Schedule I - Condensed Financial Information of Cigna Corporation

12 Months Ended

Dec. 31, 2020

Condensed Financial Information Disclosure [Abstract]

Schedule I - Condensed Financial Information of Cigna Corporation

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION

(REGISTRANT)

STATEMENTS OF INCOME

	For the years ended
	December 31,
	Cigna		Cigna		Cigna
(in millions)	2020		2019		2018
Revenues
Net investment income	$	1	$	—	$	123
Intercompany interest income	475		6		—
Total revenues	476		6		123
Operating expenses
Selling, general and administrative expenses	4		(85)		200
Total operating expenses	4		(85)		200
Income (loss) from operations	472		91		(77)
Interest and other (expense)	(1,324)		(1,032)		(244)
Intercompany interest (expense)	(48)		(127)		(5)
Debt extinguishment costs	(171)		—		—
Realized investment (loss)	—		—		(1)
Loss before taxes	(1,071)		(1,068)		(327)
Income tax (benefit)	(234)		(251)		(74)
Loss of Parent Company	(837)		(817)		(253)
Equity in income of subsidiaries	9,295		5,921		2,890
Shareholders' net income	8,458		5,104		2,637
Shareholders' other comprehensive income (loss), net of tax
Net unrealized appreciation (depreciation) on securities and derivatives	(75)		957		(365)
Net translation (losses) gains of foreign currencies	260		(54)		(152)
Postretirement benefits liability adjustment	(105)		(133)		127
Shareholders' other comprehensive income (loss), net of tax	80		770		(390)
Shareholders' comprehensive income	$	8,538	$	5,874	$	2,247

 See Notes to Financial Statements on the following pages.

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION

(REGISTRANT)

BALANCE SHEETS

	As of December 31,
(in millions)	2020		2019
Assets
Cash and cash equivalents	$	4,157	$	—
Short-term investments	49		30
Other current assets	4		4
Total current assets	4,210		34
Intercompany receivable	1,666		4,111
Investments in subsidiaries	76,040		77,380
Other noncurrent assets	22		19
TOTAL ASSETS	$	81,938	$	81,544
Liabilities
Short-term debt	$	3,278	$	4,043
Other current liabilities	616		457
Total current liabilities	3,894		4,500
Intercompany payable	5		2,341
Long-term debt	27,718		29,365
TOTAL LIABILITIES	31,617		36,206
Shareholders’ Equity
Common stock (shares issued, 390 and 386; authorized, 600)	4		4
Additional paid-in capital	28,975		28,306
Accumulated other comprehensive loss	(861)		(941)
Retained earnings	28,575		20,162
Less treasury stock, at cost	(6,372)		(2,193)
TOTAL SHAREHOLDERS’ EQUITY	50,321		45,338
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	81,938	$	81,544

See Notes to Financial Statements on the following pages.

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION

(REGISTRANT)

STATEMENTS OF CASH FLOWS

	For the years ended
	December 31,
	Cigna		Cigna		Cigna
(in millions)	2020		2019		2018
Cash Flows from Operating Activities
Shareholders’ net income	$	8,458	$	5,104	$	2,637
Adjustments to reconcile shareholders’ net income
to net cash provided by operating activities
Equity in income of subsidiaries	(9,295)		(5,921)		(2,890)
Debt extinguishment costs	171		—		—
Dividends received from subsidiaries	8,627		2,457		—
Other liabilities	112		43		412
Other, net	500		20		(14)
NET CASH PROVIDED BY OPERATING ACTIVITIES	8,573		1,703		145
Cash Flows from Investing Activities
Net change in loans due to (from) affiliates	(265)		—		—
Short-term investment purchased, net	(19)		(30)		—
Other, net	—		—		(27,115)
NET CASH (USED IN) INVESTING ACTIVITIES	(284)		(30)		(27,115)
Cash Flows from Financing Activities
Net change in amounts due to affiliates	2,262		2,015		4,437
Proceeds on issuance of commercial paper	86		944		—
Payments for debt extinguishment	(181)		—		—
Repayment of long-term debt	(5,996)		(3,002)		—
Net proceeds on issuance of long-term debt	3,465		—		22,856
Issuance of common stock	376		224		1
Common dividends paid	(15)		(15)		—
Repurchase of common stock	(4,042)		(1,987)		(32)
Tax withholding on stock compensation and other	(87)		(82)		(49)
Other	—		(13)		—
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(4,132)		(1,916)		27,213
Net increase (decrease) in cash and cash equivalents	4,157		(243)		243
Cash and cash equivalents, beginning of year	—		243		—
Cash and cash equivalents, end of year	4,157		—		243

See Notes to Financial Statements on the following pages.

