(State or other jurisdiction | (I.R.S. Employer | ||||
of incorporation or organization) | Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller Reporting Company | |||||||||
Emerging growth company |
Page | ||||||||
Cigna Corporation Consolidated Statements of Income | |||||||||||||||||||||||
Unaudited | Unaudited | ||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(In millions, except per share amounts) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Revenues | |||||||||||||||||||||||
Pharmacy revenues | $ | $ | $ | $ | |||||||||||||||||||
Premiums | |||||||||||||||||||||||
Fees and other revenues | |||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
Benefits and expenses | |||||||||||||||||||||||
Pharmacy and other service costs | |||||||||||||||||||||||
Medical costs and other benefit expenses | |||||||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Amortization of acquired intangible assets | |||||||||||||||||||||||
Total benefits and expenses | |||||||||||||||||||||||
Income from operations | |||||||||||||||||||||||
Interest expense and other | ( | ( | ( | ( | |||||||||||||||||||
Debt extinguishment costs | ( | ( | |||||||||||||||||||||
Net realized investment gains (losses) | ( | ||||||||||||||||||||||
Income before income taxes | |||||||||||||||||||||||
Total income taxes | |||||||||||||||||||||||
Net income | |||||||||||||||||||||||
Less: net income attributable to noncontrolling interests | |||||||||||||||||||||||
Shareholders’ net income | $ | $ | $ | $ | |||||||||||||||||||
Shareholders’ net income per share | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ |
Cigna Corporation Consolidated Statements of Comprehensive Income | |||||||||||||||||||||||
Unaudited | Unaudited | ||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income, net of tax | |||||||||||||||||||||||
Net unrealized appreciation on securities and derivatives | |||||||||||||||||||||||
Net translation gains (losses) on foreign currencies | ( | ( | ( | ||||||||||||||||||||
Postretirement benefits liability adjustment | ( | ( | |||||||||||||||||||||
Other comprehensive income, net of tax | |||||||||||||||||||||||
Total comprehensive income |
Comprehensive income (loss) attributable to noncontrolling interests | |||||||||||||||||||||||
Net income attributable to redeemable noncontrolling interest | |||||||||||||||||||||||
Net income attributable to other noncontrolling interests | |||||||||||||||||||||||
Other comprehensive (loss) attributable to redeemable noncontrolling interest | ( | ( | ( | ( | |||||||||||||||||||
Total comprehensive income attributable to noncontrolling interests | |||||||||||||||||||||||
SHAREHOLDERS' COMPREHENSIVE INCOME | $ | $ | $ | $ |
Cigna Corporation Consolidated Balance Sheets | |||||||||||
Unaudited | |||||||||||
(In millions) | As of June 30, 2020 | As of December 31, 2019 | |||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Investments | |||||||||||
Accounts receivable, net | |||||||||||
Inventories | |||||||||||
Other current assets | |||||||||||
Assets of business held for sale | |||||||||||
Total current assets | |||||||||||
Long-term investments | |||||||||||
Reinsurance recoverables | |||||||||||
Deferred policy acquisition costs | |||||||||||
Property and equipment | |||||||||||
Goodwill | |||||||||||
Other intangible assets | |||||||||||
Other assets | |||||||||||
Separate account assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
Liabilities | |||||||||||
Current insurance and contractholder liabilities | $ | $ | |||||||||
Pharmacy and service costs payable | |||||||||||
Accounts payable | |||||||||||
Accrued expenses and other liabilities | |||||||||||
Short-term debt | |||||||||||
Liabilities of business held for sale | |||||||||||
Total current liabilities | |||||||||||
Non-current insurance and contractholder liabilities | |||||||||||
Deferred tax liabilities, net | |||||||||||
Other non-current liabilities | |||||||||||
Long-term debt | |||||||||||
Separate account liabilities | |||||||||||
TOTAL LIABILITIES | |||||||||||
Contingencies — Note 18 | |||||||||||
Redeemable noncontrolling interests | |||||||||||
Shareholders’ equity | |||||||||||
Common stock (1) | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Retained earnings | |||||||||||
Less: treasury stock, at cost | ( | ( | |||||||||
TOTAL SHAREHOLDERS’ EQUITY | |||||||||||
Other noncontrolling interests | |||||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
Cigna Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Statements of Changes in Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(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, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Effects of issuing stock for employee benefits plans | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other transactions impacting noncontrolling interests | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(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, 2019 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Effect of issuing stock for employee benefit plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other transactions impacting noncontrolling interests | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Cigna Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Statements of Changes in Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(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, 2019 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of issuing stock for employee benefit plans | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Common dividends declared (per share: $ | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other transactions impacting noncontrolling interests | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(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, 2018 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of issuing stock for employee benefit plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Common dividends declared (per share: $ | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other transactions impacting noncontrolling interests | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Cigna Corporation Consolidated Statements of Cash Flows | |||||||||||
Unaudited | |||||||||||
Six Months Ended June 30, | |||||||||||
(In millions) | 2020 | 2019 | |||||||||
Cash Flows from Operating Activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Realized investment losses (gains), net | ( | ||||||||||
Deferred income tax (benefit) | ( | ( | |||||||||
Debt extinguishment costs | |||||||||||
Net changes in assets and liabilities, net of non-operating effects: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Inventories | ( | ||||||||||
Deferred policy acquisition costs | ( | ( | |||||||||
Reinsurance recoverable and Other assets | ( | ||||||||||
Insurance liabilities | |||||||||||
Pharmacy and service costs payable | |||||||||||
Accounts payable and Accrued expenses and other liabilities | ( | ||||||||||
Other, net | |||||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | |||||||||||
Cash Flows from Investing Activities | |||||||||||
Proceeds from investments sold: | |||||||||||
Debt securities and equity securities | |||||||||||
Investment maturities and repayments: | |||||||||||
Debt securities and equity securities | |||||||||||
Commercial mortgage loans | |||||||||||
Other sales, maturities and repayments (primarily short-term and other long-term investments) | |||||||||||
Investments purchased or originated: | |||||||||||
Debt securities and equity securities | ( | ( | |||||||||
Commercial mortgage loans | ( | ( | |||||||||
Other (primarily short-term and other long-term investments) | ( | ( | |||||||||
Property and equipment purchases, net | ( | ( | |||||||||
Acquisitions, net of cash acquired | ( | ||||||||||
Other, net | ( | ||||||||||
NET CASH (USED IN) INVESTING ACTIVITIES | ( | ( | |||||||||
Cash Flows from Financing Activities | |||||||||||
Deposits and interest credited to contractholder deposit funds | |||||||||||
Withdrawals and benefit payments from contractholder deposit funds | ( | ( | |||||||||
Net change in short-term debt | ( | ( | |||||||||
Net proceeds on issuance of term loan | |||||||||||
Payments for debt extinguishment | ( | ||||||||||
Repayment of long-term debt | ( | ( | |||||||||
Net proceeds on issuance of long-term debt | |||||||||||
Repurchase of common stock | ( | ( | |||||||||
Issuance of common stock | |||||||||||
Other, net | ( | ||||||||||
NET CASH (USED IN) FINANCING ACTIVITIES | ( | ( | |||||||||
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash | ( | ( | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||
Cash, cash equivalents, and restricted cash January 1, (1) | |||||||||||
Cash, cash equivalents and restricted cash, June 30, | |||||||||||
Cash reclassified to assets of business held for sale | ( | ||||||||||
Cash, cash equivalents, and restricted cash June 30, per Consolidated Balance Sheets (2) | $ | $ | |||||||||
Supplemental Disclosure of Cash Information: | |||||||||||
Income taxes paid, net of refunds | $ | $ | |||||||||
Interest paid | $ | $ |
Unaudited | |||||||||||
As of June 30, | |||||||||||
2020 | 2019 | ||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash and cash equivalents, included in other long-term investments | |||||||||||
Total cash, cash equivalents, and restricted cash and cash equivalents | $ | $ |
Note Number | Footnote | Page | ||||||
BUSINESS AND CAPITAL STRUCTURE | ||||||||
INSURANCE INFORMATION | ||||||||
INVESTMENTS | ||||||||
WORKFORCE MANAGEMENT AND COMPENSATION | ||||||||
Organizational Efficiency Plan | ||||||||
PROPERTY, LEASES AND OTHER ASSET BALANCES | ||||||||
COMPLIANCE, REGULATION AND CONTINGENCIES | ||||||||
RESULTS DETAILS | ||||||||
Accounting Standard and Adoption Date | Requirements and Effects of Adopting New Guidance | |||||||
Requires: | ||||||||
• | A new approach using expected credit losses to estimate and recognize credit losses for certain financial instruments (such as mortgage loans, reinsurance recoverables and other receivables) when such instruments are first originated or acquired, and in each subsequent reporting period, compared with the incurred loss model previously followed under GAAP. At adoption, the Company recorded an allowance for estimated credit losses and subsequent changes in the allowance will be reported in current period earnings. | |||||||
• | Changes in the criteria for impairment of available-for-sale debt securities | |||||||
Effects of adoption: | ||||||||
• | Adopted using a modified retrospective approach | |||||||
• | Cumulative effect adjustment of $ | |||||||
• | See additional information regarding the Company’s accounting policy for establishing the allowance for credit losses in Note 4, Accounts Receivable, Net, Note 10, Reinsurance, and Note 11, Investments. | |||||||
Simplifying the Test for Goodwill Impairment (ASU 2017-04) Adopted as of January 1, 2020 | Requires: | |||||||
• | A simplified approach to the accounting for goodwill impairment by eliminating the need to determine the fair value of individual assets and liabilities of a reporting unit to measure a goodwill impairment | |||||||
• | The amount of goodwill impairment to equal the amount by which a reporting unit’s carrying value exceeds its fair value, limited to the total amount of goodwill of the reporting unit | |||||||
Effects of adoption: | ||||||||
• | Adopted on a prospective basis | |||||||
• | There was no impact of adopting this new standard to the Company’s financial statements because our quarterly qualitative assessments did not result in a triggering event for impairment of goodwill. |
Accounting Standard and Effective Date | Requirements and Expected Effects of New Guidance Not Yet Adopted | ||||||||||
Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04) Optional, effective upon issuance (March 12, 2020) through December 31, 2022 | Guidance: | ||||||||||
• | Provides temporary optional relief to ease the potential burden of accounting for reference rate reform under existing GAAP. Amendments are elective and apply to all entities that have contracts, hedging relationships and other transactions that reference interbank offered rates, including LIBOR, expected to be discontinued by December 31, 2021. | ||||||||||
• | Permits optional expedients and exceptions to simplify the accounting for contract modifications, hedging arrangements and held-to-maturity investments, when certain changes are made to a contract or instrument to facilitate reference rate reform. | ||||||||||
• | An entity may elect to apply the amendments, by topic or subsection, at any point prospectively through December 31, 2022. When elected, the optional expedients must be applied consistently for all eligible contracts or transactions. | ||||||||||
Expected effects: | |||||||||||
• | To date, the Company has identified minimal exposure to LIBOR and does not anticipate that LIBOR’s phase-out will have a material impact on its operations or financial results. | ||||||||||
(In millions) | June 30, 2020 | December 31, 2019 | |||||||||
Noninsurance customer receivables | $ | $ | |||||||||
Pharmaceutical manufacturers receivable | |||||||||||
Insurance customer receivables | |||||||||||
Other receivables | |||||||||||
Total | |||||||||||
Accounts receivable, net classified as assets of business held for sale | ( | ( | |||||||||
Accounts receivable, net per Consolidated Balance Sheets | $ | $ |
(In millions) | June 30, 2020 | December 31, 2019 | |||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net | |||||||||||
Investments | |||||||||||
Other assets | |||||||||||
Total assets of business held for sale | |||||||||||
Insurance and contractholder liabilities | |||||||||||
Other liabilities | |||||||||||
Total liabilities of business held for sale | $ | $ |
Three Months Ended | |||||||||||||||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | ||||||||||||||||||||||||||||||||||
(Shares in thousands, dollars in millions, except per share amounts) | Basic | Effect of Dilution | Diluted | Basic | Effect of Dilution | Diluted | |||||||||||||||||||||||||||||
Shareholders’ net income | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Shares: | |||||||||||||||||||||||||||||||||||
Weighted average | |||||||||||||||||||||||||||||||||||
Common stock equivalents | |||||||||||||||||||||||||||||||||||
Total shares | |||||||||||||||||||||||||||||||||||
EPS | $ | $ | ( | $ | $ | $ | ( | $ |
Six Months Ended | |||||||||||||||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | ||||||||||||||||||||||||||||||||||
(Shares in thousands, dollars in millions, except per share amounts) | Basic | Effect of Dilution | Diluted | Basic | Effect of Dilution | Diluted | |||||||||||||||||||||||||||||
Shareholders’ net income | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Shares: | |||||||||||||||||||||||||||||||||||
Weighted average | |||||||||||||||||||||||||||||||||||
Common stock equivalents | |||||||||||||||||||||||||||||||||||
Total shares | |||||||||||||||||||||||||||||||||||
EPS | $ | $ | ( | $ | $ | $ | ( | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Anti-dilutive options |
(In millions) | June 30, 2020 | December 31, 2019 | ||||||||||||
Short-term debt | ||||||||||||||
$ | $ | $ | ||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
Commercial paper | ||||||||||||||
Other, including finance leases | ||||||||||||||
Total short-term debt | $ | $ | ||||||||||||
Long-term debt | ||||||||||||||
$ | $ | $ | ||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
Other, including finance leases | ||||||||||||||
Total long-term debt | $ | $ |
Principal | Maturity Date | Interest Rate | Net Proceeds | ||||||||||||||
$ | March 15, 2030 | $ | |||||||||||||||
$ | March 15, 2040 | $ | |||||||||||||||
$ | March 15, 2050 | $ |
June 30, 2020 | December 31, 2019 | June 30, 2019 | |||||||||||||||||||||||||||||||||||||||
(In millions) | Current | Non-current | Total | Current | Non-current | Total | Total | ||||||||||||||||||||||||||||||||||
Contractholder deposit funds | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Future policy benefits | |||||||||||||||||||||||||||||||||||||||||
Unpaid claims and claim expenses | |||||||||||||||||||||||||||||||||||||||||
Integrated Medical | |||||||||||||||||||||||||||||||||||||||||
Other segments | |||||||||||||||||||||||||||||||||||||||||
Unearned premiums | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Insurance and contractholder liabilities classified as liabilities of business held for sale(1) | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Total insurance and contractholder liabilities | $ | $ | $ | $ | $ | $ | $ |
Six Months Ended | |||||||||||
(In millions) | June 30, 2020 | June 30, 2019 | |||||||||
Beginning balance | $ | $ | |||||||||
Less: Reinsurance and other amounts recoverable | |||||||||||
Beginning balance, net | |||||||||||
Incurred costs related to: | |||||||||||
Current year | |||||||||||
Prior years | ( | ( | |||||||||
Total incurred | |||||||||||
Paid costs related to: | |||||||||||
Current year | |||||||||||
Prior years | |||||||||||
Total paid | |||||||||||
Ending balance, net | |||||||||||
Add: Reinsurance and other amounts recoverable | |||||||||||
Ending balance | $ | $ |
Six Months Ended | |||||||||||||||||||||||
(Dollars in millions) | June 30, 2020 | June 30, 2019 | |||||||||||||||||||||
$ | %(1) | $ | %(2) | ||||||||||||||||||||
Actual completion factors | $ | % | $ | % | |||||||||||||||||||
Medical cost trend | |||||||||||||||||||||||
Total favorable variance | $ | % | $ | % |
(In millions) | June 30, 2020 (1) | June 30, 2019 | |||||||||
Group Disability and Other | |||||||||||
Group Disability and Life | $ | $ | |||||||||
Other Operations | |||||||||||
Total Group Disability and Other | |||||||||||
International Markets | |||||||||||
Unpaid claims and claim expenses Group Disability and Other and International Markets | $ | $ |
Six Months Ended | |||||||||||
(In millions) | June 30, 2020(1) | June 30, 2019 | |||||||||
Beginning balance | $ | $ | |||||||||
Less: Reinsurance | |||||||||||
Beginning balance, net | |||||||||||
Incurred claims related to: | |||||||||||
Current year | |||||||||||
Prior years: | |||||||||||
Interest accretion | |||||||||||
All other incurred | ( | ( | |||||||||
Total incurred | |||||||||||
Paid claims related to: | |||||||||||
Current year | |||||||||||
Prior years | |||||||||||
Total paid | |||||||||||
Foreign currency | ( | ( | |||||||||
Ending balance, net | |||||||||||
Add: Reinsurance | |||||||||||
Ending balance | $ | $ |
(Dollars 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 | ||||||||||||||||||||||||||
Upper-medium grade and higher (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Lower-medium grade (2) | ||||||||||||||||||||||||||
Not rated | ||||||||||||||||||||||||||
Total recoverables related to ongoing operations (3) | $ | $ | $ | $ | ||||||||||||||||||||||
Acquisition, disposition or runoff activities | ||||||||||||||||||||||||||
Upper-medium grade and higher (1) | ||||||||||||||||||||||||||
Lincoln National Life and Lincoln Life & Annuity of New York | ||||||||||||||||||||||||||
Berkshire | ||||||||||||||||||||||||||
Prudential Retirement Insurance and Annuity | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Not rated | ||||||||||||||||||||||||||
Total recoverables related to acquisition, disposition or runoff activities | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
Allowance for uncollectible reinsurance | ( | |||||||||||||||||||||||||
Reinsurance recoverables classified as assets of business held for sale | ( | |||||||||||||||||||||||||
Total reinsurance recoverables | $ | |||||||||||||||||||||||||
(1) Includes A- equivalent and higher current ratings certified by a nationally recognized statistical rating organization ('NRSRO') | ||||||||||||||||||||||||||
(2) Includes BBB- to BBB+ equivalent current credit ratings certified by a NRSRO | ||||||||||||||||||||||||||
(3) This includes collateral provisions requiring the reinsurer to fully collateralize its obligation if its external credit rating is downgraded to a specified level |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Total ceded premiums | $ | $ | $ | $ | |||||||||||||||||||
Total reinsurance recoveries | $ | $ | $ | $ |
(Dollars in millions, excludes impact of reinsurance ceded) | June 30, 2020 | December 31, 2019 | |||||||||
Account value | $ | $ | |||||||||
Net amount at risk | $ | $ | |||||||||
Number of contractholders (estimated) |
(In millions) | ||||||||||||||||||||||||||
Line of Business | Reinsurer | June 30, 2020 | December 31, 2019 | Collateral and Other Terms at June 30, 2020 | ||||||||||||||||||||||
GMIB | Berkshire | $ | $ | |||||||||||||||||||||||
Sun Life Assurance Company of Canada | ||||||||||||||||||||||||||
Liberty Re (Bermuda) Ltd. | ||||||||||||||||||||||||||
Total GMIB recoverables reported in Other current assets and Other assets | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||
(In millions) | Current | Long-term | Total | Current | Long-term | Total | |||||||||||||||||||||||||||||
Debt securities | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Equity securities | |||||||||||||||||||||||||||||||||||
Commercial mortgage loans | |||||||||||||||||||||||||||||||||||
Policy loans | |||||||||||||||||||||||||||||||||||
Other long-term investments | |||||||||||||||||||||||||||||||||||
Short-term investments | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Investments classified as assets of business held for sale(1) | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
Investments per Consolidated Balance Sheets | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
(1) The table above includes $ |
(In millions) | Amortized Cost | Fair Value | |||||||||
Due in one year or less | $ | $ | |||||||||
Due after one year through five years | |||||||||||
Due after five years through ten years | |||||||||||
Due after ten years | |||||||||||
Mortgage and other asset-backed securities | |||||||||||
Total | $ | $ |
(In millions) | Amortized Cost | Allowance for Credit Loss | Unrealized Appreciation | Unrealized Depreciation | Fair Value | ||||||||||||||||||||||||
June 30, 2020 | |||||||||||||||||||||||||||||
Federal government and agency | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
State and local government | ( | ||||||||||||||||||||||||||||
Foreign government | ( | ||||||||||||||||||||||||||||
Corporate | ( | ( | |||||||||||||||||||||||||||
Mortgage and other asset-backed | ( | ( | |||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||
Investments supporting liabilities of the Company’s run-off settlement annuity business (included in total above) (1) | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||
December 31, 2019 | |||||||||||||||||||||||||||||
Federal government and agency | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
State and local government | |||||||||||||||||||||||||||||
Foreign government | ( | ||||||||||||||||||||||||||||
Corporate | ( | ||||||||||||||||||||||||||||
Mortgage and other asset-backed | ( | ||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Investments supporting liabilities of the Company’s run-off settlement annuity business (included in total above) (1) | $ | $ | $ | $ | ( | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
(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 | $ | $ | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||
Below investment grade | $ | $ | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||
More than one year | |||||||||||||||||||||||||||||||||||||||||||||||
Investment grade | $ | $ | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||
Below investment grade | $ | $ | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ | $ | $ | ( |
(In millions) | 2020 | ||||
Beginning balance, January 1, 2020 | $ | ||||
Additions to allowance for credit losses on securities for which credit losses were not previously recorded | |||||
Balance at March 31, 2020 | |||||
Second Quarter Activity: | |||||
Additions to allowance for credit losses on securities for which credit losses were not previously recorded | |||||
Reductions for securities sold during the period | ( | ||||
Net reductions to allowance for credit losses on securities that had an allowance recorded in a previous period | ( | ||||
Ending balance, June 30, 2020 | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
(Dollars in millions) | Amortized Cost | Carrying Value | Amortized Cost | Carrying Value | |||||||||||||||||||
Equity securities with readily determinable fair values | $ | $ | $ | $ | |||||||||||||||||||
Equity securities with no readily determinable fair value | $ | $ | $ | $ | |||||||||||||||||||
Hybrid equity securities | $ | $ | $ | $ | |||||||||||||||||||
Total | $ | $ | $ | $ |
(Dollars in millions) | June 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||
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% | $ | $ | |||||||||||||||||||||||||||||||||
60% to 79% | |||||||||||||||||||||||||||||||||||
80% to 100% | |||||||||||||||||||||||||||||||||||
Allowance for credit losses | ( | ||||||||||||||||||||||||||||||||||
Total | $ | % | $ | % |
Carrying value as of | |||||||||||
(In millions) | June 30, 2020 | December 31, 2019 | |||||||||
Real estate investments | $ | $ | |||||||||
Securities partnerships | |||||||||||
Other | |||||||||||
Total | $ | $ |
(In millions) | June 30, 2020 | December 31, 2019 | |||||||||
Corporate securities | $ | $ | |||||||||
Federal government securities | $ | $ | |||||||||
Foreign government securities | $ | $ | |||||||||
Money market funds | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Net realized investment gains, excluding credit loss expense and asset write-downs | $ | $ | $ | $ | |||||||||||||||||||
Credit loss expense on invested assets | ( | ||||||||||||||||||||||
Other investment asset write-downs | ( | ( | ( | ( | |||||||||||||||||||
Net realized investment gains (losses), before income taxes | $ | $ | $ | ( | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Proceeds from sales | $ | $ | $ | $ | |||||||||||||||||||
Gross gains on sales | $ | $ | $ | $ | |||||||||||||||||||
Gross losses on sales | $ | ( | $ | ( | $ | ( | $ | ( |
(In millions) | Notional Value as of | ||||||||||||||||
June 30, 2020 | December 31, 2019 | ||||||||||||||||
Purpose | Type of Instrument | ||||||||||||||||
Fair value hedge: To hedge the foreign exchange-related changes in fair values of certain foreign-denominated bonds. The notional value of these derivatives matches the amortized cost of the hedged bonds. | Foreign currency swap contracts | $ | $ | ||||||||||||||
Net investment hedge: To reduce the risk of changes in net assets due to changes in foreign currency spot exchange rates for certain foreign subsidiaries that conduct their business principally in Euros, Korean Won, and Taiwan Dollar. The notional value of hedging instruments matches the hedged amount of subsidiary net assets. | Foreign currency swap contracts | $ | $ | ||||||||||||||
Foreign currency forward contracts | $ | $ | |||||||||||||||
Economic hedge: To hedge the foreign exchange-related changes in fair value of a U.S. dollar-denominated bond portfolio to reflect the local currency for the Company’s foreign subsidiary in South Korea. The notional value of hedging instruments generally aligns with the fair value of the hedged bond portfolio. | Foreign currency forward contracts | $ | $ |
(In millions) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||||||||||||||||||||||||||||||||
As of June 30, 2020 | As of December 31, 2019 | As of June 30, 2020 | As of December 31, 2019 | As of June 30, 2020 | As of December 31, 2019 | As of June 30, 2020 | As of December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||
Financial assets at fair value | |||||||||||||||||||||||||||||||||||||||||||||||
Debt securities | |||||||||||||||||||||||||||||||||||||||||||||||
Federal government and agency | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
State and local government | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||||||||||||||||||||||||||
Corporate | |||||||||||||||||||||||||||||||||||||||||||||||
Mortgage and other asset-backed | |||||||||||||||||||||||||||||||||||||||||||||||
Total debt securities | |||||||||||||||||||||||||||||||||||||||||||||||
Equity securities (1) | |||||||||||||||||||||||||||||||||||||||||||||||
Short-term investments | |||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets | |||||||||||||||||||||||||||||||||||||||||||||||
Real estate funds priced at NAV as a practical expedient (2) | |||||||||||||||||||||||||||||||||||||||||||||||
Financial liabilities at fair value | |||||||||||||||||||||||||||||||||||||||||||||||
Derivative liabilities | $ | $ | $ | $ | $ | $ | $ | $ |
Fair Value as of | Unobservable Adjustment Range (Weighted Average by Quantity) as of | ||||||||||||||||||||||||||||
(Fair value in millions ) | June 30, 2020 | December 31, 2019 | Unobservable input June 30, 2020 | June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||
Debt securities | |||||||||||||||||||||||||||||
Corporate and government debt securities | $ | $ | Liquidity | ||||||||||||||||||||||||||
Mortgage and other asset-backed securities | Liquidity | ||||||||||||||||||||||||||||
Weighting of credit spreads | |||||||||||||||||||||||||||||
Securities not priced by the Company (1) | |||||||||||||||||||||||||||||
Total Level 3 debt securities | $ | $ |
Debt and Equity Securities | |||||||||||||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Balance at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
Total gains (losses) included in shareholders’ net income | ( | ||||||||||||||||||||||
Gains (losses) included in other comprehensive income | ( | ||||||||||||||||||||||
Gains (losses) required to adjust future policy benefits for settlement annuities (1) | ( | ||||||||||||||||||||||
Purchases, sales and settlements | |||||||||||||||||||||||
Purchases | |||||||||||||||||||||||
Sales | ( | ||||||||||||||||||||||
Settlements | ( | ( | ( | ( | |||||||||||||||||||
Total purchases, sales and settlements | $ | ( | $ | $ | $ | ||||||||||||||||||
Transfers into/(out of) Level 3 | |||||||||||||||||||||||
Transfers into Level 3 | |||||||||||||||||||||||
Transfers out of Level 3 | ( | ( | ( | ( | |||||||||||||||||||
Total transfers into/(out of) Level 3 | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Balance at June 30, | $ | $ | $ | $ | |||||||||||||||||||
Total gains (losses) included in shareholders’ net income attributable to instruments held at the reporting date | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
Change in unrealized gains or losses included in other comprehensive income for assets held at the end of the reporting period | $ | N/A | $ | ( | N/A |
(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, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||
Guaranteed separate accounts (See Note 18) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Non-guaranteed separate accounts (1) | |||||||||||||||||||||||||||||||||||||||||||||||
Subtotal | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Non-guaranteed separate accounts priced at NAV as a practical expedient (1) | |||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
Separate account assets of business classified as held for sale | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Separate account assets per Consolidated Balance Sheets | $ | $ |
Fair Value as of | Unfunded Commitment as of June 30, 2020 | Redemption Frequency (if currently eligible) | Redemption Notice Period | ||||||||||||||||||||||||||
(In millions) | June 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||
Securities partnerships | $ | $ | $ | Not applicable | Not applicable | ||||||||||||||||||||||||
Real estate funds | Quarterly | ||||||||||||||||||||||||||||
Hedge funds | Up to annually, varying by fund | ||||||||||||||||||||||||||||
Total | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||
(In millions) | Classification in Fair Value Hierarchy | Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||||||||||||||
Commercial mortgage loans | Level 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Long-term debt, including current maturities, excluding finance leases | Level 2 | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Securities and Derivatives | ||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | ||||||||||||||||||||||
