Aditional information

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012
or
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission file number: 1-10864
UnitedHealth Group Incorporated
(Exact name of registrant as specified in its charter)
Minnesota 41-1321939
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
UnitedHealth Group Center
9900 Bren Road East
Minnetonka, Minnesota 55343
(Address of principal executive offices) (Zip Code)
(952) 936-1300
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
(Title of each class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È
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 such shorter 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 È No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such files). Yes È No ‘
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act. (Check one)
Large accelerated filer È Accelerated filer ‘
Non-accelerated filer ‘ Smaller reporting company ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È
The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2012 was $59,444,144,483 (based on the last
reported sale price of $58.50 per share on June 30, 2012, on the New York Stock Exchange).*
As of January 31, 2013, there were 1,024,925,324 shares of the registrant’s Common Stock, $.01 par value per share, issued and outstanding.
Note that in Part III of this report on Form 10-K, we incorporate by reference certain information from our Definitive Proxy Statement for the
2013 Annual Meeting of Shareholders. This document will be filed with the Securities and Exchange Commission (SEC) within the time
period permitted by the SEC. The SEC allows us to disclose important information by referring to it in that manner. Please refer to such
information.
* Only shares of voting stock held beneficially by directors, executive officers and subsidiaries of the Company have been excluded in
determining this number.

UNITEDHEALTH GROUP
Table of Contents
Page
Part I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . 40
Item 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Item 8. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . 105
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Part III
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . 109
Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Part IV
Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

PART I
ITEM 1. BUSINESS
INTRODUCTION
Overview
UnitedHealth Group is a diversified health and well-being company whose mission is to help people live
healthier lives and help make health care work better (the terms “we,” “our,” “us,” “UnitedHealth Group,” or the
“Company” used in this report refer to UnitedHealth Group Incorporated and our subsidiaries).
We are helping individuals access quality care at an affordable cost; simplifying health care administration and
delivery; strengthening the physician/patient relationship; promoting evidence-based care; and empowering
physicians, health care professionals, consumers, employers and other participants in the health system with
actionable data to make better, more informed decisions.
Through our diversified family of businesses, we leverage core competencies in advanced, enabling technology;
health care data, information and intelligence; and clinical care management and coordination to help meet the
demands of the health system. These core competencies are deployed within our two distinct, but strategically
aligned, business platforms: health benefits operating under UnitedHealthcare and health services operating
under Optum.
UnitedHealthcare provides network-based health care benefits for a full spectrum of customers in the health
benefits market. UnitedHealthcare Employer & Individual serves employers ranging from sole proprietorships to
large, multi-site and national employers, as well as students and other individuals, and will serve TRICARE West
Region members beginning April 1, 2013. UnitedHealthcare Medicare & Retirement delivers health and well-
being benefits for Medicare beneficiaries and retirees. UnitedHealthcare Community & State manages health
care benefit programs on behalf of state Medicaid and community programs and their participants.
UnitedHealthcare International includes Amil Participações S.A (Amil), a health care company providing health
benefits and hospital and clinical services to individuals in Brazil, and other diversified global health businesses.
Optum is a health services business serving the broad health care marketplace, including payers, care providers,
employers, government, life sciences companies and consumers, through its OptumHealth, OptumInsight and
OptumRx businesses. These businesses have dedicated units that drive improved delivery, quality and cost
effectiveness across eight business markets: integrated care delivery, care management, consumer engagement
and support, distribution of benefits and services, health financial services, operational services and support,
health care information technology and pharmacy.
Through UnitedHealthcare and Optum, in 2012, we managed nearly $150 billion in aggregate health care
spending on behalf of the constituents and consumers we served. Our revenues are derived from premiums on
risk-based products; fees from management, administrative, technology and consulting services; sales of a wide
variety of products and services related to the broad health and well-being industry; and investment and other
income. Our two business platforms have four reportable segments:
• UnitedHealthcare, which includes UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare &
Retirement, UnitedHealthcare Community & State and UnitedHealthcare International;
• OptumHealth;
• OptumInsight; and
• OptumRx.
For our financial results and the presentation of certain other financial information by segment, see Note 13 of
Notes to the Consolidated Financial Statements included in Item 8, “Financial Statements.”
1

UnitedHealthcare
UnitedHealthcare is advancing strategies to improve the way health care is delivered and financed, offering
consumers a simpler, more affordable health care experience. Our market position is built on:
• a national scale;
• the breadth of our product offerings, which are responsive to many distinct market segments in health care;
• strong local market relationships;
• service and advanced technology;
• competitive medical and operating cost positions;
• effective clinical engagement;
• extensive expertise in distinct market segments; and
• a commitment to innovation.
The financial results of UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement,
UnitedHealthcare Community & State and UnitedHealthcare International have been aggregated in the
UnitedHealthcare reportable segment due to their similar economic characteristics, products and services,
customers, distribution methods, operational processes and regulatory environment. The domestic businesses also
share significant common assets, including our contracted networks of physicians, health care professionals,
hospitals and other facilities, information technology infrastructure and other resources. UnitedHealthcare
utilizes the expertise of UnitedHealth Group affiliates for capabilities in specialized areas, such as OptumRx
pharmacy benefit products and services, certain OptumHealth product offerings and care management and
integrated care delivery services and OptumInsight health information and technology solutions, consulting and
other services. UnitedHealthcare arranges for discounted access to care through networks that include a total of
nearly 780,000 physicians and other health care professionals and approximately 5,900 hospitals and other
facilities across the United States (UnitedHealthcare Network).
UnitedHealthcare Employer & Individual
UnitedHealthcare Employer & Individual works closely with employers and individuals to provide health benefit
plans that provide solutions to help members live healthier lives and achieve meaningful cost savings.
UnitedHealthcare Employer & Individual offers a comprehensive array of consumer-oriented health benefit plans
and services for large national employers, public sector employers, mid-sized employers, small businesses and
individuals nationwide, providing nearly 27 million Americans access to health care as of December 31, 2012.
Through its risk-based product offerings, UnitedHealthcare Employer & Individual assumes the risk of both medical
and administrative costs for its customers in return for a monthly premium, which is typically at a fixed rate per
individual served for a one-year period. When providing administrative and other management services to
customers that elect to self-fund the health care costs of their employees and employees’ dependants,
UnitedHealthcare Employer & Individual receives a fixed service fee per individual served. These customers retain
the risk of financing medical benefits for their employees and employees’ dependants, while UnitedHealthcare
Employer & Individual provides customized services such as coordination and facilitation of medical and related
services to customers, consumers and health care professionals, transaction processing and access to a contracted
network of physicians, hospitals and other health care professionals, including dental and vision. Large employer
groups, such as those serviced by UnitedHealthcare Employer & Individual National Accounts, typically use self-
funded arrangements. As of December 31, 2012, UnitedHealthcare Employer & Individual National Accounts
served 395 large employer groups under these arrangements, including 147 of the Fortune 500 companies. Smaller
employer groups are more likely to purchase risk-based products because they are less willing or able to bear a
greater potential liability for health care expenditures. UnitedHealthcare Employer & Individual also offers a variety
of non-employer based insurance options for purchase by individuals, including students, which are designed to
meet the health coverage needs of these consumers and their families.
2

As the commercial market becomes more consumer-oriented, individuals are assuming more personal and
financial responsibility for their care, and they are demanding more affordable products, greater transparency and
choice and personalized help navigating the complex system. The consolidated purchasing capacity represented
by the individuals UnitedHealth Group serves makes it possible for UnitedHealthcare Employer & Individual to
contract for cost-effective access to a large number of conveniently located care professionals. Individuals served
by UnitedHealthcare Employer & Individual have access to 91% of the physicians and other health care
professionals and 95% of the hospitals in the broad UnitedHealthcare Network; certain care providers are
available only to those consumers served through Medicare and/or Medicaid products.
UnitedHealthcare Employer & Individual is engaging physicians and consumers and using information to
promote well-informed health decisions, improved medical outcomes and greater efficiency. It offers consumers
engaging and informative tools and resources that provide greater transparency around quality and cost, such as
the Premium Designation® program and Health4Me for Apple® and Android® phones, myHealthcareCost
Estimator, Health Care Lane and myuhc.com. These easy-to-use resources support better consumer decisions,
affording members more control over their health care.
UnitedHealthcare Employer & Individual’s distribution system consists primarily of producers (i.e., brokers and
agents) and direct and internet sales in the individual market, producers in the small employer group market, and
consultant-based or direct sales for larger employer and public sector segments. In recent years, the distribution
model has been diversified to include professional employer organizations, associations, and private equity
partners. UnitedHealthcare Employer & Individual offers its products through affiliates that are licensed as
insurance companies, health maintenance organizations (HMOs), or third party administrators (TPAs).
UnitedHealthcare Employer & Individual’s diverse product portfolio offers a continuum of benefit designs, price
points and approaches to consumer engagement, and allows the flexibility to meet the needs of employers of all
sizes as well as individuals shopping for health benefits coverage. UnitedHealthcare Employer & Individual
emphasizes local markets and leverages its national scale to adapt products quickly to meet specific market
needs. UnitedHealthcare Employer & Individual’s major product families include:
Traditional Products. Traditional products include a full range of medical benefits and network options from
managed plans such as Choice and Options PPO to more traditional indemnity offerings. The plans offer a full
spectrum of covered services, including preventive care, direct access to specialists and catastrophic protection.
Consumer Engagement Products and Tools. Consumer engagement products couple plan design with financial
accounts to increase employee ownership of their health and well-being. This suite of products includes high-
deductible consumer-driven benefit plans, which include health reimbursement accounts (HRAs), health savings
accounts (HSAs) and consumer activation services such as personalized multi-channel activation messaging,
behavioral incentive programs and consumer education information. During 2012, nearly 42,000 employer-
sponsored benefit plans, including more than 200 employers in the large group self-funded market, purchased an
HRA or HSA product. The consumer engagement tools provide members with online and/or mobile access to
benefit, cost and quality information.
Value-Based Products. UnitedHealthcare Employer & Individual’s suite of consumer incentive products
increases individual awareness for heightened consumer responsibility and behavior change across diverse client
segments and funding relationships. Examples include: Small Business Wellness, which is a packaged wellness
and incentives product offering gym reimbursement and encouraging completion of important wellness activities.
For mid-sized clients, SimplyEngaged is a scalable activity-based reward program that ties incentives to
completion of health improvement activities, while SimplyEngaged Plus provides richer incentives for achieving
health outcome goals. For large, self-funded customers, UnitedHealthcare Health Rewards program offers a
flexible incentive design for employers to choose the right activities and biometric outcomes that best fit the
needs of their population. Additionally, UnitedHealth Personal Rewards leverages a tailored approach to
incentives by combining personalized scorecards with financial incentives for improving biometric scores,
compliance with key health treatments and preventive care.
3

Essential Benefits Products. UnitedHealthcare Employer & Individual’s portfolio of affordable products drives
value to consumers with lower-cost products, innovative designs and unique network programs that guide people
to physicians recognized for providing quality and cost efficient care to their patients. These approaches are
designed to deliver sustainable health care costs, enabling employers to continue to offer their employees
coverage at more affordable prices. Products such as Catalyst, Edge, Premium Tiered Benefit Plan, Navigate and
CORE offer solutions for employers looking to achieve more affordable costs through tiered benefit plans that
enhance benefits in the form of greater coinsurance coverage and/or lower copays for using UnitedHealth
Premium designated providers.
Clinical and Pharmacy Products. UnitedHealthcare Employer & Individual offers a comprehensive suite of
clinical and pharmacy benefit management programs. The clinical and pharmacy benefit products complement
the service offering by improving quality of care, engaging members and providing cost-saving options.
All UnitedHealthcare Employer & Individual members are provided access to clinical products with the goal of
helping them make better health care decisions, and thus better use of their medical benefits, with the ultimate
goal of improving health and decreasing medical expenses. Each medical plan has a core set of clinical programs
embedded in the offering, with additional services available depending on funding type (fully insured and self-
funded), line of business (Individual, Small Business, Key Accounts, Public Sector, and National Accounts), and
clinical need. The spectrum of clinical programs offered to all consumers, regardless of their health goals –
staying healthy, getting healthy, living with a chronic condition includes: wellness, decision support, utilization
management, case and disease management, and complex condition management, workplace on-site programs,
including Know Your Numbers (biometrics) and flu shots, incentives to reinforce positive behavior change,
mental health, substance use disorder management, employer assistance programs and well-being programs. The
programs promote consumer engagement, health education, admission counseling before hospital stays, care
advocacy to help avoid prolonged patients’ stays in the hospital, support for individuals at risk of needing
intensive treatment and coordination of care for people with chronic conditions. Disease and condition
management programs help individuals address significant, complex disease states, including disease-specific
benefit offerings such as the Diabetes Health Plan.
UnitedHealthcare Employer & Individual’s comprehensive and integrated pharmaceutical management services
promote lower costs by using formulary programs to drive better unit costs, encouraging consumers to use drugs
that offer better value and outcomes, and through physician and consumer programs that support the appropriate
use of drugs based on clinical evidence.
Specialty Offerings. UnitedHealthcare Employer & Individual also offers a comprehensive range of dental,
vision, life, and disability product offerings delivered through an integrated approach that enhances efficiency
and effectiveness and includes a network of nearly 55,000 vision professionals in private and retail settings, and
nearly 210,000 dental providers.
UnitedHealthcare Military & Veterans. UnitedHealthcare Employer & Individual’s Military & Veterans
Services business unit has been awarded the Department of Defense’s (DoD) TRICARE Managed Care Support
contract to provide health care services for active duty and retired military service members and their families in
the West Region. UnitedHealthcare Military & Veterans Services will be the Managed Care Support contractor
serving more than 2.7 million TRICARE beneficiaries in 21 states. The contract includes a transition period and
five one-year renewals at the government’s option for health care operations. The first year of operations is
anticipated to begin April 1, 2013.
UnitedHealthcare Military & Veterans’ responsibility as a contractor is to augment the military’s direct care
system by providing managed care support services, provider networks, medical management, claims/enrollment
administration, and customer services. In partnership with government health programs, UnitedHealthcare
Military & Veterans’ mission is to improve the health and well-being of both those who currently serve in the
military and have served in the military in the past, as well as their families, by providing innovative, high-
quality and affordable health care solutions.
4

UnitedHealthcare Medicare & Retirement
UnitedHealthcare Medicare & Retirement provides health and well-being services to individuals age 50 and
older, addressing their unique needs for preventive and acute health care services as well as for services dealing
with chronic disease and other specialized issues for older individuals. UnitedHealthcare Medicare & Retirement
is fully dedicated to serving this growing senior market segment, providing products and services in all 50 states,
the District of Columbia, and most U.S. territories and has distinct pricing, underwriting, clinical program
management and marketing capabilities dedicated to risk-based health products and services in this market.
UnitedHealthcare Medicare & Retirement offers a wide spectrum of Medicare products which may be sold to
individuals or on a group basis, including Medicare Advantage plans, Medicare Part D prescription drug
coverage and Medicare Supplement/Medigap products that supplement traditional fee-for-service coverage.
UnitedHealthcare Medicare & Retirement services include care management and clinical management programs,
a nurse health line service, 24-hour access to health care information, access to discounted health services from a
network of care providers and administrative services.
Premium revenues from the Centers for Medicare & Medicaid Services (CMS) represented 29% of UnitedHealth
Group’s total consolidated revenues for the year ended December 31, 2012, most of which were generated by
UnitedHealthcare Medicare & Retirement under a number of contracts.
UnitedHealthcare Medicare & Retirement has extensive distribution capabilities and experience, including direct
marketing to consumers on behalf of its key clients: AARP, the nation’s largest membership organization
dedicated to the needs of people age 50 and over; state and U.S. government agencies; and employer groups.
Products are also offered through employer groups to retirees.
UnitedHealthcare Medicare & Retirement’s major product categories include:
Medicare Advantage. UnitedHealthcare Medicare & Retirement provides health care coverage for seniors and
other eligible Medicare beneficiaries primarily through the Medicare Advantage program administered by CMS,
including Medicare Advantage HMO plans, preferred provider organization (PPO) plans, Point-of-Service (POS)
plans, Private-Fee-for-Service plans and Special Needs Plans (SNPs). Under the Medicare Advantage program,
UnitedHealthcare Medicare & Retirement provides health insurance coverage in exchange for a fixed monthly
premium per member from CMS. Premium amounts vary based on the geographic areas in which members
reside; demographic factors such as age, gender, and institutionalized status; and the health status of the
individual. UnitedHealthcare Medicare & Retirement had approximately 2.6 million members enrolled in its
Medicare Advantage products as of December 31, 2012.
UnitedHealthcare Medicare & Retirement offers innovative care management and clinical programs, integrating
federal, state and personal funding through its continuum of Medicare Advantage products. For high-risk patients
in certain care settings and programs, UnitedHealthcare Medicare & Retirement uses proprietary, automated
medical record software that enables clinical care teams to capture and track patient data and clinical encounters,
creating a comprehensive set of care information that bridges across home, hospital and nursing home care
settings. Proprietary predictive modeling tools help identify members at high risk and allow care managers to
proactively outreach to members to create individualized care plans and help members obtain the right care, in
the right place, at the right time.
Prescription Drug Benefit (Part D). UnitedHealthcare provides Medicare prescription drug benefits (Part D) to
beneficiaries throughout the United States and its territories through its Medicare Advantage and stand-alone Part
D plans. The portfolio of stand-alone Part D plans addresses a large spectrum of beneficiaries’ needs and
preferences for their prescription drug coverage, including low cost prescription options. As of December 31,
2012, UnitedHealthcare had enrolled 6.8 million members in the Part D program, including 4.2 million members
in the stand-alone Part D plans and 2.6 million members in its Medicare Advantage plans incorporating Part D
coverage.
5

Medicare Supplement. UnitedHealthcare Medicare & Retirement is currently serving approximately 4 million
seniors through various Medicare Supplement products in association with AARP. We offer plans in all 50 states
and most U.S. territories. These products cover varying levels of coinsurance and deductible gaps that seniors are
exposed to in the traditional Medicare program.
UnitedHealthcare Community & State
UnitedHealthcare Community & State is dedicated to providing diversified solutions to states’ programs that care
for the economically disadvantaged, the medically underserved and those without the benefit of employer-funded
health care coverage in exchange for a monthly premium per member from the applicable state.
UnitedHealthcare Community & State’s primary customers oversee Medicaid plans, the Children’s Health
Insurance Program (CHIP), and other federal, state and community health care programs. States using managed
care services for Medicaid beneficiaries select health plans using either a formal bid process, or award individual
contracts. As of December 31, 2012, UnitedHealthcare Community & State participates in programs in 25 states
and the District of Columbia, serving approximately 3.8 million beneficiaries. UnitedHealthcare Community &
State serves populations that range in size from 9,000 people to more than 600,000 people. For those states or
counties that choose not to enter into risk arrangements, UnitedHealthcare Community & State offers a variety of
management services that leverage its infrastructure and experience, as well as the considerable health care
system assets of UnitedHealth Group.
The primary categories of eligibility for the programs served by UnitedHealthcare Community & State include
Temporary Assistance for Needy Families (TANF), CHIP, Aged Blind and Disabled, SNPs, Long-Term Care,
Childless Adults & Programs, Dual Medicare-Medicaid Eligible (dually eligible) beneficiaries and other federal
and state health care programs (e.g., Developmentally Disabled, Rehabilitative Services). The health plans and
care programs offered are designed to address the complex needs of the populations they serve, including the
chronically ill, those with disabilities and people with higher risk medical, behavioral and social conditions.
UnitedHealthcare Community & State leverages the national capabilities of UnitedHealth Group, delivering them
at the local market level to support effective care management, regulatory partnerships, greater administrative
efficiency, improved clinical outcomes and the ability to adapt to a changing market environment.
UnitedHealthcare Community & State coordinates resources among family, physicians, other health care
providers, and government and community-based agencies and organizations to facilitate continuous and
effective care. For example, the Personal Care Model establishes an ongoing relationship between health care
professionals and individuals who have serious and chronic health conditions to help them maintain the best
possible health and functional status, whether care is delivered in an acute care setting, long-term care facility or
at home. Programs for families and children focus on high-prevalence and debilitating chronic illnesses such as
hypertension and cardiovascular disease, asthma, sickle cell disease, diabetes, HIV/AIDS and high-risk
pregnancies. Programs for the long-term care population focus on dementia, depression, coronary disease and
functional-use deficiencies that impede daily living.
Additionally, there are more than nine million dually eligible beneficiaries who typically have complex
conditions with costs of care that are far higher than a typical Medicare or Medicaid beneficiary. While these
individuals’ health needs are more complex and more costly, they have historically been in unmanaged
environments. As of December 31, 2012, UnitedHealthcare serves more than 250,000 members in legacy dually
eligible programs through Medicare Advantage and SNPs. In 2013, UnitedHealthcare Community & State will
help implement Ohio’s Integrated Medicare-Medicaid Eligible (MME) program, one of the first in the country
under the new CMS design.
UnitedHealthcare International
UnitedHealthcare International provides solutions for consumers of domestic or cross-border health care
management, insurance, and administration services; regardless of their geographic location, language or cultural
origins. UnitedHealthcare International’s goal is to create business solutions that are based on local infrastructure,
culture and needs, and that blend local expertise with experiences from the U.S. health care industry.
6

Amil. In 2012, UnitedHealthcare International acquired Amil, which provides health and dental benefits to over
five million people and also operates 22 acute hospitals, as well as specialty clinics, primary care, and emergency
services across Brazil, principally for the benefit of its members. Amil’s patients are also treated in its contracted
provider network of 45,000 physicians and other health care professionals, 3,300 hospitals and 12,000
laboratories and diagnostic imaging centers. Amil offers a diversified product portfolio with a wide range of
product offerings, benefit designs, price points and values, including indemnity products. Amil’s products
include various administrative services such as network access and administration, care management and
personal health services and claims processing.
Other Operations. UnitedHealthcare International also includes other diversified global health services business
with a variety of offerings for international customers, including:
• Network access and care coordination in the U.S. and overseas;
• TPA products and services for health plans and TPAs;
• Brokerage services;
• Practice management services for care providers;
• Government and corporate consulting services for improving quality and efficiency; and
• Global expatriate insurance solutions.
See Note 13 of Notes to the Consolidated Financial Statements included in Item 8, “Financial Statements” for
additional information related to the revenues and long-lived assets of the UnitedHealthcare International
operations.
Optum
Optum is a health services business serving the broad health care marketplace including:
• Those who need care: the consumers and patients who need the right support, information, resources and
products to achieve their health goals.
• Those who provide care: physicians and other care providers, hospitals and clinical facilities seeking to
modernize in ways that enable the best patient care and experience possible, delivered cost-effectively.
• Those who pay for care: insurers, employers and government agencies devoted to ensuring that those they
sponsor receive high-quality care, administered and delivered efficiently.
• Those who innovate for care: life sciences and research focused organizations dedicated to developing more
effective approaches, enabling technologies and medicines that improve the delivery and quality of care.
Using advanced data, analytics and technology, Optum helps improve overall health system performance:
optimizing care quality, reducing costs and improving the consumer experience and care provider performance.
Optum is organized in three segments:
• OptumHealth focuses on care management, integrated care delivery, and consumer solutions, including
financial services;
• OptumInsight delivers operational services and support and health information technology services; and
• OptumRx specializes in pharmacy services.
OptumHealth
OptumHealth is a diversified health and wellness business serving the physical, emotional and financial needs of
more than 61 million unique individuals and enabling consumer health management and integrated care delivery
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through programs offered by employers, payers, government entities and, increasingly, directly through the care
delivery system. OptumHealth’s products and services can be deployed individually or integrated to provide
comprehensive solutions, addressing a broad base of needs within the health care system. OptumHealth’s
solutions reduce costs for customers, improve workforce productivity and consumer satisfaction and optimize the
overall health and well-being of populations.
OptumHealth offers its products on a risk basis, where it assumes responsibility for health care costs in exchange
for a fixed monthly premium per individual served, and on an administrative fee basis whereby it manages or
administers delivery of the products or services in exchange for a fixed fee per individual served. For its financial
services offerings, OptumHealth charges fees and earns investment income on managed funds.
OptumHealth sells its products primarily through its direct sales force, strategic collaborations and external
producers in three markets: employers (which includes the sub-markets of large, mid and small employers),
payers (which includes the sub-markets of health plans, TPAs, underwriter/stop-loss carriers and individual
market intermediaries) and government entities (which includes states, CMS, DoD, Veterans Administration and
other federal procurement). As provider reimbursement models evolve, care providers are emerging as a fourth
market for the health management, financial services and integrated care delivery businesses.
OptumHealth is organized into three major operating groups: Care Management, Integrated Care Delivery and
Consumer Solutions.
Care Management. Care Management includes Specialty Networks and Health Management Solutions.
• Specialty Networks: Within Specialty Networks, OptumHealth serves over 55 million people in two primary
ways: 1) creating access to networks of provider specialists in the areas of behavioral health management
(e.g., mental health, substance abuse), global well-being (e.g., international work/life solutions), chronic
physical health management (e.g., chiropractic, physical therapy), and complex medical conditions (e.g.,
transplant, infertility); and 2) managing the care and health needs for consumers through a variety of
programs utilizing predictive modeling, evidence-based clinical outcomes management and peer support.
Specialty Networks addresses areas likely to have significant variation in clinical practice, where a
disciplined, evidence-based approach can drive improved health outcomes and reduced costs. These range
from relatively commonly accessed services (e.g., behavioral health and chiropractic) to less common
procedures such as transplant, infertility, bariatric surgery and kidney disease/end stage renal disease.
• Health Management Solutions: OptumHealth serves more than 40 million people with population health
management solutions (e.g., care management and advocacy, health and wellness, and complex conditions
including cancer, neonatal and maternity) and decision support solutions (e.g., insurance choices and
treatment and health care provider options). This comprehensive solution set empowers consumers to take
more control of their health and well-being and enables their collaboration with specialty care providers,
which is critical to decisions that drive medical costs, including hospitalization and surgery.
Integrated Care Delivery. Integrated Care Delivery is defined by the types of care delivery support services
provided within OptumHealth’s two businesses: Collaborative Care and Logistics Health, Inc. (LHI).
Collaborative Care is driven by the recognition that the market is moving to a collaborative network aligned
around the concept of total population health management and outcomes based reimbursement. Collaborative
Care’s local care delivery systems deploy a core set of technology, risk management, analytical and clinical
capabilities and tools to assist physicians in delivering high-quality care across the populations they serve.
Collaborative Care’s complex population management services augment primary care physicians to deliver
services outside of hospitals to vulnerable, chronically ill populations. Collaborative Care also delivers care to
approximately 1 million people through a spectrum of models ranging from medical clinics to contracts with
individual practice association networks. LHI designs and implements mobile care delivery solutions, providing
occupational health, medical and dental readiness services, treatments and immunization programs for the U.S.
military and U.S. Department of Health and Human Services (HHS), as well as for many commercial companies.
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Consumer Solutions. Consumer Solutions includes consumer and marketing capabilities, such as distribution
and financial services.
• Distribution: Connextions is a growth, retention and service solutions company meeting consumer
distribution needs in the health care market. Through a combination of technology, campaign management
and customer service, Connextions has developed a consumer relationship management and sales
distribution platform. Services offered include call center support, software, data analysis, certified
insurance brokers and trained nurses, which allow health care payers and providers to acquire, retain,
schedule, refer and manage large populations of individual health care consumers. Connextions is also an
enabler of health insurance exchange solutions, with private exchange business today.
• Financial Services: Dedicated solely to providing financial solutions for the health care market,
OptumHealth Financial Services helps organizations and individuals optimize their health care finances. As
a leading provider of consumer health care accounts (e.g., HSAs, flexible spending accounts),
OptumHealth’s tax-favored accounts enable individuals to save money today and build health savings for
the future. Organizations rely upon OptumHealth to manage and improve their cash flows through turnkey
electronic payment solutions (e.g., remittance advices, funds transfers), health care-related lending and
credit (e.g., financing of care provider medical equipment acquisitions) and financial risk protection for
third party payers and self-funded employers (e.g., comprehensive stop loss insurance coverage). Financial
services includes Optum Bank. As of December 31, 2012, Financial Services had $1.8 billion in customer
assets under management and during 2012 processed $66 billion in medical payments to physicians and
other health care providers.
OptumInsight
OptumInsight is a health care information, technology, operational services and consulting company providing
software and information products, advisory consulting services, and business process outsourcing services and
support to participants in the health care industry. Hospitals, physicians, commercial health plans, government
agencies, life sciences companies and other organizations that comprise the health care system work with
OptumInsight to reduce costs, meet compliance mandates, improve clinical performance and adapt to the
changing health system landscape. As of December 31, 2012, OptumInsight’s products and services are used by
four out of five hospitals, tens of thousands of physician practices and other health care facilities, approximately
300 health plans, nearly 400 global life sciences companies, and many government agencies, as well as other
UnitedHealth Group businesses.
Many of OptumInsight’s software and information products, advisory consulting arrangements, and outsourcing
contracts are performed over an extended period, often several years. OptumInsight maintains an order backlog
to track unearned revenues under these long-term arrangements. The backlog consists of estimated revenue from
signed contracts, other legally binding agreements and anticipated contract renewals based on historical
experience that either have not started but are anticipated to begin in the near future, or are in process and have
not been completed. OptumInsight’s aggregate backlog at December 31, 2012 was $4.6 billion, of which
$2.7 billion is expected to be realized within the next 12 months. This includes $1.0 billion related
to intersegment agreements, all of which are included in the current portion of the backlog. OptumInsight cannot
provide any assurance that it will be able to realize all of the revenues included in backlog due to uncertainty
regarding the timing and scope of services, the potential for cancellation, non-renewal, or early termination of
service arrangements. OptumInsight’s aggregate backlog at December 31, 2011 was $4.0 billion.
OptumInsight’s products and services are sold primarily through a direct sales force. OptumInsight’s products
are also supported and distributed through an array of alliance and business partnerships with other technology
vendors, who integrate and interface its products with their applications.
OptumInsight’s technology products and services solutions are offered through four integrated market groups.
These market groups are care providers (e.g., physician practices and hospitals), commercial payers,
governments and life sciences.
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Care Providers. The Provider Solutions businesses combine a comprehensive range of technology and
information products, advisory consulting, and outsourcing services focused on hospitals, integrated delivery
networks, and physician practices. These solutions help drive financial performance, meet compliance
requirements and deliver health intelligence and are organized around hospital and physician practice needs for:
• Financial Performance Improvement: Provides comprehensive revenue cycle management technology and
services, claims integrity and coding solutions, and full business process outsourcing for hospitals and
physicians practices to drive higher net patient revenue and lower operational costs;
• Quality Measurements and Compliance: Delivers real-time medical necessity reviews and retrospective
appeals management services to more than 2,400 hospitals in all 50 states;
• Clinical Workflow and Connectivity: Provides high-acuity and ambulatory clinical workflow, clinical cost
and performance analytics and benchmarks and electronic medical records software that makes hospital
departments and physician practices more efficient, improves patient experience, and enables sharing of
clinical data in integrated care settings; and
• Accountable Care Solutions: Working with early adopters of Accountable Care Organization models to
build the administrative, analytics, compliance, and care management infrastructure to succeed in outcomes-
based payment models.
Commercial Payers. OptumInsight’s Payer Solutions group serves clients that offer commercial health insurance
or privately administer health insurance programs on behalf of federal or state governments (e.g., Medicare
Advantage or Managed Medicaid). The business offers technology, services and consulting capabilities that
supplement OptumInsight’s clients’ existing operations, as well as fully outsourced solutions. The business
addresses diverse needs for payer clients, serving four primary areas:
• Network Performance: Comprehensive offerings to enhance performance of provider networks and improve
population health, including network design, management and operation services, as well as analytical tools
that support care management;
• Clinical Performance and Compliance: Services that align clinical quality and performance with financial
outcomes for payers, such as Medicare risk adjustment and CMS star rating system services and quality
improvement consulting;
• Operational Efficiency and Payment Integrity: A spectrum of offerings focused on improving the efficiency
and cost-effectiveness of payer operations. Solutions assist in addressing a wide variety of operational
improvement opportunities such as process improvement and automation, fraud and abuse, claims payment
accuracy and coordination of benefits; and
• Risk Optimization: Solutions help payers to grow and improve financial performance through predictive
analytics and risk management services. Offerings include actuarial services, rating and underwriting
products, and membership population modeling, as well as analytics and consulting.
Governments. OptumInsight Government Solutions helps state and federal governments improve the efficiency
and quality of health and human services programs by offering a broad range of solutions including:
• Financial Management and Program Integrity: Improves the accuracy and efficiency of provider payments
through prospective and retrospective analysis of claims transactions, driving detection of fraud and abuse
and checking payment accuracy;
• Consulting: Provides policy and compliance consulting including health policy advisory services; and
• Data and Analytics Technology and Systems Integration: Measures and identifies opportunities for
improvement in cost, network performance, and care management for populations of covered members.
Government Solutions builds and manages health care specific data model and warehouse solutions for
Federal and State based programs and applies business intelligence to analyze and drive decision making to
improve cost, clinical outcomes, and member satisfaction.
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Life Sciences. OptumInsight’s Life Sciences business addresses the changing global economic and regulatory
competitive landscape by assisting life sciences clients in identifying, analyzing and measuring the value of their
products. Life Sciences provides expertise in using real-world evidence to support market access and positioning
of products, to deliver strategic regulatory services, to provide insights into patient reported outcomes and to
optimize and manage risk to Life Sciences’ clients. Products include:
• Market Access and Reimbursement: Utilizes real-world evidence to drive increased drug revenues and
pricing and reimbursements strategies;
• Health Economics Outcomes and Late Phase Research: decreased commercialization costs through health
economics and outcomes research and late phase/Phase IV research studies;
• Data and Informatics Services;
• Regulatory Consulting: Focuses on design and execution of multi-national regulatory strategies to help
clients speed regulatory approval and maintain compliance with dynamic regulations across geographies;
• Epidemiology and Drug Safety: Designs and executes epidemiology studies to understand detailed drug
safety profiles and build integrated plans to address safety issues with regulators, providers, and patients;
and
• Patient-Reported Outcomes: Drives collection and understanding of patient reported outcomes to inform
comparative effectiveness research, patient engagement and adherence, and population health management.
OptumRx
OptumRx provides a full range of pharmacy benefit management (PBM) services to more than 14 million people
nationwide, processing over 350 million adjusted retail, mail and specialty drug prescriptions and managing more
than $25 billion in pharmaceutical spending annually. Its PBM services include benefit plan design and
consultation, claims processing, manufacturer rebate contracting and administration, retail pharmacy network
management services, mail order and specialty pharmacy services, Medicare Part D services, and a variety of
clinical services, such as formulary management and compliance, drug utilization review and disease and drug
therapy management services. The mail order and specialty pharmacy fulfillment capabilities of OptumRx are an
important strategic component of its business, providing patients with convenient access to maintenance
medications, offering a broad range of complex drug therapies and patient management services for individuals
with chronic health conditions, and enabling OptumRx to manage its clients’ drug costs through operating
efficiencies and economies of scale.
OptumRx provides PBM services to nearly all members enrolled in the benefit plans that offer pharmacy benefits
of UnitedHealthcare’s Medicare & Retirement and Community & State businesses and also serves a portion of
UnitedHealthcare’s Employer & Individual’s commercial members. In 2013, OptumRx will in-source
approximately 12 million of UnitedHealthcare’s commercial members who currently receive PBM services from
Express Scripts’ subsidiary, Medco Health Solutions, Inc. OptumRx also provides PBM services to non-affiliated
external clients, including public and private sector employer groups, insurance companies, Taft-Hartley Trust
Funds, TPAs, managed care organizations, Medicare-contracted plans, Medicaid plans and other sponsors of
health benefit plans and individuals throughout the U.S. OptumRx’s distribution system consists primarily of
health insurance brokers and other health care consultants and direct sales.
GOVERNMENT REGULATION
Most of our health and well-being services are regulated by U.S. federal and state as well as non-U.S. regulatory
agencies that generally have discretion to issue regulations and interpret and enforce laws and rules. These
regulations can vary significantly from jurisdiction to jurisdiction, and the interpretation of existing laws and
rules also may change periodically. The Patient Protection and Affordable Care Act and a reconciliation measure,
the Health Care and Education Reconciliation Act of 2010, which we refer to together as the Health Reform
Legislation, were signed into law in the first quarter of 2010 and, after being challenged, were substantially
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upheld in a U.S. Supreme Court decision in the second quarter of 2012. The Health Reform Legislation, portions
of which are summarized below, alters the regulatory environment in which we operate, in some cases to a
significant degree. U.S. federal and state governments continue to enact and consider various legislative and
regulatory proposals that could materially impact certain aspects of the health care system. New laws, regulations
and rules, or changes in the interpretation of existing laws, regulations and rules, as well as a result of changes in
the political climate, could adversely affect our business.
In the event we fail to comply with, or we fail to respond quickly and appropriately to changes in, applicable
laws, regulations and rules, our business, results of operations, financial position and cash flows could be
materially and adversely affected. See Item 1A, “Risk Factors” for a discussion of the risks related to compliance
with federal, state and international laws and regulations.
Health Care Reforms
The Health Reform Legislation expands access to coverage and modifies aspects of the commercial insurance
market, as well as the Medicaid and Medicare programs, CHIP and other aspects of the health care system.
Certain provisions of the Health Reform Legislation have already taken effect and other provisions become
effective at various dates over the next several years. The U.S. Department of Labor (DOL), HHS and the U.S.
Treasury Department have issued or proposed regulations on a number of aspects of Health Reform Legislation,
but final rules and interim guidance on other key aspects of the legislation remain pending.
The following outlines certain provisions of the Health Reform Legislation that are currently effective, currently
effective with phased implementation or are expected to take effect in the coming years.
• Currently Effective: The Health Reform Legislation mandated the expansion of dependant coverage to
include adult children until age 26; eliminated certain annual and lifetime caps on the dollar value of certain
essential health benefits; eliminated pre-existing condition limits for enrollees under age 19; prohibited
certain policy rescissions; prohibited plans and issuers from charging higher cost sharing (copayments or
coinsurance) for emergency services that are obtained outside of a plan’s network; and included a
requirement to provide coverage for preventive services without cost to members (for non-grandfathered
plans).
Commercial fully insured health plans in the large employer group, small employer group and individual
markets with medical loss ratios below certain targets (85% for large employer groups, 80% for small
employer groups and 80% for individuals, as calculated under the definitions in the Health Reform
Legislation and regulations, subject to state specific exceptions) are required to rebate ratable portions of
their premiums to their customers annually.
The Health Reform Legislation also mandated certain changes to coverage determination and appeals
processes, including: expanding the definition of “adverse benefit determination” to include rescissions;
extending external review rights of adverse benefit determinations to insured and self-funded plans; and
improving the clarity of and expanding the types of information in adverse benefit determination notices.
• Currently Effective with Phased Implementation: The Health Reform Legislation also mandated consumer
discounts on brand name and generic prescription drugs for Part D plan participants in the coverage gap.
These consumer discounts will gradually increase over the next several years, which will decrease consumer
out-of-pocket drug spending within the coverage gap, shifting a portion of these costs to the plan sponsor. In
2012, the discount on brand name prescription drugs was 50% while the discount on generic prescription
drugs was 14%.
In addition, as required under the Health Reform Legislation, HHS established a federal premium rate
review process, which generally applies to proposed rate increases equal to or exceeding 10%. The
regulations further require commercial health plans to provide to the states and HHS extensive information
supporting any rate increases subject to the new federal rate review process. The regulations clarify that
HHS review will not supersede existing state review and approval processes, but plans deemed to have a
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history of “unreasonable” rate increases may be prohibited from participating in the state-based exchanges
that are scheduled to become active under the Health Reform Legislation in 2014. Under current regulations,
the HHS rate review process would apply only to health plans in the individual and small group markets.
CMS reduced or froze benchmarks which affect our Medicare Advantage reimbursements from CMS
between 2009 and 2011, and in 2012, additional cuts to Medicare Advantage benchmarks began to take
effect (benchmarks will ultimately range from 95% of Medicare fee-for-service rates in high cost areas to
115% in low cost areas), with changes continuing to be phased-in over the next one to five years, depending
on the level of benchmark reduction in a county. In addition to other measures, quality bonuses may
partially offset these anticipated benchmark reductions. CMS quality rating bonuses are paid to certain
qualifying plans for a three year period that began in 2012. Quality bonuses are based upon STAR ratings at
the local plan level, as determined by CMS, and are dependent on numerous factors, including member
satisfaction and member behavior in the context of obtaining preventive screens.
• Effective 2013: Effective beginning in 2013 with respect to services performed after 2009, the Health
Reform Legislation limits the deductibility of executive compensation under Section 162(m) of the Internal
Revenue Code for insurance providers if at least 25% of the insurance provider’s gross premium revenue
from health business is derived from health insurance plans that meet the minimum creditable coverage
requirements.
• Effective 2013/2014: The Health Reform Legislation provides for an increase in Medicaid fee-for-service
and managed care program reimbursements for primary care services provided by primary care doctors
(family medicine, general internal medicine or pediatric medicine) to 100% of the Medicare payment rates
for 2013 and 2014, and provides 100% federal financing for the difference in rates based on rates applicable
on July 1, 2009.
• Effective 2014: A number of the provisions of the Health Reform Legislation are scheduled to take effect in
2014, including: an annual insurance industry assessment ($8 billion to be levied on the insurance industry
in 2014 increasing to $14.3 billion by 2018 with increasing annual amounts thereafter), which is not
deductible for income tax purposes; a transitional reinsurance program ($25 billion over a three-year
period), which will be funded by a $5.25 per member per month fee (as currently estimated by HHS), on all
comprehensive lines of business (including risk-based and self-insured) with only insurance plans for
individuals eligible for reinsurance recoveries; a permanent risk adjustment program designed to promote
stability in the individual and small employer group marketplace by transferring funds among competing
plans based on variance in risk populations; all individual and group health plans must offer coverage on a
guaranteed issue and guaranteed renewal basis during annual open enrollment and special enrollment
periods and cannot apply pre-existing condition exclusions or health status rating adjustments; all individual
and small group plans must provide certain essential health benefits, with member cost-sharing limitations
and no annual limits on essential benefits coverage; establishment of state-based exchanges for individuals
and small employers as well as certain CHIP eligibles; a temporary risk corridor program that limits the
losses and gains of insurers that offer products on exchanges; introduction of plan designs based on set
actuarial values to increase comparability of competing products on the exchanges and limit member cost-
sharing obligations; and establishment of minimum medical loss ratio of 85% for Medicare Advantage
plans, as calculated under rules that have not yet been issued.
The Health Reform Legislation and the related federal and state regulations will impact how we do business and
could restrict revenue and enrollment growth in certain products and market segments, restrict premium growth
rates for certain products and market segments, increase our medical and administrative costs, expose us to an
increased risk of liability (including increasing our liability in federal and state courts for coverage
determinations and contract interpretation) or put us at risk for loss of business. In addition, our results of
operations, financial position, including our ability to maintain the value of our goodwill, and cash flows could
be materially and adversely affected by such changes. The Health Reform Legislation may also create new or
expand existing opportunities for business growth, but due to its complexity, the impact of the Health Reform
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Legislation remains difficult to predict and is not yet fully known. See also Item 1A, “Risk Factors” for a
discussion of the risks related to the Health Reform Legislation and related matters.
Other Federal Laws and Regulation
We are subject to various levels of U.S. federal regulation. For example, when we contract with the federal
government, we are subject to federal laws and regulations relating to the award, administration and performance
of U.S. government contracts. CMS regulates our UnitedHealthcare businesses, and certain aspects of our Optum
businesses. Our UnitedHealthcare Medicare & Retirement, UnitedHealthcare Community & State and
OptumHealth businesses submit information relating to the health status of enrollees to CMS (or state agencies)
for purposes of determining the amount of certain payments to us. CMS also has the right to audit performance to
determine compliance with CMS contracts and regulations and the quality of care given to Medicare
beneficiaries. Beginning in 2014, our commercial business may be subject to audit related to the risk adjustment
and reinsurance data. See Note 12 of Notes to the Consolidated Financial Statements included in Item 8,
“Financial Statements” and Item 1A, “Risk Factors” for a discussion of audits by CMS.
Our UnitedHealthcare reportable segment, through UnitedHealthcare Community & State, also has Medicaid and
CHIP contracts that are subject to federal regulations regarding services to be provided to Medicaid enrollees,
payment for those services and other aspects of these programs. There are many regulations surrounding
Medicare and Medicaid compliance, and the regulatory environment with respect to these programs has become
and will continue to become increasingly complex as a result of the Health Reform Legislation. In addition, our
UnitedHealthcare Military & Veterans business and certain of Optum’s businesses hold contracts with federal
agencies including the DoD and we are subject to federal law and regulations relating to the administration of
these contracts.
Certain of UnitedHealthcare’s and Optum’s businesses, such as UnitedHealthcare’s eyeglass manufacturing
activities and Optum’s high acuity clinical workflow software, hearing aid products, and clinical research
activities, are subject to regulation by the U.S. Food and Drug Administration (FDA), and the clinical research
activities are also subject to laws and regulations outside of the United States that regulate clinical trials. Laws
and regulations relating to consumer protection, anti-fraud and abuse, anti-kickbacks, false claims, prohibited
referrals, inappropriately reducing or limiting health care services, anti-money laundering, securities and antitrust
also affect us.
HIPAA, GLBA and Other Privacy and Security Regulation. The administrative simplification provisions of the
Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA), apply to both the group and
individual health insurance markets, including self-funded employee benefit plans. HIPAA requires guaranteed
health care coverage for small employers and certain eligible individuals. It also requires guaranteed renewability
for employers and individuals and limits exclusions based on pre-existing conditions. Federal regulations related
to HIPAA include minimum standards for electronic transactions and code sets, and for the privacy and security
of protected health information. The HIPAA privacy regulations do not preempt more stringent state laws and
regulations that may also apply to us.
Federal privacy and security requirements change frequently because of legislation, regulations and judicial or
administrative interpretation. For example, the U.S. Congress enacted the American Recovery and Reinvestment
Act of 2009 (ARRA), which significantly amends, and adds new privacy and security provisions to HIPAA and
imposes additional requirements on uses and disclosures of health information. ARRA includes new contracting
requirements for HIPAA business associate agreements; extends parts of HIPAA privacy and security provisions
to business associates; adds new federal data breach notification requirements for covered entities and business
associates and new reporting requirements to HHS and the Federal Trade Commission (FTC) and, in some cases,
to the local media; strengthens enforcement and imposes higher financial penalties for HIPAA violations and, in
certain cases, imposes criminal penalties for individuals, including employees. In January 2013, HHS issued its
final regulations implementing the ARRA amendments to HIPAA and updating the HIPAA privacy, security and
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enforcement rules. In the conduct of our business, we may act, depending on the circumstances, as either a
covered entity or a business associate. Federal consumer protection laws may also apply in some instances to
privacy and security practices related to personally identifiable information. The use and disclosure of
individually identifiable health data by our businesses is also regulated in some instances by other federal laws,
including the Gramm-Leach-Bliley Act (GLBA) or state statutes implementing GLBA, which generally require
insurers to provide customers with notice regarding how their non-public personal health and financial
information is used and the opportunity to “opt out” of certain disclosures before the insurer shares such
information with a third party, and which generally require safeguards for the protection of personal information.
See Item 1A, “Risk Factors” for a discussion of the risks related to compliance with HIPAA, GLBA and other
privacy-related regulations.
ERISA. The Employee Retirement Income Security Act of 1974, as amended (ERISA), regulates how goods and
services are provided to or through certain types of employer-sponsored health benefit plans. ERISA is a set of
laws and regulations that is subject to periodic interpretation by the DOL as well as the federal courts. ERISA
places controls on how our business units may do business with employers who sponsor employee benefit health
plans, particularly those that maintain self-funded plans. Regulations established by the DOL provide additional
rules for claims payment and member appeals under health care plans governed by ERISA. Additionally, some
states require licensure or registration of companies providing third-party claims administration services for
health care plans.
State Laws and Regulation
Health Care Regulation. Our insurance and HMO subsidiaries must be licensed by the jurisdictions in which
they conduct business. All of the states in which our subsidiaries offer insurance and HMO products regulate
those products and operations. These states require periodic financial reports and establish minimum capital or
restricted cash reserve requirements. The National Association of Insurance Commissioners (NAIC) has adopted
model regulations that, when implemented by states would require certain governance practices substantially
similar to the Sarbanes-Oxley Act of 2002 and expand insurance company and HMO risk and solvency
assessment reporting. We expect that states will adopt these or similar measures over the next few years,
expanding the scope of regulations relating to corporate governance and internal control activities of HMOs and
insurance companies. Certain states have also adopted their own regulations for minimum medical loss ratios
with which health plans must comply. In addition, a number of state legislatures have enacted or are
contemplating significant reforms of their health insurance markets, either independent of or to comply with or
be eligible for grants or other incentives in connection with the Health Reform Legislation. We expect the states
to continue to introduce and pass similar laws in 2013, and this will affect our operations and our financial
results.
Health plans and insurance companies are also regulated under state insurance holding company regulations.
Such regulations generally require registration with applicable state departments of insurance and the filing of
reports that describe capital structure, ownership, financial condition, certain intercompany transactions and
general business operations. Some state insurance holding company laws and regulations require prior regulatory
approval of acquisitions and material intercompany transfers of assets, as well as transactions between the
regulated companies and their parent holding companies or affiliates. These laws may restrict the ability of our
regulated subsidiaries to pay dividends to our holding companies.
In addition, some of our business and related activities may be subject to other health care-related regulations and
requirements, including PPO, managed care organization (MCO), utilization review (UR) or TPA-related
regulations and licensure requirements. These regulations differ from state to state, and may contain network,
contracting, product and rate, and financial and reporting requirements. There are laws and regulations that set
specific standards for delivery of services, appeals, grievances and payment of claims, adequacy of health care
professional networks, fraud prevention, protection of consumer health information, pricing and underwriting
practice and covered benefits and services. State health care anti-fraud and abuse prohibitions encompass a wide
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range of activities, including kickbacks for referral of members, billing unnecessary medical services and
improper marketing. Certain of our businesses are subject to state general agent, broker, and sales distributions
laws and regulations. Our UnitedHealthcare Community & State, UnitedHealthcare Medicare & Retirement and
certain Optum businesses are subject to regulation by state Medicaid agencies that oversee the provision of
benefits to our Medicaid and CHIP beneficiaries and to our dually eligible beneficiaries. We also contract with
state governmental entities and are subject to state laws and regulations relating to the award, administration and
performance of state government contracts.
Guaranty Fund Assessments. Under state guaranty fund laws, certain insurance companies (and HMOs in some
states), including those issuing health, long-term care, life and accident insurance policies, doing business in those
states can be assessed (up to prescribed limits) for certain obligations to the policyholders and claimants of insolvent
insurance companies that write the same line or lines of business. Assessments generally are based on a formula
relating to premiums in the state compared to the premiums of other insurers and could be spread out over a period of
years. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets.
Pharmacy Regulation. OptumRx’s mail order pharmacies must be licensed to do business as pharmacies in the
states in which they are located. Our mail order pharmacies must also register with the U.S. Drug Enforcement
Administration and individual state controlled substance authorities to dispense controlled substances. In many of
the states where our mail order pharmacies deliver pharmaceuticals there are laws and regulations that require
out-of-state mail order pharmacies to register with that state’s board of pharmacy or similar regulatory body.
These states generally permit the pharmacy to follow the laws of the state in which the mail order pharmacy is
located, although some states require that we also comply with certain laws in that state. Our mail order
pharmacies maintain certain Medicare and state Medicaid provider numbers as pharmacies providing services
under these programs. Participation in these programs requires the pharmacies to comply with the applicable
Medicare and Medicaid provider rules and regulations. Other laws and regulations affecting our mail order
pharmacies include federal and state statutes and regulations governing the labeling, packaging, advertising and
adulteration of prescription drugs and dispensing of controlled substances. See Item 1A, “Risk Factors” for a
discussion of the risks related to our PBM businesses.
Privacy and Security Laws. States have adopted regulations to implement provisions of the GLBA. Like HIPAA,
GLBA allows states to adopt more stringent requirements governing privacy protection. A number of states have
also adopted other laws and regulations that may affect our privacy and security practices, for example, state
laws that govern the use, disclosure and protection of social security numbers and sensitive health information or
that are designed to protect credit card account data. State and local authorities increasingly focus on the
importance of protecting individuals from identity theft, with a significant number of states enacting laws
requiring businesses to notify individuals of security breaches involving personal information. State consumer
protection laws may also apply to privacy and security practices related to personally identifiable information,
including information related to consumers and care providers. Additionally, different approaches to state
privacy and insurance regulation and varying enforcement philosophies in the different states may materially and
adversely affect our ability to standardize our products and services across state lines. See Item 1A, “Risk
Factors” for a discussion of the risks related to compliance with state privacy and security-related regulations.
Corporate Practice of Medicine and Fee-Splitting Laws. Certain of our businesses function as direct service
providers to care delivery systems and, as such, are subject to additional laws and regulations. Some states have
corporate practice of medicine laws that prohibit certain entities from practicing medicine or employing
physicians to practice medicine. Additionally, some states prohibit certain entities from sharing in the fees or
revenues of a professional practice (fee-splitting). These prohibitions may be statutory or regulatory, or may be a
matter of judicial or regulatory interpretation. These laws, regulations and interpretations have, in certain states,
been subject to limited judicial and regulatory interpretation and are subject to change.
Consumer Protection Laws. Certain businesses participate in direct-to-consumer activities and are subject to
emerging regulations applicable to on-line communications and other general consumer protection laws and
regulations.
16

Banking Regulation
Optum Bank is subject to regulation by federal banking regulators, including the Federal Deposit Insurance
Corporation (FDIC), which performs annual examinations to ensure that the bank is operating in accordance with
federal safety and soundness requirements, and the Consumer Financial Protection Bureau, which may perform
periodic examinations to ensure that the bank is in compliance with applicable consumer protection statutes,
regulations and agency guidelines. Optum Bank is also subject to supervision and regulation by the Utah State
Department of Financial Institutions, which carries out annual examinations to ensure that the bank is operating
in accordance with state safety and soundness requirements and performs periodic examinations of the bank’s
compliance with applicable state banking statutes, regulations and agency guidelines. In the event of unfavorable
examination results from any of these agencies, the bank could be subjected to increased operational expenses
and capital requirements, enhanced governmental oversight and monetary penalties.
International Regulation
Certain of our businesses and operations are international in nature and are subject to regulation in the
jurisdictions in which they are organized or conduct business. These regulatory regimes encompass tax,
licensing, tariffs, intellectual property, investment, management control, labor, anti-fraud, anti-corruption and
privacy and data protection regulations (including requirements for cross-border data transfers) that vary from
jurisdiction to jurisdiction, among other matters. We have recently acquired and may in the future acquire or
commence additional businesses based outside of the United States, increasing our exposure to non-U.S.
regulatory regimes. For example, our acquisition of Amil subjects us to Brazilian laws and regulations affecting
the managed care and insurance industries and regulation by Brazilian regulators including the national
regulatory agency for private health insurance and plans, the Agência Nacional de Saúde Suplementar (ANS),
whose approach to the interpretation, implementation and enforcement of industry regulations could differ from
the approach taken by U.S. regulators. For more information about the Amil acquisition, see Note 6 of Notes to
the Consolidated Financial Statement included in Item 8, “Financial Statements.” In addition, our non-U.S.
businesses and operations are also subject to U.S. laws that regulate the conduct and activities of U.S.-based
businesses operating abroad, such as the Foreign Corrupt Practices Act.
Audits and Investigations
We have been and may in the future become involved in various governmental investigations, audits and
reviews. These include routine, regular and special investigations, audits and reviews by CMS, state insurance
and health and welfare departments, state attorneys general, the Office of the Inspector General (OIG), the Office
of Personnel Management, the Office of Civil Rights, the FTC, U.S. Congressional committees, the U.S.
Department of Justice (DOJ), U.S. Attorneys, the Securities and Exchange Commission (SEC), the Brazilian
securities regulator, the Comissão de Valores Mobiliários (CVM), the Internal Revenue Service (IRS), the
Brazilian federal revenue service — the Secretaria da Receita Federal (SRF), the DOL, the FDIC and other
governmental authorities. Certain of our businesses have been reviewed or are currently under review, including
for, among other things, compliance with coding and other requirements under the Medicare risk-adjustment
model. Such government investigations, audits and reviews can result in assessment of damages, civil or criminal
fines or penalties, or other sanctions, including loss of licensure or exclusion from participation in government
programs. In addition, disclosure of any adverse investigation, audit results or sanctions could adversely affect
our reputation in various markets and make it more difficult for us to sell our products and services while
retaining our current business.
COMPETITION
As a diversified health and well-being services company, we operate in highly competitive markets. Our
competitors include managed health care companies, insurance companies, HMOs, TPAs and business services
outsourcing companies, health care professionals that have formed networks to directly contract with employers
or with CMS, specialty benefit providers, government entities, disease management companies, and various
17

health information and consulting companies. For our UnitedHealthcare businesses, competitors include
Aetna Inc., Cigna Corporation, Coventry Health Care, Inc., Health Net, Inc., Humana Inc., Kaiser Permanente,
WellPoint, Inc., numerous for-profit and not-for-profit organizations operating under licenses from the
Blue Cross Blue Shield Association, and, with respect to our Brazilian operations, several established
competitors in Brazil, and other enterprises that serve more limited geographic areas. For our OptumRx
businesses, competitors include CVS Caremark Corporation, Express Scripts, Inc. and Catamaran Corporation.
Our OptumHealth and OptumInsight reportable segments also compete with a broad and diverse set of
businesses. New entrants into the markets in which we compete, as well as consolidation within these markets,
also contribute to a competitive environment. We believe the principal competitive factors that can impact our
businesses relate to the sales, marketing and pricing of our products and services; product innovation; consumer
engagement and satisfaction; the level and quality of products and services; care delivery; network and clinical
management capabilities; market share; product distribution systems; efficiency of administration operations;
financial strength and marketplace reputation. If we fail to compete effectively to maintain or increase our market
share, including maintaining or increasing enrollments in businesses providing health benefits, our results of
operations, financial position and cash flows could be materially and adversely affected. See Item 1A, “Risk
Factors,” for additional discussion of our risks related to competition.
EMPLOYEES
As of December 31, 2012, we employed approximately 133,000 individuals. We believe our employee relations
are generally positive.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information regarding our executive officers as of February 6, 2013, including
the business experience of each executive officer during the past five years:
Name Age Position
Stephen J. Hemsley . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 President and Chief Executive Officer
David S. Wichmann . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Executive Vice President and Chief Financial
Officer of UnitedHealth Group and President of
UnitedHealth Group Operations
Gail K. Boudreaux . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Executive Vice President of UnitedHealth Group
and Chief Executive Officer of UnitedHealthcare
Eric S. Rangen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Senior Vice President and Chief Accounting
Officer
Larry C. Renfro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Executive Vice President of UnitedHealth Group
and Chief Executive Officer of Optum
Marianne D. Short . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Executive Vice President and Chief Legal Officer
Lori Sweere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Executive Vice President of Human Capital
Our Board of Directors elects executive officers annually. Our executive officers serve until their successors are
duly elected and qualified.
Mr. Hemsley is President and Chief Executive Officer of UnitedHealth Group, has served in that capacity since
January 2008, and has been a member of the Board of Directors since February 2000.
Mr. Wichmann is Executive Vice President and Chief Financial Officer of UnitedHealth Group and President of
UnitedHealth Group Operations and has served in that capacity since January 2011. Mr. Wichmann has served as
Executive Vice President and President of UnitedHealth Group Operations since April 2008. From January 2008
to April 2008, Mr. Wichmann served as Executive Vice President of UnitedHealth Group and President of the
Commercial Markets Group (now UnitedHealthcare Employer & Individual).
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Ms. Boudreaux is Executive Vice President of UnitedHealth Group and Chief Executive Officer of
UnitedHealthcare and has served in that capacity since January 2011. Ms. Boudreaux has overall responsibility
for all UnitedHealthcare health benefits businesses. Ms. Boudreaux served as Executive Vice President of
UnitedHealth Group and President of UnitedHealthcare from May 2008 to January 2011. Prior to joining
UnitedHealth Group, Ms. Boudreaux served as Executive Vice President of Health Care Services Corporation
(HCSC) from January 2008 to April 2008.
Mr. Rangen is Senior Vice President and Chief Accounting Officer of UnitedHealth Group and has served in that
capacity since January 2008.
Mr. Renfro is Executive Vice President of UnitedHealth Group and Chief Executive Officer of Optum and has
served in that capacity since July 2011. From January 2011 to July 2011, Mr. Renfro served as Executive Vice
President of UnitedHealth Group. From October 2009 to January 2011, Mr. Renfro served as Executive Vice
President of UnitedHealth Group and Chief Executive Officer of the Public and Senior Markets Group. From
January 2009 to October 2009, Mr. Renfro served as Executive Vice President of UnitedHealth Group and Chief
Executive Officer of Ovations (now UnitedHealthcare Medicare & Retirement). Prior to joining UnitedHealth
Group, Mr. Renfro served as President of Fidelity Developing Businesses at Fidelity Investments and as a
member of the Fidelity Executive Committee from June 2008 to January 2009. From January 2008 to May 2008,
Mr. Renfro held several senior positions at AARP Services Inc., including President and Chief Executive Officer
of AARP Services Inc., Chief Operating Officer of AARP Services Inc., President and Chief Executive Officer of
AARP Financial and President of the AARP Funds.
Ms. Short is Executive Vice President and Chief Legal Officer of UnitedHealth Group and has served in that
capacity since January 2013. Prior to joining UnitedHealth Group, Ms. Short served as the Managing Partner at
Dorsey & Whitney LLP from 2008 to 2012.
Ms. Sweere is Executive Vice President of Human Capital of UnitedHealth Group and has served in that capacity
since January 2008.
Additional Information
UnitedHealth Group Incorporated was incorporated in January 1977 in Minnesota. Our executive offices are
located at UnitedHealth Group Center, 9900 Bren Road East, Minnetonka, Minnesota 55343; our telephone
number is (952) 936-1300.
You can access our website at www.unitedhealthgroup.com to learn more about our Company. From that site,
you can download and print copies of our annual reports to shareholders, annual reports on Form 10-K, quarterly
reports on Form 10-Q, and current reports on Form 8-K, along with amendments to those reports. You can also
download from our website our Articles of Incorporation, bylaws and corporate governance policies, including
our Principles of Governance, Board of Directors Committee Charters, and Code of Conduct. We make periodic
reports and amendments available, free of charge, as soon as reasonably practicable after we file or furnish these
reports to the SEC. We will also provide a copy of any of our corporate governance policies published on our
website free of charge, upon request. To request a copy of any of these documents, please submit your request to:
UnitedHealth Group Incorporated, 9900 Bren Road East, Minnetonka, MN 55343, Attn: Corporate Secretary.
Information on or linked to our website is neither part of nor incorporated by reference into this Annual Report
on Form 10-K or any other SEC filings.
Our transfer agent, Wells Fargo Shareowner Services, can help you with a variety of shareholder-related services,
including change of address, lost stock certificates, transfer of stock to another person and other administrative
services. You can write to our transfer agent at: Wells Fargo Shareowner Services, P.O. Box 64854, St. Paul,
Minnesota 55164-0854, email stocktransfer@wellsfargo.com, or telephone (800) 468-9716 or (651) 450-4064.
19

