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1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31,2023OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For
2、 the transition period from _ to _Commission File Number 001-38769The Cigna Group(Exact name of registrant as specified in its charter)Delaware82-4991898(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)900 Cottage Grove RoadBloomfield,Connecticut 06002
3、(Address of principal executive offices)(Zip Code)(860)226-6000(Registrants telephone number,including area code)Not Applicable(Former name,former address and former fiscal year,if changed since last report)Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s
4、)Name of each exchange on which registeredCommon Stock,Par Value$0.01CINew York Stock Exchange,Inc.Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for suchshorter
5、 period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulat
6、ion S-T during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes NoIndicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth com
7、pany.See definitions oflarge accelerated filer,accelerated filer,smaller reporting company,and emerging growth company in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate
8、 by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standardsprovided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 o
9、f the Exchange Act).Yes NoAs of April 28,2023,295,872,231 shares of the issuers common stock were outstanding.THE CIGNA GROUPTABLE OF CONTENTSPagePART IFINANCIAL INFORMATIONItem 1.Financial Statements(Unaudited)3Consolidated Statements of Income3Consolidated Statements of Comprehensive Income4Consol
10、idated Balance Sheets5Consolidated Statements of Changes in Total Equity6Consolidated Statements of Cash Flows7Notes to the Consolidated Financial Statements8Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations35Item 3.Quantitative and Qualitative Disclosures A
11、bout Market Risk50Item 4.Controls and Procedures51PART IIOTHER INFORMATIONItem 1.Legal Proceedings52Item 1A.Risk Factors52Item 2.Unregistered Sales of Equity Securities and Use of Proceeds52Item 5.Other Information52Item 6.Exhibits53SIGNATURE54As used herein,the Company refers to one or more of The
12、Cigna Group and its consolidated subsidiaries.Part I.FINANCIAL INFORMATIONItem 1.FINANCIAL STATEMENTSThe Cigna GroupConsolidated Statements of IncomeUnauditedThree Months Ended March 31,(In millions,except per share amounts)20232022 RevenuesPharmacy revenues$32,144$30,697 Premiums11,025 10,356 Fees
13、and other revenues3,071 2,539 Net investment income277 414 TOTAL REVENUES46,517 44,006 Benefits and expensesPharmacy and other service costs31,459 29,813 Medical costs and other benefit expenses9,046 8,272 Selling,general and administrative expenses3,538 3,275 Amortization of acquired intangible ass
14、ets459 458 TOTAL BENEFITS AND EXPENSES44,502 41,818 Income from operations2,015 2,188 Interest expense and other(358)(299)Net realized investment losses(56)(322)Income before income taxes1,601 1,567 TOTAL INCOME TAXES295 355 Net income1,306 1,212 Less:Net income attributable to noncontrolling intere
15、sts39 15 SHAREHOLDERS NET INCOME$1,267$1,197 Shareholders net income per shareBasic$4.28$3.76 Diluted$4.24$3.73 Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023.See Note 2 to the Consolidated Financial Statements for fu
16、rther information.The accompanying Notes to the Consolidated Financial Statements(unaudited)are an integral part of these statements.(1)(1)3The Cigna GroupConsolidated Statements of Comprehensive IncomeUnauditedThree Months Ended March 31,(In millions)20232022 Net income$1,306$1,212 Other comprehens
17、ive income(loss),net of taxNet unrealized appreciation(depreciation)on securities and derivatives194(843)Net long-duration insurance and contractholder liabilities measurement adjustments(331)459 Net translation gains(losses)on foreign currencies16(63)Postretirement benefits liability adjustment10 1
18、3 Other comprehensive loss,net of tax(111)(434)Total comprehensive income1,195 778 Comprehensive income(loss)attributable to noncontrolling interestsNet income attributable to redeemable noncontrolling interests34 3 Net income attributable to other noncontrolling interests5 12 Other comprehensive lo
19、ss attributable to redeemable noncontrolling interests(2)Total comprehensive income attributable to noncontrolling interests39 13 SHAREHOLDERS COMPREHENSIVE INCOME$1,156$765 Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2
20、023.See Note 2 to the Consolidated Financial Statements for further information.The accompanying Notes to the Consolidated Financial Statements(unaudited)are an integral part of these statements.(1)(1)4The Cigna GroupConsolidated Balance SheetsUnauditedAs ofMarch 31,As ofDecember 31,(In millions)202
21、32022 AssetsCash and cash equivalents$7,935$5,924 Investments914 905 Accounts receivable,net17,704 17,218 Inventories4,211 4,777 Other current assets1,263 1,298 Total current assets32,027 30,122 Long-term investments19,010 16,288 Reinsurance recoverables5,286 5,416 Property and equipment3,837 3,774
22、Goodwill45,811 45,811 Other intangible assets32,102 32,492 Other assets2,563 2,704 Separate account assets7,340 7,278 TOTAL ASSETS$147,976$143,885 LiabilitiesCurrent insurance and contractholder liabilities$7,166$5,409 Pharmacy and other service costs payable17,609 17,070 Accounts payable7,360 7,775
23、 Accrued expenses and other liabilities9,174 7,978 Short-term debt3,418 2,993 Total current liabilities44,727 41,225 Non-current insurance and contractholder liabilities11,790 11,976 Deferred tax liabilities,net7,707 7,786 Other non-current liabilities2,692 2,766 Long-term debt29,124 28,100 Separate
24、 account liabilities7,340 7,278 TOTAL LIABILITIES103,380 99,131 Contingencies Note 16Redeemable noncontrolling interests78 66 Shareholders equityCommon stock 4 4 Additional paid-in capital30,332 30,233 Accumulated other comprehensive loss(1,769)(1,658)Retained earnings38,841 37,940 Less:Treasury sto
25、ck,at cost(22,906)(21,844)TOTAL SHAREHOLDERS EQUITY44,502 44,675 Other noncontrolling interests16 13 Total equity44,518 44,688 Total liabilities and equity$147,976$143,885 Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 202
26、3.See Note 2 to the Consolidated Financial Statements for further information.Par value per share,$0.01;shares issued,399 million as of March 31,2023 and 398 million as of December 31,2022;authorized shares,600 million.The accompanying Notes to the Consolidated Financial Statements(unaudited)are an
27、integral part of these statements.(1)(2)(1)(2)5The Cigna GroupConsolidated Statements of Changes in Total EquityUnauditedThree Months Ended March 31,2023(In millions)Common StockAdditional Paid-in CapitalAccumulated OtherComprehensive(Loss)RetainedEarningsTreasury StockShareholders EquityOther Non-c
28、ontrollingInterestsTotal EquityRedeemableNoncontrolling InterestsBalance at December 31,2022,as retrospectively restated$4$30,233$(1,658)$37,940$(21,844)$44,675$13$44,688$66 Effect of issuing stock for employee benefit plans99(104)(5)(5)Other comprehensive loss(111)(111)(111)Net income1,267 1,267 5
29、1,272 34 Common dividends declared(per share:$1.23)(366)(366)(366)Repurchase of common stock(958)(958)(958)Other transactions impacting noncontrolling interests(2)(2)(22)Balance at March 31,2023$4$30,332$(1,769)$38,841$(22,906)$44,502$16$44,518$78 Three Months Ended March 31,2022(In millions)Common
30、StockAdditional Paid-in CapitalAccumulated OtherComprehensive(Loss)RetainedEarningsTreasury StockShareholders EquityOther Non-controllingInterestsTotal EquityRedeemableNoncontrolling InterestsBalance at December 31,2021,as retrospectively restated 4 29,574(1,068)32,623(14,175)46,958 18 46,976 54 Eff
31、ect of issuing stock for employee benefit plans162(72)90 90 Other comprehensive loss(432)(432)(432)(2)Net income1,197 1,197 12 1,209 3 Common dividends declared(per share:$1.12)(356)(356)(356)Repurchase of common stock(1,334)(1,334)(1,334)Other transactions impacting noncontrolling interests (8)(8)B
32、alance at March 31,2022$4$29,736$(1,500)$33,464$(15,581)$46,123$22$46,145$55 Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contracts in 2023.See Note 2 to the Consolidated Financial Statements to the Consolidated Financial Statements
33、for furtherinformation.The accompanying Notes to the Consolidated Financial Statements(unaudited)are an integral part of these statements.(1)(1)(1)(1)6The Cigna GroupConsolidated Statements of Cash FlowsUnauditedThree Months Ended March 31,(In millions)20232022 Cash Flows from Operating ActivitiesNe
34、t income$1,306$1,212 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization749 717 Realized investment losses,net56 322 Deferred income tax benefit(108)(134)Net changes in assets and liabilities,net of non-operating effects:Accounts receivable,
35、net(479)(983)Inventories566 222 Reinsurance recoverable and Other assets72 584 Insurance liabilities1,533 142 Pharmacy and other service costs payable539(74)Accounts payable and Accrued expenses and other liabilities690 85 Other,net104(63)NET CASH PROVIDED BY OPERATING ACTIVITIES5,028 2,030 Cash Flo
36、ws from Investing ActivitiesProceeds from investments sold:Debt securities and equity securities196 757 Investment maturities and repayments:Debt securities and equity securities257 456 Commercial mortgage loans4 65 Other sales,maturities and repayments(primarily short-term and other long-term inves
37、tments)160 479 Investments purchased or originated:Debt securities and equity securities(2,794)(1,246)Commercial mortgage loans(59)Other(primarily short-term and other long-term investments)(377)(425)Property and equipment purchases,net(408)(288)Divestitures,net of cash sold22(57)Other,net(43)(6)NET
38、 CASH USED IN INVESTING ACTIVITIES(2,983)(324)Cash Flows from Financing ActivitiesDeposits and interest credited to contractholder deposit funds45 43 Withdrawals and benefit payments from contractholder deposit funds(48)(49)Net change in short-term debt(9)(463)Repayment of long-term debt(80)Net proc
39、eeds on issuance of long-term debt1,491 Repurchase of common stock(962)(1,368)Issuance of common stock30 93 Common stock dividend paid(368)(357)Other,net(136)(70)NET CASH USED IN FINANCING ACTIVITIES(37)(2,171)Effect of foreign currency rate changes on cash,cash equivalents and restricted cash5(23)N
40、et increase(decrease)in cash,cash equivalents and restricted cash2,013(488)Cash,cash equivalents and restricted cash January 1,5,976 5,548 Cash,cash equivalents and restricted cash,March 31,7,989 5,060 Cash and cash equivalents reclassified to Assets of businesses held for sale(591)Cash,cash equival
41、ents and restricted cash March 31,per Consolidated Balance Sheets$7,989$4,469 Supplemental Disclosure of Cash Information:Income taxes paid,net of refunds$77$43 Interest paid$322$308 Amounts have been restated to reflect the adoption of Targeted Improvements to the Accounting for Long-Duration Contr
42、acts in 2023.See Note 2 to the Consolidated Financial Statements for further information.Includes$425 million reported in Assets of businesses held for sale as of January 1,2022.Restricted cash and cash equivalents were reported in other long-term investments.The accompanying Notes to the Consolidat
43、ed Financial Statements(unaudited)are an integral part of these statements.(1)(2)(3)(1)(2)(3)7THE CIGNA GROUPNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)TABLE OF CONTENTSNote NumberFootnotePageBUSINESS AND CAPITAL STRUCTURE1Description of Business92Summary of Significant Accounting Poli
44、cies93Accounts Receivable,Net114Supplier Finance Program115Mergers,Acquisitions and Divestitures116Earnings Per Share127Debt138Common and Preferred Stock14INSURANCE INFORMATION9Insurance and Contractholder Liabilities1510Reinsurance20INVESTMENTS11Investments2112Fair Value Measurements2413Variable In
