Cigna Reports Strong Third Quarter Results And Raises 2012 Outlook

Financial Results (dollars in millions):

											Nine Months
		Three Months Ended									Ended
		September 30,						June 30,			September 30,
		2012			2011			2012			2012
Premiums and Fees		$	758		$	698		$	749		$	2,250
Adjusted Income from Operations 1		$	62		$	62		$	89		$	216
Adjusted Margin, After-Tax 7			7.5%			8.1%			10.9%			8.8%

• Third quarter 2012 results reflect continued strong premium and fee growth, including an 11% increase in disability premiums and fees, and favorable life claim experience, partially offset by unfavorable claims experience in the disability business.
• Adjusted income from operations ¹ and segment margins ⁷ for the third and second quarter of 2012 include the favorable after-tax impacts related to reserve studies of $5 million and $35 million, respectively.

Other Segments

Adjusted income (loss) from operations ¹ for Cigna's remaining operations is presented below (dollars in millions):

											Nine Months
		Three Months Ended									Ended
		September 30,						June 30,			September 30,
		2012			2011			2012			2012
Run-off Reinsurance		$	(7)		$	(46)		$	(11)		$	(29)
Other Operations		$	22		$	25		$	21		$	63
Corporate		$	(51)		$	(43)		$	(62)		$	(170)

• Run-off Reinsurance includes the results for the VADBe ² business. Adjusted income from operations ¹ for the third quarter 2012, second quarter 2012, and third quarter 2011 includes reserve strengthenings of $6 million, $10 million, and $45 million after-tax, respectively, primarily related to updating reserve assumptions for VADBe ².
• Second quarter 2012 Corporate results include a $10 million after-tax charge related to the termination of a vendor contract.

OUTLOOK

• Cigna now estimates full year 2012 consolidated adjusted income from operations ^1,3 to be in the range of $1.655 billion to $1.705 billion, or $5.70 to $5.90 per share. This outlook reflects expected continued solid execution of our strategy resulting in strong organic growth, an expected increase in medical services utilization during the remainder of 2012, and contributions from the acquisition of HealthSpring.

(dollars in millions, except per share amounts)			Full-Year Ended December 31, 2012
Adjusted income (loss) from operations 1,3
Health Care		$	1,290 to 1,320
International			280 to 290
Disability and Life			265 to 275
Ongoing Businesses		$	1,835 to 1,885
Run-off Reinsurance, Other Operations and Corporate			(180)
Consolidated		$	1,655 to 1,705
Consolidated Adjusted income from operations, per share 1,3,4		$	5.70 to 5.90
U.S. Health Care medical customer growth, including medical customers acquired from HealthSpring			growth ofapproximately1.25 million

• Cigna’s earnings and earnings per share outlooks exclude the potential effects of future capital deployment ⁶.
• Cigna’s earnings and earnings per share outlooks include the impact of year-to-date results for VADBe ², but do not include an estimate for future impacts. Future potential impacts from VADBe ² are not known or reasonably estimable, including the impact of changes in capital markets or periodic updates to long-term reserve assumptions. See the Critical Accounting Estimates section of the Management’s Discussion and Analysis of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, as updated by the Current Report on Form 8-K filed on August 8, 2012, for more information on the potential effects of capital market and other assumption changes on shareholders’ net income.

The foregoing statements represent management’s current estimate of Cigna’s 2012 consolidated and segment adjusted income from operations ^1,3 as of the date of this release. Actual results may differ materially depending on a number of factors, and investors are urged to read the Cautionary Statement included in this release for a description of those factors. Management does not assume any obligation to update these estimates.

This quarterly earnings release and the Quarterly Financial Supplement are available on Cigna’s website in the Investor Relations section ( http://www.cigna.com/aboutus/investor-relations). A link to the conference call, during which management will review third quarter 2012 results and discuss full year 2012 outlook is available in the Investor Relations section of Cigna’s website ( http://www.cigna.com/aboutcigna/investors/events/index.page).

Notes:

