
Charge for organizational efficiency plan (Selling, general and administrative expenses)	—		—		22		17		—		—		22		17
(Benefits) associated with litigation matters (Selling, general and administrative expenses)	—		—		(28)		(20)		—		—		(28)		(20)





Total impact from special items	$	6	$	5	$	30	$	23	$	7	$	6	$	82	$	60

Effective January 1, 2023, we adopted amended accounting guidance for long-duration insurance contracts. See Note 2 to the Consolidated Financial Statements for further information. Prior period summarized segment information has been retrospectively adjusted to conform to this new basis of accounting. Summarized segment financial information was as follows:


(In millions)	Evernorth Health Services		Cigna Healthcare		Other Operations		Corporate and Eliminations		Total
Three months ended June 30, 2023
Revenues from external customers	$	36,721	$	11,505	$	82	$	—	$	48,308
Intersegment revenues	1,422		1,044		—		(2,466)
Net investment income	62		135		76		5		278
Total revenues	38,205		12,684		158		(2,461)		48,586

Net realized investment results from certain equity method investments	—		30		—		—		30

Adjusted revenues	$	38,205	$	12,714	$	158	$	(2,461)	$	48,616
Income (loss) before income taxes	$	1,128	$	1,156	$	29	$	(429)	$	1,884
Pre-tax adjustments to reconcile to adjusted income from operations

(Income) attributable to noncontrolling interests	(54)		(1)		—		—		(55)
Net realized investment (gains) losses (1)	(1)		5		—		—		4
Amortization of acquired intangible assets	443		12		—		—		455
Special items
Integration and transaction-related costs	—		—		—		6		6







Pre-tax adjusted income (loss) from operations	$	1,516	$	1,172	$	29	$	(423)	$	2,294

(In millions)	Evernorth Health Services		Cigna Healthcare		Other Operations		Corporate and Eliminations		Total
Three months ended June 30, 2022
Revenues from external customers	$	33,716	$	10,620	$	817	$	—	$	45,153
Intersegment revenues	1,131		586		—		(1,717)
Net investment income	16		178		131		—		325
Total revenues	34,863		11,384		948		(1,717)		45,478
Net realized investment results from certain equity method investments	—		(49)		—		—		(49)

Adjusted revenues	$	34,863	$	11,335	$	948	$	(1,717)	$	45,429
Income (loss) before income taxes	$	1,044	$	1,200	$	168	$	(431)	$	1,981
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests	(13)		—		(2)		—		(15)
Net realized investment (gains) losses (1)	—		(22)		62		—		40
Amortization of acquired intangible assets	444		57		—		—		501
Special items
Integration and transaction-related costs	—		—		—		36		36
Charge for organizational efficiency plan	—		—		—		22		22
(Benefits) associated with litigation matters	—		—		—		(28)		(28)





Pre-tax adjusted income (loss) from operations	$	1,475	$	1,235	$	228	$	(401)	$	2,537

(1) Includes the Company's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting.


(In millions)	Evernorth Health Services		Cigna Healthcare		Other Operations		Corporate and Eliminations		Total
Six months ended June 30, 2023
Revenues from external customers	$	71,232	$	23,155	$	161	$	—	$	94,548
Intersegment revenues	3,040		2,007		—		(5,047)
Net investment income	112		278		154		11		555
Total revenues	74,384		25,440		315		(5,036)		95,103
Net realized investment results from certain equity method investments	—		(8)		—		—		(8)

Adjusted revenues	$	74,384	$	25,432	$	315	$	(5,036)	$	95,095

Income (loss) before income taxes	$	2,046	$	2,233	$	50	$	(844)	$	3,485
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests	(96)		(2)		—		—		(98)
Net realized investment (gains) losses (1)	(1)		29		(6)		—		22
Amortization of acquired intangible assets	887		27		—		—		914
Special items
Integration and transaction-related costs	—		—		—		7		7







Pre-tax adjusted income (loss) from operations	$	2,836	$	2,287	$	44	$	(837)	$	4,330