ITEM 1A. RISK FACTORS
CAUTIONARY STATEMENTS
The statements, estimates, projections, guidance or outlook contained in this Annual Report on Form 10-K
include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995
(PSLRA). When used in this Annual Report on Form 10-K and in future filings by us with the SEC, in our news
releases, presentations to securities analysts or investors, and in oral statements made by or with the approval of
one of our executive officers, the words or phrases “believe,” “expect,” “intend,” “estimate,” “anticipate,”
“plan,” project,” “should” or similar expressions are intended to identify such forward-looking statements. These
statements are intended to take advantage of the “safe harbor” provisions of the PSLRA. These forward-looking
statements involve risks and uncertainties that may cause our actual results to differ materially from the results
discussed in the forward-looking statements.
The following discussion contains cautionary statements regarding our business that investors and others should
consider. We do not undertake to address or update forward-looking statements in future filings or
communications regarding our business or results of operations, and do not undertake to address how any of
these factors may have caused results to differ from discussions or information contained in previous filings or
communications. In addition, any of the matters discussed below may have affected past, as well as current,
forward-looking statements about future results. Any or all forward-looking statements in this Form 10-K and in
any other public filings or statements we make may turn out to be wrong. They can be affected by inaccurate
assumptions we might make or by known or unknown risks and uncertainties. Many factors discussed below will
be important in determining future results. By their nature, forward-looking statements are not guarantees of
future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or
quantify. Actual future results may vary materially from expectations expressed in this report or any of our prior
communications.
If we fail to effectively estimate, price for and manage our medical costs, the profitability of our risk-based
products and services could decline and could materially and adversely affect our results of operations,
financial position and cash flows.
Under our risk-based benefit product arrangements, we assume the risk of both medical and administrative costs
for our customers in return for monthly premiums. Premium revenues from risk-based benefits products
comprise approximately 90% of our total consolidated revenues. We generally use approximately 80% to 85% of
our premium revenues to pay the costs of health care services delivered to these customers. The profitability of
these products depends in large part on our ability to predict, price for, and effectively manage medical costs. In
this regard, the Health Reform Legislation established minimum medical loss ratios for certain health plans and
authorized HHS to maintain an annual price increase review process for commercial health plans, which could
make it more difficult for us to price our products competitively. See the risk factor below relating to health care
reform for further discussion of these provisions. In addition, our OptumHealth Collaborative Care business
negotiates capitation arrangements with commercial third party payers. Under the typical capitation arrangement,
the health care provider receives a fixed percentage of a third party payer’s premiums to cover all or a defined
portion of the medical costs provided to the capitated member. If we fail to accurately predict, price for or
manage the costs of providing care to our capitated members, our results of operations could be materially and
adversely affected.
We manage medical costs through underwriting criteria, product design, negotiation of favorable provider
contracts and care management programs. Total medical costs are affected by the number of individual services
rendered and the cost of each service. Our premium revenue on commercial policies is typically at a fixed rate
per individual served for a 12-month period and is generally priced one to four months before the contract
commences. Our revenue on Medicare policies is based on bids submitted in June the year before the contract
year. We base the premiums we charge and our Medicare bids on our estimates of future medical costs over the
fixed contract period; however, many factors may cause actual costs to exceed what was estimated and reflected
20

in premiums or bids. These factors may include medical cost inflation, increased use of services, increased cost
of individual services, natural catastrophes or other large-scale medical emergencies, epidemics, the introduction
of new or costly treatments and technology, new mandated benefits (such as the expansion of essential benefits
coverage) or other regulatory changes and insured population characteristics. Relatively small differences
between predicted and actual medical costs or utilization rates as a percentage of revenues can result in
significant changes in our financial results. For example, if our 2012 medical costs for commercial insured
products were 1% higher, without proportionally higher revenues from such products, our annual net earnings for
2012 would have been reduced by approximately $215 million, excluding any offsetting impact from premium
rebates.
In addition, the financial results we report for any particular period include estimates of costs that have been
incurred for which claims are still outstanding. These estimates involve an extensive degree of judgment. If these
estimates prove too low, our results of operations could be materially and adversely affected.
Our business activities are highly regulated; new laws or regulations or changes in existing laws or
regulations or their enforcement or application could materially and adversely affect our results of
operations, financial position and cash flows.
Our business is regulated at the federal, state, local and international levels. Our insurance and HMO subsidiaries
must be licensed by and are subject to the regulations of the jurisdictions in which they conduct business. For
example, states require periodic financial reports and enforce minimum capital or restricted cash reserve
requirements. Health plans and insurance companies are also regulated under state insurance holding company
regulations, and some of our activities may be subject to other health care-related regulations and requirements,
including those relating to PPOs, MCOs, utilization review and TPA-related regulations and licensure
requirements. Some of our UnitedHealthcare and Optum businesses hold or provide services related to
government contracts and are subject to U.S. federal and state and non-U.S. self-referral, anti-kickback, medical
necessity, risk adjustment, false claims, debt collection and other laws and regulations governing government
contractors and the use of government funds. In addition, under state guaranty fund laws, certain health, life and
accident insurance companies and, in certain cases, HMOs can be assessed (up to prescribed limits) for certain
obligations to the policyholders and claimants of insolvent insurance companies that write the same line or lines
of business in these states, which would expose our business to the risk of insolvency of a competitor in these
states.
Certain of our Optum businesses are also subject to regulatory and other risks and uncertainties, some of which
are distinct from those faced by our insurance and HMO subsidiaries, including, for example, FDA regulations,
state telemedicine regulations and state corporate practice of medicine doctrines and fee-splitting rules, some of
which could impact our relationships with physicians, hospitals and customers. Additionally, OptumHealth
participates in the emerging private exchange markets and it is not yet known to what extent the states will issue
new regulations that apply to private exchanges. These risks and uncertainties may materially and adversely
affect our ability to market our products and services, or to do so at targeted margins, or increase the regulatory
burdens under which we operate.
The laws and rules governing our business and interpretations of those laws and rules are subject to frequent
change, and the integration into our businesses of entities that we acquire may affect the way in which existing
laws and rules apply to us. The broad latitude given to the agencies administering, interpreting and enforcing
current and future regulations governing our business could force us to change how we do business, restrict
revenue and enrollment growth, increase our health care and administrative costs and capital requirements, or
expose us to increased liability in courts for coverage determinations, contract interpretation and other actions.
We must also obtain and maintain regulatory approvals to market many of our products, increase prices for
certain regulated products and complete certain acquisitions and dispositions or integrate certain acquisitions. For
21

example, premium rates for our health insurance and/or managed care products are subject to regulatory review
or approval in many states and by the federal government, and a number of states have enhanced (or are
proposing to enhance) their rate review processes. In addition, geographic and product expansions may be subject
to state and federal regulatory approvals. Delays in obtaining necessary approvals or our failure to obtain or
maintain adequate approvals could materially and adversely affect our results of operations, financial position
and cash flows.
Some of our businesses and operations are international in nature and consequently face political, economic,
legal, compliance, regulatory, operational and other risks and exposures that are unique and vary by jurisdiction.
The regulatory environments and associated requirements and uncertainties regarding tax, licensing, tariffs,
intellectual property, privacy, data protection, investment, management control, labor relations, fraud and
corruption present compliance requirements and uncertainties for us that are different from those faced by U.S.-
based businesses. We have recently acquired and may in the future acquire or commence additional businesses
based outside of the United States. For example, our acquisition of Amil in October 2012 subjects us to Brazilian
laws and regulations affecting the managed care and insurance industries, which vary from comparable U.S. laws
and regulations, and regulation by Brazilian regulators, whose approach to the interpretation, implementation and
enforcement of industry regulations could differ from the approach taken by U.S. regulators. For more
information about the Amil acquisition, see Note 6 of Notes to the Consolidated Financial Statements included in
Item 8, “Financial Statements.” In addition, our non-U.S. businesses and operations are also subject to U.S. laws
that regulate the conduct and activities of U.S.-based businesses operating abroad, such as the Foreign Corrupt
Practices Act. Our failure to comply with U.S. or non-U.S. laws and regulations governing our conduct outside
the United States or to establish constructive relations with non-U.S. regulators could adversely affect our ability
to market our products and services, or to do so at targeted margins, which may have a material adverse effect on
our business, financial condition and results of operations.
The health care industry is also regularly subject to negative publicity, including as a result of governmental
investigations, adverse media coverage and political debate surrounding industry regulation. Negative publicity
may adversely affect our stock price, damage our reputation in various markets or foster an increasingly active
regulatory environment, which, in turn, could further increase the regulatory burdens under which we operate and
our costs of doing business.
For a discussion of various laws and regulations that impact our businesses, see Item 1, “Business — Government
Regulation.”
The implementation of the Health Reform Legislation and other reforms could materially and adversely
affect the manner in which we conduct business and our results of operations, financial position and cash
flows.
The Health Reform Legislation expands access to coverage and modifies aspects of the commercial insurance
market, as well as the Medicaid and Medicare programs, CHIP and other aspects of the health care system.
Among other things, the Health Reform Legislation includes guaranteed coverage and expanded benefit
requirements, eliminates pre-existing condition exclusions and annual and lifetime maximum limits, restricts the
extent to which policies can be rescinded, establishes minimum medical loss ratios, creates a federal premium
review process, imposes new requirements on the format and content of communications (such as explanations of
benefits, or EOBs) between health insurers and their members, grants to members new and additional appeal
rights, imposes new and significant taxes on health insurers and health care benefits, reduces the Medicare Part D
coverage gap and reduces payments to private plans offering Medicare Advantage.
Certain provisions of the Health Reform Legislation have already taken effect, and other provisions become
effective at various dates over the next several years. HHS, the DOL and the Treasury Department have issued or
proposed regulations on a number of aspects of Health Reform Legislation, but final rules and interim guidance
22

on other key aspects of the legislation remain pending. Due to the complexity of the Health Reform Legislation,
the impact of the Health Reform Legislation remains difficult to predict and is not yet fully known. For example,
effective in 2011, the Health Reform Legislation established minimum medical loss ratios for all commercial
health plans in the large employer group, small employer group and individual markets (85% for large employer
groups, 80% for small employer groups and 80% for individuals, calculated under the definitions in the Health
Reform Legislation and regulations), subject to state specific exceptions. Companies with medical loss ratios
below these targets are required to rebate ratable portions of their premiums to their customers annually. The
medical loss ratios that determine the size of the rebates will be measured by state, by group size and by licensed
subsidiary. This disaggregation of insurance pools into much smaller pools will likely decrease the predictability
of results for any given pool and could lead to variation over time in the estimates of rebates owed in total.
Effective in 2014, Medicare Advantage plans will be required to maintain a minimum medical loss ratio of 85%,
although the rules expected to set forth the basis for calculating this medical loss ratio have not yet been issued.
Some state Medicaid programs are also imposing medical loss ratio requirements on Medicaid managed care
organizations, which generally require such plans to rebate ratable portions of their premiums to their state
customers if they cannot demonstrate they have met the minimum medical loss ratios. Depending on our
calculations of the medical loss ratios for each of our plans and the manner in which we adjust our business
model in light of these requirements, there could be meaningful disruptions in local health care markets, and our
market share, results of operations, financial position and cash flows could be materially and adversely affected.
In addition, the Health Reform Legislation requires the establishment of state-based health insurance exchanges
for individuals and small employers by 2014. The types of exchange participation requirements ultimately
enacted by each state, the availability of federal subsidies for premiums and cost-sharing reductions within
exchanges, the potential for differential imposition of state benefit mandates inside and outside the exchanges,
the operation of reinsurance, risk corridors and risk adjustment mechanisms inside and outside the exchanges and
the possibility that certain states may restrict the ability of health plans to continue to offer coverage to
individuals and small employers outside of the exchanges could result in disruptions in local health care markets
and our results of operations, financial position and cash flows could be materially and adversely affected.
The Health Reform Legislation also includes specific reforms for the individual and small group marketplace,
scheduled to take effect in January 2014, including adjusted community rating requirements (which include
elimination of health status and gender rating factors), essential health benefit requirements (expected to result in
benefit changes for many members) and actuarial value requirements likely to result in expanded benefits or reduced
member cost sharing (or a combination of both) for some policyholders. Although HHS issued proposed regulations
related to these provisions in late 2012, the federal regulations are not yet final and most states have not issued
implementing regulations or guidance with respect to these provisions. Depending on the timing and outcome of the
final federal regulations and required state regulations or guidance, there could be disruptions in local health care
markets and our results of operations, financial position and cash flows could be materially and adversely affected.
The Health Reform Legislation includes a “maintenance of effort” (MOE) provision that requires states to
maintain their eligibility rules for adults covered by Medicaid, until the Secretary of HHS determines that an
insurance exchange is operational in a given state, scheduled for January 2014, and for children covered by
Medicaid or CHIP, through federal fiscal year 2019. States with, or projecting, a budget deficit may apply for an
exception to the MOE provision. If states are successful in obtaining MOE waivers and allow certain Medicaid
programs to expire, we could experience reduced Medicaid enrollment, which could materially and adversely
affect our results of operations, financial position and cash flows.
Under the U.S. Supreme Court’s June 2012 decision, state participation in the Health Reform Legislation’s
Medicaid expansion is voluntary. Several states have indicated they may not expand their Medicaid programs
based on concerns over costs when expanded federal funding pares down, starting in 2017. The extent to which
states expand their Medicaid programs, or discontinue current expansion programs, could adversely impact our
Medicaid enrollment levels, which could in turn materially and adversely affect our results of operations,
financial position and cash flows.
23

Several of the provisions in the Health Reform Legislation will likely increase our medical cost trends. Examples
of these provisions are the excise tax on medical devices, annual fees on prescription drug manufacturers,
enhanced coverage requirements (including essential health benefit requirements and phased-in closing of the
coverage gap for Medicare Part D participants), the prohibition of pre-existing condition exclusions and the
implementation of adjusted community rating requirements. The annual insurance industry assessment ($8
billion to be levied on the insurance industry in 2014 increasing to $14.3 billion by 2018 with increasing annual
amounts thereafter), which is not deductible for income tax purposes, and the temporary reinsurer’s fee ($25
billion to be levied on all commercial lines of business including insured and self-funded arrangements, over a
three-year period starting in 2014), will increase our operating costs. Premium increases or benefit reductions
will be necessary to offset the impact these and other provisions will have on our medical and operating costs.
These premium increases are often subject to state regulatory approval, and the Federal government is
encouraging states to intensify their reviews of requests for rate increases by commercial health plans and
providing funding to assist in those state-level reviews. We have begun to experience greater regulatory
challenges to appropriate premium rate increases in several states, including California and New York. In
addition, as required under the Health Reform Legislation, HHS established a federal premium rate review
process, which became effective in September 2011 and generally applies to proposed rate increases equal to or
exceeding 10%. The regulations further require commercial health plans in the individual and small group
markets to provide to the states and HHS extensive information supporting rate increases. If we are not able to
secure approval for adequate premium increases to offset increases in our cost structure or if consumers forego
coverage as a result of such premium increases, our margins, results of operations, financial position and cash
flows could be materially and adversely affected. In addition, plans deemed to have a history of “unreasonable”
rate increases may be prohibited from participating in the state-based exchanges that become active under the
Health Reform Legislation in 2014. Under the regulations, the HHS rate review process would apply only to
health plans in the individual and small group markets.
We also expect that implementation of the Health Reform Legislation will increase the demand for products and
capabilities offered by our Optum businesses. We have made and will continue to make strategic decisions and
investments based, in part, on these assumptions, and our results of operations, financial position and cash flows
could be materially and adversely affected if fewer individuals gain coverage under the Health Reform
Legislation than we expect or we are unable to attract these new individuals to our UnitedHealthcare offerings, or
if the demand for our Optum businesses does not increase.
Future regulatory or legislative action could further impact the implementation of Health Reform Legislation. For
example, Congress may attempt to amend or withhold the funding necessary to implement the Health Reform
Legislation. In addition, a number of state legislatures have enacted or are contemplating significant reforms of
their health insurance markets, either independent of or to comply with or be eligible for grants or other
incentives in connection with the Health Reform Legislation. New federal or state laws and regulations could
force us to materially change how we do business and any amendment, withholding of funding, extended delays
in the issuance of necessary federal and state implementing regulations or guidance or other uncertainty
regarding the Health Reform Legislation could materially and adversely impact our ability to capitalize on the
opportunities presented by the legislation or cause us to incur additional costs of compliance or reverse some of
the changes we have already implemented. In addition, our market share, our results of operations, our financial
position, including our ability to maintain the value of our goodwill, and our cash flows could be materially and
adversely affected by legislative and regulatory changes.
For additional information regarding the Health Reform Legislation, see Item 1, “Business — Government
Regulation” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations — Executive Overview — Regulatory Trends and Uncertainties.”
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As a result of our participation in various government health care programs, both as a payer and as a
service provider to payers, we are exposed to additional risks associated with program funding,
enrollments, payment adjustments, audits and government investigations that could materially and
adversely affect our business, results of operations, financial position and cash flows.
We participate in various federal, state and local government health care coverage programs, including as a payer
in Medicare Advantage, Medicare Part D, various Medicaid programs, CHIP and our TRICARE West contract
with the DoD, and receive substantial revenues from these programs. We also provide services to payers through
our Optum businesses. These programs generally are subject to frequent changes, including changes that may
reduce the number of persons enrolled or eligible for coverage, reduce the amount of reimbursement or payment
levels, reduce our participation in certain service areas or markets, or increase our administrative or medical costs
under such programs. Revenues for these programs are dependent upon periodic funding from the federal
government or applicable state governments and allocation of the funding through various payment mechanisms.
Funding for these government programs is dependent upon many factors outside of our control, including general
economic conditions and budgetary constraints at the federal or applicable state level, and general political issues
and priorities. For example, CMS has in the past reduced or frozen Medicare Advantage benchmarks and
additional cuts to Medicare Advantage benchmarks are expected in the next few years. Although we have
adjusted members’ benefits and premiums on a selective basis, terminated benefit plans in certain counties, and
intensified both our medical and operating cost management in response to these benchmark reductions, there
can be no assurance that we will be able to execute successfully on these or other strategies to address changes in
the Medicare Advantage program. A reduction or less than expected increase, or a protracted delay, in
government funding for these programs or change in allocation methodologies may materially and adversely
affect our results of operations, financial position and cash flows.
Under the Medicaid Managed Care program, state Medicaid agencies are periodically required by federal law to
seek bids from eligible health plans to continue their participation in the acute care Medicaid health programs. If
we are not successful in obtaining renewals of state Medicaid Managed Care contracts, we risk losing the
members that were enrolled in those Medicaid plans. Under the Medicare Part D program, to qualify for
automatic enrollment of low income members, our bids must result in an enrollee premium below a regional
benchmark, which is calculated by the government after all regional bids are submitted. If the enrollee premium
is not below the government benchmark, we risk losing the members who were auto-assigned to us and we will
not have additional members auto-assigned to us. For example, we lost approximately 470,000 of our auto-
enrolled low-income subsidy members in 2012 because certain of our bids exceeded thresholds set by the
government. In general, our bids are based upon certain assumptions regarding enrollment, utilization, medical
costs, and other factors. In the event any of these assumptions are materially incorrect, either as a result of
unforeseen changes to the Medicare program or other programs on which we bid, or our competitors submit bids
at lower rates than our bids, our results of operations, financial position and cash flows could be materially and
adversely affected.
Many of the government health care coverage programs in which we participate are subject to the prior
satisfaction of certain conditions or performance standards or benchmarks. For example, as part of the Health
Reform Legislation, CMS has developed a system entitling plans that meet certain quality ratings at the local
plan level to various quality bonus payments. In addition, under the Health Reform Legislation, Congress
authorized CMS and the states to implement MME managed care demonstration programs to serve dually
eligible beneficiaries to improve the coordination of their care. Health plan participation in these demonstration
programs is subject to CMS approval of specified care delivery models and the satisfaction of conditions to
participation, including meeting certain performance requirements. Any changes in standards or care delivery
models that apply to government health care programs, including Medicare, Medicaid and the MME
demonstration programs for dually eligible beneficiaries, or our inability to meet government performance
requirements or to match the performance of our competitors could result in limitations to our participation in or
exclusion from these or other government programs, which in turn could materially and adversely affect our
results of operations, financial position and cash flows.
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CMS uses various payment mechanisms to allocate funding for Medicare programs, including adjusting monthly
capitation payments to Medicare Advantage plans and Medicare Part D plans according to the predicted health
status of each beneficiary as supported by data from health care providers as well as, for Medicare Part D plans,
risk-sharing provisions based on a comparison of costs predicted in our annual bids to actual prescription drug
costs. Some state Medicaid programs utilize a similar process. For example, our UnitedHealthcare Medicare &
Retirement and UnitedHealthcare Community & State businesses submit information relating to the health status
of enrollees to CMS or state agencies for purposes of determining the amount of certain payments to us. CMS
and the Office of Inspector General for HHS periodically perform risk adjustment data validation (RADV) audits
of selected Medicare health plans to validate the coding practices of and supporting documentation maintained
by health care providers, and certain of our local plans have been audited. Such audits have in the past resulted
and could in the future result in retrospective adjustments to payments made to our health plans, fines, corrective
action plans or other adverse action by CMS. In February 2012, CMS published a final RADV audit and payment
adjustment methodology. The methodology contains provisions allowing retroactive contract level payment
adjustments for the year audited, beginning with 2011 payments, using an extrapolation of the “error rate”
identified in audit samples and, for Medicare Advantage plans, after considering a fee-for-service (FFS) “error
rate” adjuster that will be used in determining the payment adjustment. Depending on the plans selected for audit,
if any, and the error rate found in those audits, if any, potential payment adjustments could have a material
adverse effect on our results of operations, financial position and cash flows.
We have been and may in the future become involved in various governmental investigations, audits, reviews
and assessments. These include routine, regular and special investigations, audits and reviews by CMS, state
insurance and health and welfare departments, state attorneys general, the OIG, the Office of Personnel
Management, the Office of Civil Rights, the FTC, U.S. Congressional committees, the DOJ, U.S. Attorneys, the
SEC, the CVM, the IRS, the SRF, the DOL, the FDIC and other governmental authorities. Certain of our
businesses have been reviewed or are currently under review, including for, among other things, compliance with
coding and other requirements under the Medicare risk-adjustment model. Such investigations, audits or reviews
sometimes arise out of or prompt claims by private litigants or whistleblowers that, among other things, we failed
to disclose certain business practices or, as a government contractor, submitted false claims to the government.
Governmental investigations, audits, reviews and assessments could expand to subjects beyond those targeted by
the original investigation, audit, review, assessment or private action and could lead to government actions,
which could result in the assessment of damages, civil or criminal fines or penalties, or other sanctions, including
restrictions or changes in the way we conduct business, loss of licensure or exclusion from participation in
government programs, any of which could have a material adverse effect on our business, results of operations,
financial position and cash flows. See Note 12 of Notes to the Consolidated Financial Statements included in
Item 8, “Financial Statements” for a discussion of certain of these matters.
If we fail to comply with applicable privacy and security laws, regulations and standards, including with
respect to third-party service providers that utilize sensitive personal information on our behalf, or if we
fail to address emerging security threats or detect and prevent privacy and security incidents, our
business, reputation, results of operations, financial position and cash flows could be materially and
adversely affected.
The collection, maintenance, protection, use, transmission, disclosure and disposal of sensitive personal
information are regulated at the federal, state, international and industry levels and requirements are imposed on
us by contracts with customers. These laws, rules and requirements are subject to change. Further, many of our
businesses are subject to the Payment Card Industry Data Security Standards (PCI DSS), which is a multifaceted
security standard that is designed to protect credit card account data as mandated by payment card industry
entities. See Item 1, “Business — Government Regulation” for additional information. HIPAA also requires
business associates as well as covered entities to comply with certain privacy and security requirements. Even
though we provide for appropriate protections through our contracts with our third-party service providers and in
certain cases assess their security controls, we still have limited oversight or control over their actions and
practices.
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Our facilities and systems and those of our third-party service providers may be vulnerable to privacy and
security incidents; security attacks and breaches; acts of vandalism or theft; computer viruses; coordinated
attacks by activist entities; emerging cybersecurity risks; misplaced or lost data; programming and/or human
errors; or other similar events. Emerging and advanced security threats, including coordinated attacks, require
additional layers of security which may disrupt or impact efficiency of operations.
Compliance with new privacy and security laws, regulations and requirements may result in increased operating
costs, and may constrain our ability to manage our business model. For example, final HHS regulations released
in January 2013 implementing the ARRA amendments to HIPAA may further restrict our ability to collect,
disclose and use sensitive personal information and may impose additional compliance requirements on our
business. In addition, HHS has announced that it will continue its audit program to assess HIPAA compliance
efforts by covered entities. Although we are not aware of HHS plans to audit any of our covered entities, an audit
resulting in findings or allegations of noncompliance could have a material adverse effect on our results of
operations, financial position and cash flows.
Noncompliance or findings of noncompliance with applicable laws, regulations or requirements, or the
occurrence of any privacy or security breach involving the misappropriation, loss or other unauthorized
disclosure of sensitive personal information, whether by us or by one of our third-party service providers, could
have a material adverse effect on our reputation and business, including mandatory disclosure to the media,
significant increases in the cost of managing and remediating privacy or security incidents and material fines,
penalties and litigation awards, among other consequences, any of which could have a material and adverse
effect on our results of operations, financial position and cash flows.
Our businesses providing PBM services face regulatory and other risks and uncertainties associated with
the PBM industry that may differ from the risks of our business of providing managed care and health
insurance products.
We provide PBM services through our OptumRx and UnitedHealthcare businesses. Each business is subject to
federal and state anti-kickback and other laws that govern their relationships with pharmaceutical manufacturers,
physicians, pharmacies, customers and consumers. OptumRx also conducts business as a mail order pharmacy
and specialty pharmacy, which subjects it to extensive federal, state and local laws and regulations. In addition,
federal and state legislatures regularly consider new regulations for the industry that could materially and
adversely affect current industry practices, including the receipt or disclosure of rebates from pharmaceutical
companies, the development and use of formularies, and the use of average wholesale prices. See Item 1,
“Business — Government Regulation” for a discussion of various federal and state laws and regulations
governing our PBM businesses.
Our PBM businesses would also be materially and adversely affected by an inability to contract on favorable
terms with pharmaceutical manufacturers and other suppliers, and could face potential claims in connection with
purported errors by our mail order or specialty pharmacies, including in connection with the risks inherent in the
packaging and distribution of pharmaceuticals and other health care products. Disruptions at any of our mail
order or specialty pharmacies due to an accident or an event that is beyond our control could affect our ability to
timely process and dispense prescriptions and could materially and adversely affect our results of operations,
financial position and cash flows.
In addition, our PBM businesses provide services to sponsors of health benefit plans that are subject to ERISA.
The DOL, which is the agency that enforces ERISA, could assert that the fiduciary obligations imposed by the
statute apply to some or all of the services provided by our PBM businesses even where our PBM businesses are
not contractually obligated to assume fiduciary obligations. In the event a court were to determine that fiduciary
obligations apply to our PBM businesses in connection with services for which our PBM businesses are not
contractually obligated to assume fiduciary obligations, we could be subject to claims for breaches of fiduciary
obligations or entering into certain prohibited transactions.
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UnitedHealthcare Employer & Individual recently began to transition pharmacy benefit management for
approximately 12 million of its commercial members, including pharmacy claims adjudication and customer
service, from Express Scripts’ subsidiary, Medco Health Solutions, Inc., to OptumRx. If our customers are not
satisfied with our pharmacy benefit management services as a result of this transition, UnitedHealthcare
Employer & Individual could face loss of business, which could adversely impact our results of operations,
financial position and cash flows.
If we fail to compete effectively to maintain or increase our market share, including maintaining or
increasing enrollments in businesses providing health benefits, our results of operations, financial position
and cash flows could be materially and adversely affected.
Our businesses compete throughout the United States and face significant competition in all of the geographic
markets in which we operate. We compete with other companies on the basis of many factors, including price of
benefits offered and cost and risk of alternatives, location and choice of health care providers, quality of
customer service, comprehensiveness of coverage offered, reputation for quality care, financial stability and
diversity of product offerings. For our UnitedHealthcare businesses, competitors include Aetna Inc., Cigna
Corporation, Coventry Health Care, Inc., Health Net, Inc., Humana Inc., Kaiser Permanente, WellPoint, Inc.,
numerous for-profit and not-for-profit organizations operating under licenses from the Blue Cross Blue Shield
Association, and, with respect to our Brazilian operations, several established competitors in Brazil, and other
enterprises that serve more limited geographic areas. For our OptumRx businesses, competitors include CVS
Caremark Corporation, Express Scripts, Inc. and Catamaran Corporation. Our OptumHealth and OptumInsight
reportable segments also compete with a broad and diverse set of businesses.
In particular markets, competitors may have greater capabilities, resources or market share; a more established
reputation; superior supplier or health care professional arrangements; better existing business relationships; or
other factors that give such competitors a competitive advantage. In addition, significant merger and acquisition
activity has occurred in the industries in which we operate, both among our competitors and suppliers (including
hospitals, physician groups and other care professionals). Consolidation may make it more difficult for us to
retain or increase our customer base, improve the terms on which we do business with our suppliers, or maintain
or increase profitability. If we do not compete effectively in our markets, if we set rates too high or too low in
highly competitive markets, if we do not design and price our products properly and competitively, if we are
unable to innovate and deliver products and services that demonstrate value to our customers, if we do not
provide a satisfactory level of services, if membership or demand for other services does not increase as we
expect or declines, or if we lose accounts with more profitable products while retaining or increasing
membership in accounts with less profitable products, our business, results of operations, financial position and
cash flows could be materially and adversely affected.
If we fail to develop and maintain satisfactory relationships with physicians, hospitals, and other health
care providers, our business could be materially and adversely affected.
We contract with physicians, hospitals, pharmaceutical benefit service providers, pharmaceutical manufacturers,
and other health care providers for services. Our results of operations and prospects are substantially dependent
on our continued ability to contract for these services at competitive prices. Failure to develop and maintain
satisfactory relationships with health care providers, whether in-network or out-of-network, could materially and
adversely affect our business, results of operations, financial position and cash flows.
In any particular market, physicians and health care providers could refuse to contract, demand higher payments,
or take other actions that could result in higher medical costs, less desirable products for customers or difficulty
meeting regulatory or accreditation requirements. In some markets, certain health care providers, particularly
hospitals, physician/hospital organizations or multi-specialty physician groups, may have significant market
positions or near monopolies that could result in diminished bargaining power on our part. In addition,
accountable care organizations (ACOs), practice management companies, which aggregate physician practices
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for administrative efficiency and marketing leverage, and other organizational structures that physicians,
hospitals and other care providers choose may change the way that these providers interact with us and may
change the competitive landscape. Such organizations or groups of physicians may compete directly with us,
which may impact our relationships with these providers or affect the way that we price our products and
estimate our costs and may require us to incur costs to change our operations, and our results of operations,
financial position and cash flows could be adversely affected. In addition, if these providers refuse to contract
with us, use their market position to negotiate favorable contracts or place us at a competitive disadvantage, our
ability to market products or to be profitable in those areas could be materially and adversely affected.
We have capitation arrangements with some physicians, hospitals and other health care providers. Capitation
arrangements limit our exposure to the risk of increasing medical costs, but expose us to risk related to the
adequacy of the financial and medical care resources of the health care provider. To the extent that a capitated
health care provider organization faces financial difficulties or otherwise is unable to perform its obligations
under the capitation arrangement, we may be held responsible for unpaid health care claims that should have
been the responsibility of the capitated health care provider and for which we have already paid the provider
under the capitation arrangement. Further, payment or other disputes between a primary care provider and
specialists with whom the primary care provider contracts can result in a disruption in the provision of services to
our members or a reduction in the services available to our members. There can be no assurance that health care
providers with whom we contract will properly manage the costs of services, maintain financial solvency or
avoid disputes with other providers. Any of these events could have a material adverse effect on the provision of
services to our members and our operations.
Some providers that render services to our members do not have contracts with us. In those cases, we do not have
a pre-established understanding about the amount of compensation that is due to the provider for services
rendered to our members. In some states, the amount of compensation due to these out-of-network providers is
defined by law or regulation, but in most instances, it is either not defined or it is established by a standard that
does not clearly specify dollar terms. In some instances, providers may believe that they are underpaid for their
services and may either litigate or arbitrate their dispute with us or try to recover from our members the
difference between what we have paid them and the amount they charged us. For example, we are involved in
litigation with out-of-network providers, as described in more detail in “Litigation Matters” in Note 12 of Notes
to the Consolidated Financial Statements included in Item 8, “Financial Statements.”
The success of certain Optum businesses, particularly Collaborative Care, depends on maintaining satisfactory
physician relationships. The primary care physicians that practice medicine or contract with our affiliated physician
organizations could terminate their provider contracts or otherwise become unable or unwilling to continue
practicing medicine or contracting with us. If we are unable to maintain satisfactory relationships with primary care
physicians, or to retain enrollees following the departure of a physician, our revenues could be materially and
adversely affected. In addition, our affiliated physician organizations contract with health insurance and HMO
competitors of UnitedHealthcare. If our affiliated physician organizations fail to maintain relationships with these
health insurance or HMO companies, or to adequately price their contracts with these third party payers, our results
of operations, financial position and cash flows could be materially and adversely affected.
In addition, physicians, hospitals, pharmaceutical benefit service providers, pharmaceutical manufacturers, and
certain health care providers are customers of our Optum businesses. Given the importance of health care
providers and other constituents to our businesses, failure to maintain satisfactory relationships with them could
materially and adversely affect our results of operations, financial position and cash flows.
Because of the nature of our business, we are routinely subject to various litigation actions, which could
damage our reputation and, if resolved unfavorably, could result in substantial penalties and/or monetary
damages and materially and adversely affect our results of operations, financial position and cash flows.
Because of the nature of our business, we are routinely made party to a variety of legal actions related to, among
other things, the design, management and delivery of our product and service offerings. These matters have
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included or could in the future include claims related to health care benefits coverage and payment (including
disputes with enrollees, customers, and contracted and non-contracted physicians, hospitals and other health care
professionals), tort (including claims related to the delivery of health care services, such as medical malpractice
by health care practitioners who are employed by us, have contractual relationships with us, or serve as providers
to our managed care networks), contract and labor disputes, tax claims and claims related to disclosure of certain
business practices. We are also party to certain class action lawsuits brought by health care professional groups
and consumers. In addition, we periodically acquire businesses or commence operations in jurisdictions outside
of the United States, where contractual rights, tax positions and applicable regulations may be subject to
interpretation or uncertainty to a greater degree than in the United States, and therefore subject to dispute by
customers, government authorities or others. We are largely self-insured with regard to litigation risks. Although
we maintain excess liability insurance with outside insurance carriers for claims in excess of our self-insurance,
certain types of damages, such as punitive damages in some circumstances, are not covered by insurance. We
record liabilities for our estimates of the probable costs resulting from self-insured matters; however, it is
possible that the level of actual losses will significantly exceed the liabilities recorded.
A description of significant legal actions in which we are currently involved is included in Note 12 of Notes to
the Consolidated Financial Statements included in Item 8, “Financial Statements.” We cannot predict the
outcome of these actions with certainty, and we are incurring expenses in resolving these matters. The legal
actions we face or may face in the future could further increase our cost of doing business and materially and
adversely affect our results of operations, financial position and cash flows. In addition, certain legal actions
could result in adverse publicity, which could damage our reputation and materially and adversely affect our
ability to retain our current business or grow our market share in select markets and businesses.
Any failure by us to successfully manage our strategic alliances or complete, manage or integrate
acquisitions and other significant strategic transactions could materially and adversely affect our business,
prospects, results of operations, financial position and cash flows.
As part of our business strategy, we frequently engage in discussions with third parties regarding possible
investments, acquisitions, divestitures, strategic alliances, joint ventures, and outsourcing transactions and often
enter into agreements relating to such transactions. For example, we have a strategic alliance with AARP under
which we provide AARP-branded Medicare Supplement insurance to AARP members and other AARP-branded
products and services to both AARP members and non-members. If we fail to meet the needs of AARP and its
members, including by developing additional products and services, pricing our products and services
competitively or responding effectively to applicable federal and state regulatory changes, our alliance with the
AARP could be damaged or terminated, which in turn could adversely impact our reputation, business and results
of operations. Further, if we fail to identify and complete successfully transactions that further our strategic
objectives, we may be required to expend resources to develop products and technology internally, we may be at
a competitive disadvantage or we may be adversely affected by negative market perceptions, any of which may
have a material adverse effect on our results of operations, financial position or cash flows. For acquisitions,
success is also dependent upon efficiently integrating the acquired business into our existing operations. We are
required to integrate these businesses into our internal control environment, which may present challenges that
are different than those presented by organic growth and that may be difficult to manage. If we are unable to
successfully integrate and grow these acquisitions and to realize contemplated revenue synergies and cost
savings, our business, prospects, results of operations, financial position and cash flows could be materially and
adversely affected.
As we continue to expand our business outside the United States, acquired foreign businesses, such as Amil, will
present challenges that are different from those presented by acquisitions of domestic businesses, including
adapting to new markets, business, labor and cultural practices and regulatory environments that are materially
different from what we have experienced in our U.S. operations. For more information on the Amil acquisition,
see Note 6 of Notes to the Consolidated Financial Statements included in Item 8, “Financial Statements.”
Adapting to these challenges could require us to devote significant senior management and other resources to the
30

acquired businesses before we realize anticipated benefits or synergies from the acquired businesses. These
challenges vary widely by country and may include political instability, government intervention, discriminatory
regulation, and currency exchange controls or other restrictions that could prevent us from transferring funds
from these operations out of the countries in which our acquired businesses operate or converting local currencies
that we hold into U.S. dollars or other currencies. If we are unable to successfully manage our foreign
acquisitions, our business, prospects, results of operations and financial position could be materially and
adversely affected.
Additionally, foreign currency exchange rates and fluctuations may have an impact on our shareholders’ equity
from period to period, which could adversely affect our debt to debt-plus-equity ratio, and the future costs of or
revenues and cash flows from our international operations, and any measures we may implement to reduce the
effect of volatile currencies may be costly or ineffective.
Sales of our products and services are dependent on our ability to attract, retain and provide support to a
network of independent producers and consultants.
Our products are sold in part through independent producers and consultants who assist in the production and
servicing of business. We typically do not have long-term contracts with our producers and consultants, who
generally are not exclusive to us and who typically also recommend and/or market health care products and
services of our competitors. As a result, we must compete intensely for their services and allegiance. Our sales
would be materially and adversely affected if we were unable to attract or retain independent producers and
consultants or if we do not adequately provide support, training and education to them regarding our product
portfolio, or if our sales strategy is not appropriately aligned across distribution channels.
Because producer commissions are included as administrative expenses under the medical loss ratio requirements
of the Health Reform Legislation, these expenses will be under the same cost reduction pressures as other
administrative costs. Our relationships with producers could be materially and adversely impacted by changes in
our business practices and the nature of our relationships to address these pressures, including potential
reductions in commissions.
In addition, there have been a number of investigations regarding the marketing practices of producers selling
health care products and the payments they receive. These have resulted in enforcement actions against
companies in our industry and producers marketing and selling these companies’ products. These investigations
and enforcement actions could result in penalties and the imposition of corrective action plans, which could
materially and adversely impact our ability to market our products.
Unfavorable economic conditions could materially and adversely affect our revenues and our results of
operations.
Unfavorable economic conditions may impact demand for certain of our products and services. For example,
high unemployment rates have caused and could continue to cause lower enrollment or lower rates of renewal in
our employer group plans and our non-employer individual plans. Unfavorable economic conditions have also
caused and could continue to cause employers to stop offering certain health care coverage as an employee
benefit or elect to offer this coverage on a voluntary, employee-funded basis as a means to reduce their operating
costs. In addition, unfavorable economic conditions could adversely impact our ability to increase premiums or
result in the cancellation by certain customers of our products and services. All of these could lead to a decrease
in our membership levels and premium and fee revenues and could materially and adversely affect our results of
operations, financial position and cash flows.
During a prolonged unfavorable economic environment, state and federal budgets could be materially and
adversely affected, resulting in reduced reimbursements or payments in our federal and state government health
care coverage programs, including Medicare, Medicaid and CHIP. A reduction in state Medicaid reimbursement
rates could be implemented retrospectively to payments already negotiated and/or received from the government
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and could materially and adversely affect our results of operations, financial position and cash flows. In addition,
the state and federal budgetary pressures could cause the government to impose new or a higher level of taxes or
assessments for our commercial programs, such as premium taxes on insurance companies and health
maintenance organizations and surcharges or fees on select fee-for-service and capitated medical claims, and
could materially and adversely affect our results of operations, financial position and cash flows.
In addition, a prolonged unfavorable economic environment could adversely impact the financial position of
hospitals and other care providers, which could materially and adversely affect our contracted rates with these
parties and increase our medical costs or materially and adversely affect their ability to purchase our service
offerings. Further, unfavorable economic conditions could adversely impact the customers of our Optum
businesses, including health plans, HMOs, hospitals, care providers, employers and others, which could, in turn,
materially and adversely affect Optum’s financial results.
Our investment portfolio may suffer losses, which could materially and adversely affect our results of
operations, financial position and cash flows.
Market fluctuations could impair our profitability and capital position. Volatility in interest rates affects our
interest income and the market value of our investments in debt securities of varying maturities, which comprise
the vast majority of the fair value of our investments as of December 31, 2012. Relatively low interest rates on
investments, such as those experienced during recent years, have adversely impacted our investment income, and
a prolonged low interest rate environment could further adversely affect our investment income. In addition, a
delay in payment of principal and/or interest by issuers, or defaults by issuers (primarily from investments in
corporate and municipal bonds), could reduce our net investment income and we may be required to write down
the value of our investments, which could materially and adversely affect our profitability and shareholders’
equity.
We also allocate a small proportion of our portfolio to equity investments, which are subject to greater volatility
than fixed income investments. General economic conditions, stock market conditions, and many other factors
beyond our control can materially and adversely affect the value of our equity investments and may result in
investment losses.
There can be no assurance that our investments will produce total positive returns or that we will not sell
investments at prices that are less than their carrying values. Changes in the value of our investment assets, as a
result of interest rate fluctuations, changes in issuer financial conditions, illiquidity or otherwise, could have an
adverse effect on our shareholders’ equity. In addition, if it became necessary for us to liquidate our investment
portfolio on an accelerated basis, it could have a material adverse effect on our results of operations and the
capital position of regulated subsidiaries.
If the value of our intangible assets is materially impaired, our results of operations, shareholders’ equity
and debt ratings could be materially and adversely affected.
Goodwill and other intangible assets were $36.0 billion as of December 31, 2012, representing 44% of our total
consolidated assets. We periodically evaluate our goodwill and other intangible assets to determine whether all or
a portion of their carrying values may be impaired, in which case a charge to earnings may be necessary. For
example, the manner in or the extent to which the Health Reform Legislation is implemented may impact our
ability to maintain the value of our goodwill and other intangible assets in our business. Similarly, the value of
our goodwill may be materially and adversely impacted if businesses that we acquire perform in a manner that is
inconsistent with our assumptions. In addition, from time to time we divest businesses, and any such divestiture
could result in significant asset impairment and disposition charges, including those related to goodwill and other
intangible assets. Any future evaluations requiring an impairment of our goodwill and other intangible assets
could materially and adversely affect our results of operations and shareholders’ equity in the period in which the
impairment occurs. A material decrease in shareholders’ equity could, in turn, adversely impact our debt ratings
or potentially impact our compliance with our debt covenants.
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If we fail to properly maintain the integrity or availability of our data or to strategically implement new or
upgrade or consolidate existing information systems, or if our technology products do not operate as
intended, our business could be materially and adversely affected.
Our ability to adequately price our products and services, to provide effective service to our customers in an
efficient and uninterrupted fashion, and to accurately report our results of operations depends on the integrity of
the data in our information systems. As a result of technology initiatives and recently enacted regulations,
changes in our system platforms and integration of new business acquisitions, we periodically consolidate,
integrate, upgrade and expand our information systems capabilities. Our information systems require an ongoing
commitment of significant resources to maintain, protect and enhance existing systems and develop new systems
to keep pace with continuing changes in information processing technology, evolving systems and regulatory
standards, emerging cybersecurity risks and threats, and changing customer patterns. If the information we rely
upon to run our businesses was found to be inaccurate or unreliable or if we fail to maintain or protect our
information systems and data integrity effectively, we could lose existing customers, have difficulty attracting
new customers, have problems in determining medical cost estimates and establishing appropriate pricing, have
difficulty preventing, detecting and controlling fraud, have disputes with customers, physicians and other health
care professionals, have regulatory sanctions or penalties imposed, have increases in operating expenses or suffer
other adverse consequences. There can be no assurance that our process of consolidating the number of systems
we operate, upgrading and expanding our information systems capabilities, protecting our systems against
cybersecurity risks and threats, enhancing our systems and developing new systems to keep pace with continuing
changes in information processing technology will be successful or that additional systems issues will not arise in
the future. Failure to protect, consolidate and integrate our systems successfully could result in higher than
expected costs and diversion of management’s time and energy, which could materially and adversely affect our
results of operations, financial position and cash flows.
Certain of our businesses sell and install hardware and software products, and these products may contain
unexpected design defects or may encounter unexpected complications during installation or when used with
other technologies utilized by the customer. Connectivity among competing technologies is becoming
increasingly important in the health care industry. A failure of our technology products to operate as intended and
in a seamless fashion with other products could materially and adversely affect our results of operations,
financial position and cash flows.
In addition, uncertain and rapidly evolving U.S. federal and state, non-U.S. and international laws and regulations
related to the health information technology market may present compliance challenges and could materially and
adversely affect the configuration of our information systems and platforms, and our ability to compete in this
market.
If we are not able to protect our proprietary rights to our databases and related products, our ability to
market our knowledge and information-related businesses could be hindered and our results of operations,
financial position and cash flows could be materially and adversely affected.
We rely on our agreements with customers, confidentiality agreements with employees, and our trademarks,
trade secrets, copyrights and patents to protect our proprietary rights. These legal protections and precautions
may not prevent misappropriation of our proprietary information. In addition, substantial litigation regarding
intellectual property rights exists in the software industry, and we expect software products to be increasingly
subject to third-party infringement claims as the number of products and competitors in this industry segment
grows. Such litigation and misappropriation of our proprietary information could hinder our ability to market and
sell products and services and our results of operations, financial position and cash flows could be materially and
adversely affected.
33

Our ability to obtain funds from some of our subsidiaries is restricted and if we are unable to obtain
sufficient funds from our subsidiaries to fund our obligations, our results of operations and financial
position could be materially and adversely affected.
Because we operate as a holding company, we are dependent upon dividends and administrative expense
reimbursements from some of our subsidiaries to fund our obligations. Many of these subsidiaries are regulated
by departments of insurance. We are also required by law or regulation to maintain specific prescribed minimum
amounts of capital in these subsidiaries. The levels of capitalization required depend primarily upon the volume
of premium revenues generated by the applicable subsidiary. A significant increase in premium volume will
require additional capitalization from us. In most states, we are required to seek prior approval by these state
regulatory authorities before we transfer money or pay dividends from these subsidiaries that exceed specified
amounts. An inability of our regulated subsidiaries to pay dividends to their parent companies in the desired
amounts or at the time of our choosing could adversely affect our ability to reinvest in our business through
capital expenditures or business acquisitions, as well as our ability to maintain our corporate quarterly dividend
payment cycle, repurchase shares of our common stock and repay our debt. If we are unable to obtain sufficient
funds from our subsidiaries to fund our obligations, our results of operations and financial position could be
materially and adversely affected.
Downgrades in our credit ratings, should they occur, may adversely affect our business, financial condition
and results of operations.
Claims paying ability, financial strength, and credit ratings by Nationally Recognized Statistical Rating
Organizations are important factors in establishing the competitive position of insurance companies. Ratings
information is broadly disseminated and generally used throughout the industry. We believe our claims paying
ability and financial strength ratings are important factors in marketing our products to certain of our customers.
Our credit ratings impact both the cost and availability of future borrowings. Each of the credit rating agencies
reviews its ratings periodically and there can be no assurance that current credit ratings will be maintained in the
future. Our ratings reflect each credit rating agency’s opinion of our financial strength, operating performance
and ability to meet our debt obligations or obligations to policyholders. Downgrades in our credit ratings, should
they occur, may adversely affect our results of operations, financial position and cash flows.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
To support our business operations in the United States and other countries we own and lease real properties. Our
various reportable segments use these facilities for their respective business purposes, and we believe these
current facilities are suitable for their respective uses and are adequate for our anticipated future needs.
ITEM 3. LEGAL PROCEEDINGS
See Note 12 of Notes to the Consolidated Financial Statements included in Item 8, “Financial Statements.”
ITEM 4. MINE SAFETY DISCLOSURES
N/A
34

PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
MARKET PRICES
Our common stock is traded on the New York Stock Exchange (NYSE) under the symbol UNH. On January 31,
2013, there were 15,204 registered holders of record of our common stock. The per share high and low common
stock sales prices reported by the NYSE were as follows:
High Low
Cash
Dividends
Declared
2013
First quarter (through February 6, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $57.83 $51.36 $0.2125
2012
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $59.43 $49.82 $0.1625
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60.75 $53.78 $0.2125
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $59.31 $50.32 $0.2125
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $58.29 $51.09 $0.2125
2011
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $45.75 $36.37 $0.1250
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $52.64 $43.30 $0.1625
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $53.50 $41.27 $0.1625
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $51.71 $41.32 $0.1625
DIVIDEND POLICY
In June 2012, our Board of Directors increased our cash dividend on common stock to an annual dividend rate of
$0.85 per share, paid quarterly. Since May 2011, we had paid an annual cash dividend on common stock of $0.65
per share, distributed quarterly. Declaration and payment of future quarterly dividends is at the discretion of the
Board and may be adjusted as business needs or market conditions change.
ISSUER PURCHASES OF EQUITY SECURITIES
Issuer Purchases of Equity Securities (a)
Fourth Quarter 2012
For the Month Ended
Total Number
of Shares
Purchased
Average Price
Paid per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Maximum Number
of Shares That May
Yet Be Purchased
Under The Plans or
Programs
(in millions) (in millions) (in millions)
October 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . — $ — — 94
November 30, 2012 . . . . . . . . . . . . . . . . . . . . . — — — 94
December 31, 2012 . . . . . . . . . . . . . . . . . . . . . 9 54 9 85
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 $ 54 9
(a) In November 1997, our Board of Directors adopted a share repurchase program, which the Board evaluates
periodically. In June 2012, the Board renewed and expanded our share repurchase program with an
authorization to repurchase up to 110 million shares of our common stock in open market purchases or other
types of transactions (including prepaid or structured repurchase programs). There is no established
expiration date for the program.
35

UNREGISTERED SALE OF EQUITY SECURITIES
On November 2, 2012, we issued and sold, in reliance on Section 4(a)(2) of the Securities Act of 1933, as
amended, 8 million shares of our common stock to CSHG 1122 FUNDO DE INVESTIMENTO
MULTIMERCADO — CRÉDITO PRIVADO INVESTIMENTO NO EXTERIOR, a fund wholly beneficially
owned by Dr. Edson de Godoy Bueno, a member of our Board of Directors. We received net proceeds of
approximately $470 million in cash and did not pay underwriting or placement discounts or fees in the
transaction. Dr. Bueno has agreed to hold the shares for five years from the date of sale, subject to certain
exceptions.
PERFORMANCE GRAPHS
The following two performance graphs compare our total return to shareholders with the returns of indexes of
other specified companies and the S&P 500 Index. The first graph compares the cumulative five-year total return
to shareholders on our common stock relative to the cumulative total returns of the S&P 500 index and a
customized peer group of certain Fortune 50 companies (the “Fortune 50 Group”), for the five-year period ended
December 31, 2012. The second graph compares our cumulative total return to shareholders with the S&P 500
Index and an index of a group of peer companies selected by us for the five-year period ended December 31,
2012. We are not included in either the Fortune 50 Group index in the first graph or the peer group index in the
second graph. In calculating the cumulative total shareholder return of the indexes, the shareholder returns of the
Fortune 50 Group companies in the first graph and the peer group companies in the second graph are weighted
according to the stock market capitalizations of the companies at January 1 of each year. The comparisons
assume the investment of $100 on December 31, 2007 in our common stock and in each index, and that
dividends were reinvested when paid.
36

Fortune 50 Group
The Fortune 50 Group consists of the following companies: American International Group, Inc., Berkshire
Hathaway Inc., Cardinal Health, Inc., Citigroup Inc., General Electric Company, International Business
Machines Corporation and Johnson & Johnson. Although there are differences in terms of size and industry, like
UnitedHealth Group, all of these companies are large multi-segment companies using a well-defined operating
model in one or more broad sectors of the economy.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among UnitedHealth Group, the S&P 500 Index,
and Fortune 50 Group
UnitedHealth Group S&P 500 Index Fortune 50 Group
$0
$80
$60
$40
$20
$100
$120
12/07 12/08 12/09 12/10 12/11 12/12
12/07 12/08 12/09 12/10 12/11 12/12
UnitedHealth Group . . . . . . . . . . . . . . . . . . . . . . . . . . $100.00 $45.74 $52.49 $62.93 $89.48 $ 97.17
S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 63.00 79.67 91.67 93.61 108.59
Fortune 50 Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 52.66 58.88 69.57 69.55 82.41
The stock price performance included in this graph is not necessarily indicative of future stock price
performance.
37

Peer Group
The companies included in our peer group are Aetna Inc., Cigna Corporation, Coventry Health Care, Inc.,
Humana Inc. and WellPoint, Inc. We believe that this peer group reflects publicly traded peers to our
UnitedHealthcare businesses.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among UnitedHealth Group, the S&P 500 Index,
and a Peer Group
UnitedHealth Group S&P 500 Index Peer Group
$0
$60
$40
$20
$100
$80
$120
12/07 12/08 12/09 12/10 12/11 12/12
12/07 12/08 12/09 12/10 12/11 12/12
UnitedHealth Group . . . . . . . . . . . . . . . . . . . . . . . . . . $100.00 $45.74 $52.49 $62.93 $89.48 $ 97.17
S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 63.00 79.67 91.67 93.61 108.59
Peer Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 44.58 60.73 62.11 80.06 83.33
The stock price performance included in this graph is not necessarily indicative of future stock price
performance.
38

ITEM 6. SELECTED FINANCIAL DATA
FINANCIAL HIGHLIGHTS
For the Year Ended December 31,
(In millions, except percentages and per share data) 2012 2011 2010 2009 2008
Consolidated operating results
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $110,618 $101,862 $94,155 $87,138 $81,186
Earnings from operations . . . . . . . . . . . . . . . . . . . . . . . . . . 9,254 8,464 7,864 6,359 5,263
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,526 5,142 4,634 3,822 2,977
Return on shareholders’ equity (a) . . . . . . . . . . . . . . . . . . . 18.7% 18.9% 18.7% 17.3% 14.9%
Basic earnings per share attributable to UnitedHealth
Group common shareholders . . . . . . . . . . . . . . . . . . . . . $ 5.38 $ 4.81 $ 4.14 $ 3.27 $ 2.45
Diluted earnings per share attributable to UnitedHealth
Group common shareholders . . . . . . . . . . . . . . . . . . . . . 5.28 4.73 4.10 3.24 2.40
Cash dividends declared per common share . . . . . . . . . . . 0.8000 0.6125 0.4050 0.0300 0.0300
Consolidated cash flows from (used for)
Operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,155 $ 6,968 $ 6,273 $ 5,625 $ 4,238
Investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,649) (4,172) (5,339) (976) (5,072)
Financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 471 (2,490) (1,611) (2,275) (605)
Consolidated financial condition
(As of December 31)
Cash and investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,148 $ 28,172 $25,902 $24,350 $21,575
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,885 67,889 63,063 59,045 55,815
Total commercial paper and long-term debt . . . . . . . . . . . 16,754 11,638 11,142 11,173 12,794
Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,178 28,292 25,825 23,606 20,780
Debt to debt-plus-equity ratio . . . . . . . . . . . . . . . . . . . . . . 35.0% 29.1% 30.1% 32.1% 38.1%
(a) Return on equity is calculated as net earnings divided by average equity. Average equity is calculated using
the equity balance at the end of the preceding year and the equity balances at the end of the four quarters of
the year presented.
Financial Highlights should be read with the accompanying Management’s Discussion and Analysis of Financial
Condition and Results of Operations in Item 7 and the Consolidated Financial Statements and Notes to the
Consolidated Financial Statements included in Item 8, “Financial Statements.”
39

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read together with the accompanying Consolidated Financial Statements and
Notes to the Consolidated Financial Statements thereto. Readers are cautioned that the statements, estimates,
projections or outlook contained in this report, including discussions regarding financial prospects, economic
conditions, trends and uncertainties contained in this Item 7, may constitute forward-looking statements within
the meaning of the PSLRA. These forward-looking statements involve risks and uncertainties that may cause our
actual results to differ materially from the results discussed in the forward-looking statements. A description of
some of the risks and uncertainties can be found further below in this Item 7 and in Item 1A, “Risk Factors.”
EXECUTIVE OVERVIEW
General
UnitedHealth Group is a diversified health and well-being company dedicated to helping people live healthier
lives and making health care work better. We offer a broad spectrum of products and services through two
distinct platforms: UnitedHealthcare, which provides health care coverage and benefits services; and Optum,
which provides information and technology-enabled health services. Further information on our business is
included in Item 1, “Business” and additional information on the our segments can be found in this Item 7 and in
Note 13 to the Consolidated Financial Statements in Item 8, “Financial Statements.”
Revenues
Our revenues are primarily comprised of premiums derived from risk-based health insurance arrangements in
which the premium is typically at a fixed rate per individual served for a one-year period, and we assume the
economic risk of funding our customers’ health care benefits and related administrative costs. We also generate
revenues from fee-based services performed for customers that self-insure the health care costs of their
employees and employees’ dependants. For both risk-based and fee-based health care benefit arrangements, we
provide coordination and facilitation of medical services; transaction processing; health care professional
services; and access to contracted networks of physicians, hospitals and other health care professionals. We also
generate service revenues from our Optum businesses relating to care management, consumer engagement and
support, distribution of benefits and services, health financial services, operational services and support, health
care information technology and pharmacy services. Product revenues are mainly comprised of products sold by
our pharmacy benefit management business. We derive investment income primarily from interest earned on our
investments in debt securities; investment income also includes gains or losses when investment securities are
sold, or other-than-temporarily impaired.
Pricing Trends. We seek to price our products consistent with anticipated underlying medical trends, while
balancing growth, margins, competitive dynamics, cost increases for the industry fees and tax provisions of
Health Reform Legislation and premium rebates at the local market level. We endeavor to sustain a commercial
medical care ratio in a stable range for an equivalent mix of business. Changes in business mix and Health
Reform Legislation may impact our premiums, medical costs and medical care ratio. Further, we continue to
expect premium rates to be under pressure through continued market competition in commercial products and
government payment rates. Aggregating UnitedHealthcare’s businesses, we expect the medical care ratio to rise
over time as we continue to grow in the senior and public markets and participate in the health benefit exchange
market in 2014.
In the commercial market segment, we expect pricing to continue to be highly competitive in 2013. We plan to
hold to our pricing disciplines and, considering the competitive environment and persistently weak employment
and new business formation rates, we expect continued pressure on our commercial risk-based product
membership in 2013. Additionally, self-insured membership as a percent of total commercial membership is
expected to continue to increase at a modest pace in 2013 and beyond, due in part to the emerging popularity of
midsize employers moving to self-funded arrangements.
40

In government programs, we are seeing continuing rate pressures, and rate changes for some Medicaid programs
are slightly negative. Unlike in prior years, recent Medicaid reductions have generally not been mitigated by
corresponding benefit reductions or care provider fee schedule reductions by the state sponsor. We continue to
take a prudent, market-sustainable posture for both new bids and maintenance of existing Medicaid contracts.
Medicare funding is similarly pressured; see further discussion below in “Regulatory Trends and Uncertainties.”
We expect these factors to result in pressure on gross margin percentages for our Medicare and Medicaid
programs in 2013.
In 2013, UnitedHealthcare created a new affordable “Basic Plan” for Medicare Part D consumers and reclassified
its large 4 million member Medicare Part D plan to an “Enhanced Plan” status with CMS. The change to
Enhanced Plan status changes the seasonal pattern of earnings to later in the year with no material impact
expected on full year profitability.
Operating Costs
Medical Costs. Medical costs represent the costs of our obligations for claims and/or benefits of our risk-based
insurance arrangements. Our operating results depend in large part on our ability to effectively estimate, price for
and manage our medical costs through underwriting criteria, product design, negotiation of favorable care
provider contracts and care coordination programs. Controlling medical costs requires a comprehensive and
integrated approach to organize and advance the full range of interrelationships among patients/consumers,
health professionals, hospitals, pharmaceutical/technology manufacturers and other key stakeholders.
Medical costs include estimates of our obligations for medical care services rendered on behalf of insured
consumers for which we have not yet received or processed claims, and our estimates for physician, hospital and
other medical cost disputes. In every reporting period, our operating results include the effects of more
completely developed medical costs payable estimates associated with previously reported periods.
Our medical care ratio, calculated as medical costs as a percentage of premium revenues, reflects the
combination of pricing, rebates, benefit designs, consumer health care utilization and comprehensive care
facilitation efforts.
Medical Cost Trends. In 2012, we managed our commercial medical cost trend to a level under 5.5 percent. In
2013, we expect a slight increase in trend from 2012, albeit with relatively consistent unit cost and utilization
trends compared to 2012. We expect our total trend will be driven primarily by continued unit cost pressure from
health care providers as they try to compensate for soft utilization trends and cross-subsidization pressure due to
their government reimbursement levels.
Underlying utilization trends declined significantly in 2010 and increased modestly in 2011 and 2012. Use of
outpatient services has been the primary driver of utilization trend increase, with inpatient utilization declining.
We also experienced an increase in prescription drug costs in 2012 and expect that trend to continue due to unit
cost pressure and a trend towards expensive new specialty drugs. As we move into 2013, we believe current
utilization trends are slightly below what we believe to be normal utilization levels. The weak economic
environment, combined with our medical cost management, has had a favorable impact on utilization trends. We
believe our alignment of progressive benefit designs, consumer engagement, clinical management, pay-for-
performance reimbursement programs for care providers and network resources is favorably controlling medical
and pharmacy costs, enhancing affordability and quality for our customers and members and helping to drive
strong market response and growth.
Operating Costs. Operating costs are primarily comprised of costs related to employee compensation and
benefits, agent and broker commissions, premium taxes and assessments, professional fees, advertising and
occupancy costs. We seek to improve our operating cost ratio, calculated as operating costs as a percentage of
total revenues, for an equivalent mix of business. However, changes in business mix, such as increases in the size
of our health services businesses or an increase in the delivery of medical services on an integrated basis may
impact our operating costs and operating cost ratio.
41

Other Business Trends
Our businesses participate in the U.S., Brazilian and certain other health economies. In the U.S., health care
spending comprises approximately 18% of gross domestic product and has grown consistently for many years.
We expect overall spending on health care to continue to grow in the future, due to inflation, medical technology
and pharmaceutical advancement, regulatory requirements, demographic trends in the population and national
interest in health and well-being. The rate of market growth may be affected by a variety of factors, including
macro-economic conditions and regulatory changes, including in the U.S. enacted health care reforms, which
could also impact our results of operations.
Delivery System and Payment Modernization. The market is changing based on demographic shifts, new
regulations, political forces and both payer and patient expectations. These factors are creating market pressures
to change from fee-for-service models to new delivery models focused on the holistic health of the consumer,
integrated care across care providers and pay-for-performance payment structures. Health plans and care
providers are being called upon to work together to close gaps in care and improve the overall care for people,
improve the health of a population and reduce the cost of care. The focus on delivery system modernization and
payment reform is critical and the alignment of incentives between key constituents remains an important theme.
We have seen increased participation in incentive-based payment models such as pay for performance, shared
savings, bundled/episode payment and Patient-Centered Medical Home models (PCMHs). We also have seen
continued development and deployment of risk-based accountable care models designed to modernize local
delivery systems by better coordinating care, reducing the fragmentation of treatments between multiple care
providers in the current system, limiting unnecessary hospital admissions and readmissions, focusing on
preventive care, breaking down reimbursement and treatment “silos,” and improving quality and outcomes.
This trend is creating the need for health management services that can coordinate care around the primary care
physician and for investment in new clinical and administrative information and management systems, providing
growth opportunities for our Optum business platform.
Government Reliance on Private Sector. The government, as a benefit sponsor, has been increasingly relying on
private sector solutions. We expect this trend to continue as we believe the private sector provides a more
flexible, better managed, higher quality health care experience than do traditional passive indemnity programs
typically used in governmental benefit programs.
States are struggling to balance unprecedented budget pressures with increases in their Medicaid expenditures. At
the same time, many are expanding their interest in managed care with particular emphasis on consumers who
have complex and expensive health care needs. More and more, Medicaid managed care is being viewed as an
effective method to improve quality and manage costs. Additionally, there are more than nine million individuals
eligible for both Medicare and Medicaid. Dually eligible beneficiaries typically have complex conditions with
costs of care that are far higher than a typical Medicare or Medicaid beneficiary. While these individuals’ health
needs are more complex and more costly, they have historically been in unmanaged environments. This provides
UnitedHealthcare an opportunity to integrate Medicare and Medicaid financing to fund efforts to optimize the
health status of this frail population through close coordination of care. As of December 31, 2012,
UnitedHealthcare served more than 250,000 members in legacy dually eligible programs through Medicare
Advantage and SNPs. In 2013, UnitedHealthcare Community & State will help implement Ohio’s MME
program, one of the first in the country under the new CMS design.
Regulatory Trends and Uncertainties
Following is a summary of management’s view of the trends and uncertainties related to some of the key
provisions of the Health Reform Legislation and other regulatory items; for additional information regarding the
Health Reform Legislation and Regulatory Trends and Uncertainties, see Item 1, “Business — Government
Regulation” and Item 1A, “Risk Factors.”
42

Commercial Rate Increase Review. The Health Reform Legislation requires HHS to maintain an annual review
of “unreasonable” increases in premium rates for commercial health plans. HHS established a review threshold
of annual premium rate increases generally at or above 10% and clarified that HHS review will not supersede
existing state review and approval procedures. Premium rate review legislation (ranging from new or enhanced
rate filing requirements to prior approval requirements) has been introduced or passed in more than half of the
states as of the date of this report.
The competitive forces common in our markets do not support unjustifiable rate increases. We have experienced
and expect to continue to experience a tight, competitive commercial pricing environment. Further, our rates and
rate filings are developed using methods consistent with the standards of actuarial practices. We anticipate
requesting rate increases above 10% in a number of markets due to the combination of medical cost trends and
the incremental costs of health care reform. We have begun to experience greater regulatory challenges to
appropriate premium rate increases in several states, including California and New York. Depending on the level
of scrutiny by the states, there is a broad range of potential business impacts. For example, it may become more
difficult to price our commercial risk business consistent with expected underlying cost trends, leading to the risk
of operating margin compression in the commercial health benefits business.
Medicare Advantage Rates and Minimum Loss Ratios. Medicare Advantage pricing benchmarks have been cut
over the last several years and additional cuts were implemented in 2012, with changes to continue to be phased
in over the next one to five years (benchmarks will ultimately range from 95% of Medicare fee-for-service rates
in high cost areas to 115% in low cost areas), depending on the level of benchmark reduction in a county.
Additionally, Congress passed the Budget Control Act of 2011, which as amended by the American Taxpayer
Relief Act of 2012, would trigger automatic across-the-board budget cuts (sequestration), including a reduction
in outlays for Medicare starting in March 2013, absent further Congressional action. Further, beginning in 2014,
Medicare Advantage plans will be required to have a minimum medical loss ratio of 85%. CMS has not yet
issued guidance as to how this requirement will be calculated for Medicare Advantage plans.
A significant portion of our network contracts are tied to Medicare reimbursement levels. However, future
Medicare Advantage rates may be outpaced by underlying medical cost trends, placing continued importance on
effective medical management and ongoing improvements in administrative costs. There are a number of annual
adjustments we can and are making to our operations, which may partially offset any impact from these rate
reductions. For example, we seek to intensify our medical and operating cost management, adjust members’
benefits and decide on a county-by-county basis in which geographies to participate. Additionally, achieving
high quality scores from CMS for improving upon certain clinical and operational performance standards will
impact future quality bonuses that may offset these anticipated rate reductions. The expanded stars bonus
program is set to expire in 2014. In 2015, quality bonus payments will only be paid to 4 and 5 star plans per
PPACA (compared to current bonuses that are available to certain qualifying plans rated 3 stars or higher).
Approximately 60% and 10% of our current Medicare Advantage members are enrolled in plans that will be
rated 3.5 stars or higher and 4 stars or higher, respectively for the 2014 payment year based on scoring released
by CMS in October 2012. Updated scores, to be released in October 2013, will determine what portion of our
Medicare Advantage membership will reside in a 4 star or 5 star plan and qualify for quality bonus payments in
2015. Although we are dedicating substantial resources to improving our quality scores and star ratings, if we are
unable to significantly increase the level of membership in plans with a rating of 4 stars or higher for the 2015
payment year, our 2015 results of operations and cash flows could be adversely impacted.
We also may be able to mitigate the effects of reduced funding by increasing enrollment due, in part, to the
increasing number of people eligible for Medicare in coming years. Compared to 2011, our 2012 Medicare
Advantage membership has increased by 400,000 consumers, or 18%, including acquisitions. Longer term,
market wide decreases in the availability or relative quality of Medicare Advantage products may increase
demand for other senior health benefits products such as our Medicare Supplement and Medicare Part D
insurance offerings.
43

Industry Fees and Taxes. The Health Reform Legislation includes an annual, non-deductible insurance industry
tax to be levied proportionally across the insurance industry for risk-based products, beginning January 1, 2014.
The amount of the annual tax is $8 billion in 2014, $11.3 billion in 2015 and 2016, $13.9 billion in 2017 and
$14.3 billion in 2018. For 2019 and beyond, the amount will be equal to the annual tax for the preceding year
increased by the rate of premium growth for the preceding year. The annual tax will be allocated based on the
ratio of an entity’s net premiums written during the preceding calendar year to the total health insurance
industry’s net premiums written for any U.S. health risk-based products during the preceding calendar year,
subject to certain exceptions. This tax will first be paid and expensed in 2014; however, because our policies are
annual, we have included the tax and other Health Reform Legislation cost factors in our 2013 rate filings
relating to 2014 rate periods and any related premium increases for 2013 policies that have coverage into 2014
will increase the amount of premium recognized in 2013. Our effective income tax rate will increase significantly
in 2014 as a result of the non-deductibility of these taxes.
With the introduction of state health insurance exchanges in 2014, the Health Reform Legislation includes three
programs designed to stabilize the health insurance markets. These programs are: a transitional reinsurance
program; a temporary risk corridors program; and a permanent risk adjustment program. The transitional
reinsurance program is a temporary program which will be funded on a per capita basis from all commercial lines
of business including insured and self-funded arrangements ($25 billion over a three-year period beginning in
2014 of which $20 billion (subject to increases based on state decisions) will fund the state reinsurance pools and
$5 billion funds the U.S. Treasury). The terms of the specific reinsurance programs to be used in each state are
not yet known.
It is our intention to pass these taxes and fees on to customers through increases in rates and/or decreases in
benefits, subject to regulatory approval.
State-Based Exchanges and Coverage Expansion. Effective in 2014, state-based exchanges are required to be
established for individuals and small employers with enrollment processes scheduled to commence in October of
2013. We expect to selectively respond and participate in exchanges as they are introduced to the market. Our
level of participation in state-based exchanges will be driven by how we assess each local market’s current and
future prospects, including how the exchange and its rules are set up state-by-state and, our market position
relative to others in the market. Our participation will likely evolve and change over time as the exchange
markets mature. Exchanges will create new market dynamics that could impact our existing businesses,
depending on the ultimate member migration patterns for each market, its pace and its impact on our established
membership. For example, certain small employers may no longer offer health benefits to their employees and
larger employers may elect to convert their benefit plans from risk-based to self-funded programs.
The Health Reform Legislation also provides for expanded Medicaid coverage effective in January 2014. These
measures remain subject to implementation at the state level.
Individual & Small Group Market Reforms. The Health Reform Legislation includes several provisions that will
take effect on January 1, 2014 and are expected to alter the individual and small group marketplace. Although
HHS issued proposed regulations in late 2012, these regulations are not yet final. Key provisions include:
(1) adjusted community rating requirements, which will change how individual and small group plans are rated
in many states and are expected to result in significant adjustments in some policyholders’ rates during the
transition period; (2) essential health benefit requirements, which will result in benefit changes for many
individual and small group policyholders and will also impact rates; and (3) actuarial value requirements, which
will significantly impact benefit designs (e.g. member cost sharing requirements) and could also significantly
impact rates for some policyholders.
44