45、terest Entities2814Accumulated Other Comprehensive Income(Loss)29COMPLIANCE,REGULATION AND CONTINGENCIES15Income Taxes3016Contingencies and Other Matters30RESULTS DETAILS17Segment Information328Note 1 Description of BusinessThe Cigna Group,together with its subsidiaries(either individually or collec
46、tively referred to as the Company,we,us or our),is a global health company with a mission of helping those weserve improve their health and vitality.Our subsidiaries offer a differentiated set of pharmacy,medical,behavioral,dental and related products and services.The majority of these products are
47、offered through employers and other groups such as governmental and non-governmental organizations,unions and associations.Cigna Healthcare also offerscommercial health and dental insurance and Medicare products to individuals in the United States and selected international markets.In addition to th
48、ese ongoing operations,The Cigna Group also hascertain run-off operations.A full description of our segments follows:Evernorth Health Services includes a broad range of coordinated and point solution health services and capabilities,as well as those from partners across the health care system,in Pha
49、rmacy Benefits,Home Delivery Pharmacy,Specialty Pharmacy,Distribution and Care Delivery and Management Solutions,which are provided to health plans,employers,government organizations and health careproviders.Cigna Healthcare includes the U.S.Commercial,U.S.Government and International Health operati
50、ng segments which provide comprehensive medical and coordinated solutions to clients andcustomers.U.S.Commercial products and services include medical,pharmacy,behavioral health,dental and other products and services for insured and self-insured clients.U.S.Government solutionsinclude Medicare Advan
51、tage,Medicare Supplement and Medicare Part D plans for seniors and individual health insurance plans.International Health solutions include health care coverage in ourinternational markets,as well as health care benefits for globally mobile individuals and employees of multinational organizations.Ot
52、her Operations comprises the remainder of our business operations,which includes ongoing businesses and exited businesses.Our ongoing businesses include continuing business(corporate-owned life insurance(COLI)and our run-off businesses.Our run-off businesses include(i)variable annuity reinsurance bu
53、siness(also referred to as guaranteed minimum death benefit(GMDB)and guaranteed minimum income benefit(GMIB)business)that was effectively exited through reinsurance with Berkshire Hathaway Life Insurance Company of Nebraska(Berkshire)in 2013,(ii)settlement annuity business,and(iii)individual life in
54、surance and annuity and retirement benefits businesses comprised of deferred gains from the sales of these businesses.Our exited businessesinclude our interest in a joint venture in Trkiye,which was sold in December 2022 and the international life,accident and supplemental benefits businesses sold i
55、n July 2022(the Chubbtransaction).Corporate reflects amounts not allocated to operating segments,including net interest expense(defined as interest on corporate debt less net investment income on investments not supporting segmentand other operations),certain litigation matters,expense associated wi
56、th our frozen pension plans,charitable contributions,operating severance,certain overhead and enterprise-wide project costs andintersegment eliminations for products and services sold between segments.Note 2 Summary of Significant Accounting Policies Basis of PresentationThe Consolidated Financial S
57、tatements include the accounts of The Cigna Group 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 A
58、merica(GAAP).Certain amounts in prior years havebeen reclassified to conform to the current year presentation.Amounts recorded in the Consolidated Financial Statements necessarily reflect managements estimates and assumptions about medical costs,investment and receivable valuations,interest rates an
59、dother 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 earningsin the period of adjustment.These interim Consolidated Financial Statements are unaudited but include
60、 all adjustments(including normal recurring adjustments)necessary,in the opinion of management,for a fair statement offinancial position and results of operations for the periods reported.The interim Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Fina
61、ncial Statementsand Notes included in the 2022 Annual Report on Form 10-K(2022 Form 10-K).The preparation of interim Consolidated Financial Statements necessarily relies heavily on estimates.This and otherfactors,including the seasonal nature of portions of the health care and related benefits busin
62、ess,as well as competitive and other market conditions,call for caution in estimating full-year resultsbased on interim results of operations.9Recent Accounting PronouncementsThe Companys 2022 Form 10-K includes discussion of significant recent accounting pronouncements that either have impacted or
63、may impact our financial statements in the future.The followinginformation provides updates on recently adopted accounting pronouncements that have occurred since the Company filed its 2022 Form 10-K.There are no accounting pronouncements not yetadopted as of March 31,2023.Targeted Improvements to t
64、he Accounting for Long-Duration Contracts(LDTI),Accounting Standards Update(ASU)2018-12 and related amendmentsThe Cigna Group adopted LDTI January 1,2023,which includes the following key provisions:Changes to the measurement of the future policy benefits liability for traditional and limited-pay ins
65、urance contracts:Assumptions used to measure cash flows(such as mortality,morbidity and lapse assumptions)are updated at least annually with the effect of changes in those assumptionsremeasured retrospectively and reflected in current period net income.Discount rate assumptions are updated quarterly
66、 based on market-level yields for low credit risk fixed income instruments(upper-medium grade fixed-income instrument),withany changes reflected in other comprehensive income.The upper-medium grade fixed-income instrument yield is interpreted to mean A-rated.Deferred policy acquisition costs(DAC)rel
67、ated to long-duration insurance contracts are amortized on a constant-level basis over the expected term of the related contracts.Other relateddeferred or capitalized balances(such as unearned revenue liability and value of business acquired)may use this simplified amortization method.Market risk be
68、nefits(MRB),defined as protecting the contractholder from other-than-nominal capital market risk and exposing the insurer to that risk,are measured at fair value,withchanges in fair value recognized in net income each period,except for the effect of the Companys change in nonperformance risk(own cre
69、dit risk),which is recognized in othercomprehensive income.Additional disclosures,including disaggregated roll forwards for the liability for future policy benefits,market risk benefits,separate account liabilities and DAC,as well as information aboutsignificant inputs,judgments,assumptions and meth
70、ods used in measurement.The transition methods applied at adoption were:The liability for future policy benefits was remeasured using a modified retrospective approach applied to all outstanding contracts as of the beginning of the earliest period presentedand was recognized in the opening balance o
71、f retained earnings.The impact of remeasuring the future policy benefits liability for the discount rate was recorded through accumulatedother comprehensive income.DAC followed the transition method used for future policyholder benefits.Market risk benefits were remeasured at fair value at the begin
72、ning of the earliest period presented.The difference between this fair value and carrying value was recognized in theopening balance of retained earnings,excluding the effect of the Companys change in nonperformance risk(own credit risk),which is recognized in accumulated othercomprehensive income.E
73、ffects of adoption:The new guidance applies to our long-duration insurance products predominantly within the Cigna Healthcare segment and Other Operations.The cumulative effects of adopting the new standard were immaterial.The impacts were a decrease to January 1,2021 Shareholders equity of$139 mill
74、ion and an increase to Shareholdersnet income for the year ended December 31,2022 and December 31,2021 of$36 million and$5 million,respectively.The corresponding impact to diluted earnings per share was an increaseof$0.11 and$0.02 for the year ended December 31,2022 and December 31,2021,respectively
75、.The prior periods within our Consolidated Statements of Income,Consolidated Statements of Comprehensive Income,Consolidated Balance Sheets,Consolidated Statements of Changes inTotal Equity and Consolidated Statements of Cash Flows were restated to conform to the current presentation.Prior period ba
76、lances in the Companys footnote disclosures have been updated to reflect adjustments resulting from the adoption of this standard.Refer to Note 9 to the ConsolidatedFinancial Statements for the Companys updated accounting policies.It is possible that our income recognition pattern could change on a
77、prospective basis for several reasons:Applying periodic assumption updates,versus the locked-in model,may change our timing of profit or loss recognition.10DAC amortization is on a constant level basis over the expected term of the related contracts and no longer tied to the emergence of profit on s
78、uch contracts.Additionally,in December 2022,the Financial Accounting Standards Board(FASB)published ASU 2022-05,which simplified the retrospective adoption of LDTI by permitting companies to makean accounting policy election to exclude contracts that are sold and removed from the balance sheet prior
79、 to the effective date of the standard from the retrospective adoption of LDTI.The CignaGroup made this policy election for the contracts sold in the Chubb transaction and our divested interest in a joint venture in Trkiye.Note 3 Accounts Receivable,NetThe following amounts were included within Acco
80、unts receivable,net:(In millions)March 31,2023December 31,2022Noninsurance customer receivables$7,845$6,899 Pharmaceutical manufacturers receivables7,128 7,108 Insurance customer receivables2,467 2,963 Other receivables264 248 Total$17,704$17,218 These receivables are reported net of our allowances
81、of$2.1 billion as of March 31,2023 and$1.9 billion as of December 31,2022.These allowances include contractual allowances for certainrebates receivable with pharmaceutical manufacturers and certain receivables from third-party payors,discounts and claims adjustments issued to customers in the form o
82、f client credits,an allowancefor current expected credit losses and other non-credit adjustments.The Companys allowance for current expected credit losses was$87 million as of March 31,2023 and$86 million as of December 31,2022.Note 4 Supplier Finance ProgramThe Company facilitates a voluntary suppl
83、ier finance program(the program)that provides suppliers the opportunity to sell their receivables due from us(i.e.,our payment obligations to thesuppliers)to a financial institution,on a non-recourse basis,in order to be paid earlier than our payment terms require.The Cigna Group is not a party to t
84、he program and agrees to commercial termswith its suppliers independently of their participation in the program.Amounts due to suppliers that participate in the program are generally paid within one month following the invoice date.Asuppliers participation in the program has no impact on the Company
85、s payment terms and the Company has no economic interest in a suppliers decision to participate in the program.The suppliers,at their sole discretion,determine which invoices,if any,to sell to the financial institution.No guarantees or pledged assets are provided by the Company or any of our subsidi