Appreciation on securities and derivatives | ||||||||||||||||||||||||||
Tax (expense) | ( | ( | ( | ( | ||||||||||||||||||||||
Net appreciation on securities and derivatives | ||||||||||||||||||||||||||
Reclassification adjustment for losses (gains) included in shareholders' net income (net realized investment losses (gains)) | ( | ( | ( | |||||||||||||||||||||||
Tax (expense) benefit | ( | |||||||||||||||||||||||||
Net losses (gains) reclassified from AOCI to net income | ( | ( | ( | |||||||||||||||||||||||
Other comprehensive income, net of tax | ||||||||||||||||||||||||||
Ending balance | $ | $ | $ | $ | ||||||||||||||||||||||
Translation of foreign currencies | ||||||||||||||||||||||||||
Beginning balance | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Translation of foreign currencies | ( | ( | ( | |||||||||||||||||||||||
Tax (expense) benefit | ( | ( | ||||||||||||||||||||||||
Net translation of foreign currencies | ( | ( | ( | |||||||||||||||||||||||
Less: Net translation of foreign currencies attributable to noncontrolling interests | ( | ( | ( | ( | ||||||||||||||||||||||
Shareholders' net translation of foreign currencies | ( | ( | ( | |||||||||||||||||||||||
Ending balance | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Postretirement benefits liability | ||||||||||||||||||||||||||
Beginning balance | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Reclassification adjustment for amortization of net losses from past experience and prior service costs (interest expense and other) | ||||||||||||||||||||||||||
Reclassification adjustment for settlement (interest expense and other) | ||||||||||||||||||||||||||
Tax (expense) benefit | ( | ( | ( | |||||||||||||||||||||||
Net adjustments reclassified from AOCI to net income | ||||||||||||||||||||||||||
Valuation update | ( | ( | ( | ( | ||||||||||||||||||||||
Tax benefit | ||||||||||||||||||||||||||
Net change due to valuation update | ( | ( | ( | ( | ||||||||||||||||||||||
Other comprehensive (loss) income, net of tax | ( | ( | ||||||||||||||||||||||||
Ending balance | $ | ( | $ | ( | $ | ( | $ | ( |
(In millions) | June 30, 2020 | December 31, 2019 | |||||||||
Operating leases: | |||||||||||
Operating lease ROU assets | $ | $ | |||||||||
Accrued expenses and other current liabilities | $ | $ | |||||||||
Total operating lease liabilities | $ | $ | |||||||||
Finance leases: | |||||||||||
Property and equipment, gross | $ | $ | |||||||||
Accumulated depreciation | ( | ( | |||||||||
Property and equipment, net | $ | $ | |||||||||
$ | $ | ||||||||||
Total finance lease liabilities | $ | $ |
Three Months Ended | ||||||||||||||||||||||||||
(In millions) | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||||||
Description of special item charges (benefits) and financial statement line item(s) | After-tax | Before-tax | After-tax | Before-tax | ||||||||||||||||||||||
Debt extinguishment costs (Debt extinguishment costs) | $ | $ | $ | $ | ||||||||||||||||||||||
Integration and transaction-related costs (Selling, general and administrative expenses) | ||||||||||||||||||||||||||
Charges associated with litigation matters (Selling, general and administrative expenses) | ||||||||||||||||||||||||||
Total impact from special items | $ | $ | $ | $ | ||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||||
(In millions) | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||||||
Description of Special Item Charges (Benefits) and Financial Statement Line Item(s) | After-tax | Before-tax | After-tax | Before-tax | ||||||||||||||||||||||
Debt extinguishment costs (Debt extinguishment costs) | $ | $ | $ | $ | ||||||||||||||||||||||
Integration and transaction-related costs (Selling, general and administrative expenses) | ||||||||||||||||||||||||||
Charge for organizational efficiency plan (Selling, general and administrative expenses) | ||||||||||||||||||||||||||
Charges associated with litigation matters (Selling, general and administrative expenses) | ||||||||||||||||||||||||||
Contractual adjustment for a former client (Pharmacy revenues) | ( | ( | ||||||||||||||||||||||||
Total impact from special items | $ | $ | $ | $ |
(In millions) | Health Services | Integrated Medical | International Markets | Group Disability and Other | Corporate and Eliminations | Total | ||||||||||||||||||||||||||||||||
Three months ended June 30, 2020 | ||||||||||||||||||||||||||||||||||||||
Revenues from external customers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Inter-segment revenues | ( | |||||||||||||||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||||||||||||||
Total revenues | ( | |||||||||||||||||||||||||||||||||||||
Net realized investment results from certain equity method investments | ( | ( | ||||||||||||||||||||||||||||||||||||
Adjusted revenues | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Income (loss) before taxes | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Pre-tax adjustments to reconcile to adjusted income from operations | ||||||||||||||||||||||||||||||||||||||
(Income) attributable to noncontrolling interests | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Net realized investment losses | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | ||||||||||||||||||||||||||||||||||||||
Special items | ||||||||||||||||||||||||||||||||||||||
Debt extinguishment costs | ||||||||||||||||||||||||||||||||||||||
Integration and transaction-related costs | ||||||||||||||||||||||||||||||||||||||
Pre-tax adjusted income (loss) from operations | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
(In millions) | Health Services | Integrated Medical | International Markets | Group Disability and Other | Corporate and Eliminations | Total | ||||||||||||||||||||||||||||||||
Three months ended June 30, 2019 | ||||||||||||||||||||||||||||||||||||||
Revenues from external customers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Inter-segment revenues | ( | |||||||||||||||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||||||||||||||
Total revenues | ( | |||||||||||||||||||||||||||||||||||||
Revenue contributions from transitioning clients | ( | ( | ||||||||||||||||||||||||||||||||||||
Net realized investment results from certain equity method investments | ||||||||||||||||||||||||||||||||||||||
Adjusted revenues | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Income (loss) before taxes | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Pre-tax adjustments to reconcile to adjusted income from operations | ||||||||||||||||||||||||||||||||||||||
Adjustment for transitioning clients | ( | ( | ||||||||||||||||||||||||||||||||||||
(Income) attributable to noncontrolling interests | ( | ( | ||||||||||||||||||||||||||||||||||||
Net realized investment (gains) losses | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | ||||||||||||||||||||||||||||||||||||||
Special items | ||||||||||||||||||||||||||||||||||||||
Integration and transaction-related costs | ||||||||||||||||||||||||||||||||||||||
Charges associated with litigation matters | ||||||||||||||||||||||||||||||||||||||
Pre-tax adjusted income (loss) from operations | $ | $ | $ | $ | $ | ( | $ |
(In millions) | Health Services | Integrated Medical | International Markets | Group Disability and Other | Corporate and Eliminations | Total | ||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2020 | ||||||||||||||||||||||||||||||||||||||
Revenues from external customers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Inter-segment revenues | ( | — | ||||||||||||||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||||||||||||||
Total revenues | ( | |||||||||||||||||||||||||||||||||||||
Net realized investment results from certain equity method investments | ( | ( | ||||||||||||||||||||||||||||||||||||
Special items | ( | ( | ||||||||||||||||||||||||||||||||||||
Adjusted revenues | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Income (loss) before taxes | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Pre-tax adjustments to reconcile to adjusted income from operations | ||||||||||||||||||||||||||||||||||||||
(Income) attributable to noncontrolling interests | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Net realized investment losses | ( | |||||||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | ||||||||||||||||||||||||||||||||||||||
Special items | ||||||||||||||||||||||||||||||||||||||
Debt extinguishment costs | ||||||||||||||||||||||||||||||||||||||
Integration and transaction-related costs | ||||||||||||||||||||||||||||||||||||||
Charge for organizational efficiency plan | ||||||||||||||||||||||||||||||||||||||
Charges associated with litigation matters | ||||||||||||||||||||||||||||||||||||||
Contractual adjustment for a former client | ( | ( | ||||||||||||||||||||||||||||||||||||
Pre-tax adjusted income (loss) from operations | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
(In millions) | Health Services | Integrated Medical | International Markets | Group Disability and Other | Corporate and Eliminations | Total | ||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2019 | ||||||||||||||||||||||||||||||||||||||
Revenues from external customers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Inter-segment revenues | ( | |||||||||||||||||||||||||||||||||||||
Net investment income (loss) | ( | |||||||||||||||||||||||||||||||||||||
Total revenues | ( | |||||||||||||||||||||||||||||||||||||
Revenue contribution from transitioning clients | ( | ( | ||||||||||||||||||||||||||||||||||||
Net realized investment results from certain equity method investments | ( | ( | ||||||||||||||||||||||||||||||||||||
Adjusted revenues | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Income (loss) before taxes | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Pre-tax adjustments to reconcile to adjusted income from operations | ||||||||||||||||||||||||||||||||||||||
Adjustment for transitioning clients | ( | ( | ||||||||||||||||||||||||||||||||||||
(Income) attributable to noncontrolling interests | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Net realized investment (gains) | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | ||||||||||||||||||||||||||||||||||||||
Special items | ||||||||||||||||||||||||||||||||||||||
Integration and transaction-related costs | ||||||||||||||||||||||||||||||||||||||
Charges associated with litigation matters | ||||||||||||||||||||||||||||||||||||||
Pre-tax adjusted income (loss) from operations | $ | $ | $ | $ | $ | ( | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Products (Pharmacy revenues) (ASC 606) | ||||||||||||||||||||||||||
Network revenues | ||||||||||||||||||||||||||
Home delivery and specialty revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Total pharmacy revenues | ||||||||||||||||||||||||||
Insurance premiums (ASC 944) | ||||||||||||||||||||||||||
Integrated Medical premiums | ||||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||
Health Insurance | ||||||||||||||||||||||||||
Stop loss | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Government | ||||||||||||||||||||||||||
Medicare Advantage | ||||||||||||||||||||||||||
Medicare Part D | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Total Integrated Medical premiums | ||||||||||||||||||||||||||
International Markets premiums | ||||||||||||||||||||||||||
Domestic disability, life and accident premiums | ||||||||||||||||||||||||||
Other premiums | ||||||||||||||||||||||||||
Total premiums | ||||||||||||||||||||||||||
Services (ASC 606) | ||||||||||||||||||||||||||
Fees | ||||||||||||||||||||||||||
Other external revenues | ||||||||||||||||||||||||||
Total services | ||||||||||||||||||||||||||
Total revenues from external customers | $ | $ | $ | $ |
PAGE | |||||
Financial highlights by segment | ||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||
Adjusted revenues by segment | ||||||||||||||||||||||||||||||||||||||
Health Services | $ | 28,602 | $ | 23,537 | 22 | % | $ | 55,770 | $ | 45,997 | 21 | % | ||||||||||||||||||||||||||
Integrated Medical | 9,237 | 8,968 | 3 | 19,097 | 18,163 | 5 | ||||||||||||||||||||||||||||||||
International Markets | 1,432 | 1,389 | 3 | 2,902 | 2,783 | 4 | ||||||||||||||||||||||||||||||||
Group Disability and Other | 1,328 | 1,309 | 1 | 2,667 | 2,605 | 2 | ||||||||||||||||||||||||||||||||
Corporate, net eliminations | (1,394) | (828) | (68) | (2,839) | (1,744) | (63) | ||||||||||||||||||||||||||||||||
Adjusted revenues | 39,205 | 34,375 | 14 | 77,597 | 67,804 | 14 | ||||||||||||||||||||||||||||||||
Revenue contribution from transitioning clients | — | 4,450 | N/M | — | 8,939 | N/M | ||||||||||||||||||||||||||||||||
Net realized investment results from certain equity method investments | 60 | (6) | N/M | 50 | 22 | 127 | ||||||||||||||||||||||||||||||||
Special items | — | — | N/M | 87 | — | N/M | ||||||||||||||||||||||||||||||||
Total revenues | $ | 39,265 | $ | 38,819 | 1 | % | $ | 77,734 | $ | 76,765 | 1 | % | ||||||||||||||||||||||||||
Shareholders’ net income | $ | 1,754 | $ | 1,408 | 25 | % | $ | 2,935 | $ | 2,776 | 6 | % | ||||||||||||||||||||||||||
Adjusted income from operations | $ | 2,152 | $ | 1,640 | 31 | % | $ | 3,910 | $ | 3,138 | 25 | % | ||||||||||||||||||||||||||
Earnings per share (diluted) | ||||||||||||||||||||||||||||||||||||||
Shareholders’ net income | $ | 4.73 | $ | 3.70 | 28 | % | $ | 7.88 | $ | 7.26 | 9 | % | ||||||||||||||||||||||||||
Adjusted income from operations | $ | 5.81 | $ | 4.30 | 35 | % | $ | 10.49 | $ | 8.20 | 28 | % | ||||||||||||||||||||||||||
Pre-tax adjusted income from operations by segment | ||||||||||||||||||||||||||||||||||||||
Health Services | $ | 1,249 | $ | 1,162 | 7 | % | $ | 2,331 | $ | 2,156 | 8 | % | ||||||||||||||||||||||||||
Integrated Medical | 1,523 | 990 | 54 | 2,722 | 2,160 | 26 | ||||||||||||||||||||||||||||||||
International Markets | 319 | 207 | 54 | 601 | 413 | 46 | ||||||||||||||||||||||||||||||||
Group Disability and Other | 132 | 149 | (11) | 209 | 233 | (10) | ||||||||||||||||||||||||||||||||
Corporate, net of eliminations | (400) | (453) | 12 | (805) | (943) | 15 | ||||||||||||||||||||||||||||||||
Consolidated pre-tax adjusted income from operations | 2,823 | 2,055 | 37 | 5,058 | 4,019 | 26 | ||||||||||||||||||||||||||||||||
Adjustment for transitioning clients | — | 655 | N/M | — | 1,315 | N/M | ||||||||||||||||||||||||||||||||
Income attributable to noncontrolling interests | 8 | 4 | 100 | 17 | 9 | 89 | ||||||||||||||||||||||||||||||||
Realized investment gains (losses) | 98 | 17 | N/M | — | 55 | N/M | ||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | (496) | (737) | 33 | (994) | (1,480) | 33 | ||||||||||||||||||||||||||||||||
Special items | (144) | (236) | 39 | (395) | (372) | (6) | ||||||||||||||||||||||||||||||||
Income before income taxes | $ | 2,289 | $ | 1,758 | 30 | % | $ | 3,686 | $ | 3,546 | 4 | % |
Consolidated Results of Operations (GAAP basis) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
(Dollars in millions) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||||||||||||||||||||||
Pharmacy revenues | $ | 26,564 | $ | 26,288 | 1 | % | $ | 51,662 | $ | 51,467 | — | % | ||||||||||||||||||||||||||
Premiums | 10,406 | 9,803 | 6 | 21,246 | 19,774 | 7 | ||||||||||||||||||||||||||||||||
Fees and other revenues | 2,072 | 2,388 | (13) | 4,250 | 4,838 | (12) | ||||||||||||||||||||||||||||||||
Net investment income | 223 | 340 | (34) | 576 | 686 | (16) | ||||||||||||||||||||||||||||||||
Total revenues | 39,265 | 38,819 | 1 | 77,734 | 76,765 | 1 | ||||||||||||||||||||||||||||||||
Pharmacy and other service costs | 25,611 | 24,963 | 3 | 49,801 | 49,013 | 2 | ||||||||||||||||||||||||||||||||
Medical costs and other benefit expenses | 7,112 | 7,576 | (6) | 15,434 | 15,196 | 2 | ||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 3,407 | 3,380 | 1 | 6,805 | 6,683 | 2 | ||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 496 | 737 | (33) | 994 | 1,480 | (33) | ||||||||||||||||||||||||||||||||
Total benefits and expenses | 36,626 | 36,656 | — | 73,034 | 72,372 | 1 | ||||||||||||||||||||||||||||||||
Income from operations | 2,639 | 2,163 | 22 | 4,700 | 4,393 | 7 | ||||||||||||||||||||||||||||||||
Interest expense and other | (374) | (428) | 13 | (765) | (880) | 13 | ||||||||||||||||||||||||||||||||
Debt extinguishment costs | (14) | — | N/M | (199) | — | N/M | ||||||||||||||||||||||||||||||||
Net realized investment gains (losses) | 38 | 23 | 65 | (50) | 33 | N/M | ||||||||||||||||||||||||||||||||
Income before income taxes | 2,289 | 1,758 | 30 | 3,686 | 3,546 | 4 | ||||||||||||||||||||||||||||||||
Total income taxes | 529 | 348 | 52 | 737 | 764 | (4) | ||||||||||||||||||||||||||||||||
Net income | 1,760 | 1,410 | 25 | 2,949 | 2,782 | 6 | ||||||||||||||||||||||||||||||||
Less: net income attributable to noncontrolling interests | 6 | 2 | 200 | 14 | 6 | 133 | ||||||||||||||||||||||||||||||||
Shareholders’ net income | $ | 1,754 | $ | 1,408 | 25 | % | $ | 2,935 | $ | 2,776 | 6 | % | ||||||||||||||||||||||||||
Consolidated effective tax rate | 23.1 | % | 19.8 | % | 330 | bps | 20.0 | % | 21.5 | % | (150) | bps | ||||||||||||||||||||||||||
Medical customers (in thousands) | ||||||||||||||||||||||||||||||||||||||
Integrated Medical | 15,415 | 15,408 | — | % | ||||||||||||||||||||||||||||||||||
International Markets | 1,668 | 1,589 | 5 | |||||||||||||||||||||||||||||||||||
Total | 17,083 | 16,997 | 1 | % |
Reconciliation of Shareholders’ Net Income (GAAP) to Adjusted Income from Operations | ||||||||||||||||||||||||||||||||||||||||||||||||||
$ in millions | Diluted Earnings Per Share | |||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||
Shareholders’ net income | $ | 1,754 | $ | 1,408 | $ | 2,935 | $ | 2,776 | $ | 4.73 | $ | 3.70 | $ | 7.88 | $ | 7.26 | ||||||||||||||||||||||||||||||||||
After-tax adjustments required to reconcile to adjusted income from operations | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized investment (gains) losses | (88) | (13) | (11) | (51) | (0.24) | (0.03) | (0.03) | (0.13) | ||||||||||||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 376 | 572 | 685 | 1,136 | 1.02 | 1.49 | 1.84 | 2.96 | ||||||||||||||||||||||||||||||||||||||||||
Adjustment for transitioning clients | — | (506) | — | (1,010) | — | (1.33) | — | (2.64) | ||||||||||||||||||||||||||||||||||||||||||
Special items | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt extinguishment costs | 11 | — | 151 | — | 0.03 | — | 0.41 | — | ||||||||||||||||||||||||||||||||||||||||||
Integration and transaction-related costs | 99 | 115 | 173 | 223 | 0.27 | 0.30 | 0.46 | 0.58 | ||||||||||||||||||||||||||||||||||||||||||
Charge for organizational efficiency plan | — | — | 24 | — | — | — | 0.06 | — | ||||||||||||||||||||||||||||||||||||||||||
Charges associated with litigation matters | — | 64 | 19 | 64 | — | 0.17 | 0.05 | 0.17 | ||||||||||||||||||||||||||||||||||||||||||
Contractual adjustment for a former client | — | — | (66) | — | — | — | (0.18) | — | ||||||||||||||||||||||||||||||||||||||||||
Total special items | 110 | 179 | 301 | 287 | 0.30 | 0.47 | 0.80 | 0.75 | ||||||||||||||||||||||||||||||||||||||||||
Adjusted income from operations | $ | 2,152 | $ | 1,640 | $ | 3,910 | $ | 3,138 | $ | 5.81 | $ | 4.30 | $ | 10.49 | $ | 8.20 |
Item | Description | ||||
Executive Orders regarding Drug Pricing | On July 24, 2020, President Trump signed four Executive Orders addressing prescription drug importation; affordability of insulin and epinephrine purchased at federally qualified health centers through the Public Health Service Act Section 340B drug pricing program; drug rebates and favored-nation international pricing. The release of the favored-nation international pricing order, an approach to international reference pricing, was delayed thirty days. The remaining three orders call for subsequent policy action by the Department of Health and Human Services (HHS). They do not contain any policy changes that take effect immediately. The order covering rebate policy directs HHS to complete prior rulemaking which proposed changes to the federal anti-kickback safe harbor to exclude regulatory protection for rebates between drug manufacturers and Medicare Part D plans, Medicaid managed care organizations and pharmacy benefit managers. This order also requires that prior to taking such action, the Secretary confirm that the action is not projected to increase federal spending, Medicare beneficiary premiums or customers’ total out-of-pocket costs. We do not believe the executive orders will have a material impact on our business. | ||||
COVID-19-related Regulatory Actions | In response to the COVID-19 public health emergency, U.S. federal and state governments have increasingly enacted new regulatory requirements, as well as provided additional flexibility to industry participants. These regulatory actions primarily provide for: •client and customer premium relief to avoid the cancellation or non-renewal of policies; •mandating or requesting waiver of customer cost-sharing and other associated costs related to COVID-19 testing or treatment, as well as future vaccine immunizations; •extending claims filing deadlines for providers, customers and facilities; •mandating or encouraging waiver of customer cost-share related to telemedicine services, as well as requiring certain reimbursement levels for telemedicine providers to encourage its utilization; •enacting coverage and reimbursement requirements at in-network levels for certain services received from out-of-network providers; •revising or suspending the use of certain medical management procedures; and •mandating prescription drug benefit administration requirements primarily related to formulary exceptions and restrictions, and prior authorization and prescription drug refill limits. We are diligently working with federal, state and local governments to deliver access to simple, affordable and predictable health care and continue to monitor developments. | ||||
Medicare Advantage ("MA") | MA Rates: Final MA reimbursement rates for 2021 were published by CMS in April 2020. We do not expect the new rates to have a material impact on our consolidated results of operations in 2021. | ||||
Risk Adjustment: As discussed in the “Regulation” and “Risk Factors” sections of our 2019 Form 10-K, our MA business is subject to reviews, including risk adjustment data validation (“RADV”) audits by CMS and the Office of the Inspector General (“OIG”). We expect that CMS, OIG and other federal agencies will continue to closely scrutinize components of the Medicare program. | |||||
The “Regulation” section of the 2019 Form 10-K also discusses a proposed rule issued by CMS in 2018 for RADV audits of contract year 2011 and all subsequent years that included, among other things, extrapolation of the error rate related to RADV audit findings without applying the adjustment for underlying fee-for-service data errors as currently contemplated by CMS’ RADV audit methodology. RADV audits for our contract years 2011 through 2015 are currently in process. CMS has announced its intent to use third-party auditors to audit all Medicare Advantage contracts by either a comprehensive or a targeted RADV review for each contract year. If the proposed rule is adopted in its current form, it could result in some combination of degraded plan benefits, higher monthly premiums and reduced choice for the population served by all MA insurers. The Company, along with other MA organizations and additional interested parties, submitted comments to CMS on the proposed rule as part of the notice-and-comment rulemaking process. The comment period concluded on August 28, 2019. If CMS adopts the rule as proposed, there could be a material impact on the Company’s future results of operations, though we expect the rule would be subject to legal challenges. In addition, the Company is subject to OIG RADV audits that are in process. Certain OIG audit activities have been suspended for an indeterminate amount of time as a result of the COVID-19 public health emergency. Previously suspended CMS audit activities have either resumed or are expected to resume during the third quarter of 2020. | |||||
Also, as described in Note 18 to the Consolidated Financial Statements, the U.S. Department of Justice is currently conducting an industry-wide investigation of risk adjustment data submission practices and business processes, which in the case of certain other MA organizations has resulted in litigation. | |||||
Item | Description | ||||
ACA Cost-Sharing Reduction Subsidies | The ACA provides for cost-sharing reductions that offset the amount that qualifying customers pay for deductibles, copays and coinsurance. The federal government stopped funding insurers for the cost-sharing reduction subsidies in 2017. Certain insurers have sued the federal government for failure to pay cost-sharing reduction subsidies and the matter remains unresolved. To date, judges in six of those actions have ruled in favor of the insurers, all of which are presently under appeal. The Court of Appeals for the Federal Circuit heard oral argument in the first set of consolidated appeals on January 9, 2020. As described in Note 18 to the Consolidated Financial Statements, as a result of the Supreme Court decision in April 2020, we filed a lawsuit in May 2020 against the federal government seeking payment of these subsidies. Our premium rates for the 2019 and 2020 plan years reflected a lack of government funding for cost-sharing reduction subsidies. | ||||
Affordable Care Act | As described in the “Business - Regulation” section of our 2019 Form 10-K, a federal district court ruled that the “individual mandate” in the ACA is unconstitutional. On appeal, the Court of Appeals for the Fifth Circuit agreed that the “individual mandate” is unconstitutional but ordered the district court to reexamine whether the other provisions of the ACA can remain in effect, thereby leaving in doubt whether the entire ACA is unconstitutional until there is a final judicial determination on appeal. The California-led states and the U.S. House of Representatives filed petitions seeking to appeal the Fifth Circuit's ruling to the U.S. Supreme Court. On March 2, 2020, the Supreme Court agreed to hear the appeals and we expect the case will be argued during the next court term which runs from October 2020 through June 2021. |
Receivable (Payable) Balances | ||||||||||||||
(In millions) | June 30, 2020 | December 31, 2019 | ||||||||||||
Risk Adjustment | ||||||||||||||
Receivables (1) | $ | 104 | $ | 47 | ||||||||||
Payables (2) | $ | (256) | $ | (213) |
Six Months Ended June 30, | ||||||||||||||
(In millions) | 2020 | 2019 | ||||||||||||
Operating activities | $ | 5,161 | $ | 4,231 | ||||||||||
Investing activities | $ | (506) | $ | (159) | ||||||||||
Financing activities | $ | (2,130) | $ | (4,307) |
(In millions, on an undiscounted basis) | Total | 2020 | 2021 to 2022 | 2023 to 2024 | Thereafter | |||||||||||||||||||||||||||
On-Balance Sheet | ||||||||||||||||||||||||||||||||
Long-term debt(1) | 53,419 | 3,967 | 7,954 | 7,106 | 34,392 | |||||||||||||||||||||||||||
Financial Summary | Three Months Ended June 30, | Change Favorable (Unfavorable) | Six Months Ended June 30, | Change Favorable (Unfavorable) | ||||||||||||||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||
Total revenues | $ | 28,602 | $ | 27,987 | 2 | % | $ | 55,857 | $ | 54,936 | 2 | % | ||||||||||||||||||||||||||
Less: transitioning clients | — | (4,450) | N/M | — | (8,939) | N/M | ||||||||||||||||||||||||||||||||
Less: contractual adjustment for a former client | — | — | N/M | (87) | — | N/M | ||||||||||||||||||||||||||||||||
Adjusted revenues(1) | $ | 28,602 | $ | 23,537 | 22 | % | $ | 55,770 | $ | 45,997 | 21 | % | ||||||||||||||||||||||||||
Gross profit | $ | 1,781 | $ | 2,325 | (23) | % | $ | 3,482 | $ | 4,439 | (22) | % | ||||||||||||||||||||||||||
Adjusted gross profit(1) | $ | 1,781 | $ | 1,611 | 11 | % | $ | 3,395 | $ | 3,007 | 13 | % | ||||||||||||||||||||||||||
Pre-tax adjusted income from operations | $ | 1,249 | $ | 1,162 | 7 | % | $ | 2,331 | $ | 2,156 | 8 | % | ||||||||||||||||||||||||||
Pre-tax adjusted margin | 4.4 | % | 4.9 | % | (50) | bps | 4.2 | % | 4.7 | % | (50) | bps |
Three Months Ended June 30, | Change Favorable (Unfavorable) | Six Months Ended June 30, | Change Favorable (Unfavorable) | |||||||||||||||||||||||||||||||||||
(Dollars and adjusted scripts in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||
Selected Financial Information(1) | ||||||||||||||||||||||||||||||||||||||
Pharmacy revenue by distribution channel | ||||||||||||||||||||||||||||||||||||||
Adjusted network revenues | $ | 13,866 | $ | 9,758 | 42 | % | $ | 26,657 | $ | 19,026 | 40 | % | ||||||||||||||||||||||||||
Adjusted home delivery and specialty revenues | 12,407 | 11,507 | 8 | % | 24,412 | 22,548 | 8 | % | ||||||||||||||||||||||||||||||
Other revenues | 1,292 | 1,258 | 3 | % | 2,534 | 2,380 | 6 | % | ||||||||||||||||||||||||||||||
Total adjusted pharmacy revenues | $ | 27,565 | $ | 22,523 | 22 | % | $ | 53,603 | $ | 43,954 | 22 | % | ||||||||||||||||||||||||||
Pharmacy script volume | ||||||||||||||||||||||||||||||||||||||
Adjusted network scripts(2) | 293 | 223 | 31 | % | 581 | 445 | 31 | % | ||||||||||||||||||||||||||||||
Adjusted home delivery and specialty scripts(2) | 71 | 71 | — | % | 143 | 141 | 1 | % | ||||||||||||||||||||||||||||||
Total adjusted scripts(2) | 364 | 294 | 24 | % | 724 | 586 | 24 | % | ||||||||||||||||||||||||||||||
Generic fill rate | ||||||||||||||||||||||||||||||||||||||
Network | 88.4 | % | 87.7 | % | 70 | bps | 88.3 | % | 87.8 | % | 50 | bps | ||||||||||||||||||||||||||
Home delivery | 85.1 | % | 84.1 | % | 100 | bps | 85.0 | % | 84.2 | % | 80 | bps | ||||||||||||||||||||||||||
Overall generic fill rate | 88.0 | % | 87.2 | % | 80 | bps | 87.9 | % | 87.3 | % | 60 | bps | ||||||||||||||||||||||||||
Financial Summary | Three Months Ended June 30, | Change Favorable (Unfavorable) | Six Months Ended June 30, | Change Favorable (Unfavorable) | ||||||||||||||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||
Adjusted revenues | $ | 9,237 | $ | 8,968 | 3 | % | $ | 19,097 | $ | 18,163 | 5 | % | ||||||||||||||||||||||||||
Pre-tax adjusted income from operations | $ | 1,523 | $ | 990 | 54 | % | $ | 2,722 | $ | 2,160 | 26 | % | ||||||||||||||||||||||||||
Pre-tax adjusted margin | 16.5 | % | 11.0 | % | 550 | bps | 14.3 | % | 11.9 | % | 240 | bps | ||||||||||||||||||||||||||
Medical care ratio | 70.5 | % | 81.6 | % | 1,110 | bps | 74.5 | % | 80.3 | % | 580 | bps | ||||||||||||||||||||||||||
Expense ratio | 23.1 | % | 21.6 | % | (150) | bps | 22.4 | % | 21.9 | % | (50) | bps |
As of June 30, | ||||||||||||||||||||
(In thousands) | 2020 | 2019 | % Change | |||||||||||||||||
Integrated Medical Customers | ||||||||||||||||||||
Commercial | 2,123 | 2,034 | 4 | % | ||||||||||||||||
Government | 1,415 | 1,382 | 2 | % | ||||||||||||||||
Insured | 3,538 | 3,416 | 4 | % | ||||||||||||||||
Service | 11,877 | 11,992 | (1) | % | ||||||||||||||||
Total | 15,415 | 15,408 | — | % |
(In millions) | As of June 30, 2020 | As of December 31, 2019 | % Change | |||||||||||||||||
Unpaid claims and claim expenses – Integrated Medical | $ | 2,959 | $ | 2,892 | 2 | % |
Financial Summary | Three Months Ended June 30, | Change Favorable (Unfavorable) | Six Months Ended June 30, | Change Favorable (Unfavorable) | ||||||||||||||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||
Adjusted revenues | $ | 1,432 | $ | 1,389 | 3 | % | $ | 2,902 | $ | 2,783 | 4 | % | ||||||||||||||||||||||||||
Pre-tax adjusted income from operations | $ | 319 | $ | 207 | 54 | % | $ | 601 | $ | 413 | 46 | % | ||||||||||||||||||||||||||
Pre-tax adjusted margin | 22.3 | % | 14.9 | % | 740 | bps | 20.7 | % | 14.8 | % | 590 | bps | ||||||||||||||||||||||||||
Loss ratio | 49.9 | % | 55.6 | % | 570 | bps | 53.9 | % | 56.4 | % | 250 | bps | ||||||||||||||||||||||||||
Acquisition cost ratio | 11.7 | % | 13.7 | % | 200 | bps | 10.4 | % | 13.0 | % | 260 | bps | ||||||||||||||||||||||||||
Expense ratio (excluding acquisition costs) | 19.1 | % | 19.0 | % | (10) | bps | 18.2 | % | 19.0 | % | 80 | bps |