RESULTS SUMMARY
(in millions, except percentages and per share data)
For the Years Ended December 31,
Increase/
(Decrease)
Increase/
(Decrease)
2012 2011 2010 2012 vs. 2011 2011 vs. 2010
Revenues:
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 99,728 $ 91,983 $85,405 $7,745 8% $6,578 8%
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,437 6,613 5,819 824 12 794 14
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,773 2,612 2,322 161 6 290 12
Investment and other income . . . . . . . . . . . . . . 680 654 609 26 4 45 7
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,618 101,862 94,155 8,756 9 7,707 8
Operating costs:
Medical costs . . . . . . . . . . . . . . . . . . . . . . . . . . 80,226 74,332 68,841 5,894 8 5,491 8
Operating costs . . . . . . . . . . . . . . . . . . . . . . . . 17,306 15,557 14,270 1,749 11 1,287 9
Cost of products sold . . . . . . . . . . . . . . . . . . . . 2,523 2,385 2,116 138 6 269 13
Depreciation and amortization . . . . . . . . . . . . . 1,309 1,124 1,064 185 16 60 6
Total operating costs . . . . . . . . . . . . . . . . . . . . . . 101,364 93,398 86,291 7,966 9 7,107 8
Earnings from operations . . . . . . . . . . . . . . . . . . . 9,254 8,464 7,864 790 9 600 8
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . (632) (505) (481) 127 25 24 5
Earnings before income taxes . . . . . . . . . . . . . . . 8,622 7,959 7,383 663 8 576 8
Provision for income taxes . . . . . . . . . . . . . . . . . (3,096) (2,817) (2,749) 279 10 68 2
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,526 $ 5,142 $ 4,634 $ 384 7% $ 508 11%
Diluted earnings per share attributable to
UnitedHealth Group common shareholders . . $ 5.28 $ 4.73 $ 4.10 $ 0.55 12% $ 0.63 15%
Medical care ratio (a) . . . . . . . . . . . . . . . . . . . . . . 80.4% 80.8% 80.6% (0.4)% 0.2%
Operating cost ratio . . . . . . . . . . . . . . . . . . . . . . . 15.6 15.3 15.2 0.3 0.1
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 8.3 8.4 0.1 (0.1)
Tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.9 35.4 37.2 0.5 (1.8)
Net margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 5.0 4.9 — 0.1
Return on equity (b) . . . . . . . . . . . . . . . . . . . . . . . 18.7% 18.9% 18.7% (0.2)% 0.2%
(a) Medical care ratio is calculated as medical costs divided by premium revenue.
(b) Return on equity is calculated as net earnings divided by average equity. Average equity is calculated using
the equity balance at the end of the preceding year and the equity balances at the end of the four quarters of
the year presented.
SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS
The following represents a summary of select 2012 year-over-year operating comparisons to 2011 and other 2012
significant items.
• Consolidated revenues increased 9% and UnitedHealthcare revenues increased 8%.
• UnitedHealthcare medical enrollment grew by 6.4 million people, including 4.4 million people served in
Brazil as a result of the Amil acquisition; Medicare Part D stand-alone membership decreased by 0.6 million
people.
• The consolidated medical care ratio of 80.4% decreased 40 basis points.
• Earnings from operations increased 8% at UnitedHealthcare and 14% at Optum.
• Net earnings of $5.5 billion and diluted earnings per share of $5.28 increased 7% and 12%, respectively.
45

• $1.1 billion in cash was held by non-regulated entities as of December 31, 2012.
• 2012 debt offerings amounted to $4 billion, including the August debt exchange.
• Cash paid for acquisitions in 2012, net of cash assumed, totaled $6.5 billion, including the fourth quarter
acquisition of approximately 65% of the outstanding shares of Amil. We also plan to acquire an additional
25% of Amil in the first half of 2013. See Note 6 of Notes to the Consolidated Financial Statements
included in Item 8, “Financial Statements” for further detail on Amil.
• We repurchased 57 million shares for $3.1 billion and paid dividends of $0.8 billion.
2012 RESULTS OF OPERATIONS COMPARED TO 2011 RESULTS
Consolidated Financial Results
Revenues
Revenue increases in 2012 were driven by growth in the number of individuals served and premium rate
increases related to underlying medical cost trends in our UnitedHealthcare businesses and growth in our Optum
health service and technology offerings.
Medical Costs
Medical costs increased in 2012 due to risk-based membership growth in our public and senior markets
businesses, unit cost inflation across all businesses and continued moderate increases in health system use,
partially offset by an increase in favorable medical reserve development. Unit cost increases represented the
primary driver of our medical cost trend, with the largest contributor being price increases to hospitals.
Operating Costs
The increases in our operating costs for 2012 were due to business growth, including increases in revenues from
UnitedHealthcare fee-based benefits and Optum services, which carry comparatively higher operating costs, as
well as investments in the OptumRx pharmacy management services and UnitedHealthcare Military & Veterans
businesses.
Income Tax Rate
The increase in our effective income tax rate for 2012 was due to the favorable resolution of various tax matters
in 2011, which lowered the 2011 effective income tax rate.
Reportable Segments
We have four reportable segments across our two business platforms, UnitedHealthcare and Optum:
• UnitedHealthcare, which includes UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare &
Retirement, UnitedHealthcare Community & State, and UnitedHealthcare International;
• OptumHealth;
• OptumInsight; and
• OptumRx.
See Note 13 of Notes to the Consolidated Financial Statements included in Item 8, “Financial Statements” and
Item 1, “Business” for a description of how each of our reportable segments derives its revenues.
Transactions between reportable segments principally consist of sales of pharmacy benefit products and services
to UnitedHealthcare customers by OptumRx, certain product offerings and care management and integrated care
delivery services sold to UnitedHealthcare by OptumHealth, and health information and technology solutions,
consulting and other services sold to UnitedHealthcare by OptumInsight. These transactions are recorded at
management’s estimate of fair value. Intersegment transactions are eliminated in consolidation.
46

The following table presents reportable segment financial information:
For the Years Ended December 31,
Increase/
(Decrease)
Increase/
(Decrease)
(in millions, except percentages) 2012 2011 2010 2012 vs. 2011 2011 vs. 2010
Revenues
UnitedHealthcare . . . . . . . . . . . . . . . . . . . . . . $103,419 $ 95,336 $ 88,730 $8,083 8% $6,606 7%
OptumHealth . . . . . . . . . . . . . . . . . . . . . . . . . 8,147 6,704 4,565 1,443 22 2,139 47
OptumInsight . . . . . . . . . . . . . . . . . . . . . . . . . 2,882 2,671 2,342 211 8 329 14
OptumRx . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,359 19,278 16,724 (919) (5) 2,554 15
Total Optum . . . . . . . . . . . . . . . . . . . . . . . . 29,388 28,653 23,631 735 3 5,022 21
Eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . (22,189) (22,127) (18,206) 62 — 3,921 22
Consolidated revenues . . . . . . . . . . . . . . . . . . $110,618 $101,862 $ 94,155 $8,756 9% $7,707 8%
Earnings from operations
UnitedHealthcare . . . . . . . . . . . . . . . . . . . . . . $ 7,815 $ 7,203 $ 6,740 $ 612 8% $ 463 7%
OptumHealth . . . . . . . . . . . . . . . . . . . . . . . . . 561 423 511 138 33 (88) (17)
OptumInsight . . . . . . . . . . . . . . . . . . . . . . . . . 485 381 84 104 27 297 354
OptumRx . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 457 529 (64) (14) (72) (14)
Total Optum . . . . . . . . . . . . . . . . . . . . . . . . 1,439 1,261 1,124 178 14 137 12
Consolidated earnings from operations . . . . . $ 9,254 $ 8,464 $ 7,864 $ 790 9% $ 600 8%
Operating margin
UnitedHealthcare . . . . . . . . . . . . . . . . . . . . . . 7.6% 7.6% 7.6% — % — %
OptumHealth . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 6.3 11.2 0.6 (4.9)
OptumInsight . . . . . . . . . . . . . . . . . . . . . . . . . 16.8 14.3 3.6 2.5 10.7
OptumRx . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 2.4 3.2 (0.3) (0.8)
Total Optum . . . . . . . . . . . . . . . . . . . . . . . . 4.9 4.4 4.8 0.5 (0.4)
Consolidated operating margin . . . . . . . . . . . 8.4% 8.3% 8.4% 0.1% (0.1)%
UnitedHealthcare
The following table summarizes UnitedHealthcare revenue by business:
For the Years Ended December 31,
Increase/
(Decrease)
Increase/
(Decrease)
(in millions, except percentages) 2012 2011 2010 2012 vs. 2011 2011 vs. 2010
UnitedHealthcare Employer & Individual . . . . . . . . . $ 46,596 $45,404 $42,550 $1,192 3% $2,854 7%
UnitedHealthcare Medicare & Retirement (a) . . . . . . 39,257 34,933 33,018 4,324 12 1,915 6
UnitedHealthcare Community & State (a) . . . . . . . . . 16,422 14,954 13,123 1,468 10 1,831 14
UnitedHealthcare International . . . . . . . . . . . . . . . . . 1,144 45 39 1,099 nm 6 15
Total UnitedHealthcare revenue . . . . . . . . . . . . . . $103,419 $95,336 $88,730 $8,083 8% $6,606 7%
nm = not meaningful
(a) In the fourth quarter of 2012, UnitedHealthcare reclassified 75,000 dually eligible enrollees to
UnitedHealthcare Community & State from UnitedHealthcare Medicare & Retirement to better reflect how
these members are served. Earlier periods presented have been conformed to reflect this change.
47

The following table summarizes the number of individuals served by our UnitedHealthcare businesses, by major
market segment and funding arrangement:
December 31,
Increase/
(Decrease)
Increase/
(Decrease)
(in thousands, except percentages) 2012 2011 2010 2012 vs. 2011 2011 vs. 2010
Commercial risk-based . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,340 9,550 9,405 (210) (2)% 145 2%
Commercial fee-based . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,585 16,320 15,405 1,265 8 915 6
Total commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,925 25,870 24,810 1,055 4 1,060 4
Medicare Advantage (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2,565 2,165 2,005 400 18 160 8
Medicaid (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,830 3,600 3,385 230 6 215 6
Medicare Supplement (Standardized) . . . . . . . . . . . . . . . . 3,180 2,935 2,770 245 8 165 6
Total public and senior . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,575 8,700 8,160 875 10 540 7
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,425 — — 4,425 nm — —
Total UnitedHealthcare — medical . . . . . . . . . . . . . . . . . . 40,925 34,570 32,970 6,355 18% 1,600 5%
Supplemental Data:
Medicare Part D stand-alone . . . . . . . . . . . . . . . . . . . . . 4,225 4,855 4,530 (630) (13)% 325 7%
nm = not meaningful
(a) Earlier periods presented above have been recast such that all periods presented reflect the dually eligible
enrollment change from Medicare Advantage to Medicaid discussed above.
Commercial risk-based membership decreased in 2012 due to a competitive market environment, conversions to
fee-based products by large public sector clients that we retained and other decreases in the public sector. In fee-
based commercial products, the increase was due to a number of new business awards and strong customer
retention. Medicare Advantage increased due to strengthened execution in product design, marketing and local
engagement, which drove sales growth, combined with the addition of 185,000 Medicare Advantage members
from 2012 acquisitions. Medicaid growth was due to a combination of winning new state accounts and growth
within existing state customers, partially offset by a fourth quarter market withdrawal from one product in a
specific region, affecting 175,000 beneficiaries. Medicare Supplement growth was due to strong retention and
new sales. In our Medicare Part D stand-alone business, membership decreased primarily as a result of the first
quarter 2012 loss of approximately 470,000 auto-assigned low-income subsidy Medicare Part D beneficiaries,
due to pricing benchmarks for the government-subsidized low income Medicare Part D market coming in below
our bids in a number of regions. International represents commercial membership in Brazil added as a result of
the Amil acquisition in 2012.
UnitedHealthcare’s revenue growth in 2012 was primarily due to growth in the number of individuals served,
commercial premium rate increases related to expected increases in underlying medical cost trends and the
impact of lower premium rebates.
UnitedHealthcare’s earnings from operations for 2012 increased compared to the prior year primarily due to the
factors that increased revenues combined with an improvement in the medical care ratio driven by effective
management of medical costs and increased favorable medical reserve development. The favorable development
for 2012 was driven by lower than expected health system utilization levels and increased efficiency in claims
handling and processing.
In March 2012, UnitedHealthcare Military & Veterans was awarded the TRICARE West Region Managed Care
Support Contract. The contract, for health care operations, includes a transition period and five one-year renewals
at the government’s option. The first year of operations is anticipated to begin April 1, 2013. The base
administrative services contract is expected to generate a total of $1.4 billion in revenues over the five years.
48

Optum. Total revenues increased in 2012 due to business growth and 2011 acquisitions at OptumHealth, partially
offset by a reduction in pharmacy service revenues related to reduced levels of UnitedHealthcare Part D
prescription drug membership and related prescription volumes.
Optum’s earnings from operations and operating margin for 2012 increased compared to 2011 due to
improvements in operating cost structure stemming from advances in business simplification, integration and
overall efficiency and revenue growth in higher margin products.
The results by segment were as follows:
OptumHealth
Revenue increases at OptumHealth for 2012 were primarily due to market expansion, including growth related to
2011 acquisitions in integrated care delivery, and strong overall business growth.
Earnings from operations for 2012 and operating margins increased compared to 2011 primarily due to gains in
operating efficiency and cost management as well as increases in earnings from integrated care operations.
OptumInsight
Revenues at OptumInsight for 2012 increased primarily due to the impact of growth in compliance services for
care providers and payment integrity offerings for commercial payers, which was partially offset by the June
2011 divestiture of the clinical trials services business.
The increases in earnings from operations and operating margins for 2012 reflect an improved mix of services
and advances in operating efficiency and cost management.
OptumRx
The decreases in OptumRx revenues in 2012 were due to the reduction in UnitedHealthcare Medicare Part D plan
participants. Intersegment revenues eliminated in consolidation were $15.6 billion for 2012 and $16.7 billion for
2011.
OptumRx earnings from operations and operating margins for 2012 decreased primarily due to decreased
prescription volume in the Medicare Part D business and investments to support growth initiatives, which were
partially offset by earnings contributions from specialty pharmacy growth and greater use of generic medications.
Over the course of 2013, we will consolidate and manage our commercial pharmacy benefit programs from
Express Scripts’ subsidiary, Medco Health Solutions, Inc. As a result of this transition, OptumRx expects to add
approximately12 million members throughout 2013.
2011 RESULTS OF OPERATIONS COMPARED TO 2010 RESULTS
Consolidated Financial Results
Revenues
The increases in revenues for 2011 were driven by strong organic growth in the number of individuals served in
our UnitedHealthcare businesses, commercial premium rate increases reflecting underlying medical cost trends
and revenue growth across all Optum businesses.
Medical Costs
Medical costs for 2011 increased due to risk-based membership growth in our commercial and public and senior
markets businesses and continued increases in the cost per service paid for health system use, and a modest
increase in health system utilization, mainly in outpatient and physician office settings.
49

For each period, our operating results include the effects of revisions in medical cost estimates related to prior
periods. Changes in medical cost estimates related to prior periods, resulting from more complete claim information
identified in the current period, are included in total medical costs reported for the current period. For 2011 and
2010 there was $720 million and $800 million, respectively, of net favorable medical cost development related to
prior fiscal years. The favorable development in both periods was primarily driven by continued improvements in
claims submission timeliness, which resulted in higher completion factors and lower than expected health system
utilization levels. The favorable development in 2010 also benefited from a reduction in reserves needed for
disputed claims from care providers; and favorable resolution of certain state-based assessments.
Operating Costs
The increase in our operating costs for 2011 was due to business growth, including an increased mix of Optum
and UnitedHealthcare fee-based and service revenues, which have higher operating costs, and increased spending
related to reform readiness and compliance. These factors were partially offset by overall operating cost
management and the increase in 2010 operating costs due to the goodwill impairment and charges for a business
line disposition of certain i3-branded clinical trial service businesses.
Income Tax Rate
The effective income tax rate for 2011 decreased compared to the prior year due to favorable resolution of
various historical tax matters in the current year as well as a higher effective income tax rate in 2010, due to the
cumulative implementation of certain changes under the Health Reform Legislation.
Reportable Segments
UnitedHealthcare
UnitedHealthcare’s revenue growth for 2011 was due to growth in the number of individuals served across our
businesses and commercial premium rate increases reflecting expected underlying medical cost trends.
UnitedHealthcare’s earnings from operations for 2011 increased compared to the prior year as revenue growth
and improvements in the operating cost ratio more than offset increased compliance costs and an increase to the
medical care ratio, which was primarily due to the initiation of premium rebate obligations in 2011, and lower
favorable reserve development levels.
Optum. Total revenue for these businesses increased in 2011 due to business growth and acquisitions at
OptumHealth and OptumInsight and growth in customers served through pharmaceutical benefit management
programs at OptumRx.
Optum’s operating margin for 2011 was down compared to 2010. The decrease was due to changes in business
mix within Optum’s businesses and realignment of certain internal business arrangements.
The results by segment were as follows:
OptumHealth
Increased revenues at OptumHealth for 2011 were primarily due to expansions in service offerings through
acquisitions in clinical services, as well as growth in consumer and population health management offerings.
Earnings from operations for 2011 and operating margin decreased compared to 2010. The decreases reflect the
impact from internal business and service arrangement realignments and the mix effect of growth and expansion
in newer businesses such as clinical services.
OptumInsight
Increased revenues at OptumInsight for 2011 were due to the impact of organic growth and the full-year impact of
2010 acquisitions, which were partially offset by the divestiture of the clinical trials services business in June 2011.
50

The increases in earnings from operations and operating margins for 2011 reflect an increased mix of higher
margin services in 2011 as well as the effect on 2010 earnings from operations and operating margin of the
goodwill impairment and charges for a business line disposition of certain i3-branded clinical trial service
businesses.
OptumRx
The increase in OptumRx revenues for 2011 was due to increased prescription volumes, primarily due to growth
in customers served through Medicare Part D prescription drug plans by our UnitedHealthcare Medicare &
Retirement business, and a favorable mix of higher revenue specialty drug prescriptions. Intersegment revenues
eliminated in consolidation were $16.7 billion and $14.4 billion for 2011 and 2010, respectively.
OptumRx earnings from operations and operating margins for 2011 decreased as the mix of lower margin
specialty pharmaceuticals and Medicaid business and investments to support growth initiatives including the in-
sourcing of our commercial pharmacy benefit programs more than offset the earnings contribution from higher
revenues and greater use of generic medications.
LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES
Liquidity
Introduction
We manage our liquidity and financial position in the context of our overall business strategy. We continually
forecast and manage our cash, investments, working capital balances and capital structure to meet the short- and
long-term obligations of our businesses while seeking to maintain liquidity and financial flexibility. Cash flows
generated from operating activities are principally from earnings before non-cash expenses.
Our regulated subsidiaries generate significant cash flows from operations and are subject to financial regulations
and standards in their respective jurisdictions. These standards, among other things, require these subsidiaries to
maintain specified levels of statutory capital, as defined by each jurisdiction, and restrict the timing and amount
of dividends and other distributions that may be paid to their parent companies. In the United States, most of
these regulations and standards are generally consistent with model regulations established by the NAIC. Except
in the case of extraordinary dividends, these standards generally permit dividends to be paid from statutory
unassigned surplus of the regulated subsidiary and are limited based on the regulated subsidiary’s level of
statutory net income and statutory capital and surplus. These dividends are referred to as “ordinary dividends”
and generally can be paid without prior regulatory approval. If the dividend, together with other dividends paid
within the preceding twelve months, exceeds a specified statutory limit or is paid from sources other than earned
surplus, the entire dividend is generally considered an “extraordinary dividend” and must receive prior regulatory
approval. In 2012, based on the 2011 statutory net income and statutory capital and surplus levels, the maximum
amount of ordinary dividends which could be paid by our U.S. regulated subsidiaries to their parent companies
was $4.6 billion.
In 2012, our regulated subsidiaries paid their parent companies dividends of $4.9 billion, including $1.2 billion of
extraordinary dividends. In 2011, our regulated subsidiaries paid their parent companies dividends of
$4.5 billion, including $1.1 billion of extraordinary dividends.
Our non-regulated businesses also generate cash flows from operations for general corporate use. Cash flows
generated by these entities, combined with dividends from our regulated entities and financing through the
issuance of long term debt as well as issuance of commercial paper or drawings under our committed credit
facility, further strengthen our operating and financial flexibility. We use these cash flows to expand our
businesses through acquisitions, reinvest in our businesses through capital expenditures, repay debt, and return
capital to our shareholders through shareholder dividends and/or repurchases of our common stock, depending on
market conditions.
51

Summary of our Major Sources and Uses of Cash
For the Years Ended
December 31,
Increase/
(Decrease)
Increase/
(Decrease)
(in millions) 2012 2011 2010 2012 vs. 2011 2011 vs. 2010
Sources of cash:
Cash provided by operating activities . . . . . . . . . $ 7,155 $ 6,968 $ 6,273 $ 187 $ 695
Proceeds from issuances of long-term debt and
commercial paper, net of repayments . . . . . . . 4,567 346 94 4,221 252
Proceeds from common stock issuances . . . . . . . 1,078 381 272 697 109
Net proceeds from customer funds
administered . . . . . . . . . . . . . . . . . . . . . . . . . . . — 37 974 (37) (937)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 391 20 (391) 371
Total sources of cash . . . . . . . . . . . . . . . . . . . . . . . . . . 12,800 8,123 7,633
Uses of cash:
Cash paid for acquisitions, net of cash assumed
and dispositions . . . . . . . . . . . . . . . . . . . . . . . . (6,280) (1,459) (2,304) (4,821) 845
Common stock repurchases . . . . . . . . . . . . . . . . . (3,084) (2,994) (2,517) (90) (477)
Purchases of investments, net of sales and
maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,299) (1,695) (2,157) 396 462
Purchases of property, equipment and capitalized
software, net of dispositions . . . . . . . . . . . . . . . (1,070) (1,018) (878) (52) (140)
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . (820) (651) (449) (169) (202)
Net cash paid for customer funds
administered . . . . . . . . . . . . . . . . . . . . . . . . . . . (324) — — (324) —
Acquisition of noncontrolling interest shares . . . (319) — — (319) —
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (627) — (5) (627) 5
Total uses of cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,823) (7,817) (8,310)
Net (decrease) increase in cash . . . . . . . . . . . . . . . . . . $ (1,023) $ 306 $ (677) $(1,329) $ 983
2012 Cash Flows Compared to 2011 Cash Flows
Cash flows from operating activities for 2012 increased $187 million, or 3% from 2011 due to increased net
income and related tax accruals, which were partially offset by the payment in 2012 of 2011 premium rebate
obligations as 2012 was the first year rebate payments were made under the Health Reform Legislation.
Cash flows used for investing activities increased $4.5 billion, or 107%, primarily due to increased investments
in acquisitions in 2012. See Note 6 of Notes to the Consolidated Financial Statements included in Item 8,
“Financial Statements” for further information on 2012 acquisitions.
Cash flows from financing activities increased $3.0 billion primarily due to increases in long-term debt,
commercial paper and common stock issuances, partially offset by increases in cash paid for customer funds
related to Part D and increased shareholder dividend payments. The increases in long-term debt, commercial
paper and common stock issuances were primarily related to the Amil acquisition.
2011 Cash Flows Compared to 2010 Cash Flows
Cash flows from operating activities increased $695 million, or 11%, from 2010. The increase was primarily
driven by growth in net earnings and changes in various working capital accounts, which were partially offset by
a reduction in unearned revenues due to the early receipt of certain 2011 state Medicaid premium payments in
2010, which increased 2010 cash from operating activities.
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Cash flows used for investing activities decreased $1.2 billion, or 22%, primarily due to relatively lower
investments in acquisitions in 2011 and a decrease in net purchases of investments.
Cash flows used for financing activities increased $879 million, or 55%, primarily due to increased share
repurchases and cash dividends in 2011, partially offset by an increase in net borrowings.
Financial Condition
As of December 31, 2012, our cash, cash equivalent and available-for-sale investment balances of $28.3 billion
included $8.4 billion of cash and cash equivalents (of which $1.1 billion was held by non-regulated entities),
$19.2 billion of debt securities and $677 million of investments in equity securities and venture capital funds.
Given the significant portion of our portfolio held in cash equivalents, we do not anticipate fluctuations in the
aggregate fair value of our financial assets to have a material impact on our liquidity or capital position. The use
of different market assumptions or valuation methodologies, especially those used in valuing our $241 million of
available-for-sale Level 3 securities (those securities priced using significant unobservable inputs), may have an
effect on the estimated fair value amounts of our investments. Due to the subjective nature of these assumptions,
the estimates may not be indicative of the actual exit price if we had sold the investment at the measurement date.
Other sources of liquidity, primarily from operating cash flows and our commercial paper program, which is
supported by our bank credit facilities, reduce the need to sell investments during adverse market conditions. See
Note 4 of Notes to the Consolidated Financial Statements included in Item 8, “Financial Statements” for further
detail of our fair value measurements.
Our cash equivalent and investment portfolio had a weighted-average duration of 2.1 years and a weighted-average
credit rating of “AA” as of December 31, 2012. Included in the debt securities balance was $1.9 billion of state and
municipal obligations that are guaranteed by a number of third parties. Due to the high underlying credit ratings of
the issuers, the weighted-average credit rating of these securities with and without the guarantee was “AA” as of
December 31, 2012. We do not have any significant exposure to any single guarantor (neither indirect through the
guarantees, nor direct through investment in the guarantor). When multiple credit ratings are available for an
individual security, the average of the available ratings is used to determine the weighted-average credit rating.
Capital Resources and Uses of Liquidity
In addition to cash flow from operations and cash and cash equivalent balances available for general corporate
use, our capital resources and uses of liquidity are as follows:
Commercial Paper. We maintain a commercial paper borrowing program, which facilitates the private
placement of unsecured debt through third-party broker-dealers. The commercial paper program is supported by
the bank credit facilities described below. As of December 31, 2012, we had $1.6 billion of commercial paper
outstanding at a weighted-average annual interest rate of 0.3%.
Bank Credit Facilities. We have $3.0 billion five-year and $1.0 billion 364-day revolving bank credit facilities
with 21 banks, which mature in November 2017 and November 2013, respectively. These facilities provide
liquidity support for our $4.0 billion commercial paper program and are available for general corporate purposes.
There were no amounts outstanding under these facilities as of December 31, 2012. The interest rates on
borrowings are variable depending on term and are calculated based on the LIBOR plus a credit spread based on
our senior unsecured credit ratings. As of December 31, 2012, the annual interest rates on these facilities, had
they been drawn, would have ranged from 1.0% to 1.3%.
Our bank credit facilities contain various covenants, including requiring us to maintain a debt to debt-plus-equity
ratio of not more than 50%. Our debt to debt-plus-equity ratio, calculated as the sum of debt divided by the sum
of debt and shareholders’ equity, which reasonably approximates the actual covenant ratio, was 35.0% as of
December 31, 2012. We were in compliance with our debt covenants as of December 31, 2012.
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Long-term debt. Periodically, we access capital markets and issue long-term debt for general corporate purposes,
for example, to meet our working capital requirements, to refinance debt, to finance acquisitions or for share
repurchases.
In connection with the Amil acquisition, we assumed variable rate debt denominated in Brazilian Reais, Amil’s
functional currency. The total Brazilian Real denominated long-term debt outstanding at December 31, 2012 was
$611 million, and had an aggregate weighted average interest rate of approximately 9%. For more detail on the
Amil debt see Note 8 of Notes to the Consolidated Financial Statements included in Item 8, “Financial
Statements.”
In October 2012, we issued $2.5 billion in senior unsecured notes, which included: $625 million of 0.850%
fixed-rate notes due October 2015, $625 million of 1.400% fixed-rate notes due October 2017, $625 million of
2.750% fixed-rate notes due February 2023 and $625 million of 3.950% fixed-rate notes due October 2042.
In August 2012, we completed an exchange of $1.1 billion of our zero coupon senior unsecured notes due
November 2022 for $0.5 billion additional issuance of our 2.875% notes due in March 2022, $0.1 billion
additional issuance of our 4.375% notes due March 2042 and $0.1 billion in cash. The transaction was
undertaken to increase financial flexibility and reduce interest expense.
In March 2012, we issued $1.0 billion in senior unsecured notes. The issuance included $600 million of 2.875%
fixed-rate notes due March 2022 and $400 million of 4.375% fixed-rate notes due March 2042.
Credit Ratings. Our credit ratings at December 31, 2012 were as follows:
Moody’s Standard & Poor’s Fitch A.M. Best
Ratings Outlook Ratings Outlook Ratings Outlook Ratings Outlook
Senior unsecured debt . . . . . . . . . . . A3 Negative A Stable A- Stable bbb+ Stable
Commercial paper . . . . . . . . . . . . . . P-2 n/a A-1 n/a F1 n/a AMB-2 n/a
The availability of financing in the form of debt or equity is influenced by many factors, including our
profitability, operating cash flows, debt levels, credit ratings, debt covenants and other contractual restrictions,
regulatory requirements and economic and market conditions. For example, a significant downgrade in our credit
ratings or conditions in the capital markets may increase the cost of borrowing for us or limit our access to
capital. We have adopted strategies and actions toward maintaining financial flexibility to mitigate the impact of
such factors on our ability to raise capital.
Share Repurchase Program. Under our Board of Directors’ authorization, we maintain a share repurchase
program. Repurchases may be made from time to time in open market purchases or other types of transactions
(including prepaid or structured share repurchase programs), subject to certain Board restrictions. In June 2012,
our Board renewed and expanded our share repurchase program with an authorization to repurchase up to
110 million shares of our common stock. As of December 31, 2012, we had Board authorization to purchase up
to an additional 85 million shares of our common stock. For details of our 2012 share repurchases, see Note 10 of
Notes to the Consolidated Financial Statements included in Item 8, “Financial Statements.”
Dividends. In June 2012, our Board of Directors increased our cash dividend to shareholders to an annual
dividend rate of $0.85 per share, paid quarterly. Since May 2011, we had paid an annual dividend of $0.65 per
share, paid quarterly. Declaration and payment of future quarterly dividends is at the discretion of the Board and
may be adjusted as business needs or market conditions change. For details of our dividend payments, see Note
10 of Notes to the Consolidated Financial Statements included in Item 8, “Financial Statements.”
Amil Tender Offer. During the fourth quarter of 2012, we purchased approximately 65% of the outstanding
shares of Amil for $3.5 billion. We expect to acquire an additional 25% ownership interest during the first half of
2013 through a tender offer for Amil’s publicly traded shares. The tender offer price will be at the same price
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paid to Amil’s controlling shareholders, adjusted for statutory interest under Brazilian law from the date of
payment to the controlling shareholders to the date of payment to the tendering minority shareholders.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
The following table summarizes future obligations due by period as of December 31, 2012, under our various
contractual obligations and commitments:
(in millions) 2013 2014 to 2015 2016 to 2017 Thereafter Total
Debt (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,413 $3,271 $3,384 $16,769 $26,837
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 676 510 556 2,122
Purchase obligations (b) . . . . . . . . . . . . . . . . . . . . . . . . . 137 184 7 — 328
Future policy benefits (c) . . . . . . . . . . . . . . . . . . . . . . . . 135 256 265 1,923 2,579
Unrecognized tax benefits (d) . . . . . . . . . . . . . . . . . . . . 11 — — 60 71
Other liabilities recorded on the Consolidated Balance
Sheet (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 18 6 1,511 1,624
Other obligations (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 144 60 43 297
Redeemable noncontrolling interests (g) . . . . . . . . . . . . 1,393 182 546 — 2,121
Total contractual obligations . . . . . . . . . . . . . . . . . . . . . $5,608 $4,731 $4,778 $20,862 $35,979
(a) Includes interest coupon payments and maturities at par or put values. For variable rate debt, the rates in
effect at December 31, 2012 were used to calculate the interest coupon payments. The table also assumes
amounts are outstanding through their contractual term. See Note 8 of Notes to the Consolidated Financial
Statements included in Item 8, “Financial Statements” for more detail.
(b) Includes fixed or minimum commitments under existing purchase obligations for goods and services,
including agreements that are cancelable with the payment of an early termination penalty. Excludes
agreements that are cancelable without penalty and excludes liabilities to the extent recorded in our
Consolidated Balance Sheets as of December 31, 2012.
(c) Future policy benefits represent account balances that accrue to the benefit of the policyholders, excluding
surrender charges, for universal life and investment annuity products and for long-duration health policies
sold to individuals for which some of the premium received in the earlier years is intended to pay benefits to
be incurred in future years. See Note 2 of Notes to the Consolidated Financial Statements included in
Item 8, “Financial Statements” for more detail.
(d) As the timing of future settlements is uncertain, the long-term portion has been classified as “Thereafter.”
(e) Includes obligations associated with contingent consideration and other payments related to business
acquisitions, certain employee benefit programs, charitable contributions related to the PacifiCare
acquisition and various other long-term liabilities. Due to uncertainty regarding payment timing, obligations
for employee benefit programs, charitable contributions and other liabilities have been classified as
“Thereafter.”
(f) Includes remaining capital commitments for venture capital funds and other funding commitments.
(g) Includes commitments to purchase the remaining publicly traded Amil shares as well as the put/call for the
shares owned by Amil’s remaining non-public shareholders. See Note 6 of Notes to the Consolidated
Financial Statements included in Item 8, “Financial Statements” for more detail.
We do not have other significant contractual obligations or commitments that require cash resources; however,
we continually evaluate opportunities to expand our operations. This includes internal development of new
products, programs and technology applications, and may include acquisitions.
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OFF-BALANCE SHEET ARRANGEMENTS
As of December 31, 2012, we were not involved in any off-balance sheet arrangements (as that phrase is defined
by SEC rules applicable to this report) which have or are reasonably likely to have a material adverse effect on
our financial condition, results of operations or liquidity.
RECENTLY ISSUED ACCOUNTING STANDARDS
We have determined that there have been no recently issued, but not yet adopted, accounting standards that will
have a material impact on our Consolidated Financial Statements.
CRITICAL ACCOUNTING ESTIMATES
Critical accounting estimates are those estimates that require management to make challenging, subjective or
complex judgments, often because they must estimate the effects of matters that are inherently uncertain and may
change in subsequent periods. Critical accounting estimates involve judgments and uncertainties that are
sufficiently sensitive and may result in materially different results under different assumptions and conditions.
Medical Costs Payable
Each reporting period, we estimate our obligations for medical care services that have been rendered on behalf of
insured consumers but for which claims have either not yet been received or processed and for liabilities for
physician, hospital and other medical cost disputes. We develop estimates for medical care services incurred but
not reported using an actuarial process that is consistently applied, centrally controlled and automated. The
actuarial models consider factors such as time from date of service to claim receipt, claim processing backlogs,
seasonal variances in medical care consumption, health care professional contract rate changes, medical care
utilization and other medical cost trends, membership volume and demographics, the introduction of new
technologies, benefit plan changes, and business mix changes related to products, customers and geography.
Depending on the health care professional and type of service, the typical billing lag for services can be up to
90 days from the date of service. Substantially all claims related to medical care services are known and settled
within nine to twelve months from the date of service. As of December 31, 2012, our days outstanding in medical
payables was 49 days.
Each period, we re-examine previously established medical costs payable estimates based on actual claim
submissions and other changes in facts and circumstances. As more complete claim information becomes
available, we adjust the amount of the estimates and include the changes in estimates in medical costs in the
period in which the change is identified. In every reporting period, our operating results include the effects of
more completely developed medical costs payable estimates associated with previously reported periods. If the
revised estimate of prior period medical costs is less than the previous estimate, we will decrease reported
medical costs in the current period (favorable development). If the revised estimate of prior period medical costs
is more than the previous estimate, we will increase reported medical costs in the current period (unfavorable
development). Medical costs in 2012, 2011, and 2010 included favorable medical cost development related to
prior years of $860 million, $720 million and $800 million, respectively.
In developing our medical costs payable estimates, we apply different estimation methods depending on the month
for which incurred claims are being estimated. For example, we actuarially calculate completion factors using an
analysis of claim adjudication patterns over the most recent 36-month period. A completion factor is an actuarial
estimate, based upon historical experience and analysis of current trends, of the percentage of incurred claims
during a given period that have been adjudicated by us at the date of estimation. For months prior to the most recent
three months, we apply the completion factors to actual claims adjudicated-to-date to estimate the expected amount
of ultimate incurred claims for those months. For the most recent three months, we estimate claim costs incurred
primarily by applying observed medical cost trend factors to the average per member per month (PMPM) medical
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costs incurred in prior months for which more complete claim data is available, supplemented by a review of near-
term completion factors. This approach is consistently applied from period to period.
Completion Factors. Completion factors are the most significant factors we use in developing our medical costs
payable estimates for older periods, generally periods prior to the most recent three months. The completion
factor includes judgments in relation to claim submissions such as the time from date of service to claim receipt,
claim inventory levels and claim processing backlogs as well as other factors. If actual claims submission rates
from providers (which can be influenced by a number of factors including provider mix and electronic versus
manual submissions) or our claim processing patterns are different than estimated, our reserves may be
significantly impacted.
The following table illustrates the sensitivity of these factors and the estimated potential impact on our medical
costs payable estimates for those periods as of December 31, 2012:
Completion Factors
Increase (Decrease) in Factors
Increase (Decrease)
In Medical Costs Payable
(in millions)
(0.75)% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 261
(0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
(0.25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
0.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (86)
0.50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (172)
0.75 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (257)
Medical cost PMPM trend factors. Medical cost PMPM trend factors are significant factors we use in
developing our medical costs payable estimates for the most recent three months. Medical cost trend factors are
developed through a comprehensive analysis of claims incurred in prior months, provider contracting and
expected unit costs, benefit design, and by reviewing a broad set of health care utilization indicators including,
but not limited to, pharmacy utilization trends, inpatient hospital census data and incidence data from the
National Centers for Disease Control. We also consider macroeconomic variables such as gross-domestic product
growth, employment and disposable income. A large number of factors can cause the medical cost trend to vary
from our estimates including: our ability and practices to manage medical costs, changes in level and mix of
services utilized, mix of benefits offered including the impact of co-pays and deductibles, changes in medical
practices, catastrophes and epidemics.
The following table illustrates the sensitivity of these factors and the estimated potential impact on our medical
costs payable estimates for the most recent three months as of December 31, 2012:
Medical Costs PMPM Trend
Increase (Decrease) in Factors
Increase (Decrease)
In Medical Costs Payable
(in millions)
3% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 505
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (168)
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (337)
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (505)
The analyses above include outcomes that are considered reasonably likely based on our historical experience
estimating liabilities for incurred but not reported benefit claims.
Our estimate of medical costs payable represents management’s best estimate of our liability for unpaid medical
costs as of December 31, 2012, developed using consistently applied actuarial methods. Management believes
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the amount of medical costs payable is reasonable and adequate to cover our liability for unpaid claims as of
December 31, 2012; however, actual claim payments may differ from established estimates as discussed above.
Assuming a hypothetical 1% difference between our December 31, 2012 estimates of medical costs payable and
actual medical costs payable, excluding AARP Medicare Supplement Insurance and any potential offsetting
impact from premium rebates, 2012 net earnings would have increased or decreased by $62 million.
Revenues
Revenues are principally derived from health care insurance premiums. We recognize premium revenues in the
period eligible individuals are entitled to receive health care services. Customers are typically billed monthly at a
contracted rate per eligible person multiplied by the total number of people eligible to receive services, as
recorded in our records.
Effective in 2011, U.S. commercial health plans with medical loss ratios on fully insured products, as calculated
under the definitions in the Health Reform Legislation, that fall below certain targets are required to rebate
ratable portions of their premiums to their customers annually. Premium revenues are recognized based on the
estimated premiums earned net of projected rebates because we are able to reasonably estimate the ultimate
premiums of these contracts. Each period, we estimate premium rebates based on the expected financial
performance of the applicable contracts within each defined aggregation set (e.g., by state, group size and
licensed subsidiary). The most significant factors in estimating the financial performance are current and future
premiums and medical claim experience, effective tax rates and expected changes in business mix. The estimated
ultimate premium is revised each period to reflect current and projected experience.
Our Medicare Advantage and Part D premium revenues are subject to periodic adjustment under CMS’ risk
adjustment payment methodology. The CMS risk adjustment model provides higher per member payments for
enrollees diagnosed with certain conditions and lower payments for enrollees who are healthier. We and health
care providers collect, capture, and submit available diagnosis data to CMS within prescribed deadlines. CMS
uses submitted diagnosis codes, demographic information, and special statuses to determine the risk score for
most Medicare Advantage beneficiaries. CMS also retroactively adjusts risk scores during the year based on
additional data. We estimate risk adjustment revenues based upon the data submitted and expected to be
submitted to CMS. As a result of the variability of factors that determine such estimations, the actual amount of
CMS’ retroactive payments could be materially more or less than our estimates. This may result in favorable or
unfavorable adjustments to our Medicare premium revenue and, accordingly, our profitability. Risk adjustment
data for certain of our plans is subject to review by the government, including audit by regulators. See Note 12 of
Notes to the Consolidated Financial Statements included in Item 8, “Financial Statements” for additional
information regarding these audits.
Goodwill and Intangible Assets
Goodwill. Goodwill represents the amount of the purchase price in excess of the fair values assigned to the
underlying identifiable net assets of acquired businesses. Goodwill is not amortized, but is subject to an annual
impairment test. Tests are performed more frequently if events occur or circumstances change that would more
likely than not reduce the fair value of the reporting unit below its carrying amount.
To determine whether goodwill is impaired, we perform a multi-step impairment test. First, we can elect to
perform a qualitative assessment of each reporting unit to determine whether facts and circumstances support a
determination that their fair values are greater than their carrying values. If the qualitative analysis is not
conclusive, or if we elect to proceed directly with quantitative testing, we will then measure the fair values of the
reporting units and compare them to their aggregate carrying values, including goodwill. If the fair value is less
than the carrying value of the reporting unit, then the implied value of goodwill would be calculated and
compared to the carrying amount of goodwill to determine whether goodwill is impaired.
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We estimate the fair values of our reporting units using discounted cash flows, which include assumptions about
a wide variety of internal and external factors. Significant assumptions used in the impairment analysis include
financial projections of free cash flow (including significant assumptions about operations, capital requirements
and income taxes), long-term growth rates for determining terminal value beyond the discretely forecasted
periods, and discount rates. For each reporting unit, comparative market multiples are used to corroborate the
results of our discounted cash flow test.
Forecasts and long-term growth rates used for our reporting units are consistent with, and use inputs from, our
internal long-term business plan and strategy. Key assumptions used in these forecasts include:
• Revenue trends. Key drivers for each reporting unit are determined and assessed. Significant factors include:
membership growth, medical trends, and the impact and expectations of regulatory environments.
Additional macro-economic assumptions around unemployment, GDP growth, interest rates, and inflation
are also evaluated and incorporated.
• Medical cost trends. See further discussion of medical costs trends within Medical Costs above. Similar
factors are considered in estimating our long-term medical trends at the reporting unit level.
• Operating productivity. We forecast expected operating cost levels based on historical levels and
expectations of future operating cost productivity initiatives.
• Capital levels. The capital structure and requirements for each business is considered.
Although we believe that the financial projections used are reasonable and appropriate for all of our reporting
units, due to the long-term nature of the forecasts there is significant uncertainty inherent in those projections.
That uncertainty is increased by the impact of health care reforms as discussed in Item 1, “Business—
Government Regulation”. For additional discussions regarding how the enactment or implementation of health
care reforms and how other factors could affect our business and the related long-term forecasts, see Item 1A,
“Risk Factors” in Part I and “Regulatory Trends and Uncertainties” above.
Discount rates are determined for each reporting unit and include consideration of the implied risk inherent in
their forecasts. This risk is evaluated using comparisons to market information such as peer company weighted
average costs of capital and peer company stock prices in the form of revenue and earnings multiples. Beyond
our selection of the most appropriate risk-free rates and equity risk premiums, our most significant estimates in
the discount rate determinations involve our adjustments to the peer company weighted average costs of capital
that reflect reporting unit-specific factors. Such adjustments include the addition of size premiums and company-
specific risk premiums intended to compensate for apparent forecast risk. We have not made any adjustments to
decrease a discount rate below the calculated peer company weighted average cost of capital for any reporting
unit. Company-specific adjustments to discount rates are subjective and thus are difficult to measure with
certainty.
The passage of time and the availability of additional information regarding areas of uncertainty in regards to the
reporting units’ operations could cause these assumptions to change in the future.
We elected to bypass the optional qualitative reporting unit fair value assessment and completed our annual
quantitative tests for goodwill impairment as of January 1, 2013. All of our reporting units had fair values
substantially in excess of their carrying values, thus we concluded that there was no need for any impairment of
our goodwill balances as of December 31, 2012.
Intangible assets. Separately-identifiable intangible assets are acquired in business combinations and are assets
that represent future expected benefits but lack physical substance (e.g., membership lists, customer contracts,
trademarks and technology). Our intangible assets are initially recorded at their fair values. Finite-lived
intangible assets are amortized over their expected useful lives, while indefinite-lived intangible assets are
evaluated for impairment on at least an annual basis. Both finite-lived and indefinite-lived intangible assets are
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evaluated for impairment between annual periods if an event occurs or circumstances change that may indicate
impairment. Our most significant intangible assets are customer-related intangibles, which represent 77% of our
total intangible asset balance of $4.7 billion.
Customer-related intangible assets acquired in business combinations are typically valued using an income
approach based on discounted future cash flows attributable to customers that exist as of the date of acquisition.
The most significant assumptions used in the valuation of customer-related assets include: projected revenue and
earnings growth, retention rate, perpetuity growth rate and discount rate. These initial valuations and the
embedded assumptions contain uncertainty to the extent that those assumptions and estimates may ultimately
differ from actual results (e.g., customer turnover may be higher or lower than the assumed retention rate
suggested).
Our finite-lived intangible assets are subject to impairment tests when events or circumstances indicate that an
asset’s (or asset group’s) carrying value may exceed its estimated fair value. Consideration is given on a
quarterly basis to a number of potential impairment indicators including: changes in the use of the assets, changes
in legal or other business factors that could affect value, experienced or expected operating cash-flow
deterioration or losses, adverse changes in customer populations, adverse competitive or technological advances
that could impact value, and other factors. Following the identification of any potential impairment indicators, we
would calculate the estimated fair value of a finite-lived intangible asset (or asset group) using the undiscounted
cash flows that are expected to result from the use of the asset or related group of assets. If it is determined that
an impairment exists, the amount by which the carrying value exceeds its estimated fair value would be recorded
as an impairment.
Our indefinite-lived intangible assets are tested for impairment on an annual basis, or more frequently if
impairment indicators exist. To determine if an indefinite-lived intangible asset is impaired, we assess qualitative
factors to determine whether the existence of events and circumstances indicate that it is more likely than not that
the indefinite-lived intangible asset’s carrying value exceeds its fair value. If, after assessing the totality of events
and circumstances, we conclude that it is not more likely than not that the indefinite-lived intangible asset’s
carrying value exceeds its fair value, no impairment exists and no further testing is performed. If we conclude
otherwise, we would perform a quantitative analysis by comparing its estimated fair value to its carrying value. If
the carrying value exceeds its estimated fair value, an impairment would be recorded for the amount by which
the carrying value exceeds its estimated fair value.
Intangible assets were not impaired in 2012.
Investments
As of December 31, 2012, we had investments with a carrying value of $21 billion, primarily held in marketable
debt securities. Our investments are principally classified as available-for-sale and are recorded at fair value. We
exclude gross unrealized gains and losses on available-for-sale investments from earnings and report net
unrealized gains or losses, net of income tax effects, as a separate component in shareholders’ equity. We
continually monitor the difference between the cost and fair value of our investments. As of December 31, 2012,
our investments had gross unrealized gains of $825 million and gross unrealized losses of $9 million.
For debt securities, if we intend to either sell or determine that we will be more likely than not be required to sell
the security before recovery of the entire amortized cost basis or maturity of the security, we recognize the entire
impairment in earnings. If we do not intend to sell the debt security and we determine that we will not be more
likely than not be required to sell the debt security but we do not expect to recover the entire amortized cost
basis, the impairment is bifurcated into the amount attributed to the credit loss, which is recognized in earnings,
and all other causes, which are recognized in other comprehensive income.
For equity securities, we recognize impairments in other comprehensive income if we expect to hold the equity
security until fair value increases to at least the equity security’s cost basis and we expect that increase in fair
60

value to occur in a reasonably forecasted period. If we intend to sell the equity security or if we believe that
recovery of fair value to cost will not occur in the near term, we recognize the impairment in our income
statement.
The most significant judgments and estimates related to investments are related to determination of their fair
values and the other-than-temporary impairment assessment.
Fair values. Fair values of available-for-sale debt and equity securities are based on quoted market prices, where
available. We obtain one price for each security primarily from a third-party pricing service (pricing service),
which generally uses quoted or other observable inputs for the determination of fair value. The pricing service
normally derives the security prices through recently reported trades for identical or similar securities, making
adjustments through the reporting date based upon available observable market information. For securities not
actively traded, the pricing service may use quoted market prices of comparable instruments or discounted cash
flow analyses, incorporating inputs that are currently observable in the markets for similar securities. Inputs that
are often used in the valuation methodologies include, but are not limited to, benchmark yields, credit spreads,
default rates and prepayment speeds, and non-binding broker quotes. As we are responsible for the determination
of fair value, we perform quarterly analyses on the prices received from the pricing service to determine whether
the prices are reasonable estimates of fair value. Specifically, we compare:
• the prices received from the pricing service to prices reported by a secondary pricing service, its custodian,
its investment consultant and/or third-party investment advisors; and
• changes in the reported market values and returns to relevant market indices and our expectations to test the
reasonableness of the reported prices.
Based on our internal price verification procedures and our review of the fair value methodology documentation
provided by independent pricing service, we have not historically adjusted the prices obtained from the pricing
service.
Other-than-temporary impairment assessment. Individual securities with fair values lower than costs are
reviewed for impairment considering the following factors: our intent to sell the security or the likelihood that we
will be required to sell the security before recovery of the entire amortized cost, the length of time and extent of
impairment and the financial condition and near-term prospects of the issuer as well as specific events or
circumstances that may influence the operations of the issuer. Other factors included in the assessment include
the type and nature of the securities and liquidity. Given the nature of our portfolio, primarily investment grade
securities, historical impairments were largely market related (e.g., interest rate fluctuations, etc.) as opposed to
credit related. We do not expect that trend to change in the near term. Our large cash holdings reduce the risk that
we will be required to sell a security. However, our intent to sell a security may change from period to period if
facts and circumstances change.
We believe we will collect the principal and interest due on our debt securities with an amortized cost in excess
of fair value. The unrealized losses of $9 million and $32 million at December 31, 2012 and 2011, respectively,
were primarily caused by market interest rate increases and not by unfavorable changes in the credit standing.
We manage our investment portfolio to limit our exposure to any one issuer or market sector, and largely limit
our investments to U.S. government and agency securities; state and municipal securities; mortgage-backed
securities; and corporate debt obligations, substantially all of investment-grade quality. Securities downgraded
below policy minimums after purchase will be disposed of in accordance with our investment policy. Total other-
than-temporary impairments during 2012, 2011 and 2010 were $6 million, $12 million and $23 million,
respectively. Our cash equivalent and investment portfolio had a weighted-average duration of 2.1 years and a
weighted-average credit rating of “AA” as of December 31, 2012. We have minimal securities collateralized by
sub-prime or Alt-A securities, and a minimal amount of commercial mortgage loans in default.
The judgments and estimates related to fair value and other-than-temporary impairment may ultimately prove to
be inaccurate due to many factors including: circumstances may change over time, industry sector and market
61

factors may differ from expectations and estimates or we may ultimately sell a security we previously intended to
hold. Our assessment of the financial condition and near-term prospects of the issuer may ultimately prove to be
inaccurate as time passes and new information becomes available including current facts and circumstances
changing, or as unknown or estimated unlikely trends develop.
As discussed further in Item 7A “Quantitative and Qualitative Disclosures About Market Risk” a 1% increase in
market interest rates has the effect of decreasing the fair value of our investment portfolio by $656 million.
Income Taxes
Our provision for income taxes, deferred tax assets and liabilities, and uncertain tax positions reflect our
assessment of estimated future taxes to be paid on items in the consolidated financial statements.
Deferred income taxes arise from temporary differences between financial reporting and tax reporting bases of
assets and liabilities, as well as net operating loss and tax credit carryforwards for tax purposes. We have
established a valuation allowance against certain deferred tax assets based on the weight of available evidence
(both positive and negative) for which it is more-likely-than-not that some portion, or all, of the deferred tax asset
will not be realized.
An uncertain tax position is recognized when it is more likely than not that the position will be sustained upon
examination, including resolutions of any related appeals or litigation processes, based on the technical merits.
We prepare and file tax returns based on our interpretation of tax laws and regulations and record estimates based
on these judgments and interpretations. In the normal course of business, our tax returns are subject to
examination by various taxing authorities. Such examinations may result in future tax and interest assessments by
these taxing authorities. Inherent uncertainties exist in estimates of tax positions due to changes in tax law
resulting from legislation, regulation and/or as concluded through the various jurisdictions’ tax court systems.
The significant assumptions and estimates described above are important contributors to our ultimate effective
tax rate in each year. A hypothetical increase or decrease in our effective tax rate by 1% on our 2012 earnings
before income taxes would have caused the provision for income taxes and net earnings to change by $86
million.
Contingent Liabilities
Because of the nature of our businesses, we are routinely involved in various disputes, legal proceedings and
governmental audits and investigations. We record liabilities for our estimates of the probable costs resulting
from these matters where appropriate. Our estimates are developed in consultation with legal counsel, if
appropriate, and are based upon an analysis of potential results, assuming a combination of litigation and
settlement strategies and considering our insurance coverage, if any, for such matters.
Estimates of costs resulting from legal and regulatory matters involving us are inherently difficult to predict,
particularly where the matters: involve indeterminate claims for monetary damages or may involve fines,
penalties or punitive damages; present novel legal theories or represent a shift in regulatory policy; involve a
large number of claimants or regulatory bodies; are in the early stages of the proceedings; or could result in a
change in business practices. Accordingly, in many cases, we are unable to estimate the losses or ranges of losses
for those matters where there is a reasonable possibility or it is probable that a loss may be incurred. Similarly,
the assessment of the likelihood of assertion of unasserted claims involves significant judgment.
Given this inherent uncertainty, it is possible that future results of operations for any particular quarterly or
annual period could be materially affected by changes in our estimates or assumptions. We evaluate our related
disclosures each reporting period. See Note 12 of Notes to the Consolidated Financial Statements included in
Item 8, “Financial Statements” for discussion of specific legal proceedings including an assessment of whether a
reasonable estimate of the losses or range of loss could be determined.
62

LEGAL MATTERS
A description of our legal proceedings is included in Note 12 of Notes to the Consolidated Financial Statements
included in Item 8 “Financial Statements.”
CONCENTRATIONS OF CREDIT RISK
Investments in financial instruments such as marketable securities and accounts receivable may subject us to
concentrations of credit risk. Our investments in marketable securities are managed under an investment policy
authorized by our Board of Directors. This policy limits the amounts that may be invested in any one issuer and
generally limits our investments to U.S. government and agency securities, state and municipal securities and
corporate debt obligations that are investment grade. Concentrations of credit risk with respect to accounts
receivable are limited due to the large number of employer groups and other customers that constitute our client
base. As of December 31, 2012, we had an aggregate $1.9 billion reinsurance receivable resulting from the sale
of our Golden Rule Financial Corporation life and annuity business in 2005. We regularly evaluate the financial
condition of the reinsurer and only record the reinsurance receivable to the extent that the amounts are deemed
probable of recovery. As of December 31, 2012, the reinsurer was rated by A.M. Best as “A+.” As of
December 31, 2012, there were no other significant concentrations of credit risk.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary market risks are exposures to (a) changes in interest rates that impact our investment income and
interest expense and the fair value of certain of our fixed-rate investments and debt, (b) foreign currency
exchange rate risk of the U.S. dollar primarily to the Brazilian Real and (c) changes in equity prices that impact
the value of our equity investments.
As of December 31, 2012, we had $9.4 billion of cash, cash equivalents and investments on which the interest
rates received vary with market interest rates, which may materially impact our investment income. Also,
$6.7 billion of our debt and deposit liabilities as of December 31, 2012 were at interest rates that vary with
market rates, either directly or through the use of related interest rate swap contracts.
The fair value of certain of our fixed-rate investments and debt also varies with market interest rates. As of
December 31, 2012, $19.1 billion of our investments were fixed-rate debt securities and $13.6 billion of our debt
was non-swapped fixed-rate term debt. An increase in market interest rates decreases the market value of fixed-
rate investments and fixed-rate debt. Conversely, a decrease in market interest rates increases the market value of
fixed-rate investments and fixed-rate debt.
We manage exposure to market interest rates by diversifying investments across different fixed income market
sectors and debt across maturities, as well as endeavoring to match our floating-rate assets and liabilities over
time, either directly or periodically through the use of interest rate swap contracts.
63

The following tables summarize the impact of hypothetical changes in market interest rates across the entire yield
curve by 1% or 2% as of December 31, 2012 and 2011 on our investment income and interest expense per
annum, and the fair value of our investments and debt (in millions, except percentages):
December 31, 2012
Increase (Decrease) in Market Interest Rate
Investment
Income Per
Annum (a)
Interest
Expense Per
Annum (a)
Fair Value of
Investments (b)
Fair Value of
Debt
2% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $189 $134 $(1,303) $(2,200)
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 67 (656) (1,194)
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18) (14) 518 1,366
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . nm nm 686 2,747
December 31, 2011
Increase (Decrease) in Market Interest Rate
Investment
Income Per
Annum (a)
Interest
Expense Per
Annum (a)
Fair Value of
Investments (b)
Fair Value of
Debt
2% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $199 $ 28 $(1,239) $(1,946)
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 14 (622) (1,082)
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12) (4) 586 1,086
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . nm nm 885 2,343
nm = not meaningful
(a) Given the low absolute level of short-term market rates on our floating-rate assets and liabilities as of
December 31, 2012 and 2011, the assumed hypothetical change in interest rates does not reflect the full
100 basis point reduction in interest income or interest expense as the rate cannot fall below zero and thus
the 200 basis point reduction is not meaningful.
(b) As of December 31, 2012, some of our investments had interest rates below 2% so the assumed hypothetical
change in the fair value of investments does not reflect the full 200 basis point reduction.
With the Amil acquisition, we have an exposure to changes in the value of the Brazilian Real to the U.S. Dollar
in translation of Amil’s operating results at the average exchange rate over the accounting period, and Amil’s
assets and liabilities at the spot rate at the end of the accounting period. The gains or losses resulting from
translating foreign currency financial statements into U.S. dollars are included in shareholders’ equity and
comprehensive income.
An appreciation of the U.S. dollar against the Brazilian Real reduces the carrying value of the net assets
denominated in Brazilian Real. For example, as of December 31, 2012 a hypothetical 10% increase in the value
of the U.S. Dollar against the Brazilian Real would cause a reduction in net assets of $510 million. We manage
exposure to foreign currency risk by conducting our international business operations primarily in their
functional currencies. We funded certain cash needs of Amil through intercompany notes. At December 31,
2012, we had currency swaps with a total notional amount of $256 million hedging the U.S. dollar to the
Brazilian Real to provide a cash flow hedge on the principal amount of the intercompany notes to Amil.
As of December 31, 2012, we had $677 million of investments in equity securities, including employee savings
plan related investments of $348 million and venture capital funds, a portion of which were invested in various
public and non-public companies concentrated in the areas of health care delivery and related information
technologies. Market conditions that affect the value of health care or technology stocks will impact the value of
our equity investments.
64

ITEM 8. FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Consolidated Statements of Changes in Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
1. Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
2. Basis of Presentation, Use of Estimates and Significant Accounting Policies . . . . . . . . . . . . . . . . . 72
3. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
4. Fair Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
5. Property, Equipment and Capitalized Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
6. Goodwill and Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
7. Medical Costs and Medical Costs Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
8. Commercial Paper and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9. Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
10. Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11. Share-Based Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
12. Commitments and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
13. Segment Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
14. Quarterly Financial Data (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
65

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of UnitedHealth Group Incorporated and Subsidiaries:
We have audited the accompanying consolidated balance sheets of UnitedHealth Group Incorporated and
Subsidiaries (the “Company”) as of December 31, 2012 and 2011, and the related consolidated statements of
operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period
ended December 31, 2012. These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial
position of UnitedHealth Group Incorporated and Subsidiaries as of December 31, 2012 and 2011, and the results
of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in
conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the Company’s internal control over financial reporting as of December 31, 2012, based on the
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 6, 2013, expressed an unqualified
opinion on the Company’s internal control over financial reporting.
/s/ DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
February 6, 2013
66

UnitedHealth Group
Consolidated Balance Sheets
(in millions, except per share data)
December 31,
2012
December 31,
2011
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,406 $ 9,429
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,031 2,577
Accounts receivable, net of allowances of $189 and $196 . . . . . . . . . . . . . . . . . . 2,709 2,294
Other current receivables, net of allowances of $206 and $72 . . . . . . . . . . . . . . . 2,889 2,255
Assets under management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,773 2,708
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463 472
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 781 615
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,052 20,350
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,711 16,166
Property, equipment and capitalized software, net of accumulated depreciation and
amortization of $2,564 and $2,440 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,939 2,515
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,286 23,975
Other intangible assets, net of accumulated amortization of $1,824 and $1,451 . . . . . 4,682 2,795
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,215 2,088
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $80,885 $67,889
Liabilities and shareholders’ equity
Current liabilities:
Medical costs payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,004 $ 9,799
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,984 6,853
Other policy liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,910 5,063
Commercial paper and current maturities of long-term debt . . . . . . . . . . . . . . . . . 2,713 982
Unearned revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,505 1,225
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,116 23,922
Long-term debt, less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,041 10,656
Future policy benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,444 2,445
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,450 1,351
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,535 1,223
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,586 39,597
Commitments and contingencies (Note 12)
Redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,121 —
Shareholders’ equity:
Preferred stock, $0.001 par value — 10 shares authorized; no shares issued or
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Common stock, $0.01 par value — 3,000 shares authorized;
1,019 and 1,039 issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 10
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 —
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,664 27,821
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438 461
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,178 28,292
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $80,885 $67,889
See Notes to the Consolidated Financial Statements
67

UnitedHealth Group
Consolidated Statements of Operations
For the Years Ended December 31,
(in millions, except per share data) 2012 2011 2010
Revenues:
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 99,728 $ 91,983 $85,405
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,437 6,613 5,819
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,773 2,612 2,322
Investment and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680 654 609
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,618 101,862 94,155
Operating costs:
Medical costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,226 74,332 68,841
Operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,306 15,557 14,270
Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,523 2,385 2,116
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,309 1,124 1,064
Total operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,364 93,398 86,291
Earnings from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,254 8,464 7,864
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (632) (505) (481)
Earnings before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,622 7,959 7,383
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,096) (2,817) (2,749)
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,526 $ 5,142 $ 4,634
Earnings per share attributable to UnitedHealth Group common
shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.38 $ 4.81 $ 4.14
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.28 $ 4.73 $ 4.10
Basic weighted-average number of common shares outstanding . . . . . . . . . 1,027 1,070 1,120
Dilutive effect of common stock equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . 19 17 11
Diluted weighted-average number of common shares outstanding . . . . . . . 1,046 1,087 1,131
Anti-dilutive shares excluded from the calculation of dilutive effect of
common stock equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 47 94
Cash dividends declared per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.8000 $ 0.6125 $0.4050
See Notes to the Consolidated Financial Statements
68

UnitedHealth Group
Consolidated Statements of Comprehensive Income
For the Years Ended December 31,
(in millions) 2012 2011 2010
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,526 $5,142 $4,634
Other comprehensive (loss) income:
Gross unrealized holding gains on investment securities during the
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 422 74
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (78) (154) (26)
Total unrealized gains, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 268 48
Gross reclassification adjustment for net realized gains included in net
earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (156) (113) (71)
Income tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 41 26
Total reclassification adjustment, net of tax . . . . . . . . . . . . . . . . . . . . . . (99) (72) (45)
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . (63) 13 (4)
Other comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23) 209 (1)
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,503 $5,351 $4,633
See Notes to the Consolidated Financial Statements
69

UnitedHealth Group
Consolidated Statements of Changes in Shareholders’ Equity
Common Stock
Accumulated Other
Comprehensive Income
(Loss)
Additional
Paid-In Retained
Net
Unrealized
Gains on
Foreign
Currency
Translation
(Losses)
(in millions) Shares Amount Capital Earnings Investments Gains Total Equity
Balance at January 1, 2010 . . . . . 1,147 $11 $ — $23,342 $277 $(24) $23,606
Net earnings . . . . . . . . . . . . . . . . . . 4,634 4,634
Other comprehensive income . . . . 3 (4) (1)
Issuances of common stock, and
related tax effects . . . . . . . . . . . . 15 — 207 207
Share-based compensation, and
related tax benefits . . . . . . . . . . . 345 345
Common stock repurchases . . . . . . (76) — (552) (1,965) (2,517)
Cash dividends paid on common
stock . . . . . . . . . . . . . . . . . . . . . . (449) (449)
Balance at December 31, 2010 . . 1,086 11 — 25,562 280 (28) 25,825
Net earnings . . . . . . . . . . . . . . . . . . 5,142 5,142
Other comprehensive income . . . . 196 13 209
Issuances of common stock, and
related tax effects . . . . . . . . . . . . 18 — 308 308
Share-based compensation, and
related tax benefits . . . . . . . . . . . 453 453
Common stock repurchases . . . . . . (65) (1) (761) (2,232) (2,994)
Cash dividends paid on common
stock . . . . . . . . . . . . . . . . . . . . . . (651) (651)
Balance at December 31, 2011 . . 1,039 10 — 27,821 476 (15) 28,292
Net earnings . . . . . . . . . . . . . . . . . . 5,526 5,526
Other comprehensive income . . . . 40 (63) (23)
Issuances of common stock, and
related tax effects . . . . . . . . . . . . 37 — 704 704
Share-based compensation, and
related tax benefits . . . . . . . . . . . 594 594
Common stock repurchases . . . . . . (57) — (1,221) (1,863) (3,084)
Acquisition of noncontrolling
interest . . . . . . . . . . . . . . . . . . . . (11) (11)
Cash dividends paid on common
stock . . . . . . . . . . . . . . . . . . . . . . (820) (820)
Balance at December 31, 2012 . . 1,019 $10 $ 66 $30,664 $516 $(78) $31,178
See Notes to the Consolidated Financial Statements
70

UnitedHealth Group
Consolidated Statements of Cash Flows
For the Years Ended December 31,
(in millions) 2012 2011 2010
Operating activities
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,526 $ 5,142 $ 4,634
Non-cash items:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,309 1,124 1,064
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308 59 45
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421 401 326
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (231) (67) 203
Net change in other operating items, net of effects from acquisitions and changes
in AARP balances:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (130) (267) (16)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (295) (121) 84
Medical costs payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 377 (88)
Accounts payable and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199 146 (341)
Other policy liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (81) 482 10
Unearned revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 (308) 352
Cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,155 6,968 6,273
Investing activities
Purchases of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,903) (9,895) (7,855)
Sales of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,794 3,949 2,593
Maturities of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,810 4,251 3,105
Cash paid for acquisitions, net of cash assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,280) (1,844) (2,323)
Cash received from dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 385 19
Purchases of property, equipment and capitalized software . . . . . . . . . . . . . . . . . . (1,070) (1,067) (878)
Proceeds from disposal of property, equipment and capitalized software . . . . . . . — 49 —
Cash flows used for investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,649) (4,172) (5,339)
Financing activities
Common stock repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,084) (2,994) (2,517)
Proceeds from common stock issuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,078 381 272
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (820) (651) (449)
Proceeds from (repayments of) commercial paper, net . . . . . . . . . . . . . . . . . . . . . 1,587 (933) 930
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,966 2,234 747
Repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (986) (955) (1,583)
Interest rate swap termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 132 —
Customer funds administered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (324) 37 974
Checks outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (202) 206 (5)
Acquisition of noncontrolling interest shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (319) — —
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (425) 53 20
Cash flows from (used for) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 471 (2,490) (1,611)
(Decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . (1,023) 306 (677)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . 9,429 9,123 9,800
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,406 $ 9,429 $ 9,123
Supplemental cash flow disclosures
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 600 $ 472 $ 509
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,666 2,739 2,725
See Notes to the Consolidated Financial Statements
71

