Schedule I - Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2019

Condensed Financial Information of Cigna Corporation (Registrant) [Abstract]

Condensed Financial Information of Cigna Corporation (Registrant)

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION

(REGISTRANT)

STATEMENTS OF INCOME

	For the years ended
	December 31,
	Cigna*		Cigna*		Old Cigna*
(in millions)	2019		2018		2017
Revenues
Net investment income	$	-	$	123	$	-
Intercompany interest income		6		-		-
Total revenues		6		123		-
Operating expenses
Selling, general and administrative expenses		(85)		200		195
Total operating expenses		(85)		200		195
Income (loss) from operations		91		(77)		(195)
Interest and other (expense)		(1,032)		(244)		(246)
Intercompany interest (expense)		(127)		(5)		(18)
Debt extinguishment costs		-		-		(321)
Realized investment (loss)		-		(1)		-
Loss before taxes		(1,068)		(327)		(780)
Income tax (benefit)		(251)		(74)		(194)
Loss of Parent Company		(817)		(253)		(586)
Equity in income of subsidiaries		5,921		2,890		2,823
Shareholders' net income		5,104		2,637		2,237
Shareholders' other comprehensive income (loss), net of tax
Net unrealized appreciation (depreciation) on securities and derivatives		957		(365)		(37)
Net translation (losses) gains of foreign currencies		(54)		(152)		304
Postretirement benefits liability adjustment		(133)		127		33
Shareholders' other comprehensive income (loss), net of tax		770		(390)		300
Shareholders' comprehensive income	$	5,874	$	2,247	$	2,537
* As described in Note 4 to the Consolidated Financial Statements, on December 20, 2018, Old Cigna became a wholly-owned subsidiary of Cigna, and Cigna became the Registrant.

See Notes to Financial Statements on the following pages.

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION

(REGISTRANT)

BALANCE SHEETS

	As of December 31,
(in millions)	2019		2018
Assets
Cash and cash equivalents	$	-	$	243
Short-term investments		30		-
Other current assets		4		14
Total current assets		34		257
Intercompany receivable		4,111		-
Investments in subsidiaries		77,380		68,969
Other noncurrent assets		19		48
TOTAL ASSETS	$	81,544	$	69,274
Liabilities
Short-term debt	$	4,043	$	-
Other current liabilities		457		418
Total current liabilities		4,500		418
Intercompany payable		2,341		4,965
Long-term debt		29,365		22,863
TOTAL LIABILITIES		36,206		28,246
Shareholders’ Equity
Common stock (shares issued, 386 and 381 ; authorized, 600 )		4		4
Additional paid-in capital		28,306		27,751
Accumulated other comprehensive loss		(941)		(1,711)
Retained earnings		20,162		15,088
Less treasury stock, at cost		(2,193)		(104)
TOTAL SHAREHOLDERS’ EQUITY		45,338		41,028
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	81,544	$	69,274

See Notes to Financial Statements on the following pages.

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION

(REGISTRANT)

STATEMENTS OF CASH FLOWS

	For the years ended
	December 31,
	Cigna*		Cigna*		Old Cigna*
(in millions)	2019		2018		2017
Cash Flows from Operating Activities
Shareholders’ net income	$	5,104	$	2,637	$	2,237
Adjustments to reconcile shareholders’ net income
to net cash provided by operating activities
Equity in income of subsidiaries		(5,921)		(2,890)		(2,823)
Dividends received from subsidiaries		2,457		-		758
Other liabilities		43		412		(224)
Debt extinguishment costs		-		-		321
Other, net		20		(14)		333
NET CASH PROVIDED BY OPERATING ACTIVITIES		1,703		145		602
Cash Flows from Investing Activities
Short-term investment purchased, net		(30)		-		(6)
Other, net		-		(27,115)		(11)
NET CASH (USED IN) INVESTING ACTIVITIES		(30)		(27,115)		(17)
Cash Flows from Financing Activities
Net change in amounts due to affiliates		2,015		4,437		1,955
Proceeds on issuance of commercial paper		944		-		100
Payments for debt extinguishment		-		-		(313)
Repayment of long-term debt		(3,002)		-		(1,250)
Net proceeds on issuance of long-term debt		-		22,856		1,581
Issuance of common stock		224		1		131
Common dividends paid		(15)		-		(10)
Repurchase of common stock		(1,987)		(32)		(2,725)
Tax withholding on stock compensation and other		(82)		(49)		(63)
Other		(13)		-		-
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(1,916)		27,213		(594)
Net (decrease) increase in cash and cash equivalents		(243)		243		(9)
Cash and cash equivalents, beginning of year		243		-		18
Cash and cash equivalents, end of year	$	-	$	243	$	9
* As described in Note 4 to the Consolidated Financial Statements, on December 20, 2018, Old Cigna became a wholly-owned subsidiary of Cigna, and Cigna became the Registrant.