1.		Cigna measures the financial results of its segments using segment earnings (loss), which is defined as shareholders’ net income (loss) before net realized investment results. Adjusted income (loss) from operations is defined as segment earnings (loss) excluding special items (which are identified and quantified in Note 4) and the results of Cigna's GMIB business. Adjusted income (loss) from operations is a measure of profitability used by Cigna’s management because it presents the underlying results of operations of Cigna’s businesses and permits analysis of trends in underlying revenue, expenses and shareholders’ net income. This measure is not determined in accordance with generally accepted accounting principles (GAAP) and should not be viewed as a substitute for the most directly comparable GAAP measures, which are segment earnings (loss) and shareholders’ net income; see Exhibits 1 and 2, and Note 2 for reconciliations of the non-GAAP measure to the most directly comparable GAAP measures.
		Effective January 1, 2012, Cigna retrospectively adopted required amended accounting rules for costs related to the acquisition or renewal of insurance contracts (“deferred policy acquisition costs”). Prior period amounts have been presented on a comparable basis.
2.		The Guaranteed Minimum Income Benefits (GMIB) business and Guaranteed Minimum Death Benefits business, also known as Variable Annuity Death Benefits (VADBe), are included in our Run-off Reinsurance operations. These businesses have been in run-off since 2000. A reconciliation of reported shareholders’ net income 1 and earnings per share to adjusted income from operations 1 excluding the results of VADBe for the third quarter of 2012 and 2011 is as follows (dollars in millions, except per share amounts):

		Three Months Ended September 30,
														% EPS
		2012			EPS			2011			EPS			Change
Shareholders’ net income		$	466		$	1.61		$	183		$	0.67		140%
Less adjustments for:
Results of GMIB, after-tax			32			0.11			(134)			(0.50)
Net realized investment gains (losses), net of taxes			7			0.02			9			0.04
Special items, after-tax 4			(62)			(0.21)			-			-
Adjusted income from operations 1			489			1.69			308			1.13		50%
Less adjustment for: Results of VADBe, after-tax			(7)			(0.02)			(45)			(0.16)
Adjusted income from operations 1, excluding VADBe		$	496		$	1.71		$	353		$	1.29		33%

3.		Information is not available for management to (1) reasonably estimate future net realized investment gains (losses) or (2) reasonably estimate future GMIB business results due in part to interest rate and stock market volatility and other internal and external factors; therefore, it is not possible to provide a forward-looking reconciliation of adjusted income from operations to shareholders’ income from continuing operations. We expect that special items for 2012 will include HealthSpring, Inc. (“HealthSpring”) acquisition costs and may also include potential adjustments associated with litigation and assessment related items. Other than these items, information is not available for management to identify, or reasonably estimate additional 2012 special items.
4.		Special items included in shareholders’ net income and segment earnings (loss), but excluded from adjusted income (loss) from operations, and the calculation of adjusted margins include:
		Third Quarter 2012
		-- After-tax loss of $50 million related to a realignment and efficiency plan.
		-- After-tax loss of $12 million related to transaction costs for the 2012 acquisition of HealthSpring.
		First Quarter 2012
		-- After-tax loss of $28 million related to transaction costs for the 2012 acquisition of HealthSpring.
		-- After-tax loss of $13 million related to a litigation matter.
5.		The application of the FASB’s fair value disclosure and measurement guidance (ASC 820-10), which impacts reinsurance contracts covering GMIB, does not represent management’s expectation of the ultimate payout. Changes in underlying contract holder account values, interest rates, stock market volatility, and other factors may result in changes to the fair value assumptions, and/or amount that will be required to ultimately settle Cigna’s obligations, which could result in a material adverse or favorable impact on the Run-off Reinsurance segment and Cigna’s results of operations.
6.		Share repurchases may from time to time be made pursuant to written trading plans under Rule 10b5-1, which permit shares to be repurchased when Cigna might otherwise be precluded from doing so under insider trading laws or because of self-employed trading blackout periods.
7.		Adjusted margins in this press release are calculated by dividing adjusted income from operations 1 by segment revenues. For the three and nine months ended September 30, 2012, segment margins including special items were 6.3% and 5.7% for Health Care, respectively, 7.3% and 7.7% for International, respectively, and 7.3% and 8.7% for Disability and Life, respectively.
8.		The number of customers reported in prior periods has been adjusted to conform to the current basis of reporting.
9.		Health Care medical claims payable are presented net of reinsurance and other recoverables. The gross Health Care medical claims payable balance was $1,581 million as of September 30, 2012 and $1,095 million as of December 31, 2011.

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Cigna Corporation and its subsidiaries (the “Company”) and its representatives may from time to time make written and oral forward-looking statements, including statements contained in press releases, in the Company’s filings with the Securities and Exchange Commission, in its reports to shareholders and in meetings with analysts and investors. Forward-looking statements may contain information about financial prospects, economic conditions, trends and other uncertainties. These forward-looking statements are based on management’s beliefs and assumptions and on information available to management at the time the statements are or were made. Forward-looking statements include, but are not limited to, the information concerning possible or assumed future business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements, trends and, in particular, the Company’s strategic initiatives, litigation and other legal matters, operational improvement initiatives in the Health Care operations, and the outlook for the Company’s full year 2012 and beyond results. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe”, “expect”, “plan”, “intend”, “anticipate”, “estimate”, “predict”, “potential”, “may”, “should” or similar expressions.

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