(In millions)	Evernorth Health Services		Cigna Healthcare		Other Operations		Corporate and Eliminations		Total
Six months ended June 30, 2022
Revenues from external customers	$	66,005	$	21,082	$	1,658	$	—	$	88,745
Intersegment revenues	2,418		1,148		—		(3,566)
Net investment income	26		444		269		—		739
Total revenues	68,449		22,674		1,927		(3,566)		89,484

Net realized investment results from certain equity method investments	—		54		—		—		54

Adjusted revenues	$	68,449	$	22,728	$	1,927	$	(3,566)	$	89,538

Income (loss) before income taxes	$	1,914	$	2,077	$	383	$	(826)	$	3,548
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests	(24)		(1)		(7)		—		(32)
Net realized investment losses (1)	—		384		81		—		465
Amortization of acquired intangible assets	887		72		—		—		959
Special items
Integration and transaction-related costs	—		—		—		88		88
Charge for organizational efficiency plan	—		—		—		22		22
(Benefits) associated with litigation matters	—		—		—		(28)		(28)





Pre-tax adjusted income (loss) from operations	$	2,777	$	2,532	$	457	$	(744)	$	5,022

*(1)*Includes the Company's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting.

Revenue from external customers includes Pharmacy revenues, Premiums and Fees and other revenues. Prior period amounts have been retrospectively adjusted to reflect adoption of amended accounting guidance for long-duration insurance contracts, as discussed in Note 2 to the Consolidated Financial Statements. The following table presents these revenues by product, premium and service type:


	Three Months Ended June 30,				Six Months Ended June 30,

(In millions)	2023		2022		2023		2022
Products (Pharmacy revenues) (ASC 606)
Network revenues	$	16,406	$	16,107	$	32,154	$	31,638
Home delivery and specialty revenues	16,594		15,268		32,619		29,967
Other revenues	2,249		1,667		4,116		3,379
Intercompany eliminations	(1,285)		(1,070)		(2,781)		(2,315)
Total pharmacy revenues	33,964		31,972		66,108		62,669
Insurance premiums (ASC 944)
Cigna Healthcare
U.S. Commercial (1)
Insured	4,091		3,771		8,171		7,491
Stop loss	1,514		1,344		3,017		2,669
Other	365		352		733		712
U.S. Government (1)
Medicare Advantage	2,180		2,053		4,416		4,131
Medicare Part D	345		345		760		746
Other
Short-duration (Individual and family plans)	1,293		706		2,501		1,317
Long-duration(2) (Individual Medicare supplement and limited benefit health products)	337		332		671		661
International Health
Short-duration (Group medical insurance)	731		636		1,431		1,256
Long-duration(2) (Individual private medical insurance)	89		76		175		158
Total Cigna Healthcare	10,945		9,615		21,875		19,141
Divested International businesses	—		737		—		1,500

Other	76		74		155		143
Intercompany eliminations	18		—		34		(2)
Total premiums	11,039		10,426		22,064		20,782
Services (Fees) (ASC 606)

Evernorth Health Services	2,838		1,790		5,337		3,414
Cigna Healthcare	1,602		1,478		3,208		2,974
Other Operations	1		4		2		9
Other revenues	63		130		129		146
Intercompany eliminations	(1,199)		(647)		(2,300)		(1,249)
Total fees and other revenues	3,305		2,755		6,376		5,294
Total revenues from external customers	$	48,308	$	45,153	$	94,548	$	88,745

*(1)*Other than the long-duration products referenced in the table, U.S. Commercial and U.S. Government insurance contracts are short-duration.

*(2)*U.S. Government's and International Health's long-duration premium revenues are associated with contracts that provide coverage greater than one year or are guaranteed to be renewed at the option of the policyholder beyond one year.

Evernorth Health Services may also provide certain financial and performance guarantees, including a minimum level of discounts a client may receive, generic utilization rates and various service levels. Clients may be entitled to receive compensation if we fail to meet the guarantees. Actual performance is compared to the contractual guarantee for each measure throughout the period and the Company defers revenue for any estimated payouts within Accrued expenses and other liabilities (current). These estimates are adjusted and paid following the end of the annual guarantee period. Historically, adjustments to original estimates have not been material. This guarantee liability was $1.2 billion as of June 30, 2023 and $1.3 billion as of December 31, 2022.

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