86、aries under the program.As of March 31,2023 and December 31,2022,$1.5 billion and$1.3 billion,respectively,of the Companys outstanding payment obligations were confirmed as valid within the program by thefinancial institution and reflected in Accounts payable in the Consolidated Balance Sheets.The a
87、mounts confirmed as valid for both periods are predominately associated with one supplier.We havebeen informed by the financial institution that$324 million as of March 31,2023 of the Companys outstanding payment obligations were voluntarily elected by suppliers to be sold to the financialinstitutio
88、n under the program.Note 5 Mergers,Acquisitions and DivestituresA.Divestiture of International BusinessesIn July 2022,the Company completed the sale of its life,accident and supplemental benefits businesses in six countries(Hong Kong,Indonesia,New Zealand,South Korea,Taiwan and Thailand)(theChubb tr
89、ansaction)for approximately$5.4 billion in cash.The Company recognized a gain of$1.7 billion pre-tax($1.4 billion after-tax),which includes recognition of previously unrealized capitallosses on investments sold and translation loss on foreign currencies.In December 2022,the Company also divested its
90、 ownership interest in a joint venture in Trkiye.B.Integration and Transaction-related CostsIn 2023 and 2022,the Company incurred net costs mainly related to the Chubb transaction.In the first three months of 2022,the Company also incurred net costs related to the sale of the GroupDisability and Lif
91、e business and acquisition of MDLIVE.These net11costs were$1 million pre-tax($1 million after-tax)for the three months ended March 31,2023 and$52 million pre-tax($37 million after-tax)for the three months ended March 31,2022.These costsconsisted primarily of certain projects to separate or integrate
92、 the Companys systems,products and services,fees for legal,advisory and other professional services and certain employment-relatedcosts.Note 6 Earnings Per ShareBasic and diluted earnings per share were computed as follows:Three Months EndedMarch 31,2023March 31,2022(Shares in thousands,dollars in m
93、illions,except per share amounts)BasicEffect ofDilutionDilutedBasicEffect ofDilutionDilutedShareholders net income$1,267$1,267$1,197$1,197 Shares:Weighted average295,706 295,706 318,487 318,487 Common stock equivalents3,293 3,293 2,795 2,795 Total shares295,706 3,293 298,999 318,487 2,795 321,282 Ea
94、rnings per share$4.28$(0.04)$4.24$3.76$(0.03)$3.73 Amounts reflected above for the three months ended March 31,2022 have been restated to reflect the impact of adopting amended accounting guidance for long-duration insurance contracts(discussed in Note 2 to the Consolidated Financial Statements).The
95、 following outstanding employee stock options were not included in the computation of diluted earnings per share because their effect was anti-dilutive:Three Months Ended March 31,(In millions)20232022Anti-dilutive options0.9 2.8 The Company held approximately 102.7 million shares of common stock in
96、 treasury at March 31,2023,99.1 million shares as of December 31,2022 and 77.3 million shares as of March 31,2022.12Note 7 DebtThe outstanding amounts of debt,net of issuance costs,discounts or premiums,and finance leases were as follows:(In millions)March 31,2023December 31,2022Short-term debt$17 m
97、illion,8.300%Notes due January 2023 17$63 million,7.650%Notes due March 2023 63$700 million,Floating Rate Notes due July 2023700 700$1,000 million,3.000%Notes due July 2023996 994$1,187 million,3.750%Notes due July 20231,187 1,186$500 million,0.613%Notes due March 2024499 Other,including finance lea
98、ses36 33 Total short-term debt$3,418$2,993 Long-term debt$500 million,0.613%Notes due March 2024 499$1,000 million,3.500%Notes due June 2024992 990$900 million,3.250%Notes due April 2025878 872$2,200 million,4.125%Notes due November 20252,195 2,195$1,500 million,4.500%Notes due February 20261,503 1,
99、503$800 million,1.250%Notes due March 2026797 797$700 million,5.685%Notes due March 2026697$1,500 million,3.400%Notes due March 20271,440 1,436$259 million,7.875%Debentures due May 2027259 259$600 million,3.050%Notes due October 2027597 597$3,800 million,4.375%Notes due October 20283,785 3,785$1,500
100、 million,2.400%Notes due March 20301,492 1,492$1,500 million,2.375%Notes due March 2031 1,398 1,380$45 million,8.080%Step Down Notes due January 2033 45 45$800 million,5.400%Notes due March 2033794$190 million,6.150%Notes due November 2036190 190$2,200 million,4.800%Notes due August 20382,192 2,192$
101、750 million,3.200%Notes due March 2040743 743$121 million,5.875%Notes due March 2041119 119$448 million,6.125%Notes due November 2041488 488$317 million,5.375%Notes due February 2042315 315$1,500 million,4.800%Notes due July 20461,466 1,466$1,000 million,3.875%Notes due October 2047989 989$3,000 mil
102、lion,4.900%Notes due December 20482,969 2,968$1,250 million,3.400%Notes due March 20501,236 1,236$1,500 million,3.400%Notes due March 20511,478 1,478 Other,including finance leases67 66 Total long-term debt$29,124$28,100 The Company has entered into interest rate swap contracts hedging a portion of
103、these fixed-rate debt instruments.See Note 11 in the Companys 2022 Form 10-K for further information about the Companys interest rate risk management andthese derivative instruments.Interest rate step down to 8.080%effective January 15,2023.Long-term debtDebt Issuance.On March 7,2023,the Company iss
104、ued$1.5 billion of new senior notes.The proceeds of this issuance will be used for general corporate purposes,and may include repayment ofoutstanding debt securities.Interest on this debt is paid semi-annually.PrincipalMaturity DateInterest RateNet Proceeds$700 million March 15,20265.685%$698 millio
105、n$800 million March 15,20335.400%$796 million Redeemable at any time discounted at the U.S.Treasury rate plus 20 basis points.Redeemable at par on or after March 15,2024.Redeemable at any time discounted at the U.S.Treasury rate plus 25 basis points.Redeemable at par on or after December 15,2032.(1)
106、(1)(2)(1)(2)(1)(2)(1)(2)13Short-term and Credit Facilities DebtRevolving Credit Agreements.Our revolving credit agreements provide us with the ability to borrow amounts for general corporate purposes,including providing liquidity support if necessary underour commercial paper program discussed below
107、.As of March 31,2023,The Cigna Group had a$3.0 billion five-year revolving credit and letter of credit agreement maturing in April 2027;a$1.0 billion three-year revolving credit agreementmaturing in April 2025;and a$1.0 billion 364-day revolving credit agreement maturing in April 2023.There were no
108、outstanding balances under these revolving credit agreements as of March 31,2023.In April 2023,The Cigna Group entered into the following revolving credit agreements(the Credit Agreements),which replaced the agreements discussed above:a$4.0 billion five-year revolving credit and letter of credit agr
109、eement that will mature in April 2028 with an option to extend the maturity date for additional one-year periods,subject toconsent of the banks.The Company can borrow up to$4.0 billion under the credit agreement for general corporate purposes,with up to$500 million available for issuance of letters
110、of credit.a$1.0 billion 364-day revolving credit agreement that will mature in April 2024.The Company can borrow up to$1.0 billion under the credit agreement for general corporate purposes.Thisagreement includes the option to term out any revolving loans that are outstanding at maturity by convertin
111、g them into a term loan maturing on the one-year anniversary of conversion.Each of the Credit Agreements include an option to increase commitments in an aggregate amount of up to$1.5 billion across both facilities for a maximum total commitment of$6.5 billion.TheCredit Agreements allow for borrowing
112、s at either a base rate or an adjusted term Secured Overnight Funding Rate(SOFR)plus,in each case,an applicable margin based on the Companys seniorunsecured credit ratings.Each of the two facilities is diversified among 21 large commercial banks,all of which had an A-equivalent or higher rating by a
113、t least one Nationally Recognized Statistical Rating Organization as ofMarch 31,2023.Each facility also contains customary covenants and restrictions,including a financial covenant that the Companys leverage ratio,as defined in the Credit Agreements,may notexceed 60%subject to certain exceptions upo
114、n the consummation of an acquisition.Commercial Paper.Under our commercial paper program,we may issue short-term,unsecured commercial paper notes privately placed on a discounted basis through certain broker-dealers at anytime not to exceed an aggregate amount of$5.0 billion.Amounts available under
115、the program may be borrowed,repaid and re-borrowed from time to time.The net proceeds of issuances have beenand are expected to be used for general corporate purposes.There was no commercial paper outstanding balance as of March 31,2023.Debt Covenants.The Company was in compliance with its debt cove
116、nants as of March 31,2023.Interest ExpenseInterest expense on long-term and short-term debt was$345 million for the three months ended March 31,2023 and$314 million for the three months ended March 31,2022.Note 8 Common and Preferred StockDividendsIn the first quarter of 2023,The Cigna Group declare
117、d quarterly cash dividends of$1.23 per share of the Companys common stock.In the first quarter of 2022,The Cigna Group declared quarterlycash dividends of$1.12 per share of the Companys common stock.The following table provides details of the Companys dividend payments:Record DatePayment DateAmount
118、per ShareTotal Amount Paid(in millions)2023March 8,2023March 23,2023$1.23$3682022March 9,2022March 24,2022$1.12$357On April 26,2023,the Board of Directors declared the second quarter cash dividend of$1.23 per share of The Cigna Group common stock to be paid on June 22,2023 to shareholders of record
119、onJune 7,2023.The Company currently intends to pay regular quarterly14dividends,with future declarations subject to approval by its Board of Directors and the Boards determination that the declaration of dividends remains in the best interests of The Cigna Group and itsshareholders.The decision of w
120、hether to pay future dividends and the amount of any such dividends will be based on the Companys financial position,results of operations,cash flows,capitalrequirements,the requirements of applicable law and any other factors the Board may deem relevant.Note 9 Insurance and Contractholder Liabiliti
121、esA.Account Balances Insurance and Contractholder LiabilitiesThe Companys insurance and contractholder liabilities were comprised of the following:March 31,2023December 31,2022March 31,2022(In millions)CurrentNon-currentTotalCurrentNon-currentTotalTotalUnpaid claims and claim expensesCigna Healthcar
122、e$4,880$79$4,959$4,117$59$4,176$4,491 Other Operations97 175 272 107 177 284 744 Future policy benefitsCigna Healthcare59 542 601 43 544 587 681 Other Operations290 3,341 3,631 150 3,442 3,592 7,981 Contractholder deposit fundsCigna Healthcare12 151 163 14 157 171 181 Other Operations361 6,309 6,670
123、 351 6,358 6,709 6,843 Market risk benefits48 1,172 1,220 51 1,217 1,268 1,558 Unearned premiums1,419 21 1,440 576 22 598 1,030 Total23,509Insurance and contractholder liabilities classified asLiabilities of businesses held for sale(4,562)Total insurance and contractholder liabilities$7,166$11,790$1
124、8,956$5,409$11,976$17,385$18,947 Amounts classified as Liabilities of businesses held for sale primarily include$3.7 billion of Future policy benefits,$0.4 billion of Unpaid claims and$0.4 billion of Unearned premiums as of March 31,2022.Insurance and contractholder liabilities expected to be paid w
125、ithin one year are classified as current.The Company adopted amended accounting guidance for long-duration insurance contracts onJanuary 1,2023,discussed further in Note 2 to the Consolidated Financial Statements,which resulted in restatement of prior period amounts.Additionally,see below updated ac
