## Notes to the Consolidated Financial Statements 

## Description of Business NOTE 1 

Cigna Corporation was incorporated in the State of Delaware in 1981. Various businesses that are described in this Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (‘‘Form 10-K’’) are conducted by its insurance and other subsidiaries. As used in this document, ‘‘Cigna’’, the ‘‘Company’’, ‘‘we’’ and ‘‘our’’ may refer to Cigna Corporation itself, one or more of its subsidiaries, or Cigna Corporation and its consolidated subsidiaries. 

The Company is a global health services organization with a mission to help its customers improve their health, well-being and sense of 

## Summary of Significant Accounting Policies NOTE 2 

## A. Basis of Presentation 

The Consolidated Financial Statements include the accounts of Cigna Corporation and its significant 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 valuation, 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. 

In preparing these Consolidated Financial Statements, the Company has evaluated events that occurred between the balance sheet date and February 28, 2013. 

Certain reclassifications have been made to prior year amounts to conform to the current presentation. In particular, as a result of the changes in segment reporting discussed further in Note 23, benefits expense amounts previously reported in Other Benefits Expense for the international health care business have been reclassified to Global Health Care Medical Claims Expense in the Consolidated Statements of Income. Similarly, insurance liabilities previously classified as Unpaid Claims for the international health care business have been reclassified to Global Health Care Medical Claims Payable in the Consolidated Balance Sheets. 

Variable interest entities.  As of December 31, 2012 and 2011 the Company determined it was not a primary beneficiary in any material variable interest entities. 

security. Its insurance subsidiaries are major providers of medical, dental, disability, life and accident insurance and related products and services, the majority of which are offered through employers and other groups (e.g. governmental and non-governmental organizations, unions and associations). Cigna also offers Medicare and Medicaid products and health, life and accident insurance coverages primarily to individuals in the U.S. and selected international markets. In addition to its ongoing operations described above, Cigna also has certain run-off operations, including a Run-off Reinsurance segment. 

## B. Changes in Accounting Pronouncements 

Fees Paid to the Federal Government by Health Insurers (Accounting Standards Update (‘‘ASU’’) 2011-06).  In 2011, the Financial Accounting Standards Board (‘‘FASB’’) issued accounting guidance for a health insurance industry assessment (the ‘‘fee’’) mandated by the Patient Protection and Affordable Care Act of 2010 (‘‘Health Care Reform’’). This fee will be levied on health insurers beginning in 2014 based on a ratio of an insurer’s net health insurance premiums written for the previous calendar year compared to the U.S. health insurance industry total. In addition, because these fees will generally not be tax deductible, the Company’s effective tax rate is expected to be adversely impacted in future periods. Under the guidance, the liability for the fee will be estimated and recorded in full each year beginning in 2014 when health insurance is first provided. A corresponding deferred cost will be recorded and amortized over the calendar year. The amount of these fees is expected to be material, although the Company is unable to estimate the impact of these fees on shareholders’ net income and the effective tax rate because guidance from the federal department of Health and Human Services for these calculations has not been finalized. 

Deferred acquisition costs. Effective January 1, 2012, the Company adopted the FASB’s amended guidance (ASU 2010-26) on accounting for costs to acquire or renew insurance contracts. This guidance requires certain sales compensation and telemarketing costs related to unsuccessful efforts and any indirect costs to be expensed as incurred. The Company’s deferred acquisition costs arise from sales and renewal activities primarily in its Global Supplemental Benefits segment. This amended guidance was implemented through retrospective adjustment of comparative prior periods. Summarized below are the effects of this amended guidance on previously reported amounts as of December 31, 2011 and for the years ended December 31, 2011 and 2010. Previously reported amounts presented below include certain immaterial reclassifications. 