UnitedHealth Group
Notes to the Consolidated Financial Statements
1. Description of Business
UnitedHealth Group Incorporated (also referred to as “UnitedHealth Group” and “the Company”) is a diversified
health and well-being company whose mission is to help people live healthier lives and make health care work
better.
The Company helps individuals access quality care at an affordable cost; simplifying health care administration
and delivery; strengthening the physician/patient relationship; promoting evidence-based care; and empowering
physicians, health care professionals, consumers, employers and other participants in the health system with
actionable data to make better, more informed decisions.
Through the Company’s diversified family of businesses, it leverages core competencies in advanced, enabling
technology; health care data, information and intelligence; and clinical care management and coordination to
help meet the demands of the health system. See Note 13 for a description of the Company’s reportable segments
and how the segments generate their revenues.
2. Basis of Presentation, Use of Estimates and Significant Accounting Policies
Basis of Presentation
The Company has prepared the Consolidated Financial Statements according to United States of America (U.S.)
Generally Accepted Accounting Principles (GAAP) and has included the accounts of UnitedHealth Group and its
subsidiaries. The Company has eliminated intercompany balances and transactions.
Use of Estimates
These Consolidated Financial Statements include certain amounts based on the Company’s best estimates and
judgments. The Company’s most significant estimates relate to medical costs payable, premium rebates and risk-
adjusted and risk-sharing provisions related to revenues, valuation and impairment analysis of goodwill and other
intangible assets, estimates of other policy liabilities and other current receivables, valuations of investments, and
estimates and judgments related to income taxes and contingent liabilities. These estimates require the
application of complex assumptions and judgments, often because they involve matters that are inherently
uncertain and will likely change in subsequent periods. The impact of any changes in estimates is included in
earnings in the period in which the estimate is adjusted.
Revenues
Premium revenues are primarily derived from risk-based health insurance arrangements in which the premium is
typically at a fixed rate per individual served for a one-year period, and the Company assumes the economic risk
of funding its customers’ health care and related administrative costs.
Premium revenues are recognized in the period in which eligible individuals are entitled to receive health care
benefits. Health care premium payments received from its customers in advance of the service period are
recorded as unearned revenues. Effective in 2011, U.S. commercial health plans with medical loss ratios on fully
insured products, as calculated under the definitions in the Patient Protection and Affordable Care Act and a
reconciliation measure, the Health Care and Education Reconciliation Act of 2010 (together, Health Reform
Legislation) and implementing regulations, that fall below certain targets are required to rebate ratable portions
of their premiums annually. Premium revenues are recognized based on the estimated premiums earned net of
projected rebates because the Company is able to reasonably estimate the ultimate premiums of these contracts.
Each period, the Company estimates premium rebates based on the expected financial performance of the
72

applicable contracts within each defined aggregation set (e.g., by state, group size and licensed subsidiary). The
most significant factors in estimating the financial performance are current and future premiums and medical
claim experience, effective tax rates and expected changes in business mix. The estimated ultimate premium is
revised each period to reflect current and projected experience. The Company also records premium revenues
from capitation arrangements at its OptumHealth businesses.
The Company’s Medicare Advantage and Part D premium revenues are subject to periodic adjustment under the
Centers for Medicare and Medicaid Services’ (CMS) risk adjustment payment methodology. CMS deploys a risk
adjustment model that apportions premiums paid to all health plans according to health severity and certain
demographic factors. The CMS risk adjustment model provides higher per member payments for enrollees
diagnosed with certain conditions and lower payments for enrollees who are healthier. Under this risk adjustment
methodology, CMS calculates the risk adjusted premium payment using diagnosis data from hospital inpatient,
hospital outpatient and physician treatment settings. The Company and health care providers collect, capture, and
submit the necessary and available diagnosis data to CMS within prescribed deadlines. The Company estimates
risk adjustment revenues based upon the diagnosis data submitted and expected to be submitted to CMS. Risk
adjustment data for certain of the Company’s plans is subject to review by the government, including audit by
regulators. See Note 12 for additional information regarding these audits.
Service revenues consist primarily of fees derived from services performed for customers that self-insure the
health care costs of their employees and employees’ dependants. Under service fee contracts, the Company
recognizes revenue in the period the related services are performed. The customers retain the risk of financing
health care costs for their employees and employees’ dependants, and the Company administers the payment of
customer funds to physicians and other health care professionals from customer-funded bank accounts. As the
Company has neither the obligation for funding the health care costs, nor the primary responsibility for providing
the medical care, the Company does not recognize premium revenue and medical costs for these contracts in its
Consolidated Financial Statements.
For both risk-based and fee-based customer arrangements, the Company provides coordination and facilitation of
medical services; transaction processing; customer, consumer and care professional services; and access to
contracted networks of physicians, hospitals and other health care professionals. These services are performed
throughout the contract period.
For the Company’s OptumRx pharmacy benefits management (PBM) business, revenues are derived from
products sold through a contracted network of retail pharmacies or mail services, and from administrative
services, including claims processing and formulary design and management. Product revenues include
ingredient costs (net of rebates), a negotiated dispensing fee and customer co-payments for drugs dispensed
through the Company’s mail-service pharmacy. In retail pharmacy transactions, revenues recognized exclude the
member’s applicable co-payment. Product revenues are recognized when the prescriptions are dispensed through
the retail network or received by consumers through the Company’s mail-service pharmacy. Service revenues are
recognized when the prescription claim is adjudicated. The Company has entered into retail service contracts in
which it is primarily obligated to pay its network pharmacy providers for benefits provided to their customers
regardless if the Company is paid. The Company is also involved in establishing the prices charged by retail
pharmacies, determining which drugs will be included in formulary listings and selecting which retail pharmacies
will be included in the network offered to plan sponsors’ members. As a result, revenues are reported on a gross
basis.
Medical Costs and Medical Costs Payable
Medical costs and medical costs payable include estimates of the Company’s obligations for medical care
services that have been rendered on behalf of insured consumers, but for which claims have either not yet been
received or processed, and for liabilities for physician, hospital and other medical cost disputes. The Company
develops estimates for medical costs incurred but not reported using an actuarial process that is consistently
73

applied, centrally controlled and automated. The actuarial models consider factors such as time from date of
service to claim receipt, claim processing backlogs, care provider contract rate changes, medical care utilization
and other medical cost trends. The Company estimates liabilities for physician, hospital and other medical cost
disputes based upon an analysis of potential outcomes, assuming a combination of litigation and settlement
strategies. Each period, the Company re-examines previously established medical costs payable estimates based
on actual claim submissions and other changes in facts and circumstances. As the medical costs payable
estimates recorded in prior periods develop, the Company adjusts the amount of the estimates and includes the
changes in estimates in medical costs in the period in which the change is identified. Medical costs also include
the direct cost of patient care rendered through OptumHealth.
Cash, Cash Equivalents and Investments
Cash and cash equivalents are highly liquid investments that have an original maturity of three months or less.
The fair value of cash and cash equivalents approximates their carrying value because of the short maturity of the
instruments.
The Company had checks outstanding of $1.3 billion and $1.5 billion as of December 31, 2012 and 2011,
respectively, which were classified as Accounts Payable and Accrued Liabilities in the Consolidated Balance
Sheets and the change in this balance has been reflected as Checks Outstanding within financing activities in the
Consolidated Statements of Cash Flows. The outstanding checks are all related to zero balance accounts; the
Company does not net checks outstanding with deposits in other accounts.
Investments with maturities of less than one year are classified as short-term. Because of regulatory
requirements, certain investments are included in long-term investments regardless of their maturity date. The
Company classifies these investments as held-to-maturity and reports them at amortized cost. Substantially all
other investments are classified as available-for-sale and reported at fair value based on quoted market prices,
where available.
The Company excludes unrealized gains and losses on investments in available-for-sale securities from earnings
and reports them as comprehensive income and, net of income tax effects, as a separate component of
shareholders’ equity. To calculate realized gains and losses on the sale of investments, the Company specifically
identifies the cost of each investment sold.
The Company evaluates an investment for impairment by considering the length of time and extent to which
market value has been less than cost or amortized cost, the financial condition and near-term prospects of the
issuer as well as specific events or circumstances that may influence the operations of the issuer and the
Company’s intent to sell the security or the likelihood that it will be required to sell the security before recovery
of the entire amortized cost.
• For debt securities, if the Company intends to either sell or determines that it will be more likely than not be
required to sell a security before recovery of the entire amortized cost basis or maturity of the security, the
Company recognizes the entire impairment in Investment and Other Income. If the Company does not
intend to sell the debt security and it determines that it will not be more likely than not be required to sell the
security but it does not expect to recover the entire amortized cost basis, the impairment is bifurcated into
the amount attributed to the credit loss, which is recognized in earnings, and all other causes, which are
recognized in other comprehensive income.
• For equity securities, the Company recognizes impairments in other comprehensive income if it expects to
hold the security until fair value increases to at least the security’s cost basis and it expects that increase in
fair value to occur in a reasonably forecasted period. If the Company intends to sell the equity security or if
it believes that recovery of fair value to cost will not occur in a reasonably forecasted period, the Company
recognizes the impairment in Investment and Other Income.
74

New information and the passage of time can change these judgments. The Company manages its investment
portfolio to limit its exposure to any one issuer or market sector, and largely limits its investments to U.S.
government and agency securities; state and municipal securities; mortgage-backed securities; and corporate debt
obligations, substantially all of which are investment grade quality. Securities downgraded below policy
minimums after purchase will be disposed of in accordance with the investment policy.
Assets Under Management
The Company provides health insurance products and services to members of AARP under a Supplemental
Health Insurance Program (the AARP Program), and to AARP members and non-members under separate
Medicare Advantage and Medicare Part D arrangements. The products and services under the AARP Program
include supplemental Medicare benefits (AARP Medicare Supplement Insurance), hospital indemnity insurance,
including insurance for individuals between 50 to 64 years of age, and other related products.
The Company’s arrangements with AARP extend to December 31, 2017 for the AARP Program and give the
Company an exclusive right to use the AARP brand on the Company’s Medicare Advantage and Medicare Part D
offerings until December 31, 2014, subject to certain limited exclusions.
Pursuant to the Company’s agreement, AARP Program assets are managed separately from its general
investment portfolio and are used to pay costs associated with the AARP Program. These assets are invested at
the Company’s discretion, within investment guidelines approved by AARP. The Company does not guarantee
any rates of return on these investments and, upon transfer of the AARP Program contract to another entity, the
Company would transfer cash equal in amount to the fair value of these investments at the date of transfer to that
entity. Because the purpose of these assets is to fund the medical costs payable, the rate stabilization fund (RSF)
liabilities and other related liabilities associated with this AARP contract, assets under management are classified
as current assets, consistent with the classification of these liabilities. Interest earnings and realized investment
gains and losses on these assets accrue to the overall benefit of the AARP policyholders through the RSF.
Accordingly, they are not included in the Company’s earnings. Interest income and realized gains and losses
related to assets under management are recorded as an increase to the RSF and were $109 million, $99 million
and $107 million in 2012, 2011 and 2010, respectively.
The effects of changes in balance sheet amounts associated with the AARP Program also accrue to the overall
benefit of the AARP policyholders through the RSF balance. Accordingly, the Company excludes the effect of
such changes in its Consolidated Statements of Cash Flows. For more detail on the RSF, see “Other Policy
Liabilities” below.
Other Current Receivables
Other current receivables include amounts due from pharmaceutical manufacturers for rebates and Medicare Part
D drug discounts, reinsurance and other miscellaneous amounts due to the Company.
The Company’s PBM businesses contract with pharmaceutical manufacturers, some of whom provide rebates
based on use of the manufacturers’ products by its PBM businesses’ affiliated and non-affiliated clients. The
Company accrues rebates as they are earned by its clients on a monthly basis based on the terms of the applicable
contracts, historical data and current estimates. The PBM businesses bill these rebates to the manufacturers on a
monthly or quarterly basis depending on the contractual terms. The PBM businesses record rebates attributable to
affiliated clients as a reduction to medical costs. Rebates attributable to non-affiliated clients are accrued as
rebates receivable and a reduction of cost of products sold with a corresponding payable for the amounts of the
rebates to be remitted to non-affiliated clients in accordance with their contracts and recorded in the Consolidated
Statements of Operations as a reduction of Product Revenue. The Company generally receives rebates from two
to five months after billing.
75

For details on the Company’s Medicare Part D receivables see “Medicare Part D Pharmacy Benefits” below.
For details on the Company’s reinsurance receivable see “Future Policy Benefits and Reinsurance Receivable”
below.
Medicare Part D Pharmacy Benefits
The Company serves as a plan sponsor offering Medicare Part D prescription drug insurance coverage under
contracts with CMS. Under the Medicare Part D program, there are seven separate elements of payment received
by the Company during the plan year. These payment elements are as follows:
• CMS Premium. CMS pays a fixed monthly premium per member to the Company for the entire plan year.
• Member Premium. Additionally, certain members pay a fixed monthly premium to the Company for the
entire plan year.
• Low-Income Premium Subsidy. For qualifying low-income members, CMS pays some or all of the
member’s monthly premiums to the Company on the member’s behalf.
• Catastrophic Reinsurance Subsidy. CMS pays the Company a cost reimbursement estimate monthly to fund
the CMS obligation to pay approximately 80% of the costs incurred by individual members in excess of the
individual annual out-of-pocket maximum. A settlement is made with CMS based on actual cost experience,
after the end of the plan year.
• Low-Income Member Cost Sharing Subsidy. For qualifying low-income members, CMS pays on the
member’s behalf some or all of a member’s cost sharing amounts, such as deductibles and coinsurance. The
cost sharing subsidy is funded by CMS through monthly payments to the Company. The Company
administers and pays the subsidized portion of the claims on behalf of CMS, and a settlement payment is
made between CMS and the Company based on actual claims and premium experience, after the end of the
plan year.
• CMS Risk-Share. Premiums from CMS are subject to risk corridor provisions that compare costs targeted in
the Company’s annual bids by product and region to actual prescription drug costs, limited to actual costs
that would have been incurred under the standard coverage as defined by CMS. Variances of more than 5%
above or below the original bid submitted by the Company may result in CMS making additional payments
to the Company or require the Company to refund to CMS a portion of the premiums it received. The
Company estimates and recognizes an adjustment to premium revenues related to the risk corridor payment
settlement based upon pharmacy claims experience to date. The estimate of the settlement associated with
these risk corridor provisions requires the Company to consider factors that may not be certain, including
estimates of eligible pharmacy costs and member eligibility status differences with CMS. The Company
records risk-share adjustments to Premium Revenues in the Consolidated Statements of Operations and
Other Policy Liabilities or Other Current Receivables in the Consolidated Balance Sheets.
• Drug Discount. Beginning in 2011, Health Reform Legislation mandated a consumer discount of 50% on
brand name prescription drugs for Part D plan participants in the coverage gap. This discount is funded by
CMS and pharmaceutical manufacturers while the Company administers the application of these funds.
Amounts received are not reflected as premium revenues, but rather are accounted for as deposits. The
Company records a liability when amounts are received from CMS and a receivable when the Company
bills the pharmaceutical manufacturers. Related cash flows are presented as Customer Funds Administered
within financing activities in the Consolidated Statements of Cash Flows.
The CMS Premium, the Member Premium, and the Low-Income Premium Subsidy represent payments for the
Company’s insurance risk coverage under the Medicare Part D program and, therefore, are recorded as Premium
Revenues in the Consolidated Statements of Operations. Premium revenues are recognized ratably over the
period in which eligible individuals are entitled to receive prescription drug benefits. The Company records
76

premium payments received in advance of the applicable service period in Unearned Revenues in the
Consolidated Balance Sheets.
The Catastrophic Reinsurance Subsidy and the Low-Income Member Cost Sharing Subsidy (Subsidies) represent
cost reimbursements under the Medicare Part D program. Amounts received for these Subsidies are not reflected
as premium revenues, but rather are accounted for as receivables and/or deposits. Related cash flows are
presented as Customer Funds Administered within financing activities in the Consolidated Statements of Cash
Flows.
Pharmacy benefit costs and administrative costs under the contract are expensed as incurred and are recognized
in Medical Costs and Operating Costs, respectively, in the Consolidated Statements of Operations.
The final 2012 risk-share amount is expected to be settled during the second half of 2013, and is subject to the
reconciliation process with CMS.
The Consolidated Balance Sheets include the following amounts associated with the Medicare Part D program:
December 31, 2012 December 31, 2011
(in millions) Subsidies Drug Discount Risk-Share Subsidies Drug Discount Risk-Share
Other current receivables . . . . . . . . . . $461 $314 $ — $ — $509 $ —
Other policy liabilities . . . . . . . . . . . . . — 319 438 70 649 170
As of January 1, 2013, certain changes were made to the Medicare Part D coverage by CMS, including:
The initial coverage limit increased to $2,970 from $2,930 in 2012.
The catastrophic coverage begins at $6,734 as compared to $6,658 in 2012.
The annual out-of-pocket maximum increased to $4,750 from $4,700 in 2012.
The discounts on prescription drugs within the coverage gap increased to 52.5% from 50% in 2012 for
brand name drugs and to 21% from 14% in 2012 for generic drugs.
Property, Equipment and Capitalized Software
Property, equipment and capitalized software are stated at cost, net of accumulated depreciation and
amortization. Capitalized software consists of certain costs incurred in the development of internal-use software,
including external direct costs of materials and services and applicable payroll costs of employees devoted to
specific software development. The Company reviews property, equipment and capitalized software for events or
changes in circumstances that would indicate that it might not recover their carrying value. If the Company
determines that an asset may not be recoverable, an impairment charge is recorded.
The Company calculates depreciation and amortization using the straight-line method over the estimated useful
lives of the assets. The useful lives for property, equipment and capitalized software are:
Furniture, fixtures and equipment . . . . . . . . . . . 3 to 7 years
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 to 40 years
Leasehold improvements . . . . . . . . . . . . . . . . . . 7 years or length of lease term, whichever is shorter
Capitalized software . . . . . . . . . . . . . . . . . . . . . . 3 to 5 years
Goodwill
Goodwill represents the amount of the purchase price in excess of the fair values assigned to the underlying
identifiable net assets of acquired businesses. Goodwill is not amortized, but is subject to an annual impairment
test. Tests are performed more frequently if events occur or circumstances change that would more likely than
not reduce the fair value of the reporting unit below its carrying amount.
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To determine whether goodwill is impaired, the Company performs a multi-step impairment test. First, the
Company can elect to perform a qualitative assessment of each reporting unit to determine whether facts and
circumstances support a determination that their fair values are greater than their carrying values. If the
qualitative analysis is not conclusive, or if the Company elects to proceed directly with quantitative testing, it
will then measure the fair values of the reporting units and compare them to their aggregate carrying values,
including goodwill. If the fair value is less than the carrying value of the reporting unit, then the implied value of
goodwill would be calculated and compared to the carrying amount of goodwill to determine whether goodwill is
impaired.
The Company estimates the fair values of its reporting units using discounted cash flows. To determine fair
values, the Company must make assumptions about a wide variety of internal and external factors. Significant
assumptions used in the impairment analysis include financial projections of free cash flow (including significant
assumptions about operations, capital requirements and income taxes), long-term growth rates for determining
terminal value, and discount rates. Comparative market multiples are used to corroborate the results of the
discounted cash flow test.
The Company elected to bypass the optional qualitative reporting-unit fair value assessment and completed its
annual quantitative test for goodwill impairment as of January 1, 2013. As of December 31, 2012, no reporting
unit had a fair value less than its carrying value and the Company concluded that there was no need for any
impairment of its goodwill balances.
Intangible assets
Separately-identifiable intangible assets are acquired in business combinations and are assets that represent future
expected benefits but lack physical substance (e.g., membership lists, customer contracts, trademarks and
technology). The Company’s intangible assets are initially recorded at their fair values. Finite-lived intangible
assets are amortized over their expected useful lives.
The Company’s intangible assets are subject to impairment tests when events or circumstances indicate that an
intangible asset’s (or asset group’s) may be impaired. The Company’s indefinite lived intangible assets are also
tested for impairment annually. There were no material impairments of intangible assets during the year ended
December 31, 2012.
Other Policy Liabilities
Other policy liabilities include the RSF associated with the AARP Program (described below), health savings
account deposits, deposits under the Medicare Part D program (see “Medicare Part D Pharmacy Benefits”
above), accruals for premium rebate payments under the Health Reform Legislation, the current portion of future
policy benefits and customer balances. Customer balances represent excess customer payments and deposit
accounts under experience-rated contracts. At the customer’s option, these balances may be refunded or used to
pay future premiums or claims under eligible contracts.
Underwriting gains or losses related to the AARP Program are directly recorded as an increase or decrease to
the RSF and accrue to the overall benefit of the AARP policyholders, unless cumulative net losses were to
exceed the balance in the RSF. The primary components of the underwriting results are premium revenue,
medical costs, investment income, administrative expenses, member service expenses, marketing expenses and
premium taxes. To the extent underwriting losses exceed the balance in the RSF, losses would be borne by the
Company. Deficits may be recovered by underwriting gains in future periods of the contract. To date, the
Company has not been required to fund any underwriting deficits. Changes in the RSF are reported in Medical
Costs in the Consolidated Statement of Operations. As of December 31, 2012 and 2011, the balance in the RSF
was $1.3 billion.
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Income Taxes
Deferred income tax assets and liabilities are recognized for the differences between the financial and income tax
reporting bases of assets and liabilities based on enacted tax rates and laws. The deferred income tax provision or
benefit generally reflects the net change in deferred income tax assets and liabilities during the year, excluding
any deferred income tax assets and liabilities of acquired businesses. The current income tax provision reflects
the tax consequences of revenues and expenses currently taxable or deductible on various income tax returns for
the year reported.
Future Policy Benefits and Reinsurance Receivable
Future policy benefits represent account balances that accrue to the benefit of the policyholders, excluding surrender
charges, for universal life and investment annuity products and for long-duration health policies sold to individuals
for which some of the premium received in the earlier years is intended to pay benefits to be incurred in future
years. As a result of the 2005 sale of the life and annuity business within the Company’s Golden Rule Financial
Corporation subsidiary under an indemnity reinsurance arrangement, the Company has maintained a liability
associated with the reinsured contracts, as it remains primarily liable to the policyholders, and has recorded a
corresponding reinsurance receivable due from the purchaser. As of December 31, 2012, the Company had an
aggregate $1.9 billion reinsurance receivable, of which $135 million was recorded in Other Current Receivables and
$1.8 billion was recorded in Other Assets in the Consolidated Balance Sheets. As of December 31, 2011, the
Company had an aggregate $1.9 billion reinsurance receivable, of which $125 million was recorded in Other
Current Receivables and $1.8 billion was recorded in Other Assets in the Consolidated Balance Sheets. The
Company evaluates the financial condition of the reinsurer and only records the reinsurance receivable to the extent
of probable recovery. As of December 31, 2012, the reinsurer was rated by A.M. Best as “A+.”
Foreign currency translation
Assets and liabilities of the Company’s foreign operations denominated in non-U.S. dollar functional currencies
are translated into U.S. dollars at current exchange rates as of the end of each accounting period. Related revenue
and expenses are translated at average exchange rates during the accounting period. The gains or losses resulting
from translating foreign currency financial statements into U.S. dollars are included in shareholders’ equity and
comprehensive income.
Noncontrolling interests
Noncontrolling interests in the Company’s subsidiaries whose redemption is outside the control of the Company
are classified as temporary equity. The redeemable noncontrolling interests are primarily related to holders of
Amil Participações S.A. (Amil) shares. Amil was acquired in 2012, see Note 6 for more information. During
2012, the Company purchased noncontrolling interest shares for $319 million, of which $11 million was recorded
as a reduction of Additional Paid-In Capital. For the year ended December 31, 2012, the Company’s net earnings
attributable to redeemable noncontrolling interests was nil and other noncontrolling interest activity was not
material.
Policy Acquisition Costs
The Company’s short duration health insurance contracts typically have a one-year term and may be canceled by
the customer with at least 30 days notice. Costs related to the acquisition and renewal of short duration customer
contracts are charged to expense as incurred.
Share-Based Compensation
The Company recognizes compensation expense for share-based awards, including stock options, stock-settled
stock appreciation rights (SARs) and restricted stock and restricted stock units (collectively, restricted shares), on
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a straight-line basis over the related service period (generally the vesting period) of the award, or to an
employee’s eligible retirement date under the award agreement, if earlier. Restricted shares vest ratably,
primarily over three to four years and compensation expense related to restricted shares is based on the share
price on date of grant. Stock options and SARs vest ratably over four to six years and may be exercised up to
10 years from the date of grant. Compensation expense related to stock options and SARs is based on the fair
value at date of grant, which is estimated on the date of grant using a binomial option-pricing model. Under the
Company’s Employee Stock Purchase Plan (ESPP) eligible employees are allowed to purchase the Company’s
stock at a discounted price, which is 85% of the lower market price of the Company’s common stock at the
beginning or at the end of the six-month purchase period. Share-based compensation expense for all programs is
recognized in Operating Costs in the Company’s Consolidated Statements of Operations.
Net Earnings Per Common Share
The Company computes basic net earnings per common share by dividing net earnings by the weighted-average
number of common shares outstanding during the period. The Company determines diluted net earnings per
common share using the weighted-average number of common shares outstanding during the period, adjusted for
potentially dilutive shares associated with stock options, SARs, restricted shares and the ESPP, using the treasury
stock method. The treasury stock method assumes a hypothetical issuance of shares to settle the share-based
awards, with the assumed proceeds used to purchase common stock at the average market price for the period.
Assumed proceeds include the amount the employee must pay upon exercise, any unrecognized compensation
cost and any related excess tax benefit. The difference between the number of shares assumed issued and number
of shares assumed purchased represents the dilutive shares.
Recently Adopted Accounting Standards
In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)
No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (ASU 2011-04). This update provides
guidance on how fair value measurement should be applied where existing GAAP already requires or permits fair
value measurements. In addition, ASU 2011-04 requires expanded disclosures regarding fair value
measurements. ASU 2011-04 became effective for the Company’s fiscal year 2012. The adoption of the
measurement guidance of ASU 2011-04 did not have a material impact on the Consolidated Financial
Statements. The new disclosures have been included with the Company’s fair value disclosures in Note 4.
In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220) — Presentation of
Comprehensive Income” (ASU 2011-05). ASU 2011-05 requires entities to present the total of comprehensive
income, the components of net income, and the components of other comprehensive income either in a single
continuous statement of comprehensive income or in two separate but consecutive statements and eliminates the
option to present the components of other comprehensive income as a part of the statement of equity. ASU 2011-05
became effective for the Company’s fiscal year 2012. The Company presented separate Consolidated Statements of
Comprehensive Income, which appear consecutive to the Consolidated Statements of Operations.
The Company has determined that there have been no other recently adopted or issued accounting standards that
had or will have a material impact on its Consolidated Financial Statements.
80

3. Investments
A summary of short-term and long-term investments by major security type is as follows:
(in millions)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
December 31, 2012
Debt securities — available-for-sale:
U.S. government and agency obligations . . . . . . . . . . . . . . . . . $ 2,501 $ 38 $ (1) $ 2,538
State and municipal obligations . . . . . . . . . . . . . . . . . . . . . . . . . 6,282 388 (3) 6,667
Corporate obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,930 283 (4) 7,209
U.S. agency mortgage-backed securities . . . . . . . . . . . . . . . . . . 2,168 70 — 2,238
Non-U.S. agency mortgage-backed securities . . . . . . . . . . . . . . 538 36 — 574
Total debt securities — available-for-sale . . . . . . . . . . . . . . . . . . . . . 18,419 815 (8) 19,226
Equity securities — available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . 668 10 (1) 677
Debt securities — held-to-maturity:
U.S. government and agency obligations . . . . . . . . . . . . . . . . . 168 6 — 174
State and municipal obligations . . . . . . . . . . . . . . . . . . . . . . . . . 30 — — 30
Corporate obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641 2 — 643
Total debt securities — held-to-maturity . . . . . . . . . . . . . . . . . . . . . . 839 8 — 847
Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,926 $833 $ (9) $20,750
December 31, 2011
Debt securities — available-for-sale:
U.S. government and agency obligations . . . . . . . . . . . . . . . . . $ 2,319 $ 54 $ — $ 2,373
State and municipal obligations . . . . . . . . . . . . . . . . . . . . . . . . . 6,363 403 (1) 6,765
Corporate obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,825 205 (23) 6,007
U.S. agency mortgage-backed securities . . . . . . . . . . . . . . . . . . 2,279 74 — 2,353
Non-U.S. agency mortgage-backed securities . . . . . . . . . . . . . . 476 28 — 504
Total debt securities — available-for-sale . . . . . . . . . . . . . . . . . . . . . 17,262 764 (24) 18,002
Equity securities — available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . 529 23 (8) 544
Debt securities — held-to-maturity:
U.S. government and agency obligations . . . . . . . . . . . . . . . . . 166 7 — 173
State and municipal obligations . . . . . . . . . . . . . . . . . . . . . . . . . 13 — — 13
Corporate obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 — — 18
Total debt securities — held-to-maturity . . . . . . . . . . . . . . . . . . . . . . 197 7 — 204
Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $17,988 $794 $(32) $18,750
81

The fair values of the Company’s mortgage-backed securities by credit rating (when multiple credit ratings are
available for an individual security, the average of the available ratings is used) and origination as of
December 31, 2012 were as follows:
(in millions) AAA AA A
Non-Investment
Grade
Total Fair
Value
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 123 $ — $ — $ — $ 123
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 — — — 27
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3 — — 3
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 — — 2 90
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 — 11 8 156
Pre-2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 5 — 3 175
U.S. agency mortgage-backed securities . . . . . . . . . . . . . . . . 2,238 — — — 2,238
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,780 $ 8 $ 11 $ 13 $2,812
The Company includes in the non-investment grade column in the table above any securities backed by Alt-A or
sub-prime mortgages and any commercial mortgage loans in default.
The amortized cost and fair value of available-for-sale debt securities as of December 31, 2012, by contractual
maturity, were as follows:
(in millions)
Amortized
Cost
Fair
Value
Due in one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,107 $ 3,120
Due after one year through five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,249 6,471
Due after five years through ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,695 5,039
Due after ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,662 1,784
U.S. agency mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,168 2,238
Non-U.S. agency mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538 574
Total debt securities — available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,419 $19,226
The amortized cost and fair value of held-to-maturity debt securities as of December 31, 2012, by contractual
maturity, were as follows:
(in millions)
Amortized
Cost
Fair
Value
Due in one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $435 $436
Due after one year through five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 129
Due after five years through ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 180
Due after ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 102
Total debt securities — held-to-maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $839 $847
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The fair value of available-for-sale investments with gross unrealized losses by major security type and length of
time that individual securities have been in a continuous unrealized loss position were as follows:
Less Than 12 Months 12 Months or Greater Total
(in millions)
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
December 31, 2012
Debt securities — available-for-sale:
U.S. government and agency obligations . . . $ 183 $ (1) $ — $ — $ 183 $ (1)
State and municipal obligations . . . . . . . . . . . 362 (3) — — 362 (3)
Corporate obligations . . . . . . . . . . . . . . . . . . . 695 (4) — — 695 (4)
Total debt securities — available-for-sale . . . . . . . $1,240 $ (8) $ — $ — $1,240 $ (8)
Equity securities — available-for-sale . . . . . . . . . . $ 13 $ (1) $ — $ — $ 13 $ (1)
December 31, 2011
Debt securities — available-for-sale:
State and municipal obligations . . . . . . . . . . . $ 85 $ (1) $ 21 $ — $ 106 $ (1)
Corporate obligations . . . . . . . . . . . . . . . . . . . 1,496 (22) 28 (1) 1,524 (23)
Total debt securities — available-for-sale . . . . . . . $1,581 $(23) $ 49 $ (1) $1,630 $(24)
Equity securities — available-for-sale . . . . . . . . . . $ 24 $ (7) $ 3 $ (1) $ 27 $ (8)
The unrealized losses from all securities as of December 31, 2012 were generated from approximately 1,300 positions
out of a total of 18,000 positions. The Company believes that it will collect the principal and interest due on its
investments that have an amortized cost in excess of fair value. The unrealized losses were primarily caused by interest
rate increases and not by unfavorable changes in the credit ratings associated with these securities. At each reporting
period, the Company evaluates securities for impairment when the fair value of the investment is less than its
amortized cost. The Company evaluated the underlying credit quality and credit ratings of the issuers, noting neither a
significant deterioration since purchase nor other factors leading to an other-than-temporary impairment (OTTI). As of
December 31, 2012, the Company did not have the intent to sell any of the securities in an unrealized loss position.
A portion of the Company’s investments in equity securities and venture capital funds consists of investments
held in various public and nonpublic companies concentrated in the areas of health care services and related
information technologies. Market conditions that affect the value of health care and related technology stocks
will likewise impact the value of the Company’s equity portfolio. The equity securities and venture capital funds
were evaluated for severity and duration of unrealized loss, overall market volatility and other market factors.
Net realized gains included in Investment and Other Income on the Consolidated Statements of Operations were
from the following sources:
For the Year Ended December 31,
(in millions) 2012 2011 2010
Total OTTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (6) $ (12) $ (23)
Portion of loss recognized in other comprehensive income . . . . . . . . . . . . . . . . . . — — —
Net OTTI recognized in earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) (12) (23)
Gross realized losses from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13) (11) (6)
Gross realized gains from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 136 100
Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $156 $113 $ 71
83

4. Fair Value
Certain assets and liabilities are measured at fair value in the Consolidated Financial Statements or have fair
values disclosed in the Notes to the Consolidated Financial Statements. These assets and liabilities are classified
into one of three levels of a hierarchy defined by GAAP. In instances in which the inputs used to measure fair
value fall into different levels of the fair value hierarchy, the fair value measurement is categorized in its entirety
based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s
assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment,
including the consideration of inputs specific to the asset or liability.
The fair value hierarchy is summarized as follows:
Level 1 — Quoted prices (unadjusted) for identical assets/liabilities in active markets.
Level 2 — Other observable inputs, either directly or indirectly, including:
• Quoted prices for similar assets/liabilities in active markets;
• Quoted prices for identical or similar assets/liabilities in non-active markets (e.g., few transactions,
limited information, non-current prices, high variability over time);
• Inputs other than quoted prices that are observable for the asset/liability (e.g., interest rates, yield
curves, implied volatilities, credit spreads); and
• Inputs that are corroborated by other observable market data.
Level 3 — Unobservable inputs that cannot be corroborated by observable market data.
Transfers between levels, if any, are recorded as of the beginning of the reporting period in which the transfer
occurs; there were no transfers between Levels 1, 2 or 3 of any financial assets or liabilities during 2012 or 2011.
Non-financial assets and liabilities or financial assets and liabilities that are measured at fair value on a
nonrecurring basis are subject to fair value adjustments only in certain circumstances, such as when the Company
records an impairment. There were no significant fair value adjustments for these assets and liabilities recorded
during the years ended December 31, 2012, 2011, and 2010.
The following methods and assumptions were used to estimate the fair value and determine the fair value
hierarchy classification of each class of financial instrument included in the tables below:
Cash and Cash Equivalents. The carrying value of cash and cash equivalents approximates fair value as
maturities are less than three months. Fair values of cash equivalent instruments that do not trade on a regular
basis in active markets are classified as Level 2.
Debt and Equity Securities. Fair values of debt and equity securities are based on quoted market prices, where
available. The Company obtains one price for each security primarily from a third-party pricing service (pricing
service), which generally uses quoted or other observable inputs for the determination of fair value. The pricing
service normally derives the security prices through recently reported trades for identical or similar securities,
and, if necessary, makes adjustments through the reporting date based upon available observable market
information. For securities not actively traded, the pricing service may use quoted market prices of comparable
instruments or discounted cash flow analyses, incorporating inputs that are currently observable in the markets
for similar securities. Inputs that are often used in the valuation methodologies include, but are not limited to,
benchmark yields, credit spreads, default rates, prepayment speeds and non-binding broker quotes. As the
Company is responsible for the determination of fair value, it performs quarterly analyses on the prices received
from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the
Company compares the prices received from the pricing service to a secondary pricing source, prices reported by
its custodian, its investment consultant and third-party investment advisors. Additionally, the Company compares
84

changes in the reported market values and returns to relevant market indices to test the reasonableness of the
reported prices. The Company’s internal price verification procedures and reviews of fair value methodology
documentation provided by independent pricing services have not historically resulted in adjustment in the prices
obtained from the pricing service.
Fair values of debt securities that do not trade on a regular basis in active markets but are priced using other
observable inputs are classified as Level 2.
Fair value estimates for Level 1 and Level 2 equity securities are based on quoted market prices for actively
traded equity securities and/or other market data for the same or comparable instruments and transactions in
establishing the prices.
The Company’s Level 3 equity securities are primarily investments in venture capital securities. The fair values
of Level 3 investments in venture capital portfolios are estimated using a market valuation technique that relies
heavily on management assumptions and qualitative observations. Under the market approach, the fair values of
the Company’s various venture capital investments are computed using limited quantitative and qualitative
observations of activity for similar companies in the current market. The Company’s market modeling utilizes, as
applicable, transactions for comparable companies in similar industries and having similar revenue and growth
characteristics; and similar preferences in their capital structure. Key significant unobservable inputs in the
market technique include implied earnings before interest, taxes, depreciation and amortization (EBITDA)
multiples and revenue multiples. Additionally, the fair value of certain of the Company’s venture capital
securities are based off of recent transactions in inactive markets for identical or similar securities. Significant
changes in any of these inputs could result in significantly lower or higher fair value measurements.
Throughout the procedures discussed above in relation to the Company’s processes for validating third party
pricing information, the Company validates the understanding of assumptions and inputs used in security pricing
and determines the proper classification in the hierarchy based on that understanding.
AARP Program-related Investments. AARP Program-related investments consist of debt and equity securities
held to fund costs associated with the AARP Program and are priced and classified using the same methodologies
as the Company’s debt and equity securities.
Interest Rate and Currency Swaps. Fair values of the Company’s swaps are estimated using the terms of the
swaps and publicly available information including market yield curves. Because the swaps are unique and not
actively traded but are valued using other observable inputs, the fair values are classified as Level 2.
Long-term debt. The fair value of the Company’s long-term debt is estimated and classified using the same
methodologies as the Company’s investments in debt securities.
AARP Program-related Other Liabilities. AARP Program-related other liabilities consist of liabilities that
represent the amount of net investment gains and losses related to AARP Program-related investments that
accrue to the benefit of the AARP policyholders.
85

The following table presents a summary of fair value measurements by level and carrying values for items
measured at fair value on a recurring basis in the Consolidated Balance Sheets excluding AARP related assets
and liabilities, which are presented in a separate table below:
(in millions)
Quoted Prices
in Active
Markets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Total
Fair and
Carrying
Value
December 31, 2012
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,615 $ 791 $ — $ 8,406
Debt securities — available-for-sale:
U.S. government and agency obligations . . . . . . . . . . . . . 1,752 786 — 2,538
State and municipal obligations . . . . . . . . . . . . . . . . . . . . — 6,667 — 6,667
Corporate obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 7,185 11 7,209
U.S. agency mortgage-backed securities . . . . . . . . . . . . . — 2,238 — 2,238
Non-U.S. agency mortgage-backed securities . . . . . . . . . — 568 6 574
Total debt securities — available-for-sale . . . . . . . . . . . . . . . . 1,765 17,444 17 19,226
Equity securities — available-for-sale . . . . . . . . . . . . . . . . . . . 450 3 224 677
Interest rate swap assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 14 — 14
Total assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,830 $18,252 $241 $28,323
Percentage of total assets at fair value . . . . . . . . . . . . . . . . . . . 35% 64% 1% 100%
Interest rate and currency swap liabilities . . . . . . . . . . . . . . . . $ — $ 14 $ — $ 14
December 31, 2011
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,569 $ 860 $ — $ 9,429
Debt securities — available-for-sale:
U.S. government and agency obligations . . . . . . . . . . . . . 1,551 822 — 2,373
State and municipal obligations . . . . . . . . . . . . . . . . . . . . — 6,750 15 6,765
Corporate obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 5,805 186 6,007
U.S. agency mortgage-backed securities . . . . . . . . . . . . . — 2,353 — 2,353
Non-U.S. agency mortgage-backed securities . . . . . . . . . — 497 7 504
Total debt securities — available-for-sale . . . . . . . . . . . . . . . . 1,567 16,227 208 18,002
Equity securities — available-for-sale . . . . . . . . . . . . . . . . . . . 333 2 209 544
Total assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,469 $17,089 $417 $27,975
Percentage of total assets at fair value . . . . . . . . . . . . . . . . . . . 37% 61% 2% 100%
86

The following table presents a summary of fair value measurements by level and carrying values for certain
financial instruments not measured at fair value on a recurring basis in the Consolidated Balance Sheets:
(in millions)
Quoted Prices
in Active
Markets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Total
Fair
Value
Total
Carrying
Value
December 31, 2012
Debt securities — held-to-maturity:
U.S. government and agency obligations . . . . $174 $ — $ — $ 174 $ 168
State and municipal obligations . . . . . . . . . . . . — 1 29 30 30
Corporate obligations . . . . . . . . . . . . . . . . . . . 10 346 287 643 641
Total debt securities — held-to-maturity . . . . . . . . $184 $ 347 $316 $ 847 $ 839
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $17,034 $ — $17,034 $15,167
December 31, 2011
Debt securities — held-to-maturity:
U.S. government and agency obligations . . . . $173 $ — $ — $ 173 $ 166
State and municipal obligations . . . . . . . . . . . . — 1 12 13 13
Corporate obligations . . . . . . . . . . . . . . . . . . . 9 9 — 18 18
Total debt securities — held-to-maturity . . . . . . . . $182 $ 10 $ 12 $ 204 $ 197
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $13,149 $ — $13,149 $11,638
The carrying amounts reported in the Consolidated Balance Sheets for accounts and other current receivables,
unearned revenues, commercial paper, accounts payable and accrued liabilities approximate fair value because of
their short-term nature. These assets and liabilities are not listed in the table above. A reconciliation of the
beginning and ending balances of assets measured at fair value on a recurring basis using Level 3 inputs is as
follows:
December 31, 2012 December 31, 2011 December 31, 2010
(in millions)
Debt
Securities
Equity
Securities Total
Debt
Securities
Equity
Securities Total
Debt
Securities
Equity
Securities Total
Balance at beginning of period . . . . $ 208 $209 $ 417 $141 $208 $349 $120 $ 312 $ 432
Purchases . . . . . . . . . . . . . . . . . . . . . 11 71 82 92 35 127 43 45 88
Sales . . . . . . . . . . . . . . . . . . . . . . . . — (34) (34) — (17) (17) (4) (167) (171)
Settlements . . . . . . . . . . . . . . . . . . . (1) — (1) (25) (7) (32) (20) — (20)
Net unrealized (losses) gains in
accumulated other comprehensive
income . . . . . . . . . . . . . . . . . . . . . — (14) (14) — (4) (4) — 9 9
Net realized gains (losses) in
investment and other income . . . — 13 13 — (6) (6) 2 9 11
Transfers to held-to-maturity . . . . . (201) (21) (222) — — — — — —
Balance at end of period . . . . . . . . . $ 17 $224 $ 241 $208 $209 $417 $141 $ 208 $ 349
87

The following table presents quantitative information regarding unobservable inputs that were significant to the
valuation of assets measured at fair value on a recurring basis using Level 3 inputs:
(in millions)
Fair
Value Valuation Technique Unobservable Input Low High
December 31, 2012
Equity securities — available-for-sale
Venture capital portfolios . . . . . . . . . . . . . $193 Market approach – comparable companies Revenue multiple 1.0 10.0
EBITDA multiple 8.0 10.0
31 Market approach – recent transactions Inactive market transactions N/A N/A
Total equity securities
available-for-sale . . . . . . . . . . . . . . . . . . $224
Also included in the Company’s assets measured at fair value on a recurring basis using Level 3 inputs were $17
million of available-for-sale debt securities at December 31, 2012, which were not significant.
The Company elected to measure the entirety of the AARP Assets Under Management at fair value pursuant to
the fair value option. See Note 2 for further detail on AARP. The following table presents fair value information
about the AARP Program-related financial assets and liabilities:
(in millions)
Quoted Prices
in Active
Markets
(Level 1)
Other
Observable
Inputs
(Level 2)
Total
Fair and
Carrying
Value
December 31, 2012
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $230 $ — $ 230
Debt securities:
U.S. government and agency obligations . . . . . . . . . . . . . . . . . . . 545 244 789
State and municipal obligations . . . . . . . . . . . . . . . . . . . . . . . . . . — 51 51
Corporate obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,118 1,118
U.S. agency mortgage-backed securities . . . . . . . . . . . . . . . . . . . . — 427 427
Non-U.S. agency mortgage-backed securities . . . . . . . . . . . . . . . — 155 155
Total debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545 1,995 2,540
Equity securities — available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . — 3 3
Total assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $775 $1,998 $2,773
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23 $ 58 $ 81
December 31, 2011
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $257 $ 10 $ 267
Debt securities:
U.S. government and agency obligations . . . . . . . . . . . . . . . . . . . 566 214 780
State and municipal obligations . . . . . . . . . . . . . . . . . . . . . . . . . . — 25 25
Corporate obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,048 1,048
U.S. agency mortgage-backed securities . . . . . . . . . . . . . . . . . . . . — 436 436
Non-U.S. agency mortgage-backed securities . . . . . . . . . . . . . . . — 150 150
Total debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566 1,873 2,439
Equity securities — available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . — 2 2
Total assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $823 $1,885 $2,708
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27 $ 49 $ 76
88

5. Property, Equipment and Capitalized Software
A summary of property, equipment and capitalized software is as follows:
(in millions)
December 31,
2012
December 31,
2011
Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 358 $ 45
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,910 1,052
Computer equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,447 1,345
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488 274
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,542) (1,424)
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,661 1,292
Capitalized software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,300 2,239
Less accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,022) (1,016)
Capitalized software, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,278 1,223
Total property, equipment and capitalized software, net . . . . . . . . . . . . . . . . . . . . . . . . $ 3,939 $ 2,515
Depreciation expense for property and equipment for 2012, 2011 and 2010 was $449 million, $386 million and
$398 million, respectively. Amortization expense for capitalized software for 2012, 2011 and 2010 was $412
million, $377 million and $349 million, respectively.
6. Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill, by reportable segment, were as follows:
(in millions) UnitedHealthcare OptumHealth OptumInsight OptumRx Consolidated
Balance at January 1, 2011 . . . . . . . . . . . . . . . . . $17,837 $ 760 $3,308 $840 $22,745
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 1,353 — — 1,454
Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) — (214) — (216)
Adjustments, net . . . . . . . . . . . . . . . . . . . . . . . . . (4) — (4) — (8)
Balance at December 31, 2011 . . . . . . . . . . . . . . 17,932 2,113 3,090 840 23,975
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,557 705 98 — 7,360
Adjustments and foreign currency effects, net . . . (30) — (19) — (49)
Balance at December 31, 2012 . . . . . . . . . . . . . . $24,459 $2,818 $3,169 $840 $31,286
In October 2012, the Company purchased approximately 60% of the outstanding shares of Amil for
approximately $3.2 billion in a private transaction. Later in the fourth quarter of 2012, the Company purchased
an additional 17.8 million shares of Amil for $0.3 billion, bringing the stake in Amil attributable to the Company
to approximately 65% of Amil’s outstanding shares. Amil is a health care company located in Brazil, providing
health and dental benefits, hospital and clinical services, and advanced care management resources to more than
5 million people. The total consideration paid and fair value of the noncontrolling interest exceeded the estimated
fair value of the net tangible assets acquired by $5.9 billion, of which $1.0 billion has been allocated to finite-
lived intangible assets, $0.6 billion to indefinite-lived intangible assets and $4.3 billion to goodwill. To estimate
the acquisition date fair value of the noncontrolling interest of $2.2 billion, the Company utilized the public share
price as of the date of acquisition. Contingent liabilities were measured based on the probable amount that could
be reasonably estimated. The results of operations and financial condition of Amil have been included in the
Company’s consolidated results and the results of the UnitedHealthcare reportable segment since the acquisition
date. The pro-forma effects of this acquisition on the Company’s results of operations were not material. In
conjunction with the 2012 purchases, the Company generated Brazilian tax deductible goodwill of approximately
$2.7 billion.
89

Because of the acquisition of a controlling interest in Amil, the Company is required by Brazilian law to
commence a mandatory tender offer for the remaining publicly traded shares. The Company expects to acquire
an additional 25% ownership interest during the first half of 2013 through this tender offer. The tender offer price
will be at the same price paid to Amil’s controlling shareholders, adjusted for statutory interest under Brazilian
law from the date of payment to the controlling shareholders to the date of payment to the tendering minority
shareholders. The remaining 10% stake in Amil is held by shareholders, including Amil’s CEO, who has been a
member of the Company’s Board of Directors since October 2012, who have committed to retain the shares for at
least five years. They have the right to put the shares to the Company and the Company has the right to call these
shares upon expiration of the five year term, unless accelerated upon certain events, at fair market value. Related
to this acquisition, Amil’s CEO invested approximately $470 million in unregistered UnitedHealth Group
common shares in the fourth quarter of 2012 and has committed to hold those shares for the same five year term,
subject to certain exceptions.
Acquired net tangible assets and liabilities for Amil at acquisition date were:
(in millions)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 240
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Accounts receivable and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
Property, equipment and other long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,266
Medical costs payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 586
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 638
Contingent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270
Long-term debt and other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569
Since the Amil acquisition occurred in the fourth quarter, the purchase price allocation is subject to adjustment as
valuation analyses, primarily related to intangible and fixed assets and contingent and tax liabilities, are finalized.
For the years ended December 31, 2012, 2011 and 2010, aggregate consideration paid, net of cash assumed, for
acquisitions excluding Amil was $3.3 billion, $1.8 billion and $2.3 billion, respectively. These acquisitions were
not material to the Company’s Consolidated Financial Statements.
The gross carrying value, accumulated amortization and net carrying value of other intangible assets were as
follows:
December 31, 2012 December 31, 2011
(in millions)
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Customer-related . . . . . . . . . . . . . . . . . . . . . $5,229 $(1,629) $3,600 $3,766 $(1,310) $2,456
Trademarks and technology . . . . . . . . . . . . . 445 (146) 299 368 (98) 270
Trademarks — indefinite-lived . . . . . . . . . . 611 — 611 — — —
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 (49) 172 112 (43) 69
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,506 $(1,824) $4,682 $4,246 $(1,451) $2,795
90

The acquisition date fair values and weighted-average useful lives assigned to finite-lived intangible assets
acquired in business combinations consisted of the following by year of acquisition:
2012 2011
(in millions, except years)
Fair
Value
Weighted-
Average
Useful Life
Fair
Value
Weighted-
Average
Useful Life
Customer-related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,530 8 years $187 9 years
Trademarks and technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 4 years 49 5 years
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 15 years 5 15 years
Total acquired finite-lived intangible assets . . . . . . . . . . . . . . . . . . . . . . . $1,720 9 years $241 9 years
Estimated full year amortization expense relating to intangible assets for each of the next five years ending
December 31 is as follows:
(in millions)
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $545
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456
Amortization expense relating to intangible assets for 2012, 2011 and 2010 was $448 million, $361 million and
$317 million, respectively.
7. Medical Costs and Medical Costs Payable
The following table provides details of the Company’s favorable medical reserve development:
For the Years Ended December 31,
(in millions) 2012 2011 2010
Related to Prior Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $860 $720 $800
The favorable development for 2012, 2011 and 2010 was driven by lower than expected health system utilization
levels and increased efficiency in claims handling and processing. The favorable development for 2010 was also
impacted by a reduction in reserves needed for disputed claims from care providers; and favorable resolution of
certain state-based assessments.
The following table shows the components of the change in medical costs payable for the years ended
December 31:
(in millions) 2012 2011 2010
Medical costs payable, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,799 $ 9,220 $ 9,362
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,029 155 —
Reported medical costs:
Current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,086 75,052 69,641
Prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (860) (720) (800)
Total reported medical costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,226 74,332 68,841
Claim payments:
Payments for current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (71,832) (65,763) (60,949)
Payments for prior year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,218) (8,145) (8,034)
Total claim payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (80,050) (73,908) (68,983)
Medical costs payable, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,004 $ 9,799 $ 9,220
91

8. Commercial Paper and Long-Term Debt
Commercial paper and long-term debt consisted of the following:
December 31, 2012 December 31, 2011
(in millions, except percentages)
Par
Value
Carrying
Value
Fair
Value
Par
Value
Carrying
Value
Fair
Value
Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,587 $ 1,587 $ 1,587 $ — $ — $ —
5.500% senior unsecured notes due November 2012 . . . . . — — — 352 363 366
4.875% senior unsecured notes due February 2013 . . . . . . 534 534 536 534 540 556
4.875% senior unsecured notes due April 2013 . . . . . . . . . 409 411 413 409 421 427
4.750% senior unsecured notes due February 2014 . . . . . . 172 178 180 172 184 185
5.000% senior unsecured notes due August 2014 . . . . . . . . 389 411 414 389 423 424
4.875% senior unsecured notes due March 2015 (a) . . . . . . 416 444 453 416 458 460
0.850% senior unsecured notes due October 2015 (a) . . . . 625 623 627 — — —
5.375% senior unsecured notes due March 2016 . . . . . . . . 601 660 682 601 678 689
1.875% senior unsecured notes due November 2016 . . . . . 400 397 412 400 397 400
5.360% senior unsecured notes due November 2016 . . . . . 95 95 110 95 95 110
6.000% senior unsecured notes due June 2017 . . . . . . . . . . 441 489 528 441 499 518
1.400% senior unsecured notes due October 2017 (a) . . . . 625 622 626 — — —
6.000% senior unsecured notes due November 2017 . . . . . 156 170 191 156 173 183
6.000% senior unsecured notes due February 2018 . . . . . . 1,100 1,120 1,339 1,100 1,123 1,308
3.875% senior unsecured notes due October 2020 . . . . . . . 450 442 499 450 442 478
4.700% senior unsecured notes due February 2021 . . . . . . 400 417 466 400 419 450
3.375% senior unsecured notes due November 2021 (a) . . 500 512 533 500 497 517
2.875% senior unsecured notes due March 2022 . . . . . . . . 1,100 998 1,128 — — —
0.000% senior unsecured notes due November 2022 . . . . . 15 9 11 1,095 619 696
2.750% senior unsecured notes due February 2023 (a) . . . . 625 619 631 — — —
5.800% senior unsecured notes due March 2036 . . . . . . . . 850 845 1,025 850 844 1,017
6.500% senior unsecured notes due June 2037 . . . . . . . . . . 500 495 659 500 495 636
6.625% senior unsecured notes due November 2037 . . . . . 650 645 860 650 645 834
6.875% senior unsecured notes due February 2038 . . . . . . 1,100 1,084 1,510 1,100 1,084 1,475
5.700% senior unsecured notes due October 2040 . . . . . . . 300 298 364 300 298 359
5.950% senior unsecured notes due February 2041 . . . . . . 350 348 440 350 348 430
4.625% senior unsecured notes due November 2041 . . . . . 600 593 641 600 593 631
4.375% senior unsecured notes due March 2042 . . . . . . . . 502 486 521 — — —
3.950% senior unsecured notes due October 2042 . . . . . . . 625 611 622 — — —
Total U.S. Dollar denominated debt . . . . . . . . . . . . . . . . . . 16,117 16,143 18,008 11,860 11,638 13,149
Cetip Interbank Deposit Rate (CDI) + 1.3% Subsidiary
floating debt due October 2013 . . . . . . . . . . . . . . . . . . . . 147 148 150 — — —
CDI + 1.45 % Subsidiary floating debt due October 2014 . . . 147 149 150 — — —
110% CDI Subsidiary floating debt due December 2014 . . . . 147 151 147 — — —
CDI + 1.6% Subsidiary floating debt due October 2015 . . . 74 76 76 — — —
Brazilian Extended National Consumer Price Index (IPCA) +
7.61% Subsidiary floating debt due October 2015 . . . . . . . 73 87 90 — — —
Total Brazilian Real denominated debt (in U.S. Dollars) . . 588 611 613 — — —
Total commercial paper and long-term debt . . . . . . . . . . . . $16,705 $16,754 $18,621 $11,860 $11,638 $13,149
(a) In 2012, the Company entered into interest rate swap contracts with a notional amount of $2.8 billion
hedging these fixed-rate debt instruments. See below for more information on the Company’s interest rate
swaps.
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Maturities of commercial paper and long-term debt for the years ending December 31 are as follows:
(in millions)
2013 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,713
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 920
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,175
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,152
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,281
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,513
(a) Includes $33 million of debt subject to acceleration clauses.
Long-Term Debt
In August 2012, the Company completed an exchange of $1.1 billion of its zero coupon senior unsecured notes
due November of 2022 for $0.5 billion additional issuance of its 2.875% notes due in March 2022, $0.1 billion
additional issuance of its 4.375% notes due March 2042 and $0.1 billion in cash.
Commercial Paper and Bank Credit Facilities
Commercial paper consists of short-duration, senior unsecured debt privately placed on a discount basis through
broker-dealers. As of December 31, 2012, the Company’s outstanding commercial paper had a weighted-average
annual interest rate of 0.3%.
The Company has $3.0 billion five-year and $1.0 billion 364-day revolving bank credit facility with 21 banks,
which mature in November 2017 and November 2013, respectively. These facilities provide liquidity support for
the Company’s $4.0 billion commercial paper program and are available for general corporate purposes. There
were no amounts outstanding under these facilities as of December 31, 2012. The interest rates on borrowings are
variable based on term and are calculated based on the London Interbank Offered Rate (LIBOR) plus a credit
spread based on the Company’s senior unsecured credit ratings. As of December 31, 2012, the annual interest
rates on both of the credit facilities, had they been drawn, would have ranged from 1.0% to 1.3%.
Debt Covenants
The Company’s bank credit facilities contain various covenants including requiring the Company to maintain a
debt to debt-plus-equity ratio not more than 50%. The Company was in compliance with its debt covenants as of
December 31, 2012.
Interest Rate and Currency Swap Contracts
In 2012, the Company entered into interest rate swap contracts to convert a portion of its interest rate exposure
from fixed rates to floating rates to more closely align interest expense with interest income received on its cash
equivalent and variable rate investment balances. The floating rates are benchmarked to LIBOR. The swaps are
designated as fair value hedges on the Company’s fixed-rate debt. Since the critical terms of the swaps match
those of the debt being hedged, they are assumed to be highly effective hedges and all changes in fair value of the
swaps are recorded as an adjustment to the carrying value of the related debt with no net impact recorded in the
Consolidated Statements of Operations. Both the hedge fair value changes and the offsetting debt adjustments are
recorded in Interest Expense on the Consolidated Statements of Operations. The net fair value of these swaps was
$3 million at December 31, 2012 and is recorded in Other Long-Term Assets for $14 million and Other Long-
Term Liabilities for $11 million in the Consolidated Balance Sheets.
In December 2012, the Company entered into currency swap contracts to hedge the foreign currency exposure on
the principal amount of intercompany borrowings denominated in Brazilian Real. The currency swaps have a
93

notional amount of $256 million and mature on December 31, 2013. As of December 31, 2012, the fair value of
the currency swap liability was $3 million, which was recorded in Other Current Liabilities in the Company’s
Consolidated Balance Sheets.
9. Income Taxes
The components of the provision for income taxes for the years ended December 31 are as follows:
(in millions) 2012 2011 2010
Current Provision:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,638 $2,608 $2,524
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 150 180
Total current provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,788 2,758 2,704
Deferred provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308 59 45
Total provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,096 $2,817 $2,749
The reconciliation of the tax provision at the U.S. Federal Statutory Rate to the provision for income taxes for the
years ended December 31 is as follows:
(in millions, except percentages) 2012 2011 2010
Tax provision at the U.S. federal statutory rate . . . . . . . . . . . . $3,018 35.0% $2,785 35.0% $2,584 35.0%
State income taxes, net of federal benefit . . . . . . . . . . . . . . . . . 143 1.7 136 1.7 129 1.7
Settlement of state exams, net of federal benefit . . . . . . . . . . . 2 — (29) (0.4) (3) —
Tax-exempt investment income . . . . . . . . . . . . . . . . . . . . . . . . (59) (0.7) (63) (0.8) (65) (0.9)
Non-deductible compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 22 0.2 10 0.1 64 0.9
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30) (0.3) (22) (0.2) 40 0.5
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,096 35.9% $2,817 35.4% $2,749 37.2%
The higher effective income tax rate for 2012 as compared to 2011 resulted from the favorable resolution of
various tax matters in 2011. The 2010 effective income tax rates were at higher levels due to the cumulative
implementation of changes under the Health Reform Legislation.
94

The components of deferred income tax assets and liabilities as of December 31 are as follows:
(in millions) 2012 2011
Deferred income tax assets:
Accrued expenses and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 306 $ 259
U.S. Federal and State net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . 276 247
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238 417
Long term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 155
Medical costs payable and other policy liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 166
Non-U.S. tax loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 —
Unearned revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 56
Unrecognized tax benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 44
Domestic other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 192
Foreign other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 —
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,579 1,536
Less: valuation allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (271) (184)
Total deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,308 1,352
Deferred income tax liabilities:
U.S. Federal and State intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,335) (1,148)
Non-U.S. goodwill and intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (640) —
Capitalized software development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (482) (465)
Net unrealized gains on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (296) (275)
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (249) (256)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (113) (86)
Foreign other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (179) —
Total deferred income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,294) (2,230)
Net deferred income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,986) $ (878)
Valuation allowances are provided when it is considered more likely than not that deferred tax assets will not be
realized. The valuation allowances primarily relate to future tax benefits on certain federal, state and non-U.S. net
operating loss carryforwards. Federal net operating loss carryforwards of $105 million expire beginning in 2019
through 2032, state net operating loss carryforwards expire beginning in 2013 through 2032. Substantially all of
the non-U.S. tax loss carryforwards have indefinite carryforward periods.
As of December 31, 2012 the Company had $94 million of undistributed earnings from non-U.S. subsidiaries that
are intended to be reinvested in non-U.S. operations. Because these earnings are considered permanently
reinvested, no U.S. tax provision has been accrued related to the repatriation of these earnings. It is not
practicable to estimate the amount of U.S. tax that might be payable on the eventual remittance of such earnings.
95

A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 31 is as
follows:
(in millions) 2012 2011 2010
Gross unrecognized tax benefits, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $129 $220 $220
Gross increases:
Current year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 11 13
Prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 10 30
Gross decreases:
Prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48) (34) —
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10) (25) —
Statute of limitations lapses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14) (53) (43)
Gross unrecognized tax benefits, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 81 $129 $220
The Company classifies interest and penalties associated with uncertain income tax positions as income taxes
within its Consolidated Financial Statements. The Company recognized tax benefits from the net reduction of
interest and penalties accrued of $20 million and $12 million during the years ended December 31, 2012 and
2011, respectively. During the year ended December 31, 2010, the Company recognized $15 million of interest
expense and penalties. The Company had $23 million and $41 million of accrued interest and penalties for
uncertain tax positions as of December 31, 2012 and 2011, respectively. These amounts are not included in the
reconciliation above. As of December 31, 2012, the total amount of unrecognized tax benefits that, if recognized,
would affect the effective tax rate, was $77 million.
The Company currently files income tax returns in the U.S., various states and foreign jurisdictions. The U.S.
Internal Revenue Service (IRS) has completed exams on the consolidated income tax returns for fiscal years
2011 and prior. The Company’s 2012 tax year is under advance review by the IRS under its Compliance
Assurance Program. With the exception of a few states, the Company is no longer subject to income tax
examinations prior to 2007. The Brazilian federal revenue service — Secretaria da Receita Federal (SRF) may
audit the Company’s Brazilian subsidiaries for a period of five years from the date on which corporate income
taxes should have been paid and/or the date when the tax return was filed. Estimated taxes are paid monthly or
quarterly with an annual return due on June 30 following the end of the taxable year.
The Company believes it is reasonably possible that its liability for unrecognized tax benefits will decrease in the
next twelve months by $37 million as a result of audit settlements and the expiration of statutes of limitations in
certain major jurisdictions.
10. Shareholders’ Equity
Regulatory Capital and Dividend Restrictions
The Company’s regulated subsidiaries are subject to regulations and standards in their respective jurisdictions.
These standards, among other things, require these subsidiaries to maintain specified levels of statutory capital,
as defined by each jurisdiction, and restrict the timing and amount of dividends and other distributions that may
be paid to their parent companies. In the United States, most of these regulations and standards are generally
consistent with model regulations established by the National Association of Insurance Commissioners. Except
in the case of extraordinary dividends, these standards generally permit dividends to be paid from statutory
unassigned surplus of the regulated subsidiary and are limited based on the regulated subsidiary’s level of
statutory net income and statutory capital and surplus. These dividends are referred to as “ordinary dividends”
and generally can be paid without prior regulatory approval. If the dividend, together with other dividends paid
within the preceding twelve months, exceeds a specified statutory limit or is paid from sources other than earned
surplus, it is generally considered an “extraordinary dividend” and must receive prior regulatory approval. In
96

2012, based on the 2011 statutory net income and statutory capital and surplus levels, the maximum amount of
ordinary dividends that could have been paid by the Company’s U.S. regulated subsidiaries to their parent
companies was $4.6 billion.
For the year ended December 31, 2012, the Company’s regulated subsidiaries paid their parent companies
dividends of $4.9 billion, including $1.2 billion of extraordinary dividends. For the year ended December 31,
2011, the Company’s regulated subsidiaries paid their parent companies dividends of $4.5 billion, including
$1.1 billion of extraordinary dividends. As of December 31, 2012, $1.1 billion of the Company’s $8.4 billion of
cash and cash equivalents was held by non-regulated entities.
The Company’s regulated subsidiaries had estimated aggregate statutory capital and surplus of approximately
$13 billion as of December 31, 2012; regulated entity statutory capital exceeded aggregate minimum capital
requirements.
Optum Bank must meet minimum requirements for Tier 1 leverage capital, Tier 1 risk-based capital, and Total
risk-based capital of the Federal Deposit Insurance Corporation (FDIC) to be considered “Well Capitalized”
under the capital adequacy rules to which it is subject. At December 31, 2012, the Company believes that Optum
Bank met the FDIC requirements to be considered “Well Capitalized.”
Share Repurchase Program
Under its Board of Directors’ authorization, the Company maintains a share repurchase program. The objectives
of the share repurchase program are to optimize the Company’s capital structure and cost of capital, thereby
improving returns to shareholders, as well as to offset the dilutive impact of share-based awards. Repurchases
may be made from time to time in open market purchases or other types of transactions (including prepaid or
structured share repurchase programs), subject to certain Board restrictions. In June 2012, the Board renewed and
expanded the Company’s share repurchase program with an authorization to repurchase up to 110 million shares
of its common stock. During the year ended December 31, 2012, the Company repurchased 57 million shares at
an average price of $54.45 per share and an aggregate cost of $3.1 billion. As of December 31, 2012, the
Company had Board authorization to purchase up to an additional 85 million shares of its common stock.
Dividends
In June 2012, the Company’s Board of Directors increased the Company’s cash dividend to shareholders to an
annual dividend rate of $0.85 per share, paid quarterly. Since May 2011, the Company had paid an annual
dividend of $0.65 per share, paid quarterly. Declaration and payment of future quarterly dividends is at the
discretion of the Board and may be adjusted as business needs or market conditions change.
The following table provides details of the Company’s dividend payments:
Payment Date
Amount
per Share Total Amount Paid
(in millions)
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.4050 $449
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6125 651
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8000 820
11. Share-Based Compensation
The Company’s outstanding share-based awards consist mainly of non-qualified stock options, SARs and
restricted shares. As of December 31, 2012, the Company had 43 million shares available for future grants of
share-based awards under its share-based compensation plan, including, but not limited to, incentive or non-
qualified stock options, SARs and up to 16 million of awards in restricted shares. As of December 31, 2012, there
were also 20 million shares of common stock available for issuance under the ESPP.
97

Stock Options and SARs
Stock option and SAR activity for the year ended December 31, 2012 is summarized in the table below:
Shares
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual Life
Aggregate
Intrinsic Value
(in millions) (in years) (in millions)
Outstanding at beginning of period . . . . . . . . . . . . . . . . . . 91 $42
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 55
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29) 36
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) 43
Outstanding at end of period . . . . . . . . . . . . . . . . . . . . . . . 63 45 4.0 $625
Exercisable at end of period . . . . . . . . . . . . . . . . . . . . . . . 53 46 3.5 460
Vested and expected to vest, end of period . . . . . . . . . . . . 62 45 4.0 622
Restricted Shares
Restricted share activity for the year ended December 31, 2012 is summarized in the table below:
(shares in millions) Shares
Weighted-Average
Grant Date
Fair Value
per Share
Nonvested at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 $36
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 52
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14) 37
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) 44
Nonvested at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 46
Other Share-Based Compensation Data
(in millions, except per share amounts)
For the Years Ended
December 31,
2012 2011 2010
Stock Options and SARs
Weighted-average grant date fair value of shares granted, per share . . . . . . . . . . . . . . . . . . . $ 18 $ 15 $ 13
Total intrinsic value of stock options and SARs exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . 559 327 164
Restricted Shares
Weighted-average grant date fair value of shares granted, per share . . . . . . . . . . . . . . . . . . . 52 42 32
Total fair value of restricted shares vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 716 113 99
Employee Stock Purchase Plan
Number of shares purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3 4
Share-Based Compensation Items
Share-based compensation expense, before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $421 $401 $326
Share-based compensation expense, net of tax effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299 260 278
Income tax benefit realized from share-based award exercises . . . . . . . . . . . . . . . . . . . . . . . 461 170 78
(in millions, except years) December 31, 2012
Unrecognized compensation expense related to share awards . . . . . . . . . . . . . . . . . . . . . . . . . . . $307
Weighted-average years to recognize compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
98