126、counting policies andincremental disclosures associated with future policy benefits(Note 9C),contractholder deposit funds(Note 9D),and market risk benefits(Note 9E).B.Unpaid Claims and Claim Expenses Cigna HealthcareThis liability reflects estimates of the ultimate cost of claims that have been incu
127、rred but not reported,including expected development on reported claims,those that have been reported but not yetpaid(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 profe
128、ssionalsand facilities.The total of incurred but not reported liabilities plus expected development on reported claims,including reported claims in process,was$4.6 billion at March 31,2023 and$4.2 billion at March 31,2022.(1)(1)15Activity,net of intercompany transactions,in the unpaid claims liabili
129、ty for the Cigna Healthcare segment was as follows:Three Months Ended(In millions)March 31,2023March 31,2022Beginning balance$4,176$4,261 Less:Reinsurance and other amounts recoverable221 261 Beginning balance,net3,955 4,000 Incurred costs related to:Current year9,041 8,024 Prior years(144)(276)Tota
130、l incurred8,897 7,748 Paid costs related to:Current year5,316 4,634 Prior years2,795 2,822 Total paid8,111 7,456 Ending balance,net4,741 4,292 Add:Reinsurance and other amounts recoverable218 199 Ending balance$4,959$4,491 Reinsurance and other amounts recoverable reflect amounts due from reinsurers
131、 and policyholders to cover incurred but not reported and pending claims of certain business for which the Companyadministers the plan benefits without any right of offset.See Note 10 to the Consolidated Financial Statements for additional information on reinsurance.Variances in incurred costs relat
132、ed to prior years unpaid claims and claim expenses that resulted from the differences between actual experience and the Companys key assumptions were as follows:Three Months EndedMarch 31,2023March 31,2022(Dollars in millions)$%$%Actual completion factors$1%$99 0.3%Medical cost trend143 0.5 177 0.6
133、Total favorable variance$144 0.5%$276 0.9%Percentage of current year incurred costs as reported for the year ended December 31,2022.Percentage of current year incurred costs as reported for the year ended December 31,2021.Favorable prior year development in both years reflects lower than expected ut
134、ilization of medical services as compared to our assumptions.C.Future Policy BenefitsAccounting Policy.Future policy benefits represent the present value of estimated future obligations,estimated using actuarial methods,for long-term insurance policies and annuity productscurrently in force,consisti
135、ng primarily of reserves for annuity contracts,life insurance benefits,and certain supplemental health products that are guaranteed renewable beyond one year.Contracts are grouped at a level no higher than issue year,based on the original contract issue date,and at lower levels of disaggregation wit
136、hin each issue year for certain businesses to reflect factorsincluding product type,plan type and currency.Management estimates these obligations based on assumptions for premiums,interest rates,mortality or morbidity,future claim adjudication expensesand surrenders.Mortality,morbidity and surrender
137、 assumptions are based on the Companys own experience and published actuarial tables,and are updated at least annually,to the extent changes incircumstances require.Interest rate assumptions are based on market-level yields for low credit risk fixed income instruments(upper-medium grade fixed-income
138、 instrument).For interest accretionpurposes,interest rates are fixed at the year of the cohorts inception,however for purposes of liability measurement,are updated to the current rate quarterly,with all changes in the interest rate frominception to current period reported through Accumulated other c
139、omprehensive loss.For contracts issued domestically,we use observable inputs from a published spot rate curve for terms up to 30years and extrapolate for longer terms using a constant forward rate approach.For contracts issued by foreign operating entities with functional currencies other than the U
140、.S.dollar,we use observableinputs to approximate a risk free rate and add a credit spread adjustment to align with a low credit risk fixed income instrument.For terms beyond the last observable risk free rates,which vary byinternational market,we extrapolate to the ultimate forward rate assuming a c
141、onstant credit spread.(1)(2)(1)(2)16For the annuity business,the premium paying period is shorter than the benefit coverage period,and a deferred profit liability(DPL)is reported in future policy benefits representing gross premiumreceived in excess of net premiums.DPL is amortized based on expected
142、 future benefit payments.Cigna HealthcareThe weighted average interest rates applied and duration for future policy benefits in the Cigna Healthcare segment,consisting primarily of supplemental health products including individual Medicaresupplement,limited benefit health products and individual pri
143、vate medical insurance,were as follows:As ofMarch 31,2023March 31,2022Interest accretion rate2.59%2.64%Current discount rate5.29%4.90%Weighted average duration8.05 years7.45 yearsThe net liability for future policy benefits for the segments supplemental health products represents the present value o
144、f benefits expected to be paid to policyholders,net of the present value ofexpected net premiums,which is the portion of expected future gross premium expected to be collected from policyholders that is required to provide for all expected future benefits and expenses.Thepresent values of expected n
145、et premiums and expected future policy benefits for the Cigna Healthcare segment are as follows:Three Months Ended(In millions)March 31,2023March 31,2022Present value of expected net premiumsBeginning balance$8,557$9,314 Reversal of effect of beginning of period discount rate assumptions1,537(367)Ef
146、fect of assumption changes and actual variances from expected experience Issuances and lapses306 143 Net premiums collected(326)(310)Interest and other 56 46 Ending balance at original discount rate10,130 8,826 Effect of end of period discount rate assumptions(1,312)(376)Ending balance$8,818$8,450 P
147、resent value of expected policy benefitsBeginning balance$8,945$9,794 Reversal of effect of discount rate assumptions1,611(379)Effect of assumption changes and actual variances from expected experience Issuances and lapses307 215 Benefit payments(326)(385)Interest and other 58 52 Ending balance at o
148、riginal discount rate10,595 9,297 Effect of discount rate assumptions(1,378)(392)Ending balance$9,217$8,905 Liability for future policy benefits$399$455 Other202 226 Total liability for future policy benefits$601$681 Includes the foreign exchange rate impact of translating from transactional and fun
149、ctional currency to United States dollar and the impact of flooring the liability at zero.The flooring impact is calculated at the cohort level after discounting thereserves at the current discount rate.As of March 31,2023 and March 31,2022,respectively,undiscounted expected future gross premiums we
150、re$17.6 billion and$13.5 billion.As of March 31,2023 and March 31,2022,respectively,discounted expected future gross premiums were$12.5 billion and$10.7 billion.As of March 31,2023 and March 31,2022,respectively,undiscounted expected future policy benefits were$12.8 billion and$11.2 billion.The liab
151、ility for future policyholder benefits includes immaterial businesses shown as reconciling items above,most of which are in run-off.$154 million and$171 million of reinsurance recoverable asset reported in the Consolidated Balance Sheets as of March 31,2023 and March 31,2022,respectively,relate to t
152、he liability for future policy benefits.(1)(2)(1)(3)(4)(5)(1)(2)(3)(4)(5)17Other OperationsThe weighted average interest rates applied and duration for future policy benefits in Other Operations,consisting of annuity and life insurance products,were as follows:As ofMarch 31,2023March 31,2022Interest
153、 accretion rate5.64%5.64%Current discount rate4.95%3.59%Weighted average duration11.7 years13.9 yearsObligations for annuities represent discounted periodic benefits to be paid to an individual or groups of individuals over their remaining lives.Other Operations traditional insurance contracts,which
154、are in run-off,have no premium remaining to be collected;therefore,future policy benefit reserves represent the present value of expected future policy benefits,discounted using the current discountrate and the remaining amortizable DPL.Future policy benefits for Other Operations includes DPL of$392
155、 million as of March 31,2023 and$384 million as of March 31,2022.Future policy benefits excluding DPL,were$3.2 billion as ofboth March 31,2023 and December 31,2022 and$3.9 billion and$4.3 billion as of March 31,2022 and December 31,2021,respectively.These balances exclude amounts classified as Liabi
156、lities ofbusinesses held for sale of$3.7 billion as of March 31,2022 and$3.8 billion as of December 31,2021.The change in future policy benefits reserves year-to-date was primarily driven by changes inthe current discount rate.Undiscounted expected future policy benefits were$4.6 billion as of March
157、 31,2023 and$4.7 billion as of March 31,2022.As of March 31,2023 and March 31,2022,$1.0 billion and$1.2 billion ofthe future policy benefit reserve was recoverable through treaties with external reinsurers.D.Contractholder Deposit FundsAccounting Policy.Liabilities for contractholder deposit funds p
158、rimarily include deposits received from customers for investment-related and universal life products and investment earnings on theirfund balances in Other Operations.These liabilities are adjusted to reflect administrative charges and,for universal life fund balances,mortality charges.Interest cred
159、ited on these funds is accruedratably over the contract period.Contractholder deposit fund liabilities within Other Operations were$6.7 billion as of both March 31,2023 and December 31,2022 and$6.8 billion and$6.9 billion as of March 31,2022 andDecember 31,2021,respectively.Approximately 39%of the b
160、alance is reinsured externally.Activity in these liabilities is presented net of reinsurance in the Consolidated Statements of Cash Flows.The net year-to-date decrease in contractholder deposit fund liabilities generally relates to withdrawals and benefit payments from contractholder deposit funds,p
161、artially offset by deposits and interestcredited to contractholder deposit funds.As of March 31,2023,the weighted average crediting rate,net amount at risk and cash surrender value for contractholder deposit fund liabilities not externally reinsured were 3.25%,$3.2 billion and$2.8 billion,respective
162、ly.The comparative amounts as of March 31,2022 were 3.18%,$3.5 billion and$2.9 billion,respectively.As of both March 31,2023 and March 31,2022,more than 99%ofthe$4.1 billion liability not reinsured externally is for contracts with guaranteed interest rates of 3%-4%,and approximately$1.2 billion repr
163、esented contracts with policies at the guarantee.At bothof these same period ends,$1.2 billion was 50-150 bps above the guarantee and the remaining$1.7 billion represented contracts above the guarantee that pay the policyholder based on the greater of aguaranteed minimum cash value or the actual cas
164、h value.More than 90%of these contracts have actual cash values of at least 110%of the guaranteed cash value.E.Market Risk BenefitsLiabilities for market risk benefits consist of variable annuity reinsurance contracts(also referred to as GMDB and GMIB contracts)in Other Operations.These liabilities
165、arise under annuities andriders to annuities written by ceding companies that guarantee the benefit received at death and,for a subset of policies,also provide contractholders the option,within 30 days of a policy anniversaryafter the appropriate waiting period,to elect minimum income payments.The C