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION

(REGISTRANT)

NOTES TO CONDENSED FINANCIAL STATEMENTS

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

Note 1 — Cigna Holding Company (formerly Cigna Corporation) was incorporated in Delaware in 1981. Halfmoon Parent, Inc. was incorporated in Delaware in March 2018. Halfmoon Parent, Inc. was renamed Cigna Corporation and Cigna Holding Company became its subsidiary concurrent with the consummation of the combination with Express Scripts on December 20, 2018.

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

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

Debt Issuance and Redemption. In order to decrease future interest expense and reduce future refinancing risk, the Company entered into the following transactions during 2020:

•Debt issuance: On March 16, 2020, the Company issued $3.5 billion of new senior notes. The proceeds of this issuance 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.

Principal	Maturity Date	Interest Rate	Net Proceeds
$1,500 million	March 15, 2030	2.4%	$1,491 million
$750 million	March 15, 2040	3.2%	$743 million
$1,250 million	March 15, 2050	3.4%	$1,237 million

•Debt tender and redemption: In March and April 2020, the Company completed a tender offer and an optional redemption totaling $2.9 billion of aggregate principal amount of certain of its outstanding debt securities. The principal amount repurchased in this tender offer was $1.3 billion. Additionally, $1.6 billion of notes were repurchased via optional redemption. The Company recorded a pre-tax loss of $171 million ($124 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 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. In 2020, the Company repaid $6.0 billion of long-term debt, including the $2.9 billion debt tender and redemption described above. On December 31, 2020 Cigna issued a notice of full redemption to the holders of Cigna’s Senior Floating Rate Notes due 2021 (the “Notes”) pursuant to which Cigna redeemed the entire $1.0 billion aggregate principal amount of the Notes outstanding on January 15, 2021 at a redemption price calculated in accordance with the terms and conditions of the indenture governing the Notes.

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.

Additionally, Cigna has a 364-day $1.0 billion revolving credit agreement that will mature in October 2021. The agreement replaces the $1.0 billion 364-day revolving credit agreement that expired in October 2020. The agreement 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 December 31, 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. In connection with the sale of the Group Life and Disability business, on December 31, 2020 we repaid the entire $1.4 billion balance outstanding.

Commercial Paper. Under our commercial paper program we may issue short-term, unsecured commercial paper notes privately placed on a discount basis through certain broker dealers at any time not to exceed $4.25 billion. Amounts available under the program may be borrowed, repaid and re-borrowed from time to time. The net proceeds of issuances have been and are expected to be used for general corporate purposes. The commercial paper program had approximately $1.0 billion outstanding at December 31, 2020 at an average interest rate of 0.2%.

The Company was in compliance with its debt covenants as of December 31, 2020.

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

(in millions)
2021	$	2,250
2022	$	1,378
2023	$	3,754
2024	$	714
2025	$	2,957
Maturities after 2025	$	19,182

Note 3 — Intercompany receivables of the Company consist primarily of net amounts due from Express Scripts Holdings of $1.4 billion (consisting of an $8.2 billion receivable offset by a $6.8 billion payable) as of December 31, 2020 and $3.9 billion (consisting of an $8.2 billion receivable offset by a $4.3 billion payable) as of December 31, 2019. Interest income on the receivable was accrued at an annual fixed rate of 5.50%. Interest expense on the payable was accrued at an average rate of 0.97% in 2020.

Note 4 — The Company had guarantees of approximately $87 million as of December 31, 2020. These guarantees are primarily related to outstanding letters of credit. In 2020, no payments have been made on these guarantees.