Financial Summary | Three Months Ended June 30, | Change Favorable (Unfavorable) | Six Months Ended June 30, | Change Favorable (Unfavorable) | ||||||||||||||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||
Adjusted revenues | $ | 1,328 | $ | 1,309 | 1 | % | $ | 2,667 | $ | 2,605 | 2 | % | ||||||||||||||||||||||||||
Pre-tax adjusted income from operations | $ | 132 | $ | 149 | (11) | % | $ | 209 | $ | 233 | (10) | % | ||||||||||||||||||||||||||
Pre-tax adjusted margin | 9.9 | % | 11.4 | % | (150) | bps | 7.8 | % | 8.9 | % | (110) | bps |
Financial Summary | Three Months Ended June 30, | Change Favorable (Unfavorable) | Six Months Ended June 30, | Change Favorable (Unfavorable) | ||||||||||||||||||||||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||
Pre-tax adjusted loss from operations | $ | (400) | $ | (453) | 12 | % | $ | (805) | $ | (943) | 15 | % |
(In millions) | June 30, 2020 | December 31, 2019 | ||||||||||||
Debt securities | $ | 23,674 | $ | 23,755 | ||||||||||
Equity securities | 373 | 303 | ||||||||||||
Commercial mortgage loans | 1,942 | 1,947 | ||||||||||||
Policy loans | 1,364 | 1,357 | ||||||||||||
Other long-term investments | 2,900 | 2,403 | ||||||||||||
Short-term investments | 456 | 423 | ||||||||||||
Total | $ | 30,709 | $ | 30,188 | ||||||||||
Investments classified as assets of business held for sale (1) | $ | (8,181) | $ | (7,709) | ||||||||||
Investments per Consolidated Balance Sheets | $ | 22,528 | $ | 22,479 |
(In millions) | June 30, 2020 | December 31, 2019 | ||||||||||||
Federal government and agency | $ | 637 | $ | 733 | ||||||||||
State and local government | 737 | 810 | ||||||||||||
Foreign government | 2,286 | 2,256 | ||||||||||||
Corporate | 19,543 | 19,420 | ||||||||||||
Mortgage and other asset-backed | 471 | 536 | ||||||||||||
Total | $ | 23,674 | $ | 23,755 |
Period | Total # of shares purchased (1) | Average price paid per share | Total # of shares purchased as part of publicly announced program (2) | Approximate dollar value of shares that may yet be purchased as part of publicly announced program (3) | ||||||||||||||||||||||
April 1-30, 2020 | 476,671 | $ | 167.03 | 475,000 | $ | 2,903,570,181 | ||||||||||||||||||||
May 1-31, 2020 | 563,876 | $ | 190.44 | 533,100 | $ | 2,802,107,025 | ||||||||||||||||||||
June 1-30, 2020 | 851,987 | $ | 193.00 | 850,985 | $ | 2,637,861,789 | ||||||||||||||||||||
Total | 1,892,534 | $ | 185.70 | 1,859,085 | N/A |
Number | Description | Method of Filing | ||||||
10.1 | Filed by the registrant as Exhibit 10.1 to the Current Report on Form 8-K on April 3, 2020 and incorporated herein by reference. | |||||||
31.1 | Filed herewith. | |||||||
31.2 | Filed herewith. | |||||||
32.1 | Furnished herewith. | |||||||
32.2 | Furnished herewith. | |||||||
101 | Financial statements from the quarterly report on Form 10-Q of Cigna Corporation for the quarter ended June 30, 2020 formatted in inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of Comprehensive Income; (iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Total Equity; (v) the Consolidated Statements of Cash Flow; and (vi) the Notes to the Consolidated Financial Statements | Filed herewith. | ||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed herewith. |
CIGNA CORPORATION | ||||||||
/s/ Eric P. Palmer | ||||||||
Eric P. Palmer | ||||||||
Executive Vice President and | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial Officer and Authorized Signatory) |
Date: August 6, 2020 | /s/ David M. Cordani | ||||
Chief Executive Officer |
Date: August 6, 2020 | /s/ Eric P. Palmer | ||||
Chief Financial Officer |
/s/ David M. Cordani | ||
David M. Cordani | ||
Chief Executive Officer | ||
August 6, 2020 |
/s/ Eric P. Palmer | ||
Eric P. Palmer | ||
Chief Financial Officer | ||
August 6, 2020 |
Consolidated Statements of Income - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Revenues | ||||
Premiums | $ 10,406 | $ 9,803 | $ 21,246 | $ 19,774 |
Net investment income | 223 | 340 | 576 | 686 |
Total revenues | 39,265 | 38,819 | 77,734 | 76,765 |
Benefits and expenses | ||||
Pharmacy and other service costs | 25,611 | 24,963 | 49,801 | 49,013 |
Medical costs and other benefit expenses | 7,112 | 7,576 | 15,434 | 15,196 |
Selling, general and administrative expenses | 3,407 | 3,380 | 6,805 | 6,683 |
Amortization of acquired intangible assets | 496 | 737 | 994 | 1,480 |
Total benefits and expenses | 36,626 | 36,656 | 73,034 | 72,372 |
Income from operations | 2,639 | 2,163 | 4,700 | 4,393 |
Interest expense and other | (374) | (428) | (765) | (880) |
Debt extinguishment costs | (14) | 0 | (199) | 0 |
Net realized investment gains (losses) | 38 | 23 | (50) | 33 |
Income before income taxes | 2,289 | 1,758 | 3,686 | 3,546 |
Total income taxes | 529 | 348 | 737 | 764 |
Net income | 1,760 | 1,410 | 2,949 | 2,782 |
Less: net income attributable to noncontrolling interests | 6 | 2 | 14 | 6 |
Shareholders’ net income | $ 1,754 | $ 1,408 | $ 2,935 | $ 2,776 |
Shareholders’ net income per share | ||||
Basic (in dollars per share) | $ 4.77 | $ 3.73 | $ 7.96 | $ 7.33 |
Diluted (in dollars per share) | $ 4.73 | $ 3.70 | $ 7.88 | $ 7.26 |
Pharmacy revenues | ||||
Revenues | ||||
Revenues | $ 26,564 | $ 26,288 | $ 51,662 | $ 51,467 |
Fees and other revenues | ||||
Revenues | ||||
Revenues | $ 2,072 | $ 2,388 | $ 4,250 | $ 4,838 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 389,000,000 | 386,000,000 |
Common stock, shares authorized (in shares) | 600,000,000 | 600,000,000 |
Consolidated Statements of Changes in Total Equity - USD ($) $ in Millions |
Total |
Adjustment upon Adoption |
Shareholders’ Equity |
Shareholders’ Equity
Adjustment upon Adoption
|
Common Stock |
Additional Paid-in Capital |
Accumulated Other Comprehensive (Loss) |
Retained Earnings |
Retained Earnings
Adjustment upon Adoption
|
Treasury Stock |
Other Non- controlling Interests |
|||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2018 | $ 41,035 | $ (15) | $ 41,028 | $ (15) | $ 4 | $ 27,751 | $ (1,711) | $ 15,088 | $ (15) | $ (104) | $ 7 | |||||
Changes in Total Equity | ||||||||||||||||
Effect of issuing stock for employee benefit plans | 163 | 163 | 140 | 23 | ||||||||||||
Other comprehensive income (loss) | 746 | 746 | 746 | |||||||||||||
Net income | 2,777 | 2,776 | 2,776 | 1 | ||||||||||||
Common dividends declared | (15) | (15) | (15) | |||||||||||||
Repurchase of common stock | (868) | (868) | (868) | |||||||||||||
Other transactions impacting noncontrolling interests | (5) | (5) | ||||||||||||||
Balance at Jun. 30, 2019 | 43,818 | 43,815 | 4 | 27,891 | (965) | 17,834 | (949) | 3 | ||||||||
Balance at Dec. 31, 2018 | 37 | |||||||||||||||
Change in Redeemable Noncontrolling Interests | ||||||||||||||||
Other comprehensive income (loss) | (4) | |||||||||||||||
Net income | 5 | |||||||||||||||
Other transactions impacting noncontrolling interests | (7) | |||||||||||||||
Balance at Jun. 30, 2019 | 31 | |||||||||||||||
Balance at Dec. 31, 2018 | 41,035 | (15) | 41,028 | (15) | 4 | 27,751 | (1,711) | 15,088 | (15) | (104) | 7 | |||||
Balance at Dec. 31, 2019 | 45,344 | (30) | [1] | 45,338 | (30) | [1] | 4 | 28,306 | (941) | 20,162 | (30) | [1] | (2,193) | 6 | ||
Balance at Dec. 31, 2018 | 37 | |||||||||||||||
Balance at Dec. 31, 2019 | $ 35 | |||||||||||||||
Change in Redeemable Noncontrolling Interests | ||||||||||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | |||||||||||||||
Balance at Mar. 31, 2019 | $ 42,413 | 42,408 | 4 | 27,855 | (1,282) | 16,426 | (595) | 5 | ||||||||
Changes in Total Equity | ||||||||||||||||
Effect of issuing stock for employee benefit plans | 88 | 88 | 36 | 52 | ||||||||||||
Other comprehensive income (loss) | 317 | 317 | 317 | |||||||||||||
Net income | 1,408 | 1,408 | 1,408 | |||||||||||||
Repurchase of common stock | (406) | (406) | (406) | |||||||||||||
Other transactions impacting noncontrolling interests | (2) | (2) | ||||||||||||||
Balance at Jun. 30, 2019 | 43,818 | 43,815 | 4 | 27,891 | (965) | 17,834 | (949) | 3 | ||||||||
Balance at Mar. 31, 2019 | 38 | |||||||||||||||
Change in Redeemable Noncontrolling Interests | ||||||||||||||||
Other comprehensive income (loss) | (2) | |||||||||||||||
Net income | 2 | |||||||||||||||
Other transactions impacting noncontrolling interests | (7) | |||||||||||||||
Balance at Jun. 30, 2019 | 31 | |||||||||||||||
Balance at Dec. 31, 2019 | 45,344 | $ (30) | [1] | 45,338 | $ (30) | [1] | 4 | 28,306 | (941) | 20,162 | $ (30) | [1] | (2,193) | 6 | ||
Changes in Total Equity | ||||||||||||||||
Effect of issuing stock for employee benefit plans | 309 | 309 | 393 | (84) | ||||||||||||
Other comprehensive income (loss) | 153 | 153 | 153 | |||||||||||||
Net income | 2,941 | 2,935 | 2,935 | 6 | ||||||||||||
Common dividends declared | (15) | (15) | (15) | |||||||||||||
Repurchase of common stock | (1,324) | (1,324) | (1,324) | |||||||||||||
Other transactions impacting noncontrolling interests | (7) | (7) | ||||||||||||||
Balance at Jun. 30, 2020 | 47,371 | 47,366 | 4 | 28,699 | (788) | 23,052 | (3,601) | 5 | ||||||||
Balance at Dec. 31, 2019 | 35 | |||||||||||||||
Change in Redeemable Noncontrolling Interests | ||||||||||||||||
Other comprehensive income (loss) | (6) | |||||||||||||||
Net income | 8 | |||||||||||||||
Other transactions impacting noncontrolling interests | (3) | |||||||||||||||
Balance at Jun. 30, 2020 | $ 34 | |||||||||||||||
Change in Redeemable Noncontrolling Interests | ||||||||||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | |||||||||||||||
Balance at Mar. 31, 2020 | $ 45,086 | 45,079 | 4 | 28,554 | (1,527) | 21,298 | (3,250) | 7 | ||||||||
Changes in Total Equity | ||||||||||||||||
Effect of issuing stock for employee benefit plans | 139 | 139 | 145 | (6) | ||||||||||||
Other comprehensive income (loss) | 739 | 739 | 739 | |||||||||||||
Net income | 1,756 | 1,754 | 1,754 | 2 | ||||||||||||
Repurchase of common stock | (345) | (345) | (345) | |||||||||||||
Other transactions impacting noncontrolling interests | (4) | (4) | ||||||||||||||
Balance at Jun. 30, 2020 | 47,371 | $ 47,366 | $ 4 | $ 28,699 | $ (788) | $ 23,052 | $ (3,601) | $ 5 | ||||||||
Balance at Mar. 31, 2020 | 35 | |||||||||||||||
Change in Redeemable Noncontrolling Interests | ||||||||||||||||
Other comprehensive income (loss) | (2) | |||||||||||||||
Net income | 4 | |||||||||||||||
Other transactions impacting noncontrolling interests | (3) | |||||||||||||||
Balance at Jun. 30, 2020 | $ 34 | |||||||||||||||
|
Consolidated Statements of Changes in Total Equity (Parenthetical) - $ / shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Statement of Stockholders' Equity [Abstract] | ||
Common dividends declared (in dollars per share) | $ 0.04 | $ 0.04 |
Consolidated Statements of Cash Flows - USD ($) $ in Millions |
6 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|||||
Cash Flows from Operating Activities | ||||||
Net income | $ 2,949 | $ 2,782 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 1,387 | 1,811 | ||||
Realized investment losses (gains), net | 50 | (33) | ||||
Deferred income tax (benefit) | (259) | (241) | ||||
Debt extinguishment costs | 199 | 0 | ||||
Net changes in assets and liabilities, net of non-operating effects: | ||||||
Accounts receivable | (2,121) | (1,165) | ||||
Inventories | (50) | 524 | ||||
Deferred policy acquisition costs | (177) | (99) | ||||
Reinsurance recoverable and Other assets | 28 | (177) | ||||
Insurance liabilities | 483 | 297 | ||||
Pharmacy and service costs payable | 1,655 | 713 | ||||
Accounts payable and Accrued expenses and other liabilities | 630 | (370) | ||||
Other, net | 387 | 189 | ||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 5,161 | 4,231 | ||||
Proceeds from investments sold: | ||||||
Debt securities and equity securities | 1,638 | 2,036 | ||||
Investment maturities and repayments: | ||||||
Debt securities and equity securities | 765 | 738 | ||||
Commercial mortgage loans | 10 | 169 | ||||
Other sales, maturities and repayments (primarily short-term and other long-term investments) | 664 | 650 | ||||
Investments purchased or originated: | ||||||
Debt securities and equity securities | (2,150) | (2,212) | ||||
Commercial mortgage loans | (13) | (184) | ||||
Other (primarily short-term and other long-term investments) | (934) | (847) | ||||
Property and equipment purchases, net | (523) | (497) | ||||
Acquisitions, net of cash acquired | 0 | (6) | ||||
Other, net | 37 | (6) | ||||
NET CASH (USED IN) INVESTING ACTIVITIES | (506) | (159) | ||||
Cash Flows from Financing Activities | ||||||
Deposits and interest credited to contractholder deposit funds | 529 | 498 | ||||
Withdrawals and benefit payments from contractholder deposit funds | (483) | (542) | ||||
Net change in short-term debt | (953) | (621) | ||||
Net proceeds on issuance of term loan | 1,398 | 0 | ||||
Payments for debt extinguishment | (212) | 0 | ||||
Repayment of long-term debt | (4,798) | (2,740) | ||||
Net proceeds on issuance of long-term debt | 3,465 | 0 | ||||
Repurchase of common stock | (1,324) | (866) | ||||
Issuance of common stock | 229 | 70 | ||||
Other, net | 19 | (106) | ||||
NET CASH (USED IN) FINANCING ACTIVITIES | (2,130) | (4,307) | ||||
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash | (15) | (10) | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 2,510 | (245) | ||||
Cash, cash equivalents, and restricted cash January 1, | [1] | 5,411 | 3,855 | |||
Cash, cash equivalents and restricted cash, June 30, | 7,921 | 3,610 | ||||
Cash reclassified to assets of business held for sale | (418) | 0 | ||||
Cash, cash equivalents, and restricted cash March 31, per Consolidated Balance Sheets | [2] | 7,503 | 3,610 | |||
Supplemental Disclosure of Cash Information: | ||||||
Income taxes paid, net of refunds | 190 | 1,190 | ||||
Interest paid | $ 743 | $ 865 | ||||
|
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
||
---|---|---|---|---|---|
Cash and cash equivalents | $ 7,185 | $ 4,619 | $ 3,610 | ||
Restricted cash and cash equivalents, included in other long-term investments | 318 | 0 | |||
Total cash, cash equivalents, and restricted cash and cash equivalents | [1] | $ 7,503 | $ 3,610 | ||
Other Assets | |||||
Restricted cash and cash equivalents, included in other long-term investments | 26 | ||||
Long-Term Investments | |||||
Restricted cash and cash equivalents, included in other long-term investments | 23 | ||||
Assets Held for Sale | |||||
Restricted cash and cash equivalents, included in other long-term investments | $ 743 | ||||
|
Description of Business |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Cigna Corporation, together with its subsidiaries (either individually or collectively referred to as “Cigna,” the “Company,” “we,” “our” or “us”) is a global health service organization with a mission of helping those we serve improve their health, well-being and peace of mind. We offer a differentiated set of pharmacy, medical, dental, disability, life and accident insurance and related products and services offered by our subsidiaries. The majority of these products are offered through employers and other groups such as governmental and non-governmental organizations, unions and associations. Cigna also offers commercial health and dental insurance, Medicare and Medicaid products and health, life and accident insurance coverages to individuals in the United States and selected international markets. In addition to these ongoing operations, Cigna also has certain run-off operations. The Company reports its results in the following segments. Health Services includes pharmacy benefits management, specialty pharmacy services, clinical solutions, home delivery and health management services. Integrated Medical offers a variety of health care solutions to employers and individuals. •The Commercial operating segment serves employers (also referred to as “clients”) and their employees (also referred to as “customers”) and other groups. This segment provides deeply integrated medical and specialty offerings including medical, pharmacy, dental, behavioral health and vision, health advocacy programs and other products and services to insured and self-insured clients. •The Government operating segment offers Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors (including the acquired Express Scripts' Medicare Part D business), Medicaid plans, and individual health insurance coverage both on and off the public exchanges. International Markets includes supplemental health, life and accident insurance products and health care coverage in our international markets, as well as health care benefits to globally mobile employees of multinational organizations. The remainder of our business operations are reported in Group Disability and Other, consisting of the following: •Group Disability and Life provides group long-term and short-term disability, group life, accident, voluntary and specialty insurance products and related services. In December 2019, Cigna entered into a definitive agreement to sell the U.S. Group Disability and Life insurance business to New York Life Insurance Company. See Note 6 for further information on the classification of this business as held for sale. •Corporate-Owned Life Insurance (“COLI”) offers permanent insurance contracts sold to corporations to provide coverage on the lives of certain employees for the purpose of financing employer-paid future benefit obligations. •Run-off businesses: •Reinsurance: predominantly comprised of guaranteed minimum death benefit (“GMDB”) and guaranteed minimum income benefit (“GMIB”) business effectively exited through reinsurance with Berkshire Hathaway Life Insurance Company of Nebraska (“Berkshire”) in 2013. •Settlement Annuity business in run-off. •Individual Life Insurance and Annuity and Retirement Benefits Businesses: deferred gains from the sales of these businesses. Corporate reflects amounts not allocated to operating segments, including interest expense, net investment income on investments not supporting segment and other operations, interest on uncertain tax positions, certain litigation matters, expense associated with our frozen pension plans, severance, certain enterprise-wide projects and intersegment eliminations for products and services sold between segments.
|
COVID-19 and Related Economic Impact |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Unusual or Infrequent Items, or Both [Abstract] | |
COVID-19 and Related Economic Impact | COVID-19 and Related Economic Impact Cigna continues to actively monitor all aspects of our business in light of the ongoing coronavirus ("COVID-19") pandemic. As described below, management has taken a number of steps to assess the impact on our business, including the financial reporting implications associated with this pandemic. The COVID-19 pandemic has pervasively impacted the economy, financial markets and the global health care delivery systems during the second quarter, including significant deferral of care of our customers. These impacts were most prominent in April 2020 and moderated throughout the quarter with utilization levels returning to nearly normal levels by the end of June 2020. These impacts were most significant in our Integrated Medical segment where results reflect higher quarterly earnings and a lower medical care ratio as a result of the deferral of care significantly exceeding the incremental COVID-19 costs, partially offset by COVID-19 related actions including premium relief programs for clients as well as cost share waivers for customers. The Health Services segment quarterly earnings also reflected effects of the pandemic, specifically, a favorable mix of claims as a result of both the type of drugs dispensed as well as the distribution method used for dispensing and fulfilling, partially offset by lower non-specialty, 30-day retail script volume. The Company conducted its normal quarterly qualitative assessment of goodwill impairment, and concluded that the current economic and business conditions did not result in a triggering event requiring a quantitative impairment analysis. All other long-lived assets, including intangible assets, were reviewed for impairment and no material impairments were recorded for the six months ended June 30, 2020. The Company reviewed all classes of financial instruments including investments, accounts receivable and reinsurance recoverables, and recorded an additional allowance for expected credit losses of $48 million related to investments (see Note 11) and $13 million related to accounts receivable (see Note 4) for the six months ended June 30, 2020. The Company also initiated several actions to assist our customers, clients, health care providers, and employees in this time of crisis. Additionally, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the United States. The direct impact of this new legislation was not material to the Company's results of operations for the six months ended June 30, 2020. As permitted by the CARES Act and COVID-19 related regulatory actions, the Company deferred approximately $900 million in income and payroll tax payments during the second quarter of 2020. Approximately $825 million of the deferred tax payments will be made during the third quarter of 2020. The Company did not request any funding under the CARES Act. However, in April 2020 the Company received $41 million from the provider relief fund which was immediately returned to the U.S. Department of Health and Human Services.
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Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The Consolidated Financial Statements include the accounts of Cigna Corporation 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”). 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 2019 Annual Report on Form 10-K (“2019 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, competitive and other market conditions, as well as COVID-19 related impacts, call for caution in estimating full-year results based on interim results of operations. Recent Accounting Pronouncements The Company's 2019 Form 10-K includes discussion of significant recent accounting pronouncements that either have impacted our financial statements or may impact them in the future. The following information provides updates on recently adopted or recently issued accounting pronouncements that have occurred since the Company filed its 2019 Form 10-K. Recently Adopted Accounting Guidance
Accounting Guidance Not Yet Adopted
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Accounts Receivable, Net |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net | Accounts Receivable, Net Accounting policy. The Company's accounts receivable balances primarily include amounts due from clients, third-party payors, customers and pharmaceutical manufacturers, and are presented net of allowances. The Company's adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments (ASU 2016-13), as of January 1, 2020 did not have a material impact on our accounts receivable credit loss allowance, as there were no substantive changes to our methodology for this class of assets. The allowance for expected credit losses for current accounts receivable is based primarily on past collections experience relative to the length of time receivables are past due; however, when available evidence reasonably supports an assumption that counterparty credit risk over the expected payment period will differ from current and historical payment collections, a forecasting adjustment is reflected in the allowance for expected credit losses. All other (non-credit) allowances are based on the current status of each customer's receivable balance as well as current economic and market conditions and a variety of other factors, including the length of time the receivables are past due, the financial health of customers and our past experience. We bill pharmaceutical manufacturers based on management's interpretation of contractual terms and estimate a contractual allowance based on the best information available at the time a claim is processed. Contractual allowances for certain rebates receivable from pharmaceutical manufacturers are determined by reviewing payment experience and specific known items that could be adjusted under contract terms. The Company's estimation process for contractual allowances for pharmaceutical manufacturer receivables generally results in an allowance for balances outstanding greater than 90 days. Contractual allowances for certain receivables from third-party payors are based on their contractual terms and are estimates based on the Company's best information available at the time revenue is recognized. Receivables and any associated allowance are written off only when all collection attempts have failed and such amounts are determined unrecoverable. We regularly review the adequacy of these allowances based on a variety of factors, including age of the outstanding receivable and collection history. When circumstances related to specific collection patterns change, estimates of the recoverability of receivables are adjusted. The following amounts were included within accounts receivable, net:
These receivables are reported net of our allowances of $1.1 billion as of June 30, 2020 and $778 million as of December 31, 2019. 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 the balance of our risk corridor receivables under the Patient Protection and Affordable Care Act ("ACA"), an allowance for current expected credit losses and other non-credit adjustments. The Company's allowance for current expected credit losses was $72 million as of June 30, 2020 and $39 million as of January 1, 2020 (no change to allowance for credit losses from December 31, 2019). The allowance for current expected credit losses as of June 30, 2020 includes an additional forecasting adjustment of $13 million related to COVID-19.
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Mergers and Acquisitions |
6 Months Ended |
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Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Mergers and Acquisitions | Mergers and Acquisitions Integration and Transaction-related Costs The Company incurred integration and transaction costs related to the acquisition and integration of Express Scripts, the terminated merger with Anthem, Inc. (“Anthem”), the sale of the U.S. Group Disability and Life insurance business, and other transactions. These costs were $130 million pre-tax ($99 million after-tax) for the three months and $227 million pre-tax ($173 million after tax) for the six months ended June 30, 2020, compared with $155 million pre-tax ($115 million after-tax) for the three months and $291 million pre-tax ($223 million after-tax) for the six months ended June 30, 2019. These costs consisted primarily of certain projects to integrate or separate the Company’s systems, products and services, fees for legal, advisory and other professional services and certain employment-related costs.
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Assets and Liabilities of Business Held for Sale |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities of Business Held for Sale | Assets and Liabilities of Business Held for Sale In December 2019, Cigna entered into a definitive agreement to sell its U.S. Group Disability and Life insurance business to New York Life Insurance Company for $6.3 billion. The sale is expected to close in the third quarter of 2020 following applicable regulatory approvals and other customary closing conditions. The Company believes this sale is probable and has aggregated and classified the assets and liabilities directly associated with the pending sale of its Group Disability and Life insurance business as held for sale and has reported them separately on our Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019. The assets and liabilities of business held for sale were as follows:
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Earnings Per Share |
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Earnings Per Share | Earnings Per Share (“EPS”) Basic and diluted earnings per share were computed as follows:
The following outstanding employee stock options were not included in the computation of diluted earnings per share because their effect was anti-dilutive.
The Company held approximately 20.8 million shares of common stock in treasury at June 30, 2020, 13.0 million shares as of December 31, 2019 and 6.2 million shares as of June 30, 2019.
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Debt |
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Debt | Debt The outstanding amounts of debt and finance leases were as follows:
Debt issuance and redemption. In order to decrease future interest expense and reduce future refinancing risk, the Company entered into the following transactions: •Debt issuance: On March 16, 2020, the Company issued $3.5 billion of new senior notes. The proceeds of this debt were mainly used to pay the consideration for the cash tender and redemption offer as described below. Interest on this debt is paid semi-annually.
•Debt tender and redemption: In March and April 2020, the Company completed a tender offer and an optional redemption totaling $3.5 billion of aggregate principal amount of certain of its outstanding debt securities. The principal amount repurchased in this tender offer was $1.5 billion. Additionally, $2.0 billion of notes were repurchased via optional redemption. The Company recorded a pre-tax loss of $199 million ($151 million after-tax), consisting primarily of premium payments on the tender and optional redemption. Debt Exchange. In the fourth quarter of 2019, the Company settled an exchange of approximately $12.7 billion of Notes issued by Express Scripts Holding Company, Medco Health Solutions, Inc. and Cigna Holding Company (formerly named Cigna Corporation) for privately placed Notes issued by Cigna with the same interest rates and maturities and comparable other terms. We initiated an exchange offer to register such debt in the second quarter of 2020 and completed the exchange in July 2020. Debt Repayment. During the first six months of 2020, the Company repaid $4.8 billion of long-term debt, including the $3.5 billion debt tender and redemption described above. Revolving Credit Agreements. Cigna has a revolving credit and letter of credit agreement that matures in April 2023 and is diversified among 23 banks. Cigna can borrow up to $3.25 billion for general corporate purposes, with up to $500 million available for issuance of letters of credit. This revolving credit agreement also includes an option to increase the facility amount up to $500 million and an option to extend the termination date for additional one year periods, subject to consent of the banks. In the fourth quarter of 2019, the Company entered into an additional 364-day revolving credit agreement that matures in October 2020 and is diversified among 23 banks. Pursuant to this revolving credit agreement, Cigna can borrow up to $1.0 billion for general corporate purposes. The 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. The revolving credit agreements contain customary covenants and restrictions including a financial covenant that the Company’s leverage ratio may not exceed 60%. As of June 30, 2020, there were no outstanding balances under the revolving credit agreements. Term Loan Credit Agreement. On April 1, 2020, the Company borrowed an aggregate principal amount of $1.4 billion under a new 364-Day Term Loan Credit Agreement (the "Credit Agreement"). The Company entered into the Credit Agreement to enhance its liquidity position in light of disruption in the commercial paper market and used a portion of the net proceeds to pay down amounts outstanding under its commercial paper facility. The Credit Agreement may be prepaid at any time in whole or in part without premium or penalty. Term loans prepaid may not be reborrowed. The Credit Agreement provides for mandatory prepayment of the term loans in an amount equal to 20% of any Net Cash Proceeds (as defined in the Credit Agreement) arising from the previously announced sale of Cigna’s U.S. Group Disability and Life insurance business to New York Life Insurance Company. Commercial Paper. The commercial paper program had approximately $5 million outstanding at June 30, 2020 at an average interest rate of 1.0%. The Company was in compliance with its debt covenants as of June 30, 2020.