166、ompanys capital market risk exposure on variable annuity reinsurance contracts arises when the reinsured guaranteedminimum benefit exceeds the contractholders account value in the related underlying mutual funds at the time the insurance benefit is payable under the respective contract.The Company r
167、eceivesand pays premium periodically based on the terms of the reinsurance agreements.Accounting Policy.Variable annuity reinsurance liabilities are measured as MRBs at fair value,net of nonperformance risk,with fluctuations in value gross of reinsurer nonperformance risk reportedin benefits expense
168、 while fluctuations in the Companys own18nonperformance risk(own credit risk)are reported in Accumulated other comprehensive loss.Nonperformance risk reflects risk that a party might default and therefore not fulfill its obligations(i.e.nonpayment risk).The nonperformance risk adjustment reflects a
169、market participants view of nonpayment risk by adding an additional spread to the discount rate in the calculation of both(a)thevariable annuity reinsurance liabilities to be paid by the Company and(b)the variable annuity reinsurance assets to be paid by the reinsurers,after considering collateral.T
170、he Company classifiesvariable annuity assets and liabilities in Level 3 of the fair value hierarchy described in Note 12 to the Consolidated Financial Statements because assumptions related to future annuitant behavior arelargely unobservable.As discussed further in Note 10 to the Consolidated Finan
171、cial Statements,due to the reinsurance agreements covering these liabilities,the liabilities do not generally impact netincome except for the change in nonperformance risk on the reinsurance recoverable,which is reported in benefits expense and does not offset the nonperformance risk valuation on th
172、e liability.Variable annuity liabilities are established using capital market assumptions and assumptions related to future annuitant behavior(including mortality,lapse and annuity election rates).Market risk benefits activity was as follows:Three Months Ended(Dollars in millions)March 31,2023March
173、31,2022Balance,beginning of year$1,268$1,824 Balance,beginning of year,before the effect of nonperformance risk(own credit risk)1,379 1,949 Changes due to expected run-off(6)(19)Changes due to capital markets versus expected(41)(271)Changes due to policyholder behavior versus expected6(9)Assumption
174、changes(33)39 Balance,end of year,before the effect of changes in nonperformance risk(own credit risk)1,305 1,689 Nonperformance risk(own credit risk),end of period(85)(131)Balance,end of period$1,220$1,558 Reinsured market risk benefit,end of period$1,301$1,681 The following table presents the net
175、amount at risk and the average attained age of contractholders(weighted by exposure)for contracts assumed by the Company.The net amount at risk is the amountthe Company would have to pay to contractholders if all deaths or annuitizations occurred as of the earliest possible date in accordance with t
176、he insurance contract.The Company should be reimbursedin full for these payments unless the Berkshire reinsurance limit is exceeded,as discussed further in Note 10 to the Consolidated Financial Statements.(Dollars in millions,excludes impact of reinsurance ceded)March 31,2023March 31,2022Net amount
177、at risk$2,183$1,892 Average attained age of contractholders(weighted by exposure)75.4 years76.4 years19Note 10 ReinsuranceThe Companys insurance subsidiaries enter into agreements with other insurance companies to limit losses from large exposures and to permit recovery of a portion of incurred loss
178、es.Reinsurance isceded primarily in acquisition and disposition transactions when the underwriting company is not being acquired.Reinsurance does not relieve the originating insurer of liability.Therefore,reinsuredliabilities must continue to be reported along with the related reinsurance recoverabl
179、es.The Company regularly evaluates the financial condition of its reinsurers and monitors concentrations of itscredit risk.A.Reinsurance RecoverablesThe majority of the Companys reinsurance recoverables resulted from acquisition and disposition transactions in which the underwriting company was not
180、acquired.The Company bears the risk ofloss 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 reservesagainst the recoverables.The Companys reinsurance recoverables as
181、 of March 31,2023 are presented at amount due by range of external credit rating and collateral level in the following table,with reinsurance recoverablesthat are market risk benefits separately presented at fair value:(In millions)Fair value of collateralcontractually required to meetor exceed carr
182、ying value ofrecoverableCollateral provisions existthat may mitigate risk ofcredit loss No collateralTotalOngoing OperationsA-equivalent and higher current ratings$94$94 BBB-to BBB+equivalent current credit ratings 59 59 Not rated142 5 63 210 Total recoverables related to ongoing operations 142 5 21
183、6 363 Acquisition,disposition or run-off activitiesBBB+equivalent and higher current ratings Lincoln National Life and Lincoln Life&Annuity of New York 2,750 2,750 Empower Annuity Insurance Company 133 133 Prudential Insurance Company of America380 380 Life Insurance Company of North America 386 386
184、 Other187 25 15 227 Not rated 9 3 12 Total recoverables related to acquisition,disposition or run-off activities567 3,170 151 3,888 Total reinsurance recoverables before market risk benefits$709$3,175$367$4,251 Allowance for uncollectible reinsurance(35)Market risk benefits 1,301 Total reinsurance r
185、ecoverables$5,517 Certified by a Nationally Recognized Statistical Rating Organization(NRSRO).Includes$231 million of current reinsurance recoverables that are reported in Other current assets.Includes collateral provisions requiring the reinsurer to fully collateralize its obligation if its externa
186、l credit rating is downgraded to a specified level.Total Berkshire and certain Other recoverables reflected under acquisition,disposition or run-off activities in the Companys 2022 Form 10-K that relate to the Companys variable annuity reinsurance products discussed in section B below arenow reporte
187、d at fair market value as MRBs,as further discussed in Note 9 to the Consolidated Financial Statements.At December 31,2022,we reported$711 million related to these recoverables related to the GMDB variable annuity reinsuranceproduct.The restated December 31,2022 variable annuity reinsurance recovera
188、ble balance is$1.4 billion,which also includes the GMIB variable annuity reinsurance product that was classified in Other assets prior to the adoption of LDTI.Collateral levels are defined internally based on the fair value of the collateral relative to the carrying amount of the reinsurance recover
189、able,the frequency at which collateral is required to bereplenished and the potential for volatility in the collaterals fair value.B.Effective Exit of Variable Annuity Reinsurance BusinessThe Company entered into an agreement with Berkshire to effectively exit the variable annuity reinsurance busine
190、ss via a reinsurance transaction in 2013.Variable annuity contracts are accounted foras assumed and ceded reinsurance and categorized as market risk(3)(1)(1)(2)(1)(4)(2)(1)(2)(3)(4)20benefits as discussed in Note 9 to the Consolidated Financial Statements.Berkshire reinsured 100%of the Companys futu
191、re cash flows in this business,net of other reinsurance arrangements existingat that time.The reinsurance agreement is subject to an overall limit with approximately$3.1 billion remaining at March 31,2023.As a result of the reinsurance transaction,reserve increases are offsetby a corresponding incre
192、ase in the recorded reinsurance recoverable,provided the increased recoverable remains within the overall Berkshire limit.(In millions)Reinsurer March 31,2023December 31,2022Collateral and Other Terms at March 31,2023Berkshire$1,043$1,116 90%were secured by assets in a trust.Sun Life Assurance Compa
193、ny of Canada117 115 Liberty Re(Bermuda)Ltd.128 128 100%were secured by assets in a trust.SCOR SE35 39 70%were secured by a letter of credit.Market risk benefits$1,323$1,398 All reinsurers are rated A-equivalent and higher by an NRSRO.Includes IBNR and outstanding claims of$25 million offset by premi
194、um due of$3 million.These amounts are excluded from market risk benefits at March 31,2023 in Note 9 and Note 10A to the Consolidated Financial Statements.AtDecember 31,2022,IBNR and outstanding claims of$27 million offset by premium due of$3 million were excluded from the market risk benefits as res
195、tated due to the adoption of LDTI.The impact of nonperformance risk(i.e.the risk that a counterparty might default)on the variable annuity reinsurance asset was immaterial for the three months ended March 31,2023 and March 31,2022.Note 11 InvestmentsThe Cigna Groups investment portfolio consists of
196、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 gai
197、ns and losses.See Note 12 to theConsolidated Financial Statements for information about the valuation of the Companys investment portfolio.Further information about our accounting policies for investment assets can be found inNote 11 in the Companys 2022 Form 10-K.The following table summarizes the
198、Companys investments by category and current or long-term classification:March 31,2023December 31,2022(In millions)CurrentLong-termTotalCurrentLong-termTotalDebt securities$616$9,293$9,909$654$9,218$9,872 Equity securities51 3,069 3,120 45 577 622 Commercial mortgage loans106 1,501 1,607 67 1,547 1,
199、614 Policy loans 1,211 1,211 1,218 1,218 Other long-term investments 3,936 3,936 3,728 3,728 Short-term investments141 141 139 139 Total$914$19,010$19,924$905$16,288$17,193 A.Investment PortfolioDebt SecuritiesAccounting policy.Our accounting policy for debt securities(including bonds,mortgage and o
200、ther asset-backed securities and preferred stocks redeemable by the investor)remains materiallyconsistent with the policy disclosed in the Companys 2022 Form 10-K.However,with the adoption of amended accounting guidance for long-duration insurance contracts on January 1,2023(discussed in Note 2 to t
201、he Consolidated Financial Statements),net unrealized appreciation on debt securities supporting the Companys run-off settlement annuity business is no longer reported inNon-current insurance and contractholder liabilities but rather is reported in Accumulated other comprehensive loss.See Note 14 to
202、the Consolidated Financial Statements for the impact toAccumulated other comprehensive loss.(1)(2)(1)(2)21The amortized cost and fair value by contractual maturity periods for debt securities were as follows as of March 31,2023:(In millions)AmortizedCostFairValueDue in one year or less$638$630 Due a
203、fter one year through five years3,972 3,752 Due after five years through ten years3,227 2,915 Due after ten years2,450 2,268 Mortgage and other asset-backed securities381 344 Total$10,668$9,909 Actual maturities of these securities could differ from their contractual maturities used in the table abo
204、ve 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:(In millions)AmortizedCostAllowance for CreditLossUnrealizedAppreciationUnrealizedDepreciationFairValueMarch 31
205、,2023Federal government and agency$276$29$(8)$297 State and local government42 (1)41 Foreign government373 16(18)371 Corporate9,596(41)124(823)8,856 Mortgage and other asset-backed381 1(38)344 Total$10,668$(41)$170$(888)$9,909 December 31,2022Federal government and agency$292$32$(12)$312 State and l
206、ocal government43 (2)41 Foreign government375 11(21)365 Corporate9,742(44)89(981)8,806 Mortgage and other asset-backed390 1(43)348 Total$10,842$(44)$133$(1,059)$9,872 Review of declines in fair value.Management reviews impaired debt securities to determine whether a credit loss allowance is needed b
207、ased on criteria that include:severity of decline;financial health and specific prospects of the issuer;andchanges in the regulatory,economic or general market environment of the issuers industry or geographic region.The table below summarizes debt securities with a decline in fair value from amorti