Share-Based Compensation Recognition and Estimates
The principal assumptions the Company used in calculating grant-date fair value for stock options and SARs
were as follows:
2012 2011 2010
Risk free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7% – 0.9% 0.9% – 2.3% 1.0% – 2.1%
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.2% – 44.0% 44.3% – 45.1% 45.4% – 46.2%
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2% – 1.7% 1.0% -1.4% 0.1% -1.7%
Forfeiture rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0% 5.0% 5.0%
Expected life in years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 – 5.6 4.9 -5.0 4.6 -5.1
Risk-free interest rates are based on U.S. Treasury yields in effect at the time of grant. Expected volatilities are
based on the historical volatility of the Company’s common stock and the implied volatility from exchange-
traded options on the Company’s common stock. Expected dividend yields are based on the per share cash
dividend paid by the Company’s Board of Directors. The Company uses historical data to estimate option and
SAR exercises and forfeitures within the valuation model. The expected lives of options and SARs granted
represents the period of time that the awards granted are expected to be outstanding based on historical exercise
patterns.
Other Employee Benefit Plans
The Company also offers a 401(k) plan for all employees. Compensation expense related to this plan was not
material for the years 2012, 2011 and 2010.
In addition, the Company maintains non-qualified, unfunded deferred compensation plans, which allow certain
members of senior management and executives to defer portions of their salary or bonus and receive certain
Company contributions on such deferrals, subject to plan limitations. The deferrals are recorded within Long-
Term Investments with an approximately equal amount in Other Liabilities in the Consolidated Balance Sheets.
The total deferrals are distributable based upon termination of employment or other periods, as elected under
each plan and were $348 million and $281 million as of December 31, 2012 and 2011, respectively.
12. Commitments and Contingencies
The Company leases facilities and equipment under long-term operating leases that are non-cancelable and
expire on various dates through 2028. Rent expense under all operating leases for 2012, 2011 and 2010 was $334
million, $295 million and $297 million, respectively.
As of December 31, 2012, future minimum annual lease payments, net of sublease income, under all non-
cancelable operating leases were as follows:
(in millions)
Future Minimum
Lease Payments
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $380
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556
The Company provides guarantees related to its service level under certain contracts. If minimum standards are
not met, the Company may be financially at risk up to a stated percentage of the contracted fee or a stated dollar
99

amount. None of the amounts accrued, paid or charged to income for service level guarantees were material as of
or for the years ended December 31, 2012, 2011 and 2010.
As of December 31, 2012, the Company had outstanding, undrawn letters of credit with financial institutions of
$45 million and surety bonds outstanding with insurance companies of $432 million, primarily to bond
contractual performance.
Legal Matters
Because of the nature of its businesses, the Company is frequently made party to a variety of legal actions and
regulatory inquiries, including class actions and suits brought by members, care providers, customers and
regulators, relating to the Company’s businesses, including management and administration of health benefit
plans and other services. These matters include medical malpractice, employment, intellectual property, antitrust,
privacy and contract claims, and claims related to health care benefits coverage and other business practices.
The Company records liabilities for its estimates of probable costs resulting from these matters where
appropriate. Estimates of costs resulting from legal and regulatory matters involving the Company are inherently
difficult to predict, particularly where the matters: involve indeterminate claims for monetary damages or may
involve fines, penalties or punitive damages; present novel legal theories or represent a shift in regulatory policy;
involve a large number of claimants or regulatory bodies; are in the early stages of the proceedings; or could
result in a change in business practices. Accordingly, the Company is often unable to estimate the losses or
ranges of losses for those matters where there is a reasonable possibility or it is probable that a loss may be
incurred.
Litigation Matters
Out-of-Network Reimbursement Litigation. The Company is involved in a number of lawsuits challenging
reimbursement amounts for non-network health care services based on the Company’s use of a database
previously maintained by Ingenix, Inc. (now known as OptumInsight), including putative class actions and
multidistrict litigation brought on behalf of members of Aetna and WellPoint. These suits allege, among other
things, that the database licensed to these companies by Ingenix was flawed and that Ingenix conspired with
these companies to underpay their members’ claims and seek unspecified damages and treble damages,
injunctive and declaratory relief, interest, costs and attorneys’ fees. The Company is vigorously defending these
suits. In 2012, the Company was dismissed as a party from a similar lawsuit involving Cigna and its members.
The Company cannot reasonably estimate the range of loss, if any, that may result from these matters due to the
procedural status of the cases, dispositive motions that remain pending, the absence of class certification in any
of the cases, the lack of a formal demand on the Company by the plaintiffs, and the involvement of other
insurance companies as defendants.
California Claims Processing Matter. On January 25, 2008, the California Department of Insurance (CDI)
issued an Order to Show Cause to PacifiCare Life and Health Insurance Company, a subsidiary of the Company,
alleging violations of certain insurance statutes and regulations related to an alleged failure to include certain
language in standard claims correspondence, timeliness and accuracy of claims processing, interest payments,
care provider contract implementation, care provider dispute resolution and other related matters. The matter has
been the subject of an administrative hearing before a California administrative law judge since December 2009.
Although the Company believes that CDI has never issued a penalty in excess of $8 million, CDI is seeking a
penalty of approximately $325 million in this matter. The Company is vigorously defending against the claims in
this matter and believes that the penalty requested by CDI is excessive and without merit. After the
administrative law judge issues a ruling at the conclusion of the administrative proceeding, expected in early
2013, the California Insurance Commissioner may accept, reject or modify the administrative law judge’s ruling,
issue his own decision, and impose a fine or penalty. The Commissioner’s decision is subject to challenge in
court. The Company cannot reasonably estimate the range of loss, if any, that may result from this matter given
100

the procedural status of the dispute, the novel legal issues presented (including the legal basis for the majority of
the alleged violations), the inherent difficulty in predicting regulatory fines and penalties, and the various
remedies and levels of judicial review available to the Company in the event a fine or penalty is assessed.
Government Investigations, Audits and Reviews
The Company has been and is currently involved in various governmental investigations, audits and reviews.
These include routine, regular and special investigations, audits and reviews by CMS, state insurance and health
and welfare departments, state attorneys general, the Office of the Inspector General (OIG), the Office of
Personnel Management, the Office of Civil Rights, the Federal Trade Commission (FTC), U.S. Congressional
committees, the U.S. Department of Justice (DOJ), U.S. Attorneys, the Securities and Exchange Commission
(SEC), the Brazilian securities regulator — Comissão de Valores Mobiliários (CVM), IRS, SRF, the U.S.
Department of Labor (DOL), the FDIC and other governmental authorities. Certain of the Company’s businesses
have been reviewed or are currently under review, including for, among other things, compliance with coding
and other requirements under the Medicare risk-adjustment model.
In February 2012, CMS announced a final RADV audit and payment adjustment methodology and that it will
conduct RADV audits beginning with the 2011 payment year. These audits involve a review of medical records
maintained by care providers and may result in retrospective adjustments to payments made to health plans. CMS
has not communicated how the final payment adjustment under its methodology will be implemented.
Government actions can result in assessment of damages, civil or criminal fines or penalties, or other sanctions,
including loss of licensure or exclusion from participation in government programs and could have a material
effect on the Company’s results of operations, financial position and cash flows.
13. Segment Financial Information
Factors used to determine the Company’s reportable segments include the nature of operating activities,
economic characteristics, existence of separate senior management teams and the type of information presented
to the Company’s chief operating decision maker to evaluate its results of operations. Reportable segments with
similar economic characteristics are combined.
The following is a description of the types of products and services from which each of the Company’s four
reportable segments derives its revenues:
• UnitedHealthcare includes the combined results of operations of UnitedHealthcare Employer & Individual,
UnitedHealthcare Medicare & Retirement, UnitedHealthcare Community & State and UnitedHealthcare
International because they have similar economic characteristics, products and services, customers,
distribution methods and operational processes and operate in a similar regulatory environment. The U.S.
businesses also share significant common assets, including a contracted network of physicians, health care
professionals, hospitals and other facilities, information technology infrastructure and other resources.
UnitedHealthcare Employer & Individual offers an array of consumer-oriented health benefit plans and
services for large national employers, public sector employers, mid-sized employers, small businesses and
individuals nationwide and will serve TRICARE West Region members beginning April 1, 2013.
UnitedHealthcare Medicare & Retirement provides health care coverage and health and well-being services
to individuals age 50 and older, addressing their unique needs for preventive and acute health care services
as well as services dealing with chronic disease and other specialized issues for older individuals.
UnitedHealthcare Community & State provides health plans and care programs to beneficiaries of acute and
long-term care Medicaid plans, the Children’s Health Insurance Program (CHIP), Special Needs Plans,
Medicare-Medicaid Eligible beneficiaries eligible for both Medicare and Medicaid and other federal, state
and community health care programs. UnitedHealthcare International is a diversified global health services
business with a variety of offerings, including international commercial health and dental benefits.
101

• OptumHealth serves the physical, emotional and financial needs of individuals, enabling consumer health
management and integrated care delivery through programs offered by employers, payers, government
entities and directly with the care delivery system. OptumHealth offers access to networks of care provider
specialists, health management services, integrated care delivery services, consumer relationship
management and sales distribution platform services and financial services.
• OptumInsight is a health care information, technology, operational services and consulting company
providing software and information products, advisory consulting services, and business process
outsourcing services and support to participants in the health care industry. Hospitals, physicians,
commercial health plans, government agencies, life sciences companies and other organizations that
comprise the health care system work with OptumInsight to reduce costs, meet compliance mandates,
improve clinical performance and adapt to the changing health system landscape.
• OptumRx offers a multitude of pharmacy benefit management services and programs including claims
processing, retail network contracting, rebate contracting and management, clinical programs, such as step
therapy, formulary management and disease/drug therapy management programs to achieve a low-cost,
high-quality pharmacy benefit. OptumRx also provides patient support programs and dispensing of
prescribed medications, including specialty medications, through its mail order pharmacies for its clients’
members.
The Company’s accounting policies for reportable segment operations are consistent with those described in the
Summary of Significant Accounting Policies (see Note 2). Transactions between reportable segments principally
consist of sales of pharmacy benefit products and services to UnitedHealthcare customers by OptumRx, certain
product offerings and care management and integrated care delivery services sold to UnitedHealthcare by
OptumHealth, and health information and technology solutions, consulting and other services sold to
UnitedHealthcare by OptumInsight. These transactions are recorded at management’s estimate of fair value.
Intersegment transactions are eliminated in consolidation. Assets and liabilities that are jointly used are assigned
to each reportable segment using estimates of pro-rata usage. Cash and investments are assigned such that each
reportable segment has working capital and/or at least minimum specified levels of regulatory capital.
As a percentage of the Company’s total consolidated revenues, premium revenues from CMS were 29% for the
year ended December 31, 2012, 28% for year ended December 31, 2011, and 27% for the year ended
December 31, 2010, most of which were generated by UnitedHealthcare Medicare & Retirement and included in
the UnitedHealthcare segment. U.S. customer revenue represented approximately 99% of consolidated total
revenues during 2012. Long-lived fixed assets located in the U.S. represented approximately 70% of the total
long-lived fixed assets as of December 31, 2012.
102

Corporate and intersegment elimination amounts are presented to reconcile the reportable segment results to the consolidated
results. The following table presents the reportable segment financial information:
Optum
(in millions) UnitedHealthcare OptumHealth OptumInsight OptumRx Total Optum
Corporate and
Intersegment
Eliminations Consolidated
2012
Revenues — external customers:
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . $ 97,985 $ 1,743 $ — $ — $ 1,743 $ — $ 99,728
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,867 767 1,720 83 2,570 — 7,437
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . — 21 87 2,665 2,773 — 2,773
Total revenues — external customers . . . . . . . . 102,852 2,531 1,807 2,748 7,086 — 109,938
Total revenues — intersegment . . . . . . . . . . . . . — 5,503 1,075 15,611 22,189 (22,189) —
Investment and other income . . . . . . . . . . . . . . . 567 113 — — 113 — 680
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $103,419 $ 8,147 $ 2,882 $18,359 $ 29,388 $(22,189) $110,618
Earnings from operations . . . . . . . . . . . . . . . . . . $ 7,815 $ 561 $ 485 $ 393 $ 1,439 $ — $ 9,254
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — (632) (632)
Earnings before income taxes . . . . . . . . . . . . . . $ 7,815 $ 561 $ 485 $ 393 $ 1,439 $ (632) $ 8,622
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63,591 $ 8,274 $ 5,463 $ 3,466 $ 17,203 $ 91 $ 80,885
Purchases of property, equipment and
capitalized software . . . . . . . . . . . . . . . . . . . . $ 585 $ 184 $ 165 $ 136 $ 485 $ — $ 1,070
Depreciation and amortization . . . . . . . . . . . . . . $ 794 $ 193 $ 210 $ 112 $ 515 $ — $ 1,309
2011
Revenues — external customers:
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . $ 90,487 $ 1,496 $ — $ — $ 1,496 $ — $ 91,983
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,291 628 1,616 78 2,322 — 6,613
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . — 24 96 2,492 2,612 — 2,612
Total revenues — external customers . . . . . . . . 94,778 2,148 1,712 2,570 6,430 — 101,208
Total revenues — intersegment . . . . . . . . . . . . . — 4,461 958 16,708 22,127 (22,127) —
Investment and other income . . . . . . . . . . . . . . . 558 95 1 — 96 — 654
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95,336 $ 6,704 $ 2,671 $19,278 $ 28,653 $(22,127) $101,862
Earnings from operations . . . . . . . . . . . . . . . . . . $ 7,203 $ 423 $ 381 $ 457 $ 1,261 $ — $ 8,464
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — (505) (505)
Earnings before income taxes . . . . . . . . . . . . . . $ 7,203 $ 423 $ 381 $ 457 $ 1,261 $ (505) $ 7,959
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 52,618 $ 6,756 $ 5,308 $ 3,503 $ 15,567 $ (296) $ 67,889
Purchases of property, equipment and
capitalized software . . . . . . . . . . . . . . . . . . . . $ 635 $ 168 $ 175 $ 89 $ 432 $ — $ 1,067
Depreciation and amortization . . . . . . . . . . . . . . $ 680 $ 154 $ 195 $ 95 $ 444 $ — $ 1,124
2010
Revenues — external customers:
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . $ 84,158 $ 1,247 $ — $ — $ 1,247 $ — $ 85,405
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,021 331 1,403 64 1,798 — 5,819
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . — 19 93 2,210 2,322 — 2,322
Total revenues — external customers . . . . . . . . 88,179 1,597 1,496 2,274 5,367 — 93,546
Total revenues — intersegment . . . . . . . . . . . . . — 2,912 845 14,449 18,206 (18,206) —
Investment and other income . . . . . . . . . . . . . . . 551 56 1 1 58 — 609
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $ 88,730 $ 4,565 $ 2,342 $16,724 $ 23,631 $(18,206) $ 94,155
Earnings from operations . . . . . . . . . . . . . . . . . . $ 6,740 $ 511 $ 84 $ 529 $ 1,124 $ — $ 7,864
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — (481) (481)
Earnings before income taxes . . . . . . . . . . . . . . $ 6,740 $ 511 $ 84 $ 529 $ 1,124 $ (481) $ 7,383
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,913 $ 3,897 $ 5,435 $ 3,087 $ 12,419 $ (269) $ 63,063
Purchases of property, equipment and
capitalized software . . . . . . . . . . . . . . . . . . . . $ 525 $ 117 $ 156 $ 80 $ 353 $ — $ 878
Depreciation and amortization . . . . . . . . . . . . . . $ 725 $ 100 $ 159 $ 80 $ 339 $ — $ 1,064
Goodwill impairment . . . . . . . . . . . . . . . . . . . . . $ — $ — $ 172 $ — $ 172 $ — $ 172
103

14. Quarterly Financial Data (Unaudited)
Selected quarterly financial information for all quarters of 2012 and 2011 is as follows:
For the Quarter Ended
(in millions, except per share data) March 31 June 30 September 30 December 31
2012
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $27,282 $27,265 $27,302 $28,769
Operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,965 25,039 24,692 26,668
Earnings from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,317 2,226 2,610 2,101
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,388 1,337 1,557 1,244
Net earnings per share attributable to UnitedHealth Group
common shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.34 1.30 1.52 1.22
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.31 1.27 1.50 1.20
2011
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,432 $25,234 $25,280 $25,916
Operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,211 23,135 23,210 23,842
Earnings from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,221 2,099 2,070 2,074
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,346 1,267 1,271 1,258
Basic net earnings per common share . . . . . . . . . . . . . . . . . . . . . 1.24 1.18 1.19 1.19
Diluted net earnings per common share . . . . . . . . . . . . . . . . . . . . 1.22 1.16 1.17 1.17
104

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (Exchange Act) that are designed to provide reasonable assurance that information
required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and
communicated to our management, including our principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure.
In connection with the filing of this Form 10-K, management evaluated, under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and
operation of our disclosure controls and procedures as of December 31, 2012. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
effective at the reasonable assurance level as of December 31, 2012.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal control over financial reporting during the quarter ended
December 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
105

Report of Management on Internal Control over Financial Reporting as of December 31, 2012
The Company’s management is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The
Company’s internal control system is designed to provide reasonable assurance to our management and board of
directors regarding the reliability of financial reporting and the preparation of consolidated financial statements
for external purposes in accordance with generally accepted accounting principles. The Company’s internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
consolidated financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the Company are being made only in accordance with authorizations of management and
directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the
consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2012. In making this assessment, we used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework.
Management’s assessment of the effectiveness of our internal control over financial reporting excluded an
assessment of the effectiveness of our internal control over financial reporting of Amil Participações S.A and its
subsidiaries (Amil). Such exclusion was in accordance with Securities and Exchange Commission guidance that
an assessment of a recently acquired business may be omitted in management’s report on internal control over
financial reporting in the year of acquisition. We acquired a controlling interest in Amil during October 2012.
Amil represented 10% of our consolidated total assets and 1% of our consolidated total revenues as of and for the
year ended December 31, 2012. Based on our assessment and the COSO criteria, we believe that, as of
December 31, 2012, the Company maintained effective internal control over financial reporting.
The Company’s independent registered public accounting firm has audited the Company’s internal control over
financial reporting as of December 31, 2012, as stated in the Report of Independent Registered Public
Accounting Firm, appearing under Item 9A, which expresses an unqualified opinion on the effectiveness of the
Company’s internal controls over financial reporting as of December 31, 2012.
106

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of UnitedHealth Group Incorporated and Subsidiaries:
We have audited the internal control over financial reporting of UnitedHealth Group Incorporated and
Subsidiaries (the “Company”) as of December 31, 2012, based on criteria established in Internal
Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. As described in Report of Management on Internal Control over Financial Reporting as of
December 31, 2012, management excluded from its assessment the internal control over financial reporting at
Amil Participações S.A and its subsidiaries (Amil), which was acquired during October 2012 and whose financial
statements collectively constitute approximately 10% of total assets and 1% of total revenues of the consolidated
financial statement amounts as of and for the year ended December 31, 2012. Accordingly, our audit did not
include the internal control over financial reporting at Amil. The Company’s management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Report of Management on Internal
Control Over Financial Reporting as of December 31, 2012. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the
company’s principal executive and principal financial officers, or persons performing similar functions, and
effected by the company’s board of directors, management, and other personnel to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion
or improper management override of controls, material misstatements due to error or fraud may not be prevented or
detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over
financial reporting to future periods are subject to the risk that the controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2012, based on the criteria established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated financial statements as of and for the year ended December 31, 2012 of the
Company and our reports dated February 6, 2013 expressed as an unqualified opinion on those consolidated
financial statements and financial statement schedule.
/s/ DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
February 6, 2013
107

ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Pursuant to General Instruction G(3) to Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K,
information regarding our executive officers is provided in Item 1 of Part I of this Annual Report on Form 10-K
under the caption “Executive Officers of the Registrant.”
The remaining information required by Items 401, 405, 406 and 407(c)(3), (d)(4) and (d)(5) of Regulation S-K
will be included under the headings “Corporate Governance,” “Election of Directors” and “Section 16(a)
Beneficial Ownership Reporting Compliance” in our definitive proxy statement for our 2013 Annual Meeting of
Shareholders, and such required information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Items 402, 407(e)(4) and (e)(5) of Regulation S-K will be included under the
headings “Executive Compensation,” “Director Compensation,” “Corporate Governance—Risk Oversight” and
“Compensation Committee Interlocks and Insider Participation” in our definitive proxy statement for our 2013
Annual Meeting of Shareholders, and such required information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
Equity Compensation Plan Information
The following table sets forth certain information, as of December 31, 2012, concerning shares of common stock
authorized for issuance under all of our equity compensation plans:
Plan Category
(a)
Number of securities
to be issued upon
exercise of
outstanding
options, warrants
and rights (3)
(b)
Weighted-average
exercise
price of
outstanding
options, warrants
and rights (3)
(c)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(in millions) (in millions)
Equity compensation plans approved by
shareholders(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 $43 63(4)
Equity compensation plans not approved by
shareholders(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
Total(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 $43 63
(1) Consists of the UnitedHealth Group Incorporated 2011 Stock Incentive Plan, as amended, and the
UnitedHealth Group 1993 Employee Stock Purchase Plan, as amended.
(2) Excludes 0.1 million shares underlying stock options assumed by us in connection with our acquisition of
the companies under whose plans the options originally were granted. These options have a weighted-
average exercise price of $41 and an average remaining term of approximately 2.1 years. The options are
administered pursuant to the terms of the plan under which the option originally was granted. No future
awards will be granted under these acquired plans.
108

(3) Excludes stock appreciation rights (SARs) to acquire 12 million shares of common stock of the Company
with exercise prices above $54.24, the closing price of a share of our common stock as reported on the
NYSE on December 31, 2012.
(4) Includes 20 million shares of common stock available for future issuance under the Employee Stock
Purchase Plan as of December 31, 2012, and 43 million shares available under the 2011 Stock Incentive
Plan as of December 31, 2012. Shares available under the 2011 Stock Incentive Plan may become the
subject of future awards in the form of stock options, SARs, restricted stock, restricted stock units,
performance awards and other stock-based awards, except that only 16 million of these shares are available
for future grants of awards other than stock options or SARs.
The information required by Item 403 of Regulation S-K will be included under the heading “Security
Ownership of Certain Beneficial Owners and Management” in our definitive proxy statement for our 2013
Annual Meeting of Shareholders, and such required information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by Items 404 and 407(a) of Regulation S-K will be included under the headings
“Certain Relationships and Transactions” and “Corporate Governance” in our definitive proxy statement for our
2013 Annual Meeting of Shareholders, and such required information is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 9(e) of Schedule 14A will be included under the heading “Independent
Registered Public Accounting Firm” in our definitive proxy statement for our 2013 Annual Meeting of
Shareholders, and such required information is incorporated herein by reference.
109

PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. Financial Statements
The financial statements are included under Item 8 of this report:
• Reports of Independent Registered Accounting Firm.
• Consolidated Balance Sheets as of December 31, 2012 and 2011.
• Consolidated Statement of Operations for the years ended December 31, 2012, 2011, and 2010.
• Consolidated Statement of Comprehensive Income for the years ended December 31, 2012, 2011,
and 2010.
• Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, 2012,
2011, and 2010.
• Consolidated Statement of Cash Flows for the years ended December 31, 2012, 2011, and 2010.
• Notes to the Consolidated Financial Statements.
2. Financial Statement Schedules
The following financial statement schedule of the Company is included in Item 15(c):
• Schedule I — Condensed Financial Information of Registrant (Parent Company Only).
All other schedules for which provision is made in the applicable accounting regulations of the SEC are
not required under the related instructions, are inapplicable, or the required information is included in the
consolidated financial statements, and therefore have been omitted.
(b) The following exhibits are filed in response to Item 601 of Regulation S-K.
EXHIBIT INDEX**
3.1 Third Restated Articles of Incorporation of UnitedHealth Group Incorporated (incorporated by
reference to Exhibit 3.1 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated
May 29, 2007)
3.2 Fourth Amended and Restated Bylaws of UnitedHealth Group Incorporated (incorporated by reference
to Exhibit 3.1 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated
October 23, 2009)
4.1 Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and The
Bank of New York (incorporated by reference to Exhibit 4.1 to UnitedHealth Group Incorporated’s
Registration Statement on Form S-3/A, SEC File Number 333-66013, filed on January 11, 1999)
4.2 Amendment, dated as of November 6, 2000, to Senior Indenture, dated as of November 15, 1998,
between the UnitedHealth Group Incorporated and The Bank of New York (incorporated by reference
to Exhibit 4.1 to UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001)
4.3 Instrument of Resignation, Appointment and Acceptance of Trustee, dated January 8, 2007, pursuant
to the Senior Indenture, dated November 15, 1988, amended November 6, 2000, among UnitedHealth
Group Incorporated, The Bank of New York and Wilmington Trust Company (incorporated by
reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2007)
110

4.4 Indenture, dated as of February 4, 2008, between UnitedHealth Group Incorporated and U.S. Bank
National Association (incorporated by reference to Exhibit 4.1 to UnitedHealth Group Incorporated’s
Registration Statement on Form S-3, SEC File Number 333-149031, filed on February 4, 2008)
*10.1 UnitedHealth Group Incorporated 2011 Stock Incentive Plan, effective May 23, 2011 (incorporated
by reference to Exhibit A to UnitedHealth Group Incorporated’s Definitive Proxy Statement dated
April 13, 2011)
*10.2 Form of Agreement for Non-Qualified Stock Option Award to Executives under UnitedHealth Group
Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011 (incorporated by reference to
Exhibit 10.2 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated
May 23, 2011)
*10.3 Form of Agreement for Restricted Stock Award to Executives under UnitedHealth Group
Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011 (incorporated by reference to
Exhibit 10.5 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated
May 23, 2011)
*10.4 Form of Agreement for Restricted Stock Unit Award to Executives under UnitedHealth Group
Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011 (incorporated by reference to
Exhibit 10.1 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated
May 23, 2011)
*10.5 Form of Agreement for Stock Appreciation Rights Award to Executives under UnitedHealth Group
Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011 (incorporated by reference to
Exhibit 10.4 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated
May 23, 2011)
*10.6 Form of Agreement for Performance-based Restricted Stock Unit Award to Executives under
UnitedHealth Group Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011
(incorporated by reference to Exhibit 10.3 to UnitedHealth Group Incorporated’s Current Report on
Form 8-K dated May 23, 2011)
*10.7 Form of Agreement for Initial Deferred Stock Unit Award to Non-Employee Directors under
UnitedHealth Group Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011
(incorporated by reference to Exhibit 10.7 to UnitedHealth Group Incorporated’s Current Report on
Form 8-K dated May 23, 2011)
*10.8 Form of Agreement for Deferred Stock Unit Award to Non-Employee Directors under UnitedHealth
Group Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011 (incorporated by
reference to Exhibit 10.6 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated
May 23, 2011)
*10.9 Amended and Restated UnitedHealth Group Incorporated Executive Incentive Plan (2009 Statement),
effective as of December 31, 2008 (incorporated by reference to Exhibit 10.12 to UnitedHealth
Group Incorporated’s Annual Report on Form 10-K for the year ended December 31, 2008)
*10.10 Amended and Restated UnitedHealth Group Incorporated 2008 Executive Incentive Plan, effective as
of December 31, 2008 (incorporated by reference to Exhibit 10.13 to UnitedHealth Group
Incorporated’s Annual Report on Form 10-K for the year ended December 31, 2008)
*10.11 Amendment, dated as of December 21, 2012, of Amended and Restated UnitedHealth Group
Incorporated 2008 Executive Incentive Plan
*10.12 UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated by reference to
Exhibit 10(e) of UnitedHealth Group Incorporated’s Annual Report on Form 10-K for the year ended
December 31, 2003)
111

*10.13 First Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated by
reference to Exhibit 10.3 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated
October 31, 2006)
*10.14 Second Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated
by reference to Exhibit 10.13 to UnitedHealth Group Incorporated’s Annual Report on Form 10-K for
the year ended December 31, 2007)
*10.15 Third Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated by
reference to Exhibit 10.17 to UnitedHealth Group Incorporated’s Annual Report on Form 10-K for
the year ended December 31, 2008)
*10.16 Fourth Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated
by reference to Exhibit 10.1 of UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2010)
*10.17 Summary of Non-Management Director Compensation, effective as of July 1, 2009 (incorporated by
reference to Exhibit 10.1 to UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for
the quarter ended June 30, 2009)
*10.18 UnitedHealth Group Directors’ Compensation Deferral Plan (2009 Statement) (incorporated by
reference to Exhibit 10.18 to UnitedHealth Group Incorporated’s Annual Report on Form 10-K for
the year ended December 31, 2008)
*10.19 Amendment to the UnitedHealth Group Directors’ Compensation Deferral Plan, effective as of
January 1, 2010 (incorporated by reference to Exhibit 10.20 to UnitedHealth Group Incorporated’s
Annual Report on Form 10K for the year ended December 31, 2009)
*10.20 First Amendment to UnitedHealth Group Directors’ Compensation Deferral Plan (incorporated by
reference to Exhibit 10.2 to UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2010)
*10.21 Employment Agreement, dated as of November 7, 2006, between UnitedHealth Group Incorporated
and Stephen J. Hemsley (incorporated by reference to Exhibit 10.1 to UnitedHealth Group
Incorporated’s Current Report on Form 8-K dated November 7, 2006)
*10.22 Agreement for Supplemental Executive Retirement Pay, effective April 1, 2004, between
UnitedHealth Group Incorporated and Stephen J. Hemsley (incorporated by reference to
Exhibit 10(b) to UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004)
*10.23 Amendment to Agreement for Supplemental Executive Retirement Pay, dated as of November 7,
2006, between UnitedHealth Group Incorporated and Stephen J. Hemsley (incorporated by reference
to Exhibit A to Exhibit 10.1 to UnitedHealth Group Incorporated’s Current Report on Form 8-K
dated November 7, 2006)
*10.24 Amendment to Employment Agreement and Agreement for Supplemental Executive Retirement Pay,
effective as of December 31, 2008, between United HealthCare Services, Inc. and Stephen J.
Hemsley (incorporated by reference to Exhibit 10.22 to UnitedHealth Group Incorporated’s Annual
Report on Form 10-K for the year ended December 31, 2008)
*10.25 Letter Agreement, effective as of February 19, 2008, by and between UnitedHealth Group
Incorporated and Stephen J. Hemsley (incorporated by reference to Exhibit 10.22 to UnitedHealth
Group Incorporated’s Annual Report on Form 10-K for the year ended December 31, 2007)
*10.26 Amendment to Employment Agreement, dated as of December 14, 2010, between UnitedHealth
Group Incorporated and Stephen J. Hemsley (incorporated by reference to Exhibit 10.1 to
UnitedHealth Group Incorporated’s Current Report on Form 8-K dated December 15, 2010)
112

*10.27 Amended and Restated Employment Agreement, dated as of August 8, 2011, between
United HealthCare Services, Inc. and Gail K. Boudreaux (incorporated by reference to Exhibit 10.1
to UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2011)
*10.28 Amended and Restated Employment Agreement, dated as of October 25, 2011, between
United HealthCare Services, Inc. and Larry C. Renfro (incorporated by reference to Exhibit 10.2 to
UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2011)
*10.29 Employment Agreement, effective as of December 1, 2006, between United HealthCare Services,
Inc. and David S. Wichmann (incorporated by reference to Exhibit 10.2 to UnitedHealth Group
Incorporated’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008)
*10.30 Amendment to Employment Agreement, effective as of December 31, 2008, between
United HealthCare Services, Inc. and David S. Wichmann (incorporated by reference to Exhibit
10.37 to UnitedHealth Group Incorporated’s Annual Report on Form 10-K for the year ended
December 31, 2008)
*10.31 Amended and Restated Employment Agreement, dated as of March 26, 2012, between
United HealthCare Services, Inc. and Larry C. Renfro (incorporated by reference to Exhibit 10.1 to
UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter ended March 31,
2012)
*10.32 Amended Employment Agreement, effective as of November 1, 2012, between Amil Assistência
Médica Internacional S.A. and Dr. Edson de Godoy Bueno
*10.33 Employment Agreement, effective as of June 29, 2007, and amendment thereto, effective as of
December 31, 2008, between United HealthCare Services, Inc. and Lori Sweere
*10.34 Employment Agreement, effective as of April 12, 2007, between United HealthCare Services, Inc.
and Anthony Welters (incorporated by reference to Exhibit 10.28 to UnitedHealth Group
Incorporated’s Annual Report on Form 10-K for the year ended December 31, 2007)
*10.35 Amendment to Employment Agreement, effective as of December 31, 2008, between United
HealthCare Services, Inc. and Anthony Welters (incorporated by reference to Exhibit 10.35 to
UnitedHealth Group Incorporated’s Annual Report on Form 10-K for the year ended December 31,
2008)
*10.36 Form of Agreement for Non-Qualified Stock Option Award for International Participants under
UnitedHealth Group Incorporated’s 2011 Stock Incentive Plan
*10.37 Form of Addendum for Non-Qualified Stock Option Award Agreement for International Participants
under UnitedHealth Group Incorporated’s 2011 Stock Incentive Plan
11.1 Statement regarding computation of per share earnings (incorporated by reference to the information
contained under the heading “Net Earnings Per Common Share” in Note 2 of Notes to the
Consolidated Financial Statements included in Item 8, “Financial Statements”)
12.1 Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of UnitedHealth Group Incorporated
23.1 Consent of Independent Registered Public Accounting Firm
24.1 Power of Attorney
31.1 Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
113

101 The following materials from UnitedHealth Group Incorporated’s Annual Report on Form 10-K for the
year ended December 31, 2012, filed on February 6, 2013, formatted in XBRL (eXtensible Business
Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii)
Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in
Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to the Consolidated
Financial Statements.
* Denotes management contracts and compensation plans in which certain directors and named executive
officers participate and which are being filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.
** Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain
holders of long-term debt are not filed. The Company will furnish copies thereof to the SEC upon request.
(c) Financial Statement Schedule
Schedule I — Condensed Financial Information of Registrant (Parent Company Only).
114

Schedule I
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of UnitedHealth Group Incorporated and Subsidiaries:
We have audited the consolidated financial statements of UnitedHealth Group Incorporated and Subsidiaries (the
“Company”) as of December 31, 2012 and 2011, and for each of the three years in the period ended
December 31, 2012, and the Company’s internal control over financial reporting as of December 31, 2012, and
have issued our reports thereon dated February 6, 2013; such consolidated financial statements and reports are
included elsewhere in this Form 10-K. Our audits also included the consolidated financial statement schedule of
the Company listed in Item 15. This consolidated financial statement schedule is the responsibility of the
Company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, the
consolidated financial statement schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material respects, the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
February 6, 2013
115

Schedule I
Condensed Financial Information of Registrant
(Parent Company Only)
UnitedHealth Group
Condensed Balance Sheets
(in millions, except per share data)
December 31,
2012
December 31,
2011
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,025 $ 1,506
Notes receivable from subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,889 —
Deferred income taxes, prepaid expenses and other current assets . . . . . . . . . . . . 225 179
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,139 1,685
Equity in net assets of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,724 38,688
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 77
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $47,969 $40,450
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 356 $ 351
Note payable to subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 145
Commercial paper and current maturities of long-term debt . . . . . . . . . . . . . . . . . 2,541 982
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,072 1,478
Long-term debt, less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,602 10,656
Deferred income taxes and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 24
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,791 12,158
Commitments and contingencies (Note 4)
Shareholders’ equity:
Preferred stock, $0.001 par value —10 shares authorized; no shares issued or
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Common stock, $0.01 par value — 3,000 shares authorized; 1,019 and 1,039
issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 10
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 —
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,664 27,821
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438 461
Total UnitedHealth Group shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,178 28,292
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $47,969 $40,450
See Notes to the Condensed Financial Statements of Registrant
116

Schedule I
Condensed Financial Information of Registrant
(Parent Company Only)
UnitedHealth Group
Condensed Statements of Comprehensive Income
For the Years Ended December 31,
(in millions) 2012 2011 2010
Revenues:
Investment and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28 $ 3 $ 2
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3 2
Operating costs:
Operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) 25 54
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566 451 433
Total operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564 476 487
Loss before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (536) (473) (485)
Benefit for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 167 180
Loss of parent company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (344) (306) (305)
Equity in undistributed income of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,870 5,448 4,939
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,526 5,142 4,634
Other comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23) 209 (1)
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,503 $5,351 $4,633
See Notes to the Condensed Financial Statements of Registrant
117

Schedule I
Condensed Financial Information of Registrant
(Parent Company Only)
UnitedHealth Group
Condensed Statements of Cash Flows
For the Years Ended December 31,
(in millions) 2012 2011 2010
Operating activities
Cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,116 $ 5,560 $ 3,731
Investing activities
Cash paid for acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,737) (2,081) (2,470)
Capital contributions to subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (99) (171) (104)
Cash flows used for investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,836) (2,252) (2,574)
Financing activities
Common stock repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,084) (2,994) (2,517)
Issuance of notes to subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,149) — —
Proceeds from common stock issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,078 381 272
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (820) (651) (449)
Proceeds from commercial paper, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,587 (933) 930
Proceeds from issuance of long term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,966 2,234 747
Repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (986) (955) (1,583)
Interest rate swap termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 132 —
Proceeds of note from subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 15 30
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (383) 53 20
Cash flows used for financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,761) (2,718) (2,550)
(Decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . (481) 590 (1,393)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . 1,506 916 2,309
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,025 $ 1,506 $ 916
Supplemental cash flow disclosures
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 547 $ 418 $ 459
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,666 2,739 2,725
See Notes to the Condensed Financial Statements of Registrant
118

Schedule I
Condensed Financial Information of Registrant
(Parent Company Only)
UnitedHealth Group
Notes to Condensed Financial Statements
1. Basis of Presentation
UnitedHealth Group’s parent company financial information has been derived from its consolidated financial
statements and should be read in conjunction with the consolidated financial statements included in this
Form 10-K. The accounting policies for the registrant are the same as those described in the Summary of
Significant Accounting Policies in Note 2 of Notes to the Consolidated Financial Statements included in Item 8,
“Financial Statements.”
2. Subsidiary Transactions
Investment in Subsidiaries. UnitedHealth Group’s investment in subsidiaries is stated at cost plus equity in
undistributed earnings of subsidiaries.
Notes Receivable from Subsidiaries. Notes issued to subsidiaries were used primarily to fund acquisitions.
During 2012, the parent company completed a non-cash exchange of a $3.9 billion intercompany note to a
subsidiary for a new term note of $2.6 billion and an equity interest of $1.3 billion.
Dividends. Cash dividends received from subsidiaries and included in Cash Flows from Operating Activities in
the Condensed Statements of Cash Flows were $7.8 billion, $5.6 billion and $4.3 billion in 2012, 2011 and 2010,
respectively.
3. Commercial Paper and Long-Term Debt
Maturities of commercial paper and long-term debt for the years ending December 31 are as follows:
(in millions)
2013 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,541
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,067
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,152
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,281
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,513
(a) Includes $9 million of debt subject to acceleration clauses.
Long-term debt obligations of the parent company do not include Brazilian real denominated debt of a subsidiary
with a total par value of $588 million. Further information on commercial paper and long-term debt can be found
in Note 8 of Notes to the Consolidated Financial Statements included in Item 8, “Financial Statements.”
4. Commitments and Contingencies
For a summary of commitments and contingencies, see Note 12 of Notes to the Consolidated Financial
Statements included in Item 8, “Financial Statements.”
119

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: February 6, 2013
UNITEDHEALTH GROUP INCORPORATED
By /s/ STEPHEN J. HEMSLEY
Stephen J. Hemsley
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
/S/ STEPHEN J. HEMSLEY
Stephen J. Hemsley
Director, President and
Chief Executive Officer
(principal executive officer)
February 6, 2013
/S/ DAVID S. WICHMANN
David S. Wichmann
Executive Vice President and
Chief Financial Officer of
UnitedHealth Group and
President of UnitedHealth Group
Operations
(principal financial officer)
February 6, 2013
/S/ ERIC S. RANGEN
Eric S. Rangen
Senior Vice President and
Chief Accounting Officer
(principal accounting officer)
February 6, 2013
*
William C. Ballard, Jr.
Director February 6, 2013
*
Richard T. Burke
Director February 6, 2013
*
Edson Bueno
Director February 6, 2013
*
Robert J. Darretta
Director February 6, 2013
*
Michele J. Hooper
Director February 6, 2013
*
Rodger A. Lawson
Director February 6, 2013
*
Douglas W. Leatherdale
Director February 6, 2013
*
Glenn M. Renwick
Director February 6, 2013
*
Kenneth I. Shine
Director February 6, 2013
*
Gail R. Wilensky
Director February 6, 2013
*By /s/ MARIANNE D. SHORT
Marianne D. Short,
As Attorney-in-Fact
120

EXHIBIT INDEX**
3.1 Third Restated Articles of Incorporation of UnitedHealth Group Incorporated (incorporated by
reference to Exhibit 3.1 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated
May 29, 2007)
3.2 Fourth Amended and Restated Bylaws of UnitedHealth Group Incorporated (incorporated by reference
to Exhibit 3.1 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated October 23,
2009)
4.1 Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and The
Bank of New York (incorporated by reference to Exhibit 4.1 to UnitedHealth Group Incorporated’s
Registration Statement on Form S-3/A, SEC File Number 333-66013, filed on January 11, 1999)
4.2 Amendment, dated as of November 6, 2000, to Senior Indenture, dated as of November 15, 1998,
between the UnitedHealth Group Incorporated and The Bank of New York (incorporated by reference
to Exhibit 4.1 to UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001)
4.3 Instrument of Resignation, Appointment and Acceptance of Trustee, dated January 8, 2007, pursuant
to the Senior Indenture, dated November 15, 1988, amended November 6, 2000, among UnitedHealth
Group Incorporated, The Bank of New York and Wilmington Trust Company (incorporated by
reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2007)
4.4 Indenture, dated as of February 4, 2008, between UnitedHealth Group Incorporated and U.S. Bank
National Association (incorporated by reference to Exhibit 4.1 to UnitedHealth Group Incorporated’s
Registration Statement on Form S-3, SEC File Number 333-149031, filed on February 4, 2008)
*10.1 UnitedHealth Group Incorporated 2011 Stock Incentive Plan, effective May 23, 2011 (incorporated by
reference to Exhibit A to UnitedHealth Group Incorporated’s Definitive Proxy Statement dated
April 13, 2011)
*10.2 Form of Agreement for Non-Qualified Stock Option Award to Executives under UnitedHealth Group
Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011 (incorporated by reference to
Exhibit 10.2 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated May 23, 2011)
*10.3 Form of Agreement for Restricted Stock Award to Executives under UnitedHealth Group
Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011 (incorporated by reference to
Exhibit 10.5 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated May 23, 2011)
*10.4 Form of Agreement for Restricted Stock Unit Award to Executives under UnitedHealth Group
Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011 (incorporated by reference to
Exhibit 10.1 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated May 23, 2011)
*10.5 Form of Agreement for Stock Appreciation Rights Award to Executives under UnitedHealth Group
Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011 (incorporated by reference to
Exhibit 10.4 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated May 23, 2011)
*10.6 Form of Agreement for Performance-based Restricted Stock Unit Award to Executives under
UnitedHealth Group Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011
(incorporated by reference to Exhibit 10.3 to UnitedHealth Group Incorporated’s Current Report on
Form 8-K dated May 23, 2011)
*10.7 Form of Agreement for Initial Deferred Stock Unit Award to Non-Employee Directors under
UnitedHealth Group Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011
(incorporated by reference to Exhibit 10.7 to UnitedHealth Group Incorporated’s Current Report on
Form 8-K dated May 23, 2011)
121

*10.8 Form of Agreement for Deferred Stock Unit Award to Non-Employee Directors under UnitedHealth
Group Incorporated’s 2011 Stock Incentive Plan, effective as of May 24, 2011 (incorporated by
reference to Exhibit 10.6 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated
May 23, 2011)
*10.9 Amended and Restated UnitedHealth Group Incorporated Executive Incentive Plan (2009 Statement),
effective as of December 31, 2008 (incorporated by reference to Exhibit 10.12 to UnitedHealth
Group Incorporated’s Annual Report on Form 10-K for the year ended December 31, 2008)
*10.10 Amended and Restated UnitedHealth Group Incorporated 2008 Executive Incentive Plan, effective as
of December 31, 2008 (incorporated by reference to Exhibit 10.13 to UnitedHealth Group
Incorporated’s Annual Report on Form 10-K for the year ended December 31, 2008)
*10.11 Amendment, dated as of December 21, 2012, of Amended and Restated UnitedHealth Group
Incorporated 2008 Executive Incentive Plan
*10.12 UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated by reference to
Exhibit 10(e) of UnitedHealth Group Incorporated’s Annual Report on Form 10-K for the year ended
December 31, 2003)
*10.13 First Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated by
reference to Exhibit 10.3 to UnitedHealth Group Incorporated’s Current Report on Form 8-K dated
October 31, 2006)
*10.14 Second Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated
by reference to Exhibit 10.13 to UnitedHealth Group Incorporated’s Annual Report on Form 10-K for
the year ended December 31, 2007)
*10.15 Third Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated by
reference to Exhibit 10.17 to UnitedHealth Group Incorporated’s Annual Report on Form 10-K for
the year ended December 31, 2008)
*10.16 Fourth Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated
by reference to Exhibit 10.1 of UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2010)
*10.17 Summary of Non-Management Director Compensation, effective as of July 1, 2009 (incorporated by
reference to Exhibit 10.1 to UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for
the quarter ended June 30, 2009)
*10.18 UnitedHealth Group Directors’ Compensation Deferral Plan (2009 Statement) (incorporated by
reference to Exhibit 10.18 to UnitedHealth Group Incorporated’s Annual Report on Form 10-K for
the year ended December 31, 2008)
*10.19 Amendment to the UnitedHealth Group Directors’ Compensation Deferral Plan, effective as of
January 1, 2010 (incorporated by reference to Exhibit 10.20 to UnitedHealth Group Incorporated’s
Annual Report on Form 10K for the year ended December 31, 2009)
*10.20 First Amendment to UnitedHealth Group Directors’ Compensation Deferral Plan (incorporated by
reference to Exhibit 10.2 to UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2010)
*10.21 Employment Agreement, dated as of November 7, 2006, between UnitedHealth Group Incorporated
and Stephen J. Hemsley (incorporated by reference to Exhibit 10.1 to UnitedHealth Group
Incorporated’s Current Report on Form 8-K dated November 7, 2006)
*10.22 Agreement for Supplemental Executive Retirement Pay, effective April 1, 2004, between
UnitedHealth Group Incorporated and Stephen J. Hemsley (incorporated by reference to
Exhibit 10(b) to UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004)
122

*10.23 Amendment to Agreement for Supplemental Executive Retirement Pay, dated as of November 7,
2006, between UnitedHealth Group Incorporated and Stephen J. Hemsley (incorporated by reference
to Exhibit A to Exhibit 10.1 to UnitedHealth Group Incorporated’s Current Report on Form 8-K
dated November 7, 2006)
*10.24 Amendment to Employment Agreement and Agreement for Supplemental Executive Retirement Pay,
effective as of December 31, 2008, between United HealthCare Services, Inc. and Stephen J.
Hemsley (incorporated by reference to Exhibit 10.22 to UnitedHealth Group Incorporated’s Annual
Report on Form 10-K for the year ended December 31, 2008)
*10.25 Letter Agreement, effective as of February 19, 2008, by and between UnitedHealth Group
Incorporated and Stephen J. Hemsley (incorporated by reference to Exhibit 10.22 to UnitedHealth
Group Incorporated’s Annual Report on Form 10-K for the year ended December 31, 2007)
*10.26 Amendment to Employment Agreement, dated as of December 14, 2010, between UnitedHealth
Group Incorporated and Stephen J. Hemsley (incorporated by reference to Exhibit 10.1 to
UnitedHealth Group Incorporated’s Current Report on Form 8-K dated December 15, 2010)
*10.27 Amended and Restated Employment Agreement, dated as of August 8, 2011, between
United HealthCare Services, Inc. and Gail K. Boudreaux (incorporated by reference to Exhibit 10.1
to UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2011)
*10.28 Amended and Restated Employment Agreement, dated as of October 25, 2011, between
United HealthCare Services, Inc. and Larry C. Renfro (incorporated by reference to Exhibit 10.2 to
UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2011)
*10.29 Employment Agreement, effective as of December 1, 2006, between United HealthCare Services,
Inc. and David S. Wichmann (incorporated by reference to Exhibit 10.2 to UnitedHealth Group
Incorporated’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008)
*10.30 Amendment to Employment Agreement, effective as of December 31, 2008, between
United HealthCare Services, Inc. and David S. Wichmann (incorporated by reference to Exhibit
10.37 to UnitedHealth Group Incorporated’s Annual Report on Form 10-K for the year ended
December 31, 2008)
*10.31 Amended and Restated Employment Agreement, dated as of March 26, 2012, between
United HealthCare Services, Inc. and Larry C. Renfro (incorporated by reference to Exhibit 10.1 to
UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter ended March 31,
2012)
*10.32 Amended Employment Agreement, effective as of November 1, 2012, between Amil Assistência
Médica Internacional S.A. and Dr. Edson de Godoy Bueno
*10.33 Employment Agreement, effective as of June 29, 2007, and amendment thereto, effective as of
December 31, 2008, between United HealthCare Services, Inc. and Lori Sweere
*10.34 Employment Agreement, effective as of April 12, 2007, between United HealthCare Services, Inc.
and Anthony Welters (incorporated by reference to Exhibit 10.28 to UnitedHealth Group
Incorporated’s Annual Report on Form 10-K for the year ended December 31, 2007)
*10.35 Amendment to Employment Agreement, effective as of December 31, 2008, between
United HealthCare Services, Inc. and Anthony Welters (incorporated by reference to Exhibit 10.35 to
UnitedHealth Group Incorporated’s Annual Report on Form 10-K for the year ended December 31,
2008)
*10.36 Form of Agreement for Non-Qualified Stock Option Award for International Participants under
UnitedHealth Group Incorporated’s 2011 Stock Incentive Plan
123

*10.37 Form of Addendum for Non-Qualified Stock Option Award Agreement for International Participants
under UnitedHealth Group Incorporated’s 2011 Stock Incentive Plan
11.1 Statement regarding computation of per share earnings (incorporated by reference to the information
contained under the heading “Net Earnings Per Common Share” in Note 2 of Notes to the
Consolidated Financial Statements included in Item 8, “Financial Statements”)
12.1 Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of UnitedHealth Group Incorporated
23.1 Consent of Independent Registered Public Accounting Firm
24.1 Power of Attorney
31.1 Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 The following materials from UnitedHealth Group Incorporated’s Annual Report on Form 10-K for
the year ended December 31, 2012, filed on February 6, 2013, formatted in XBRL (eXtensible
Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of
Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of
Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to the
Consolidated Financial Statements.
* Denotes management contracts and compensation plans in which certain directors and named executive
officers participate and which are being filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.
** Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain
holders of long-term debt are not filed. The Company will furnish copies thereof to the SEC upon request.
124

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29OCT201118203261
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
� ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
OR
� TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8323
(Exact name of registrant as specified in its charter)
DELAWARE 06-1059331
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
900 Cottage Grove Road, Bloomfield, Connecticut 06002
(Address of principal executive offices) (Zip Code)
(860) 226-6000
Registrant’s telephone number, including area code
(860) 226-6741
Registrant’s facsimile number, including area code
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
Common Stock, Par Value $0.25 New York Stock Exchange, Inc.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
Indicate by check mark YES NO
�if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. �
�if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. �
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 such shorter period that the registrant was required to file such reports), and
�(2) has been subject to such filing requirements for the past 90 days. �
whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
�shorter period that the registrant was required to submit and post such files). �
if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of
�this Form 10-K or any amendment to this Form 10-K. �
• whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of ‘‘large
accelerated filer’’, ‘‘accelerated filer’’, and ‘‘smaller reporting company’’ in Rule 12b-2 of the Exchange Act.
Large accelerated filer � Accelerated filer � Non-accelerated filer � Smaller Reporting Company �
�whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). �
The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 29, 2012 was approximately $12.7 billion.
As of January 31, 2013, 285,954,499 shares of the registrant’s Common Stock were outstanding.
Part III of this Form 10-K incorporates by reference information from the registrant’s proxy statement to be dated on or about March 15, 2013.
CIGNA CORPORATION
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Table of contents
PART I 1
ITEM 1 Business ……………………………………………………………………………………………………………………. 1
A. Description of Business …………………………………………………………………………………………1
B. Global Health Care ………………………………………………………………………………………………………………………….. 2
C. Group Disability and Life ………………………………………………………………………………………9
D. Global Supplemental Benefits ………………………………………………………………………………… 11
E. Run-off Reinsurance ………………………………………………………………………………………….. 12
F. Other Operations ……………………………………………………………………………………………… 13
G. Investments and Investment Income …………………………………………………………………………. 13
H. Regulation …………………………………………………………………………………………………….. 14
I. Miscellaneous………………………………………………………………………………………………….. 18
ITEM 1A Risk Factors …………………………………………………………………………………………………………….. 19
ITEM 1B Unresolved Staff Comments ……………………………………………………………………………………….. 28
ITEM 2 Properties ………………………………………………………………………………………………………………… 28
ITEM 3 Legal Proceedings ……………………………………………………………………………………………………… 28
ITEM 4 Mine Safety Disclosures …………………………………………………………………………………………….. 28
EXECUTIVE OFFICERS OF THE REGISTRANT ………………………………………………………………………. 29
PART II 30
ITEM 5 Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities………………………………………………………………………. 30
ITEM 6 Selected Financial Data ……………………………………………………………………………………………… 31
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations ……. 32
ITEM 7A Quantitative and Qualitative Disclosures about Market Risk ……………………………………………. 63
ITEM 8 Financial Statements and Supplementary Data ………………………………………………………………. 64
ITEM 9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure…….. 129
ITEM 9A Controls and Procedures ………………………………………………………………………………………….. 129
ITEM 9B Other Information ………………………………………………………………………………………………….. 129

PART III 130
ITEM 10 Directors, Executive Officers and Corporate Governance ………………………………………………. 130
A. Directors of the Registrant……………………………………………………………………………………130
B. Executive Officers of the Registrant ………………………………………………………………………….130
C. Code of Ethics and Other Corporate Governance Disclosures ……………………………………………..130
ITEM 11 Executive Compensation ………………………………………………………………………………………….. 130
ITEM 12 Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters ………………………………………………………………………………………………… 131
ITEM 13 Certain Relationships, Related Transactions and Director Independence ………………………….. 131
ITEM 14 Principal Accountant Fees and Services ………………………………………………………………………. 131
PART IV 132
ITEM 15 Exhibits and Financial Statement Schedules ………………………………………………………………… 132
SIGNATURES …………………………………………………………………………………………………………………………. 133
INDEX TO FINANCIAL STATEMENT SCHEDULES ………………………………………………………………. FS-1
INDEX TO EXHIBITS ……………………………………………………………………………………………………………..E-1

PART I
Business
Description of Business
Cigna Corporation was incorporated in the State of Delaware in GO GLOBAL: Cigna delivers a range of differentiated products
1981. Various businesses that are described in this Annual Report on and superior service to meet the distinct needs of a growing global
Form 10-K for the fiscal year ended December 31, 2012 middle class and a globally mobile workforce through expansion in
(‘‘Form 10-K’’) are conducted by its insurance and other subsidiaries. existing international markets as well as an extension of the
As used in this document, ‘‘Cigna’’, the ‘‘Company’’, ‘‘we’’ and ‘‘our’’ Company’s business model to new geographic areas.
may refer to Cigna Corporation itself, one or more of its subsidiaries,
GO INDIVIDUAL: Cigna strives to establish a deep understanding
or Cigna Corporation and its consolidated subsidiaries.
of its customers’ unique needs and to be a highly customer-centric
Cigna had consolidated shareholders’ equity of $9.8 billion and assets organization through simplifying the buying process by providing
of $53.7 billion as of December 31, 2012, and revenues of choice, transparency of information, and a personalized customer
$29.1 billion for the year then ended. Cigna’s revenues are derived experience. The Company’s goal is to build long-term relationships
principally from premiums, fees, mail order pharmacy, and with each of the individuals it serves and meet their needs
investment income. throughout the stages of their lives regardless of the customer’s plan
type: employer-based, government-sponsored, or individual
coverage.Strategy and Key Developments
Executing on Cigna’s strategy, including the goals of achieving better
Cigna is a global health services organization with a mission to help its
health outcomes for our global customers, improving employee
customers improve their health, well-being and sense of security. Its
productivity and realizing medical cost savings is being achieved by:
insurance subsidiaries are major providers of medical, dental,
disability, life and accident insurance and related products and focusing on delivery of innovative health and wellness solutions
services, the majority of which are offered through employers and tailored to each of our employer and government clients;
other groups (e.g. governmental and non-governmental organizations,
ensuring that we focus on the individual customer by providing
unions and associations). Cigna also offers Medicare and Medicaid
deep customer insights through customer research and feedback;
products and health, life and accident insurance coverages primarily to
and
individuals in the U.S. and selected international markets. In addition
to its ongoing operations described above, Cigna also has certain enhancing collaboration with physicians and hospitals to offer
run-off operations, including a Run-off Reinsurance segment. affordable access to value-based high-quality care.
Cigna’s long-term growth strategy is based on: (1) repositioning the In addition to investing in these capabilities, Cigna executed on its
portfolio for growth in targeted geographies, product lines, buying strategy during 2012 with three acquisitions that better position the
segments and distribution channels; (2) improving its strategic and Company in several key markets: seniors, individual and global
financial flexibility; and (3) pursuing additional opportunities in high supplemental. HealthSpring, the largest of the acquisitions,
growth markets with particular focus on individuals. strengthens Cigna’s ability to serve individuals across their life stages as
well as deepens the Company’s presence in a number of geographic
Cigna’s mission and focus on delivering value by serving the emerging
markets. The addition of HealthSpring also brings industry leading
needs of our global customers is being accomplished through
physician partnership capabilities, deepens Cigna’s existing client and
executing on our long-term growth strategy, that is:
customer relationships, and facilitates a broader deployment of
GO DEEP: Cigna seeks to increase its presence and brand strength Cigna’s range of health and wellness capabilities and product offerings.
in key ‘‘go deep’’ geographic areas, grow in targeted segments or The acquisition of Great American Supplemental Benefits strengthens
capabilities, and deepen its relationships with current customers Cigna’s capabilities in the individual market in addition to allowing
through cross selling. Cigna to expand into the Medicare supplemental business, and our
CIGNA CORPORATION – 2012 Form 10-K 1
ITEM 1
A.
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PART I
ITEM 1 Business
joint venture with Finansbank expands Cigna’s global footprint in and supplemental health, life and accident) are now reported as
Turkey. follows:
Cigna is also focused on continuing to improve its strategic and substantially all of the international health care business (comprised
financial flexibility by driving further operating expense efficiencies, primarily of the global health benefits business) is now reported
improving its medical cost competitiveness in targeted markets and with the former Health Care segment and renamed Global Health
effectively managing balance sheet exposures. In 2013, Cigna reached Care; and
a significant milestone in this strategy related to mitigating the
the supplemental health, life and accident business becomes a
financial exposure associated with the Run-off guaranteed minimum
separate reporting segment named Global Supplemental Benefits.
death benefit (‘‘GMDB’’ also known as ‘‘VADBe’’) and guaranteed
minimum income benefit (‘‘GMIB’’) reinsurance businesses. Effective As a result of these changes, the financial results of Cigna’s businesses
February 4, 2013, the Company entered into an agreement with are now reported in the following segments:
Berkshire Hathaway Life Insurance Company of Nebraska
Global Health Care aggregates the following two operating
(‘‘Berkshire’’) to reinsure 100% of the Company’s future exposures for
segments:
these businesses, net of retrocessional arrangements in place as of
February 4, 2013, up to a specified limit. See Note 25 to the Commercial (including the international health care business)
Consolidated Financial Statements for additional information.
Government
Group Disability and LifeFinancial Information about Business Segments
Global Supplemental BenefitsThe financial information included herein is in conformity with
accounting principles generally accepted in the United States of Run-off Reinsurance and
America (‘‘GAAP’’), unless otherwise indicated. Certain
Other Operations, including Corporate-owned Life Insurance.reclassifications have been made to prior years’ financial information
to conform to the 2012 presentation. Industry rankings and Financial data for each of Cigna’s business segments is set forth in
percentages set forth herein are for the year ended December 31, 2012 Note 23 to the Consolidated Financial Statements. Prior year segment
unless otherwise indicated. In addition, statements set forth in this information has been conformed to the new segment structure.
document concerning Cigna’s rank or position in an industry or
particular line of business have been developed internally, based on
Available Informationpublicly available information, unless otherwise noted.
Cigna’s annual, quarterly and current reports, proxy statements andEffective December 31, 2012, Cigna changed its external reporting
other filings, and any amendments to these filings, are made availablesegments to reflect the Company’s realignment of its businesses to
free of charge on its website (http://www.cigna.com, under thebetter leverage distribution and service delivery capabilities for the
‘‘Investors – Quarterly Reports and SEC Filings’’ captions) as soon asbenefit of our global clients and customers. Management believes the
reasonably practicable after the Company electronically files theserealignment of its businesses will enable the Company to more
materials with, or furnishes them to, the Securities and Exchangeeffectively address global health services challenges by leveraging best
Commission (the ‘‘SEC’’). The Company uses its website as a channelpractices across geographies to improve the health, well being and
of distribution for material company information. Importantsense of security of the global customers that the Company serves.
information, including news releases, analyst presentations andThe changes in the Company’s internal financial reporting structure,
financial information regarding Cigna is routinely posted on andto support this realignment, took effect on December 31, 2012 and
accessible at www.cigna.com. See ‘‘Code of Ethics and Otherresulted in changes to our external reporting segments. The
Corporate Governance Disclosures’’ in Part III, Item 10 beginning onCompany’s results are now aggregated based on the nature of the
page 130 of this Form 10-K for additional available information.Company’s products and services, rather than its geographies.
The primary segment reporting change is that the two businesses that
comprised the former International segment (international health care
Global Health Care
As explained in Item 1A ‘‘Description of Business’’, in the fourth designed to meet the needs of local and multinational companies and
quarter of 2012 Cigna changed its external reporting segments. The organizations and their domestic and globally mobile employees and
new Global Health Care segment (previously Health Care) now dependents.
includes substantially all of the international health care business
Global Health Care aggregates the following two operating segments:
previously reported in the former International segment. This
business, that is included in the Commercial operating segment, The Commercial operating segment includes both the U.S.
consists principally of global health benefits, products and services commercial and international health care businesses and offers
2 CIGNA CORPORATION – 2012 Form 10-K
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PART I
ITEM 1 Business
insured and self-insured medical, dental, behavioral health, vision, Financial information, including premiums and fees, is presented in
and prescription drug benefit plans, health advocacy programs and the Global Health Care section of the MD&A beginning on page 41
other products and services that may be integrated to provide and in Note 23 to Cigna’s Consolidated Financial Statements
comprehensive global health care benefit programs to employers beginning on page 119 of this Form 10-K.
and their employees, including globally mobile individuals. Cigna,
either directly or through its partners, offers some or all of these
Health Plansproducts and services in all 50 states, the District of Columbia, the
U.S. Virgin Islands, Canada, Europe, the Middle East, and Asia. Commercial Medical – U.S. and International
Cigna services its globally mobile customers virtually everywhere in
Managed Care Plans. Global Health Care offers a broad product linethe world. These products and services are offered through a variety
of managed care benefit plans that use meaningful coinsurance andof funding arrangements such as administrative services only (ASO),
copayment differences to encourage the use of ‘‘in-network’’ versusguaranteed cost and retrospectively experience rated.
‘‘out-of-network’’ health care providers and the use of primary care
The Government operating segment offers Medicare Advantage physicians. While these products offer access to a broad national
plans to seniors in 13 states and the District of Columbia, Medicare network of ‘‘in-network’’ health care providers (that is somewhat
Part D plans in all 50 states and the District of Columbia and smaller than the network used with the preferred provider (‘‘PPO’’)
Medicaid plans. plan product line), employers may elect to utilize a subset of Cigna’s
network to better manage costs and quality.Global Health Care seeks to differentiate itself by providing superior
customer insights, care delivery, product integration and unique Preferred Provider Plans. Global Health Care also offers an open
product offerings. Global Health Care expects to accomplish these access product line that features a network with even broader access
goals by deepening its reach in selected geographies and market than the Managed Care Plans with no option to designate a primary
segments as well as accelerating its engagement with preferred health care physician, in-network and out-of-network coverage, and may
care professionals. For its globally mobile customers, Global Health be at a somewhat higher medical cost.
Care’s strategic advantages include unique health care solutions,
Choice Fund� suite of Consumer-Driven Products. In connection withseamless worldwide care delivery and superior customer service.
many of the health care products described above, Global Health
With the exception of Health Maintenance Organization (‘‘HMO’’), Care offers the Cigna Choice Fund suite of consumer-driven
Medicare, Medicaid and stop loss products, each of Global Health products, including Health Reimbursement Accounts (‘‘HRA’’),
Care’s group health benefit products are offered with alternative Health Savings Accounts (‘‘HSA’’) and Flexible Spending Accounts
funding options (i.e.: administrative services only (‘‘ASO’’ or (‘‘FSA’’). These plans can be used to pay medical care expenses not
‘‘self-insured’’), insured experience rated, and insured guaranteed covered by a base medical plan and are designed to encourage
cost). These funding options are further described on page 5 of this customers to understand and manage their health and health
Form 10-K. Approximately 86% of the Company’s commercial benefits.
medical customers are enrolled in self-insured and experience-rated
Cigna’s Choice Fund HRA is funded by employerplans, where lower costs of providing health care directly benefit our
contributions and is often combined with a high deductiblecorporate clients and their employees, with the remainder being
plan. HRA dollars can be rolled over from year-to-year atinsured under guaranteed cost plans.
the plan sponsors’ discretion.
HSA plans combine a high deductible health plan with aPrincipal Products and Services
tax-advantaged savings account funded by customer
Cigna’s principal health care products (discussed below) include: contributions that offers mutual fund investment options.
Funds in an HSA can be used to pay the deductible andHealth Plans – group and individual medical coverage:
other IRS-approved health care expenses. The health
Commercial Medical: U.S. and International – medical plans savings account is portable and unused funds accumulate
covering domestic-based employees and, for certain from year to year.
multinational employers, their globally mobile employees. In
An FSA allows customers to pay for IRS-approved healthorder to engage customers in their health care choices, consumer-
care expenses with pre-tax employee contributions. Unuseddriven core medical plans are often combined with the Cigna
funds in an FSA do not accumulate from year to year, butChoice Fund suite of accounts.
are forfeited by the employee.
Government – Medicare Advantage, Medicare Part D and
Stop Loss Coverage. Global Health Care offers stop loss insuranceMedicaid plans sold to Medicare or Medicaid-eligible individuals
coverage for self-insured plans. This stop loss coverage reimburses(primarily seniors).
the plan for claims in excess of a predetermined amount, for
Specialty Products – products and services that improve quality, lower individuals (‘‘specific’’), the entire group (‘‘aggregate’’), or both.
the cost of medical services and help customers achieve better health Global Health Care also includes stop loss features in its experience-
outcomes. These products can be sold on a standalone basis but are rated policies (discussed below).
most effective when integrated with a Cigna-administered health
plan.
CIGNA CORPORATION – 2012 Form 10-K 3
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PART I
ITEM 1 Business
healthier life; 3) Cigna’s Well Informed program, that uses clinicalGovernment
rules-based software to identify potential gaps and omissions in
Medicare Advantage. Cigna offers Medicare Advantage coordinated customers’ health care by analyzing integrated medical, behavioral,
care plans in 13 states and the District of Columbia. Under a pharmacy and lab data allowing Cigna to communicate the gaps to
Medicare Advantage plan, Medicare-eligible beneficiaries may receive customers and their doctors; and 4) an array of health coaching
health care benefits, including prescription drugs, through a managed offerings to address lifestyle management issues such as stress, weight,
care health plan such as the Company’s coordinated care plans, and and tobacco cessation.
the Centers for Medicare and Medicaid Services (‘‘CMS’’) reimburse
Cost Containment Service. Cigna administers cost containmentthe Company pursuant to a risk adjustment payment methodology.
programs for health care services and supplies that are covered underCigna ensures that our Medicare Advantage customers receive quality
health benefit plans. These programs, that may involve contractedmedical care through our innovative plan models that focus on
vendors, are designed to control health costs by reducingdeveloping highly engaged physician networks, aligning payment
out-of-network utilization, including educating customers regardingincentives to improved health outcomes, and using timely and
the availability of lower cost in-network services, reviewing providertransparent data sharing. Approximately 75% of our Medicare
bills, and recovering overpayments from other insurance carriers orAdvantage customers are served by physicians in these innovative
health care professionals. Cigna charges fees for providing ormodels, and Cigna is focused on expanding these models in the
arranging for these services.future. The HealthSpring acquisition expanded the size of Cigna’s
Medicare Advantage customer base. As of December 31, 2012,
HealthSpring represented 89% of Cigna’s Medicare Advantage
Behavioral Specialtycustomer base. Cigna also offers Medicaid coverage to low income
individuals in selected markets in the U.S. Cigna’s Medicaid Behavioral Health. Cigna arranges for behavioral health care services
customers benefit from many of the coordinated care aspects of the for customers through its network of participating behavioral health
Company’s Medicare Advantage programs discussed above. care professionals. Cigna offers behavioral health care case
management services, employee assistance programs (EAP), and
Medicare Part D. Cigna’s Medicare Part D prescription drug
work/life programs to employers, government entities and other
program provides a number of plan options as well as service and
groups sponsoring health benefit plans. Cigna Behavioral Health
information support to Medicare and Medicaid eligible customers.
focuses on integrating its programs and services with medical,
Cigna’s Part D plans are available in all 50 states and the District of
pharmacy and disability programs to facilitate customized, holistic
Columbia. These plans offer the savings of Medicare combined with
care.
the flexibility to provide enhanced benefits and a drug list tailored to
individuals’ specific needs. Retirees benefit from broad network access As of December 31, 2012, Cigna’s behavioral network had
and value-added services that help keep them well and save them approximately 118,000 access points to independent psychiatrists,
money. The HealthSpring acquisition expanded the size of Cigna’s psychologists and clinical social workers and approximately 9,800
Medicare Part D customer base. As of December 31, 2012, facilities and clinics that are reimbursed on a contracted fee-for-service
HealthSpring represented 49% of Cigna’s Medicare Part D customer basis.
base.
Cigna Pharmacy Management
Specialty Products
Cigna Pharmacy Management. Cigna Pharmacy Management offers
prescription drug plans to its insured and self-funded customers bothMedical Specialty
in conjunction with its medical products and on a stand-alone basis.
Health Advocacy. Global Health Care offers a wide array of medical With a network of over 64,000 contracted pharmacies, Cigna
management, disease management, and other health advocacy services Pharmacy Management is a comprehensive pharmacy benefits
to employers and other plan sponsors to help individuals improve manager (PBM) offering clinical integration programs, specialty
their health, well-being and sense of security. These services are pharmacy solutions, and fast, efficient home delivery of prescription
offered to customers covered under Global Health Care’s administered medicines.
plans or plans insured or administered by competing insurers or third-
Programs that facilitate this integration of medical, behavioral andparty administrators. Cigna offers seamless integration of services that
pharmacy offerings include the Well Informed program, that is focusedaddress the clinical and administrative challenges inherent in
on chronic conditions requiring strict compliance with a prescriptioncoordinating multiple vendors. Through its health advocacy
drug therapy such as asthma, diabetes, back pain or high cholesterol,programs, Global Health Care works to help healthy people stay
as well as Step Therapy, that encourages customers to use generichealthy; help people change behaviors that put their health at risk; and
and/or preferred brand drugs rather than higher cost brand-namedassist those with problems in accessing quality care.
drugs. Step Therapy is implemented through claim management
Health advocacy programs and services include: 1) early intervention protocols, that may include communications with customers and
by Cigna’s network of clinical professionals; 2) Cigna’s online health their physicians. The Company coordinates pharmacy management
assessment, powered by insights and analytics from the University of with all of Cigna’s health advocacy programs and tools by focusing on
Michigan Health Management Research Center, that helps customers patient education, including emphasizing the importance of adhering
identify potential health risks and learn what they can do to live a to medication instructions.
4 CIGNA CORPORATION – 2012 Form 10-K