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Insurance and Contractholder Liabilities |
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Insurance Loss Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance and Contractholder Liabilities | Insurance and Contractholder Liabilities A.Account Balances – Insurance and Contractholder Liabilities As of June 30, 2020, December 31, 2019 and June 30, 2019, the Company’s insurance and contractholder liabilities were comprised of the following:
(1) Amounts classified as Liabilities of business held for sale primarily include $5.1 billion of unpaid claims, $758 million of contractholder deposit funds and $644 million of future policy benefits as of June 30, 2020 and $4.9 billion of unpaid claims, $717 million of contractholder deposit funds and $653 million of future policy benefits as of December 31, 2019. Insurance and contractholder liabilities expected to be paid within one year are classified as current. B.Unpaid Claims and Claim Expenses – Integrated Medical 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 $2.7 billion at June 30, 2020 and June 30, 2019. Activity, net of intercompany transactions, in the unpaid claims liability for the Integrated Medical segment for the six months ended June 30 was as follows:
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 for additional information on reinsurance. Variances in incurred costs related to prior years’ unpaid claims and claims expenses that resulted from the differences between actual experience and the Company’s key assumptions for the six months ended June 30 were as follows:
(1)Percentage of current year incurred costs as reported for the year ended December 31, 2019. (2)Percentage of current year incurred costs as reported for the year ended December 31, 2018. Incurred costs related to prior years in the table above, although adjusted through shareholders’ net income, do not directly correspond to an increase or decrease to shareholders’ net income. The primary reason for this difference is that decreases to prior year incurred costs pertaining to the portion of the liability established for moderately adverse conditions are not considered as impacting shareholders’ net income if they are offset by increases in the current year provision for moderately adverse conditions. Prior year development increased shareholders’ net income by $44 million ($56 million before-tax) for the six months ended June 30, 2020, compared with $62 million ($78 million before-tax) for the six months ended June 30, 2019. Favorable prior year development in both periods reflects lower than expected utilization of medical services. C.Unpaid Claims and Claim Expenses – Group Disability and Other and International Markets Liability balance details. The liability details for unpaid claims and claim expenses are as follows:
(1) Includes unpaid claim amounts classified as Liabilities of business held for sale. Activity in the Company’s liabilities for unpaid claims and claim expenses, excluding Other Operations, are presented in the following table. Liabilities associated with Other Operations are excluded because they pertain to obligations for long-duration insurance contracts or, if short-duration, the liabilities have been fully reinsured.
(1) Includes Unpaid claims amounts classified as Liabilities of business held for sale. Reinsurance in the table above reflects amounts due from reinsurers related to unpaid claims liabilities. The Company’s insurance subsidiaries enter into agreements with other companies primarily to limit losses from large exposures and to permit recovery of a portion of incurred losses. See Note 10 for additional information on reinsurance. The majority of the liability for unpaid claims and claim expenses is related to disability claims with long-tailed payouts that relate to a business held for sale. Interest earned on assets backing these liabilities is an integral part of pricing and reserving. Therefore, interest accreted on prior year balances is shown as a separate component of prior year incurred claims and reported in Medical costs and other benefit expenses in the income statement. This interest is calculated by applying the average discount rate used in determining the liability balance to the average liability balance over the period. The remaining prior year incurred claims amount primarily reflects updates to the Company’s liability estimates and variances between actual experience during the period relative to the assumptions and expectations reflected in determining the liability. Assumptions reflect the Company’s expectations over the life of the book of business and will vary from actual experience in any period, both favorably and unfavorably, with variation in resolution rates being the most significant driver for the long-term disability business. Favorable prior year incurred claims for the six months ended June 30, 2020 primarily reflected favorable experience in Europe and the Middle East and favorable Voluntary and Life incidence, partially offset by unfavorable long-term disability resolution rate experience relative to expectations reflected in the prior year reserve. Favorable prior year incurred claims for the six months ended June 30, 2019 primarily reflected favorable life and voluntary loss ratio experience relative to expectations reflected in the prior year reserve.
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Reinsurance |
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Reinsurance Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance | Reinsurance The Company’s insurance subsidiaries enter into agreements with other insurance companies to assume and cede reinsurance. Reinsurance is ceded primarily in acquisition and disposition transactions when the underwriting company is not being acquired. Reinsurance is also used to limit losses from large exposures and to permit recovery of a portion of direct or assumed losses. 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 Accounting policy. Reinsurance recoverables represent amounts due from reinsurers for both paid and unpaid claims of the Company’s insurance businesses. Most reinsurance recoverables are classified as non-current assets. The current portion of reinsurance recoverables is reported in Other current assets and consists primarily of recoverables on paid claims expected to be settled within one year. Reinsurance recoverables are presented net of allowances for uncollectible reinsurance that, effective with adopting ASU 2016-13 on January 1, 2020, consists primarily of an allowance for expected credit losses. Estimates of the allowance for expected credit losses are based on internal and external data used to develop expected loss rates over the anticipated duration of the recoverable asset that vary by external credit rating and collateral level. The Company's allowance for credit losses on reinsurance recoverables was $34 million as of June 30, 2020, of which $31 million was through a cumulative effect adjustment to retained earnings at adoption. The majority of the Company’s reinsurance recoverables resulted from acquisition and disposition transactions in which the underwriting company was not acquired. Included in the table below is $224 million of current reinsurance recoverables that are reported in Other current assets as of June 30, 2020; as of December 31, 2019 there was $222 million of current reinsurance recoverables reported in Other current assets. The Company’s reinsurance recoverables are presented in the following table by range of external credit rating and collateral level.
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. 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, as further described above. B.Effects of Reinsurance In the Company’s Consolidated Statements of Income, premiums were reported net of amounts ceded to reinsurers and medical costs and other benefit expenses were reported net of reinsurance recoveries in the following amounts:
C.Effective Exit of GMDB and GMIB Business The Company entered into an agreement with Berkshire to effectively exit the GMDB and GMIB business via a reinsurance transaction in 2013. Berkshire reinsured 100% of the Company’s future claim payments in this business, net of other reinsurance arrangements existing at that time. The reinsurance agreement is subject to an overall limit with approximately $3.3 billion remaining at June 30, 2020. GMDB is accounted for as assumed and ceded reinsurance and GMIB assets and liabilities are reported as derivatives at fair value as discussed below. GMIB assets are reported in Other current assets and Other assets, and GMIB liabilities are reported in Accrued expenses and other liabilities and Other non-current liabilities. GMDB The GMDB exposure arises under annuities written by ceding companies that guarantee the benefit received at death. The Company’s exposure arises when the guaranteed minimum death benefit exceeds the fair value of the related mutual fund investments at the time of a contractholder’s death. The following table presents the account value, net amount at risk and the number of contractholders for guarantees assumed by the Company in the event of death. The net amount at risk is the amount that the Company would have to pay if all contractholders died as of the specified date. The Company should be reimbursed in full for these payments unless the Berkshire reinsurance limit is exceeded.
GMIB The Company reinsured contracts with issuers of GMIB products. The Company’s exposure represents the excess of a contractually guaranteed amount over the level of variable annuity account values. Payment by the Company depends on the actual account value in the related underlying mutual funds and the level of interest rates when the contractholders elect to receive minimum income payments that can only occur within 30 days of a policy anniversary after the appropriate waiting period. The Company has purchased retrocessional coverage (“GMIB assets”) for these contracts including retrocessional coverage from Berkshire. Assumptions used in fair value measurement. GMIB assets and liabilities are established using capital market assumptions and assumptions related to future annuitant behavior (including mortality, lapse, and annuity election rates). The Company classifies GMIB assets and liabilities in Level 3 of the fair value hierarchy described in Note 12 because assumptions related to future annuitant behavior are largely unobservable. The only assumption expected to impact future shareholders’ net income is non-performance risk. The non-performance 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 GMIB liabilities to be paid by the Company, and (b) the GMIB assets to be paid by the reinsurers, after considering collateral. The impact of non-performance risk was immaterial for the three and six months ended June 30, 2020 and June 30, 2019. GMIB liabilities totaling $838 million as of June 30, 2020 and $688 million as of December 31, 2019 were reported in Accrued expenses and other liabilities and Other non-current liabilities. There were three reinsurers covering 100% of the GMIB exposures as of June 30, 2020 and December 31, 2019 as follows:
Amounts included in shareholders’ net income for GMIB assets and liabilities were not material for the three or six months ended June 30, 2020 or June 30, 2019.
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Investments | Investments Cigna’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 for information about the valuation of the Company’s investment portfolio. The following table summarizes the Company's investments by category and current or long-term classification.
A.Investment Portfolio Debt Securities Accounting policy. Debt securities (including bonds, mortgage and other asset-backed securities and preferred stocks redeemable by the investor) are classified as available for sale and are carried at fair value with changes in fair value recorded either in Accumulated other comprehensive income (loss) within Shareholders’ equity or in credit loss expense based on fluctuations in the allowance for credit losses, as further discussed below. Net unrealized appreciation on debt securities supporting the Company’s run-off settlement annuity business is reported in Non-current insurance and contractholder liabilities rather than Accumulated other comprehensive income (loss). When the Company intends to sell or determines that it is more likely than not to be required to sell an impaired debt security, the excess of amortized cost over fair value is directly written down with a charge to Realized investment gains and losses. As of January 1, 2020, the Company adopted ASU 2016-13 that included certain targeted improvements to the accounting for available-for-sale debt securities. The new guidance resulted in certain policy changes related to the process used by the Company to review declines in fair value from a security’s amortized cost basis to determine whether a credit loss exists. For example, the length of time that a debt security has been impaired is no longer a criterion for this review. In addition, under this new guidance, the Company recognizes an allowance for credit loss with a corresponding charge to credit loss expense, presented in Realized investment gains and losses in the Company’s income statement. Prior to this new guidance, the Company recorded a direct write-down of the instrument’s amortized cost basis. The allowance for credit loss represents the excess of amortized cost over the greater of its fair value or the net present value of the debt security's projected future cash flows (based on qualitative and quantitative factors, including the probability of default, and the estimated timing and amount of recovery). Each period, the allowance for credit loss is adjusted through credit loss expense. The Company elected the expedient to not measure an allowance for credit losses for accrued interest receivables. Consistent with prior practice, when interest payments are delinquent based on contractual terms or when certain terms (interest rate or maturity date) of the investment have been restructured, accrued interest, reported in Other current assets, is written off through a charge to Net investment income, and interest income is recognized on a cash basis. Debt securities are classified as either Current or Long-term investments based on their contractual maturities. 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 amortized cost and fair value by contractual maturity periods for debt securities were as follows at June 30, 2020:
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.
(1)Net unrealized appreciation for these investments is excluded from accumulated other comprehensive income. The table below summarizes debt securities with a decline in fair value from amortized cost by investment grade and the length of time these securities have been in an unrealized loss position. These debt securities are primarily corporate securities with a decline in fair value that reflects an increase in market yields since purchase. See discussion of Realized Investment Gains and Losses below for further information on the credit loss expense recorded for the Company's investments.
The table below presents a roll-forward of the allowance for credit losses on debt securities for the six months ended June 30, 2020.
Equity Securities Equity securities with a readily determinable fair value consist primarily of mutual funds that invest in fixed income debt securities. Equity securities without a readily determinable fair value consist of private equity investments and are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes. The amount of impairments or value changes resulting from observable price changes was not material as of June 30, 2020 and December 31, 2019. Hybrid equity securities consist of preferred stock investments that have call features. The following table provides the values of the Company's equity security investments as of June 30, 2020 and December 31, 2019.
Commercial Mortgage Loans Accounting policy. Commercial mortgage loans are carried at unpaid principal balances. Beginning January 1, 2020 with the adoption of ASU 2016-13, unpaid principal balances are presented net of an allowance for expected credit losses. Changes in the allowance for expected credit losses are recognized as credit loss expense and presented in Realized investment gains and losses in the Company’s income statement. Each period, the Company establishes (or adjusts) its allowance for expected credit losses for commercial mortgage loans. The allowance for expected credit losses is based on a credit risk category that is assigned to each loan at origination using key credit quality indicators, including debt service coverage and loan-to-value ratios. Credit risk categories are updated as key credit quality indicators change. An expected loss rate, assigned based on the credit risk category, is applied to each loan's unpaid principal balance to develop an aggregate allowance for expected credit losses. Prior to adoption, impaired commercial mortgage loans were written down to the lower of unpaid principal or fair value of the underlying collateral when it became probable that the Company would not collect all amounts due under its promissory note. The Company recorded an allowance of $7 million through a cumulative effect adjustment to retained earnings to reflect expected credit losses at adoption. The credit loss allowance for the Company’s commercial mortgage loan investments was $8 million as of June 30, 2020. Commercial mortgage loans are considered impaired and written off against the allowance when it is probable that the Company will not collect all amounts due per the terms of the promissory note. The Company elected the expedient to not measure an allowance for credit losses for accrued interest receivables. Consistent with our prior practice, accrued interest, reported in other current assets, is written off through a charge to net investment income; interest income on impaired loans is only recognized when a payment is received. In the event of a foreclosure, the allowance for credit losses is based on the excess of the carrying value of the mortgage loan over the fair value of its underlying collateral. 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. Commercial mortgage loans are classified as either current or long-term investments based on their contractual maturities. Credit quality. The Company regularly evaluates and monitors credit risk, beginning with the initial underwriting of a mortgage loan and continuing throughout the investment holding period. Mortgage origination professionals employ an internal credit quality rating system designed to evaluate the relative risk of the transaction at origination that is then updated each year as part of the annual portfolio loan review. The Company evaluates and monitors credit quality on a consistent and ongoing basis, classifying each loan as a loan in good standing, potential problem loan or problem loan. Quality ratings are based on our evaluation of a number of key inputs related to the loan, including real estate market-related factors such as rental rates and vacancies, and property-specific inputs such as growth rate assumptions and lease rollover statistics. However, the two most significant contributors to the credit quality rating are the debt service coverage and loan-to-value ratios. The debt service coverage ratio measures the amount of property cash flow available to meet annual interest and principal payments on debt, with a ratio below 1.0 indicating that there is not enough cash flow to cover the required loan payments. The loan-to-value ratio, commonly expressed as a percentage, compares the amount of the loan to the fair value of the underlying property collateralizing the loan. The following table summarizes the credit risk profile of the Company’s commercial mortgage loan portfolio based on loan-to-value and debt service coverage ratios as of June 30, 2020 and December 31, 2019:
The Company’s annual in-depth review of its commercial mortgage loan investments is the primary mechanism for identifying emerging risks in the portfolio. The Company’s investment professionals completed the annual in-depth review in the second quarter of 2020 that included an analysis of each underlying property’s most recent annual financial statements, rent rolls, operating plans, budgets, a physical inspection of the property and other pertinent factors. Based on historical results, current leases, lease expirations and rental conditions in each market, the Company estimated the current year and future stabilized property income and fair value for each loan. The average loan to value increased slightly from last year and remains strong. The portfolio's average debt service coverage ratio decreased slightly as June 30, 2020 compared with December 31, 2019 but remains at a high level. The Company re-evaluates a loan’s credit quality between annual reviews if new property information is received or an event such as delinquency or a borrower’s request for restructure causes management to believe that the Company’s estimate of financial performance, fair value or the risk profile of the underlying property has been impacted. All commercial mortgage loans in the Company's portfolio are current as of June 30, 2020 and December 31, 2019. 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, foreign currency swaps, and statutory and other deposits. The following table provides carrying value information for these investments.
Short-Term Investments and Cash Equivalents Short-term investments and cash equivalents included the following types of issuers:
B.Realized Investment Gains and Losses Accounting policy. Realized investment gains and losses are based on specifically identified assets and results from sales, investment asset write-downs, change in the fair value of certain derivatives and equity securities, and changes in valuation reserves on commercial mortgage loans. Commencing January 1, 2020, realized gains and losses also include credit loss expense resulting from the impact of changes in the allowances for credit losses on debt securities and commercial mortgage loan investments under ASU 2016-13. The following realized gains and losses on investments exclude amounts required to adjust future policy benefits for the run-off settlement annuity business (consistent with accounting for a premium deficiency), as well as realized gains and losses attributed to the Company’s separate accounts because those gains and losses generally accrue directly to separate account policyholders.
Net realized investment gains, excluding credit loss expense and asset write-downs, for the six months ended June 30, 2020 primarily represent gains on the sales of debt securities, partially offset by mark-to-market losses on foreign exchange derivatives and equity securities. Net realized investment gains, excluding credit loss expense and asset write-downs, for the six months ended June 30, 2019 represent mark-to-market gains on equity securities and gains on the sales of debt securities and real estate partnerships. Credit loss expense on invested assets for the six months ended June 30, 2020 reflects credit losses incurred on debt securities due to uncertainty around issuers in certain industries that are particularly impacted by the global COVID-19 pandemic. Realized gains and losses on equity securities still held at June 30, 2020 and 2019 were not material. The following table presents sales information for available-for-sale debt securities. Gross gains on sales and gross losses on sales exclude amounts required to adjust future policy benefits for the run-off settlement annuity business.
C.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 contract holder 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. The Company has written and purchased GMIB reinsurance contracts in its run-off reinsurance business that are accounted for as freestanding derivatives as discussed in Note 10. Derivatives in the Company’s separate accounts are excluded from the following discussion because associated gains and losses generally accrue directly to separate account policyholders. Derivative instruments used by the Company typically include foreign currency swap contracts and foreign currency forward contracts. Foreign currency swap contracts periodically exchange cash flows between two currencies for principal and interest. Foreign currency forward contracts require the Company to purchase a foreign currency in exchange for the functional currency of its operating unit at a future date, generally within three months from the contracts’ trade dates. The Company manages the credit risk of these derivative instruments by diversifying its portfolio among approved dealers of high credit quality and through routine monitoring of credit risk exposures. Certain of the Company’s over-the-counter derivative instruments require either the Company or the counterparty to post collateral or demand immediate payment depending on the amount of the net liability position of the derivative instrument and predefined financial strength or credit rating thresholds. These collateral posting requirements vary by counterparty. The Company would incur a loss if dealers completely failed to perform under derivative contracts, however collateral has been posted by dealers to cover substantially all of the fair values owed by dealers at June 30, 2020 and December 31, 2019. The fair value of collateral posted by the Company was not significant as of June 30, 2020 or December 31, 2019. The gross fair values of our derivative financial instruments are presented in Note 12. The following table summarizes the types and notional quantity of derivative instruments held by the Company. As of June 30, 2020 and December 31, 2019, the effects of these individual hedging strategies were not material to the Consolidated Financial Statements, including gains or losses reclassified from accumulated other comprehensive income into shareholders' net income, as well as amounts excluded from the assessment of hedge effectiveness.
The Company’s derivative financial instruments are presented as follows: •Fair value hedges of the foreign exchange-related changes in fair values of certain foreign-denominated bonds: Swap fair values are reported in Long-term investments or Other non-current liabilities. Changes in fair values attributable to foreign exchange risk of the swap contracts and the hedged bonds are reported in Realized investment gains and losses. The portion of the swap contracts’ changes in fair value excluded from the assessment of hedge effectiveness is recorded in Other comprehensive income and recognized in Net investment income as swap coupon payments are accrued, offsetting the foreign-denominated coupons received on the designated bonds. Net cash flows are reported in Operating activities, while exchanges of notional principal amounts are reported in Investing activities. •Net investment hedges of certain foreign subsidiaries that conduct their business principally in currencies other than the U.S. dollar: The fair values of the foreign currency swap and forward contracts are reported in Other assets or Other liabilities. The changes in fair values of these instruments are reported in Other comprehensive income, specifically in translation of foreign currencies. The portion of the change in fair values relating to foreign exchange spot rates will be recognized in earnings upon deconsolidation of the hedged foreign subsidiaries. The remaining changes in fair value of these instruments are excluded from our effectiveness assessment and recognized in interest expense when coupon payments are accrued or ratably over the term of the instrument. The notional value of hedging instruments matches the hedged amount of subsidiary net assets. Cash flows relating to these contracts are reported in Investing activities. •Economic hedges for derivatives not designated as accounting hedges: Fair values of forward contracts are reported in current Investments or Accrued expenses and other liabilities. The changes in fair values are reported in Realized investment gains and losses. Cash flows relating to these contracts are reported in Investing activities.
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Fair Value Measurements | 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). The Company estimates fair values using prices from third parties or internal pricing methods. Fair value estimates received from third-party pricing services are based on reported trade activity and quoted market prices when available, and other market information that a market participant would use to estimate fair value. The internal pricing methods are performed by the Company’s investment professionals and generally involve using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality as well as other qualitative factors. In instances where there is little or no market activity for the same or similar instruments, fair value is estimated using methods, models and assumptions that the Company believes a hypothetical market participant would use to determine a current transaction price. These valuation techniques involve some level of estimation and judgment that becomes significant with increasingly complex instruments or pricing models. The Company is responsible for determining fair value and for assigning the appropriate level within the fair value hierarchy based on the significance of unobservable inputs. The Company reviews methodologies, processes and controls of third-party pricing services and compares prices on a test basis to those obtained from other external pricing sources or internal estimates. The Company performs ongoing analyses of both prices received from third-party pricing services and those developed internally to determine that they represent appropriate estimates of fair value. The controls executed by the Company include evaluating changes in prices and monitoring for potentially stale valuations. The Company also performs sample testing of sales values to confirm the accuracy of prior fair value estimates. The minimal exceptions identified during these processes indicate that adjustments to prices are infrequent and do not significantly impact valuations. We conduct an annual on-site visit of the most significant pricing service to review their processes, methodologies and controls. This on-site review includes a walk-through of inputs for a sample of securities held across various asset types to validate the documented pricing process. A.Financial Assets and Financial Liabilities Carried at Fair Value The following table provides information as of June 30, 2020 and December 31, 2019 about the Company’s financial assets and liabilities carried at fair value. 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 policyholders.
(1)Excludes certain equity securities that have no readily determinable fair value. (2)As a practical expedient, certain real estate funds are carried at fair value based on the Company’s ownership share of the equity of the investee (Net Asset Value (“NAV“)) including changes in the fair value of its underlying investments. The Company has $55 million in unfunded commitments in these funds as of June 30, 2020. Level 1 Financial Assets Inputs for instruments classified in Level 1 include unadjusted quoted prices for identical assets in active markets accessible at the measurement date. Active markets provide pricing data for trades occurring at least weekly and include exchanges and dealer markets. Assets in Level 1 include actively-traded U.S. government bonds and exchange-listed equity securities. A relatively small portion of the Company’s investment assets are classified in this category given the narrow definition of Level 1 and the Company’s investment asset strategy to maximize investment returns. Level 2 Financial Assets and Financial Liabilities Inputs for instruments classified in Level 2 include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active or other inputs that are market observable or can be corroborated by market data for the term of the instrument. Such other inputs include market interest rates and volatilities, spreads and yield curves. An instrument is classified in Level 2 if the Company determines that unobservable inputs are insignificant. Debt and equity securities. Approximately 95% of the Company’s investments in debt and equity securities are classified in Level 2 including most public and private corporate debt and hybrid equity securities, federal agency and municipal bonds, non-government mortgage-backed securities and preferred stocks. Third-party pricing services and internal methods often use recent trades of securities with similar features and characteristics because many debt securities do not trade daily. Pricing models are used to determine these prices when recent trades are not available. These models calculate fair values by discounting future cash flows at estimated market interest rates. Such market rates are derived by calculating the appropriate spreads over comparable U.S. Treasury securities based on the credit quality, industry and structure of the asset. Typical inputs and assumptions to pricing models include, but are not limited to, a combination of benchmark yields, reported trades, issuer spreads, liquidity, benchmark securities, bids, offers, reference data and industry and economic events. For mortgage-backed securities, inputs and assumptions may also include characteristics of the issuer, collateral attributes, prepayment speeds and credit rating. Nearly all of these instruments are valued using recent trades or pricing models. Less than 1% of the fair value of investments classified in Level 2 represents foreign bonds that are valued using a single, unadjusted market-observable input derived by averaging multiple broker-dealer quotes, consistent with local market practice. Short-term investments are carried at fair value that approximates cost. The Company compares market prices for these securities to recorded amounts on a regular basis to validate that current carrying amounts approximate exit prices. The short-term nature of the investments and corroboration of the reported amounts over the holding period support their classification in Level 2. Derivative assets and liabilities classified in Level 2 represent over-the-counter instruments such as foreign currency forward and swap contracts. Fair values for these instruments are determined using market observable inputs including forward currency and interest rate curves and widely published market observable indices. Credit risk related to the counterparty and the Company is considered when estimating the fair values of these derivatives. However, the Company is largely protected by collateral arrangements with counterparties and determined that no adjustments for credit risk were required as of June 30, 2020 or December 31, 2019. The nature and use of these derivative financial instruments are described in Note 11. 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. The Company classifies certain newly-issued, privately-placed, complex or illiquid securities in Level 3. Approximately 4% of debt and equity securities are priced using significant unobservable inputs and classified in this category. Fair values of mortgage and other asset-backed securities, as well as corporate and government debt securities, are primarily determined using pricing models that incorporate the specific characteristics of each asset and related assumptions including the investment type and structure, credit quality, industry and maturity date in comparison to current market indices, spreads and liquidity of assets with similar characteristics. Inputs and assumptions for pricing may also include characteristics of the issuer, collateral attributes and prepayment speeds for mortgage and other asset-backed securities. Recent trades in the subject security or similar securities are assessed when available, and the Company may also review published research in its evaluation, as well as the issuer’s financial statements. Quantitative Information about Unobservable Inputs The following table summarizes the fair value and significant unobservable inputs used in pricing the following debt securities that were developed directly by the Company as of June 30, 2020 and December 31, 2019. The range and weighted average basis point (“bps”) amounts for liquidity and credit spreads (adjustment to discount rates) reflect the Company’s best estimates of the unobservable adjustments a market participant would make to calculate these fair values. These inputs have increased over the reported periods, resulting from continued uncertainty over the economic impacts related to COVID-19. Corporate and government debt securities. The significant unobservable input used to value the following corporate and government debt 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. Mortgage and other asset-backed securities. The significant unobservable inputs used to value the following mortgage and other asset-backed securities are liquidity and weighting of credit spreads. An adjustment for liquidity is made as of the measurement date that considers current market conditions, issuer circumstances and complexity of the security structure when there is limited trading activity for the security. An adjustment to weight credit spreads is needed to value a more complex bond structure with multiple underlying collateral and no standard market valuation technique. The weighting of credit spreads is primarily based on the underlying collateral’s characteristics and their proportional cash flows supporting the bond obligations.
(1)The fair values for these securities use single, unadjusted non-binding broker quotes not developed directly by the Company. Significant increases in liquidity or credit spreads would result in lower fair value measurements while decreases in these inputs would result in higher fair value measurements. The unobservable inputs are generally not interrelated and a change in the assumption used for one unobservable input is not accompanied by a change in the other unobservable input. Changes in Level 3 Financial Assets and Financial Liabilities Carried at Fair Value The following tables summarize the changes in financial assets and financial liabilities classified in Level 3 for the three and six months ended June 30, 2020 and 2019. Gains and losses reported in these tables may include net changes in fair value that are attributable to both observable and unobservable inputs.
(1)Amounts do not accrue to shareholders. 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 income in the tables above are reflected in Net unrealized appreciation (depreciation) on securities 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. Transfers between Level 2 and Level 3 during 2020 and 2019 primarily reflected changes in liquidity and credit risk estimates for certain private placement issuers across several sectors. 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. Fair values of separate account assets at June 30, 2020 and December 31, 2019 were as follows:
(1)Non-guaranteed separate accounts included $3.9 billion as of June 30, 2020 and $4.0 billion as of December 31, 2019 in assets supporting the Company’s pension plans, including $0.3 billion classified in Level 3 as of June 30, 2020 and $0.2 billion classified in Level 3 as of December 31, 2019. Separate account assets classified as Level 1 primarily include exchange-listed equity securities. Level 2 assets primarily include: •corporate and structured bonds valued using recent trades of similar securities or pricing models that discount future cash flows at estimated market interest rates as described above; and •actively-traded institutional and retail mutual fund investments. Separate account assets classified in Level 3 primarily support Cigna’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, 2020 and 2019. 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 Cigna Pension Plans. The following table provides additional information on these investments.
As of June 30, 2020, 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 unredeemable, 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 each reporting period, but may be measured using fair value only under certain conditions such as when investments become impaired, including investment real estate and commercial mortgage loans and certain equity securities with no readily determinable fair value. Equity securities with no readily determinable fair value are also measured at fair value when there are observable price changes from orderly transactions with the same issuer. For the six months ended June 30, 2020, there were immaterial losses relating to price changes for equity securities with no readily determinable fair value and no impaired investments written down to their fair values. For the six months ended June 30, 2019, there were immaterial gains relating to price changes for equity securities with no readily determinable fair value and no impaired investments written down to their fair values . Carrying values represented less than 1% of total investments as of both June 30, 2020 and June 30, 2019. 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 that are subject to fair value disclosure requirements at June 30, 2020 and December 31, 2019. In addition to universal life products and finance leases, financial instruments that are carried in the Company’s Consolidated Financial Statements at amounts that approximate fair value are excluded from the following table.
Fair values of off-balance sheet financial instruments were not material as of June 30, 2020 and December 31, 2019.