208、zed cost for which an allowance for credit losses has not been recorded,by investment grade and the length of timethese securities have been in an unrealized loss position.Unrealized depreciation on these debt securities is primarily due to declines in fair value resulting from increasing interest r
209、ates since thesesecurities were purchased.March 31,2023December 31,2022(Dollars in millions)FairValueAmortizedCostUnrealizedDepreciationNumberof IssuesFairValueAmortizedCostUnrealizedDepreciationNumberof IssuesOne year or lessInvestment grade$3,176$3,362$(186)1,019$5,533$6,127$(594)1,659 Below inves
210、tment grade353 371(18)936887 964(77)1,287 More than one yearInvestment grade3,222 3,808(586)1,0351,151 1,487(336)462 Below investment grade682 780(98)770330 382(52)369 Total$7,433$8,321$(888)3,760$7,901$8,960$(1,059)3,777 22Equity SecuritiesThe following table provides the values of the Companys equ
211、ity security investments as of March 31,2023 and December 31,2022:March 31,2023December 31,2022(In millions)CostCarrying Value CostCarrying ValueEquity securities with readily determinable fair values$680$91$673$138 Equity securities with no readily determinable fair value2,926 3,029 380 484 Total$3
212、,606$3,120$1,053$622 Consistent with our strategy to invest in targeted startup and growth-stage companies in the health care industry,approximately 95%of our investments in equity securities are in the health care sector.Commercial Mortgage LoansMortgage loans held by the Company are made exclusive
213、ly to commercial borrowers and are diversified by property type,location and borrower.Loans are generally issued at fixed rates of interestand are secured by high quality,primarily completed and substantially leased operating properties.The Company regularly evaluates and monitors credit risk from t
214、he initial mortgage loan underwriting and throughout the investment holding period.For more information on the Companysaccounting policies and methodologies regarding these investments,see Note 11 in the Companys 2022 Form 10-K.The following table summarizes the credit risk profile of the Companys c
215、ommercial mortgage loan portfolio:(Dollars in millions)March 31,2023December 31,2022Loan-to-Value RatioCarrying ValueAverage Debt ServiceCoverage RatioAverage Loan-to-Value RatioCarrying ValueAverage Debt ServiceCoverage RatioAverage Loan-to-Value RatioBelow 60%$912 2.11$901 2.1260%to 79%504 1.73564
216、 1.7380%to 100%191 1.32149 1.17Total$1,607 1.8960%$1,614 1.8960%Other Long-Term InvestmentsOther long-term investments include investments in unconsolidated entities,including certain limited partnerships and limited liability companies holding real estate,securities or loans.Theseinvestments are ca
217、rried at cost plus the Companys ownership percentage of reporting income or loss,based on the financial statements of the underlying investments that are generally reported at fairvalue.Income or loss from these investments is reported on a one quarter lag due to the timing of when financial informa
218、tion is received from the general partner or manager of the investments.Other long-term investments also include investment real estate carried at depreciated cost less any impairment write-downs to fair value when cash flows indicate that the carrying value may not berecoverable.Additionally,statut
219、ory and other restricted deposits and foreign currency swaps carried at fair value are reported in the table below as Other.The following table provides the carryingvalue information for these investments:Carrying Value as of(In millions)March 31,2023December 31,2022Real estate investments$1,434$1,3
220、19 Securities partnerships2,259 2,166 Other243 243 Total$3,936$3,728 B.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 relatedinsuranc
221、e and contractholder liabilities.The Company also uses23derivative 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 and to hedge the interest rate risk ofcertain long-term debt.As of March 31
222、,2023,there have been no material changes to the Companys derivative financial instruments.The effects of derivative financial instruments used in our individual hedging strategieswere not material to the Consolidated Financial Statements as of March 31,2023 and December 31,2022.The gross fair value
223、s of our derivative financial instruments are presented in Note 12 to theConsolidated Financial Statements.Please refer to the Companys 2022 Form 10-K for further discussion of the types of derivative financial instruments and associated accounting policies.C.Realized Investment Gains and LossesAcco
224、unting policy.Realized investment gains and losses are based on specifically identified assets and result from sales,investment asset write-downs,change in the fair value of certain derivativesand equity securities and changes in allowances for credit losses on debt securities and commercial mortgag
225、e loan investments.With the adoption of amended accounting guidance for long-durationinsurance contracts on January 1,2023(discussed in Note 2 to the Consolidated Financial Statements),realized investment gains and losses no longer exclude amounts that were previously required toadjust future policy
226、 benefits for the run-off settlement annuity business.Prior period net realized investment losses have been updated to reflect the impact of adopting LDTI.The following realized gains and losses on investments exclude realized gains and losses attributed to the Companys separate accounts because tho
227、se gains and losses generally accrue directly toseparate account policyholders:Three Months Ended March 31,(In millions)20232022Net realized investment(losses),excluding credit loss expense and asset write-downs$(51)$(322)Credit loss recoveries3 Other investment asset write-downs(8)Net realized inve
228、stment(losses),before income taxes$(56)$(322)Net realized investment losses for the three months ended March 31,2023 and March 31,2022 were primarily due to mark-to-market losses on a strategic health care equity securities investment.Note 12 Fair Value MeasurementsThe Company carries certain financ
229、ial instruments at fair value in the financial statements including debt securities,certain equity securities,short-term investments and derivatives.Other financialinstruments are measured at fair value only under certain conditions,such as when impaired or when there are observable price changes fo
230、r 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 liabilitys fair value is defined as the amountthat would be paid to transfer the liabi
231、lity to a market participant,not the amount that would be paid to settle the liability with the creditor.The Companys 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 determinedus
232、ing 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 assets or a liabilitys classification is based on the lowest level of input that is signifi
233、cant to its measurement.For example,a financial asset or liability carried at fair value would beclassified in Level 3 if unobservable inputs were significant to the instruments fair value,even though the measurement may be derived using inputs that are both observable(Levels 1 and 2)andunobservable
234、(Level 3).For a description of the policies,methods and assumptions that are used to estimate fair value and determine the fair value hierarchy for each class of financial instruments,see Note 12 in theCompanys 2022 Form 10-K.24A.Financial Assets and Financial Liabilities Carried at Fair ValueThe fo
235、llowing table provides information about the Companys financial assets and liabilities carried at fair value.Further information regarding insurance assets and liabilities carried at fair value isprovided in Note 9E to the Consolidated Financial Statements.Separate account assets are also recorded a
236、t fair value on the Companys Consolidated Balance Sheets and are reported separately in theSeparate Accounts section below as gains and losses related to these assets generally accrue directly to contractholders:(In millions)Quoted Prices in Active Markets for IdenticalAssets(Level 1)Significant Oth
237、er Observable Inputs(Level 2)Significant Unobservable Inputs(Level 3)TotalMarch 31,2023December 31,2022March 31,2023December 31,2022March 31,2023December 31,2022March 31,2023December 31,2022Financial assets at fair valueDebt securitiesFederal government and agency$151$147$146$165$297$312 State and l
238、ocal government 41 41 41 41 Foreign government 371 365 371 365 Corporate 8,421 8,394 435 412 8,856 8,806 Mortgage and other asset-backed 309 313 35 35 344 348 Total debt securities151 147 9,288 9,278 470 447 9,909 9,872 Equity securities 6 6 84 132 1 91 138 Short-term investments 141 139 141 139 Der
239、ivative assets 206 230 1 1 207 231 Excludes certain equity securities that have no readily determinable fair value.Level 3 Financial Assets and Financial LiabilitiesCertain inputs for instruments classified in Level 3 are unobservable(supported by little or no market activity)and significant to thei
240、r resulting fair value measurement.Unobservable inputs reflect theCompanys best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date.Additionally,as discussed in Note 9 to theConsolidated Financial Statements,th
241、e Company classifies variable annuity assets and liabilities in Level 3 of the fair value hierarchy.Quantitative Information about Unobservable InputsThe significant unobservable input used to value our corporate and government debt securities and mortgage and other asset-backed securities is an adj
242、ustment for liquidity.This adjustment is neededto reflect current market conditions and issuer circumstances when there is limited trading activity for the security.The following table summarizes the fair value and significant unobservable inputs that were developed directly by the Company and used
243、in pricing these debt securities.The range and weightedaverage basis point(bps)amounts for liquidity reflect the Companys best estimates of the unobservable adjustments a market participant would make to calculate these fair values.Fair Value as ofUnobservable Adjustment Range(Weighted Average byQua
244、ntity)as of(Fair value in millions)March 31,2023December 31,2022Unobservable input March 31,2023March 31,2023December 31,2022Debt securitiesCorporate and government debt securities$433$412 Liquidity60-1060(300)bps60-1060(270)bpsMortgage and other asset-backed securities35 35 Liquidity105-520(310)bps
245、110-520(310)bpsOther debt securities2 Total Level 3 debt securities$470$447 A significant increase in liquidity spread adjustments would result in a lower fair value measurement,while a decrease would result in a higher fair value measurement.(1)(1)25Changes in Level 3 Financial Assets and Financial
246、 Liabilities Carried at Fair ValueThe following table summarizes the changes in financial assets and financial liabilities classified in Level 3.Gains and losses reported in the table may include net changes in fair value that areattributable to both observable and unobservable inputs.For the Three
247、Months EndedMarch 31,(In millions)20232022Debt and Equity SecuritiesBeginning balance$447$796 Gains included in Shareholders net income1 12 Gains(losses)included in Other comprehensive loss5(15)Losses required to adjust future policy benefits for settlement annuities (12)Purchases,sales and settleme
248、ntsPurchases4 49 Settlements(9)(81)Total purchases,sales and settlements(5)(32)Transfers into/(out of)Level 3Transfers into Level 339 101 Transfers out of Level 3(16)(164)Total transfers into/(out of)Level 323(63)Ending balance$471$686 Total gains included in Shareholders net income attributable to
249、instruments held at the reporting date$1$Change in unrealized gain or(loss)included in Other comprehensive loss for assets held at the end of the reporting period$5$(13)Amounts do not accrue to shareholders.Total gains and losses included in Shareholders net income in the tables above are reflected