PART I
ITEM 1 Business
Cigna Specialty Pharmacy Management. Cigna’s administered optometrist offices, as well as retail eye care centers. Routine vision
medical and pharmacy coverage can meet the needs of customers with products are offered in conjunction with Global Health Care’s
complex conditions that require specialty pharmaceuticals. These medical and dental product offerings.
types of medications are covered under both pharmacy and medical
benefits and can be expensive, often requiring associated lab work and
Funding Arrangementsadministration by a health care professional. Therefore, coordination
is critical in improving affordability and outcomes. Clients with The segment’s commercial medical products and services are offered
Cigna-administered medical and pharmacy coverage benefit from through the following funding arrangements:
continuity of care, integrated reporting, and aggressive unit cost
Administrative Services Only (80% of commercial medicaldiscounts on all specialty drugs – regardless of where they are
customers);administered.
Insured – Guaranteed Cost (14% of commercial medical
Cigna Home Delivery Pharmacy. Cigna also offers cost-effective mail
customers); and
order, telephone and on-line pharmaceutical fulfillment services
through its home delivery operation. Cigna Home Delivery Pharmacy Insured – Shared ReturnsSM (6% of commercial medical customers).
provides a high-quality, efficient home delivery pharmacy
Administrative Services Only. Global Health Care contracts withdistinguished by individual care relating to compliance and specialty
employers, unions and other groups sponsoring self-insured plans onmedications. Orders may be submitted through the mail, via phone or
an administrative services only (‘‘ASO’’) basis to administer claims andthrough the internet at myCigna.com.
perform other plan related services. The key features of an ASO
funding arrangement are:
Dental and Vision
Global Health Care collects administrative service fees in exchange
Dental. Cigna Dental Health offers a variety of dental care products for providing these self-insured plans with access to Global Health
including dental health maintenance organization plans (‘‘Dental Care’s applicable participating provider network and for providing
HMO’’), dental preferred provider organization (‘‘Dental PPO’’) other services and programs including: claim administration;
plans, dental exclusive provider organization plans, traditional dental quality management; utilization management; cost containment;
indemnity plans and a dental discount program. Employers and other health advocacy; 24-hour help line; 24/7 call center; case
groups can purchase Cigna Dental Health products as stand-alone management; disease management; pharmacy benefit management;
products or integrated with Global Health Care’s medical products. behavioral health care management services (through its provider
Additionally, individual customers can purchase Dental PPO plans in networks); or any combination of these services.
conjunction with individual medical policies. As of December 31,
The self-insured plan sponsor is responsible for self-funding all2012, Cigna Dental Health customers totaled approximately
claims, but may purchase stop loss insurance from Global Health11.4 million. Most of these customers are in self-insured plans. All of
Care or other insurers for claims in excess of a predeterminedCigna’s Dental HMO customers participate in guaranteed cost
amount, for either individuals (‘‘specific’’), the entire groupinsured plans. Managed dental care products are offered in 37 states
(‘‘aggregate’’), or both.for Dental HMO and 42 states and the District of Columbia for
Dental PPO through a network of independent health care In some cases, Global Health Care provides performance guarantees
professionals that have contracted with Cigna Dental Health to associated with meeting certain service standards, clinical outcomes,
provide dental services. or financial metrics. If these service standards, clinical outcomes, or
financial metrics are not met, Global Health Care may be financiallyCigna Dental Health customers access care from one of the largest
at risk up to a stated percentage of the contracted fee or a stateddental PPO networks and dental HMO networks in the U.S., with
dollar amount. Global Health Care does not recognize revenues forapproximately 266,400 Dental PPO-contracted access points
estimated payouts associated with these guarantees. See Note 2 to(approximately 99,200 unique health care professionals) and
the Consolidated Financial Statements for details regarding theseapproximately 68,600 Dental HMO-contracted access points
guarantees.(approximately 18,000 unique health care professionals).
Insured – Guaranteed Cost. Charges to policyholders under anCigna Dental Health stresses preventive dentistry; it believes that
insured, guaranteed cost policy are established at the beginning of thepromoting preventive care contributes to a healthier workforce, an
policy period and are not adjusted to reflect actual claim experienceimproved quality of life, increased productivity and fewer treatment
during the policy period. Accordingly, Global Health Care bears theclaims and associated costs over time. Cigna Dental Health offers
risk for claims and costs. Generally, guaranteed cost policyholdercustomers a dental treatment cost estimator to educate customers on
groups are smaller than retrospectively experience-rated groups;oral health and aid them in their dental health care decision-making.
accordingly, claim and expense assumptions may be based in whole or
Vision. Cigna Vision offers flexible, cost-effective PPO coverage that in part on prior experience of the policyholder or on a pool of
includes a range of both in and out-of-network benefits for routine accounts, depending on the policyholder’s size and the statistical
vision services. Cigna’s national vision care network, which consists of credibility of the experience.
approximately 57,500 health care professionals in approximately
23,500 locations, includes private practice ophthalmologist and
CIGNA CORPORATION – 2012 Form 10-K 5
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PART I
ITEM 1 Business
Insured – Shared ReturnsSM (also referred to as experience-rated). U.S. Department of Health and Human Service (‘‘HHS’’) require the
Under a Shared Returns funding arrangement, the premium MLR to be calculated on a state-by-state basis for each separate
determined at the beginning of the policy period may be adjusted for insurance company or HMO, and then separately within each state
the actual claim and, in some cases, administrative cost experience of for large groups, small groups and individuals. The MLR is
the policyholder. Favorable cost experience in relation to the premium determined generally as the sum of claims plus health care quality
rates may result in a portion of the initial premiums being credited to improvement expenses divided by premiums less taxes and
the policyholder as an experience refund. However, if claims and assessments. HHS regulations permit adjustments to be made to the
expenses exceed the initial premiums (an ‘‘experience deficit’’), Global claims used in the calculation for Cigna’s international health care and
Health Care generally bears the risk. These experience deficits may be limited benefit plans subject to the MLR minimums. The adjustment
recovered through future year surpluses, according to contractual for limited benefit plans is only permitted through 2014. To the
provisions, provided the policy remains in force. extent the MLR minimums are not met for large groups, small groups
or individual segments within each state, premium rebates are paid to
Minimum premium funding arrangements combine insurance
both employers and customers enrolled in the plans based on the
protection with an element of self-funding. Key features of insurance
portion of the premium each has contributed. Approximately 20% of
policies using a minimum premium funding arrangement are
Cigna’s commercial customers are enrolled in insured plans subject to
summarized below:
the MLR requirements. For additional information related to the
effects of Health Care Reform on these businesses, see the RegulationThe policyholder is responsible for funding a bank account to pay
section of this Form 10-K.all claims up to a predetermined aggregate, maximum monthly
amount, and Global Health Care bears the risk for claim costs
Medicare Advantage pricing is determined based upon expected
incurred in excess of that amount.
medical services utilization and costs resulting from CMS-required
services and Company-specific supplemental plan benefits, as well asThe policyholder must maintain an agreed-upon amount in the
expected administrative expenses and profit margin. Revenue for eachaccount.
plan customer is received from CMS, with CMS providing a subsidy
The policyholder pays a significantly reduced monthly ‘‘residual’’
payment based on customer demographic data and expected customer
premium while the policy is in effect and a supplemental premium
health risk factors compared to the broader Medicare population.
(to cover reserves for run-out claims and administrative expenses)
Additional revenue from CMS may be earned by the Company
upon termination.
related to quality performance measures. In many markets, the
customer pays no premium. In some situations, additional premiumsGlobal Health Care may recover deficits from surplus amounts in
may be received from customers, representing the difference betweenfuture years if the policy is renewed.
CMS subsidy payments and the revenue assumed by the Company as
Liabilities are established for estimated experience refunds based on part of its annual Medicare Advantage bid submissions. Profits from
the results of Shared Returns (retrospectively experience-rated) our Medicare Advantage plans vary depending on the actual
policies and applicable contract terms. Global Health Care credits utilization of medical services, the cost of services provided, the costs
interest on experience refund balances to these policyholders using to administer the benefit programs, and the receipt of quality
rates that are set at Global Health Care’s discretion, taking investment performance revenue from CMS. Beginning in 2014, Health Care
performance and market rates into consideration. For 2012, the rates Reform requires Medicare Advantage and Medicare Part D plans to
of interest credited ranged from 0.5% to 3.5%, with a weighted meet a minimum MLR of 85%. Under the rules proposed by HHS, if
average rate of approximately 1%. the MLR for a CMS contract is less than 85%, the contractor is
required to pay a penalty to CMS and could be subject to additional
sanctions if the MLR continues to be less than 85% for successivePricing and Reinsurance
years.
Pricing. Premium rates for insured funding arrangements are based
Pricing for self-funded arrangements is generally based on theon assumptions about the expected utilization levels of medical
expected cost to administer these arrangements and will vary by theservices, costs of medical services and the Company’s administrative
services provided and the size and complexity of the benefit programs,costs. The profitability of these arrangements will vary by the actual
among other factors.utilization level of medical services, the cost of the services provided
and the costs to administer the benefit programs and the premium Reinsurance. Cigna’s international health care business reduces its
charged. In some states, premium rates must be approved by the state exposure to large catastrophic losses under insurance contracts by
insurance department and state laws may restrict or limit the use of purchasing reinsurance from unaffiliated reinsurers.
rating methods. Premium rates for groups and individuals are subject
to state and/or the United States Department of Health and Human
Service and QualityServices (‘‘HHS’’) review for unreasonable increases.
The Patient Protection and Affordable Care Act (‘‘Health Care Customer Service
Reform’’) requires Cigna’s comprehensive medical insurance products
For U.S.-based customers, Global Health Care operates 19 serviceto meet a minimum medical loss ratio (‘‘MLR’’) of 85% for large
centers that together processed approximately 154 million medicalgroups (generally defined as employers with more than 50 employees)
claims in 2012. Cigna recognizes that customers with significantand 80% for small groups and individuals. Regulations issued by the
6 CIGNA CORPORATION – 2012 Form 10-K
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PART I
ITEM 1 Business
health events may have additional customer service needs. As of coordinate end-to-end care for a defined population of patients and
December 31, 2012, Cigna operated 13 call centers and a virtual team share timely, patient-specific medical information with the physician
that customers can call toll-free about their health care benefits, group. Each CAC has an embedded care coordinator that supports
wellness programs and claims. Ten of these call centers are available patient care and care plan development. The coordinator uses patient-
24 hours a day, 365 days a year. The remaining three, that service specific information supplied by Cigna to conduct proactive outreach
HealthSpring providers and customers, operate for extended hours to coordinate care for patients in three categories: i) patients who are
during high volume periods to accommodate customer demands. being discharged from the hospital who are at risk for readmission;
Cigna offers the ‘‘My Personal Champion’’ program that provides ii) patients with high priority gaps in care; and iii) patients with high
qualified customers with a dedicated point of contact. Personal health risk scores based on Cigna’s predictive models. This approach
Champions serve as a resource for benefits and claims questions, assist leverages the role of the physician as the trusted advisor. With the
with navigating the complex health care industry, and offer education innovative physician engagement models acquired with HealthSpring,
and support to customers and their families. As of December 31, we utilize a variety of business arrangements that shift the physician’s
2012, approximately 5 million Cigna customers had access to the My reimbursement from the traditional fee-for-service approach to one
Personal Champion program. that is focused on rewarding quality medical outcomes and an
enhanced customer experience at a lower cost. In these arrangements,
With over 1.2 million customers across the globe, Cigna’s
the physician group shares financial risk with Cigna. The
international health care business continues to be a leader in providing
HealthSpring clinical model also includes outreach to new and at-risk
quality customer service. Its globally mobile customers have access to
customers to ensure they are accessing their primary care physician.
medical professionals, case management experts and claims specialists
24 hours a day, 365 days a year, through service centers dedicated to Cigna also continues to engage in a variety of other medical quality
their unique needs. Cigna uses a wide range of measurement tools to activities, including: credentialing medical health care professionals
better understand customers’ needs – ranging from quick 5-minute and facilities that participate in Global Health Care’s Managed Care
surveys of a customer’s call-center experience to more elaborate and PPO networks as well as developing the Cigna Care NetworkSM
tracking of loyalty as measured by customers’ likelihood to refer Cigna specialist physician designation described below.
to a friend.
Participating Provider Network. Cigna has an extensive network of
Technology. Global Health Care understands the important role that participating health care professionals and hospitals, as well as other
information technology plays in improving the level of service that facilities, pharmacies and vendors of health care services and supplies.
Cigna can provide to its customers, which is critical to the continued In most instances, Global Health Care contracts directly with the
growth of the Company’s health care business and its focus on participating hospital, health care professional or other facility to
customer-centricity. Accordingly, Global Health Care continues to provide covered services to customers at agreed-upon rates of
invest in its information technology infrastructure and capabilities reimbursement. In some instances, however, Global Health Care
including innovative mobile tools and Internet-enabled technology companies contract with third parties for access to their provider
that support Global Health Care’s focus on providing customers with networks and care management services. In addition, Global Health
a personalized experience in making health care decisions and Care has entered into strategic alliances with several regional managed
leveraging customer insights to drive the Company’s strategy and care organizations (Tufts Health Plan, HealthPartners, Inc., Health
mission. Alliance Plan, and MVP Health Plan) to gain access to their provider
networks and discounts.
Cigna Medical Group. Cigna Medical Group is the multi-specialtyQuality Medical Care
medical group practice division of Cigna HealthCare of Arizona, Inc.
Global Health Care’s commitment to promoting quality medical care
that delivers primary care and certain specialty care services through
to its customers is reflected in a variety of activities. Most recently,
25 medical facilities and approximately 190 employed clinicians in the
Cigna has focused on collaborating with physicians and other health
Phoenix, Arizona metropolitan area. Twenty-two of these multi-
care professionals and facilities with the goal of improving quality and
specialty health care centers and their affiliated primary care
customer satisfaction while lowering medical costs. This focus has
physicians have received the top level of accreditation (level 3) from
manifested itself through the rapid expansion of collaborative
the National Committee for Quality Assurance (NCQA) a private,
accountable care organizations developed by Cigna as well as the
nonprofit organization dedicated to improving health care quality.
innovative physician engagement models acquired with HealthSpring
Cigna Medical Group currently holds the highest level of this
in 2012. As of December 31, 2012, almost one million medical
accreditation for the greatest number of practices and physicians in
customers are serviced by physicians compensated under these types
the state of Arizona.
of arrangements.
Cigna Care NetworkSM. Cigna Care Network is a benefit design option
Collaborative Accountable Care Organizations (CAC). As of available for Global Health Care administered plans in 69 service areas
December 31, 2012, Cigna has established over 50 CACs, and expects across the U.S. Cigna Care Network’s designated physicians are a
to continue to expand these arrangements. The overall objective of subset of participating physicians in certain specialties who are so
these organizations is to improve the quality of care and service designated based on specific clinical quality and cost-efficiency
experience for customers while lowering their costs, resulting in selection criteria. Customers pay reduced co-payments or
improved overall value. The goal is to identify health care delivery co-insurance when they receive care from a specialist designated as a
organizations (medical groups and hospital organizations) that can
CIGNA CORPORATION – 2012 Form 10-K 7

PART I
ITEM 1 Business
Cigna Care Network provider. Participating specialists are evaluated International Health Care – focused on health care products and
regularly for the Cigna Care Network designation. services to meet the needs of local and multinational companies and
organizations and their local and globally mobile employees and
Provider Credentialing. Global Health Care credentials physicians, dependents.
hospitals and other health care professionals in its participating
Global Health Care employs sales representatives to distribute itsprovider networks using quality criteria that meet or exceed the
products and services through insurance brokers and insurancestandards of external accreditation or state regulatory agencies, or
consultants or directly to employers, unions and other groups. Globalboth. Typically, most health care professionals are re-credentialed
Health Care also employs representatives to sell utilization reviewevery three years.
services, managed behavioral health care, pharmacy, and employee
External Validation. Cigna continues to demonstrate its assistance services directly to insurance companies, HMOs, third
commitment to quality and has a broad scope of quality programs party administrators and employer groups. As of December 31, 2012,
validated through nationally recognized external accreditation the field sales force for the products and services of this segment
organizations. Cigna was awarded Excellent, Commendable or consisted of approximately 1,160 sales representatives in
Accredited for Health Plan accreditation from NCQA in 36 of our approximately 115 field locations. With respect to the acquired
markets. Additional NCQA recognitions include Full Accreditation HealthSpring business, Medicare Advantage enrollment is generally a
for Managed Behavioral Healthcare Organization accreditation for decision made individually by the customer, and accordingly, sales
Cigna Behavioral Health, Performance Reporting for Wellness & agents and representatives focus their efforts on in-person contacts
Health Promotion accreditation for Cigna’s wellness programs and with potential enrollees as well as telephonic and group selling venues.
Physician & Hospital Quality Certification for Cigna’s provider
transparency program. Cigna has Full Accreditation for Health
Competition and Industry DevelopmentsUtilization Management, Case Management and Pharmacy Benefit
Management from URAC, an independent, nonprofit health care Global Health Care’s business is subject to intense competition and
accrediting organization dedicated to promoting health care quality continuing industry consolidation that has created an even more
through accreditation, certification and commendation. competitive business environment. In certain geographic locations,
some health care companies may have significant market share
HEDIS� Measures. In addition, Global Health Care participates in
positions, but no one competitor dominates the health care market
the NCQA’s Health Plan Employer Data and Information Set
nationally. Global Health Care expects a continuing trend of
(‘‘HEDIS�’’) Quality Compass Report, whose Effectiveness of Care
consolidation in the industry given the current economic and political
measures are a standard set of metrics to evaluate the effectiveness of
environment. Global Health Care also expects continued vertical
managed care clinical programs. Global Health Care’s national results
integration, with the line blurring between clinicians and hospitals,
compare favorably to industry averages.
and traditional insurers.
Competition in the health care market exists both for employers andMarkets and Distribution
other groups sponsoring plans and for the employees in those
instances where the employer offers its employees a choice of productsGlobal Health Care offers products in the following customer
from more than one health care company. Most group policies aremarkets:
subject to annual review by the policyholder, who may seek
National segment – these employers have 5,000 or more U.S.-based,
competitive quotations prior to renewal. As Health Care Reform is
full-time employees living in two or more states.
implemented, Cigna expects competition to increase in the individual
market as individual customers seek to purchase insurance forMiddle Market segment – comprised of employers with 250 to
themselves or their families.4,999 U.S.-based, full-time employees located in one or more states
with a majority of their full-time employees living and working in
The primary competitive factors are quality and cost-effectiveness of
the same state. This segment also includes single site employers with
service and provider networks; effectiveness of medical care
more than 250 employees, Taft-Hartley plans and other third party
management; products that meet the needs of clients and their
payers.
employees; price; total cost management; technology; and
effectiveness of marketing and sales. Financial strength of the insurer,Select segment – focused on employers with 51-249 eligible
as indicated by ratings issued by nationally recognized rating agencies,employees and provides ASO and guaranteed cost funding
is also a competitive factor. Cigna believes that its health advocacysolutions. Select also provides ASO funding to employers with a
capabilities, holistic approach to consumer engagement, breadth ofminimum of 25 employees.
product offerings, clinical care and medical management capabilities
Individual – Global Health Care actively markets health and dental and funding options are competitive advantages. These advantages
insurance to individuals in ten states as of December 31, 2012, allow Cigna to respond to the diverse needs of its customer base.
including Arizona, California, Colorado, Connecticut, Florida, Cigna also believes that its focus on helping to improve the health,
Georgia, North Carolina, South Carolina, Tennessee and Texas. well-being and sense of security of its customers will allow it to
differentiate itself from its competitors.Seniors (Medicare) – focused on the health care needs of individuals
who are pre- or post-65 retirees and employers who offer coverage to
their pre- and post-65 retirees.
8 CIGNA CORPORATION – 2012 Form 10-K
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PART I
ITEM 1 Business
Cigna’s principal competitors in its U.S.-based business are: health. This is accomplished primarily through financial incentives,
access to enhanced medical quality data and other informationother large insurance companies that provide group health and life
sharing. The effective use of the Company’s health advocacy, customerinsurance products;
insight and physician engagement capabilities, along with decision
Blue Cross and Blue Shield organizations; support tools (some of which are web-based) and enabling technology
are critical to success in the health care industry, and Cigna believes itsstand-alone HMOs and PPOs;
capabilities in these areas will be competitive differentiators.
HMOs affiliated with major insurance companies and hospitals;
On February 15, 2013, CMS issued its Advance Notice ofand
Methodological Changes for Calendar Year (CY) 2014 for Medicare
national managed pharmacy, behavioral health and utilization
Advantage (MA) Capitation Rates, Part C and Part D Payment
review services companies.
Policies (the ‘‘Notice’’). CMS is accepting comments on the Notice,
The primary competitors of the international health care business and final terms are expected to be published on April 1, 2013. While
include U.S.-based and European health insurance companies with management believes that a significant number of comments from
global health benefits operations. For the Company’s international interested parties (including Cigna) will be provided to CMS, there
health care operations in the United Kingdom and Spain, the primary can be no assurance that CMS will amend its current position. Given
competitors are regional and local insurers. the uncertainty regarding the final terms of the Notice, the Company
cannot estimate the impact that it will have on its business, revenuesCompetition also arises from smaller regional or specialty companies
or results of operations but recognizes that any impacts could bewith strength in a particular geographic area or product line,
materially adverse. Accordingly, the Company is currently evaluatingadministrative service firms and, indirectly, self-insurers. In addition
the potential implications of the Notice, including adjustments thatto these traditional competitors, a new group of competitors is
the Company may make to the programs and services it offers to offsetemerging. These new competitors are focused on delivering employee
any adverse impacts.benefits and services through Internet-enabled technology that allows
consumers to take a more active role in the management of their
Group Disability and Life
Cigna’s Group Disability and Life segment provides the following return to work rate. Examples of the benefits of this integrated
insurance products and their related services: group long-term and approach (for which Cigna may receive fees) include:
short-term disability insurance, group life insurance and accident and using information from the health care and disability databases to
specialty insurance. These products and services are provided by help identify, treat and manage disabilities before they become
subsidiaries of Cigna Corporation. Cigna markets products in all 50 chronic, longer in duration and more costly; and
states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands
proactive outreach from Cigna Behavioral Health to assistand Canada.
employees suffering from a mental health condition, either as a
primary condition or as a result of another condition.
Principal Products and Services
As measured by 2012 premiums and fees, disability constituted
Disability approximately 45% of this segment’s business. Approximately 12,300
insured disability policies covering approximately 6.5 million livesLong-term and short-term disability insurance products and services
were outstanding as of December 31, 2012.generally provide a fixed level of income to replace a portion of wages
lost because of disability. Cigna also provides assistance to employees
in returning to work and assistance to their employers in managing Life Insurance
the cost of employee disability. Group disability coverage is typically
Life insurance products offered by Group Disability and Life includeemployer-paid or a combination of employer and employee-paid, but
group term life and group universal life. Group term life insurancemay also include coverage paid for entirely by employees.
may be employer-paid basic life insurance, employee-paid
Cigna is an industry leader in returning employees to work quickly, supplemental life insurance or a combination thereof.
resulting in higher productivity and lower cost for employers and a
Group universal life insurance is a voluntary life insurance product inbetter quality of life for their employees. Cigna’s disability insurance
which the owner may accumulate cash value. The cash value earnsproducts may be integrated with other disability benefit programs,
interest at rates declared from time to time, subject to a minimumbehavioral programs, medical programs, social security advocacy, and
guaranteed contracted rate, and may be borrowed, withdrawn, or,leave of absence administration. Cigna believes this integration
within certain limits, used to fund future life insurance coverage.provides customers with increased efficiency and effectiveness in
disability claims management, enhances productivity and reduces As measured by 2012 premiums and fees, group life insurance
overall costs to employers. Coordinating the administration of the constituted approximately 46% of this segment’s business.
segment’s disability programs with medical programs offered by Cigna Approximately 6,200 group life insurance policies covering
HealthCare provides enhanced opportunities to influence outcomes, approximately 5.6 million lives were outstanding as of December 31,
reduce the cost of both medical and disability events and improve the 2012.
CIGNA CORPORATION – 2012 Form 10-K 9
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PART I
ITEM 1 Business
interest and mortality experience. Mortality charges are subject toOther Products and Services
guaranteed maximum rates stated in the policy.
Cigna offers personal accident insurance coverage, which consists
The profitability of this segment’s products depends on the adequacyprimarily of accidental death and dismemberment and travel accident
of premiums charged and investment returns relative to claims andinsurance to employers. Group accident insurance may be
expenses. The effectiveness of return to work programs and mortalityemployer-paid or employee-paid.
levels also impact the profitability of disability insurance products.
Cigna also offers specialty insurance services that consist primarily of Cigna’s previous claim experience and industry data indicate a
disability and life, accident, and hospital indemnity products to correlation between disability claim incidence levels and economic
professional or trade associations and financial institutions. conditions, with submitted claims rising under adverse economic
conditions, although the impact of the current adverse economicVoluntary benefits are those paid by the employee and are offered at
conditions is not clear. For life insurance products, the degree tothe employer’s worksite. Cigna plans provide employers, among other
which future experience deviates from mortality, morbidity andservices, flexible enrollment options, list billing, medical
expense assumptions also affects profitability.underwriting, and individual record keeping. Cigna designed its
voluntary offerings to offer employers a complete and simple way to In order to reduce its exposure to large individual and catastrophic
manage their benefits, including personalized enrollment losses under group life, disability and accidental death policies, Cigna
communication and administration of the benefits program. purchases reinsurance from unaffiliated reinsurers.
Financial information, including premiums and fees, is presented in
the Group Disability and Life section of the MD&A beginning on Markets and Distribution
page 44 and in Note 23 to Cigna’s Consolidated Financial Statements.
Cigna markets the group insurance products and services described
above to employers, employees, professional and other associations
Pricing and Reinsurance and groups in the following customer segments:
This segment’s products and services are offered on a fully insured, National segment – these are multi-site employers generally with
experience-rated and ASO basis. Under fully insured arrangements, more than 5,000 employees;
policyholders pay a fixed premium and Cigna bears the risk for claims
Middle Market segment – generally defined as multi-site employersand costs. Under experience-rated funding arrangements, a premium
with more than 250 but fewer than 5,000 employees, and single-sitethat typically includes a margin to partially protect against adverse
employers with more than 250 employees; andclaim fluctuations is determined at the beginning of the policy period.
Cigna generally bears the risk if claims and expenses exceed this Select segment – generally includes employers with more than 50
premium. If premiums exceed claims and expenses, any surplus but fewer than 250 employees.
amount is generally first used to offset prior deficits and is otherwise
In marketing these products, Cigna primarily sells through insurancegenerally returned to the policyholder if surplus exceeds minimum
brokers and consultants and employs a direct sales force. As ofcontractual levels. With experience-rated insurance products, Cigna
December 31, 2012, the field sales force for the products and servicesmay recover deficits from margins in future years if the policy is
of this segment consisted of approximately 200 sales professionals inrenewed. Under ASO arrangements, Cigna contracts with groups
27 office locations.sponsoring self-insured plans to administer claims and perform other
plan related services in return for service fees. The self-insured plan
sponsor is responsible for self funding all claims. The majority of this Competition
segment’s products and services are fully insured.
The principal competitive factors that affect the Group Disability and
Premiums and fees charged for disability and life insurance products Life segment are underwriting and pricing, the quality and
are generally established in advance of the policy period and are effectiveness of claims management, relative operating efficiency,
generally guaranteed for one to three years and selectively guaranteed investment and risk management, distribution methodologies and
for up to five years, but policies are generally subject to early producer relations, the breadth and variety of products and services
termination by the policyholder or by the insurance company. offered, and the quality of customer service. For certain products with
Premium rates reflect assumptions about future claims, expenses, longer-term liabilities, such as group long-term disability insurance,
credit risk, investment returns and profit margins. Assumptions may the financial strength of the insurer, as indicated by ratings issued by
be based in whole or in part on prior experience of the account or on a nationally recognized rating agencies, is also a competitive factor.
pool of accounts, depending on the group size and the statistical
The principal competitors of Cigna’s group disability, life and accidentcredibility of the experience, that varies by product.
businesses are other large and regional insurance companies that
Premiums for group universal life insurance products consist of market and distribute these or similar types of products. As of
mortality, administrative and surrender charges assessed against the December 31, 2012, Cigna is one of the top five providers of group
policyholder’s fund balance. Interest credited and mortality charges disability, life and accident insurance in the United States, based on
for group universal life, and mortality charges on group variable premiums.
universal life, may be adjusted prospectively to reflect expected
10 CIGNA CORPORATION – 2012 Form 10-K
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PART I
ITEM 1 Business
grows, Cigna believes it is well positioned to deliver integratedIndustry Developments and Strategic
solutions that address these broad employer and employee needs
Initiatives through its programs that promote a healthy lifestyle, offer assistance
in returning to work and integrate health care and disability programs.The group insurance market remains highly competitive as the rising
Cigna also believes that its strong disability management portfolio andcost of providing medical coverage to employees has forced companies
fully integrated programs provide employers and employees tools toto re-evaluate their overall employee benefit spending. Demographic
improve health status. This focus on managing the employee’s totalshifts have further driven demand for products and services that are
absence enables Cigna to increase the number and likelihood ofsufficiently flexible to meet the evolving needs of employers and
interventions and minimize disabling events.employees who want innovative, cost-effective solutions to their
insurance needs. Employers continue to shift towards greater There is heightened review by state regulators of group disability
employee participatory coverage and voluntary purchases. insurance industry business and reporting practices. Cigna is
frequently the subject of regulatory market conduct and other reviews,Employers are also expressing a growing interest in employee wellness,
audits and investigations by state insurance departments.absence management and productivity and recognizing a strong link
between health, productivity and their profitability. As this interest
Global Supplemental Benefits
As explained in Item 1A ‘‘Description of Business’’, in the fourth interest in a Chinese joint venture and a 51% interest in a joint
quarter of 2012, Cigna changed its external reporting segments. The venture in Turkey, through which its products and services are offered.
Global Supplemental Benefits segment is comprised of the Cigna continues to work with its partner in India to establish a health
international supplemental health, life and accident businesses insurance company that will operate as a joint venture upon licensing.
(previously reported in the former International segment) as well as Licensing is expected to occur in 2013.
the Medicare supplement business acquired in 2012.
This segment offers supplemental health, life and accident insurance Medicare Supplement Plans
products in the U.S. and selected international markets. With local
Through its 2012 acquisition, Cigna also offers individual Medicarelicenses and partnerships in approximately 20 countries and
Supplement plans that provide retirees with federally standardizedjurisdictions, Cigna is able to offer products and services to local
Medigap-style plans. Retirees may select amongst the various planscitizens and globally mobile individuals. These products and services
with specific plan options to meet their unique needs and may visitare provided by subsidiaries of Cigna Corporation, including foreign
any health care professional or facility that accepts Medicareoperating entities.
throughout the U.S. – with no referrals required.
Cigna continues to distinguish itself in the global supplemental
Financial information, including premiums and fees, is presented inhealth, life and accident businesses through its differentiated direct to
the Global Supplemental Benefits section of the MD&A beginningconsumer distribution, customer insights and marketing capabilities.
on page 46 and in Note 23 to Cigna’s Consolidated FinancialCigna enters new markets when the opportunity to bring its product
Statements.and health solutions is attractive. In 2012, Cigna extended its reach in
Turkey through the joint venture with Finansbank and expanded into
the U.S. Medigap and supplemental lines of business through Pricing and Reinsurance
acquisition. The 2011 acquisition of FirstAssist in the U.K. added a
Premium rates for Cigna’s global supplemental benefits products aretravel insurance product line and expanded the Company’s
based on assumptions about mortality, morbidity, customerdistribution channels.
acquisition and retention, expenses and target profit margins, as well
as interest rates. The profitability of these products is primarily driven
Principal Products and Services by the adequacy of mortality and morbidity assumptions used, and
customer retention.Supplemental Health, Life and Accident Insurance
Fees for variable universal life insurance products consist of mortality,
These insurance products generally provide simple, affordable
administrative, asset management and surrender charges assessed
coverage of risks for the health and financial security of individuals.
against the contractholder’s fund balance. Mortality charges on
Supplemental health products provide specified payments for a variety
variable universal life may be adjusted prospectively to reflect expected
of health risks and include personal accident, accidental death, critical
mortality experience. The profitability of these products is primarily
illness, hospitalization, travel, dental, cancer and other dread disease
driven by the policyholders’ fund balances on which fees are charged
coverages. Term life and individual private medical insurance as well
as well as customer retention.
as variable universal life insurance and other savings products are also
included in the product portfolio. Cigna’s supplemental health, life Premium rates and fees for Medicare supplement products reflect
and accident insurance products are offered in South Korea, Taiwan, assumptions about future claims, customer retention, expenses,
Indonesia, Hong Kong, the United States, the European Union, customer demographics, investment returns, and profit margins.
China, New Zealand, Thailand and Turkey. Cigna owns a 50%
CIGNA CORPORATION – 2012 Form 10-K 11
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PART I
ITEM 1 Business
Most contracts permit premium rate changes at least annually. The distribution channels may also impact Cigna’s business or results. See
profitability of Medicare supplement products is dependent upon the the Regulation section beginning on page 14 and the Risk Factors
accuracy of projections for health care inflation (unit cost and section beginning on page 19 of this Form 10-K.
utilization), customer retention, customer demographics, and the
adequacy of fees charged for administration. Competition
The operations of Cigna’s Global Supplemental Benefits segment are
Competitive factors in Cigna’s supplemental health, life and accidentdiversified by line of business. South Korea, however, represents the
and health care businesses include product and distributionsingle largest geographic market for this segment. In 2012, South
innovation and differentiation, efficient management of marketingKorea generated 54% of this segment’s revenues and 90% of its
processes and costs, commission levels paid to distribution partners,segment earnings. For information on the concentration of risk with
and quality of claims and customer services. In most overseas markets,respect to the Global Supplemental Benefits segment’s business in
perception of financial strength is also an important competitiveSouth Korea, see ‘‘Other Items Affecting Results of Global
factor.Supplemental Benefits’’ in the Global Supplemental Benefits section
of the MD&A beginning on page 46 of this Form 10-K. For Cigna’s supplemental health, life and accident insurance
businesses operating in foreign markets, competitors are primarilyA global approach to underwriting risk management allows for each
locally based insurance companies, including insurance subsidiaries oflocal business to underwrite and accept risk within specified limits.
banks primarily in Asia and Europe as well as multi-nationalRetentions are centrally managed through cost effective use of external
companies. Insurance company competitors in this segment primarilyreinsurance to limit segment liability on a per life, per risk, and per
focus on traditional product distribution through captive agents, withevent (catastrophe) basis.
direct marketing being secondary channels. Cigna estimates that it has
less than 2% market share of the total life insurance premiums in anyMarkets and Distribution
given market in which it operates.
Cigna’s supplemental health, life and accident insurance products sold
The principal competitive factors that affect Cigna’s Medicarein foreign countries are generally marketed through distribution
supplement business are underwriting and pricing, relative operatingpartners with whom the individual insured has an affinity
efficiency, broker relations, and the quality of claims and customerrelationship. These products are sold primarily through direct
service.marketing channels, such as outbound telemarketing and in-branch
bancassurance (where Cigna partners with a bank and uses the bank’s The primary competitors of the Medicare supplement business
sales channels to sell its insurance products). Marketing campaigns are include U.S.-based health insurance companies.
conducted through these channels under a variety of arrangements
Cigna expects that the competitive environment will intensify as U.S.with affinity partners. These affinity partners primarily include banks,
and Europe-based insurance and financial services providers pursuecredit card companies and other financial and non-financial
global expansion opportunities.institutions. Cigna also markets directly to consumers via direct
response television and the Internet.
Industry DevelopmentsCigna’s Medicare supplement product line acquired in 2012 is
primarily distributed through independent agents and telemarketing Pressure on social health care systems and increased wealth and
directly to the consumer. education in emerging markets are leading to higher demand for
products providing health insurance and financial security. In theFor Cigna’s supplemental health, life and accident insurance products
supplemental health, life and accident business, direct marketingsold in foreign markets, a significant portion of premiums are billed
channels are growing and attracting new competitors while industryand collected through credit cards. A substantial contraction in
consolidation among financial institutions and other affinity partnersconsumer credit could impact Cigna’s ability to retain existing policies
continues. See ‘‘Risk Factors’’ beginning on page 19 of this Form 10-Kand sell new policies. A decline in customer retention would result in
for a discussion of risks related to the Global Supplemental Benefitsboth a reduction of revenue and an acceleration of the amortization of
acquisition related costs. Changes in regulation around permitted segment.
Run-off Reinsurance
Until 2000, Cigna offered reinsurance coverage for part or all of the reinsurance businesses) into run-off as of June 1, 2000, and stopped
risks written by other insurance companies (or ‘‘ceding companies’’) underwriting new reinsurance business.
under life and annuity policies (both group and individual) and
As of December 31, 2012, Cigna’s remaining exposures resulted
accident policies (workers’ compensation, personal accident, and
primarily from its annuity reinsurance business, including its
catastrophe coverages). The products and services related to these
reinsurance of GMDB and GMIB contracts. Effective February 4,
operations were offered by subsidiaries of Cigna Corporation.
2013, the Company reinsured 100% of the Company’s future
In 2000, Cigna sold its U.S. individual life, group life and accidental exposures for the Run-off GMDB and GMIB businesses, net of
death reinsurance businesses. Cigna placed its remaining reinsurance retrocessional arrangements in place prior to February 4, 2013 up to a
businesses (including its accident, international life, and annuity specified limit. For additional information regarding this reinsurance
transaction, see Note 25 to the Consolidated Financial Statements.
12 CIGNA CORPORATION – 2012 Form 10-K
E.

PART I
ITEM 1 Business
Other Operations
Cigna’s Other Operations segment includes the following businesses: mortality charges on variable universal life may be adjusted
prospectively to reflect expected interest and mortality experience. Incorporate owned life insurance;
order to reduce its exposure to large individual and catastrophe losses,
deferred gains recognized from the 1998 sale of the individual life Cigna purchases reinsurance from unaffiliated reinsurers.
insurance and annuity business and the 2004 sale of the retirement
benefits business; and
Individual Life Insurance & Annuity andrun-off settlement annuity business.
Retirement Benefits BusinessesThe products and services related to these operations are offered by
For more information regarding the sale of these businesses and thesubsidiaries of Cigna Corporation.
arrangements which secure Cigna’s reinsurance recoverables, see
Note 8 of the Consolidated Financial Statements.Corporate-owned Life Insurance (‘‘COLI’’)
The principal products of the COLI business are permanent insurance
Settlement Annuity Businesscontracts sold to corporations to provide coverage on the lives of
Cigna’s settlement annuity business is a closed run-off block of singlecertain employees for the purpose of funding employer-paid future
premium annuity contracts. These contracts are primarily liabilitybenefit obligations. Permanent life insurance provides coverage that,
settlements with approximately 28% of the liabilities associated withwhen adequately funded, does not expire after a term of years. The
payments that are guaranteed and not contingent on survivorship. Incontracts are primarily non-participating universal life policies. Fees
the case of the contracts that involve non-guaranteed payments, suchfor universal life insurance products consist primarily of mortality and
payments are contingent on the survival of one or more partiesadministrative charges assessed against the policyholder’s fund
involved in the settlement.balance. Interest credited and mortality charges for universal life and
Investments and Investment Income
cash flows to those of corresponding liabilities. Investment strategyGeneral Accounts
and results are affected by the amount and timing of cash available for
Cigna’s investment operations provide investment management and investment, competition for investments, economic conditions,
related services for Cigna’s corporate invested assets and the insurance- interest rates and asset allocation decisions. Cigna routinely monitors
related invested assets in its General Account (‘‘General Account Invested and evaluates the status of its investments, obtaining and analyzing
Assets’’). Cigna acquires or originates, directly or through intermediaries, relevant investment-specific information as well as assessing current
a broad range of investments including private placements and public economic conditions, trends in capital markets and other factors.
securities, commercial mortgage loans, real estate, mezzanine, private Such factors include industry sector considerations for fixed maturity
equity partnerships and short-term investments. Invested assets also investments and mezzanine and private equity partnership
include policy loans, that are fully collateralized by insurance policy cash investments, and geographic and property-type considerations for
values. Invested Assets are managed primarily by Cigna subsidiaries and, commercial mortgage loan and real estate investments.
to a lesser extent, external managers with whom Cigna’s subsidiaries
contract. Net investment income and realized investment gains (losses)
Separate Accountsare included as a component of earnings for each of Cigna’s operating
segments (Global Health Care, Group Disability and Life, Global Cigna subsidiaries or external managers manage Separate Account
Supplemental Benefits, Run-off Reinsurance, and Other Operations) and assets on behalf of contractholders. These assets are legally segregated
Corporate. For additional information about invested assets, see the from the Company’s other businesses and are not included in the
‘‘Investment Assets’’ section of the MD&A beginning on page 56 and General Account Invested Assets. Income, gains and losses generally
Notes 11, 12, 13, 14 and 15 to Cigna’s Consolidated Financial accrue directly to the contractholders.
Statements.
As of December 31, 2012, Cigna’s Separate Account assets consisted
Cigna’s investment strategy is to maximize risk-adjusted yields for the of:
portfolios. Cigna manages the investment portfolios to reflect the
$3.4 billion in separate account assets that constitute a portion of
underlying characteristics of related insurance and contractholder
the assets of the Cigna Pension Plan;
liabilities and capital requirements, as well as regulatory and tax
$3.4 billion in separate account assets that support Variableconsiderations pertaining to those liabilities and state investment laws.
Universal Life products sold as a part of the Company’s corporate-Insurance and contractholder liabilities range from short duration
owned life insurance business, as well as through the Company’shealth care products to longer term obligations associated with
Global Supplemental Benefits segment; anddisability and life products, and the run-off settlement annuity
business. Assets supporting these liabilities are managed in segregated $1.0 billion in separate account assets that support primarily health
investment portfolios to facilitate matching of asset durations and care and other disability and life products.
CIGNA CORPORATION – 2012 Form 10-K 13
F.
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PART I
ITEM 1 Business
Regulation
Cigna and its subsidiaries are subject to comprehensive state, federal reimbursement accounts and flexible spending accounts are also
and international regulations. The laws and regulations governing regulated by the U.S. Department of the Treasury and the Internal
Cigna’s business continue to increase each year and are subject to Revenue Service.
frequent change. Cigna has established policies and procedures to Cigna’s operations, accounts and other books and records are subject
comply with applicable requirements. to examination at regular intervals by regulatory agencies, including
Cigna’s insurance and HMO subsidiaries must be licensed by the state insurance and health and welfare departments, state boards of
jurisdictions in which they conduct business. These subsidiaries are pharmacy and the Centers for Medicare and Medicaid Services to
subject to numerous state and federal regulations related to their assess compliance with applicable laws and regulations. In addition,
business operations, including, but not limited to: Cigna’s current and past business practices are subject to review by,
and from time to time the Company receives subpoenas and otherthe form and content of customer contracts including benefit
requests of information from, various state insurance and health caremandates (including special requirements for small groups,
regulatory authorities, attorneys general, the Office of Inspectorgenerally under 50 employees);
General, and other state and federal authorities, including inquiries
premium rates; by, and testimony before committees and subcommittees of the U.S.
medical loss ratios; Congress regarding certain of its business practices. These
examinations, reviews, subpoenas and requests may result in changesthe content of agreements with participating providers of covered
to or clarifications of Cigna’s business practices, as well as fines,services;
penalties or other sanctions.
producer appointment and compensation;
claims processing and appeals;
Regulatory and Legislative Developments
underwriting practices;
The federal and state governments in the U.S. as well as governments
reinsurance arrangements; in other countries where Cigna does business continue to enact and
unfair trade and claim practices; seriously consider many broad-based legislative and regulatory
proposals that could materially impact various aspects of Cigna’sprotecting the privacy and confidentiality of the information
business.received from customers;
risk sharing arrangements with providers;
Health Care Reformreimbursement or payment levels for Medicare services;
In the first quarter of 2010, Health Care Reform was signed into law.advertising; and
Health Care Reform mandates broad changes in the delivery of health
the operation of consumer-directed plans (including health savings care benefits that may impact the Company’s current business model,
accounts, health reimbursement accounts, flexible spending including its relationship with current and future customers,
accounts and debit cards). producers and health care providers, products, services, processes and
Cigna and its international subsidiaries comply with regulations in technology. Health Care Reform includes, among other requirements,
international jurisdictions where foreign insurers may be faced with provisions for guaranteed coverage and renewal requirements,
more onerous regulations than their domestic competitors. The prohibitions on some annual and all lifetime limits on the dollar
broader regulatory environment may include anti-corruption laws, amount of benefits for essential health services, increased restrictions
economic sanctions laws, various privacy, consumer protection, on rescinding coverage, minimum medical loss ratio and customer
insurance, tax, tariff and trade laws and regulations, corporate rebate requirements, a requirement to cover preventive services on a
governance, employment, intellectual property and investment laws first dollar basis, and greater controls on premium rate increases for
and regulation, discriminatory licensing procedures, compulsory individual and small employer health insurance. It also reduces the
cessions of reinsurance, required localization of records and funds, Medicare Part D coverage gap and reduces payments to private plans
higher premium and income taxes, and requirements for local offering Medicare Advantage, as well as provides for state insurance
participation in an insurer’s ownership. In addition, the expansion of exchanges through which qualified insurers and HMOs will be able to
Cigna’s operations into foreign countries increases the Company’s offer insured plans to individuals and small employers. Certain of the
exposure to certain U.S. laws, such as the Foreign Corrupt Practices law’s provisions became effective between 2010 and 2012 and other
Act of 1977 (FCPA). See page 16 for further discussion of provisions will take effect from 2013 to 2018. Health Care Reform
international regulations. left many of the details of the new law to be established through
regulations. While federal agencies have published interim finalThe business of administering and insuring employee benefit
regulations with respect to certain requirements, many issues remainprograms, particularly health care programs, is heavily regulated by
uncertain.state and federal laws and administrative agencies, such as state
departments of insurance and the federal departments of Labor, The provisions of the new law that became effective between 2010
Health and Human Services, Treasury and Justice and the Internal and 2012 included those requiring coverage of preventive services
Revenue Service, as well as the courts. Health savings accounts, health with no enrollee cost-sharing, banning the use of lifetime and annual
14 CIGNA CORPORATION – 2012 Form 10-K
H.
•
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•
•
•
•
•
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PART I
ITEM 1 Business
limits on the dollar amount of essential health benefits, increasing Management continues to closely monitor the implementation of
restrictions on rescinding coverage and extending coverage of Health Care Reform and is actively engaged with regulators and
dependents to the age of 26. Minimum medical loss ratio policymakers on the conversion of legislation to regulation. In
requirements as prescribed by the Department of Health and Human addition, management is implementing the necessary capabilities to
Services (‘‘HHS’’) became effective in January 2011 and required ensure that the Company is compliant with the law and assessing
payment of premium rebates beginning in 2012 to employers and potential opportunities arising from Health Care Reform.
customers covered under the Company’s comprehensive medical
insurance if certain annual minimum medical loss ratios (‘‘MLR’’) are
Dodd-Frank Act
not met. HHS regulations permit adjustments to be made to the
In 2010, Congress enacted the Dodd-Frank Wall Street Reform andclaims used in the calculation for Cigna’s international health care and
Consumer Protection Act (the ‘‘Dodd-Frank Act’’) that provides for alimited benefit plans subject to the MLR minimums. The adjustment
number of reforms and regulations in the corporate governance,for limited benefit plans is only permitted through 2014.
financial reporting and disclosure, investments, tax and enforcement
Certain other provisions of Health Care Reform will not become
areas that affect Cigna. The SEC and other regulatory authorities
effective until 2013 or later, including: (1) the annual health insurer
engaged in rulemaking efforts under the Dodd-Frank Act throughout
fee on health insurers and HMOs to help fund the expanded coverage
2011 and 2012, and additional rulemaking still continues. The
provided under this legislation; (2) reinsurance assessments on
Dodd-Frank Act established a Federal Insurance Office that will
insurers and HMOs to help stabilize rates in the individual and small
develop and coordinate federal policy on insurance matters. Cigna is
group markets beginning in 2014; (3) the guaranteed issue and
closely monitoring how these regulations impact the Company,
renewal requirements and the requirement that individuals maintain
however the full impact of the legislation may not be known for
coverage, and (4) an excise tax on high-cost employer-sponsored
several years until regulations become fully effective.
coverage. These fees and excise taxes will generally not be tax
deductible with the exception of the reinsurance assessment on
insurers and HMOs. Health Care Reform also changed certain tax Regulation of Insurance Companies
laws that will effectively limit the amount of certain employee
Financial Reporting and Internal Control
compensation that is tax deductible by health insurers.
Regulators closely monitor the financial condition of licensed
Health Care Reform also impacts Cigna’s Medicare Advantage and
insurance companies and HMOs. States regulate the form and
Medicare Part D prescription drug plan businesses acquired with
content of statutory financial statements, the type and concentration
HealthSpring in a variety of additional ways, including reduced
of permitted investments, and corporate governance over financial
Medicare premium rates (which began with the 2011 contract year),
reporting. Cigna’s insurance and HMO subsidiaries are required to
mandated minimum reductions to risk scores (beginning in 2014),
file periodic financial reports and schedules with regulators in most of
transition of Medicare Advantage ‘‘benchmark’’ rates to Medicare
the jurisdictions in which they do business as well as annual financial
fee-for-service parity, reduced enrollment periods and limitations on
statements audited by independent registered public accountants.
disenrollment, providing ‘‘quality bonuses’’ for Medicare Advantage
Certain insurance and HMO subsidiaries are required to file an
plans with a rating for four or five stars from CMS and mandated
annual report of internal control over financial reporting with most
consumer discounts on brand name and generic prescription drugs for
jurisdictions in which they do business. Insurance and HMO
Medicare Part D plan participants in the coverage gap. Beginning in
subsidiaries’ operations and accounts are subject to examination by
2014, Health Care Reform requires Medicare Advantage and
such agencies. Cigna expects states to expand the scope of regulations
Medicare Part D plans to meet a minimum MLR of 85%. Under the
relating to corporate governance and internal control activities of its
rules proposed by HHS, if the MLR for a CMS contract is less than
insurance and HMO subsidiaries as a result of the National
85%, the contractor is required to pay a penalty to CMS and could be
Association of Insurance Commissioners’ (‘‘NAIC’’) amendment to
subject to additional sanctions if the MLR continues to be less than
the Annual Financial Reporting Model Regulation to adopt elements
85% for successive years. Through Health Care Reform and other
of corporate governance and internal control requirements similar to
federal legislation, funding for Medicare Advantage plans has been
those under federal securities’ laws.
and may continue to be altered.
Health Care Reform significantly affects states that can elect to
Guaranty Associations, Indemnity Funds, Risk Poolsestablish their own state exchanges for individual and small employer
and Administrative Fundsinsurance business or allow the federal government to establish and
operate the exchange for them. Cigna, therefore, expects state Most states and certain non-U.S. jurisdictions require insurance
legislatures to focus on legislation to implement Health Care Reform companies to support guaranty associations or indemnity funds that
and to address the impact of Health Care Reform on state budgets. are established to pay claims on behalf of insolvent insurance
companies. In the United States, these associations levy assessmentsOn June 28, 2012, the U.S. Supreme Court upheld the
on member insurers licensed in a particular state to pay such claims.constitutionality of most parts of Health Care Reform, including the
obligation to purchase health care coverage (the ‘‘individual Several states also require HMOs to participate in guaranty funds,
mandate’’). The Company has implemented the provisions of Health special risk pools and administrative funds. For additional
Care Reform that are currently in effect (including the commercial information about guaranty fund and other assessments, see Note 24
minimum MLR requirements) and continues its implementation to Cigna’s Consolidated Financial Statements.
planning for those provisions that must be adopted in the future.
CIGNA CORPORATION – 2012 Form 10-K 15

PART I
ITEM 1 Business
Some states also require health insurers and HMOs to participate in incorporate the concept of ‘‘enterprise risk’’ and to enact provisions
assigned risk plans, joint underwriting authorities, pools or other designed to provide regulators with additional information and
residual market mechanisms to cover risks not acceptable under authority to manage this new concept. To date, a few states have taken
normal underwriting standards. action to adopt the amended Model Act and Regulation. Cigna
continues to follow the states’ activity in this area and will amend its
processes as necessary to comply with revised state laws.
Solvency and Capital Requirements
Many states have adopted some form of the NAIC model solvency-
Marketing, Advertising and Productsrelated laws and risk-based capital rules (‘‘RBC rules’’) for life and
health insurance companies. The RBC rules recommend a minimum In most states, Cigna’s insurance companies and HMO subsidiaries
level of capital depending on the types and quality of investments are required to certify compliance with applicable advertising
held, the types of business written and the types of liabilities incurred. regulations on an annual basis. Cigna’s insurance companies and
If the ratio of the insurer’s adjusted surplus to its risk-based capital falls HMO subsidiaries are also required in most states to file and secure
below statutory required minimums, the insurer could be subject to regulatory approval of products prior to the marketing, advertising,
regulatory actions ranging from increased scrutiny to conservatorship. and sale of such products. State and/or federal regulatory scrutiny of
life and health insurance company and HMO marketing andIn addition, various non-U.S. jurisdictions prescribe minimum
advertising practices, including the adequacy of disclosure regardingsurplus requirements that are based upon solvency, liquidity and
products and their administration, may result in increased regulation.reserve coverage measures. During 2012, Cigna’s HMOs and life and
Products offering limited coverage, such as those Cigna issues throughhealth insurance subsidiaries, as well as non-U.S. insurance
the Star HRG business, continue to attract increased regulatorysubsidiaries, were compliant with applicable RBC and non-U.S.
scrutiny.surplus rules.
In September 2012, the National Association of Insurance
Licensing RequirementsCommissioners adopted the Risk Management and Own Risk and
Solvency Assessment Model Act. The Act provides requirements and Pharmacy Licensure Laws
principles for maintaining a group solvency assessment and a risk
Certain Cigna subsidiaries are pharmacies that dispense prescriptionmanagement framework and reflects a broader and more prospective
drugs to participants of benefit plans administered or insured byapproach to U.S. insurance regulation. The Act, which includes a
Cigna’s HMO and insurance company subsidiaries. These pharmacy-requirement to file an annual ORSA Summary Report in the lead
subsidiaries are subject to state licensing requirements and regulationstate of domicile, now must be adopted into law by each state. Cigna’s
as well as U.S. Drug Enforcement Agency registration requirements.insurance business in the U.S. will be subject to the requirements that
Other laws and regulation affecting Cigna’s pharmacy-subsidiariesare expected to become effective in 2015. Cigna will be prepared to
include federal and state laws concerning labeling, packaging,file an ORSA Summary Report with its lead state regulator consistent
advertising and adulteration of prescription drugs and dispensing ofwith the requirements.
controlled substances.
Cigna’s businesses in the European Union will be subject to the
directive on insurance regulation and solvency requirements known as
International Licensure LawsSolvency II. This directive will impose economic risk-based solvency
requirements and supervisory rules and is expected to become Cigna’s international subsidiaries are often required to be licensed
effective in January 2014, although certain regulators are requiring when entering new markets or starting new operations in certain
companies to demonstrate technical capability and comply with jurisdictions. The licensure requirements for these Cigna subsidiaries
increased capital levels in advance of the effective date. Cigna’s vary by country and are subject to change.
European insurance companies are capitalized at levels consistent with
projected Solvency II requirements and in compliance with
Claim Administration, Utilization Review and Relatedanticipated technical capability requirements.
Services
Certain Cigna subsidiaries contract to provide claim administration,Holding Company Laws
utilization management and other related services for the
Cigna’s domestic insurance companies and certain of its HMOs are administration of self-insured benefit plans. These Cigna subsidiaries
subject to state laws regulating subsidiaries of insurance holding may be subject to state third-party administration and other licensing
companies. Under such laws, certain dividends, distributions and requirements and regulation.
other transactions between an insurance or HMO subsidiary and its
affiliates may require notification to, or approval by, one or more state
International Regulationsinsurance commissioners.
Cigna’s revenue from operations outside the United States exposes theIn December 2010, the NAIC adopted revisions to the Model
Company to laws of multiple jurisdictions and the rules andInsurance Holding Company System Regulatory Act and Regulation.
regulations of various governing bodies and regulators, includingThe revisions were designed to allow a better understanding of the
those related to financial and other disclosures, corporate governance,risks and activities of non-insurance entities within a holding
privacy, data protection, data mining, data transfer, labor andcompany system. The main focus of the revisions has been to
16 CIGNA CORPORATION – 2012 Form 10-K

PART I
ITEM 1 Business
employment, consumer protection and anti-corruption. The Medicare Regulations
operations in countries outside the United States:
Several Cigna subsidiaries, including those acquired in the
are subject to local regulations in the locations in which Cigna HealthSpring transaction, engage in businesses that are subject to
subsidiaries conduct business, federal Medicare regulations such as:
in some cases, are subject to regulations in the locations of those offering individual and group Medicare Advantage (HMO)
customers, and coverage;
in all cases are subject to FCPA. contractual arrangements with the federal government for the
processing of certain Medicare claims and other administrativeFCPA prohibits offering, promising, providing or authorizing others
services; andto give anything of value to a foreign government official to obtain or
retain business or otherwise secure a business advantage. Cigna is also those offering Medicare Pharmacy (Part D) products that are subject
subject to applicable anti-corruption laws in the jurisdictions in which to federal Medicare regulations.
it operates. Additionally, in many countries outside of the U.S., health
In Cigna’s Medicare Advantage business, the Company contracts with
care professionals are employed by the government. Therefore, Cigna’s
the Centers for Medicare and Medicaid Services (‘‘CMS’’) to provide
dealings with them are subject to regulation under the FCPA.
services to Medicare beneficiaries pursuant to their Medicare
Violations of the FCPA and other anti-corruption laws may result in
program. As a result, the Company’s right to obtain payment from
severe criminal and civil sanctions as well as other penalties and the
CMS is subject to compliance with numerous and complex
SEC and Department of Justice have increased their enforcement
regulations and requirements that are frequently modified and subject
activities with respect to FCPA. The UK Bribery Act of 2010, which
to administrative discretion. The marketing and sales activities
went into effect in 2011, is an anti-corruption law that applies to all
(including those of third-party brokers and agents) are also heavily
companies with a nexus to the United Kingdom and whose scope is
regulated by CMS and other governmental agencies.
even broader than the FCPA. It is yet to be seen how the UK Bribery
Several Cigna subsidiaries are also subject to reporting requirementsAct will be enforced, but any voluntary disclosures of FCPA violations
pursuant to Section 111 of the Medicare, Medicaid and SCHIPmay be shared with the UK authorities, thus potentially exposing
Extension Act of 2007.companies to liability and potential penalties in multiple jurisdictions.
Cigna has internal control policies and procedures and has
implemented training and compliance programs for its employees to Federal Audits of Government Sponsored Health Care
deter prohibited practices. However, if Cigna’s employees or agents fail Programs
to comply with applicable laws governing its international operations,
Participation in government sponsored health care programs subjectsthe Company may face investigations, prosecutions and other legal
Cigna to a variety of federal laws and regulations and risks associatedproceedings and actions that could result in civil penalties,
with audits conducted under these programs. These audits may occuradministrative remedies and criminal sanctions. See the Risk Factors
in years subsequent to Cigna providing the relevant services undersection beginning on page 19 for a discussion of the risks related to
audit. These risks may include reimbursement claims as well asoperating globally.
potential fines and penalties. For example, with respect to Cigna’s
Medicare Advantage business, CMS and the Office of the Inspector
Federal Regulations General perform audits to determine a health plan’s compliance with
federal regulations and contractual obligations, including complianceEmployee Retirement Income Security Act and the
with proper coding practices (sometimes referred to as RiskPublic Health Service Act
Adjustment Data Validation Audits or RADV audits) and compliance
Cigna subsidiaries sell most of their products and services to sponsors with fraud and abuse enforcement practices through Recovery Audit
of employee benefit plans that are governed by ERISA. Many of the Contractor (RAC) audits in which third-party contractors conduct
health insurance reform provisions of the Patient Protection and post-payment reviews on a contingency fee basis to detect and correct
Affordable Care Act were incorporated in ERISA, Cigna subsidiaries improper payments. See ‘‘Global Health Care’’ in Section B beginning
are subject to requirements imposed by ERISA affecting claim and on page 2 of this Form 10-K for additional information about Cigna’s
appeals procedures for individual insurance and insured and participation in government health-related programs.
self-insured group health plans and are expected to comply with these
The Federal government has made investigating and prosecutingrequirements on behalf of the dental, disability, life and accident plans
health care fraud and abuse a priority. Fraud and abuse prohibitionsthey administer. These health insurance reform provisions made
encompass a wide range of activities, including kickbacks for referralapplicable to group health plans under ERISA were also incorporated
of customers, billing for unnecessary medical services, improperinto the Public Health Service Act and are directly applicable to health
marketing, and violation of patient privacy rights. The regulationsinsurance issuers (i.e., health insurers and HMOs).
and contractual requirements in this area are complex and subject to
change and compliance will continue to require significant resources.
CIGNA CORPORATION – 2012 Form 10-K 17
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PART I
ITEM 1 Business
regulations, regulating data security and requiring security breachHealth Insurance Portability and Accountability Act
notification that may apply to Cigna in certain circumstances.Regulations
The federal Health Insurance Portability and Accountability Act of
Antitrust Regulations1996 and its implementing regulations (‘‘HIPAA’’) impose
requirements on health insurers, HMOs, health plans, health care Cigna subsidiaries are also engaged in activities that may be
providers and clearinghouses. Health insurers and HMOs are further scrutinized under federal and state antitrust laws and regulations.
subject to regulations related to guaranteed issuance (for groups with These activities include the administration of strategic alliances with
50 or fewer lives), guaranteed renewal, and portability of health competitors, information sharing with competitors and provider
insurance. contracting.
HIPAA also imposes minimum standards for the privacy and security
of protected health information. HIPAA’s privacy and security Anti-Money Laundering Regulations
requirements were expanded by the Health Information Technology
Certain Cigna products (‘‘Covered Products’’ as defined in the Bankfor Economic and Clinical Health Act (‘‘HITECH’’) that enhanced
Secrecy Act) are subject to U.S. Department of the Treasurypenalties for HIPAA violations and requires regulated entities to
anti-money laundering regulations. Cigna has implementedprovide notification to various parties in the event of a breach of
anti-money laundering policies designed to ensure that its Coveredunsecured protected health information. Regulations pursuant to
Products are underwritten and sold in compliance with theseHITECH continue to be promulgated and are monitored and
regulations. Cigna may also be subject to anti-money laundering lawsimplemented as they are finalized.
in non-U.S. jurisdictions where it operates.
HIPAA also established rules that standardize the format and content
of certain electronic transactions, including, but not limited to,
Office of Foreign Assets Controleligibility and claims. Federal regulations were issued requiring
entities subject to HIPAA to update their transaction formats for The Company is also subject to regulation put forth by the Office of
electronic data interchange from HIPAA 4010 to version 5010 Foreign Assets Control of the U.S. Department of the Treasury which
standards and convert from the ICD-9 diagnosis and procedure codes administers and enforces economic and trade sanctions based on U.S.
to the ICD-10 diagnosis and procedure codes. The ICD-10 foreign policy and national security goals against targeted foreign
conversion is required by October 1, 2013, though CMS has countries and regimes, terrorists, international narcotics traffickers,
proposed a rule that would delay the implementation for one year those engaged in activities related to the proliferation of weapons of
until October 1, 2014. mass destruction, and other threats to the national security, foreign
policy or economy of the United States. In addition, Cigna may be
subject to similar regulations in non-U.S. jurisdictions in which itOther Confidentiality Requirements
operates.
The federal Gramm-Leach-Bliley Act generally places restrictions on
the disclosure of non-public information to non-affiliated third
Investment-Related Regulationsparties, and requires financial institutions, including insurers, to
provide customers with notice regarding how their non-public Depending upon their nature, Cigna’s investment management
personal information is used, including an opportunity to ‘‘opt out’’ of activities are subject to U.S. federal securities laws, ERISA, and other
certain disclosures. State departments of insurance and certain federal federal and state laws governing investment related activities. In many
agencies adopted implementing regulations as required by federal law. cases, the investment management activities and investments of
Neither the HIPAA nor the Gramm-Leach-Bliley privacy regulations individual insurance companies are subject to regulation by multiple
preempt more stringent state laws and regulations that apply to Cigna, jurisdictions.
and a number of states have adopted data security laws and
Miscellaneous
Cigna and its principal subsidiaries are not dependent on business submitted by independent brokers and agents, and generally all such
from one or a few customers. No one customer accounted for 10% or business is subject to its approval and acceptance.
more of Cigna’s consolidated revenues in 2012. Cigna and its Cigna had approximately 35,800 employees as of December 31,
principal subsidiaries are not dependent on business from one or a few 2012; 31,400 employees as of December 31, 2011; and 30,600
brokers or agents. In addition, Cigna’s insurance businesses are employees as of December 31, 2010.
generally not committed to accept a fixed portion of the business
18 CIGNA CORPORATION – 2012 Form 10-K
I.