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Variable Interest Entities [Abstract] | |
Variable Interest Entities | Variable Interest Entities When the Company becomes involved with a variable interest entity and when there is a change in the Company’s involvement with an entity, the Company must determine if it is the primary beneficiary and must consolidate the entity. The Company is considered the primary beneficiary if it has the power to direct the entity’s most significant economic activities and has the right to receive benefits or obligation to absorb losses that could be significant to the entity. The Company evaluates the following criteria: •the structure and purpose of the entity; •the risks and rewards created by, and shared through, the entity; and •the Company’s ability to direct its activities, receive its benefits and absorb its losses relative to the other parties involved with the entity including its sponsors, equity holders, guarantors, creditors and servicers. The Company determined it was not a primary beneficiary in any material variable interest entities as of June 30, 2020 or December 31, 2019. The Company’s involvement in variable interest entities for which it is not the primary beneficiary is described below. Securities limited partnerships and real estate limited partnerships. The Company owns interests in securities limited partnerships and real estate limited partnerships that are defined as variable interest entities. These partnerships invest in the equity or mezzanine debt of privately-held companies and real estate properties. General partners unaffiliated with the Company control decisions that most significantly impact the partnership’s operations and the limited partners do not have substantive kick-out or participating rights. The Company’s maximum exposure to loss from these entities of $3.8 billion across approximately 150 limited partnerships as of June 30, 2020, included $1.9 billion reported in Long-term investments and commitments to contribute an additional $1.9 billion. The Company’s noncontrolling interest in each of these limited partnerships is generally less than 15% of the partnership ownership interests. Other asset-backed and corporate securities. In the normal course of its investing activities, the Company also makes passive investments in certain asset-backed and corporate securities that are issued by variable interest entities whose sponsors or issuers are unaffiliated with the Company. The Company receives fixed-rate cash flows from these investments and the maximum potential exposure to loss is limited to our carrying amount of $0.7 billion as of June 30, 2020 that is reported in debt securities. The Company’s combined ownership interests are insignificant relative to the total principal amounts issued by these entities. The Company is involved with various other variable interest entities with immaterial carrying values and maximum exposures to loss. The Company has not provided, and does not intend to provide, financial support to any of the variable interest entities beyond what it is contractually required to provide. The Company performs ongoing qualitative analyses of its involvement with these variable interest entities to determine if consolidation is required.
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) (“AOCI”) AOCI includes unrealized appreciation on securities and derivatives (excluding appreciation on investments supporting future policy benefit liabilities of the run-off settlement annuity business) (See Note 11), 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 net income in the same period that the related pre-tax AOCI reclassifications are recognized. Changes in the components of AOCI were as follows:
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Organizational Efficiency Plan |
6 Months Ended |
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Jun. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Organizational Efficiency Plan | Organizational Efficiency Plan The Company is continuously evaluating ways to deliver our products and services more efficiently and at a lower cost. During the fourth quarter of 2019, we committed to a plan to increase our organizational alignment and operational efficiency and reduce costs. As a result, we recognized a charge in Selling, general and administrative expenses of $207 million pre-tax ($162 million after-tax) in the fourth quarter of 2019 and an additional $31 million pre-tax ($24 million after-tax) in the first quarter 2020, primarily for severance costs related to headcount reductions. As of June 30, 2020 we expect most of the severance to be paid by the end of 2021. |
Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases Operating and finance lease right of use ("ROU") assets and lease liabilities were as follows:
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Leases | Leases Operating and finance lease right of use ("ROU") assets and lease liabilities were as follows:
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Income Taxes |
6 Months Ended |
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Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income Tax Expense The 20.0% effective tax rate for the six months ended June 30, 2020 was lower than the 21.5% rate for the same period in 2019. This decrease is primarily attributable to incremental tax benefits including the remeasurement of deferred state income taxes and the settlement of uncertain tax positions. This decrease was partially offset by return of the nondeductible health insurer tax.
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Contingencies and Other Matters |
6 Months Ended |
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Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Other Matters | 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, 2020, employers maintained assets that exceeded the benefit obligations under these arrangements of approximately $455 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, 2020. 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, 2020 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, 2020. 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 effects for existing or new guaranty fund assessments for the six months ended June 30, 2020. 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 service 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. Further information on income tax matters can be found in Note 17. 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 immaterial. 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 Risk Corridors and CSR Litigation with the Federal Government. As a result of the Supreme Court decision in April 2020, the Company filed suit in early May against the United States in the U.S. Court of Federal Claims seeking to recover two types of payments the Federal Government owes Cigna under the risk corridors and cost-sharing reduction (“CSR”) programs of the ACA. In aggregate, the complaint seeks to recover more than $315 million: $120 million in risk corridors payments and more than $195 million in CSR payments. Cigna’s complaint is pending and we await the Federal Government’s response. Cigna Litigation with Anthem. In February 2017, the Company delivered a notice to Anthem terminating the 2015 merger agreement and notifying Anthem that it must pay the Company the $1.85 billion reverse termination fee pursuant to the terms of the merger agreement. Also in February 2017, the Company filed suit against Anthem in the Delaware Court of Chancery (the “Chancery Court”) seeking declaratory judgments that the Company’s termination of the merger agreement was valid and that Anthem was not permitted to extend the termination date. The complaint also sought payment of the reverse termination fee and additional damages in an amount exceeding $13 billion, including the lost premium value to the Company’s shareholders caused by Anthem’s willful breaches of the merger agreement. Anthem has countersued, alleging its own claims for damages. On February 15, 2017, the Chancery Court granted Anthem’s motion for a temporary restraining order and temporarily enjoined the Company from terminating the merger agreement. In May 2017, the Chancery Court denied Anthem’s motion for a preliminary injunction to enjoin Cigna from terminating the merger agreement but stayed its ruling pending Anthem’s determination as to whether to seek an appeal. Anthem subsequently notified Cigna and the Chancery Court that it did not intend to appeal the Chancery Court’s decision. As a result, the merger agreement was terminated. The litigation between the parties remains pending. A trial was held during the first quarter of 2019. Oral arguments on post-trial briefs were held on November 26, 2019. In February 2020, the Chancery Court requested additional post-trial briefing, which has been completed. In June 2020, the Company was notified by the Chancery Court that its decision had been delayed, due in part to COVID-19 complexities. We believe in the merits of our claims and dispute Anthem’s claims, and we intend to vigorously defend ourselves and pursue our claims. Express Scripts Litigation with Anthem. In March 2016, Anthem 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. Anthem also requested that the court enter declaratory judgment that Express Scripts is required to provide Anthem competitive benchmark pricing, that Anthem can terminate the agreement, and that Express Scripts is required to provide Anthem with post-termination services at competitive benchmark pricing for one year following any termination by Anthem. Anthem claims 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 Anthem and $150 million damages for service issues (“Anthem’s Allegations”). On April 19, 2016, in response to Anthem’s complaint, Express Scripts filed its answer denying Anthem’s Allegations in their entirety and asserting affirmative defenses and counterclaims against Anthem. The court subsequently granted Anthem’s motion to dismiss two of six counts of Express Scripts’ amended counterclaims. The current scheduling order runs through the completion of summary judgment briefing in March 2021. There is no tentative trial date. We believe in the merits of our claims and dispute Anthem’s claims, and we intend to vigorously defend ourselves and pursue our claims. Regulatory Matters Civil Investigative Demand. The U.S. Department of Justice (“DOJ”) is conducting an industry-wide investigation of Medicare Advantage organizations’ risk adjustment practices under Medicare Parts C and D including medical chart reviews and health exams. For certain other Medicare Advantage organizations, the investigation has resulted in litigation. The Company is currently responding to information requests (civil investigative demands) received from the DOJ (U.S. Attorney’s Offices for the Eastern District of Pennsylvania and the Southern District of New York). We will continue to cooperate with the DOJ’s investigation. Disability claims regulatory matter. The Company is subject to an agreement with the Departments of Insurance for Maine, Massachusetts, Pennsylvania, Connecticut and California (together, the “Lead States”), originally entered into in 2013, that relates to the Company’s long-term disability claims handling practices. The agreement provides for enhanced procedures related to documentation and disposition. Cigna has cooperated fully with the Lead States and we believe we have addressed the requirements of the agreement. The Lead States initiated a re-examination of our practices. In April 2020, the re-examination was closed with a determination that the Company is in material compliance and no adverse regulatory action was, or is expected to be, taken.
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information See Note 1 for a description of our segments. A description of our basis for reporting segment operating results is outlined below. Intersegment revenues primarily reflect pharmacy related transactions between the Health Services and Integrated Medical segments. The Company uses “pre-tax adjusted income from operations” and “adjusted revenues” as its principal financial measures of segment operating performance because management believes they best reflect the underlying results of business operations and permit analysis of trends in underlying revenue, expenses and profitability. Pre-tax adjusted income from operations is defined as income before taxes excluding realized investment results, amortization of acquired intangible assets, special items and, for periods prior to 2020, earnings contribution from transitioning clients Anthem Inc. and Coventry Health Care, Inc. (the “transitioning clients”). As of December 31, 2019, the transition of these clients was substantially complete; therefore, beginning in 2020, we no longer exclude results of transitioning clients from our adjusted revenues and adjusted income from operations. Income or expense amounts that are excluded from adjusted income from operations because they are not indicative of underlying performance or the responsibility of operating segment management include: •Realized investment gains (losses) including changes in market values of certain financial instruments between balance sheet dates, as well as gains and losses associated with invested asset sales. •Amortization of acquired intangible assets because these relate to costs incurred for acquisitions. •Results of transitioning clients, for periods prior to 2020, because those results were not indicative of ongoing results. •Special items, if any, that management believes are not representative of the underlying results of operations due to the nature or size of these matters. The Company does not report total assets by segment because this is not a metric used to allocate resources or evaluate segment performance. Adjusted revenues is defined as revenues excluding: 1) revenue contribution from transitioning clients for periods prior to 2020; 2) the Company’s share of certain realized investment results of its joint ventures reported in the International Markets segment using the equity method of accounting; and 3) special items, if any. The following tables present the special items recorded by the Company for the three and six months ended June 30, 2020 and 2019.
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The Consolidated Financial Statements include the accounts of Cigna Corporation 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”). 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 2019 Annual Report on Form 10-K (“2019 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, competitive and other market conditions, as well as COVID-19 related impacts, call for caution in estimating full-year results based on interim results of operations.
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Recent Accounting Pronouncements, Recently Adopted Accounting Guidance and Accounting Guidance Not Yet Adopted | Recent Accounting Pronouncements The Company's 2019 Form 10-K includes discussion of significant recent accounting pronouncements that either have impacted our financial statements or may impact them in the future. The following information provides updates on recently adopted or recently issued accounting pronouncements that have occurred since the Company filed its 2019 Form 10-K. Recently Adopted Accounting Guidance
Accounting Guidance Not Yet Adopted
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Allowance for Credit Losses | The Company's accounts receivable balances primarily include amounts due from clients, third-party payors, customers and pharmaceutical manufacturers, and are presented net of allowances. The Company's adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments (ASU 2016-13), as of January 1, 2020 did not have a material impact on our accounts receivable credit loss allowance, as there were no substantive changes to our methodology for this class of assets. The allowance for expected credit losses for current accounts receivable is based primarily on past collections experience relative to the length of time receivables are past due; however, when available evidence reasonably supports an assumption that counterparty credit risk over the expected payment period will differ from current and historical payment collections, a forecasting adjustment is reflected in the allowance for expected credit losses.All other (non-credit) allowances are based on the current status of each customer's receivable balance as well as current economic and market conditions and a variety of other factors, including the length of time the receivables are past due, the financial health of customers and our past experience. We bill pharmaceutical manufacturers based on management's interpretation of contractual terms and estimate a contractual allowance based on the best information available at the time a claim is processed. Contractual allowances for certain rebates receivable from pharmaceutical manufacturers are determined by reviewing payment experience and specific known items that could be adjusted under contract terms. The Company's estimation process for contractual allowances for pharmaceutical manufacturer receivables generally results in an allowance for balances outstanding greater than 90 days. Contractual allowances for certain receivables from third-party payors are based on their contractual terms and are estimates based on the Company's best information available at the time revenue is recognized. Receivables and any associated allowance are written off only when all collection attempts have failed and such amounts are determined unrecoverable. We regularly review the adequacy of these allowances based on a variety of factors, including age of the outstanding receivable and collection history. When circumstances related to specific collection patterns change, estimates of the recoverability of receivables are adjusted.
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Unpaid Claims and Claims Expenses | Unpaid Claims and Claim Expenses – Integrated MedicalThis 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance | 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.Accounting policy. Reinsurance recoverables represent amounts due from reinsurers for both paid and unpaid claims of the Company’s insurance businesses. Most reinsurance recoverables are classified as non-current assets. The current portion of reinsurance recoverables is reported in Other current assets and consists primarily of recoverables on paid claims expected to be settled within one year. Reinsurance recoverables are presented net of allowances for uncollectible reinsurance that, effective with adopting ASU 2016-13 on January 1, 2020, consists primarily of an allowance for expected credit losses. Estimates of the allowance for expected credit losses are based on internal and external data used to develop expected loss rates over the anticipated duration of the recoverable asset that vary by external credit rating and collateral level. 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. 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, as further described above.GMDB is accounted for as assumed and ceded reinsurance and GMIB assets and liabilities are reported as derivatives at fair value as discussed below. GMIB assets are reported in Other current assets and Other assets, and GMIB liabilities are reported in Accrued expenses and other liabilities and Other non-current liabilities. GMIB The Company reinsured contracts with issuers of GMIB products. The Company’s exposure represents the excess of a contractually guaranteed amount over the level of variable annuity account values. Payment by the Company depends on the actual account value in the related underlying mutual funds and the level of interest rates when the contractholders elect to receive minimum income payments that can only occur within 30 days of a policy anniversary after the appropriate waiting period. The Company has purchased retrocessional coverage (“GMIB assets”) for these contracts including retrocessional coverage from Berkshire. Assumptions used in fair value measurement. GMIB assets and liabilities are established using capital market assumptions and assumptions related to future annuitant behavior (including mortality, lapse, and annuity election rates). The Company classifies GMIB assets and liabilities in Level 3 of the fair value hierarchy described in Note 12 because assumptions related to future annuitant behavior are largely unobservable. The only assumption expected to impact future shareholders’ net income is non-performance risk. The non-performance 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 GMIB liabilities to be paid by the Company, and (b) the GMIB assets to be paid by the reinsurers, after considering collateral
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Contractholder Deposit Funds | The majority of the liability for unpaid claims and claim expenses is related to disability claims with long-tailed payouts that relate to a business held for sale. Interest earned on assets backing these liabilities is an integral part of pricing and reserving. Therefore, interest accreted on prior year balances is shown as a separate component of prior year incurred claims and reported in Medical costs and other benefit expenses in the income statement. This interest is calculated by applying the average discount rate used in determining the liability balance to the average liability balance over the period. The remaining prior year incurred claims amount primarily reflects updates to the Company’s liability estimates and variances between actual experience during the period relative to the assumptions and expectations reflected in determining the liability. Assumptions reflect the Company’s expectations over the life of the book of business and will vary from actual experience in any period, both favorably and unfavorably, with variation in resolution rates being the most significant driver for the long-term disability business. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Debt Securities Accounting policy. Debt securities (including bonds, mortgage and other asset-backed securities and preferred stocks redeemable by the investor) are classified as available for sale and are carried at fair value with changes in fair value recorded either in Accumulated other comprehensive income (loss) within Shareholders’ equity or in credit loss expense based on fluctuations in the allowance for credit losses, as further discussed below. Net unrealized appreciation on debt securities supporting the Company’s run-off settlement annuity business is reported in Non-current insurance and contractholder liabilities rather than Accumulated other comprehensive income (loss). When the Company intends to sell or determines that it is more likely than not to be required to sell an impaired debt security, the excess of amortized cost over fair value is directly written down with a charge to Realized investment gains and losses. As of January 1, 2020, the Company adopted ASU 2016-13 that included certain targeted improvements to the accounting for available-for-sale debt securities. The new guidance resulted in certain policy changes related to the process used by the Company to review declines in fair value from a security’s amortized cost basis to determine whether a credit loss exists. For example, the length of time that a debt security has been impaired is no longer a criterion for this review. In addition, under this new guidance, the Company recognizes an allowance for credit loss with a corresponding charge to credit loss expense, presented in Realized investment gains and losses in the Company’s income statement. Prior to this new guidance, the Company recorded a direct write-down of the instrument’s amortized cost basis. The allowance for credit loss represents the excess of amortized cost over the greater of its fair value or the net present value of the debt security's projected future cash flows (based on qualitative and quantitative factors, including the probability of default, and the estimated timing and amount of recovery). Each period, the allowance for credit loss is adjusted through credit loss expense. The Company elected the expedient to not measure an allowance for credit losses for accrued interest receivables. Consistent with prior practice, when interest payments are delinquent based on contractual terms or when certain terms (interest rate or maturity date) of the investment have been restructured, accrued interest, reported in Other current assets, is written off through a charge to Net investment income, and interest income is recognized on a cash basis. Debt securities are classified as either Current or Long-term investments based on their contractual maturities. 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. Equity Securities Equity securities with a readily determinable fair value consist primarily of mutual funds that invest in fixed income debt securities. Equity securities without a readily determinable fair value consist of private equity investments and are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes. Commercial Mortgage Loans Accounting policy. Commercial mortgage loans are carried at unpaid principal balances. Beginning January 1, 2020 with the adoption of ASU 2016-13, unpaid principal balances are presented net of an allowance for expected credit losses. Changes in the allowance for expected credit losses are recognized as credit loss expense and presented in Realized investment gains and losses in the Company’s income statement. Each period, the Company establishes (or adjusts) its allowance for expected credit losses for commercial mortgage loans. The allowance for expected credit losses is based on a credit risk category that is assigned to each loan at origination using key credit quality indicators, including debt service coverage and loan-to-value ratios. Credit risk categories are updated as key credit quality indicators change. An expected loss rate, assigned based on the credit risk category, is applied to each loan's unpaid principal balance to develop an aggregate allowance for expected credit losses. Prior to adoption, impaired commercial mortgage loans were written down to the lower of unpaid principal or fair value of the underlying collateral when it became probable that the Company would not collect all amounts due under its promissory note. The Company recorded an allowance of $7 million through a cumulative effect adjustment to retained earnings to reflect expected credit losses at adoption. The credit loss allowance for the Company’s commercial mortgage loan investments was $8 million as of June 30, 2020. Commercial mortgage loans are considered impaired and written off against the allowance when it is probable that the Company will not collect all amounts due per the terms of the promissory note. The Company elected the expedient to not measure an allowance for credit losses for accrued interest receivables. Consistent with our prior practice, accrued interest, reported in other current assets, is written off through a charge to net investment income; interest income on impaired loans is only recognized when a payment is received. In the event of a foreclosure, the allowance for credit losses is based on the excess of the carrying value of the mortgage loan over the fair value of its underlying collateral. 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. Commercial mortgage loans are classified as either current or long-term investments based on their contractual maturities. Credit quality. The Company regularly evaluates and monitors credit risk, beginning with the initial underwriting of a mortgage loan and continuing throughout the investment holding period. Mortgage origination professionals employ an internal credit quality rating system designed to evaluate the relative risk of the transaction at origination that is then updated each year as part of the annual portfolio loan review. The Company evaluates and monitors credit quality on a consistent and ongoing basis, classifying each loan as a loan in good standing, potential problem loan or problem loan. Quality ratings are based on our evaluation of a number of key inputs related to the loan, including real estate market-related factors such as rental rates and vacancies, and property-specific inputs such as growth rate assumptions and lease rollover statistics. However, the two most significant contributors to the credit quality rating are the debt service coverage and loan-to-value ratios. The debt service coverage ratio measures the amount of property cash flow available to meet annual interest and principal payments on debt, with a ratio below 1.0 indicating that there is not enough cash flow to cover the required loan payments. The loan-to-value ratio, commonly expressed as a percentage, compares the amount of the loan to the fair value of the underlying property collateralizing the loan. The Company’s annual in-depth review of its commercial mortgage loan investments is the primary mechanism for identifying emerging risks in the portfolio. The Company’s investment professionals completed the annual in-depth review in the second quarter of 2020 that included an analysis of each underlying property’s most recent annual financial statements, rent rolls, operating plans, budgets, a physical inspection of the property and other pertinent factors. Based on historical results, current leases, lease expirations and rental conditions in each market, the Company estimated the current year and future stabilized property income and fair value for each loan. The average loan to value increased slightly from last year and remains strong. The portfolio's average debt service coverage ratio decreased slightly as June 30, 2020 compared with December 31, 2019 but remains at a high level.The Company re-evaluates a loan’s credit quality between annual reviews if new property information is received or an event such as delinquency or a borrower’s request for restructure causes management to believe that the Company’s estimate of financial performance, fair value or the risk profile of the underlying property has been impacted.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. Realized Investment Gains and LossesAccounting policy. Realized investment gains and losses are based on specifically identified assets and results from sales, investment asset write-downs, change in the fair value of certain derivatives and equity securities, and changes in valuation reserves on commercial mortgage loans. Commencing January 1, 2020, realized gains and losses also include credit loss expense resulting from the impact of changes in the allowances for credit losses on debt securities and commercial mortgage loan investments under ASU 2016-13.Derivative Financial InstrumentsThe 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 contract holder 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. The Company has written and purchased GMIB reinsurance contracts in its run-off reinsurance business that are accounted for as freestanding derivatives as discussed in Note 10. Derivatives in the Company’s separate accounts are excluded from the following discussion because associated gains and losses generally accrue directly to separate account policyholders. Derivative instruments used by the Company typically include foreign currency swap contracts and foreign currency forward contracts. Foreign currency swap contracts periodically exchange cash flows between two currencies for principal and interest. Foreign currency forward contracts require the Company to purchase a foreign currency in exchange for the functional currency of its operating unit at a future date, generally within three months from the contracts’ trade dates.The Company manages the credit risk of these derivative instruments by diversifying its portfolio among approved dealers of high credit quality and through routine monitoring of credit risk exposures. Certain of the Company’s over-the-counter derivative instruments require either the Company or the counterparty to post collateral or demand immediate payment depending on the amount of the net liability position of the derivative instrument and predefined financial strength or credit rating thresholds.The Company’s derivative financial instruments are presented as follows: •Fair value hedges of the foreign exchange-related changes in fair values of certain foreign-denominated bonds: Swap fair values are reported in Long-term investments or Other non-current liabilities. Changes in fair values attributable to foreign exchange risk of the swap contracts and the hedged bonds are reported in Realized investment gains and losses. The portion of the swap contracts’ changes in fair value excluded from the assessment of hedge effectiveness is recorded in Other comprehensive income and recognized in Net investment income as swap coupon payments are accrued, offsetting the foreign-denominated coupons received on the designated bonds. Net cash flows are reported in Operating activities, while exchanges of notional principal amounts are reported in Investing activities. •Net investment hedges of certain foreign subsidiaries that conduct their business principally in currencies other than the U.S. dollar: The fair values of the foreign currency swap and forward contracts are reported in Other assets or Other liabilities. The changes in fair values of these instruments are reported in Other comprehensive income, specifically in translation of foreign currencies. The portion of the change in fair values relating to foreign exchange spot rates will be recognized in earnings upon deconsolidation of the hedged foreign subsidiaries. The remaining changes in fair value of these instruments are excluded from our effectiveness assessment and recognized in interest expense when coupon payments are accrued or ratably over the term of the instrument. The notional value of hedging instruments matches the hedged amount of subsidiary net assets. Cash flows relating to these contracts are reported in Investing activities. •Economic hedges for derivatives not designated as accounting hedges: Fair values of forward contracts are reported in current Investments or Accrued expenses and other liabilities. The changes in fair values are reported in Realized investment gains and losses. Cash flows relating to these contracts are reported in Investing activities.
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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). The Company estimates fair values using prices from third parties or internal pricing methods. Fair value estimates received from third-party pricing services are based on reported trade activity and quoted market prices when available, and other market information that a market participant would use to estimate fair value. The internal pricing methods are performed by the Company’s investment professionals and generally involve using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality as well as other qualitative factors. In instances where there is little or no market activity for the same or similar instruments, fair value is estimated using methods, models and assumptions that the Company believes a hypothetical market participant would use to determine a current transaction price. These valuation techniques involve some level of estimation and judgment that becomes significant with increasingly complex instruments or pricing models. The Company is responsible for determining fair value and for assigning the appropriate level within the fair value hierarchy based on the significance of unobservable inputs. The Company reviews methodologies, processes and controls of third-party pricing services and compares prices on a test basis to those obtained from other external pricing sources or internal estimates. The Company performs ongoing analyses of both prices received from third-party pricing services and those developed internally to determine that they represent appropriate estimates of fair value. The controls executed by the Company include evaluating changes in prices and monitoring for potentially stale valuations. The Company also performs sample testing of sales values to confirm the accuracy of prior fair value estimates. The minimal exceptions identified during these processes indicate that adjustments to prices are infrequent and do not significantly impact valuations. We conduct an annual on-site visit of the most significant pricing service to review their processes, methodologies and controls. This on-site review includes a walk-through of inputs for a sample of securities held across various asset types to validate the documented pricing process.Level 1 Financial Assets Inputs for instruments classified in Level 1 include unadjusted quoted prices for identical assets in active markets accessible at the measurement date. Active markets provide pricing data for trades occurring at least weekly and include exchanges and dealer markets. Assets in Level 1 include actively-traded U.S. government bonds and exchange-listed equity securities. A relatively small portion of the Company’s investment assets are classified in this category given the narrow definition of Level 1 and the Company’s investment asset strategy to maximize investment returns. Level 2 Financial Assets and Financial Liabilities Inputs for instruments classified in Level 2 include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active or other inputs that are market observable or can be corroborated by market data for the term of the instrument. Such other inputs include market interest rates and volatilities, spreads and yield curves. An instrument is classified in Level 2 if the Company determines that unobservable inputs are insignificant. Debt and equity securities. Approximately 95% of the Company’s investments in debt and equity securities are classified in Level 2 including most public and private corporate debt and hybrid equity securities, federal agency and municipal bonds, non-government mortgage-backed securities and preferred stocks. Third-party pricing services and internal methods often use recent trades of securities with similar features and characteristics because many debt securities do not trade daily. Pricing models are used to determine these prices when recent trades are not available. These models calculate fair values by discounting future cash flows at estimated market interest rates. Such market rates are derived by calculating the appropriate spreads over comparable U.S. Treasury securities based on the credit quality, industry and structure of the asset. Typical inputs and assumptions to pricing models include, but are not limited to, a combination of benchmark yields, reported trades, issuer spreads, liquidity, benchmark securities, bids, offers, reference data and industry and economic events. For mortgage-backed securities, inputs and assumptions may also include characteristics of the issuer, collateral attributes, prepayment speeds and credit rating. Nearly all of these instruments are valued using recent trades or pricing models. Less than 1% of the fair value of investments classified in Level 2 represents foreign bonds that are valued using a single, unadjusted market-observable input derived by averaging multiple broker-dealer quotes, consistent with local market practice. Short-term investments are carried at fair value that approximates cost. The Company compares market prices for these securities to recorded amounts on a regular basis to validate that current carrying amounts approximate exit prices. The short-term nature of the investments and corroboration of the reported amounts over the holding period support their classification in Level 2. Derivative assets and liabilities classified in Level 2 represent over-the-counter instruments such as foreign currency forward and swap contracts. Fair values for these instruments are determined using market observable inputs including forward currency and interest rate curves and widely published market observable indices. Credit risk related to the counterparty and the Company is considered when estimating the fair values of these derivatives. However, the Company is largely protected by collateral arrangements with counterparties and determined that no adjustments for credit risk were required as of June 30, 2020 or December 31, 2019. The nature and use of these derivative financial instruments are described in Note 11. 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. The Company classifies certain newly-issued, privately-placed, complex or illiquid securities in Level 3. Approximately 4% of debt and equity securities are priced using significant unobservable inputs and classified in this category. Fair values of mortgage and other asset-backed securities, as well as corporate and government debt securities, are primarily determined using pricing models that incorporate the specific characteristics of each asset and related assumptions including the investment type and structure, credit quality, industry and maturity date in comparison to current market indices, spreads and liquidity of assets with similar characteristics. Inputs and assumptions for pricing may also include characteristics of the issuer, collateral attributes and prepayment speeds for mortgage and other asset-backed securities. Recent trades in the subject security or similar securities are assessed when available, and the Company may also review published research in its evaluation, as well as the issuer’s financial statements.Corporate and government debt securities. The significant unobservable input used to value the following corporate and government debt 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. Mortgage and other asset-backed securities. The significant unobservable inputs used to value the following mortgage and other asset-backed securities are liquidity and weighting of credit spreads. An adjustment for liquidity is made as of the measurement date that considers current market conditions, issuer circumstances and complexity of the security structure when there is limited trading activity for the security. An adjustment to weight credit spreads is needed to value a more complex bond structure with multiple underlying collateral and no standard market valuation technique. The weighting of credit spreads is primarily based on the underlying collateral’s characteristics and their proportional cash flows supporting the bond obligations. Significant increases in liquidity or credit spreads would result in lower fair value measurements while decreases in these inputs would result in higher fair value measurements. The unobservable inputs are generally not interrelated and a change in the assumption used for one unobservable input is not accompanied by a change in the other unobservable input.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 income in the tables above are reflected in Net unrealized appreciation (depreciation) on securities 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.Separate account assets classified as Level 1 primarily include exchange-listed equity securities. Level 2 assets primarily include: •corporate and structured bonds valued using recent trades of similar securities or pricing models that discount future cash flows at estimated market interest rates as described above; and •actively-traded institutional and retail mutual fund investments. Separate account assets classified in Level 3 primarily support Cigna’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, 2020 and 2019. 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 Cigna Pension Plans.Some financial assets and liabilities are not carried at fair value each reporting period, but may be measured using fair value only under certain conditions such as when investments become impaired, including investment real estate and commercial mortgage loans and certain equity securities with no readily determinable fair value. Equity securities with no readily determinable fair value are also measured at fair value when there are observable price changes from orderly transactions with the same issuer.
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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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | When the Company becomes involved with a variable interest entity and when there is a change in the Company’s involvement with an entity, the Company must determine if it is the primary beneficiary and must consolidate the entity. The Company is considered the primary beneficiary if it has the power to direct the entity’s most significant economic activities and has the right to receive benefits or obligation to absorb losses that could be significant to the entity. The Company evaluates the following criteria: •the structure and purpose of the entity; •the risks and rewards created by, and shared through, the entity; and •the Company’s ability to direct its activities, receive its benefits and absorb its losses relative to the other parties involved with the entity including its sponsors, equity holders, guarantors, creditors and servicers.