See Notes to Financial Statements on the following pages.

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION

(REGISTRANT)

NOTES TO CONDENSED FINANCIAL STATEMENTS

The accompanying condensed financial statements should be read in conjunction with the Consolidated Financial Statements and the accompanying notes thereto contained in this Annual Report on Form 10-K (“Form 10-K”).

Note 1 – For purposes of these condensed financial statements, Cigna Corporation’s (the “Company”) wholly-owned and majority-owned subsidiaries are recorded using the equity method of accounting.

Note 2 – See Note 7 – Debt included in Part II, Item 8 of this Form 10-K for a description of the short-term and long-term debt obligations of Cigna Corporation and its subsidiaries.

Debt repayment. During 2019, the Company repaid the $3.0 billion term loan.

Exchange of Legacy Notes for Cigna Notes and Redemption of Medco Notes. In the fourth quarter of 2019, the Company completed an exchange of $12.7 billion of legacy Notes issued by Express Scripts, Medco and Old Cigna for new Notes issued by the Company with the same interest rates, maturities and other comparable terms. The exchange is reflected as a non-cash investing and financing activity. The Company entered into this exchange primarily to simplify its capital structure and reporting obligations. Additionally, in the fourth quarter of 2019, Medco, a subsidiary of the Company, fully redeemed all of the remaining outstanding Medco Notes. As a result of the exchange and redemption, guarantees of obligations under the remaining legacy Notes not exchanged, as well as under Notes issued by the Company in September 2018 to finance its acquisition of Express Scripts, were released and we are no longer required to separately present Condensed Consolidated Financial Information under Rule 3-10 of Regulation S-X.

Term Loan Credit Agreement. The Company borrowed $3.0 billion under its Term Loan Credit Agreement to finance the Merger and to pay fees and expenses of the Merger. As of December 31, 2019, the Company repaid the term loan in full and the agreement was terminated.

Notes issued to fund the Express Scripts acquisition. In the third quarter of 2018, the Company issued private placement Notes with registration rights to finance the Express Scripts acquisition. Total proceeds were approximately $20.0 billion. Interest on this debt is generally paid semi-annually except for quarterly interest payments on the floating rate notes. The Company completed an exchange offer to register such debt in the third quarter of 2019.

Maturity of the Company’s long-term debt is as follows:

(In millions)
2020	$	3,099
2021	$	3,812
2022	$	1,770
2023	$	4,699
2024	$	714
Maturities after 2024	$	18,638

Note 3 — Intercompany liabilities of the Company consist primarily of payables to Old Cigna of $2.3 billion as of December 31, 2019 and $4.3 billion as of and December 31, 2018. Interest was accrued at an average monthly rate of 2.58% for 2019 and 2.33% for 2018. Intercompany receivables of the Company consist primarily of net amounts due from Express Scripts Holdings of $3.9 billion (consisting of an $8.2 billion receivable offset by a $4.3 billion payable) as of December 31, 2019. Interest income on the receivable was accrued at an annual fixed rate of 5.5%. Interest expense on the payable was accrued at an average rate of 2.58%.Note 4 — The Company had guarantees of approximately $48 million as of December 31, 2019. These guarantees are primarily related to outstanding letters of credit. In 2019, no payments have been made on these guarantees.