PART I
ITEM 1A Risk Factors
Risk Factors
As a large company operating in a complex industry, Cigna risks and uncertainties that could have a material adverse effect on
encounters a variety of risks and uncertainties including those Cigna’s business, liquidity, results of operations or financial condition.
identified in this Risk Factor discussion and elsewhere in this report. These risks and uncertainties are not the only ones Cigna faces.
Cigna has implemented and maintains enterprise-wide risk Additional risks and uncertainties not presently known to the
management processes, in addition to the risk management processes Company or that it currently believes to be immaterial may also
within its businesses. The factors discussed below represent significant adversely affect Cigna.
Regulatory and Litigation Risks
causing employers to drop health care coverage for their employees;Health Care Reform legislation, as well as potential
additional changes in federal or state regulations, driving potential cost shifting in the health care delivery system to
could have a material adverse effect on Cigna’s health insurance companies and HMOs;
business, results of operations, financial condition
regulating business practices;
and liquidity.
imposing new or increasing taxes and financial assessments;
In 2010, Health Care Reform was signed into law, and it is resulting in
limiting the ability to increase premiums to meet costs (includingsignificant changes to the current U.S. health care system. Health
denial or delays in approval and implementation of those rates); andCare Reform mandates broad changes in the delivery of health care
benefits that may impact the Company’s current business model, significantly reducing the growth of Medicare program payments.
including its relationship with current and future customers,
Accordingly, Health Care Reform, other regulatory reform initiativesproducers and health care providers, products, services, processes and
or additional changes in existing laws or regulations, or theirtechnology. Health Care Reform includes, among other requirements,
interpretations, could have a material adverse effect on the Company’sprovisions for guaranteed coverage and renewal requirements,
business, results of operations, financial condition and liquidity.prohibitions on annual and lifetime limits on the dollar amount of
benefits for essential health services, increased restrictions on The Medicare business acquired with HealthSpring presents
rescinding coverage, minimum medical loss ratio and customer rebate additional risks for Cigna, as the Medicare program has been the
requirements, a requirement to cover preventive services on a first subject of recent regulatory reform initiatives, including Health Care
dollar basis, and greater controls on premium rate increases for Reform. Because Medicare program premiums account for
individual and small employer health insurance. It also reduces the substantially all of the acquired business’s revenue, reductions or less
Medicare Part D coverage gap and reduces payments to private plans than expected increases in funding for Medicare programs (including
offering Medicare Advantage, as well as provides for state insurance the potential effect of sequestration) could significantly reduce the
exchanges through which insurers and HMOs will, if qualified, be Company’s profitability, and non-renewal or termination of Medicare
able to offer insured plans to individuals and small employers. In contracts would substantially impair the acquired business.
addition, the legislation imposes an excise tax on high-cost employer-
In June 2012, the U.S. Supreme Court upheld the constitutionality ofsponsored coverage and annual fees on insurance companies and
most parts of Health Care Reform, but considerable uncertaintyHMOs that will generally not be deductible for income tax purposes
remains and it is difficult to predict the impact of Health Care Reformand therefore may adversely impact the Company’s effective tax rate.
on the business due to the law’s complexity, continuing developmentIt also limits the amount of compensation for executives of insurers
of implementing regulations and interpretive guidance. Cigna isthat is tax deductible.
unable to predict how these events will develop and what impact they
Certain of the law’s provisions became effective between 2010 and will have on Health Care Reform, and in turn, on Cigna.
2012 and other provisions will take effect from 2013 to 2018. Health
For additional information on Health Care Reform, see ‘‘Business –Care Reform left many of the details of the new law to be set forth
Regulation’’ in Section H beginning on page 14 of this Form 10-Kthrough regulations. While federal agencies have published interim
and the ‘‘Introduction’’ section of MD&A beginning on page 32 offinal regulations with respect to certain requirements, many issues
this Form 10-K. See also the description of minimum medical lossremain uncertain, thus the full impact on the Company is not yet
ratio and customer rebate requirements in the ‘‘Business – B. Globalknown. This legislation could impact the Company significantly by:
Health Care’’ section beginning on page 2 of this Form 10-K.
disrupting the employer-based market, which is currently the
primary business model for the Company’s Global Health Care
segment;
CIGNA CORPORATION – 2012 Form 10-K 19
ITEM 1A
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PART I
ITEM 1A Risk Factors
Court decisions and legislative activity may increase Cigna’s exposureCigna’s business is subject to substantial government
for any of these types of claims. In some cases, substantialregulation that, along with new regulation, could
non-economic or punitive damages may be sought. Cigna currentlyincrease its costs of doing business and have a
has insurance coverage for some of these potential liabilities. Other
material adverse effect on its profitability. potential liabilities may not be covered by insurance, insurers may
dispute coverage or the amount of insurance may not be sufficient toCigna’s business is regulated at the international, federal, state and
cover the entire damages awarded. In addition, certain types oflocal levels. The laws and rules governing Cigna’s business and related
damages, such as punitive damages, may not be covered by insurance,interpretations are increasing in number and complexity, are subject
and insurance coverage for all or certain forms of liability may becometo frequent change and can be inconsistent or even conflict with each
unavailable or prohibitively expensive in the future. It is possible thatother. As a public company with global operations, Cigna is subject to
the resolution of one or more of the legal matters and claims describedthe laws of multiple jurisdictions and the rules and regulations of
could result in losses material to Cigna’s results of operations, financialvarious governing bodies, including those related to financial and
condition and liquidity.other disclosures, corporate governance, privacy, data protection,
labor and employment, consumer protection, tax and A description of material pending legal actions and other legal matters
anti-corruption. Cigna must identify, assess and respond to new in which Cigna is currently involved is included in Note 24 to Cigna’s
trends in the legislative and regulatory environments as well as Consolidated Financial Statements included in this Form 10-K. The
effectively comply with the various existing regulations applicable to outcome of litigation and other legal matters is always uncertain, and
its business. Existing or future laws, rules, regulatory interpretations outcomes that are not justified by the evidence or existing law can
or judgments could force Cigna to change how it does business, occur. Cigna believes that it has valid defenses to the legal matters
restrict revenue and enrollment growth, increase health care, pending against it and is defending itself vigorously.
technology and administrative costs, including pension costs and
In addition, there is heightened review by federal and state regulatorscapital requirements, require enhancements to the Company’s
of health care and group disability insurance industry business andcompliance infrastructure and internal controls environment. Existing
reporting practices. Cigna is frequently the subject of regulatoryor future laws and rules could also require Cigna to take other actions
market conduct and other reviews, audits and investigations by statesuch as changing its business practices for disability payments thereby
insurance and health and welfare departments, attorneys general, theincreasing Cigna’s liability in federal and state courts for coverage
Centers for Medicare and Medicaid Services (CMS) and, the Office ofdeterminations, contract interpretation and other actions.
Inspector General (OIG). With respect to Cigna’s Medicare
In addition, Cigna must obtain and maintain regulatory approvals to Advantage business, CMS and OIG perform audits to determine a
market many of its products, to increase prices for certain regulated health plan’s compliance with federal regulations and contractual
products and to consummate some of its acquisitions and divestitures. obligations, including compliance with proper coding practices
Delays in obtaining or failure to obtain or maintain these approvals (sometimes referred to as Risk Adjustment Data Validation Audits or
could reduce the Company’s revenue or increase its costs. For further RADV audits) and compliance with fraud and abuse enforcement
information on regulatory matters relating to Cigna, see ‘‘Business – practices through Recovery Audit Contractor (RAC) audits in which
Regulation’’ in Section H of this Form 10-K. third-party contractors conduct post-payment reviews on a
contingency fee basis to detect and correct improper payments. In
2012, Cigna significantly expanded its Medicare business with itsCigna faces risks related to litigation, regulatory
acquisition of HealthSpring. This expansion of its Medicare businessaudits and investigations.
may increase the risks the Company faces from lawsuits, regulatory
Cigna is routinely involved in numerous claims, lawsuits, regulatory audits, investigations and other regulatory matters. These regulatory
audits, investigations and other legal matters arising in the ordinary reviews could result in changes to or clarifications of Cigna’s business
course of business, including that of administering and insuring practices or retroactive adjustments to certain premiums, and also
employee benefit programs. These could include benefit claims, could result in significant fines, penalties, civil liabilities, criminal
breach of contract actions, tort claims, disputes regarding reinsurance liabilities or other sanctions, that could have a material adverse effect
arrangements, employment and employment discrimination-related on the Company’s business, results of operation, financial condition
suits, employee benefit claims, wage and hour claims, tax, privacy, and liquidity. Additionally, the employee benefits industry remains
intellectual property and real estate related disputes. In addition, under scrutiny by various state and federal government agencies and
Cigna incurs and likely will continue to incur liability for claims could be subject to governmental efforts to bring criminal actions in
related to its health care business, such as failure to pay for or provide circumstances that could previously have given rise only to civil or
health care, poor outcomes for care delivered or arranged, provider administrative proceedings.
disputes, including disputes over compensation, and claims related to
self-funded business. Also, there are currently, and may be in the
future, attempts to bring class action lawsuits against the industry.
20 CIGNA CORPORATION – 2012 Form 10-K

PART I
ITEM 1A Risk Factors
Business Risks
organizational processes smoothly and communicate roles andFuture performance of Cigna’s business will depend
responsibilities clearly.on the Company’s ability to execute on its strategic
and operational initiatives effectively.
As a global company, Cigna faces political, legal,The future performance of Cigna’s business will depend in large part
operational, regulatory, economic and other riskson Cigna’s ability to effectively implement and execute its strategic
that present challenges and could negatively affect itsand operational initiatives that include: (1) driving growth in targeted
geographies, product lines, buying segments and distribution multinational operations or the Company’s long-term
channels; (2) improving its strategic and financial flexibility; and growth.
(3) pursuing additional opportunities in high-growth markets with
As a global company, Cigna’s business is increasingly exposed to risksparticular focus on individuals.
inherent in foreign operations. These risks, which can vary
Successful execution of these strategic and operational initiatives substantially by market, include political, legal, operational,
depends on a number of factors including: regulatory, economic and other risks, including government
intervention and censorship that the Company does not face in itsdifferentiating Cigna’s products and services from those of its
U.S. operations. The global nature of Cigna’s business and operationscompetitors by leveraging its health advocacy capabilities and other
presents challenges including, but not limited, to those arising from:strengths in targeted markets, geographies and buyer segments;
varying regional and geopolitical business conditions and demands;developing and introducing new products or programs, particularly
in response to government regulation and the increased focus on discriminatory regulation, nationalization or expropriation of assets;
consumer directed products;
price controls or other pricing issues and exchange controls or other
identifying and introducing the proper mix or integration of restrictions that prevent it from transferring funds from these
products that will be accepted by the marketplace; operations out of the countries in which it operates or converting
local currencies that our foreign operations hold into U.S. dollars orattracting and retaining sufficient numbers of qualified employees;
other currencies;
attracting and engaging a sufficient number of qualified partners,
foreign currency exchange rates and fluctuations that may have anincluding physicians partners in an environment with a growing
impact on the future costs or on future sales and cash flows from theshortage of primary care physicians;
Company’s international operations, and any measures that it may
effectively managing balance sheet exposures, including the implement to reduce the effect of volatile currencies and other risks
Company’s pension funding obligation; of its international operations may not be effective;
improving medical cost competitiveness in targeted markets; and reliance on local sales forces for some of its operations in countries
that may have labor problems and less flexible employeereducing Cigna HealthCare’s medical operating expenses to achieve
relationships that can be difficult and expensive to terminate, orsustainable benefits.
where changes in local regulation or law may disrupt the business
If these initiatives fail or are not executed effectively, it could harm the operations;
Company’s consolidated financial position and results of operations.
risk associated with managing Cigna’s partner relationships inFor example, reducing operating expenses while maintaining the
accordance with business objectives in countries where our foreignnecessary resources and the Company’s talent pool is important to the
businesses voluntarily operate or are required to operate with localCompany and, if not managed effectively, could have long-term
business partners;effects on the business such as failure to maintain or improve the
quality of its products and limiting its ability to retain or hire key challenges associated with managing more geographically diverse
personnel. In addition, to succeed, the Company must align its operations and projects;
organization to its strategy. Cigna must effectively integrate its
the need to provide sufficient levels of technical support in differentoperations, including its most recently acquired businesses, actively
locations;work to ensure consistency throughout the organization, and promote
a global mind-set and a focus on individual customers. If the political instability or acts of war, terrorism, natural disasters,
Company fails to do so, it may be unable to grow as planned, or the pandemics in locations where Cigna operates; and
result of expansion may be unsatisfactory. Also, the current
general economic and political conditions.competitive, economic and regulatory environment will require
Cigna’s organization to adapt rapidly and nimbly to new These factors may increase in importance as Cigna continues to
opportunities and challenges. The Company will be unable to do so if expand globally, and any one of these challenges could negatively
it does not make important decisions quickly, define its appetite for affect the Company’s operations or its long-term growth. Currently,
risk specifically, implement new governance, managerial and South Korea is the single largest geographic market in Cigna’s Global
CIGNA CORPORATION – 2012 Form 10-K 21
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PART I
ITEM 1A Risk Factors
Supplemental Benefits segment. South Korea generated 54% of the outsources selected services or selected functions to third parties in
segment’s revenues and 90% of the segment’s earnings in 2012. Due foreign jurisdictions, the Company could be exposed to risks inherent
to the concentration of business in South Korea, the Global in conducting business outside of the United States, including
Supplemental Benefits segment is exposed to potential losses resulting international economic and political conditions, and the additional
from economic and geopolitical developments in that country, as well costs associated with complying with foreign laws and fluctuations in
as foreign currency movements affecting the South Korean currency, currency values.
that could have a significant impact on the segment’s results and the
The expanding role of third party service vendors may also require
Company’s consolidated financial results. Further, expansion into new
changes to Cigna’s existing operations and the adoption of new
markets may require considerable management time before any
procedures and processes for retaining and managing these providers,
significant revenues and earnings are generated, that could divert
as well as redistributing responsibilities as needed, in order to realize
management’s attention from other strategic activities.
the potential productivity and operational efficiencies. Effective
International operations also require the Company to devote management, development and implementation of its outsourcing
significant management resources to implement its controls and strategies are important to Cigna’s business and strategy. If there are
systems in new markets, to comply with the U.S. anti-bribery and delays or difficulties in enhancing business processes or its third party
anti-corruption as well as anti-money laundering provisions and providers do not perform as anticipated, Cigna may not fully realize
similar laws in local jurisdictions and to overcome logistical and other on a timely basis the anticipated economic and other benefits of the
challenges based on differing languages, cultures and time zones. outsourcing projects or other relationships it enters into with key
Violations of these laws and regulations could result in fines, criminal vendors, which could result in substantial costs or regulatory
sanctions against the Company, its officers or employees, prohibitions compliance issues, divert management’s attention from other strategic
on the conduct of its business, and reputational harm. Cigna must activities, negatively affect employee morale or create other
regularly reassess the size, capability and location of its global operational or financial problems for the Company. Terminating or
infrastructure and make appropriate changes, and must have effective transitioning arrangements with key vendors could result in
change management processes and internal controls in place to additional costs and risks of operational delays, potential errors and
address changes in its business and operations. Cigna’s success possible control issues as a result of the termination or during the
depends, in part, on its ability to anticipate these risks and manage transition phase.
these difficulties, and the failure to do so could have a material adverse
effect on Cigna’s business, results of operations, financial condition,
Acquisitions, including HealthSpring, involve risksliquidity and long-term growth.
and the Company may not realize the expected
benefits because of integration difficulties,
Successful management of Cigna’s outsourcing underperformance relative to Cigna’s expectations
projects and key vendors including taking steps to and other challenges.
ensure that third parties that obtain access to
As part of the Company’s growth strategy, Cigna regularly considerssensitive personal information maintain its
strategic transactions, including acquisitions, with the expectationconfidentiality and security, is important to its
that these transactions will result in various benefits. Cigna’s ability to
business. achieve the anticipated benefits of acquisitions is subject to a number
of uncertainties, including whether Cigna integrates its acquiredTo improve operating costs, productivity and efficiencies, Cigna
companies in an efficient and effective manner, the performance ofoutsources selected functions to third parties. Cigna takes steps to
the acquired businesses and general competitive factors in themonitor and regulate the performance of independent third parties
marketplace. Failure to achieve these anticipated benefits could resultwho provide services or to whom the Company delegates selected
in increased costs, decreases in expected revenues, goodwillfunctions. These third parties include information technology system
impairment charges, and diversion of management’s time and energy.providers, independent practice associations, providers of medical
management services, call center and claim service providers and In January 2012, Cigna acquired HealthSpring, an operator of
various types of other service providers. Medicare Advantage coordinated care plans in 13 states and the
District of Columbia. The success of the HealthSpring acquisitionArrangements with key vendors may make Cigna’s operations
depends on Cigna’s ability to integrate HealthSpring with its existingvulnerable if third parties fail to satisfy their obligations to the
businesses and the performance of the acquired business. TheCompany, including their obligations to maintain and protect the
potential difficulties of integrating the operations of HealthSpring andsecurity and confidentiality of the Company’s information and data,
achieving the performance expected of the acquired businessesas a result of their performance, changes in their own operations,
include: implementing the Company’s business plan for the combinedfinancial condition, or other matters outside of Cigna’s control. The
business; executing Cigna’s growth plans by leveraging its capabilitiesCompany has limited control over the actions of third-party providers
and those of the businesses acquired in serving the Seniors segment;even though contracts provide certain protections. Noncompliance
unanticipated issues in integrating logistics, information,with any privacy or security laws and regulations or any security
communications and other systems; changes in applicable laws andbreach involving one of its third-party service providers could have a
regulations or conditions imposed by regulators; retaining keymaterial adverse effect on its business, results of operations, financial
employees; operating risks inherent in HealthSpring’s business andcondition, liquidity and reputation. In addition, to the extent Cigna
22 CIGNA CORPORATION – 2012 Form 10-K

PART I
ITEM 1A Risk Factors
Cigna’s business; retaining and growing membership; renewing or processed as quickly as clients desire, decreased levels of client service
successfully rebidding for contracts with CMS, including maintaining and client satisfaction, and harm to Cigna’s reputation. Because
or improving upon the CMS performance plan star ratings; leveraging Cigna’s information technology and telecommunications systems
the information technology platform of the acquired businesses; and interface with and depend on third-party systems, Cigna could
unanticipated issues, costs, obligations and liabilities. If Cigna is experience service denials if demand for such service exceeds capacity
unable to integrate the HealthSpring business successfully, or if the or a third-party system fails or experiences an interruption. If
acquired business’ performance evaluations under contracts with sustained or repeated, such a business interruption, systems failure or
CMS are adverse, these factors could have a material adverse effect on service denial could result in a deterioration of Cigna’s ability to pay
Cigna’s business, results of operations, financial condition and claims in a timely manner, provide customer service, write and process
liquidity and could affect expectations for future revenue and earnings new and renewal business, or perform other necessary corporate
growth. functions, and could have a material adverse effect on Cigna’s
business, results of operations, financial condition and liquidity.
Effective internal controls are necessary for the Company to provide
reliable and accurate financial reports and to mitigate the risk of fraud. Like other companies in our industry, we have been and may in the
The integration of acquired businesses is likely to result in Cigna’s future be the subject of cybersecurity breaches. Computer systems
systems and controls becoming increasingly complex and more may be vulnerable to physical break-ins, computer viruses,
difficult to manage. Any difficulties in the assimilation of acquired programming errors, attacks by third parties or similar disruptive
businesses into the Company’s control system could cause it to fail to problems. If a cybersecurity breach of Cigna’s computer systems or the
meet its financial reporting obligations. Ineffective internal controls computer systems of a third-party service provider occurs, it could also
could also cause investors to lose confidence in the Company’s interrupt Cigna’s operations and damage Cigna’s reputation. Cigna
reported financial information, which could have a negative effect on could also be subject to liability if sensitive customer information is
the trading price of Cigna’s stock and its access to capital. misappropriated. Any publicized compromise of security could result
in a loss of existing or new customers, increased operating expenses,
financial losses, and additional litigation or other claims that could
Cigna’s business depends on its ability to properly have a material adverse effect on Cigna’s business, results of
maintain the integrity of its data and the operations, financial condition and liquidity.
uninterrupted operation of its systems and business
functions, including information technology and
Effective investment in and execution ofother business systems.
improvements in the Company’s information
Cigna’s business depends on effective information systems and the technology infrastructure and functionality are
integrity and timeliness of the data it uses to run its business. Cigna’s important to its strategy and failure to do so may
business strategy requires providing customers and health care impede its ability to deliver the services required in
professionals with Internet-enabled products and information to meet
the evolving marketplace at a competitive cost.their needs. Cigna’s ability to adequately price its products and
services, establish reserves, provide effective and efficient service to its Cigna’s information technology strategy and execution are critical to
customers, and to timely and accurately report its financial results also the continued success of the Company. Increasing regulatory and
depends significantly on the integrity of the data in its information legislative mandated changes will place additional demands on Cigna’s
systems. If the information Cigna relies upon to run its businesses information technology infrastructure, which could have a direct
were found to be inaccurate or unreliable due to fraud or other error, impact on available resources for projects more directly tied to
or if Cigna (or the third-party service parties it utilizes) were to fail to strategic initiatives. The Company must continue to invest in
maintain information systems and data integrity effectively, the long-term solutions that will enable it to anticipate customer needs
Company could experience difficulties with: operational disruptions and expectations, enhance the customer experience and act as a
(that may impact customers and health care professionals); differentiator in the market. Cigna’s success is dependent, in large
determining medical cost estimates and establishing appropriate part, on maintaining the effectiveness of existing technology systems
pricing; retaining and attracting customers; regulatory compliance and continuing to deliver and enhance technology systems that
and other challenges. support the Company’s business processes in a cost-efficient and
resource-efficient manner. Cigna also must develop new systems toIn addition, Cigna’s business is highly dependent upon its ability to
meet current market standards and keep pace with continuingperform, in an efficient and uninterrupted fashion, its necessary
changes in information processing technology, evolving industry andbusiness functions, such as: claims processing and payment; internet
regulatory standards and customer needs. Failure to do so may impedesupport and customer call centers; and the processing of new and
the Company’s ability to deliver services at a competitive cost.renewal business. Failure to comply with relevant regulations, a power
Furthermore, system development projects are long-term in nature,outage, pandemic, cyber-attack or other failure of one or more of
may be more costly than expected to complete and may not deliver theinformation technology, telecommunications or other systems could
expected benefits upon completion.cause slower system response times resulting in claims not being
CIGNA CORPORATION – 2012 Form 10-K 23

PART I
ITEM 1A Risk Factors
Effective prevention, detection and control systems In operating its onsite clinics and medical facilities,
are critical to maintain regulatory compliance and the Company may be subject to additional liability,
prevent fraud and failure of these systems could that could result in significant time and expense and
adversely affect the Company. divert management’s attention from other strategic
activities.Failure of Cigna’s prevention, detection or control systems related to
regulatory compliance or the failure of employees to comply with The Company employs physicians, nurse practitioners, nurses and
Cigna’s internal policies, including data systems security or unethical other health care professionals at onsite low acuity and primary care
conduct by managers and employees, could adversely affect Cigna’s clinics it operates for the Company’s customers (as well as certain
reputation and also expose it to litigation and other proceedings, fines clinics for Company employees). Through the HealthSpring business
and penalties. Federal and state governments have made investigating acquired in 2012, Cigna also operates LivingWell health centers and
and prosecuting health care and other insurance fraud and abuse a health care practices for its customers. In addition, the Company
priority. Fraud and abuse prohibitions encompass a wide range of owns and operates medical facilities in the Phoenix, Arizona
activities, including kickbacks for referral of members, billing for metropolitan area, including multispecialty health care centers,
unnecessary medical services, improper marketing, and violations of outpatient surgery and urgent care centers, low acuity clinics,
patient privacy rights. The regulations and contractual requirements laboratory, pharmacy and other operations that employ primary care
applicable to the Company are complex and subject to change. In as well as specialty care physicians and other types of health care
addition, ongoing vigorous law enforcement, a highly technical professionals. As a direct employer of health care professionals and as
regulatory scheme and the Dodd-Frank legislation and related an operator of primary and low-acuity care clinics and other types of
regulations being adopted to enhance regulators’ enforcement powers medical facilities, the Company is subject to liability for negligent
and whistleblower incentives and protections, mean that Cigna’s acts, omissions, or injuries occurring at one of its clinics or caused by
compliance efforts in this area will continue to require significant one of its employees. Even if any claims brought against the Company
resources. were unsuccessful or without merit, it would have to defend against
such claims. The defense of any actions may be time-consuming andIn addition, provider or customer fraud that is not prevented or
costly, and may distract management. As a result, Cigna may incurdetected could impact Cigna’s medical costs or those of its self-insured
significant expenses that could have a material adverse effect oncustomers. Further, during an economic downturn, Cigna’s segments,
Cigna’s business, results of operations, financial condition, andincluding Global Health Care, Group Disability and Life and Global
liquidity.Supplemental Benefits, may see increased fraudulent claims volume
that may lead to additional costs due to an increase in disputed claims
and litigation. Cigna faces competitive pressure, particularly price
competition, that could result in premiums which are
insufficient to cover the cost of the health careCigna’s pharmacy benefit management business is
services delivered to its members and inadequatesubject to a number of risks and uncertainties, in
medical claims reserves.addition to those Cigna faces with its health care
business. While health plans compete on the basis of many factors, including
service quality of clinical resources, claims administration services andCigna’s pharmacy benefit management business is subject to federal
medical management programs, and quality, sufficiency and costand state regulation, including federal and state anti-remuneration
effectiveness of health care professional network relationships, Cignalaws, ERISA, HIPAA and laws related to the operation of Internet and
expects that price will continue to be a significant basis ofmail-service pharmacies. Noncompliance with such regulations could
competition. Cigna’s customer contracts are subject to negotiation ashave a material adverse effect on Cigna’s business, results of
customers seek to contain their costs, and customers may elect tooperations, financial condition, liquidity and reputation.
reduce benefits in order to constrain increases in their benefit costs.
The Company’s pharmacy benefit management business would also Such an election may result in lower premiums for the Company’s
be adversely affected by an inability to contract on favorable terms products, and even though it may also reduce Cigna’s costs, it could
with pharmaceutical manufacturers and could suffer claims and still adversely affect Cigna’s financial results. Alternatively, the
reputational harm in connection with purported errors by Cigna’s Company’s customers may purchase different types of products that
mail order or retail pharmacy businesses. Disruptions at any of the are less profitable, or move to a competitor to obtain more favorable
Company’s pharmacy business facilities due to failure of technology or premiums.
any other failure or disruption to these systems or to the infrastructure
Factors such as business consolidations, strategic alliances, legislativedue to fire, electrical outage, natural disaster, acts of terrorism or some
reform and marketing practices create pressure to contain premiumother catastrophic event could reduce Cigna’s ability to process and
price increases, despite increasing medical costs. For example, thedispense prescriptions and provide products and services to customers,
Gramm-Leach-Bliley Act gives banks and other financial institutionsthat could have a material adverse effect on Cigna’s business, results of
the ability to be affiliated with insurance companies that may lead tooperations, financial condition and liquidity.
new competitors with significant financial resources in the insurance
and health benefits fields. The Company’s product margins and
24 CIGNA CORPORATION – 2012 Form 10-K

PART I
ITEM 1A Risk Factors
growth depend, in part, on its ability to compete effectively in its Substantially all of the Company’s investment assets are in fixed
markets, set rates appropriately in highly competitive markets to keep interest-yielding debt securities of varying maturities, fixed
or increase its market share, increase membership as planned, and redeemable preferred securities and commercial mortgage loans. The
avoid losing accounts with favorable medical cost experience while value of these investment assets can fluctuate significantly with
retaining or increasing membership in accounts with unfavorable changes in market conditions. A rise in interest rates could reduce the
medical cost experience. value of the Company’s investment portfolio and increase interest
expense if Cigna were to access its available lines of credit.
Cigna’s profitability depends, in part, on its ability to accurately
predict and control future health care costs through underwriting The Company is also exposed to interest rate and equity risk
criteria, provider contracting, utilization management and product associated with the Company’s pension and other post-retirement
design. Premiums in the health care business are generally fixed for obligations. Sustained declines in interest rates could have an adverse
one-year periods. Accordingly, future cost increases in excess of impact on the funded status of the Company’s pension plans and the
medical cost projections reflected in pricing cannot generally be Company’s reinvestment yield on new investments.
recovered in the current contract year through higher premiums.
Although Cigna bases the premiums it charges on its estimate of
A downgrade in the financial strength ratings offuture health care costs over the fixed premium period, actual costs
Cigna’s insurance subsidiaries could adversely affectmay exceed what was estimated and reflected in premiums. Factors
new sales and retention of current business, and athat may cause actual costs to exceed premiums include: medical cost
inflation; higher than expected utilization of medical services; the downgrade in Cigna’s debt ratings would increase the
introduction of new or costly treatments and technology; and cost of borrowed funds and affect the Company’s
membership mix. ability to access capital.
Cigna records medical claims reserves for estimated future payments. Financial strength, claims paying ability and debt ratings by
The Company continually reviews estimates of future payments recognized rating organizations are an important factor in establishing
relating to medical claims costs for services incurred in the current and the competitive position of insurance companies and health benefits
prior periods and makes necessary adjustments to its reserves. companies. Ratings information by nationally recognized ratings
However, actual health care costs may exceed what was estimated. agencies is broadly disseminated and generally used throughout the
industry. Cigna believes the claims paying ability and financial
strength ratings of its principal insurance subsidiaries are an importantSignificant stock market declines could result in
factor in marketing its products to certain of Cigna’s customers. Inadditional pension obligations, increased funding for
addition, Cigna Corporation’s debt ratings impact both the cost and
those obligations, and increased pension plan availability of future borrowings, and accordingly, its cost of capital.
expenses. Each of the rating agencies reviews Cigna’s ratings periodically and
there can be no assurance that current ratings will be maintained inCigna currently has unfunded obligations in its frozen pension plans.
the future. In addition, a downgrade of these ratings could make itA significant decline in the value of the plan’s equity and fixed income
more difficult to raise capital and to support business growth atinvestments or unfavorable changes in applicable laws or regulations
Cigna’s insurance subsidiaries.could materially increase Cigna’s expenses and change the timing and
amount of required plan funding that could reduce the cash available Insurance ratings represent the opinions of the rating agencies on the
to Cigna, including its subsidiaries. See Note 10 to Cigna’s financial strength of a company and its capacity to meet the
Consolidated Financial Statements for more information on the obligations of insurance policies. The principal agencies that rate
Company’s obligations under the pension plan. Cigna’s insurance subsidiaries characterize their insurance rating scales
as follows:
Significant changes in market interest rates affect the A.M. Best Company, Inc. (‘‘A.M. Best’’), A++ to S (‘‘Superior’’ to
‘‘Suspended’’);value of Cigna’s financial instruments that promise a
fixed return or benefit and the value of particular Moody’s Investors Service (‘‘Moody’s’’), Aaa to C (‘‘Exceptional’’ to
assets and liabilities. ‘‘Lowest’’);
As an insurer, Cigna has substantial investment assets that support Standard & Poor’s Corp. (‘‘S&P’’), AAA to R (‘‘Extremely Strong’’
insurance and contractholder deposit liabilities. Generally low levels to ‘‘Regulatory Action’’); and
of interest rates on investments, such as those experienced in United
Fitch, Inc. (‘‘Fitch’’), AAA to D (‘‘Exceptionally Strong’’ to ‘‘OrderStates and foreign financial markets during recent years, have
of Liquidation’’).negatively impacted the level of investment income earned by the
Company in recent periods, and such lower levels of investment
income would continue if these lower interest rates were to continue.
CIGNA CORPORATION – 2012 Form 10-K 25
•
•
•
•

PART I
ITEM 1A Risk Factors
As of February 28, 2013, the insurance financial strength ratings were as follows for the Cigna subsidiaries, Connecticut General Life Insurance
Company (‘‘CGLIC’’), Life Insurance Company of North America (‘‘LINA’’) and Cigna Health & Life Insurance Company (‘‘CHLIC’’):
CGLIC LINA CHLIC
Insurance Ratings (1) Insurance Ratings (1) Insurance Ratings (1)
A.M. Best A A A
(‘‘Excellent,’’ 3rd of 16) (‘‘Excellent,’’ 3rd of 16) (‘‘Excellent,’’ 3rd of 16)
Moody’s A2 A2 A2
(‘‘Good,’’ 6th of 21) (‘‘Good,’’ 6th of 21) (‘‘Good,’’ 6th of 21)
S&P A A
(‘‘Strong,’’ 6th of 21) (Not Rated) (‘‘Strong,’’ 6th of 21)
Fitch A A
(‘‘Strong,’’ 6th of 19) (‘‘Strong,’’ 6th of 19) (Not Rated)
(1) Includes the rating assigned, the agency’s characterization of the rating and the position of the rating in the agency’s rating scale (e.g., CGLIC’s rating by A.M. Best is the 3rd highest rating
awarded in its scale of 16).
and uncertainty regarding the U.S. fiscal position, geopolitical issues,Global market, economic and geopolitical
the availability and cost of credit and other capital, consumerconditions may cause fluctuations in equity market
spending and other factors continue to negatively impact expectationsprices, interest rates and credit spreads, which
for the U.S. and global economy. Unfavorable economic conditions
could impact the Company’s ability to raise or could cause lower enrollment in our plans and negatively impact the
deploy capital as well as affect the Company’s demand for certain of our products and services as employers try to
overall liquidity. reduce their operating costs. As a result, they may modify, delay or
cancel plans to purchase the Company’s products, may make changesIf the equity markets and credit market experience extreme volatility
in the mix of products purchased that are unfavorable to theand disruption, there could be downward pressure on stock prices and
Company, or may be forced to reduce their workforces. Specifically,credit capacity for certain issuers without regard to those issuers’
higher unemployment rates as a result of an economic downturnunderlying financial strength. Extreme disruption in the credit
could lead to lower enrollment in the Company’s employer groupmarkets could adversely impact the Company’s availability and cost of
plans, lower enrollment in our non-employer individual plans and acredit in the future. In addition, unpredictable or unstable market
higher number of employees opting out of Cigna’s employer groupconditions or continued pressure in the global or U.S. economy, such
plans. The adverse economic conditions could also cause employers toas the sovereign debt crisis in the European Union and uncertainty
stop offering certain health care coverage as an employee benefit orregarding the U.S. fiscal position, including with respect to the federal
elect to offer this coverage on a voluntary, employee-funded basis as adebt ceiling, could result in reduced opportunities to find suitable
means to reduce their operating costs. All of these developments couldopportunities to raise capital.
lead to a decrease in Cigna’s membership levels and premium and fee
In November 2011, Cigna issued $2.1 billion in aggregate principal revenues. Additionally, Cigna’s previous disability claim experience
amount of senior notes to finance part of the cost for the and industry data indicate that submitted disability claims rise under
HealthSpring acquisition. As of December 31, 2012, the Company’s adverse economic conditions, although the impact of the current
outstanding long-term debt totaled $5.0 billion. Cigna’s increased adverse economic conditions is not clear. Further, if customers are not
debt obligations could make the Company more vulnerable to general successful in generating sufficient revenue or are precluded from
adverse economic and industry conditions and require the Company securing financing, they may not be able to pay, or may delay payment
to dedicate increased cash flow from operations to the payment of of, accounts receivable that are owed to the Company. Further, our
principal and interest on its debt, thereby reducing the funds it has customers or potential customers may force us to compete more
available for other purposes, such as investments in ongoing vigorously on factors such as price and service to retain or obtain their
businesses, acquisitions, dividends and stock repurchases. In these business. All of these could lead to a decrease in our membership levels
circumstances, the Company’s ability to execute on its strategy may be and revenues, and could materially and adversely affect our business,
limited, its flexibility in planning for or reacting to changes in its results of operations and financial condition. In addition, a prolonged
business and market conditions may be reduced, or its access to capital unfavorable economic environment could adversely impact the
markets may be limited such that additional capital may not be financial position of hospitals and other care providers, which could
available or may only be available on unfavorable terms. increase our medical costs as hospitals and other care providers
attempt to maintain revenue levels in their efforts to adjust to their
own economic challenges. The same conditions that may affect
Unfavorable developments in economic conditions Cigna’s customers and network also could adversely affect its vendors,
may adversely affect our business, results of causing them to significantly and quickly increase their prices or
operations and financial condition. reduce their output. Cigna’s business depends on its ability to perform
its necessary business functions in an efficient and uninterruptedThe economic conditions in the U.S. and globally continue to be
fashion.challenging. Continued concerns about slow economic growth, high
unemployment rates, the sovereign debt crisis in the European Union
26 CIGNA CORPORATION – 2012 Form 10-K

PART I
ITEM 1A Risk Factors
During a prolonged unfavorable economic environment, state and reinsured by Berkshire Hathaway Life Insurance Company of
federal budgets could be materially and adversely affected, resulting in Nebraska on February 4, 2013.
reduced reimbursements or payments in federal and state government
Under all reinsurance arrangements, reinsurers assume insured losses,
coverage programs, such as Medicare and social security. In addition,
subject to certain limitations or exceptions that may include a loss
the state and federal budgetary pressures could cause the government
limit. These arrangements also subject Cigna to various obligations,
to impose new or a higher level of taxes or assessments on us, such as
representations and warranties with the reinsurers. Reinsurance does
premium taxes on insurance companies and health maintenance
not relieve the Company of liability as the originating insurer. Cigna
organizations and surcharges or fees on select fee-for-service and
remains liable to the underlying policyholders if a reinsurer defaults
capitated medical claims. Although we could attempt to mitigate or
on obligations under the reinsurance arrangement. Although the
cover our exposure from such increased costs through, among other
Company regularly evaluates the financial condition of reinsurers to
things, increases in premiums, there can be no assurance that we will
minimize exposure to significant losses from reinsurer insolvencies,
be able to mitigate or cover all of such costs which may have a material
reinsurers may become financially unsound. If a reinsurer fails to meet
adverse effect on our business, results of operations, financial
its obligations under the reinsurance contract or if the liabilities
condition and liquidity.
exceed any applicable loss limit, the Company will be forced to cover
the claims on the reinsured policies.
Cigna is subject to the credit risk of its reinsurers. The collectability of amounts due from reinsurers is subject to
uncertainty arising from a number of factors, including whether theCigna enters into reinsurance arrangements with other insurance
insured losses meet the qualifying conditions of the reinsurancecompanies, primarily to limit losses from large exposures or to permit
contract, whether reinsurers or their affiliates have the financialrecovery of a portion of direct losses. The Company may also enter
capacity and willingness to make payments under the terms of theinto reinsurance arrangements in connection with acquisition or
reinsurance contract, and the magnitude and type of collateraldivestiture transactions where the underwriting company is not being
supporting the Company’s reinsurance recoverable, such as byacquired or sold. The run-off businesses that Cigna has effectively
sufficient qualifying assets in trusts or letters of credit issued.exited through reinsurance include, among others: the retirement
Although a portion of the Company’s reinsurance exposures arebenefit business reinsured by Prudential Retirement Insurance and
secured, the inability to collect a material recovery from a reinsurerAnnuity Company; the individual life insurance and annuity business
could have a material adverse effect on the Company’s results ofreinsured by Lincoln National Life Insurance Company and Lincoln
operations, financial condition and liquidity.Life and Annuity of New York; and the VADBe and GMIB businesses
CIGNA CORPORATION – 2012 Form 10-K 27

PART I
ITEM 1B Unresolved Staff Comments
Unresolved Staff Comments
None.
Properties
Cigna’s global real estate portfolio consists of approximately Services, Core Medical and Service Operations and the domestic
8.1 million square feet of owned and leased properties. Our domestic office of Cigna’s Global Supplemental Benefits business are the Wilde
portfolio has approximately 6.7 million square feet in 40 states, the Building located at 900 Cottage Grove Road in Bloomfield,
District of Columbia, and Puerto Rico. Our International properties Connecticut (Cigna’s corporate headquarters) and Two Liberty Place
contain approximately 1.4 million square feet located throughout the located at 1601 Chestnut Street in Philadelphia, Pennsylvania. The
following countries: Belgium, Canada, China, France, Germany, Wilde Building measures approximately 833,000 square feet and is
Hong Kong, India, Indonesia, Ireland, Italy, Malaysia, Netherlands, owned, while Two Liberty Place measures approximately 462,000
New Zealand, Singapore, South Korea, Spain, Sweden, Switzerland, square feet and is leased office space.
Taiwan, Thailand, Turkey, United Arab Emirates, and the United
Cigna believes its properties are adequate and suitable for its business
Kingdom.
as presently conducted. The foregoing does not include information
Our principal, domestic office locations, including various support on investment properties.
operations, along with Group Disability and Life Insurance, Health
Legal Proceedings
The information contained under ‘‘Litigation and Other Legal Matters’’ in Note 24 to Cigna’s Financial Statements beginning on page 122 of this
Form 10-K, is incorporated herein by reference.
Mine Safety Disclosures
Not applicable.
28 CIGNA CORPORATION – 2012 Form 10-K
ITEM 1B
ITEM 2
ITEM 3
ITEM 4

PART I
EXECUTIVE OFFICERS OF THE REGISTRANT
All officers are elected to serve for a one-year term or until their NICOLE S. JONES, 42, Executive Vice President and General
successors are elected. Principal occupations and employment during Counsel of Cigna beginning June 2011; Senior Vice President and
the past five years are listed below. General Counsel of Lincoln Financial Group from May 2010 until
June 2011; Vice President and Deputy General Counsel of Cigna
MARK L. BOXER, 53, Executive Vice President and Global Chief
from April 2008 until May 2010; Vice President and Chief Counsel
Information Officer of Cigna beginning April 2011; Deputy Chief
of Domestic Health Service, Securities and Investment Law of Cigna
Information Officer, Xerox Corporation; Group President,
from September 2006 until April 2008; and Corporate Secretary of
Government Health Care, for Xerox Corporation/Affiliated
Cigna from September 2006 until April 2010.
Computer Services from March 2009 until April 2011; Executive
Vice President and President of Wellpoint’s Operations, Technology MATTHEW G. MANDERS, 51, President, Regional and
and Government Services unit, as well as other senior management Operations beginning November 2011; President, U.S. Service,
roles at WellPoint from November 2000 until November 2008. Clinical and Specialty from January 2010 until November 2011;
President of Cigna HealthCare, Total Health, Productivity,
DAVID M. CORDANI, 47, Chief Executive Officer of Cigna
Network & Middle Market from June 2009 until January 2010; and
beginning December 2009; Director since 2009; President beginning
President, of Cigna’s Customer Segments from July 2006 until June
June 2008; Chief Operating Officer from June 2008 until December
2009.
2009; and President of Cigna HealthCare from July 2005 until June
2008. JOHN M. MURABITO, 54, Executive Vice President, Human
Resources and Services of Cigna beginning August 2003.
HERBERT A. FRITCH, 61, President, Cigna HealthSpring
beginning January 2012; Chairman of the Board and Chief Executive RALPH J. NICOLETTI, 55, Executive Vice President and Chief
Officer of HealthSpring and its predecessor, NewQuest, LLC, from Financial Officer of Cigna beginning June 2011; Executive Vice
commencement of operations in September 2000 until HealthSpring President and Chief Financial Officer of Alberto-Culver, Inc. from
was acquired by Cigna in January 2012; also served as President of August 2009 until May 2011; and Senior Vice President and Chief
HealthSpring, from September 2000 until October 2008. Financial Officer of Alberto-Culver, Inc. from February 2007 until
August 2009;
DAVID D. GUILMETTE, 51, President, Global Employer Segment
beginning July 2012; President, National, Pharmacy and Product JASON D. SADLER, 44, President, Global Individual Health, Life
from November 2011 until July 2012; President, National Segment and Accident beginning July 2010, and Managing Director Insurance
from February 2010 until November 2011; and Managing Director of Business Hong Kong, HSBC Insurance Asia Limited from January
Towers Perrin Global Health & Welfare from January 2005 until 2007 until July 2010.
January 2010.
CIGNA CORPORATION – 2012 Form 10-K 29
EXECUTIVE OFFICERS OF THE REGISTRANT

PART II
Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of
Equity Securities
The information under the caption ‘‘Quarterly Financial Data-Stock caption ‘‘Highlights’’ on page 31 of this Form 10-K. Cigna’s common
and Dividend Data’’ appears on page 127 and the number of stock is listed with, and trades on, the New York Stock Exchange
shareholders of record as of December 31, 2012 appears under the under the symbol ‘‘CI’’.
Issuer Purchases of Equity Securities
The following table provides information about Cigna’s share repurchase activity for the quarter ended December 31, 2012:
Approximate dollar value of shares
Total # of shares Average price paid Total # of shares purchased as part of that may yet be purchased as part
Period purchased (1) per share publicly announced program (2) of publicly announced program (3)
October 1-31, 2012 2,467,731 $ 49.55 2,464,898 $ 314,709,797
November 1-30, 2012 4,612 $ 53.07 – $ 314,709,797
December 1-31, 2012 9,501 $ 53.13 – $ 314,709,797
TOTAL 2,481,844 $ 49.57 2,464,898 N/A
(1) Includes shares tendered by employees as payment of taxes withheld on the exercise of stock options and the vesting of restricted stock granted under the Company’s equity compensation plans.
Employees tendered 2,833 shares in October, 4,612 in November and 9,501 shares in December 2012.
(2) Cigna has had a repurchase program for many years, and has had varying levels of repurchase authority and activity under this program. The program has no expiration date. Cigna suspends
activity under this program from time to time and also removes such suspensions, generally without public announcement. Through December 31, 2012, the Company had repurchased
approximately 4.4 million shares for approximately $208 million. Remaining authorization under the program was approximately $315 million as of December 31, 2012. On
February 27, 2013, the Company’s Board of Directors increased share repurchase authority by $500 million, making the remaining authorization $815 million as of February 28, 2013.
(3) Approximate dollar value of shares is as of the last date of the applicable month.
30 CIGNA CORPORATION – 2012 Form 10-K
ITEM 5

PART II
ITEM 6 Selected Financial Data
Selected Financial Data
The selected financial data should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements and accompanying notes included elsewhere herein.
Highlights
(Dollars in millions, except per share amounts) 2012 2011 2010 2009 2008
Revenues
Premiums and fees and other revenues $ 26,308 $ 19,210 $ 18,528 $ 16,018 $ 16,880
Net investment income 1,144 1,146 1,105 1,014 1,063
Mail order pharmacy revenues 1,623 1,447 1,420 1,282 1,204
Realized investment gains (losses) 44 62 75 (43) (170)
TOTAL REVENUES $ 29,119 $ 21,865 $ 21,128 $ 18,271 $ 18,977
Results of Operations:
Global Health Care $ 1,418 $ 1,105 $ 940 $ 775 $ 732
Group Disability and Life 279 295 305 306 282
Global Supplemental Benefits 142 97 84 107 70
Run-off Reinsurance – (183) 26 185 (646)
Other Operations 82 89 85 86 87
Corporate (329) (184) (211) (142) (162)
Realized investment gains (losses), net of taxes and
noncontrolling interest 31 41 50 (26) (110)
Shareholders’ income from continuing operations 1,623 1,260 1,279 1,291 253
Income from continuing operations attributable to
redeemable noncontrolling interest 1 – – – –
Income from continuing operations attributable to other
noncontrolling interest – 1 4 3 2
Income from continuing operations 1,624 1,261 1,283 1,294 255
Income from discontinued operations, net of taxes – – – 1 4
NET INCOME $ 1,624 $ 1,261 $ 1,283 $ 1,295 $ 259
Shareholders’ income per share from continuing
operations:
Basic $ 5.70 $ 4.65 $ 4.69 $ 4.71 $ 0.91
Diluted $ 5.61 $ 4.59 $ 4.65 $ 4.69 $ 0.91
Shareholders’ net income per share:
Basic $ 5.70 $ 4.65 $ 4.69 $ 4.71 $ 0.93
Diluted $ 5.61 $ 4.59 $ 4.65 $ 4.69 $ 0.92
Common dividends declared per share $ 0.04 $ 0.04 $ 0.04 $ 0.04 $ 0.04
Total assets $ 53,734 $ 50,697 $ 45,393 $ 42,794 $ 41,206
Long-term debt $ 4,986 $ 4,990 $ 2,288 $ 2,436 $ 2,090
Shareholders’ equity $ 9,769 $ 7,994 $ 6,356 $ 5,198 $ 3,392
Per share $ 34.18 $ 28.00 $ 23.38 $ 18.95 $ 12.51
Common shares outstanding (in thousands) 285,829 285,533 271,880 274,257 271,036
Shareholders of record 7,885 8,178 8,568 8,888 9,014
Employees 35,800 31,400 30,600 29,300 30,300
Effective December 31, 2012, the Company changed its external reporting segments. See Note 23 to the Consolidated Financial Statements for additional information. Prior year
segment information has been conformed to the new segment structure.
See Note 2 to the Consolidated Financial Statements for further discussion of changes resulting from the retrospective adoption of amended accounting guidance for deferred policy
acquisition costs in 2012.
Beginning in 2010, the Company began reporting the expense associated with its frozen pension plans in Corporate. Prior periods were not restated. The effect on prior periods was not
material.
In 2008, the Company recorded significant charges related to the guaranteed minimum income benefits and guaranteed minimum death benefits businesses of the Run-off Reinsurance
segment, as well as an after-tax litigation charge of $52 million in Corporate related to the Cigna pension plan.
CIGNA CORPORATION – 2012 Form 10-K 31
ITEM 6

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Index
Introduction ……………………………………………………………………………………………………………………………………………………..32
Consolidated Results of Operations………………………………………………………………………………………………………………………………………35
Critical Accounting Estimates ………………………………………………………………………………………………………………………………………………38
Segment Reporting …………………………………………………………………………………………………………………………………………………………….40
Global Health Care……………………………………………………………………………………………………………………………………………………..41
Group Disability and Life …………………………………………………………………………………………………………………………………………….44
Global Supplemental Benefits ……………………………………………………………………………………………………………………………………….46
Run-off Reinsurance ……………………………………………………………………………………………………………………………………………………47
Other Operations………………………………………………………………………………………………………………………………………………………..50
Corporate…………………………………………………………………………………………………………………………………………………………………..50
Liquidity and Capital Resources …………………………………………………………………………………………………………………………………………..51
Investment Assets ………………………………………………………………………………………………………………………………………………………………56
Cautionary Statement …………………………………………………………………………………………………………………………………………………………61
Introduction
As used in this document, ‘‘Cigna’’ the ‘‘Company’’, ‘‘we’’ and ‘‘our’’ 2011, and a comparison of results of operations for the years ended
may refer to Cigna Corporation itself, one or more of its subsidiaries, December 31, 2012, 2011 and 2010.
or Cigna Corporation and its consolidated subsidiaries. The
Unless otherwise indicated, financial information in the MD&A is
Company is a global health services organization with a mission to
presented in accordance with accounting principles generally accepted
help its customers improve their health, well-being and sense of
in the United States (‘‘GAAP’’). See Note 2 to the Consolidated
security. Its insurance subsidiaries are major providers of medical,
Financial Statements for the effect of the January 2012 retrospective
dental, disability, life and accident insurance and related products and
adoption of the amended accounting guidance for deferred policy
services, the majority of which are offered through employers and
acquisition costs. Certain reclassifications have been made to prior
other groups (e.g. governmental and non-governmental organizations,
period amounts to conform to the presentation of 2012 amounts.
unions and associations). Cigna also offers Medicare and Medicaid
products and health, life and accident insurance coverages primarily to See Note 2 to the Consolidated Financial Statements for additional
individuals in the U.S. and selected international markets. In addition information.
to its ongoing operations described above, Cigna also has certain
Effective December 31, 2012, Cigna changed its external reporting
run-off operations, including a Run-off Reinsurance segment.
segments to reflect the Company’s realignment of its businesses to
In this filing and in other marketplace communications, the better leverage distribution and service delivery capabilities for the
Company makes certain forward-looking statements relating to its benefit of our global clients and customers. Management believes the
financial condition and results of operations, as well as to trends and realignment of its businesses will enable the Company to more
assumptions that may affect the Company. Generally, forward- effectively address global health services challenges by leveraging best
looking statements can be identified through the use of predictive practices across geographies to improve the health, well being and
words (e.g. ‘‘Outlook for 2013’’). Actual results may differ from the sense of security of the global customers that the Company serves.
Company’s predictions. The changes in the Company’s internal financial reporting structure,
to support this realignment, took effect on December 31, 2012 and
Some factors that could cause results to differ are discussed
resulted in changes to our external reporting segments. The
throughout Management’s Discussion and Analysis (‘‘MD&A’’),
Company’s results are now aggregated based on the nature of the
including in the Cautionary Statement. The forward-looking
Company’s products and services, rather than its geographies.
statements contained in this filing represent management’s current
estimate as of the date of this filing. Management does not assume any The primary segment reporting change is that the two businesses that
obligation to update these estimates. comprised the former International segment (international health care
The following discussion addresses the financial condition of the
Company as of December 31, 2012, compared with December 31,
32 CIGNA CORPORATION – 2012 Form 10-K
ITEM 7

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
and supplemental health, life and accident) are now reported as Medicare reimbursement rates issued by the Centers for Medicare
follows: and Medicaid Services (‘‘CMS’’), including the bonus structure
based on CMS performance ratings; and
substantially all of the international health care business (comprised
primarily of the global health benefits business) is now reported federal, state and international regulation.
with the former Health Care segment and renamed Global Health
The Company regularly monitors the trends impacting operating
Care; and
results from the above mentioned key factors to appropriately respond
the supplemental health, life and accident business becomes a to economic and other factors affecting its operations, both in its
separate reporting segment named Global Supplemental Benefits. ongoing and run-off operations.
As a result of these changes, the financial results of Cigna’s businesses
are now reported in the following segments: Run-off Operations
Global Health Care aggregates the following two operating As of December 31, 2012 the Company’s run-off reinsurance
segments: operations had significant exposures, primarily from its guaranteed
minimum death benefits (‘‘GMDB’’, also known as ‘‘VADBe’’) andCommercial (including the international health care business)
guaranteed minimum income benefits (‘‘GMIB’’) products. Effective
Government February 4, 2013, the Company entered into an agreement to reinsure
100% of the Company’s future exposures for these businesses, net ofGroup Disability and Life
retrocessional arrangements in place prior to February 4, 2013, up to a
Global Supplemental Benefits specified limit. See Note 25 to the Consolidated Financial Statements
for additional information.Run-off Reinsurance and
Other Operations, including Corporate-owned Life Insurance.
Health Care Reform
Prior year segment information has been conformed to the new
In the first quarter of 2010, the Patient Protection and Affordablesegment structure.
Care Act and the Health Care and Education Reconciliation Act
(‘‘Health Care Reform’’) were signed into law. Certain of the law’s
Significant Factors Affecting the Company provisions are already effective while others will take effect from 2013
to 2018. The Company has implemented the provisions of Health
For information on the Company’s business strategy, see the
Care Reform that are currently in effect (including the commercial
‘‘Description of Business’’ section of this Form 10-K beginning on
minimum medical loss ratio requirements) and continues its
page 1. The Company’s ability to increase revenue, shareholders’ net
implementation planning for those provisions that must be adopted
income and operating cash flows from ongoing operations is directly
in the future. Management is currently unable to estimate the full
related to progress in executing its strategy as well as other key factors,
impact of Health Care Reform on the Company’s future results of
including the Company’s ability to:
operations, and its financial condition and liquidity due to
profitably underwrite and price products and services at competitive uncertainties related to interpretation, implementation and timing of
levels that manage risk and reflect emerging experience; its many provisions as well as the potential for the law to be amended.
It is possible, however, that certain provisions of Health Care Reform
cross sell its various health and related benefit products;
could have a material impact on future results of operations.
invest available cash at attractive rates of return for appropriate
Commercial minimum medical loss ratio requirements became
durations; and
effective in January 2011, requiring payment of premium rebates
effectively deploy capital. beginning in 2012 to employers and customers covered under the
Company’s comprehensive commercial medical insurance plans if
In addition to the Company-specific factors cited above, overall results
certain annual minimum loss ratios are not met. The Company
are influenced by a range of economic and other factors, especially:
recorded its rebate accrual based on estimated medical loss ratios
calculated as prescribed by the U.S. Department of Health andcost trends and inflation for medical and related services;
Human Services (‘‘HHS’’) using full-year premium and claim
utilization patterns of medical and other services;
information by state and market segment for each legal entity that
issues comprehensive medical insurance. HHS regulations permitemployment levels;
adjustments to be made to the claims used in the calculation for
the tort liability system; Cigna’s international health care and limited benefits plans subject to
the MLR minimums. The adjustments for limited benefit plans aredevelopments in the political environment both domestically and
only allowed through 2014. In 2012, the Company accrued aninternationally, including U.S. Health Care Reform;
estimated rebate of $37 million pre-tax ($24 million after-tax),
interest rates, equity market returns, foreign currency fluctuations compared with an accrual of $63 million pre-tax ($41 million
and credit market volatility, including the availability and cost of after-tax) in 2011. The Company paid $77 million in 2012, slightly
credit in the future; higher than the estimated rebate accrual of $63 million, primarily due
CIGNA CORPORATION – 2012 Form 10-K 33
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•
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
to the favorable claim run-out of 2011 estimated claim reserves in On June 28, 2012, the U.S. Supreme Court upheld the
2012. The decrease in the 2012 estimated rebate accrual compared to constitutionality of most parts of Health Care Reform, including the
2011 reflects changes to the 2012 minimum loss ratio calculation in obligation to purchase health care coverage (the ‘‘individual
accordance with HHS regulations that can include combined 2011 mandate’’). Management continues to closely monitor the
and 2012 experience including rebates paid for the 2011 plan year, implementation of Health Care Reform and is actively engaged with
lower premiums resulting from a change in business practice regarding regulators and policymakers on the conversion of legislation to
the billing for broker commissions, as well as modestly higher loss regulation. In addition, management is implementing the necessary
ratios due to slightly higher utilization. capabilities to ensure that the Company is compliant with the law and
assessing potential opportunities arising from Health Care Reform.
Health Care Reform imposes new fees on health insurers that become
These opportunities include the continued evolution and innovation
payable in 2013 and 2014. Payment of these fees will result in charges
of our broad health and wellness portfolio to improve the health and
to the Company’s financial results in future periods. These fees will
productivity of our clients and customers, as well as the expansion of
generally not be tax deductible with the exception of the reinsurance
our physician partnership capabilities to improve the quality of care
assessments on insurers and HMOs. Accordingly, the Company’s
and service experience for our customers while lowering costs and
effective tax rate is expected to be adversely impacted in future
improving overall value.
periods. The amount of the fees is expected to be material, although
the Company is unable to estimate the impact of these fees on For additional information regarding Health Care Reform, see the
shareholders’ net income and the effective tax rate because guidance ‘‘Regulation’’ section of the Company’s 2012 Form 10-K.
for these calculations has not been finalized.
Health Care Reform also impacts Cigna’s Medicare Advantage and Realignment and Efficiency Plan
Medicare Part D prescription drug plan businesses acquired with
During the third quarter of 2012, the Company, in connection with
HealthSpring in a variety of additional ways, including reduced
the execution of its strategy, committed to a series of actions to further
Medicare premium rates (that began with the 2011 contract year),
improve its organizational alignment, operational effectiveness, and
mandated minimum reductions to risk scores (beginning in 2014),
efficiency. As a result, the Company recognized charges in other
transition of Medicare Advantage ‘‘benchmark’’ rates to Medicare
operating expenses of $77 million pre-tax ($50 million after-tax) in
fee-for-service parity, reduced enrollment periods and limitations on
the third quarter of 2012, consisting primarily of severance costs. The
disenrollment, providing ‘‘quality bonuses’’ for Medicare Advantage
Global Health Care segment reported $65 million pre-tax
plans with a rating of four or five stars from CMS, and mandated
($42 million after-tax) of the charge. The remainder was reported as
consumer discounts on brand name and generic prescription drugs for
follows: $9 million pre-tax ($6 million after- tax) in Global
Medicare Part D plan participants in the coverage gap. Beginning in
Supplemental Benefits and $3 million pre-tax ($2 million after-tax) in
2014, Health Care Reform requires Medicare Advantage and
Group Disability and Life. The severance costs are expected to be
Medicare Part D plans to meet a minimum MLR of 85%. Under the
substantially paid in 2013. The Company expects to realize
rules proposed by HHS, if the MLR for a CMS contract is less than
annualized after-tax savings of approximately $60 million, the
85%, the contractor is required to pay a penalty to CMS and could be
majority of which is expected to be reinvested in the business in order
subject to additional sanctions if the MLR continues to be less than
to enhance the Company’s ability to provide superior service and
85% for successive years.
affordable products to our customers.
Effective in 2014, each state is required to establish a health insurance
exchange for individuals and small employers with enrollment Acquisitions and Dispositions
processes scheduled to commence in October of 2013. These
exchanges may either be state-based, a state partnership, or federally In line with its growth strategy, the Company has strengthened its
facilitated. Of the ten states where the Company currently offers market position through various acquisition transactions. See Note 3
individual coverage, most currently expect to use a federally facilitated to the Consolidated Financial Statements for additional information.
exchange. Cigna will continue to evaluate its potential participation in
these exchanges in each market as they develop.
34 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Results of Operations – Executive Summary
The Company measures the financial results of its segments using viewed as a substitute for the most directly comparable GAAP
‘‘segment earnings (loss)’’, that is defined as shareholders’ net income measure, that is shareholders’ net income.
(loss) before after-tax realized investment results. Adjusted income
The Company excludes special items because management does not
(loss) from operations is defined as consolidated segment earnings
believe they are representative of the Company’s underlying results of
(loss) excluding special items (described in the table below) and the
operations. The Company also excludes the results of the GMIB
results of the GMIB business. Adjusted income (loss) from operations
business because the changes in the fair value of GMIB assets and
is another measure of profitability used by the Company’s
liabilities are volatile and unpredictable. See the Run-off Reinsurance
management because it presents the underlying results of operations
section of the MD&A for additional information on GMIB. Because
of the Company’s businesses and permits analysis of trends in
of this volatility, and since the GMIB business is in run-off,
underlying revenue, expenses and shareholders’ net income. This
management does not believe that its results are meaningful in
measure is not determined in accordance with accounting principles
assessing underlying results of operations.
generally accepted in the United States (‘‘GAAP’’) and should not be
Summarized below is a reconciliation between shareholders’ income from continuing operations and adjusted income from operations.
Financial Summary
(In millions) 2012 2011 2010
Premiums and fees $ 26,187 $ 18,966 $ 18,274
Net investment income 1,144 1,146 1,105
Mail order pharmacy revenues 1,623 1,447 1,420
Other revenues 121 244 254
Realized investment gains 44 62 75
Total revenues 29,119 21,865 21,128
Benefits and expenses 26,642 19,989 19,326
Income before income taxes 2,477 1,876 1,802
Income taxes 853 615 519
Net income 1,624 1,261 1,283
Less: net income attributable to redeemable noncontrolling interest 1 – –
Less: net income attributable to other noncontrolling interest – 1 4
Shareholders’ net income 1,623 1,260 1,279
Less: realized investment gains, net of taxes 31 41 50
SEGMENT EARNINGS 1,592 1,219 1,229
Less: adjustments to reconcile to adjusted income from operations:
Results of GMIB business (after-tax) 29 (135) (24)
Special items (after-tax):
Charge for realignment and efficiency plan (See Note 6 to the Consolidated Financial Statements) (50) – –
Costs associated with acquisitions (See Note 3 to the Consolidated Financial Statements) (40) (31) –
Resolution of a federal tax matter (See Note 20 to the Consolidated Financial Statements) – – 101
Loss on early extinguishment of debt (See Note 16 to the Consolidated Financial Statements) – – (39)
Loss on reinsurance transaction (See Note 3 to the Consolidated Financial Statements) – – (20)
Litigation Matters (See Note 24 to the Consolidated Financial Statements) (81) – –
Completion of IRS examination (See Note 20 to the Consolidated Financial Statements) – 24 –
ADJUSTED INCOME FROM OPERATIONS $ 1,734 $ 1,361 $ 1,211
CIGNA CORPORATION – 2012 Form 10-K 35