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AOCI | AOCI includes unrealized appreciation on securities and derivatives (excluding appreciation on investments supporting future policy benefit liabilities of the run-off settlement annuity business) (See Note 11), 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 net income in the same period that the related pre-tax AOCI reclassifications are recognized. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitment and Contingencies | 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | A description of our basis for reporting segment operating results is outlined below. Intersegment revenues primarily reflect pharmacy related transactions between the Health Services and Integrated Medical segments. The Company uses “pre-tax adjusted income from operations” and “adjusted revenues” as its principal financial measures of segment operating performance because management believes they best reflect the underlying results of business operations and permit analysis of trends in underlying revenue, expenses and profitability. Pre-tax adjusted income from operations is defined as income before taxes excluding realized investment results, amortization of acquired intangible assets, special items and, for periods prior to 2020, earnings contribution from transitioning clients Anthem Inc. and Coventry Health Care, Inc. (the “transitioning clients”). As of December 31, 2019, the transition of these clients was substantially complete; therefore, beginning in 2020, we no longer exclude results of transitioning clients from our adjusted revenues and adjusted income from operations. Income or expense amounts that are excluded from adjusted income from operations because they are not indicative of underlying performance or the responsibility of operating segment management include: •Realized investment gains (losses) including changes in market values of certain financial instruments between balance sheet dates, as well as gains and losses associated with invested asset sales. •Amortization of acquired intangible assets because these relate to costs incurred for acquisitions. •Results of transitioning clients, for periods prior to 2020, because those results were not indicative of ongoing results. •Special items, if any, that management believes are not representative of the underlying results of operations due to the nature or size of these matters. The Company does not report total assets by segment because this is not a metric used to allocate resources or evaluate segment performance. Adjusted revenues is defined as revenues excluding: 1) revenue contribution from transitioning clients for periods prior to 2020; 2) the Company’s share of certain realized investment results of its joint ventures reported in the International Markets segment using the equity method of accounting; and 3) special items, if any.
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Summary of Significant Accounting Policies (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Requirements and Expected Effects of New Guidance Not Yet Adopted | Recently Adopted Accounting Guidance
Accounting Guidance Not Yet Adopted
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Accounts Receivable, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net | The following amounts were included within accounts receivable, net:
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Assets and Liabilities of Business Held for Sale (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Held for Sale | The assets and liabilities of business held for sale were as follows:
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Earnings Per Share | Basic and diluted earnings per share were computed as follows:
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Outstanding Employee Stock Options Not Included in the Computation of Diluted Earnings Per Share | The following outstanding employee stock options were not included in the computation of diluted earnings per share because their effect was anti-dilutive.
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Amounts of Debt and Finance Leases | The outstanding amounts of debt and finance leases were as follows:
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Summary of Debt Issuances |
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Insurance and Contractholder Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance Loss Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Insurance and Contractholder Liabilities, Activity in the Unpaid Claims Liability and Liability Details for Unpaid Claims and Claim Expenses | As of June 30, 2020, December 31, 2019 and June 30, 2019, the Company’s insurance and contractholder liabilities were comprised of the following:
(1) Amounts classified as Liabilities of business held for sale primarily include $5.1 billion of unpaid claims, $758 million of contractholder deposit funds and $644 million of future policy benefits as of June 30, 2020 and $4.9 billion of unpaid claims, $717 million of contractholder deposit funds and $653 million of future policy benefits as of December 31, 2019. Activity, net of intercompany transactions, in the unpaid claims liability for the Integrated Medical segment for the six months ended June 30 was as follows:
(1) Includes unpaid claim amounts classified as Liabilities of business held for sale. Activity in the Company’s liabilities for unpaid claims and claim expenses, excluding Other Operations, are presented in the following table. Liabilities associated with Other Operations are excluded because they pertain to obligations for long-duration insurance contracts or, if short-duration, the liabilities have been fully reinsured.
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Variances in Incurred Costs Related to Prior Years' Unpaid Claims and Claims Expenses | Variances in incurred costs related to prior years’ unpaid claims and claims expenses that resulted from the differences between actual experience and the Company’s key assumptions for the six months ended June 30 were as follows:
(1)Percentage of current year incurred costs as reported for the year ended December 31, 2019. (2)Percentage of current year incurred costs as reported for the year ended December 31, 2018.
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Reinsurance (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effects of Reinsurance [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance Recoverables by Range of External Credit Rating and Collateral Level | The Company’s reinsurance recoverables are presented in the following table by range of external credit rating and collateral level.
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Effects of Reinsurance | In the Company’s Consolidated Statements of Income, premiums were reported net of amounts ceded to reinsurers and medical costs and other benefit expenses were reported net of reinsurance recoveries in the following amounts:
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Account Value, Net Amount at Risk and the Number of Contractholders for Guarantees Assumed in the Event of Death | The following table presents the account value, net amount at risk and the number of contractholders for guarantees assumed by the Company in the event of death. The net amount at risk is the amount that the Company would have to pay if all contractholders died as of the specified date. The Company should be reimbursed in full for these payments unless the Berkshire reinsurance limit is exceeded.
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GMIB | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effects of Reinsurance [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Assets at Fair Value | There were three reinsurers covering 100% of the GMIB exposures as of June 30, 2020 and December 31, 2019 as follows:
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Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments by Category | The following table summarizes the Company's investments by category and current or long-term classification.
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Debt Securities by Contractual Maturity | The amortized cost and fair value by contractual maturity periods for debt securities were as follows at June 30, 2020:
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Gross Unrealized Appreciation (Depreciation) on Debt Securities | Gross unrealized appreciation (depreciation) on debt securities by type of issuer is shown below.
(1)Net unrealized appreciation for these investments is excluded from accumulated other comprehensive income.
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Summary of Debt Securities with a Decline in Fair Value | The table below summarizes debt securities with a decline in fair value from amortized cost by investment grade and the length of time these securities have been in an unrealized loss position. These debt securities are primarily corporate securities with a decline in fair value that reflects an increase in market yields since purchase. See discussion of Realized Investment Gains and Losses below for further information on the credit loss expense recorded for the Company's investments.
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Roll-Forward of the Allowance for Credit Losses on Debt Securities | The table below presents a roll-forward of the allowance for credit losses on debt securities for the six months ended June 30, 2020.
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Equity Security Investments | The following table provides the values of the Company's equity security investments as of June 30, 2020 and December 31, 2019.
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Summary of the Credit Risk Profile of the Commercial Mortgage Loan Portfolio | The following table summarizes the credit risk profile of the Company’s commercial mortgage loan portfolio based on loan-to-value and debt service coverage ratios as of June 30, 2020 and December 31, 2019:
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Carrying Value Information for Other Long-Term Investments | Other long-term investments also include investment real estate, foreign currency swaps, and statutory and other deposits. The following table provides carrying value information for these investments.
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Short-Term Investments and Cash Equivalents | Short-term investments and cash equivalents included the following types of issuers:
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Realized Gains and Losses on Investments | The following realized gains and losses on investments exclude amounts required to adjust future policy benefits for the run-off settlement annuity business (consistent with accounting for a premium deficiency), as well as realized gains and losses attributed to the Company’s separate accounts because those gains and losses generally accrue directly to separate account policyholders.
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Sales Information for Available-for-Sale Debt Securities | The following table presents sales information for available-for-sale debt securities. Gross gains on sales and gross losses on sales exclude amounts required to adjust future policy benefits for the run-off settlement annuity business.
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Summary of Derivative Instruments Held | The following table summarizes the types and notional quantity of derivative instruments held by the Company. As of June 30, 2020 and December 31, 2019, the effects of these individual hedging strategies were not material to the Consolidated Financial Statements, including gains or losses reclassified from accumulated other comprehensive income into shareholders' net income, as well as amounts excluded from the assessment of hedge effectiveness.
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Financial Liabilities Carried at Fair Value | The following table provides information as of June 30, 2020 and December 31, 2019 about the Company’s financial assets and liabilities carried at fair value. 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 policyholders.
(1)Excludes certain equity securities that have no readily determinable fair value. (2)As a practical expedient, certain real estate funds are carried at fair value based on the Company’s ownership share of the equity of the investee (Net Asset Value (“NAV“)) including changes in the fair value of its underlying investments. The Company has $55 million in unfunded commitments in these funds as of June 30, 2020
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Fair Value and Significant Unobservable Inputs Used in Pricing Debt Securities | The following table summarizes the fair value and significant unobservable inputs used in pricing the following debt securities that were developed directly by the Company as of June 30, 2020 and December 31, 2019. The range and weighted average basis point (“bps”) amounts for liquidity and credit spreads (adjustment to discount rates) reflect the Company’s best estimates of the unobservable adjustments a market participant would make to calculate these fair values. These inputs have increased over the reported periods, resulting from continued uncertainty over the economic impacts related to COVID-19. Corporate and government debt securities. The significant unobservable input used to value the following corporate and government debt 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. Mortgage and other asset-backed securities. The significant unobservable inputs used to value the following mortgage and other asset-backed securities are liquidity and weighting of credit spreads. An adjustment for liquidity is made as of the measurement date that considers current market conditions, issuer circumstances and complexity of the security structure when there is limited trading activity for the security. An adjustment to weight credit spreads is needed to value a more complex bond structure with multiple underlying collateral and no standard market valuation technique. The weighting of credit spreads is primarily based on the underlying collateral’s characteristics and their proportional cash flows supporting the bond obligations.
(1)The fair values for these securities use single, unadjusted non-binding broker quotes not developed directly by the Company.
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Changes in Level 3 Financial Assets and Financial Liabilities Carried at Fair Value | The following tables summarize the changes in financial assets and financial liabilities classified in Level 3 for the three and six months ended June 30, 2020 and 2019. Gains and losses reported in these tables may include net changes in fair value that are attributable to both observable and unobservable inputs.
(1)Amounts do not accrue to shareholders.
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Fair Values of Separate Account Assets | Fair values of separate account assets at June 30, 2020 and December 31, 2019 were as follows:
(1)Non-guaranteed separate accounts included $3.9 billion as of June 30, 2020 and $4.0 billion as of December 31, 2019 in assets supporting the Company’s pension plans, including $0.3 billion classified in Level 3 as of June 30, 2020 and $0.2 billion classified in Level 3 as of December 31, 2019.
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Additional Information on Separate Account Assets Priced at NAV | The following table provides additional information on these investments.
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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 that are subject to fair value disclosure requirements at June 30, 2020 and December 31, 2019. In addition to universal life products and finance leases, financial instruments that are carried in the Company’s Consolidated Financial Statements at amounts that approximate fair value are excluded from the following table.
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Accumulated Other Comprehensive Income (Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the Components of AOCI | Changes in the components of AOCI were as follows:
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Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating and Finance Lease Right of Use ("ROU") Assets and Lease Liabilities | Operating and finance lease right of use ("ROU") assets and lease liabilities were as follows:
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Special Items | The following tables present the special items recorded by the Company for the three and six months ended June 30, 2020 and 2019.
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Summarized Segment Financial Information | Summarized segment financial information for the three and six months ended June 30 was as follows:
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Revenue from External Customers | Revenue from external customers includes pharmacy revenues, premiums and fees and other revenues. The following table presents these revenues by product, premium and service type for the three and six months ended June 30:
|
COVID-19 and Related Economic Impact (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|---|
Apr. 30, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Jun. 30, 2020 |
Jan. 01, 2020 |
|
Unusual or Infrequent Item, or Both [Line Items] | |||||
Allowance for current expected credit losses on accounts receivable | $ 72 | $ 72 | $ 39 | ||
Deferred income and payroll tax payments as permitted by the CARES Act | 900 | ||||
Proceeds from provider relief fund, CARES Act | $ 41 | ||||
Return of proceeds to the provider relief fund, CARES Act | $ 41 | ||||
Forecast | |||||
Unusual or Infrequent Item, or Both [Line Items] | |||||
Deferred tax payments, CARES Act | $ 825 | ||||
COVID-19 | |||||
Unusual or Infrequent Item, or Both [Line Items] | |||||
Impairments of long-lived assets | |||||
Allowance for expected credit losses related to investments | 48 | 48 | |||
Allowance for current expected credit losses on accounts receivable | $ 13 | $ 13 |
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2020 |
Jan. 01, 2020 |
Jun. 30, 2019 |
Mar. 31, 2019 |
||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Stockholders' equity | $ 47,371 | $ 45,344 | $ 41,035 | $ 45,086 | $ 43,818 | $ 42,413 | ||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201602Member | |||||||
Retained Earnings | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Stockholders' equity | $ 23,052 | $ 20,162 | $ 15,088 | $ 21,298 | $ 17,834 | $ 16,426 | ||||
Adjustment upon Adoption | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Stockholders' equity | (30) | [1] | (15) | |||||||
Adjustment upon Adoption | Retained Earnings | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Stockholders' equity | $ (30) | [1] | $ (15) | $ (30) | ||||||
|
Accounts Receivable, Net - Summary of Accounts Receivable, Net (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Receivables [Abstract] | ||
Noninsurance customer receivables | $ 5,678 | $ 5,143 |
Pharmaceutical manufacturers receivable | 4,654 | 3,439 |
Insurance customer receivables | 2,607 | 2,321 |
Other receivables | 386 | 334 |
Total | 13,325 | 11,237 |
Accounts receivable, net classified as assets of business held for sale | (631) | (521) |
Accounts receivable, net per Consolidated Balance Sheets | $ 12,694 | $ 10,716 |
Accounts Receivable, Net - Narrative (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Jan. 01, 2020 |
Dec. 31, 2019 |
---|---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Allowance for receivables net current | $ 1,100 | $ 778 | |
Allowance for current expected credit losses on accounts receivable | 72 | $ 39 | |
Adjustment upon Adoption | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Allowance for current expected credit losses on accounts receivable | |||
COVID-19 | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Allowance for current expected credit losses on accounts receivable | $ 13 |
Mergers and Acquisitions (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Business Combinations [Abstract] | ||||
Integration and transaction-related costs, pre-tax | $ 130 | $ 155 | $ 227 | $ 291 |
Integration and transaction-related costs, after-tax | $ 99 | $ 115 | $ 173 | $ 223 |
Assets and Liabilities of Business Held for Sale - Narrative (Details) $ in Billions |
Dec. 31, 2019
USD ($)
|
---|---|
Group Disability and Life | Held-for-Sale | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Sale price | $ 6.3 |
Assets and Liabilities of Business Held for Sale - Assets and Liabilities Held for Sale (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Accounts receivable, net | $ 631 | $ 521 |
Investments | 8,200 | 7,700 |
Total assets of business held for sale | 9,788 | 9,512 |
Insurance and contractholder liabilities | 6,549 | 6,308 |
Total liabilities of business held for sale | 7,109 | 6,812 |
Group Disability and Life | Held-for-Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Cash and cash equivalents | 418 | 743 |
Accounts receivable, net | 631 | 521 |
Investments | 8,181 | 7,709 |
Other assets | 558 | 539 |
Total assets of business held for sale | 9,788 | 9,512 |
Insurance and contractholder liabilities | 6,549 | 6,308 |
Other liabilities | 560 | 504 |
Total liabilities of business held for sale | $ 7,109 | $ 6,812 |
Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Earnings Per Share [Abstract] | ||||
Shareholders’ net income | $ 1,754 | $ 1,408 | $ 2,935 | $ 2,776 |
Shares: | ||||
Weighted average (in shares) | 367,396 | 377,962 | 368,918 | 378,672 |
Common stock equivalents (in shares) | 3,301 | 3,007 | 3,750 | 3,824 |
Total shares (in shares) | 370,697 | 380,969 | 372,668 | 382,496 |
EPS, basic (in dollars per share) | $ 4.77 | $ 3.73 | $ 7.96 | $ 7.33 |
EPS, effect of dilution (in dollars per share) | (0.04) | (0.03) | (0.08) | (0.07) |
EPS, diluted (in dollars per share) | $ 4.73 | $ 3.70 | $ 7.88 | $ 7.26 |
Earnings Per Share - Outstanding Employee Stock Options Not Included in the Computation of Diluted Earnings Per Share (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Employee Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive options (in shares) | 4.0 | 5.4 | 4.0 | 4.1 |
Earnings Per Share - Narrative (Details) - shares shares in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
---|---|---|---|
Income Statement [Abstract] | |||
Shares of common stock held in treasury (in shares) | 20.8 | 13.0 | 6.2 |
Debt - Outstanding Amounts of Debt and Finance Leases (Details) - USD ($) |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Short-term debt | ||
Commercial paper | $ 5,000,000 | $ 944,000,000 |
Other, including finance leases | 22,000,000 | 27,000,000 |
Total short-term debt | 4,750,000,000 | 5,514,000,000 |
Long-term debt | ||
Other, including finance leases | 43,000,000 | 61,000,000 |
Total long-term debt | 31,774,000,000 | 31,893,000,000 |
$1,000 million, Floating Rate Notes due 3/2020 | ||
Short-term debt | ||
Current maturities | 0 | 999,000,000 |
Long-term debt | ||
Face value | 1,000,000,000 | |
$300 million, 5.125% Notes due 6/2020 | ||
Short-term debt | ||
Current maturities | 0 | 300,000,000 |
Long-term debt | ||
Face value | $ 300,000,000 | |
Stated interest rate | 5.125% | |
$1,750 million, 3.2% Notes due 9/2020 | ||
Short-term debt | ||
Current maturities | $ 1,750,000,000 | 1,748,000,000 |
Long-term debt | ||
Face value | $ 1,750,000,000 | |
Stated interest rate | 3.20% | |
$349 million, 4.125% Notes due 9/2020 | ||
Short-term debt | ||
Current maturities | $ 349,000,000 | 351,000,000 |
Long-term debt | ||
Face value | $ 349,000,000 | |
Stated interest rate | 4.125% | |
$500 million, 2.6% Notes due 11/2020 | ||
Short-term debt | ||
Current maturities | $ 498,000,000 | 496,000,000 |
Long-term debt | ||
Face value | $ 500,000,000 | |
Stated interest rate | 2.60% | |
$400 million, Floating Rate Notes due 11/2020 | ||
Short-term debt | ||
Current maturities | $ 400,000,000 | 400,000,000 |
Long-term debt | ||
Face value | 400,000,000 | |
$250 million, 4.375% Notes due 12/2020 | ||
Short-term debt | ||
Current maturities | 250,000,000 | 249,000,000 |
Long-term debt | ||
Face value | $ 250,000,000 | |
Stated interest rate | 4.375% | |
$1,400 million, Floating Rate Term Loan due 3/2021 | ||
Short-term debt | ||
Current maturities | $ 1,398,000,000 | 0 |
Long-term debt | ||
Face value | 1,400,000,000 | |
$78 million, 6.37% Notes due 6/2021 | ||
Short-term debt | ||
Current maturities | 78,000,000 | 0 |
Long-term debt | ||
Long-term debt | 0 | 78,000,000 |
Face value | $ 78,000,000 | |
Stated interest rate | 6.37% | |
$500 million, 3.3% Notes due 2021 | ||
Long-term debt | ||
Long-term debt | $ 0 | 499,000,000 |
Face value | $ 500,000,000 | |
Stated interest rate | 3.30% | |
$300 million, 4.5% Notes due 2021 | ||
Long-term debt | ||
Long-term debt | $ 0 | 298,000,000 |
Face value | $ 300,000,000 | |
Stated interest rate | 4.50% | |
$1,000 million, Floating Rate Notes due 2021 | ||
Long-term debt | ||
Long-term debt | $ 998,000,000 | 998,000,000 |
Face value | 1,000,000,000 | |
$1,250 million, 3.4% Notes due 2021 | ||
Long-term debt | ||
Long-term debt | 1,248,000,000 | 1,247,000,000 |
Face value | $ 1,250,000,000 | |
Stated interest rate | 3.40% | |
$1,248 million, 4.75% Notes due 2021 | ||
Long-term debt | ||
Long-term debt | $ 0 | 1,272,000,000 |
Face value | $ 1,248,000,000 | |
Stated interest rate | 4.75% | |
$277 million, 4% Notes due 2022 | ||
Long-term debt | ||
Long-term debt | $ 276,000,000 | 747,000,000 |
Face value | $ 277,000,000 | |
Stated interest rate | 4.00% | |
$973 million, 3.9% Notes due 2022 | ||
Long-term debt | ||
Long-term debt | $ 972,000,000 | 999,000,000 |
Face value | $ 973,000,000 | |
Stated interest rate | 3.90% | |
$500 million, 3.05% Notes due 2022 | ||
Long-term debt | ||
Long-term debt | $ 488,000,000 | 485,000,000 |
Face value | $ 500,000,000 | |
Stated interest rate | 3.05% | |
$17 million, 8.3% Notes due 2023 | ||
Long-term debt | ||
Long-term debt | $ 17,000,000 | 17,000,000 |
Face value | $ 17,000,000 | |
Stated interest rate | 8.30% | |
$63 million, 7.65% Notes due 2023 | ||
Long-term debt | ||
Long-term debt | $ 63,000,000 | 100,000,000 |
Face value | $ 63,000,000 | |
Stated interest rate | 7.65% | |
$700 million, Floating Rate Notes due 2023 | ||
Long-term debt | ||
Long-term debt | $ 698,000,000 | 698,000,000 |
Face value | 700,000,000 | |
$1,000 million, 3% Notes due 2023 | ||
Long-term debt | ||
Long-term debt | 971,000,000 | 966,000,000 |
Face value | $ 1,000,000,000 | |
Stated interest rate | 3.00% | |
$2,187 million, 3.75% Notes due 2023 | ||
Long-term debt | ||
Long-term debt | $ 2,180,000,000 | 3,088,000,000 |
Face value | $ 2,187,000,000 | |
Stated interest rate | 3.75% | |
$1,000 million, 3.5% Notes due 2024 | ||
Long-term debt | ||
Long-term debt | $ 974,000,000 | 970,000,000 |
Face value | $ 1,000,000,000 | |
Stated interest rate | 3.50% | |
$900 million, 3.25% Notes due 2025 | ||
Long-term debt | ||
Long-term debt | $ 895,000,000 | 895,000,000 |
Face value | $ 900,000,000 | |
Stated interest rate | 3.25% | |
$2,200 million, 4.125% Notes due 2025 | ||
Long-term debt | ||
Long-term debt | $ 2,189,000,000 | 2,188,000,000 |
Face value | $ 2,200,000,000 | |
Stated interest rate | 4.125% | |
$1,500 million, 4.5% Notes due 2026 | ||
Long-term debt | ||
Long-term debt | $ 1,505,000,000 | 1,506,000,000 |
Face value | $ 1,500,000,000 | |
Stated interest rate | 4.50% | |
$1,500 million, 3.4% Notes due 2027 | ||
Long-term debt | ||
Long-term debt | $ 1,404,000,000 | 1,396,000,000 |
Face value | $ 1,500,000,000 | |
Stated interest rate | 3.40% | |
$259 million, 7.875% Debentures due 2027 | ||
Long-term debt | ||
Long-term debt | $ 259,000,000 | 259,000,000 |
Face value | $ 259,000,000 | |
Stated interest rate | 7.875% | |
$600 million, 3.05% Notes due 2027 | ||
Long-term debt | ||
Long-term debt | $ 595,000,000 | 595,000,000 |
Face value | $ 600,000,000 | |
Stated interest rate | 3.05% | |
$3,800 million, 4.375% Notes due 2028 | ||
Long-term debt | ||
Long-term debt | $ 3,778,000,000 | 3,776,000,000 |
Face value | $ 3,800,000,000 | |
Stated interest rate | 4.375% | |
$1,500 million, 2.4% Notes due 2030 | ||
Long-term debt | ||
Long-term debt | $ 1,489,000,000 | 0 |
Face value | $ 1,500,000,000 | |
Stated interest rate | 2.40% | |
$45 million, 8.3% Step Down Notes due 2033 | ||
Long-term debt | ||
Long-term debt | $ 45,000,000 | 45,000,000 |
Face value | $ 45,000,000 | |
Stated interest rate | 8.30% | |
$190 million, 6.15% Notes due 2036 | ||
Long-term debt | ||
Long-term debt | $ 190,000,000 | 190,000,000 |
Face value | $ 190,000,000 | |
Stated interest rate | 6.15% | |
$2,200 million, 4.8% Notes due 2038 | ||
Long-term debt | ||
Long-term debt | $ 2,179,000,000 | 2,178,000,000 |
Face value | $ 2,200,000,000 | |
Stated interest rate | 4.80% | |
$750 million, 3.2% Notes due 2040 | ||
Long-term debt | ||
Long-term debt | $ 742,000,000 | 0 |
Face value | $ 750,000,000 | |
Stated interest rate | 3.20% | |
$121 million, 5.875% Notes due 2041 | ||
Long-term debt | ||
Long-term debt | $ 119,000,000 | 119,000,000 |
Face value | $ 121,000,000 | |
Stated interest rate | 5.875% | |
$448 million, 6.125% Notes due 2041 | ||
Long-term debt | ||
Long-term debt | $ 490,000,000 | 491,000,000 |
Face value | $ 448,000,000 | |
Stated interest rate | 6.125% | |
$317 million, 5.375% Notes due 2042 | ||
Long-term debt | ||
Long-term debt | $ 315,000,000 | 315,000,000 |
Face value | $ 317,000,000 | |
Stated interest rate | 5.375% | |
$1,500 million, 4.8% Notes due 2046 | ||
Long-term debt | ||
Long-term debt | $ 1,464,000,000 | 1,465,000,000 |
Face value | $ 1,500,000,000 | |
Stated interest rate | 4.80% | |
$1,000 million, 3.875% Notes due 2047 | ||
Long-term debt | ||
Long-term debt | $ 988,000,000 | 988,000,000 |
Face value | $ 1,000,000,000 | |
Stated interest rate | 3.875% | |
$3,000 million, 4.9% Notes due 2048 | ||
Long-term debt | ||
Long-term debt | $ 2,965,000,000 | 2,964,000,000 |
Face value | $ 3,000,000,000 | |
Stated interest rate | 4.90% | |
$1,250 million, 3.4% Notes due 2050 | ||
Long-term debt | ||
Long-term debt | $ 1,235,000,000 | $ 0 |
Face value | $ 1,250,000,000 | |
Stated interest rate | 3.40% |
Debt - Narrative (Details) |
2 Months Ended | 3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Apr. 01, 2020
USD ($)
|
Apr. 30, 2020
USD ($)
|
Jun. 30, 2020
USD ($)
bank
|
Dec. 31, 2019
USD ($)
bank
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2020
USD ($)
bank
|
Jun. 30, 2019
USD ($)
|
Mar. 16, 2020
USD ($)
|
|
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount of outstanding debt securities under tender offer and optional redemption | $ 3,500,000,000 | |||||||
Aggregate principal amount of outstanding debt securities repurchased under tender offer | 1,500,000,000 | |||||||
Aggregate principal amount of outstanding debt securities repurchased under optional redemption | 2,000,000,000.0 | |||||||
Loss on repurchase of debt, pre-tax | 199,000,000 | $ 14,000,000 | $ 0 | $ 199,000,000 | $ 0 | |||
Loss on repurchase of debt, after-tax | $ 151,000,000 | |||||||
Notes issued by Express Scripts, Medco and Old Cigna exchanged for Notes issued by Cigna | $ 12,700,000,000 | |||||||
Repayment of long-term debt | 4,798,000,000 | $ 2,740,000,000 | ||||||
Payments for debt tender and redemption | 3,500,000,000 | |||||||
Commercial paper | $ 5,000,000 | $ 944,000,000 | $ 5,000,000 | |||||
Commercial Paper | ||||||||
Debt Instrument [Line Items] | ||||||||
Weighted-average interest rate | 1.00% | 1.00% | ||||||
Revolving Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Number of participating banks | bank | 23 | 23 | ||||||
Maximum borrowing capacity | $ 3,250,000,000 | $ 3,250,000,000 | ||||||
Amount by which credit facilty amount can be increased | $ 500,000,000 | $ 500,000,000 | ||||||
Amount by which credit facilty term length can be increased | 1 year | |||||||
Leverage ratio covenant | 60.00% | 60.00% | ||||||
Outstanding balances | $ 0 | $ 0 | ||||||
Revolving Credit Agreement | Letter of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing capacity | $ 500,000,000 | $ 500,000,000 | ||||||
364-day Revolving Credit Agreement | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Number of participating banks | bank | 23 | |||||||
Maximum borrowing capacity | $ 1,000,000,000.0 | |||||||
Credit agreement term | 364 days | |||||||
Leverage ratio covenant | 60.00% | 60.00% | ||||||
Outstanding balances | $ 0 | $ 0 | ||||||