250、in the Consolidated Statements of Income as Net realized investment losses and Net investment income.Gains and losses included in Other comprehensive loss,net of tax in the tables above are reflected in Net unrealized appreciation(depreciation)on securities and derivatives in the ConsolidatedStateme
251、nts of Comprehensive Income.Transfers into or out of the Level 3 category occur when unobservable inputs,such as the Companys 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.Market activity ty
252、pically decreases during periods of economic uncertainty and this decrease in activity reduces the availability ofmarket observable data.As a result,the level of unobservable judgment that must be applied to the pricing of certain instruments increases and is typically observed through the widening
253、of liquidityspreads.Transfers between Level 2 and Level 3 during 2023 and 2022 primarily reflected changes in liquidity estimates for certain private placement issuers across several sectors.See discussionunder Quantitative Information about Unobservable Inputs above for more information.Separate Ac
254、countsThe 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 fromthe Companys Consolidated Statements of Income and Cash Flows.(1)(1)26Fair values of Separate acco
255、unt assets were as follows:Quoted Prices in Active Markets forIdentical Assets(Level 1)Significant Other Observable Inputs(Level 2)Significant Unobservable Inputs(Level 3)Total(In millions)March 31,2023December 31,2022March 31,2023December 31,2022March 31,2023December 31,2022March 31,2023December 31
256、,2022Guaranteed separate accounts(See Note 16)$213$203$349$382$562$585 Non-guaranteed separate accounts221 211 5,586 5,522 213 203 6,020 5,936 Subtotal$434$414$5,935$5,904$213$203 6,582 6,521 Non-guaranteed separate accounts priced at net assetvalue(NAV)as a practical expedient 758 757 Total$7,340$7
257、,278 Non-guaranteed separate accounts include$4.0 billion as of March 31,2023 and December 31,2022 in assets supporting the Companys pension plans,including$0.2 billion classified in Level 3 as of March 31,2023 and December 31,2022.Separate account assets classified in Level 3 primarily support the
258、Companys pension plans and include certain newly-issued,privately-placed,complex or illiquid securities that are priced usingmethods discussed above,as well as commercial mortgage loans.Activity,including transfers into and out of Level 3,was not material for the three months ended March 31,2023 or
259、2022.Separate account investments in securities partnerships,real estate and hedge funds are generally valued based on the separate accounts ownership share of the equity of the investee(NAV as apractical expedient),including changes in the fair values of its underlying investments.Substantially all
260、 of these assets support the Companys pension plans.The following table provides additionalinformation on these investments:Fair Value as ofUnfunded Commitment as ofMarch 31,2023Redemption Frequency(if currently eligible)Redemption NoticePeriod(In millions)March 31,2023December 31,2022Securities par
261、tnerships$467$451$228 Not applicableNot applicableReal estate funds287 302 Quarterly30-90 daysHedge funds4 4 Up to annually,varying by fund30-90 daysTotal$758$757$228 As of March 31,2023,the Company does not have plans to sell any of these assets at less than fair value.These investments are structu
262、red to satisfy longer-term investment objectives.Securitiespartnerships are contractually non-redeemable 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 ConditionsSo
263、me financial assets and liabilities are not carried at fair value,such as commercial mortgage loans that are carried at unpaid principal,investment real estate that is carried at depreciated cost andequity securities with no readily determinable fair value when there are no observable market transac
264、tions.However,these financial assets and liabilities may be measured using fair value undercertain conditions,such as when investments become impaired and are written down to their fair value,or when there are observable price changes from orderly market transactions of equity securitiesthat otherwi
265、se had no readily determinable fair value.For the three months ended March 31,2023 and 2022,impairments recognized requiring these assets to be measured at fair value were not material.Realized investment gains and losses from theseobservable price changes for the three months ended March 31,2023 an
266、d March 31,2022 were not material.(1)(1)(1)27C.Fair Value Disclosures for Financial Instruments Not Carried at Fair ValueThe following table includes the Companys financial instruments not recorded at fair value but for which fair value disclosure is required.In addition to universal life products a
267、nd finance leases,financial instruments that are carried in the Companys Consolidated Balance Sheets at amounts that approximate fair value are excluded from the following table:Classification in FairValue HierarchyMarch 31,2023December 31,2022(In millions)Fair ValueCarrying ValueFair ValueCarrying
268、ValueCommercial mortgage loansLevel 3$1,509$1,607$1,491$1,614 Long-term debt,including current maturities,excluding finance leasesLevel 2$30,679$32,439$28,653$30,994 Note 13 Variable Interest EntitiesWe perform ongoing qualitative analyses of our involvement with variable interest entities to determ
269、ine if consolidation is required.The Company determined that it was not a primary beneficiary inany material variable interest entity as of March 31,2023 or December 31,2022.The Companys involvement with variable interest entities for which it is not the primary beneficiary has not changedmaterially
270、 from December 31,2022.For details of our accounting policy for variable interest entities and the composition of variable interest entities with which the Company is involved,refer toNote 13 in the Companys 2022 Form 10-K.The Company has not provided,and does not intend to provide,financial support
271、 to any of these variable interest entities in excess of its maximumexposure.28Note 14 Accumulated Other Comprehensive Income(Loss)(AOCI)AOCI includes net unrealized(depreciation)appreciation on securities and derivatives,change in discount rate and instrument specific credit risk for certain long-d
272、uration insurance contractholderliabilities(Note 9 to the Consolidated Financial Statements),foreign currency translation and the net postretirement benefits liability adjustment.AOCI includes the Companys share fromunconsolidated entities reported on the equity method.Generally,tax effects in AOCI
273、are established at the currently enacted tax rate and reclassified to Shareholders net income in the same periodthat the related pre-tax AOCI reclassifications are recognized.Changes in the components of AOCI,including the impact of adopting amended accounting guidance for long-duration insurancecon
274、tracts(discussed in Note 2 to the Consolidated Financial Statements),were as follows:Three Months Ended March 31,(In millions)20232022Securities and DerivativesBeginning balance,as retrospectively restated$(332)1,266 Unrealized appreciation(depreciation)on securities and derivatives252(1,065)Tax(exp
275、ense)benefit(54)231 Net unrealized appreciation(depreciation)on securities and derivatives198(834)Reclassification adjustment for(gains)included in Shareholders net income(Net realized investment losses)(5)(11)Reclassification adjustment for tax expense included in Shareholders net income1 2 Net(gai
276、ns)reclassified from AOCI to Shareholders net income(4)(9)Other comprehensive income(loss),net of tax194(843)Ending balance$(138)$423 Net long-duration insurance and contractholder liabilities measurement adjustments Beginning balance(256)(765)Current period change in discount rate for certain long
277、duration liabilities(411)584 Tax benefit(expense)101(130)Net current period change in discount rate for certain long duration liabilities(310)454 Current period change in instrument-specific credit risk for market risk benefits(26)6 Tax benefit(expense)5(1)Net current period change in instrument-spe
278、cific credit risk for market risk benefits(21)5 Other comprehensive(loss)income,net of tax(331)459 Ending balance(587)(306)Translation of foreign currenciesBeginning balance,as retrospectively restated$(154)(233)Translation of foreign currencies15(60)Tax benefit(expense)1(3)Net translation of foreig
279、n currencies16(63)Less:Net translation(loss)on foreign currencies attributable to noncontrolling interests(2)Shareholders other comprehensive income(loss),net of tax16(61)Ending balance$(138)$(294)Postretirement benefits liabilityBeginning balance$(916)$(1,336)Reclassification adjustment for amortiz
280、ation of net prior actuarial losses and prior service costs(Interest expense and other)13 16 Reclassification adjustment for tax(benefit)included in Shareholders net income(3)(3)Net adjustments reclassified from AOCI to Shareholders net income10 13 Other comprehensive income,net of tax10 13 Ending b
281、alance$(906)$(1,323)Total Accumulated other comprehensive lossBeginning balance,as retrospectively restated(1,658)(1,068)Shareholders other comprehensive(loss),net of tax(111)(432)Ending balance$(1,769)$(1,500)Established upon the adoption of Targeted Improvements to the Accounting for Long-Duration
282、 Contracts in 2023.See Note 2 to the Consolidated Financial Statements for further information.(1)(1)29Note 15 Income TaxesIncome Tax ExpenseThe 18.4%effective tax rate for the three months ended March 31,2023 was lower than the 22.7%rate for the three months ended March 31,2022.This decrease was dr
283、iven largely by favorableresults relative to the Companys foreign operations,partially offset by an increase pertaining to the year over year impact of remeasurement of deferred taxes.As of March 31,2023,we had approximately$255 million in deferred tax assets(DTAs)associated with unrealized investme
284、nt losses that are partially recorded in Accumulated othercomprehensive loss.We have determined that a valuation allowance against the DTAs is not currently required based on the Companys ability to carryback losses and our ability and intent to holdcertain securities until recovery.We continue to m
285、onitor and evaluate the need for any valuation allowance in the future.Note 16 Contingencies and Other MattersThe Company,through its subsidiaries,is contingently liable for various guarantees provided in the ordinary course of business.A.Financial Guarantees:Retiree and Life Insurance BenefitsThe C
286、ompany 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 primarilyresponsible for ensuring that assets are sufficient to pay these benefits and are required to maintain assets t
287、hat exceed a certain percentage of benefit obligations.If employers fail to do so,theCompany 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 March 31,2023,employersmaintained assets
288、that generally exceeded the benefit obligations under these arrangements of approximately$420 million.An additional liability is established if management believes that theCompany will be required to make payments under the guarantees;there were no additional liabilities required for these guarantee
289、s,net of reinsurance,as of March 31,2023.Separate account assetssupporting 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 Companys consolidated results of operations,liq
290、uidity or financial condition.B.Certain Other GuaranteesThe Company had indemnification obligations as of March 31,2023 in connection with acquisition and disposition transactions.These indemnification obligations are triggered by the breach ofrepresentations or covenants provided by the Company,suc
291、h as representations for the presentation of financial statements,filing of tax returns,compliance with law or identification of outstandinglitigation.These obligations are typically subject to various time limitations,defined by the contract or by operation of law,such as statutes of limitation.In