364-Day Term Loan | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount | $ 1,400,000,000 | |||||||
Credit agreement term | 364 days | |||||||
Prepayment rate | 20.00% | |||||||
Senior Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount | $ 3,500,000,000 |
Debt - Summary of Debt Issuances (Details) - Senior Notes |
Mar. 16, 2020
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Principal | $ 3,500,000,000 |
$1,500 Million, 2.40% Debt due March 15, 2030 | |
Debt Instrument [Line Items] | |
Principal | $ 1,500,000,000 |
Interest rate | 2.40% |
Net proceeds | $ 1,491,000,000 |
$750 Million, 3.20% Debt due March 15, 2040 | |
Debt Instrument [Line Items] | |
Principal | $ 750,000,000 |
Interest rate | 3.20% |
Net proceeds | $ 743,000,000 |
$1,250 Million, 3.40% Debt due March 15, 2050 | |
Debt Instrument [Line Items] | |
Principal | $ 1,250,000,000 |
Interest rate | 3.40% |
Net proceeds | $ 1,237,000,000 |
Insurance and Contractholder Liabilities - Summary of Insurance and Contractholder Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|
Current | ||||
Contractholder deposit funds | $ 627 | $ 600 | ||
Future policy benefits | 528 | 553 | ||
Unearned premiums, current | 561 | 453 | ||
Total | 7,209 | 7,010 | ||
Insurance and contractholder liabilities classified as held for sale | (2,149) | (2,089) | ||
Total insurance and contractholder liabilities | 5,060 | 4,921 | ||
Non-current | ||||
Contractholder deposit funds | 7,062 | 7,139 | ||
Future policy benefits | 9,417 | 9,281 | ||
Unearned premiums | 369 | 360 | ||
Total | 20,464 | 20,271 | ||
Insurance and contractholder liabilities classified as held for sale | (4,400) | (4,219) | ||
Total insurance and contractholder liabilities | 16,064 | 16,052 | ||
Total | ||||
Contractholder deposit funds | 7,689 | 7,739 | ||
Future policy benefits | 9,945 | 9,834 | ||
Unearned premiums | 930 | 813 | ||
Total | 27,673 | 27,281 | ||
Insurance and contractholder liabilities classified as held for sale | (6,549) | (6,308) | ||
Contractholder deposit funds | $ 7,883 | |||
Future policy benefits | 9,715 | |||
Unearned premiums | 776 | |||
Total insurance and contractholder liabilities | 21,124 | 20,973 | 27,048 | |
Unpaid claims classified as liabilities of business held for sale | 5,100 | 4,900 | ||
Contractholder deposit funds classified as liabilities of business held for sale | 758 | 717 | ||
Future policy benefits classified as liabilities of business held for sale | 644 | 653 | ||
Integrated Medical | ||||
Current | ||||
Unpaid claims and claim expenses | 2,942 | 2,875 | ||
Non-current | ||||
Unpaid claims and claim expenses | 17 | 17 | ||
Total | ||||
Unpaid claims and claim expenses | 2,959 | 2,892 | ||
Unpaid claims and claim expenses | 2,959 | 2,892 | 2,881 | $ 2,697 |
Other segments | ||||
Current | ||||
Unpaid claims and claim expenses | 2,551 | 2,529 | ||
Non-current | ||||
Unpaid claims and claim expenses | 3,599 | 3,474 | ||
Total | ||||
Unpaid claims and claim expenses | $ 6,150 | $ 6,003 | ||
Unpaid claims and claim expenses | $ 5,793 |
Insurance and Contractholder Liabilities - Narrative (Details) - Integrated Medical - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Insurance and Contractholder Liabilities [Line Items] | ||
Total of incurred but not reported liabilities plus expected claim development on reported claims, including reported claims in process | $ 2,700 | $ 2,700 |
Favorable (unfavorable) impact of prior year development on shareholders' net income | 44 | 62 |
Favorable (unfavorable) impact of prior year development on pre-tax income | $ 56 | $ 78 |
Insurance and Contractholder Liabilities - Integrated Medical - Activity (Details) - Integrated Medical - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Beginning balance | $ 2,892 | $ 2,697 |
Less: Reinsurance and other amounts recoverable | 303 | 264 |
Beginning balance, net | 2,589 | 2,433 |
Incurred costs related to: | ||
Current year | 12,212 | 12,120 |
Prior years | (130) | (149) |
Total incurred | 12,082 | 11,971 |
Paid costs related to: | ||
Current year | 9,585 | 9,629 |
Prior years | 2,284 | 2,134 |
Total paid | 11,869 | 11,763 |
Ending balance, net | 2,802 | 2,641 |
Add: Reinsurance and other amounts recoverable | 157 | 240 |
Ending balance | $ 2,959 | $ 2,881 |
Insurance and Contractholder Liabilities - Variances in Incurred Costs Related to Prior Years' Unpaid Claims and Claims Expenses (Details) - Integrated Medical - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Abstract] | ||
Favorable (unfavorable) variance, amount | $ 130 | $ 149 |
Favorable (unfavorable) variance, percentage | 0.50% | 0.70% |
Actual completion factors | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Abstract] | ||
Favorable (unfavorable) variance, amount | $ 50 | $ 91 |
Favorable (unfavorable) variance, percentage | 0.20% | 0.40% |
Medical cost trend | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Abstract] | ||
Favorable (unfavorable) variance, amount | $ 80 | $ 58 |
Favorable (unfavorable) variance, percentage | 0.30% | 0.30% |
Insurance and Contractholder Liabilities - Liability Details for Unpaid Claims and Claim Expenses (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Jun. 30, 2019 |
---|---|---|
Group Disability and Other and International Markets | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Unpaid claims and claim expenses | $ 6,150 | |
Unpaid claims and claim expenses | $ 5,793 | |
Group Disability and Other | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Unpaid claims and claim expenses | 5,325 | |
Unpaid claims and claim expenses | 5,022 | |
Group Disability and Life | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Unpaid claims and claim expenses | 5,165 | |
Unpaid claims and claim expenses | 4,827 | |
Other Operations | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Unpaid claims and claim expenses | 160 | |
Unpaid claims and claim expenses | 195 | |
International Markets | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Unpaid claims and claim expenses | $ 825 | |
Unpaid claims and claim expenses | $ 771 |
Insurance and Contractholder Liabilities - Activity in Liabilities for Unpaid Claims and Claim Expenses (Details) - Intenational Markets and Group Disability and Life - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Beginning balance | $ 5,816 | |
Beginning balance | $ 5,432 | |
Less: Reinsurance and other amounts recoverable | 184 | |
Less: Reinsurance and other amounts recoverable | 156 | |
Beginning balance, net | 5,632 | |
Beginning balance, net | 5,276 | |
Incurred costs related to: | ||
Current year | 2,829 | 2,814 |
Prior years: | ||
Interest accretion | 81 | 81 |
All other prior years | (8) | (42) |
Total incurred | 2,902 | 2,853 |
Paid costs related to: | ||
Current year | 1,357 | 1,415 |
Prior years | 1,353 | 1,275 |
Total paid | 2,710 | 2,690 |
Foreign currency | (14) | (16) |
Ending balance, net | 5,810 | |
Ending balance, net | 5,423 | |
Add: Reinsurance and other amounts recoverable | 180 | |
Add: Reinsurance and other amounts recoverable | 175 | |
Ending balance | $ 5,990 | |
Ending balance | $ 5,598 |
Reinsurance - Narrative (Details) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2020
USD ($)
reinsurer
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2020
USD ($)
reinsurer
|
Jun. 30, 2019
USD ($)
|
Jan. 01, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
reinsurer
|
|
Effects of Reinsurance [Line Items] | ||||||
Allowance for credit losses on reinsurance recoverables | $ 34 | $ 34 | ||||
GMIB | ||||||
Effects of Reinsurance [Line Items] | ||||||
Percent of future claim payments reinsured | 100.00% | 100.00% | 100.00% | |||
Annuitization election period | 30 days | |||||
Impact of non-performance risk | ||||||
GMIB liabilities | $ 838 | $ 838 | $ 688 | |||
Number of external reinsurers | reinsurer | 3 | 3 | 3 | |||
Amounts included in shareholders net income for GMIB assets | ||||||
Amounts included in shareholders net income for GMIB liabilities | ||||||
Variable Annuity | Berkshire | ||||||
Effects of Reinsurance [Line Items] | ||||||
Percent of future claim payments reinsured | 100.00% | 100.00% | ||||
Remaining overall limit under reinsurance agreement | $ 3,300 | $ 3,300 | ||||
Other Current Assets | ||||||
Effects of Reinsurance [Line Items] | ||||||
Reinsurance recoverables | $ 224 | $ 224 | $ 222 | |||
Adjustment upon Adoption | ||||||
Effects of Reinsurance [Line Items] | ||||||
Allowance for credit losses on reinsurance recoverables | $ 31 |
Reinsurance - Reinsurance Recoverables by Range of External Credit Rating and Collateral Level (Details) $ in Millions |
Jun. 30, 2020
USD ($)
|
---|---|
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | $ 5,373 |
Allowance for uncollectible reinsurance | (34) |
Reinsurance recoverables classified as assets of business held for sale | (173) |
Total reinsurance recoverables | 5,166 |
Fair value of collateral contractually required to meet or exceed carrying value of recoverable | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 1,319 |
Collateral provisions exist that may mitigate risk of credit loss | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 3,638 |
No collateral | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 416 |
Ongoing Operations | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 503 |
Ongoing Operations | Upper-medium grade and higher | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 317 |
Ongoing Operations | Lower-medium grade | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 66 |
Ongoing Operations | Not rated | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 120 |
Ongoing Operations | Fair value of collateral contractually required to meet or exceed carrying value of recoverable | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 89 |
Ongoing Operations | Fair value of collateral contractually required to meet or exceed carrying value of recoverable | Upper-medium grade and higher | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 0 |
Ongoing Operations | Fair value of collateral contractually required to meet or exceed carrying value of recoverable | Lower-medium grade | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 0 |
Ongoing Operations | Fair value of collateral contractually required to meet or exceed carrying value of recoverable | Not rated | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 89 |
Ongoing Operations | Collateral provisions exist that may mitigate risk of credit loss | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 20 |
Ongoing Operations | Collateral provisions exist that may mitigate risk of credit loss | Upper-medium grade and higher | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 6 |
Ongoing Operations | Collateral provisions exist that may mitigate risk of credit loss | Lower-medium grade | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 0 |
Ongoing Operations | Collateral provisions exist that may mitigate risk of credit loss | Not rated | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 14 |
Ongoing Operations | No collateral | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 394 |
Ongoing Operations | No collateral | Upper-medium grade and higher | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 311 |
Ongoing Operations | No collateral | Lower-medium grade | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 66 |
Ongoing Operations | No collateral | Not rated | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 17 |
Acquisition, disposition or runoff activities | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 4,870 |
Acquisition, disposition or runoff activities | Upper-medium grade and higher | Lincoln National Life and Lincoln Life & Annuity of New York | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 3,064 |
Acquisition, disposition or runoff activities | Upper-medium grade and higher | Berkshire | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 822 |
Acquisition, disposition or runoff activities | Upper-medium grade and higher | Prudential Retirement Insurance and Annuity | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 660 |
Acquisition, disposition or runoff activities | Upper-medium grade and higher | Other | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 281 |
Acquisition, disposition or runoff activities | Not rated | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 43 |
Acquisition, disposition or runoff activities | Fair value of collateral contractually required to meet or exceed carrying value of recoverable | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 1,230 |
Acquisition, disposition or runoff activities | Fair value of collateral contractually required to meet or exceed carrying value of recoverable | Upper-medium grade and higher | Lincoln National Life and Lincoln Life & Annuity of New York | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 0 |
Acquisition, disposition or runoff activities | Fair value of collateral contractually required to meet or exceed carrying value of recoverable | Upper-medium grade and higher | Berkshire | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 329 |
Acquisition, disposition or runoff activities | Fair value of collateral contractually required to meet or exceed carrying value of recoverable | Upper-medium grade and higher | Prudential Retirement Insurance and Annuity | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 660 |
Acquisition, disposition or runoff activities | Fair value of collateral contractually required to meet or exceed carrying value of recoverable | Upper-medium grade and higher | Other | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 241 |
Acquisition, disposition or runoff activities | Fair value of collateral contractually required to meet or exceed carrying value of recoverable | Not rated | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 0 |
Acquisition, disposition or runoff activities | Collateral provisions exist that may mitigate risk of credit loss | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 3,618 |
Acquisition, disposition or runoff activities | Collateral provisions exist that may mitigate risk of credit loss | Upper-medium grade and higher | Lincoln National Life and Lincoln Life & Annuity of New York | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 3,064 |
Acquisition, disposition or runoff activities | Collateral provisions exist that may mitigate risk of credit loss | Upper-medium grade and higher | Berkshire | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 493 |
Acquisition, disposition or runoff activities | Collateral provisions exist that may mitigate risk of credit loss | Upper-medium grade and higher | Prudential Retirement Insurance and Annuity | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 0 |
Acquisition, disposition or runoff activities | Collateral provisions exist that may mitigate risk of credit loss | Upper-medium grade and higher | Other | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 21 |
Acquisition, disposition or runoff activities | Collateral provisions exist that may mitigate risk of credit loss | Not rated | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 40 |
Acquisition, disposition or runoff activities | No collateral | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 22 |
Acquisition, disposition or runoff activities | No collateral | Upper-medium grade and higher | Lincoln National Life and Lincoln Life & Annuity of New York | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 0 |
Acquisition, disposition or runoff activities | No collateral | Upper-medium grade and higher | Berkshire | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 0 |
Acquisition, disposition or runoff activities | No collateral | Upper-medium grade and higher | Prudential Retirement Insurance and Annuity | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 0 |
Acquisition, disposition or runoff activities | No collateral | Upper-medium grade and higher | Other | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | 19 |
Acquisition, disposition or runoff activities | No collateral | Not rated | |
Ceded Credit Risk [Line Items] | |
Reinsurance recoverables | $ 3 |
Reinsurance - Effects of Reinsurance (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Reinsurance Disclosures [Abstract] | ||||
Total ceded premiums | $ 117 | $ 126 | $ 245 | $ 256 |
Total reinsurance recoveries | $ 102 | $ 53 | $ 280 | $ 112 |
Reinsurance - Account Value, Net Amount at Risk and Contractholders for GMDB Business (Details) - Variable Annuity - GMDB contractholder in Thousands, $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2020
USD ($)
contractholder
|
Dec. 31, 2019
USD ($)
contractholder
|
|
Net Amount at Risk by Product and Guarantee [Line Items] | ||
Account value | $ 8,424 | $ 9,110 |
Net amount at risk | $ 1,776 | $ 1,764 |
Number of contractholders (estimated) | contractholder | 190 | 200 |
Reinsurance - GMIB Reinsurers (Details) - GMIB - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Ceded Credit Risk [Line Items] | ||
GMIB recoverables | $ 871 | $ 713 |
Berkshire | ||
Ceded Credit Risk [Line Items] | ||
GMIB recoverables | $ 404 | 332 |
Berkshire | Secured | GMIB Assets | ||
Ceded Credit Risk [Line Items] | ||
Concentration percentage | 100.00% | |
Sun Life Assurance Company of Canada | ||
Ceded Credit Risk [Line Items] | ||
GMIB recoverables | $ 249 | 202 |
Liberty Re (Bermuda) Ltd. | ||
Ceded Credit Risk [Line Items] | ||
GMIB recoverables | $ 218 | $ 179 |
Liberty Re (Bermuda) Ltd. | Secured | GMIB Assets | ||
Ceded Credit Risk [Line Items] | ||
Concentration percentage | 96.00% |
Investments - Investments by Category (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Current | ||
Investments including assets held for sale | $ 1,502 | $ 1,351 |
Investments classified as assets held for sale | (312) | (414) |
Investments per Consolidated Balance Sheets | 1,190 | 937 |
Long-term | ||
Investments including assets held for sale | 29,207 | 28,837 |
Investments classified as assets held for sale | (7,869) | (7,295) |
Investments per Consolidated Balance Sheets | 21,338 | 21,542 |
Total | ||
Investments including assets held for sale | 30,709 | 30,188 |
Investments classified as assets held for sale | (8,181) | (7,709) |
Investments per Consolidated Balance Sheets | 22,528 | 22,479 |
Investments | 8,200 | 7,700 |
Debt securities | ||
Current | ||
Investments including assets held for sale | 1,046 | 928 |
Long-term | ||
Investments including assets held for sale | 22,628 | 22,827 |
Total | ||
Investments including assets held for sale | 23,674 | 23,755 |
Equity securities | ||
Current | ||
Investments including assets held for sale | 0 | 0 |
Long-term | ||
Investments including assets held for sale | 373 | 303 |
Total | ||
Investments including assets held for sale | 373 | 303 |
Commercial mortgage loans | ||
Current | ||
Investments including assets held for sale | 0 | 0 |
Long-term | ||
Investments including assets held for sale | 1,942 | 1,947 |
Total | ||
Investments including assets held for sale | 1,942 | 1,947 |
Policy loans | ||
Current | ||
Investments including assets held for sale | 0 | 0 |
Long-term | ||
Investments including assets held for sale | 1,364 | 1,357 |
Total | ||
Investments including assets held for sale | 1,364 | 1,357 |
Other long-term investments | ||
Current | ||
Investments including assets held for sale | 0 | 0 |
Long-term | ||
Investments including assets held for sale | 2,900 | 2,403 |
Total | ||
Investments including assets held for sale | 2,900 | 2,403 |
Short-term investments | ||
Current | ||
Investments including assets held for sale | 456 | 423 |
Long-term | ||
Investments including assets held for sale | 0 | 0 |
Total | ||
Investments including assets held for sale | $ 456 | $ 423 |
Investments - Debt Securities by Contractual Maturity Periods (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Amortized Cost | ||
Due in one year or less | $ 1,049 | |
Due after one year through five years | 7,298 | |
Due after five years through ten years | 8,751 | |
Due after ten years | 4,053 | |
Mortgage and other asset-backed securities | 475 | |
Amortized Cost | 21,626 | $ 21,909 |
Fair Value | ||
Due in one year or less | 1,059 | |
Due after one year through five years | 7,593 | |
Due after five years through ten years | 9,582 | |
Due after ten years | 4,969 | |
Mortgage and other asset-backed securities | 471 | |
Fair Value | $ 23,674 |
Investments - Gross Unrealized Appreciation (Depreciation) on Debt Securities (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 21,626 | $ 21,909 |
Allowance for Credit Loss | (48) | 0 |
Unrealized Appreciation | 2,291 | 1,876 |
Unrealized Depreciation | (195) | (30) |
Fair Value | 23,674 | 23,755 |
Run-Off Settlement Annuity Business | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 2,209 | 2,229 |
Allowance for Credit Loss | (11) | 0 |
Unrealized Appreciation | 803 | 740 |
Unrealized Depreciation | (25) | (4) |
Fair Value | 2,976 | 2,965 |
Federal government and agency | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 415 | 498 |
Allowance for Credit Loss | 0 | 0 |
Unrealized Appreciation | 222 | 235 |
Unrealized Depreciation | 0 | 0 |
Fair Value | 637 | 733 |
State and local government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 654 | 729 |
Allowance for Credit Loss | 0 | 0 |
Unrealized Appreciation | 85 | 81 |
Unrealized Depreciation | (2) | 0 |
Fair Value | 737 | 810 |
Foreign government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 2,002 | 2,027 |
Allowance for Credit Loss | 0 | 0 |
Unrealized Appreciation | 293 | 230 |
Unrealized Depreciation | (9) | (1) |
Fair Value | 2,286 | 2,256 |
Corporate | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 18,080 | 18,149 |
Allowance for Credit Loss | (39) | 0 |
Unrealized Appreciation | 1,663 | 1,299 |
Unrealized Depreciation | (161) | (28) |
Fair Value | 19,543 | 19,420 |
Mortgage and other asset-backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 475 | 506 |
Allowance for Credit Loss | (9) | 0 |
Unrealized Appreciation | 28 | 31 |
Unrealized Depreciation | (23) | (1) |
Fair Value | $ 471 | $ 536 |
Investments - Summary of Debt Securities with a Decline in Fair Value (Details) $ in Millions |
Jun. 30, 2020
USD ($)
position
|
Dec. 31, 2019
USD ($)
position
|
---|---|---|
More than one year | ||
Total Fair Value | $ 2,581 | $ 1,513 |
Total Amortized Cost | 2,776 | 1,543 |
Total Unrealized Depreciation | $ (195) | $ (30) |
Total Number of Issues | position | 1,169 | 833 |
Investment grade | ||
One year or less | ||
Fair Value | $ 1,337 | $ 723 |
Amortized Cost | 1,412 | 729 |
Unrealized Depreciation | $ (75) | $ (6) |
Number of Issues | position | 280 | 267 |
More than one year | ||
Fair Value | $ 201 | $ 366 |
Amortized Cost | 221 | 378 |
Unrealized Depreciation | $ (20) | $ (12) |
Number of Issues | position | 23 | 118 |
Below investment grade | ||
One year or less | ||
Fair Value | $ 968 | $ 340 |
Amortized Cost | 1,055 | 348 |
Unrealized Depreciation | $ (87) | $ (8) |
Number of Issues | position | 831 | 355 |
More than one year | ||
Fair Value | $ 75 | $ 84 |
Amortized Cost | 88 | 88 |
Unrealized Depreciation | $ (13) | $ (4) |
Number of Issues | position | 35 | 93 |
Investments - Roll-Forward of the Allowance for Credit Losses on Debt Securities (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
|
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 55 | $ 0 |
Additions to allowance for credit losses on securities for which credit losses were not previously recorded | 25 | 55 |
Reductions for securities sold during the period | (9) | |
Net reductions to allowance for credit losses on securities that had an allowance recorded in a previous period | (23) | |
Ending Balance | $ 48 | $ 55 |
Investments - Equity Security Investments (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Amortized Cost | ||
Equity securities with readily determinable fair values | $ 140 | $ 61 |
Equity securities with no readily determinable fair value | 187 | 183 |
Hybrid equity securities | 58 | 58 |
Total | 385 | 302 |
Carrying Value | ||
Equity securities with readily determinable fair values | 134 | 64 |
Equity securities with no readily determinable fair value | 196 | 192 |
Hybrid equity securities | 43 | 47 |
Total | $ 373 | $ 303 |
Investments - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
Mar. 31, 2020 |
Jan. 01, 2020 |
Mar. 31, 2019 |
Dec. 31, 2018 |
||||
Schedule of Investments [Line Items] | ||||||||||
Impairments of equity securities related to value changes resulting from observable prices | ||||||||||
Stockholders' equity | 47,371 | 43,818 | 45,344 | $ 45,086 | $ 42,413 | $ 41,035 | ||||
Realized gains (losses) on investments still held at the reporting date | ||||||||||
Derivative contract term | 3 months | |||||||||
Fair value of collateral posted | ||||||||||
Gain (loss) recognized in the income statement | ||||||||||
Gain (loss) recognized in other comprehensive income | ||||||||||
Gains (losses) reclassified from other comprehensive income into shareholders' net income | ||||||||||
Amounts excluded from assessment of hedge effectiveness | ||||||||||
Retained Earnings | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Stockholders' equity | 23,052 | $ 17,834 | 20,162 | $ 21,298 | $ 16,426 | 15,088 | ||||
Adjustment upon Adoption | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Stockholders' equity | (30) | [1] | (15) | |||||||
Allowance for credit losses on financing receivables | $ 7 | |||||||||
Adjustment upon Adoption | Retained Earnings | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Stockholders' equity | (30) | [1] | (30) | $ (15) | ||||||
Commercial Portfolio Segment | Real Estate Loan | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Allowance for credit losses on financing receivables | 8 | |||||||||
Current loans | $ 1,942 | $ 1,947 | ||||||||
Commercial Portfolio Segment | Real Estate Loan | Adjustment upon Adoption | Retained Earnings | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Stockholders' equity | $ (7) | |||||||||
|
Investments - Summary of the Credit Risk Profile of the Commercial Mortgage Loan Portfolio (Details) - Real Estate Loan - Commercial Portfolio Segment $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
|
Schedule of Investments [Line Items] | ||
Allowance for credit losses | $ (8) | |
Allowance for credit losses | $ 1,942 | $ 1,947 |
Weighted Average | ||
Schedule of Investments [Line Items] | ||
Average Debt Service Coverage Ratio | 2.01 | 2.09 |
Average Loan-to-Value Ratio | 60.00% | 58.00% |
Below 60% | ||
Schedule of Investments [Line Items] | ||
Carrying Value | $ 904 | $ 1,136 |
Below 60% | Weighted Average | ||
Schedule of Investments [Line Items] | ||
Average Debt Service Coverage Ratio | 2.18 | 2.19 |
60% to 79% | ||
Schedule of Investments [Line Items] | ||
Carrying Value | $ 903 | $ 723 |
60% to 79% | Weighted Average | ||
Schedule of Investments [Line Items] | ||
Average Debt Service Coverage Ratio | 1.94 | 1.98 |
80% to 100% | ||
Schedule of Investments [Line Items] | ||
Carrying Value | $ 143 | $ 88 |
80% to 100% | Weighted Average | ||
Schedule of Investments [Line Items] | ||
Average Debt Service Coverage Ratio | 1.33 | 1.62 |
Investments - Carrying Values of Other Long-Term Investments (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Schedule of Investments [Line Items] | ||
Other long-term investments | $ 2,900 | $ 2,403 |
Real estate investments | ||
Schedule of Investments [Line Items] | ||
Other long-term investments | 850 | 788 |
Securities partnerships | ||
Schedule of Investments [Line Items] | ||
Other long-term investments | 1,525 | 1,409 |
Other | ||
Schedule of Investments [Line Items] | ||
Other long-term investments | $ 525 | $ 206 |
Investments - Short-Term Investments and Cash Equivalents (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Corporate securities | ||
Short Term Investments And Cash Equivalents [Line Items] | ||
Short-term investments and cash equivalents | $ 4,266 | $ 1,985 |
Federal government securities | ||
Short Term Investments And Cash Equivalents [Line Items] | ||
Short-term investments and cash equivalents | 482 | 472 |
Foreign government securities | ||
Short Term Investments And Cash Equivalents [Line Items] | ||
Short-term investments and cash equivalents | 32 | 65 |
Money market funds | ||
Short Term Investments And Cash Equivalents [Line Items] | ||
Short-term investments and cash equivalents | $ 814 | $ 631 |
Investments - Realized Gains and Losses on Investments (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Investments [Abstract] | ||||
Net realized investment gains, excluding credit loss expense and asset write-downs | $ 33 | $ 25 | $ 9 | $ 36 |
Credit loss expense on invested assets | 6 | 0 | (49) | 0 |
Other investment asset write-downs | (1) | (2) | (10) | (3) |
Net realized investment gains (losses), before income taxes | $ 38 | $ 23 | $ (50) | $ 33 |
Investments - Sales Information for Available-for-Sale Debt Securities (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Statement of Financial Position [Abstract] | ||||
Proceeds from sales | $ 880 | $ 565 | $ 1,623 | $ 1,651 |
Gross gains on sales | 27 | 9 | 66 | 23 |
Gross losses on sales | $ (14) | $ (2) | $ (21) | $ (12) |
Investments - Summary of Derivative Instruments Held (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Designated as Hedging Instrument | Fair Value Hedging | Foreign currency swap contracts | ||
Derivative [Line Items] | ||
Notional value | $ 817 | $ 817 |
Designated as Hedging Instrument | Net Investment Hedging | Foreign currency swap contracts | ||
Derivative [Line Items] | ||
Notional value | 526 | 438 |
Designated as Hedging Instrument | Net Investment Hedging | Foreign currency forward contracts | ||
Derivative [Line Items] | ||
Notional value | 606 | 406 |
Not Designated as Hedging Instrument | Foreign currency forward contracts | ||
Derivative [Line Items] | ||
Notional value | $ 442 | $ 410 |
Fair Value Measurements - Financial Assets and Financial Liabilities Carried at Fair Value (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Financial assets at fair value: | ||
Debt securities | $ 23,674 | $ 23,755 |
Equity securities | 134 | 64 |
Financial liabilities at fair value | ||
Unfunded commitments | 55 | |
Recurring | ||
Financial assets at fair value: | ||
Debt securities | 23,674 | 23,755 |
Equity securities | 177 | 111 |
Short-term investments | 456 | 423 |
Real estate funds priced at NAV as a practical expedient | 168 | 184 |
Recurring | Other Derivatives | ||
Financial assets at fair value: | ||
Derivative assets | 193 | 83 |
Financial liabilities at fair value | ||
Derivative liabilities | 15 | 18 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 192 | 197 |
Equity securities | 1 | 7 |
Short-term investments | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring | Other Derivatives | ||
Financial assets at fair value: | ||
Derivative assets | 0 | 0 |
Financial liabilities at fair value | ||
Derivative liabilities | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 22,653 | 23,035 |
Equity securities | 145 | 72 |
Short-term investments | 456 | 423 |
Significant Other Observable Inputs (Level 2) | Recurring | Other Derivatives | ||
Financial assets at fair value: | ||
Derivative assets | 193 | 83 |
Financial liabilities at fair value | ||
Derivative liabilities | 15 | 18 |
Significant Unobservable Inputs (Level 3) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 829 | 523 |
Equity securities | 31 | 32 |
Short-term investments | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Recurring | Other Derivatives | ||
Financial assets at fair value: | ||
Derivative assets | 0 | 0 |
Financial liabilities at fair value | ||
Derivative liabilities | 0 | 0 |
Federal government and agency | ||
Financial assets at fair value: | ||
Debt securities | 637 | 733 |
Federal government and agency | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 637 | 733 |
Federal government and agency | Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 192 | 197 |
Federal government and agency | Significant Other Observable Inputs (Level 2) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 445 | 536 |
Federal government and agency | Significant Unobservable Inputs (Level 3) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 0 | 0 |
State and local government | ||
Financial assets at fair value: | ||
Debt securities | 737 | 810 |
State and local government | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 737 | 810 |
State and local government | Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 0 | 0 |