292、some cases,the maximum potential amountdue 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 ispossible to determine the maximum potential amount due unde
293、r these obligations because not all amounts due under these indemnification obligations are subject to limitation.There were noliabilities for these indemnification obligations as of March 31,2023.C.Guaranty Fund AssessmentsThe Company operates in a regulatory environment that may require its partic
294、ipation in assessments under state insurance guaranty association laws.The Companys exposure to assessments forcertain 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 charges or
295、 credits resulting from existing or new guaranty fund assessments for the three months ended March 31,2023.D.Legal and Regulatory MattersThe Company is routinely involved in numerous claims,lawsuits,regulatory inquiries and audits,government investigations,including under the federal False Claims Ac
296、t and state false claims actsinitiated by a government investigating body or by a qui tam relators filing of a complaint under court seal,and other legal matters arising,for the most part,in the ordinary course of managing aglobal health services business.Additionally,the Company has received and is
297、 cooperating with subpoenas or similar processes from various governmental agencies requesting information,all arisingin the normal course of its business.Disputed tax matters arising30from audits by the Internal Revenue Service or other state and foreign jurisdictions,including those resulting in l
298、itigation,are accounted for under GAAP guidance for uncertain tax positions.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 thosematters that the Company
299、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 informationcannot be estimated.The Companys accruals for the matters discussed below under Litigation Matters and Regulatory Matters are not
300、 material.Due to numerous uncertain factors presented inthese 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 ultimateresolution will not exceed the amounts
301、currently accrued by the Company.An adverse outcome in one or more of these matters could be material to the Companys results of operations,financialcondition or liquidity for any particular period.The outcomes of lawsuits are inherently unpredictable and we may be unsuccessful in these ongoing liti
302、gation matters or any future claims or litigation.Litigation MattersExpress Scripts Litigation with Elevance.In March 2016,Elevance filed a lawsuit in the United States District Court for the Southern District of New York alleging various breach of contract claimsagainst Express Scripts relating to
303、the parties rights and obligations under the periodic pricing review section of the pharmacy benefit management agreement between the parties including allegationsthat Express Scripts failed to negotiate new pricing concessions in good faith,as well as various alleged service issues.Elevance also re
304、quested that the court enter declaratory judgment that ExpressScripts is required to provide Elevance competitive benchmark pricing,that Elevance can terminate the agreement and that Express Scripts is required to provide Elevance with post-terminationservices at competitive benchmark pricing for on
305、e year following any termination by Elevance.Elevance claimed it is entitled to$13 billion in additional pricing concessions over the remaining termof the agreement,as well as$1.8 billion for one year following any contract termination by Elevance and$150 million damages for service issues(Elevances
306、 Allegations).On April 19,2016,inresponse to Elevances complaint,Express Scripts filed its answer denying Elevances Allegations in their entirety and asserting affirmative defenses and counterclaims against Elevance.The courtsubsequently granted Elevances motion to dismiss two of six counts of Expre
307、ss Scripts amended counterclaims.Express Scripts filed its Motion for Summary Judgment on August 27,2021.Elevancecompleted filing of its Response to Express Scripts Motion for Summary Judgment on October 16,2021.Express Scripts filed its Reply in Support of its Motion for Summary Judgment on Novembe
308、r19,2021.On March 31,2022,the court granted summary judgment in favor of Express Scripts on all of Elevances pricing claims for damages totaling$14.8 billion and on most of Elevances claimsrelating to service issues.Elevances only remaining service claims relate to the review or processing of prior
309、authorizations.On June 10,2022,Express Scripts filed a Motion for Partial SummaryJudgment seeking to limit Elevances remaining prior authorization claims and a Motion to Exclude certain opinions offered by its experts.Elevance filed its opposition to both motions,and a cross-motion to submit a suppl
310、emental expert report,on July 9,2022.Express Scripts pending Motions were fully briefed at the end of July 2022.On March 8,2023,the Court granted Express ScriptsMotion for Partial Summary Judgement,excluding in full the testimony of four of Elevances experts and in part the testimony of two addition
311、al experts,and granted Elevance leave to submit asupplemental expert report.On April 5,2023,the Court entered a scheduling order setting a trial on Elevances remaining prior authorization claims to commence on December 4,2023.Medicare Advantage.A qui tam action that was filed by a private individual
312、 on behalf of the government in the United States District Court for the Southern District of New York in 2017 wasunsealed on August 6,2020.The action asserts claims related to risk adjustment practices arising from certain health exams conducted as part of the Companys Medicare Advantage business.I
313、nSeptember 2021,the qui tam action was transferred to the United States District Court for the Middle District of Tennessee.On January 11,2022,the U.S.Department of Justice(DOJ)(U.S.Attorneys Offices for the Southern District of New York and the Middle District of Tennessee)filed a motion to partial
314、ly intervene,which was granted on August 2,2022.On October 14,2022,theDOJ filed its complaint-in-intervention alleging that certain diagnoses made during in-home exams were invalid for risk adjustment purposes,seeking unspecified damages and penalties under thefederal False Claims Act.The Company fi
315、led motions to dismiss the DOJs complaint and the remainder of the qui tam complaint on December 16,2022.Briefing is complete and the matter ispending before the court.Regulatory MattersCivil Investigative Demand.The DOJ is conducting industry-wide investigations of Medicare Advantage organizations
316、risk adjustment practices.For certain Medicare Advantage organizations,including The Cigna Group,those investigations have resulted in litigation(see Litigation MattersMedicare Advantage above).The Company has responded to information requests(civilinvestigative demands)from the DOJ(U.S.Attorneys Of
317、fice for the Eastern District of Pennsylvania)and is continuing to cooperate with the DOJ.31Note 17 Segment InformationSee Note 1 to the Consolidated Financial Statements for a description of our segments.A description of our basis for reporting segment operating results is outlined below.Intersegme
318、nt revenuesprimarily reflect pharmacy and care services transactions between the Evernorth Health Services and Cigna Healthcare segments.The Company uses pre-tax adjusted income(loss)from operations and adjusted revenues as its principal financial measures of segment operating performance because ma
319、nagement believes thesemetrics best reflect the underlying results of business operations and permit analysis of trends in underlying revenue,expenses and profitability.We define pre-tax adjusted income from operations asincome before income taxes excluding pre-tax income(loss)attributable to noncon
320、trolling interests,net realized investment results,amortization of acquired intangible assets,and special items.TheCigna Groups share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded.Special
321、items arematters that management believes are not representative of the underlying results of operations due to their nature or size.Adjusted income(loss)from operations is measured on an after-tax basis forconsolidated results and on a pre-tax basis for segment results.The Company defines adjusted
322、revenues as total revenues excluding the following adjustments:special items and The Cigna Groups share of certain realized investment results of its joint venturesreported in the Cigna Healthcare segment using the equity method of accounting.Special items are matters that management believes are no
323、t representative of the underlying results of operations dueto their nature or size.We exclude these items from this measure because management believes they are not indicative of past or future underlying performance of the business.The Company does not report total assets by segment because this i
324、s not a metric used to allocate resources or evaluate segment performance.Special items charges(benefits)recorded by the Company were$1 million both pre-tax and after-tax for the three months ended March 31,2023 and$52 million pre-tax($37 million after-tax)for thethree months ended March 31,2022.Eff
325、ective January 1,2023,we adopted amended accounting guidance for long-duration insurance contracts.See Note 2 to the Consolidated Financial Statements for further information.Prior periodsummarized segment information has been retrospectively adjusted to conform to this new basis of accounting.Summa
326、rized segment financial information was as follows:32(In millions)Evernorth HealthServicesCigna HealthcareOther OperationsCorporate andEliminationsTotalThree months ended March 31,2023Revenues from external customers$34,511$11,650$79$46,240 Intersegment revenues1,618 963 (2,581)Net investment income
327、50 143 78 6 277 Total revenues36,179 12,756 157(2,575)46,517 Net realized investment results from certain equity method investments(38)(38)Adjusted revenues$36,179$12,718$157$(2,575)$46,479 Income(loss)before income taxes$918$1,077$21$(415)$1,601 Pre-tax adjustments to reconcile to adjusted income f
328、rom operations(Income)attributable to noncontrolling interests(42)(1)(43)Net realized investment losses(gains)24(6)18 Amortization of acquired intangible assets444 15 459 Special itemsIntegration and transaction-related costs 1 1 Pre-tax adjusted income(loss)from operations$1,320$1,115$15$(414)$2,03
329、6(In millions)Evernorth HealthServicesCigna HealthcareOther OperationsCorporate andEliminationsTotalThree months ended March 31,2022Revenues from external customers$32,289$10,462$841$43,592 Intersegment revenues1,287 562 (1,849)Net investment income10 266 138 414 Total revenues33,586 11,290 979(1,84
330、9)44,006 Net realized investment results from certain equity method investments 103 103 Adjusted revenues$33,586$11,393$979$(1,849)$44,109 Income(loss)before income taxes$870$877$215$(395)$1,567 Pre-tax adjustments to reconcile to adjusted income from operations(Income)attributable to noncontrolling
331、 interests(11)(1)(5)(17)Net realized investment losses(gains)406 19 425 Amortization of acquired intangible assets443 15 458 Special itemsIntegration and transaction-related costs 52 52 Pre-tax adjusted income(loss)from operations$1,302$1,297$229$(343)$2,485 Includes the Companys share of certain re
332、alized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting.(1)(1)(1)33Revenue from external customers includes Pharmacy revenues,Premiums and Fees and other revenues.Prior period amounts have been retrospectively adjusted to reflect
333、 adoption of amendedaccounting guidance for long-duration insurance contracts,as discussed in Note 2 to the Consolidated Financial Statements.The following table presents these revenues by product,premium andservice type:Three Months Ended March 31,(In millions)20232022Products(Pharmacy revenues)(ASC 606)Network revenues$15,748$15,531 Home delivery and specialty revenues16,025 14,699 Other revenue