State and local government | Significant Other Observable Inputs (Level 2) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 737 | 810 |
State and local government | Significant Unobservable Inputs (Level 3) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 0 | 0 |
Foreign government | ||
Financial assets at fair value: | ||
Debt securities | 2,286 | 2,256 |
Foreign government | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 2,286 | 2,256 |
Foreign government | Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 0 | 0 |
Foreign government | Significant Other Observable Inputs (Level 2) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 2,260 | 2,228 |
Foreign government | Significant Unobservable Inputs (Level 3) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 26 | 28 |
Corporate | ||
Financial assets at fair value: | ||
Debt securities | 19,543 | 19,420 |
Corporate | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 19,543 | 19,420 |
Corporate | Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 0 | 0 |
Corporate | Significant Other Observable Inputs (Level 2) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 18,889 | 19,063 |
Corporate | Significant Unobservable Inputs (Level 3) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 654 | 357 |
Mortgage and other asset-backed | ||
Financial assets at fair value: | ||
Debt securities | 471 | 536 |
Mortgage and other asset-backed | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 471 | 536 |
Mortgage and other asset-backed | Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 0 | 0 |
Mortgage and other asset-backed | Significant Other Observable Inputs (Level 2) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | 322 | 398 |
Mortgage and other asset-backed | Significant Unobservable Inputs (Level 3) | Recurring | ||
Financial assets at fair value: | ||
Debt securities | $ 149 | $ 138 |
Fair Value Measurements - Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Percent of debt and equity securities classified in Level 2 | 95.00% | 95.00% | |||
Maximum percentage of investments classified in Level 2 representing foreign bonds priced using unadjusted broker quotes | 1.00% | 1.00% | |||
Percent of debt and equity securities classified in Level 3 | 4.00% | 4.00% | |||
Realized investment losses on assets measured at fair value under certain conditions, after-tax | $ 0 | $ 0 | |||
Realized investment losses on equity securities with no readily determinable fair value | |||||
Fair value of off-balance-sheet financial assets | |||||
Fair value of off-balance-sheet financial liabilities | |||||
Maximum | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Assets measured at fair value under certain conditions as a percent of total investments | 1.00% | 1.00% | 1.00% | 1.00% | |
Separate Account Assets | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Activity, including transfers in and out of Level 3 | |||||
Separate Account Assets | Recurring | Securities partnerships | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Expected liquidation period after inception | 10 years | ||||
Other Derivatives | Significant Other Observable Inputs (Level 2) | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Adjustment for credit risk on derivatives assets | 0 | $ 0 | 0 | ||
Adjustment for credit risk on derivatives liabilities | $ 0 | $ 0 | $ 0 |
Fair Value Measurements - Fair Value and Significant Unobservable Inputs Used in Pricing Debt Securities (Details) - Recurring - Significant Unobservable Inputs (Level 3) $ in Millions |
Jun. 30, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
---|---|---|
Debt securities | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair Value | $ 829 | $ 523 |
Debt securities | Securities Not Priced by the Company | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair Value | 2 | 0 |
Corporate and government debt securities | Securities Priced by the Company | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair Value | $ 678 | $ 385 |
Corporate and government debt securities | Securities Priced by the Company | Minimum | Liquidity | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Unobservable Adjustment | 0.0070 | 0.0070 |
Corporate and government debt securities | Securities Priced by the Company | Maximum | Liquidity | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Unobservable Adjustment | 0.1700 | 0.0930 |
Corporate and government debt securities | Securities Priced by the Company | Weighted Average | Liquidity | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Unobservable Adjustment | 0.0390 | 0.0280 |
Mortgage and other asset-backed securities | Securities Priced by the Company | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair Value | $ 149 | $ 138 |
Mortgage and other asset-backed securities | Securities Priced by the Company | Minimum | Liquidity | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Unobservable Adjustment | 0.0060 | 0.0060 |
Mortgage and other asset-backed securities | Securities Priced by the Company | Minimum | Weighting of credit spreads | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Unobservable Adjustment | 0.0310 | 0.0240 |
Mortgage and other asset-backed securities | Securities Priced by the Company | Maximum | Liquidity | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Unobservable Adjustment | 0.0370 | 0.0370 |
Mortgage and other asset-backed securities | Securities Priced by the Company | Maximum | Weighting of credit spreads | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Unobservable Adjustment | 0.0620 | 0.0460 |
Mortgage and other asset-backed securities | Securities Priced by the Company | Weighted Average | Liquidity | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Unobservable Adjustment | 0.0070 | 0.0070 |
Mortgage and other asset-backed securities | Securities Priced by the Company | Weighted Average | Weighting of credit spreads | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Unobservable Adjustment | 0.0440 | 0.0330 |
Fair Value Measurements - Changes in Level 3 Financial Assets and Financial Liabilities Carried at Fair Value (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Transfers into/(out of) Level 3 | ||||
Change in unrealized gains or losses included in other comprehensive income for assets held at the end of the reporting period | $ 12 | $ (54) | ||
Debt and Equity Securities | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance | 766 | $ 436 | 555 | $ 410 |
Total gains (losses) included in shareholders’ net income | 17 | 0 | 5 | (1) |
Gains (losses) included in other comprehensive income | 12 | 5 | (59) | 12 |
Gains (losses) required to adjust future policy benefits for settlement annuities | 7 | 0 | (3) | 2 |
Purchases, sales and settlements | ||||
Purchases | 2 | 43 | 64 | 43 |
Sales | 0 | 0 | (12) | 0 |
Settlements | (5) | (9) | (7) | (10) |
Total purchases, sales and settlements | (3) | 34 | 45 | 33 |
Transfers into/(out of) Level 3 | ||||
Transfers into Level 3 | 179 | 13 | 527 | 33 |
Transfers out of Level 3 | (118) | (57) | (210) | (58) |
Total transfers into/(out of) Level 3 | 61 | (44) | 317 | (25) |
Balance | 860 | 431 | 860 | 431 |
Total gains (losses) included in shareholders’ net income attributable to instruments held at the reporting date | $ 16 | $ (1) | $ (1) | $ (1) |
Fair Value Measurements - Fair Values of Separate Account Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Guaranteed separate accounts | $ 501 | $ 490 |
Non-guaranteed separate accounts, including disposal groups | 7,047 | 7,235 |
Subtotal | 7,548 | 7,725 |
Non-guaranteed separate accounts priced at NAV as a practical expedient | 727 | 756 |
Total | 8,275 | 8,481 |
Separate account assets of business classified as held for sale | (14) | (16) |
Separate account assets per Consolidated Balance Sheets | 8,261 | 8,465 |
Pension Plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Non-guaranteed separate accounts, including disposal groups | 3,900 | 4,000 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Guaranteed separate accounts | 203 | 219 |
Non-guaranteed separate accounts, including disposal groups | 1,485 | 1,450 |
Subtotal | 1,688 | 1,669 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Guaranteed separate accounts | 298 | 271 |
Non-guaranteed separate accounts, including disposal groups | 5,228 | 5,522 |
Subtotal | 5,526 | 5,793 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Guaranteed separate accounts | 0 | 0 |
Non-guaranteed separate accounts, including disposal groups | 334 | 263 |
Subtotal | 334 | 263 |
Significant Unobservable Inputs (Level 3) | Pension Plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Non-guaranteed separate accounts, including disposal groups | $ 300 | $ 200 |
Fair Value Measurements - Additional Information on Separate Account Assets Priced at NAV (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | $ 55 | |
Recurring | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Fair Value | 168 | $ 184 |
Separate Account Assets | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 314 | |
Separate Account Assets | Recurring | NAV | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Fair Value | 727 | 756 |
Securities partnerships | Separate Account Assets | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | 314 | |
Securities partnerships | Separate Account Assets | Recurring | NAV | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Fair Value | 499 | 531 |
Real estate funds | Separate Account Assets | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | $ 0 | |
Real estate funds | Separate Account Assets | Minimum | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Redemption Notice Period | 30 days | |
Real estate funds | Separate Account Assets | Maximum | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Redemption Notice Period | 90 days | |
Real estate funds | Separate Account Assets | Recurring | NAV | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Fair Value | $ 224 | 220 |
Hedge funds | Separate Account Assets | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Unfunded Commitments | $ 0 | |
Hedge funds | Separate Account Assets | Minimum | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Redemption Notice Period | 30 days | |
Hedge funds | Separate Account Assets | Maximum | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Redemption Notice Period | 90 days | |
Hedge funds | Separate Account Assets | Recurring | NAV | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Fair Value | $ 4 | $ 5 |
Fair Value Measurements - Fair Value Disclosures for Financial Instruments Not Carried at Fair Value (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt, including current maturities, excluding finance leases | $ 40,310 | $ 39,439 |
Fair Value | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Commercial mortgage loans | 1,990 | 1,989 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Commercial mortgage loans | 1,942 | 1,947 |
Long-term debt, including current maturities, excluding finance leases | $ 35,054 | $ 36,375 |
Variable Interest Entities (Details) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020
USD ($)
entity
limitedPartnership
|
Dec. 31, 2019
USD ($)
entity
|
|
Variable Interest Entity [Line Items] | ||
Long-term investments | $ 21,338 | $ 21,542 |
Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Number of VIEs | entity | ||
Variable Interest Entity, Not Primary Beneficiary | Securities Limited Partnerships and Real Estate Limited Partnerships | ||
Variable Interest Entity [Line Items] | ||
Maximum exposure to loss related to arrangements with variable interest entity | $ 3,800 | |
Number of limited partnerships defined as variable interest entities | limitedPartnership | 150 | |
Long-term investments | $ 1,900 | |
Commitments to contribute additional cash, amount | $ 1,900 | |
Variable Interest Entity, Not Primary Beneficiary | Securities Limited Partnerships and Real Estate Limited Partnerships | Maximum | ||
Variable Interest Entity [Line Items] | ||
Non-controlling interest percentage | 15.00% | |
Variable Interest Entity, Not Primary Beneficiary | Other Asset-Backed and Corporate Securities | ||
Variable Interest Entity [Line Items] | ||
Maximum exposure to loss related to arrangements with variable interest entity | $ 700 | |
Carrying values | 700 | |
Variable Interest Entity, Not Primary Beneficiary | Various Other Variable Interest Entities | ||
Variable Interest Entity [Line Items] | ||
Maximum exposure to loss related to arrangements with variable interest entity | ||
Carrying values |
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | $ 45,338 | |||
Other comprehensive income, net of tax | $ 737 | $ 315 | 147 | $ 742 |
Other comprehensive (loss) attributable to redeemable noncontrolling interest | (2) | (2) | (6) | (4) |
Shareholders' other comprehensive income (loss) | 739 | 317 | 153 | 746 |
Ending balance | 47,366 | 47,366 | ||
Securities and Derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | 547 | 460 | 975 | 18 |
Other comprehensive income (loss) before reclassifications, before tax | 920 | 442 | 340 | 1,007 |
Other comprehensive income (loss) before reclassifications, tax | (197) | (94) | (69) | (216) |
Other comprehensive income (loss) before reclassifications, after-tax | 723 | 348 | 271 | 791 |
Reclassification adjustment, before tax | (19) | (6) | 13 | (7) |
Reclassification adjustment, tax | 5 | 1 | (3) | 1 |
Net amounts reclassified from AOCI to net income | (14) | (5) | 10 | (6) |
Shareholders' other comprehensive income (loss) | 709 | 343 | 281 | 785 |
Ending balance | 1,256 | 803 | 1,256 | 803 |
Translation of foreign currencies | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | (446) | (245) | (275) | (221) |
Other comprehensive income (loss), before reclassifications, before tax, including temporary equity | 65 | (42) | (95) | (67) |
Other comprehensive income (loss) before reclassifications, tax, including temporary equity | 5 | 0 | (10) | (1) |
Other comprehensive income, net of tax | 70 | (42) | (105) | (68) |
Other comprehensive (loss) attributable to redeemable noncontrolling interest | (2) | (2) | (6) | (4) |
Shareholders' other comprehensive income (loss) | 72 | (40) | (99) | (64) |
Ending balance | (374) | (285) | (374) | (285) |
Postretirement benefits liability | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | (1,628) | (1,497) | (1,641) | (1,508) |
Other comprehensive income (loss) before reclassifications, before tax | (73) | (8) | (73) | (8) |
Other comprehensive income (loss) before reclassifications, tax | 17 | 1 | 17 | 1 |
Other comprehensive income (loss) before reclassifications, after-tax | (56) | (7) | (56) | (7) |
Reclassification adjustment, tax | (4) | 5 | (9) | (9) |
Net amounts reclassified from AOCI to net income | 14 | 21 | 27 | 32 |
Shareholders' other comprehensive income (loss) | (42) | 14 | (29) | 25 |
Ending balance | (1,670) | (1,483) | (1,670) | (1,483) |
Reclassification adjustment for amortization of net losses from past experience and prior service costs (interest expense and other) | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassification adjustment, before tax | 18 | 16 | 36 | 31 |
Reclassification adjustment for settlement (interest expense and other) | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassification adjustment, before tax | $ 0 | $ 0 | $ 0 | $ 10 |
Organizational Efficiency Plans (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2020 |
Dec. 31, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Restructuring and Related Activities [Abstract] | ||||
Charge for organizational efficiency plan, pre-tax | $ 31 | $ 207 | $ 31 | $ 0 |
Charge for organizational efficiency plan, after-tax | $ 24 | $ 162 | $ 24 | $ 0 |
Leases (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Operating leases: | ||
Operating lease ROU assets | $ 544 | $ 536 |
Accrued expenses and other current liabilities | 158 | 166 |
Other non-current liabilities | 482 | 465 |
Total operating lease liabilities | 640 | 631 |
Finance leases: | ||
Property and equipment, gross | 98 | 110 |
Accumulated depreciation | (35) | (23) |
Property and equipment, net | 63 | 87 |
Short-term debt | 22 | 27 |
Long-term debt | 43 | 61 |
Total finance lease liabilities | $ 65 | $ 88 |
Balance sheet location of current operating lease liabilities | ci:AccruedExpensesAndOtherLiabilities | |
Balance sheet location of non-current operating lease liabilities | us-gaap:OtherLiabilitiesNoncurrent | |
Balance sheet location of non-current finance lease assets | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization | |
Balance sheet location of current finance lease liabilities | us-gaap:DebtCurrent | |
Balance sheet location of non-current finance lease liabilities | us-gaap:LongTermDebtAndCapitalLeaseObligations |
Income Taxes (Details) |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Income Tax Disclosure [Abstract] | ||
Consolidated effective tax rate | 20.00% | 21.50% |
Contingencies and Other Matters (Details) - USD ($) |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2016 |
Jun. 30, 2020 |
May 07, 2020 |
Feb. 28, 2017 |
|
Commitments And Contingencies [Line Items] | ||||
Reserves for litigation matters, pre-tax | ||||
Guaranty Fund Assessments | ||||
Commitments And Contingencies [Line Items] | ||||
Provision for loss contingency | ||||
CSR Litigation with the Federal Government | Pending Litigation | ||||
Commitments And Contingencies [Line Items] | ||||
Damages sought by the complaint | $ 315,000,000 | |||
Express Scripts Litigation with Anthem | Pending Litigation | Pricing Concessions Through Remaining Contract Term | ||||
Commitments And Contingencies [Line Items] | ||||
Damages sought by Anthem | $ 13,000,000,000 | |||
Express Scripts Litigation with Anthem | Pending Litigation | Pricing Concessions After Remaining Term of Agreement | ||||
Commitments And Contingencies [Line Items] | ||||
Damages sought by Anthem | 1,800,000,000 | |||
Express Scripts Litigation with Anthem | Pending Litigation | Damages for Service Issues | ||||
Commitments And Contingencies [Line Items] | ||||
Damages sought by Anthem | $ 150,000,000 | |||
Positive Outcome of Litigation | Cigna Litigation with Anthem | Pending Litigation | ||||
Commitments And Contingencies [Line Items] | ||||
Reverse termination fee receivable | $ 1,850,000,000 | |||
Collectibility of Risk Corridor Payments | CSR Litigation with the Federal Government | Pending Litigation | ||||
Commitments And Contingencies [Line Items] | ||||
Damages sought by the complaint | 120,000,000 | |||
Collectibility of CSRs | CSR Litigation with the Federal Government | Pending Litigation | ||||
Commitments And Contingencies [Line Items] | ||||
Damages sought by the complaint | $ 195,000,000 | |||
Additional Damages Including Lost Premium Value To Shareholders | Cigna Litigation with Anthem | Pending Litigation | ||||
Commitments And Contingencies [Line Items] | ||||
Damages sought by the complaint | $ 13,000,000,000 | |||
Indemnification Agreement | ||||
Commitments And Contingencies [Line Items] | ||||
Liability for guarantees | 0 | |||
Retiree and Life Insurance Benefits | Financial Guarantee | ||||
Commitments And Contingencies [Line Items] | ||||
Maximum guarantee exposure | 455,000,000 | |||
Assets maintained by employers (minimum) | 455,000,000 | |||
Liability for guarantees | $ 0 |
Segment Information - Summary of Special Items (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
After-tax | ||||||
Debt extinguishment costs (Debt extinguishment costs) | $ 11 | $ 0 | $ 151 | $ 0 | ||
Integration and transaction-related costs (Selling, general and administrative expenses) | 99 | 115 | 173 | 223 | ||
Charge for organizational efficiency plan (Selling, general and administrative expenses) | $ 24 | $ 162 | 24 | 0 | ||
Charges associated with litigation matters (Selling, general and administrative expenses) | 0 | 64 | 19 | 64 | ||
Contractual adjustment for a former client (Pharmacy revenues) | (66) | 0 | ||||
Total impact from special items | 110 | 179 | 301 | 287 | ||
Before-tax | ||||||
Debt extinguishment costs (Debt extinguishment costs) | 14 | 0 | 199 | 0 | ||
Integration and transaction-related costs (Selling, general and administrative expenses) | 130 | 155 | 227 | 291 | ||
Charge for organizational efficiency plan (Selling, general and administrative expenses) | $ 31 | $ 207 | 31 | 0 | ||
Charges associated with litigation matters (Selling, general and administrative expenses) | 0 | 81 | 25 | 81 | ||
Contractual adjustment for a former client (Pharmacy revenues) | (87) | 0 | ||||
Total impact from special items | $ 144 | $ 236 | $ 395 | $ 372 |
Segment Information - Summarized Segment Financial Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Segment Reporting Information [Line Items] | ||||||
Revenues from customers | $ 39,042 | $ 38,479 | $ 77,158 | $ 76,079 | ||
Net investment income | 223 | 340 | 576 | 686 | ||
Total revenues | 39,265 | 38,819 | 77,734 | 76,765 | ||
Revenue contribution from transitioning clients | (4,450) | (8,939) | ||||
Net realized investment results from certain equity method investments | (60) | 6 | (50) | (22) | ||
Special items | (87) | |||||
Adjusted revenues | 39,205 | 34,375 | 77,597 | 67,804 | ||
Income before income taxes | 2,289 | 1,758 | 3,686 | 3,546 | ||
Pre-tax adjustments to reconcile to adjusted income from operations | ||||||
Adjustment for transitioning clients | (655) | (1,315) | ||||
(Income) attributable to noncontrolling interests | (8) | (4) | (17) | (9) | ||
Net realized investments (gains) losses | (98) | (17) | 0 | (55) | ||
Amortization of acquired intangible assets | 496 | 737 | 994 | 1,480 | ||
Special items | ||||||
Debt extinguishment costs | 14 | 0 | 199 | 0 | ||
Integration and transaction-related costs | 130 | 155 | 227 | 291 | ||
Charge for organizational efficiency plan | $ 31 | $ 207 | 31 | 0 | ||
Charges associated with litigation matters | 0 | 81 | 25 | 81 | ||
Contractual adjustment for a former client | (87) | 0 | ||||
Pre-tax adjusted income (loss) from operations | 2,823 | 2,055 | 5,058 | 4,019 | ||
Health Services | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from customers | 27,714 | 27,337 | 53,970 | 53,534 | ||
Integrated Medical | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from customers | 8,684 | 8,668 | 17,952 | 17,578 | ||
International Markets | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from customers | 1,466 | 1,343 | 2,886 | 2,727 | ||
Group Disability and Other | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from customers | 1,178 | 1,131 | 2,350 | 2,240 | ||
Operating Segments | Health Services | ||||||
Segment Reporting Information [Line Items] | ||||||
Net investment income | 3 | 17 | 28 | 32 | ||
Total revenues | 28,602 | 27,987 | 55,857 | 54,936 | ||
Revenue contribution from transitioning clients | (4,450) | (8,939) | ||||
Net realized investment results from certain equity method investments | 0 | 0 | 0 | 0 | ||
Special items | (87) | |||||
Adjusted revenues | 28,602 | 23,537 | 55,770 | 45,997 | ||
Income before income taxes | 771 | 1,108 | 1,465 | 2,050 | ||
Pre-tax adjustments to reconcile to adjusted income from operations | ||||||
Adjustment for transitioning clients | (655) | (1,315) | ||||
(Income) attributable to noncontrolling interests | (3) | 0 | (7) | (1) | ||
Net realized investments (gains) losses | 0 | 0 | 0 | 0 | ||
Amortization of acquired intangible assets | 481 | 709 | 960 | 1,422 | ||
Special items | ||||||
Debt extinguishment costs | 0 | 0 | ||||
Integration and transaction-related costs | 0 | 0 | 0 | 0 | ||
Charge for organizational efficiency plan | 0 | |||||
Charges associated with litigation matters | 0 | 0 | 0 | |||
Contractual adjustment for a former client | (87) | |||||
Pre-tax adjusted income (loss) from operations | 1,249 | 1,162 | 2,331 | 2,156 | ||
Operating Segments | Integrated Medical | ||||||
Segment Reporting Information [Line Items] | ||||||
Net investment income | 49 | 111 | 175 | 234 | ||
Total revenues | 9,237 | 8,968 | 19,097 | 18,163 | ||
Revenue contribution from transitioning clients | 0 | 0 | ||||
Net realized investment results from certain equity method investments | 0 | 0 | 0 | 0 | ||
Special items | 0 | |||||
Adjusted revenues | 9,237 | 8,968 | 19,097 | 18,163 | ||
Income before income taxes | 1,543 | 989 | 2,683 | 2,146 | ||
Pre-tax adjustments to reconcile to adjusted income from operations | ||||||
Adjustment for transitioning clients | 0 | 0 | ||||
(Income) attributable to noncontrolling interests | 0 | 0 | 0 | 0 | ||
Net realized investments (gains) losses | (26) | (17) | 22 | (22) | ||
Amortization of acquired intangible assets | 6 | 18 | 17 | 36 | ||
Special items | ||||||
Debt extinguishment costs | 0 | 0 | ||||
Integration and transaction-related costs | 0 | 0 | 0 | 0 | ||
Charge for organizational efficiency plan | 0 | |||||
Charges associated with litigation matters | 0 | 0 | 0 | |||
Contractual adjustment for a former client | 0 | |||||
Pre-tax adjusted income (loss) from operations | 1,523 | 990 | 2,722 | 2,160 | ||
Operating Segments | International Markets | ||||||
Segment Reporting Information [Line Items] | ||||||
Net investment income | 26 | 40 | 66 | 78 | ||
Total revenues | 1,492 | 1,383 | 2,952 | 2,805 | ||
Revenue contribution from transitioning clients | 0 | 0 | ||||
Net realized investment results from certain equity method investments | (60) | 6 | (50) | (22) | ||
Special items | 0 | |||||
Adjusted revenues | 1,432 | 1,389 | 2,902 | 2,783 | ||
Income before income taxes | 390 | 195 | 624 | 417 | ||
Pre-tax adjustments to reconcile to adjusted income from operations | ||||||
Adjustment for transitioning clients | 0 | 0 | ||||
(Income) attributable to noncontrolling interests | (5) | (4) | (10) | (8) | ||
Net realized investments (gains) losses | (73) | 8 | (27) | (15) | ||
Amortization of acquired intangible assets | 7 | 8 | 14 | 19 | ||
Special items | ||||||
Debt extinguishment costs | 0 | 0 | ||||
Integration and transaction-related costs | 0 | 0 | 0 | 0 | ||
Charge for organizational efficiency plan | 0 | |||||
Charges associated with litigation matters | 0 | 0 | 0 | |||
Contractual adjustment for a former client | 0 | |||||
Pre-tax adjusted income (loss) from operations | 319 | 207 | 601 | 413 | ||
Operating Segments | Group Disability and Other | ||||||
Segment Reporting Information [Line Items] | ||||||
Net investment income | 144 | 171 | 306 | 351 | ||
Total revenues | 1,328 | 1,309 | 2,667 | 2,605 | ||
Revenue contribution from transitioning clients | 0 | 0 | ||||
Net realized investment results from certain equity method investments | 0 | 0 | 0 | 0 | ||
Special items | 0 | |||||
Adjusted revenues | 1,328 | 1,309 | 2,667 | 2,605 | ||
Income before income taxes | 129 | 155 | 201 | 248 | ||
Pre-tax adjustments to reconcile to adjusted income from operations | ||||||
Adjustment for transitioning clients | 0 | 0 | ||||
(Income) attributable to noncontrolling interests | 0 | 0 | 0 | 0 | ||
Net realized investments (gains) losses | 1 | (8) | 5 | (18) | ||
Amortization of acquired intangible assets | 2 | 2 | 3 | 3 | ||
Special items | ||||||
Debt extinguishment costs | 0 | 0 | ||||
Integration and transaction-related costs | 0 | 0 | 0 | 0 | ||
Charge for organizational efficiency plan | 0 | |||||
Charges associated with litigation matters | 0 | 0 | 0 | |||
Contractual adjustment for a former client | 0 | |||||
Pre-tax adjusted income (loss) from operations | 132 | 149 | 209 | 233 | ||
Corporate and Eliminations | ||||||
Segment Reporting Information [Line Items] | ||||||
Net investment income | 1 | 1 | 1 | (9) | ||
Total revenues | (1,394) | (828) | (2,839) | (1,744) | ||
Revenue contribution from transitioning clients | 0 | 0 | ||||
Net realized investment results from certain equity method investments | 0 | 0 | 0 | 0 | ||
Special items | 0 | |||||
Adjusted revenues | (1,394) | (828) | (2,839) | (1,744) | ||
Income before income taxes | (544) | (689) | (1,287) | (1,315) | ||
Special items | ||||||
Pre-tax adjusted income (loss) from operations | (400) | (453) | (805) | (943) | ||
Corporate | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from customers | 0 | 0 | 0 | 0 | ||
Pre-tax adjustments to reconcile to adjusted income from operations | ||||||
Adjustment for transitioning clients | 0 | 0 | ||||
(Income) attributable to noncontrolling interests | 0 | 0 | 0 | 0 | ||
Net realized investments (gains) losses | 0 | 0 | 0 | 0 | ||
Amortization of acquired intangible assets | 0 | 0 | 0 | 0 | ||
Special items | ||||||
Debt extinguishment costs | 14 | 199 | ||||
Integration and transaction-related costs | 130 | 155 | 227 | 291 | ||
Charge for organizational efficiency plan | 31 | |||||
Charges associated with litigation matters | 81 | 25 | 81 | |||
Contractual adjustment for a former client | 0 | |||||
Intersegment Eliminations | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from customers | (1,395) | (829) | (2,840) | (1,735) | ||
Intersegment Eliminations | Health Services | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from customers | (885) | (633) | (1,859) | (1,370) | ||
Intersegment Eliminations | Integrated Medical | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from customers | (504) | (189) | (970) | (351) | ||
Intersegment Eliminations | International Markets | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from customers | 0 | 0 | 0 | 0 | ||
Intersegment Eliminations | Group Disability and Other | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from customers | $ (6) | $ (7) | $ (11) | $ (14) |
Segment Information - Revenue from External Customers (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Revenue from External Customer [Line Items] | ||||
Premiums | $ 10,406 | $ 9,803 | $ 21,246 | $ 19,774 |
Total revenues from external customers | 39,042 | 38,479 | 77,158 | 76,079 |
Integrated Medical | ||||
Revenue from External Customer [Line Items] | ||||
Total revenues from external customers | 8,684 | 8,668 | 17,952 | 17,578 |
International Markets | ||||
Revenue from External Customer [Line Items] | ||||
Premiums | 1,344 | 1,301 | 2,719 | 2,605 |
Total revenues from external customers | 1,466 | 1,343 | 2,886 | 2,727 |
Pharmacy revenues | ||||
Revenue from External Customer [Line Items] | ||||
Revenues | 26,564 | 26,288 | 51,662 | 51,467 |
Network revenues | ||||
Revenue from External Customer [Line Items] | ||||
Revenues | 13,090 | 12,758 | 25,232 | 25,031 |
Home delivery and specialty revenues | ||||
Revenue from External Customer [Line Items] | ||||
Revenues | 12,183 | 12,272 | 23,897 | 24,056 |
Other | ||||
Revenue from External Customer [Line Items] | ||||
Revenues | 1,291 | 1,258 | 2,533 | 2,380 |
Integrated Medical premiums | Integrated Medical | ||||
Revenue from External Customer [Line Items] | ||||
Premiums | 7,912 | 7,396 | 16,232 | 14,979 |
Health Insurance | Integrated Medical | ||||
Revenue from External Customer [Line Items] | ||||
Premiums | 3,090 | 3,065 | 6,551 | 6,104 |
Stop loss | Integrated Medical | ||||
Revenue from External Customer [Line Items] | ||||
Premiums | 1,152 | 1,067 | 2,313 | 2,136 |
Other | Integrated Medical | ||||
Revenue from External Customer [Line Items] | ||||
Premiums | 283 | 241 | 572 | 519 |
Medicare Advantage | Integrated Medical | ||||
Revenue from External Customer [Line Items] | ||||
Premiums | 1,904 | 1,610 | 3,785 | 3,217 |
Medicare Part D | Integrated Medical | ||||
Revenue from External Customer [Line Items] | ||||
Premiums | 420 | 400 | 882 | 925 |
Other | Integrated Medical | ||||
Revenue from External Customer [Line Items] | ||||
Premiums | 1,063 | 1,013 | 2,129 | 2,078 |
Domestic disability, life and accident premiums | ||||
Revenue from External Customer [Line Items] | ||||
Premiums | 1,124 | 1,069 | 2,240 | 2,116 |
Other premiums | ||||
Revenue from External Customer [Line Items] | ||||
Premiums | 26 | 37 | 55 | 74 |
Services | ||||
Revenue from External Customer [Line Items] | ||||
Revenues | 2,072 | 2,388 | 4,250 | 4,838 |
Fees | ||||
Revenue from External Customer [Line Items] | ||||
Revenues | 1,979 | 2,376 | 4,133 | 4,766 |
Other external revenues | ||||
Revenue from External Customer [Line Items] | ||||
Revenues | $ 93 | $ 12 | $ 117 | $ 72 |
Segment Information - Narrative (Details) - USD ($) $ in Billions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Loss Contingencies [Line Items] | ||
Reserves for performance guarantees | ||
Performance Guarantee | Pharmacy Benefits Management Services | ||
Loss Contingencies [Line Items] | ||
Reserves for performance guarantees | $ 0.9 | $ 1.0 |
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