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Summarized below is adjusted income from operations by segment and other key consolidated financial data:
Adjusted Income (Loss) From Operations
(In millions) 2012 2011 2010
Global Health Care $ 1,480 $ 1,104 $ 940
Group Disability and Life 281 290 305
Global Supplemental Benefits 148 100 84
Run-off Reinsurance (29) (48) (27)
Other Operations 82 85 85
Corporate (228) (170) (176)
TOTAL $ 1,734 $ 1,361 $ 1,211
Other Key Consolidated Financial Data
Global medical customers (in thousands) 14,045 12,680 12,473
Cash flows from operating activities $ 2,350 $ 1,491 $ 1,743
Shareholders’ equity $ 9,769 $ 7,994 $ 6,356
Shareholders’ net income decreased 1% in 2011 compared withConsolidated Results of Operations – 2012
2010, due to significantly higher GMIB losses principally reflecting
Compared to 2011 lower interest rates, substantially offset by higher adjusted income
from operations.Revenues increased 33% in 2012, primarily reflecting contributions
from HealthSpring as well as higher revenues in each of the Adjusted income from operations increased 12% in 2011
Company’s ongoing businesses from continued growth in the compared with 2010 primarily due to higher earnings contributions
Company’s targeted global market segments. See further detailed from the Company’s Global Health Care and Global Supplemental
discussion of revenues below and segment revenues in the individual Benefits segments. These results reflect solid business growth in
segment discussions of this MD&A. strategically targeted markets and continued low medical services
utilization trend.Shareholders’ net income increased 29% in 2012, primarily
resulting from substantially higher adjusted income from operations Global medical customers increased 2%, reflecting growth in
as discussed below and significantly improved GMIB results due to targeted markets, primarily the middle and select market segments
more favorable market conditions in 2012. See the Run-off domestically as well as growth in the international health care
Reinsurance section of this MD&A for additional information on business. These increases were partially offset by exits from certain
GMIB results. These favorable effects were partially offset by the non-strategic markets, primarily Medicare IPFFS.
2012 special items for litigation and the realignment and efficiency
plan.
Liquidity and Financial Condition
Adjusted income from operations increased 27% in 2012, largely
During 2012, the following items affected the Company’s liquidityattributable to earnings contributions from HealthSpring, as well as
and financial condition:overall revenue growth in the other ongoing operating segments and
lower charges related to the GMDB business. See the individual Cash flows from operating activities. For 2012, cash flows from
segment sections of this MD&A for further discussion. operating activities were higher than 2011 primarily attributable to
strong earnings and business growth in the Company’s ongoingGlobal medical customers increased 11% primarily attributable to
operating segments.growth in strategically targeted global markets reflecting solid
customer persistency and strong new sales as well as the acquisition Acquisitions. During 2012, the Company acquired HealthSpring,
of HealthSpring. Great American Supplemental Benefits and Finans Emeklilik for a
combined purchase price of approximately $4.2 billion. See Note 3
to the Consolidated Financial Statement for additional information.Consolidated Results of Operations – 2011
Repayment of Debt. During the first quarter of 2012, theCompared to 2010
Company repaid the acquired HealthSpring debt of $326 million.
Revenues rose 3% in 2011 compared with 2010, reflecting solid See Note 16 to the Consolidated Financial Statements for additional
growth in the Company’s strategically targeted domestic and information.
international customer segments of its ongoing global health care,
Pension Plan Contributions. During 2012, the Companyglobal supplemental benefits, and group disability and life
contributed $250 million to the Company’s domestic qualifiedbusinesses. In addition, the increase in revenue reflects the effect of
pension plans; See Note 10 to the Consolidated Financialthe programs to hedge equity and growth interest rate exposures in
Statements for additional information; andthe run-off reinsurance operations. See the Run-off Reinsurance
section of this MD&A beginning on page 47 for additional Share Repurchase. The Company repurchased 4.4 million shares
information. These increases were partially offset by the exit from of stock for $208 million. See the Liquidity and Capital Resources
certain non-strategic markets, primarily the Medicare Advantage section of this MD&A for additional information.
Individual Private Fee For Service (‘‘Medicare IPFFS’’) business.
36 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Shareholders’ equity increased since 2011, reflecting strong earnings Net Investment Income
in 2012 and net unrealized appreciation on investments. Cash at the
Net investment income remained flat in 2012, compared with 2011,
parent company as of December 31, 2012 was approximately
primarily reflecting higher average investment assets and improved
$700 million. As described in Note 25 to the Consolidated Financial
results from partnership investments offset by lower reinvestment
Statements, on February 4, 2013, the Company entered into a
yields.
reinsurance agreement for the Run-off GMDB and GMIB businesses.
Net investment income increased by 4% in 2011, compared withThe reinsurance premium will ultimately be funded from the sale or
2010. The key factors causing the increase were higher investmentinternal transfer of investment assets that were supporting this book of
assets and improved results from real estate investments, partiallybusiness, as well as tax benefits related to the transaction, and cash.
offset by lower reinvestment yields.Based on known liquidity needs at the parent company for 2013,
including the funding for the 2013 reinsurance transaction,
management believes that the Company has adequate liquidity at the
Mail Order Pharmacy Revenues
parent company level to satisfy its required obligations.
Mail order pharmacy revenues increased by 12% in 2012, compared
with 2011, primarily reflecting higher prescription volume forOutlook for 2013
injectible medications, partially offset by price decreases related to a
The Company expects 2013 consolidated adjusted income from shift to generic oral medications from brand names. In 2011, mail
operations to be higher than 2012 results. Realized investment results order pharmacy revenues increased by 2% compared with 2010 due in
in 2013 are expected to include after-tax gains ranging from large part to price increases offset by a decline in volume.
$50 million to $150 million for investment asset sales to fund the
reinsurance premium described above. In addition, special items in
Other Revenues2013 will include an after-tax charge of approximately $500 million
related to the 2013 reinsurance transaction. Except for the items Other revenues included pre-tax losses of $119 million in 2012
mentioned, information is not available for management to compared with $4 million in 2011 and $157 million in 2010 related
reasonably estimate realized investment results. In addition, the to futures and swaps entered into as part of a dynamic hedge program
Company is not able to identify or reasonably estimate the financial to manage equity and growth interest rate risks in the Company’s
impact of special items in 2013. run-off reinsurance operations. See the Run-off Reinsurance section
of the MD&A for more information on this program.The Company’s outlook for 2013 is subject to the factors cited above
and in the Cautionary Statement of this Form 10-K and the Excluding the impact of these swaps and futures contracts, other
sensitivities discussed in the Critical Accounting Estimates section of revenues declined 3% in 2012, compared with 2011. The decline
the MD&A. If unfavorable equity market and interest rate primarily reflects the absence of revenue in 2012 from Cigna
movements occur, the Company could experience losses related to Government Services, which was sold in the second quarter of 2011,
investment impairments. These losses could adversely impact the partially offset by contributions from HealthSpring.
Company’s consolidated results of operations and financial condition
Other revenues, excluding the impact of these swaps and futures
and liquidity by potentially reducing the capital of the Company’s
contracts, declined 40% in 2011, compared with 2010. The decline
insurance subsidiaries and reducing their dividend-paying capabilities.
primarily reflects the absence of revenue in 2011 from the workers’
compensation and case management business, which was sold in 2010
as well as lower revenues in 2011 from Cigna Government Services,Revenues
which was sold in the second quarter of 2011.
Total revenues increased by 33% in 2012, compared with 2011, and
3% in 2011 compared with 2010. Changes in the components of total
revenue are described more fully below. Realized Investment Results
Realized investment results in 2012 were lower than in 2011,
primarily due to the absence of gains on sales of real estate held inPremiums and Fees
joint ventures reported in 2011and lower prepayment fees received on
Premiums and fees increased by 38% in 2012, compared with 2011,
fixed maturities, partially offset by lower impairment losses and higher
including contributions from the HealthSpring acquisition, customer
valuation on hybrid securities.
growth in the other targeted market segments of the Global Health
Realized investment results in 2011 were lower than in 2010 primarilyCare business and continued business growth in the Global
due to higher impairment losses on fixed maturities and valuationSupplemental Benefits and Group Disability and Life segments.
declines on hybrid securities, partially offset by higher gains on sales of
Premiums and fees increased by 4% in 2011, compared with 2010,
real estate properties held in joint ventures.
primarily reflecting business growth in the Company’s targeted
See Note 15 to the Consolidated Financial Statements for additionalmarket segments, partially offset by the Company’s exit from the
information.Medicare IPFFS business beginning in 2011. Excluding this business,
premiums and fees increased by 9% in 2011 compared with 2010.
CIGNA CORPORATION – 2012 Form 10-K 37

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Critical Accounting Estimates
The preparation of consolidated financial statements in accordance As explained further in Note 25 to the Consolidated Financial
with GAAP requires management to make estimates and assumptions Statements, effective February 4, 2013, the Company entered into an
that affect reported amounts and related disclosures in the agreement to reinsure 100% of the Company’s GMDB and GMIB
consolidated financial statements. Management considers an businesses, net of retrocessional arrangements in place prior to
accounting estimate to be critical if: February 4, 2013, up to a specified limit. As a result, the Company
will no longer consider liabilities associated with these contracts to be
it requires assumptions to be made that were uncertain at the time
a critical accounting estimate because changes in these estimates are
the estimate was made; and
not expected to have a material effect on the Company’s consolidated
results of operations or financial condition.changes in the estimate or different estimates that could have been
selected could have a material effect on the Company’s consolidated
Management believes the current assumptions used to estimate
results of operations or financial condition.
amounts reflected in the Company’s consolidated financial statements
are appropriate. However, if actual experience differs from theManagement has discussed the development and selection of its
assumptions used in estimating amounts reflected in the Company’scritical accounting estimates with the Audit Committee of the
consolidated financial statements, the resulting changes could have aCompany’s Board of Directors and the Audit Committee has reviewed
material adverse effect on the Company’s consolidated results ofthe disclosures presented below.
operations, and in certain situations, could have a material adverse
In addition to the estimates presented in the following table, there are
effect on the Company’s liquidity and financial condition.
other accounting estimates used in the preparation of the Company’s
See Note 2 to the Consolidated Financial Statements for furtherconsolidated financial statements, including estimates of liabilities for
information on significant accounting policies that impact thefuture policy benefits, as well as estimates with respect to unpaid
Company.claims and claim expenses, postemployment and postretirement
benefits other than pensions, certain compensation accruals, and
income taxes.
Balance Sheet Caption / Nature of Critical Accounting Estimate Effect if Different Assumptions Used
Goodwill If the Company does not achieve its earnings objectives or its cost of
capital rises significantly, the assumptions and estimates underlying
At the acquisition date, goodwill represents the excess of the cost of
these impairment evaluations could be adversely affected and result in
businesses acquired over the fair value of their net assets.
impairment charges that would negatively impact the Company’s
operating results. The fair value estimates of the Company’s reportingThe Company evaluates goodwill for impairment at least annually
units could decrease by 40% to 80% before an indication ofduring the third quarter at the reporting unit level, based on
impairment of goodwill occurs. This potential outcome is estimateddiscounted cash flow analyses and writes it down through results of
during the Company’s annual testing process, by determining theoperations if impaired.
magnitude of changes to certain assumptions and estimates necessary
Discounted cash flow analyses use assumptions and estimates
for the estimated fair value of a reporting unit to approach its carrying
including discount rates and projections of future earnings considering
value.
operating plans, revenues, claims, operating expenses, taxes, capital
levels and long-term growth rates.
Goodwill as of December 31 was as follows (in millions):
2012 – $6,001
2011 – $3,164
See Notes 2 (H) and 9 to the Consolidated Financial Statements for
additional discussion of the Company’s goodwill.
38 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Balance Sheet Caption / Nature of Critical Accounting Estimate Effect if Different Assumptions Used
Accounts payable, accrued expenses and other liabilities – pension Using past experience, the Company expects that it is reasonably
liabilities possible that a favorable or unfavorable change in assumptions for the
discount rate or expected return on plan assets of 50 basis points could
These liabilities are estimates of the present value of the qualified and
occur. An unfavorable change is a decrease in these key assumptions
nonqualified pension benefits to be paid (attributed to employee
with resulting impacts as discussed below.
service to date) net of the fair value of plan assets. The accrued pension
benefit liability as of December 31 was as follows (in millions): If discount rates for the qualified and nonqualified pension plans
decreased by 50 basis points:
2012 – $1,602
2011 – $1,769 annual pension costs for 2013 would decrease by approximately
$5 million, after-tax; and
See Note 10 to the Consolidated Financial Statements for assumptions
and methods used to estimate pension liabilities. the accrued pension benefit liability would increase by approximately
$280 million as of December 31, 2012 resulting in an after-tax
decrease to shareholders’ equity of approximately $180 million as of
December 31, 2012.
If the expected long-term return on domestic qualified pension plan
assets decreased by 50 basis points, annual pension costs for 2013
would increase by approximately $11 million after-tax.
If the Company used the market value of assets to measure pension
costs as opposed to the market-related value, annual pension cost for
2013 would decrease by approximately $9 million after-tax.
If the December 31, 2012 fair values of domestic qualified plan assets
decreased by 10%, the accrued pension benefit liability would increase
by approximately $365 million as of December 31, 2012 resulting in
an after-tax decrease to shareholders’ equity of approximately
$235 million.
An increase in these key assumptions would result in impacts to annual
pension costs, the accrued pension liability and shareholders’ equity in
an opposite direction, but similar amounts.
Global Health Care medical claims payable In 2012, actual experience differed from the Company’s key
assumptions as of December 31, 2011, resulting in $200 million of
Medical claims payable for the Global Health Care segment include
favorable incurred claims related to prior years’ medical claims payable
both reported claims and estimates for losses incurred but not yet
or 2.2% of the current year incurred claims as reported in 2011. In
reported.
2011, actual experience differed from the Company’s key assumptions
as of December 31, 2010, resulting in $140 million of favorableLiabilities for medical claims payable as of December 31 were as
incurred claims related to prior years’ medical claims, or 1.5% of thefollows (in millions):
current year incurred claims reported in 2010. Specifically, the
2012 – gross $1,856; net $1,614
favorable impact is due to faster than expected completion factors and
2011 – gross $1,305; net $1,056
lower than expected medical cost trends, both of which included an
assumption for moderately adverse experience.These liabilities are presented above both gross and net of reinsurance
and other recoverables and generally exclude amounts for
The impact of this favorable prior year development was an increase to
administrative services only business.
shareholders’ net income of $66 million after-tax ($101 million
pre-tax) in 2012. The change in the amount of the incurred claimsSee Notes 2 and 5 to the Consolidated Financial Statements for
related to prior years in the medical claims payable liability does notadditional information regarding assumptions and methods used to
directly correspond to an increase or decrease in shareholders’ netestimate this liability.
income as explained in Note 5 to the Consolidated Financial
Statements.
CIGNA CORPORATION – 2012 Form 10-K 39
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Balance Sheet Caption / Nature of Critical Accounting Estimate Effect if Different Assumptions Used
Valuation of fixed maturity investments Typically, the most significant input in the measurement of fair value is
the market interest rate used to discount the estimated future cash
Most fixed maturities are classified as available for sale and are carried
flows from the instrument. Such market rates are derived by calculating
at fair value with changes in fair value recorded in accumulated other
the appropriate spreads over comparable U.S. Treasury securities, based
comprehensive income (loss) within shareholders’ equity.
on the credit quality, industry and structure of the asset.
Fair value is defined as the price at which an asset could be exchanged
If the spreads used to calculate fair value changed by 100 basis points,
in an orderly transaction between market participants at the balance
the fair value of the total fixed maturity portfolio of $17.7 billion
sheet date.
would change by approximately $1.1 billion.
The determination of fair value for a financial instrument requires
management judgment. The degree of judgment involved generally
correlates to the level of pricing readily observable in the markets.
Financial instruments with quoted prices in active markets or with
market observable inputs to determine fair value, such as public
securities, generally require less judgment. Conversely, private
placements including more complex securities that are traded
infrequently are typically measured using pricing models that require
more judgment as to the inputs and assumptions used to estimate fair
value. There may be a number of alternative inputs to select, based on
an understanding of the issuer, the structure of the security and overall
market conditions. In addition, these factors are inherently variable in
nature as they change frequently in response to market conditions.
Approximately two-thirds of the Company’s fixed maturities are public
securities, and one-third are private placement securities.
See Note 11 to the Consolidated Financial Statements for a discussion
of the Company’s fair value measurements and the procedures
performed by management to determine that the amounts represent
appropriate estimates.
Assessment of ‘‘other-than-temporary’’ impairments of fixed For all fixed maturities with cost in excess of their fair value, if this
maturities excess was determined to be other-than-temporary, shareholders’ net
income for the year ended December 31, 2012 would have decreased
To determine whether a fixed maturity’s decline in fair value below its
by approximately $20 million after-tax.
amortized cost is other than temporary, the Company must evaluate
the expected recovery in value and its intent to sell or the likelihood of
a required sale of the fixed maturity prior to an expected recovery. To
make this determination, the Company considers a number of general
and specific factors including the regulatory, economic and market
environment, length of time and severity of the decline, and the
financial health and specific near term prospects of the issuer.
See Notes 2 (C) and 12 to the Consolidated Financial Statements for
additional discussion of the Company’s review of declines in fair value,
including information regarding the Company’s accounting policies
for fixed maturities.
Segment Reporting
The Company measures the financial results of its segments using Company’s management because it presents the underlying results of
‘‘segment earnings (loss)’’, which is defined as shareholders’ income operations of the segment and permits analysis of trends. Each
(loss) from continuing operations excluding after-tax realized segment provides a reconciliation between segment earnings and
investment gains and losses. ‘‘Adjusted income from operations’’ for adjusted income from operations.
each segment is defined as segment earnings excluding special items
Effective December 31, 2012, the Company changed its reporting
and the results of the Company’s GMIB business. Adjusted income
segments. See the Introduction section of the MD&A and Note 23 to
from operations is the primary measure of profitability used by the
the Consolidated Financial Statements for additional information.
40 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
U.S. Virgin Islands, Canada, Europe, the Middle East, and Asia.Global Health Care Segment
Cigna services its globally mobile customers virtually everywhere in
the world. These products and services are offered through a varietySegment Description
of funding arrangements such as administrative services only (ASO),
As discussed in the Introduction section of this MD&A and Note 23
guaranteed cost and retrospectively experience rated.
to the Consolidated Financial Statements, effective December 31,
The Government operating segment offers Medicare Advantage2012, the Company changed its reporting segments. The Global
plans to seniors in 13 states and the District of Columbia, MedicareHealth Care segment now includes the Company’s international
Part D plans in all 50 states and the District of Columbia andhealth care business, previously reported in the former International
Medicaid plans. Results for the Government operating segmentsegment and excludes certain disability and life business that is now
include HealthSpring from the date of acquisition, January 31,reported in the Group Disability and Life segment. Prior year
2012.information has been conformed to the new segment presentation.
The international health care business is included in the Commercial
The Company measures the operating effectiveness of the Global
operating segment.
Health Care segment using the following key factors:
Global Health Care aggregates the following two operating segments:
segment earnings and adjusted income from operations;
The Commercial operating segment includes both the U.S.
customer growth;
commercial and international health care businesses that offer
insured and self-insured medical, dental, behavioral health, vision, sales of specialty products;
and prescription drug benefit plans, health advocacy programs and
other operating expense as a percentage of segment revenues
other products and services that may be integrated to provide
(operating expense ratio); and
comprehensive global health care benefit programs to employers
and their employees, including globally mobile individuals. Cigna, medical expense as a percentage of premiums (medical care ratio) in
either directly or through its partners, offers some or all of these the guaranteed cost and Medicare businesses.
products and services in all 50 states, the District of Columbia, the
Results of Operations
Financial Summary
(In millions) 2012 2011 2010
Premiums and fees $ 20,973 $ 14,443 $ 14,134
Net investment income 259 263 230
Mail order pharmacy revenues 1,623 1,447 1,420
Other revenues 225 236 269
Segment revenues 23,080 16,389 16,053
Mail order pharmacy cost of goods sold 1,328 1,203 1,169
Benefits and other operating expenses 19,541 13,465 13,424
Benefits and expenses 20,869 14,668 14,593
Income before taxes 2,211 1,721 1,460
Income taxes 793 616 520
SEGMENT EARNINGS 1,418 1,105 940
Less: special items (after-tax) included in segment earnings:
Charge for realignment and efficiency plan (See Note 6 to the Consolidated Financial Statements) (42) – –
Costs associated with the HealthSpring acquisition (See Note 3 to the Consolidated Financial Statements) (7) – –
Completion of IRS examination (See Note 20 to the Consolidated Financial Statements) – 1 –
Charge related to litigation matter (See Note 24 to the Consolidated Financial Statements) (13) – –
ADJUSTED INCOME FROM OPERATIONS $ 1,480 $ 1,104 $ 940
Realized investment gains, net of taxes $ 9 $ 23 $ 25
Segment earnings increased 28% in 2012 compared with 2011, due The Global Health Care segment’s adjusted income from operations
to higher adjusted income from operations, partially offset by the increased 34% in 2012, as compared with 2011 reflecting:
special items related to the realignment and efficiency plan charge, the
strong earnings contributions from the government segment,
costs associated with the acquisition of HealthSpring and a litigation
primarily attributable to the acquired HealthSpring business
matter. Segment earnings increased 18% in 2011 compared with
reflecting effective medical cost and pharmacy management
2010, due to higher adjusted income from operations.
programs;
CIGNA CORPORATION – 2012 Form 10-K 41
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
revenue growth in the U.S. commercial business, primarily due to a average membership in the guaranteed cost and ASO commercial
higher ASO customer base resulting in higher fees, as well as businesses, particularly in the targeted market segments: Middle,
additional sales of stop loss and specialty products; Select and Individual;
growth in the international health care business; and strong revenue growth in the international health care business;
increased specialty margins including behavioral and pharmacy growth in specialty revenues, as well as rate increases on most
products. products consistent with underlying trend;
These favorable impacts were partially offset by: a lower guaranteed cost medical care ratio and higher experience-
rated margins in the commercial business driven by low medical
higher operating expenses, primarily attributable to investments in
services utilization trend, as well as favorable prior year claim
technology and initiatives to expand business capabilities as well as
development. These favorable effects were partially offset by the
to support business growth; and
estimated cost of premium rebates calculated under the minimum
medical loss ratio requirements of Health Care Reform; andmodestly higher medical care ratios in our commercial risk
businesses due to slightly higher utilization.
higher net investment income of 14% in 2011, primarily reflecting
increased average asset levels driven by membership growth, as wellThe Global Health Care segment’s adjusted income from operations
as higher income from partnership investments.increased 17% in 2011, as compared with 2010 reflecting:
growth in premiums and fees of 9% in 2011 (excluding the impact
of exiting the Medicare IPFFS business), primarily due to higher
Revenues
The table below shows premiums and fees for the Global Health Care segment:
(In millions) 2012 2011 2010
Medical:
Guaranteed cost (1) $ 4,256 $ 4,176 $ 3,929
Experience-rated (2) 2,022 1,934 1,823
Stop loss 1,672 1,451 1,287
International health care 1,648 1,344 976
Dental 1,005 894 804
Medicare 4,969 489 1,470
Medicaid 207 – –
Medicare Part D 1,421 685 615
Other 677 600 543
Total medical 17,877 11,573 11,447
Fees (3) 3,096 2,870 2,687
TOTAL PREMIUMS AND FEES 20,973 14,443 14,134
Less: Medicare IPFFS – – 827
Premiums and fees, excluding Medicare IPFFS $ 20,973 $ 14,443 $ 13,307
(1) Excludes international health care guaranteed cost premiums.
(2) Includes minimum premium business that has a risk profile similar to experience-rated funding arrangements. The risk portion of minimum premium revenue is reported in experience-rated
medical premium whereas the self funding portion of minimum premium revenue is reported in fees. Also, includes certain non-participating cases for which special customer level reporting
of experience is required.
(3) Includes fees related to the U.S. and international health care businesses. Fees related to Medicare Part D of $61 million in 2011 and $57 million in 2010 have been reclassified to
premiums to conform to current presentation.
Premiums and fees increased 45% in 2012, compared with 2011, Premiums and fees increased 2% in 2011 compared with 2010.
primarily reflecting growth in the government segment due to the Excluding the impact of exiting the Medicare IPFFS business,
acquisition of HealthSpring. Revenue growth in the U.S. commercial premiums and fees rose 9% in 2011, compared with 2010, due
business was driven by rate increases on most products consistent with primarily to higher revenues in the international health care and U.S.
underlying cost trends and a higher ASO customer base, resulting in commercial businesses. International health care revenues increased
higher fees, stop loss revenues and specialty product penetration. In due to business growth and the acquisition of Vanbreda. In the U.S.
addition, revenue in the international health care business increased commercial business, the increase in revenues was attributable
primarily due to the conversion of the Vanbreda business from service primarily to membership growth in the ASO business and higher
to insurance contracts and, to a lesser extent, other business growth. average membership in guaranteed cost, driven by strong retention
and sales in targeted market segments. Rate increases on most
products consistent with underlying cost trends and higher
42 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
penetration of specialty products also contributed to the increase in Other revenues for the Global Health Care segment consist primarily
revenues for the U.S. commercial business. of revenues earned on direct channel sales of certain specialty
products, including behavioral health and disease management, as
These increases in premiums and fees in 2012 and 2011 reflect the
well as revenues for management services provided to independent
Company’s sustained success in delivering differentiated value to its
physician associations and health plans. Other revenues decreased 5%
customers with a focus on providing cost-effective products and
in 2012 compared with 2011, driven primarily by the divestiture of
services that expand access and provide superior clinical outcomes.
Cigna Government Services in the second quarter of 2011, partially
offset by revenue contributions from HealthSpring.Net investment income decreased 2% in 2012 compared with 2011
reflecting lower yields, partially offset by the impact of the
Other revenues decreased 12% in 2011 compared with 2010 mostly
HealthSpring acquisition and higher income from partnership
due to the sale of the Cigna Government Services business in the
investments. Net investment income increased 14% in 2011
second quarter of 2011, as well as declines in certain stand-alone
compared with 2010 benefiting from increased average asset levels
medical cost management business.
driven by membership growth and higher income from partnership
investments.
Benefits and Expenses
Health Care segment benefits and expenses consist of the following:
(In millions) 2012 2011 2010
Medical claims expense – excluding Medicare IPFFS $ 14,235 $ 9,144 $ 8,450
Medical claims expense – Medicare IPFFS (7) (19) 772
Medical claims expense 14,228 9,125 9,222
Mail order pharmacy cost of goods sold 1,328 1,203 1,169
Other operating expenses, excluding Medicare IPFFS and special items 5,217 4,340 4,120
Other operating expenses, Medicare IPFFS – – 82
Other operating expenses, excluding special items 5,217 4,340 4,202
Special items 96 – –
Total other operating expenses 5,313 4,340 4,202
TOTAL BENEFITS AND EXPENSES $ 20,869 $ 14,668 $ 14,593
Selected ratios
Guaranteed cost medical care ratio 80.2% 79.7% 80.1%
Medicare Advantage medical care ratio (excluding IPFFS) 80.9% 89.6% 90.9%
Medicare Part D medical care ratio 81.2% 83.4% 84.2%
Operating expense ratio – including special items and Medicare IPFFS 23.0% 26.5% 26.2%
Operating expense ratio – excluding special items and Medicare IPFFS 22.6% 26.5% 27.1%
Medical claims expense increased 56% in 2012 compared with 2011, quarter of 2011 and expense management actions taken in 2012.
primarily reflecting growth in the government segment due to the Operating expenses increased 3% in 2011 compared with 2010.
acquisition of HealthSpring, growth in the international health care Excluding the impact of the Medicare IPFFS business, operating
business driven by the conversion of Vanbreda business from service expenses increased 5% primarily due to business growth, strategic
to insurance contracts, and medical cost inflation. The guaranteed investments including brand strategy and Individual segment
cost medical care ratio is modestly higher in 2012 compared with expansion, partially offset by the impact of exiting the Medicare
2011, due to slightly higher utilization. The Medicare Advantage and IPFFS business and divestiture of Cigna Government Services.
Medicare Part D medical care ratios were lower in 2012 compared
One measure of the segment’s overall operating efficiency is the
with 2011, driven by the acquisition of HealthSpring.
operating expense ratio calculated as total other operating expenses
Medical claims expense decreased 1% in 2011 compared with 2010. divided by segment revenues. The table above shows the operating
Excluding the impact of Medicare IPFFS business, medical claims expense ratios for the Global Health Care Segment.
expenses increased 8% in 2011 compared with 2010, largely due to
The operating expense ratios decreased for 2012 compared with 2011,
the acquisition of Vanbreda in the international health care business,
primarily driven by the acquisition of HealthSpring, as well as organic
as well as medical cost inflation, tempered by low medical services
revenue growth and operating expense efficiencies achieved through
utilization trend in commercial risk businesses.
expense management actions taken in 2012, partially offset by higher
Operating expenses (including special items) increased by 22% in investments in technology and business initiatives. The HealthSpring
2012 compared with 2011. Excluding special items, operating acquired business largely reflects fully insured, premium-based
expenses increased by 20% in 2012 compared with 2011, primarily products with substantially lower operating expense ratios than the
due to the acquisition of HealthSpring, investments in technology, Company’s commercial businesses. The Company’s commercial
business initiatives, and customer-driven volume growth, partially businesses are heavily weighted to ASO fee-based products that have
offset by the divestiture of Cigna Government Services in the second relatively higher operating expense ratios.
CIGNA CORPORATION – 2012 Form 10-K 43

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
The operating expense ratio increased from 2010 to 2011 primarily driven by a change in business mix resulting from the Company’s decision to
exit the non-strategic Medicare IPFFS business that was a fully-insured business. Excluding the impact of the Medicare IPFFS business, the
operating expense ratio improved for 2011 compared with 2010 driven largely by continued focus on expense management.
Other Items Affecting Global Health Care Results
Global Health Care Medical Claims Payable
Medical claims payable increased 42% in 2012 compared with 2011, primarily reflecting the acquisition of HealthSpring. Medical claims payable
decreased by 7% in 2011 compared with 2010, primarily reflecting the run-out of the Medicare IPFFS business that the Company exited in 2011.
Medical Customers
A medical customer is defined as a person meeting any one of the following criteria:
is covered under an insurance policy or service agreement issued by the Company;
has access to the Company’s provider network for covered services under their medical plan; or
has medical claims that are administered by the Company.
As of December 31, estimated medical customers were as follows:
(In thousands) 2012 2011 2010
Commercial Risk:
U.S. Guaranteed cost (1) 1,135 1,091 1,177
U.S. Experience-rated (2) 786 798 849
International health care – Risk 744 582 480
Total commercial risk 2,665 2,471 2,506
Medicare 426 44 145
Medicaid 23 – –
Total government 449 44 145
Total risk 3,114 2,515 2,651
Service, including international health care 10,931 10,165 9,822
TOTAL MEDICAL CUSTOMERS 14,045 12,680 12,473
(1) Excludes customers from the international health care business.
(2) Includes minimum premium customers, who have a risk profile similar to experience-rated members. Also, includes certain non-participating cases for which special customer level reporting
of experience is required. Excludes international health care business.
The Company’s overall medical customer base as of December 31, 2012 increased 11% when compared with December 31, 2011, primarily
reflecting ASO customer growth driven by strong retention and sales in targeted market segments, increases in the government segment, primarily
reflecting the impact of the acquisition of HealthSpring as well as growth in the international health care business. The increase in the
international health care risk customers in 2012 also reflects the conversion of the Vanbreda business from service to insurance contracts. The
Global Health Care segment’s overall medical customers as of December 31, 2011 increased 2% when compared with December 31, 2010,
primarily reflecting new business sales and growth in ASO in the targeted Middle and Select market segments, growth in the Individual market
segment that is sold under the guaranteed cost funding arrangement, as well as growth in the international health care business.
Medicare Advantage Reimbursement Rates for 2014
On February 15, 2013, CMS issued its Advance Notice of Methodological Changes for Calendar Year (CY) 2014 for Medicare Advantage (MA)
Capitation Rates, Part C and Part D Payment Policies (the ‘‘Notice’’). CMS is accepting comments on the Notice, and final terms are expected to
be published on April 1, 2013. While management believes that a significant number of comments from interested parties (including Cigna) will
be provided to CMS, there can be no assurance that CMS will amend its current position. Given the uncertainty regarding the final terms of the
Notice, the Company cannot estimate the impact that it will have on its business, revenues or results of operations but recognizes that any impacts
could be materially adverse. Accordingly, the Company is currently evaluating the potential implications of the Notice, including adjustments
that the Company may make to the programs and services it offers to offset any adverse impacts.
Group Disability and Life Segment
Segment Description
As explained in the Introduction section of this MD&A and in Note 23 to the Consolidated Financial Statements, effective December 31, 2012,
the Company changed its external reporting segments. The Group Disability and Life segment includes group disability, life, accident and
specialty insurance, including certain disability and life insurance business previously reported in the former Health Care segment. Prior year
information has been conformed to the new segment structure.
Key factors for this segment are:
premium growth, including new business and customer retention;
net investment income;
benefits expense as a percentage of earned premium (loss ratio); and
other operating expense as a percentage of earned premiums and fees (expense ratio).
44 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Financial Summary
(In millions) 2012 2011 2010
Premiums and fees $ 3,109 $ 2,857 $ 2,770
Net investment income 300 291 287
Other revenues – – 123
Segment revenues 3,409 3,148 3,180
Benefits and expenses 3,014 2,740 2,748
Income before taxes 395 408 432
Income taxes 116 113 127
SEGMENT EARNINGS 279 295 305
Less: special items (after-tax) included in segment earnings:
Charge for realignment and efficiency plan (See Note 6 to the Consolidated Financial Statements) (2) – –
Completion of IRS examination (See Note 20 to the Consolidated Financial Statements) – 5 –
ADJUSTED INCOME FROM OPERATIONS $ 281 $ 290 $ 305
Realized investment gains, net of taxes $ 18 $ 7 $ 13
Segment earnings for 2012 decreased 5% compared with 2011 Excluding the impact of this item, premiums and fees increased 6%.
reflecting lower adjusted income from operations, a special item for a Disability premiums and fees grew by 9%.
realignment and efficiency plan charge in 2012 as well as the absence
Net investment income increased 3% in 2012 compared with 2011
of the 2011 special item related to completing the 2007 and 2008 IRS
due to higher assets and higher partnership investment income,
examination. Segment adjusted income from operations decreased
partially offset by lower yields. Net investment income increased 1%
3%, primarily attributable to a higher disability loss ratio and higher
in 2011 compared with 2010 due to higher average assets reflecting
expense ratio, partially offset by a lower life loss ratio (see Benefits and
business growth and higher prepayment fees partially offset by lower
Expenses below) and higher net investment income. Results in 2012
yields.
include the $43 million after-tax favorable impact of reserve studies.
Results in 2011 include the $39 million after-tax favorable impact of Other revenues. The absence of other revenues in 2012 and 2011
reserve studies offset by a $7 million after-tax litigation accrual. reflects the sale of the workers’ compensation and case management
business that was completed during the fourth quarter of 2010. Other
Segment earnings decreased 3% in 2011 compared with 2010
revenues in 2010 include the $18 million pre-tax gain on the sale of
reflecting 5% lower adjusted income from operations offset by a
the workers’ compensation and case management business.
$5 million favorable special item related to completing the 2007 and
2008 IRS examinations. Adjusted income from operations decreased
as a result of: Benefits and Expenses
the absence of the $11 million after-tax gain on the sale of the Benefits and expenses increased 10% in 2012 compared with 2011 as
workers’ compensation and case management business in 2010; a result of premium growth in the disability and life business, a higher
loss ratio in the disability business and a higher operating expensea higher disability loss ratio;
ratio, partially offset by a lower loss ratio in the life business. The
a higher expense ratio: and higher disability loss ratio reflects less favorable claim experience
primarily as a result of higher new claims. The higher operatingan after-tax charge of $7 million for litigation matters.
expense ratio is driven by higher commissions and strategic
Offsetting these factors were more favorable life and accident claims information technology and claim office investments. The lower life
experience and higher net investment income driven largely by higher loss ratio primarily reflects lower new claims. Benefits and expenses
invested assets and partnership income. include the favorable impact of reserve studies of $60 million in 2012
as compared with the $59 million favorable impact of reserve studies
offset by a $10 million litigation accrual in 2011.
Revenues
Benefits and expenses were essentially flat in 2011 as compared with
Premiums and fees increased 9% in 2012 compared with 2011
2010 reflecting disability and life business growth, less favorable
reflecting strong disability and life new sales, in-force growth and
disability claims experience and a higher operating expense ratio,
continued strong persistency.
largely offset by the absence of operating expenses associated with the
workers’ compensation and case management business that was soldPremiums and fees increased 3% in 2011 compared with 2010
in 2010 and favorable life and accident claims experience. Thereflecting disability and life sales growth and continued solid
disability claims experience reflects higher incidence rates, mitigatedpersistency partially offset by the impact of the Company’s exit from a
in part by higher resolution rates reflecting the sustained stronglarge, low-margin assumed government life insurance program.
performance of the Company’s disability claims management process.
CIGNA CORPORATION – 2012 Form 10-K 45
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
The higher operating expense ratio is driven by strategic investments. Benefits and expenses include the favorable before tax impact of reserve
studies of $59 million in 2011 as compared with $55 million in 2010.
Global Supplemental Benefits Segment
Segment Description
As explained in the Introduction section of this MD&A and Note 23 to the Consolidated Financial Statements, effective December 31, 2012, the
Company changed its external reporting segments. Prior year information has been conformed to the new segment structure.
The Global Supplemental segment includes supplemental health, life and accident insurance products offered in the U.S. and foreign markets,
primarily in Asia as well as Medicare supplemental coverage following the 2012 acquisition of Great American Supplemental Benefits.
The key factors for this segment are:
premium growth, including new business and customer retention;
benefits expense as a percentage of earned premium (loss ratio);
operating expense as a percentage of earned premium (expense ratio); and
impact of foreign currency movements.
Throughout this discussion, the impact of foreign currency movements was calculated by comparing the reported results to what the results would
have been had the exchange rates remained constant with the prior year’s comparable period exchange rates.
Results of Operations
Financial Summary
(In millions) 2012 2011 2010
Premiums and fees $ 1,984 $ 1,528 $ 1,231
Net investment income 90 83 69
Other revenues 21 15 22
Segment revenues 2,095 1,626 1,322
Benefits and expenses 1,916 1,492 1,192
Income before taxes 179 134 130
Income taxes 36 36 42
Income attributable to redeemable noncontrolling interest 1 – –
Income attributable to other noncontrolling interest – 1 4
SEGMENT EARNINGS 142 97 84
Less: special items (after-tax) included in segment earnings:
Charge for realignment and efficiency plan (See Note 6 to the Consolidated Financial Statements) (6) – –
Costs associated with the acquisition of FirstAssist – (3) –
ADJUSTED INCOME FROM OPERATIONS $ 148 $ 100 $ 84
Impact of foreign currency movements using 2011 rates $ (2)
Impact of foreign currency movements using 2010 rates $ 4
Realized investment gains, net of taxes $ 1 $ 1 $ 2
Global Supplemental Benefits segment earnings increased 46% in management of solicitation spending. Excluding the first quarter
2012 compared to 2011. Segment earnings for 2012 include an 2012 implementation effect of the capital management strategy, the
after-tax charge of $6 million associated with the realignment and Global Supplemental Benefits segment’s effective tax rate for the full
efficiency plan, and an $8 million favorable adjustment related to the year 2012 was 24.6%, compared with 27.3% for 2011.
first quarter 2012 expansion of a capital management strategy to
Global Supplemental Benefits segment earnings increased 15% in
permanently invest the earnings of its China and Indonesia operations
2011 compared with 2010. Segment earnings for 2010 include a
overseas (see further discussion in the Liquidity and Capital Resources
$10 million unfavorable tax adjustment related to the first quarter
section of the MD&A). Excluding these adjustments and the
2010 expansion of a capital management strategy to permanently
unfavorable impact of foreign currency movements (presented in the
invest the earnings of its Hong Kong operations overseas (see further
table above) adjusted income from operations increased 42% for the
discussion in the Liquidity and Capital Resources section of the
2012 compared with 2011. These increases were primarily driven by
MD&A). Excluding the impact of this tax adjustment and foreign
the strong revenue growth, primarily in South Korea and, to a lesser
currency movements (presented in the table above), the Global
extent, margin improvement largely attributable to disciplined
46 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Supplemental Benefits segment’s adjusted income from operations activities in certain markets. Policy acquisition expenses increased in
increased 2% in 2011 compared with 2010. The increases in both 2011 compared with 2010 reflecting business growth and foreign
segment earnings and adjusted income from operations were currency movements.
primarily due to revenue growth and higher persistency, particularly
Excluding the special items (presented in the table above), expense
in South Korea, and higher net investment income, substantially
ratios increased for 2012 compared to 2011. This increase was
offset by higher policy acquisition costs and expense ratios, as well as,
primarily driven by the impact of the higher expense ratios associated
by a higher effective tax rate primarily due to unfavorable changes in
with FirstAssist. Excluding the special items (presented in the table
foreign tax law.
above), expense ratios increased in 2011 compared with 2010,
The unfavorable impacts of foreign currency movements in 2012 primarily due to strategic investments for future growth and costs to
using 2011 rates, as well as the favorable impacts in 2011 using 2010 streamline operations, partially offset by higher revenues in South
rates, primarily reflects the movement between the U.S. dollar and the Korea.
South Korean won.
Other Items Affecting Global Supplemental Benefits
Revenues Results
Premiums and fees. Excluding the effect of foreign currency For the Company’s Global Supplemental Benefits segment, South
movements, premiums and fees increased by 32% in 2012, compared Korea is the single largest geographic market, generating 54% of the
with 2011. These increases are primarily attributable to the higher segment’s revenues and 90% of earnings in 2012. Due to the
revenue associated with the acquisitions of FirstAssist and Great concentration of business in South Korea, the Global Supplemental
American Supplemental Benefits (the acquisitions), strong Benefits segment is exposed to potential losses resulting from
persistency, and new sales growth, particularly in South Korea. economic, regulatory and geopolitical developments in that country,
as well as foreign currency movements affecting the South KoreanExcluding the effect of foreign currency movements, premiums and
currency, that could have a significant impact on the segment’s resultsfees were $1.5 billion in 2011 compared with reported premiums and
and the Company’s consolidated financial results.fees of $1.2 billion in 2010, an increase of 19%. The increase is
primarily attributable to new sales growth, particularly in South Korea
and Taiwan. Run-off Reinsurance Segment
Net investment income increased by 8% in 2012, compared with Segment Description
2011, and 20% in 2011, compared with 2010. These increases were
The Company’s reinsurance operations were discontinued and areprimarily due to asset growth in South Korea.
now an inactive business in run-off mode since the sale of the U.S.
individual life, group life and accidental death reinsurance business in
Benefits and Expenses 2000. In 2010, the Company essentially exited from its workers’
compensation and personal accident reinsurance business byExcluding the impact of foreign currency movements, benefits and
purchasing retrocessional coverage from a Bermuda subsidiary ofexpenses were $1.9 billion in 2012, compared to reported benefits and
Enstar Group Limited. This segment is predominantly comprised ofexpenses of $1.5 billion in 2011, an increase of 30%. These increases
guaranteed minimum death benefit (‘‘GMDB’’, also known aswere primarily due to the acquisitions and business growth.
‘‘VADBe’’) and guaranteed minimum income benefit (‘‘GMIB’’)
Excluding the impact of foreign currency movements, benefits and products.
expenses were $1.4 billion in 2011, compared with reported benefits
Effective February 4, 2013, the Company reinsured 100% of theand expenses of $1.2 billion in 2010, an increase of 20%. The increase
Company’s future exposures for the Run-off GMDB and GMIBwas primarily due to business growth.
businesses, net of retrocessional arrangements in place prior to
Loss ratios increased slightly in 2012, reflecting the inherently higher February 4, 2013, up to a specified limit. See Note 25 to the
loss ratios of the acquisitions. Loss ratios were flat in 2011 compared Consolidated Financial Statements for additional information. The
with 2010. Company describes the assumptions used to develop the reserves for
GMDB in Note 7 to the Consolidated Financial Statements and forPolicy acquisition expenses increased in 2012 compared with 2011
the assets and liabilities associated with GMIB in Note 11 to thereflecting the acquisitions and business growth, partially offset by
Consolidated Financial Statements.lower acquisition costs in Europe reflecting a decision to cease selling
CIGNA CORPORATION – 2012 Form 10-K 47

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Company excludes the results of the GMIB business from adjusted income from operations because the fair value of GMIB assets and
liabilities must be recalculated each quarter using updated capital market assumptions. The resulting changes in fair value, that are reported in
shareholders’ net income, can be volatile and unpredictable.
Results of Operations
Financial Summary
(In millions) 2012 2011 2010
Premiums and fees $ 21 $ 24 $ 25
Net investment income 102 103 114
Other revenues (119) (4) (158)
Segment revenues 4 123 (19)
Benefits and expenses 4 405 91
Loss before income tax benefits – (282) (110)
Income tax benefits – (99) (136)
SEGMENT EARNINGS (LOSS) – (183) 26
Less: special items (after-tax) included in segment earnings:
Resolution of federal tax matters (See Note 20 to the Consolidated Financial Statements) – – 97
Loss on Reinsurance transaction (See Note 3 to the Consolidated Financial Statements) – – (20)
Less: results of GMIB business 29 (135) (24)
ADJUSTED LOSS FROM OPERATIONS $ (29) $ (48) $ (27)
Realized investment gains, net of taxes $ 1 $ 4 $ 5
Segment results improved in 2012 compared to 2011 due to in interest rates, periods of high volatility, and less favorable equity
significantly more favorable results for the GMIB business (presented market conditions during 2011. In addition, segment results in 2010
in the table above) and lower reserve strengthening for GMDB. reflect the favorable effect of resolving a federal tax matter.
Segment results in 2011 reflected higher losses for the GMIB and See the Benefits and Expenses section for further discussion around
GMDB businesses compared to 2010 due to the significant declines the results of the GMIB and GMDB businesses.
Other Revenues
Other revenues consisted of gains and losses from futures and swap contracts used in the GMDB and GMIB equity and interest rate hedge
programs. See Note 13 to the Consolidated Financial Statements for additional information. The components were as follows:
(In millions) 2012 2011 2010
GMDB – Equity Hedge Program $ (110) $ (45) $ (157)
GMDB – Growth Interest Rate Hedge Program 5 31 –
GMIB – Equity Hedge Program (16) 4 –
GMIB – Growth Interest Rate Hedge Program 2 6 –
Other – – (1)
TOTAL OTHER REVENUES $ (119) $ (4) $ (158)
The hedging programs generally produce losses when equity markets on shareholders’ net income (see below ‘‘Other Benefits and
and interest rates are rising and gains when equity markets and interest Expenses’’). Changes in liabilities for GMIB contracts, including the
rates are falling. Amounts reflecting related changes in liabilities for portion covered by the hedges, are recorded in GMIB fair value (gain)
GMDB contracts were included in benefits and expenses consistent loss. These hedging programs were discontinued after February 4,
with GAAP when a premium deficiency exists, resulting in no effect 2013 due to the reinsurance transaction discussed above.
48 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Benefits and Expenses
Benefits and expenses were comprised of the following:
(In millions) 2012 2011 2010
GMIB fair value (gain) loss $ (41) $ 234 $ 55
Other benefits and expenses 45 171 36
BENEFITS AND EXPENSES $ 4 $ 405 $ 91
GMIB fair value (gain) loss. Under the GAAP guidance for fair value GMIB fair value losses of $234 million for 2011, were primarily due
to a decline in both the interest rate used for projecting claim exposuremeasurements, the Company’s results of operations have been volatile
(7-year Treasury rates) and the rate used for projecting market returnsbecause capital market assumptions needed to estimate the assets and
and discounting (LIBOR swap curve).liabilities for the GMIB business are based largely on market
observable inputs at the close of each reporting period including
GMIB fair value losses of $55 million for 2010, were primarily due to
interest rates (LIBOR swap curve) and market implied volatilities. See declining interest rates, partially offset by increases in underlying
Note 11 to the Consolidated Financial Statements for additional account values resulting from favorable equity and bond fund returns.
information about assumptions and asset and liability balances related
The GMIB liabilities and related assets are calculated using an internalto GMIB and Note 13 for additional information regarding the hedge
model and assumptions from the viewpoint of a hypothetical marketprograms to hedge a portion of equity and interest rate risks in GMIB
participant. Payments for GMIB claims are expected to occur over thecontracts.
next 15 to 20 years and will be based on actual values of the
GMIB fair value gains of $41 million for 2012, were primarily due to underlying mutual funds and the 7-year Treasury rate at the dates
the effect of increases in underlying account values, updates in the benefits are elected. As explained above, on February 4, 2013, the
claim exposure calculation, and a reduction in annuitization rates, Company reinsured 100% of the future exposures under these GMIB
partially offset by a reduction in lapse rates and general declines in contracts, net of retrocessional arrangements in place prior to
interest rates. February 4, 2013.
Other Benefits and Expenses are comprised of the following:
(In millions) 2012 2011 2010
Results of GMDB equity and growth interest rate hedging programs $ (105) $ (14) $ (157)
GMDB reserve strengthening 43 70 52
Other GMDB, primarily accretion of discount 79 82 85
GMDB benefit expense (income) 17 138 (20)
Loss on reinsurance of workers’ compensation and personal accident business – – 31
Other, including operating expenses 28 33 25
OTHER BENEFITS AND EXPENSES $ 45 $ 171 $ 36
update to management’s consideration of the anticipated impact ofOther Benefits and Expenses
the continued low level of short-term interest rates, and the adverse
Capital market movements. Benefits expense related to capital impacts of overall market declines, including an increase in the
market movements as represented by the results of the hedging provision for future partial surrenders and declines in the value of
programs decreased in 2012 compared with 2011 due to more contract holders’ non-equity investments such as bond funds, neither
favorable equity market performance. The increase in benefits expense of which are included in the hedge program.
in 2011 compared with 2010 was due to turbulent conditions in an
The 2010 reserve strengthening was driven primarily byoverall declining equity market. As explained in Other revenues above,
management’s consideration of the anticipated impact of thethese changes do not affect shareholders’ net income because they are
continued low level of current short-term interest rates, and to a lesseroffset by gains or losses on futures contracts used to hedge equity
extent, a reduction in assumed lapse rates for policies that have takenmarket and interest rate performance.
or are assumed to take significant partial withdrawals.
Reserve strengthening. The following highlights the impacts of
See Note 7 to the Consolidated Financial Statements for additionalGMDB reserve strengthening:
information about assumptions and reserve balances related to
The 2012 reserve strengthening was driven primarily by reductions to
GMDB.
the lapse rate assumptions, an update to management’s consideration
of the anticipated impact of continued low short-term interest rates, Other, including operating expenses. The decrease in 2012
and to a lesser extent, an increase to the volatility and correlation compared with 2011 was due to the favorable impact of reserve
assumptions, partially offset by favorable equity market conditions. studies and lower operating expenses. The increase in 2011 compared
with 2010 was due to the reduced favorable impacts of reserve studies.The 2011 reserve strengthening was driven primarily by volatility-
related impacts due to the turbulent equity market conditions, an
CIGNA CORPORATION – 2012 Form 10-K 49

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Other Operations Segment
Segment Description
Cigna’s Other Operations segment includes the results of the following businesses:
corporate-owned life insurance (‘‘COLI’’);
deferred gains recognized from the sale of the retirement benefits and individual life insurance and annuity businesses; and
run-off settlement annuity business.
Results of Operations
Financial Summary
(In millions) 2012 2011 2010
Premiums and fees $ 100 $ 114 $ 114
Net investment income 388 400 404
Other revenues 55 55 60
Segment revenues 543 569 578
Benefits and expenses 418 451 454
Income before taxes 125 118 124
Income taxes 43 29 39
SEGMENT EARNINGS 82 89 85
Completion of IRS examination (See Note 20 to the Consolidated Financial Statements) – 4 –
ADJUSTED INCOME FROM OPERATIONS $ 82 $ 85 $ 85
Realized investment gains, net of taxes $ 2 $ 6 $ 5
Segment earnings decreased 8% in 2012 compared with 2011, Other revenues were flat in 2012 compared with 2011 and decreased
primarily reflecting lower COLI interest margins and mortality gains 8% in 2011 compared with 2010 primarily due to lower deferred gain
and the continued decline in deferred gain amortization associated amortization related to the sold retirement benefits and individual life
with the sold businesses. insurance and annuity businesses. 2012 results were partially offset by
higher investment management fees.
Segment earnings increased in 2011 compared with 2010, reflecting a
$4 million increase from completing the Company’s 2007 and 2008 Benefits and expenses decreased 7% in 2012 compared with 2011
IRS examination during the first quarter of 2011. primarily due to favorable COLI claims experience and lower
policyholder death benefit coverage and the absence of a charge
recorded in the first quarter of 2011 to reimburse the buyer of the
Revenues retirement benefits business with a portion of the tax benefits resulting
from the completion of the 2007 and 2008 IRS examination asPremiums and fees reflect fees charged primarily on universal life
required under a tax sharing agreement.insurance policies in the COLI business. Premiums and fees decreased
12% in 2012, compared with 2011 due to lower policyholder death For more information regarding the sale of these businesses see Note 8
benefit exposures. to the Consolidated Financial Statements.
Net investment income decreased 3% in 2012 compared with 2011,
primarily reflecting lower average yields and decreased 1% in 2011
compared with 2010 due to lower portfolio yields partially offset by
higher average invested assets.
Corporate
Description
Corporate reflects amounts not allocated to operating segments, such as net interest expense (defined as interest on corporate debt less net
investment income on investments not supporting segment operations), interest on uncertain tax positions, certain litigation matters,
intersegment eliminations, compensation cost for stock options and certain corporate overhead expenses such as directors’ expenses and pension
expense related to the Company’s frozen pension plans.
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financial Summary
(In millions) 2012 2011 2010
Segment loss $ (329) $ (184) $ (211)
Less: special items (after-tax) included in segment loss:
Cost associated with HealthSpring acquisition (See Note 3 to the Consolidated Financial Statements) (33) (28) –
Resolution of Federal Tax Matter (See Note 20 to the Consolidated Financial Statements) – – 4
Loss on early extinguishment of debt (See Note 16 to the Consolidated Financial Statements) – – (39)
Charges related to litigation matters (See Note 24 to the Consolidated Financial Statements) (68) – –
Completion of IRS examination (See Note 20 to the Consolidated Financial Statements) – 14 –
ADJUSTED LOSS FROM OPERATIONS $ (228) $ (170) $ (176)
In 2012, segment loss for Corporate was significantly higher than in Corporate’s segment loss was lower in 2011 compared with 2010
2011, primarily reflecting: primarily reflecting a tax benefit from completing the IRS
examination and absence of the 2010 loss on debt extinguishment,
higher interest expense due to the $2.1 billion of long-term debt
partially offset by costs associated with the HealthSpring acquisition,
issued in the fourth quarter of 2011 to fund the HealthSpring
all of which were reported as special items.
acquisition;
Corporate’s adjusted loss from operations was lower in 2011
charges associated with litigation matters due primarily to recent
compared with 2010 primarily reflecting decreased pension expense
developments. See Note 24 to the Consolidated Financial
and lower tax adjustments related to postretirement benefits and
Statements for additional information;
compensation resulting from Health Care Reform. These factors were
partially offset by increased net interest expense due to higher averagethe absence of a tax benefit; and
borrowings outstanding in 2011.
estimated penalties for terminating a service contract.
Liquidity and Capital Resources
Financial Summary
(In millions) 2012 2011 2010
Short-term investments $ 154 $ 225 $ 174
Cash and cash equivalents $ 2,978 $ 4,690 $ 1,605
Short-term debt $ 201 $ 104 $ 552
Long-term debt $ 4,986 $ 4,990 $ 2,288
Shareholders’ equity $ 9,769 $ 7,994 $ 6,356
matching investment durations to those estimated for the relatedLiquidity
insurance and contractholder liabilities; and
The Company maintains liquidity at two levels: the subsidiary level
borrowing from its parent company.and the parent company level.
Liquidity requirements at the parent level generally consist of:Liquidity requirements at the subsidiary level generally consist of:
debt service and dividend payments to shareholders;claim and benefit payments to policyholders;
pension plan funding; andoperating expense requirements, primarily for employee
compensation and benefits; and federal tax payments.
dividends and federal tax payments to the parent company. The parent normally meets its liquidity requirements by:
The Company’s subsidiaries normally meet their operating maintaining appropriate levels of cash, cash equivalents and
requirements by: short-term investments;
maintaining appropriate levels of cash, cash equivalents and collecting dividends and federal tax payments from its subsidiaries;
short-term investments;
using proceeds from issuance of debt and equity securities; and
using cash flows from operating activities;
borrowing from its subsidiaries.
selling investments;
CIGNA CORPORATION – 2012 Form 10-K 51
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Company prioritizes its use of capital resources to:Capital Resources
provide capital necessary to support growth and maintain orThe Company’s capital resources (primarily retained earnings and the
improve the financial strength ratings of its subsidiaries;proceeds from the issuance of debt and equity securities) provide
protection for policyholders, furnish the financial strength to consider acquisitions that are strategically and economically
underwrite insurance risks and facilitate continued business growth. advantageous; and
Management, guided by regulatory requirements and rating agency return capital to investors through share repurchase.
capital guidelines, determines the amount of capital resources that the
The availability of capital resources will be impacted by equity andCompany maintains. Management allocates resources to new
credit market conditions. Extreme volatility in credit or equity marketlong-term business commitments when returns, considering the risks,
conditions may reduce the Company’s ability to issue debt or equitylook promising and when the resources available to support existing
securities.business are adequate.
Cash flows for the years ended December 31, were as follows:
(In millions) 2012 2011 2010
Operating activities $ 2,350 $ 1,491 $ 1,743
Investing activities $ (3,857) $ (1,270) $ (1,342)
Financing activities $ (228) $ 2,867 $ 274
Cash flows from operating activities consist of cash receipts and Investing activities
disbursements for premiums and fees, mail order pharmacy and other
Cash used in investing activities was $3.9 billion in 2012, $3.6 billionrevenues, gains (losses) recognized in connection with the Company’s
of which was for the acquisitions (net of cash acquired) ofGMDB and GMIB equity hedge programs, investment income, taxes,
HealthSpring, Great American Supplemental Benefits, and the jointand benefits and expenses. Because certain income and expense
venture in Turkey. Cash used in investing activities also included nettransactions do not generate cash, and because cash transactions
purchases of investments of $132 million and net purchases ofrelated to revenues and expenses may occur in periods different from
property and equipment (primarily internal-use software) ofwhen those revenues and expenses are recognized in shareholders’ net
$408 million.income, cash flows from operating activities can be significantly
different from shareholders’ net income.
Financing activitiesCash flows from investing activities generally consist of net
investment purchases or sales and net purchases of property and
Cash used in financing activities in 2012 primarily reflects the
equipment, that includes capitalized software, as well as cash used to
repayment of debt assumed in the HealthSpring acquisition of
acquire businesses.
$326 million and the repurchase of common stock for $208 million.
These effects were partially offset by the change in short-term debt ofCash flows from financing activities are generally comprised of
$98 million primarily from the issuance of commercial paper,issuances and re-payment of debt at the parent company level,
proceeds from the issuance of common stock from employee benefitproceeds on the issuance of common stock resulting from stock
plans of $121 million and net deposits to contractholder depositoption exercises, and stock repurchases. In addition, the subsidiaries
funds of $73 million.report net deposits and withdrawals to or from investment contract
liabilities (that include universal life insurance liabilities) because such
Share Repurchase. The Company maintains a share repurchaseliabilities are considered financing activities with policyholders.
program, that was authorized by its Board of Directors. The decision
to repurchase shares depends on market conditions and alternate uses
of capital. The Company has, and may continue from time to time, to2012:
repurchase shares on the open market through a Rule 10b5-1 plan
Operating activities that permits a company to repurchase its shares at times when it
otherwise might be precluded from doing so under insider tradingCash flows from operating activities increased by $859 million in
laws or because of self-imposed trading blackout periods. The2012 compared with 2011, primarily the result of strong earnings
Company suspends activity under this program from time to time andgrowth in the ongoing business segments in 2012. In addition, 2011
also removes such suspensions, generally without publicoperating cash flows were adversely affected by significant claim
announcement.run-out from the Medicare IPFFS business that the Company exited
in 2011. In 2012 the Company repurchased 4.4 million shares for
$208 million. On February 27, 2013, the Company’s Board of
Directors increased share repurchase authority by $500 million.
Accordingly, the total remaining share repurchase authorization as of
February 28, 2013 was $815 million. In 2011 the Company
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
repurchased 5.3 million shares for $225 million and 6.2 million shares Investing activities
for $201 million during 2010.
Cash used in investing activities was $1.3 billion. This use of cash
primarily consisted of net purchases of investments of $746 million,
2011: cash used to fund acquisitions (net of cash acquired) of $114 million,
and net purchases of property and equipment of $422 million.
Operating activities
Cash flows from operating activities decreased by $252 million in Financing activities
2011 compared with 2010. Excluding the results of the GMDB
equity hedge program (that did not affect net income), cash flows Cash provided from financing activities primarily consisted of net
from operating activities decreased by $364 million. This decrease in proceeds from the issuance of long-term debt of $2.7 billion and
2011 primarily reflects higher management compensation, income proceeds on issuances of common stock of $734 million, primarily
tax and pension payments in 2011 compared with 2010 and used to fund the acquisition of HealthSpring, Inc. See Notes 16 and
unfavorable operating cash flows in the Medicare IPFFS business in 17 to the Consolidated Financial Statements for further information.
2011 due to significant claim run-out compared to significant Financing activities also included net deposits to contractholder
favorable operating cash flows from the growth of this business in deposit funds of $145 million. These inflows were partially offset by
2010. Operating cash flows were favorably affected in 2010 because scheduled payments of debt of $451 million and common stock
paid claims on this business growth lagged premium collections. repurchases of $225 million.
Interest Expense
Interest expense on long-term debt, short-term debt and capital leases was as follows:
(In millions) 2012 2011 2010
Interest expense $ 268 $ 202 $ 182
The increase in interest expense in 2012 was primarily due to the The Company expects, based on its current cash position and current
issuance of $2.1 billion of long-term debt in the fourth quarter of projections for subsidiary dividends, to have sufficient liquidity to
2011 to fund the acquisition of HealthSpring, partially offset by a meet the obligations discussed above.
lower weighted average interest rate reflecting the more favorable rates
However, the Company’s cash projections may not be realized and the
of this debt issued. The weighted average interest rate for outstanding
demand for funds could exceed available cash if:
short-term debt (primarily commercial paper) was 0.47% at
December 31, 2012 and 2011. ongoing businesses experience unexpected shortfalls in earnings;
regulatory restrictions or rating agency capital guidelines reduce the
Liquidity and Capital Resources Outlook amount of dividends available to be distributed to the parent
company from the insurance and HMO subsidiaries (including the
At December 31, 2012, there was approximately $700 million in cash
impact of equity market deterioration and volatility on subsidiary
and short-term investments available at the parent company level. In
capital);
2013, the parent company’s cash obligations are expected to consist of
the following: significant disruption or volatility in the capital and credit markets
reduces the Company’s ability to raise capital; or
scheduled interest payments of approximately $265 million on
outstanding long-term debt of $5.0 billion at December 31, 2012; a substantial increase in funding over current projections is required
for the Company’s pension plan.
contributions to the domestic qualified pension plan of
$250 million (most of which is voluntary); and In those cases, the Company expects to have the flexibility to satisfy
liquidity needs through a variety of measures, including intercompany
repayment of $200 million of commercial paper outstanding as of
borrowings and sales of liquid investments. The parent company may
December 31, 2012. The Company expects to have at least
borrow up to $750 million from its insurance subsidiaries without
$200 million outstanding as of March 31, 2013.
prior state approval. As of December 31, 2012, the parent company
In addition, the parent company will be required to fund a portion of had no net intercompany loan balance with its insurance subsidiaries.
the $2.2 billion reinsurance premium due to Berkshire. The premium
In addition, the Company may use short-term borrowings, such as the
will ultimately be paid to Berkshire in cash, that will be funded by the
commercial paper program, the committed revolving credit and letter
sale or internal transfer of investment assets supporting this business,
of credit agreement of up to $1.5 billion subject to the maximum debt
tax benefits related to the transaction, and parent cash of
leverage covenant in its line of credit agreement. As of December 31,
$100 million.
2012, the Company had $1.4 billion of borrowing capacity under the
credit agreement, reflecting $66 million of letters of credit issued out
of the credit facility. Within the maximum debt leverage covenant in
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
the line of credit agreement, the Company has an additional life and health insurance companies. The RBC rules recommend a
$5.3 billion of borrowing capacity in addition to the $5.2 billion of minimum level of capital depending on the types and quality of
debt outstanding. investments held, the types of business written and the types of
liabilities incurred. If the ratio of the insurer’s adjusted surplus to its
The Company maintains a capital management strategy to
risk-based capital falls below statutory required minimums, the
permanently invest the earnings for certain of its foreign operations
insurer could be subject to regulatory actions ranging from increased
overseas. During the first quarter of 2012 the Company expanded this
scrutiny to conservatorship.
strategy to its China and Indonesia operations. As of December 31,
2012 the Company’s cash and cash equivalents in its foreign In addition, various non-U.S. jurisdictions prescribe minimum
operations were $768 million, and permanently reinvested earnings surplus requirements that are based upon solvency, liquidity and
were approximately $628 million. Repatriation of foreign cash via a reserve coverage measures. During 2012, the Company’s HMOs and
dividend of these permanently reinvested earnings would result in a life and health insurance subsidiaries, as well as non-U.S. insurance
charge for the incremental U.S. taxes due on the repatriation. Because subsidiaries, were compliant with applicable RBC and non-U.S.
of the size, strength and diversity of earnings from domestic sources, surplus rules.
management does not believe this global capital management strategy
Solvency II. Cigna’s businesses in the European Union will be subjectmaterially limits the Company’s ability to meet its liquidity and
to the directive on insurance regulation and solvency requirementscapital needs in the United States.
known as Solvency II. This directive will impose economic risk-based
Though the Company believes it has adequate sources of liquidity, solvency requirements and supervisory rules and is expected to
continued significant disruption or volatility in the capital and credit become effective in January 2014, although certain regulators are
markets could affect the Company’s ability to access those markets for requiring companies to demonstrate technical capability and comply
additional borrowings or increase costs associated with borrowing with increased capital levels in advance of the effective date. Cigna’s
funds. European insurance companies are capitalized at levels consistent with
projected Solvency II requirements and in compliance with
Solvency regulation. Many states have adopted some form of the
anticipated technical capability requirements.
National Association of Insurance Commissioners (‘‘NAIC’’) model
solvency-related laws and risk-based capital rules (‘‘RBC rules’’) for
Guarantees and Contractual Obligations
The Company is contingently liable for various contractual obligations entered into in the ordinary course of business. The maturities of the
Company’s primary contractual cash obligations, as of December 31, 2012, are estimated to be as follows:
(In millions, on an undiscounted basis) Total Less than 1 year 1-3 years 4-5 years After 5 years
On-Balance Sheet:
Insurance liabilities:
Contractholder deposit funds $ 7,104 $ 677 $ 938 $ 817 $ 4,672
Future policy benefits 11,489 486 1,153 1,083 8,767
Global Health Care medical claims payable 1,864 1,796 29 9 30
Unpaid claims and claims expenses 4,379 1,321 857 590 1,611
Short-term debt 200 200 – – –
Long-term debt 8,955 269 549 1,352 6,785
Other long-term liabilities 1,037 433 166 111 327
Off-Balance Sheet:
Purchase obligations 871 393 289 120 69
Operating leases 570 116 190 108 156
TOTAL $ 36,469 $ 5,691 $ 4,171 $ 4,190 $ 22,417
As discussed further in Note 25 to the Consolidated Financial On-Balance Sheet:
Statements, effective February 4, 2013, the Company entered into a
Insurance liabilities. Contractual cash obligations for insurancereinsurance agreement for its GMDB and GMIB businesses. The
liabilities, excluding unearned premiums and fees, representreinsurance premium due to Berkshire of $2.2 billion is not included
estimated net benefit payments for health, life and disabilityin the contractual obligations table presented above. In addition, the
insurance policies and annuity contracts. Recorded contractholderexpected future cash flows for GMDB and GMIB contracts included
deposit funds reflect current fund balances primarily from universalin the table above do not consider this reinsurance arrangement.
life customers. Contractual cash obligations for these universal life
contracts are estimated by projecting future payments using
assumptions for lapse, withdrawal and mortality. These projected
future payments include estimated future interest crediting on
54 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
current fund balances based on current investment yields less the Other long-term liabilities. These items are presented in accounts
estimated cost of insurance charges and mortality and payable, accrued expenses and other liabilities in the Company’s
administrative fees. Actual obligations in any single year will vary Consolidated Balance Sheets. This table includes estimated
based on actual morbidity, mortality, lapse, withdrawal, investment payments for GMIB contracts, pension and other postretirement
and premium experience. The sum of the obligations presented and postemployment benefit obligations, supplemental and
above exceeds the corresponding insurance and contractholder deferred compensation plans, interest rate and foreign currency
liabilities of $18 billion recorded on the balance sheet because the swap contracts, and certain tax and reinsurance liabilities.
recorded insurance liabilities reflect discounting for interest and the
Estimated payments of $75 million for deferred compensation,
recorded contractholder liabilities exclude future interest crediting,
non-qualified and international pension plans and other
charges and fees. The Company manages its investment portfolios
postretirement and postemployment benefit plans are expected to be
to generate cash flows needed to satisfy contractual obligations. Any
paid in less than one year. The Company’s best estimate is that
shortfall from expected investment yields could result in increases to
contributions to the qualified domestic pension plans during 2013
recorded reserves and adversely impact results of operations. The
will be approximately $250 million. The Company expects to make
amounts associated with the sold retirement benefits and individual
payments subsequent to 2013 for these obligations, however
life insurance and annuity businesses, as well as the reinsured
subsequent payments have been excluded from the table as their
workers’ compensation, personal accident and supplemental
timing is based on plan assumptions which may materially differ from
benefits businesses, are excluded from the table above as net cash
actual activities (see Note 10 to the Consolidated Financial Statements
flows associated with them are not expected to impact the
for further information on pension and other postretirement benefit
Company. The total amount of these reinsured reserves excluded is
obligations).
approximately $6 billion.
The above table also does not contain $51 million of liabilities for
Short-term debt represents commercial paper, current maturities of
uncertain tax positions because the Company cannot reasonably
long-term debt, and current obligations under capital leases.
estimate the timing of their resolution with the respective taxing
Long-term debt includes scheduled interest payments. Capital authorities. See Note 20 to the Consolidated Financial Statements for
leases are included in long-term debt and represent obligations for the year ended December 31, 2012 for further information.
software licenses.
Off-Balance Sheet:
Purchase obligations. As of December 31, 2012, purchase obligations consisted of estimated payments required under contractual
arrangements for future services and investment commitments as follows:
(In millions)
Fixed maturities $ 58
Commercial mortgage loans 6
Real estate 7
Limited liability entities (other long-term investments) 509
Total investment commitments 580
Future service commitments 291
TOTAL PURCHASE OBLIGATIONS $ 871
The Company had commitments to invest in limited liability entities ability to terminate these agreements, but does not anticipate doing so
that hold real estate, loans to real estate entities or securities. See at this time. Purchase obligations exclude contracts that are cancelable
Note 12(D) to the Consolidated Financial Statements for additional without penalty and those that do not specify minimum levels of
information. goods or services to be purchased.
Future service commitments include an agreement with IBM for Operating leases. For additional information, see Note 22 to the
various information technology (IT) infrastructure services. The Consolidated Financial Statements.
Company’s remaining commitment under this contract is
approximately $15 million over the next year. The Company has the Guarantees
ability to terminate this agreement with 90 days notice, subject to
termination fees. The Company, through its subsidiaries, is contingently liable for
various financial and other guarantees provided in the ordinary course
The Company’s remaining estimated future service commitments
of business. See Note 24 to the Consolidated Financial Statements for
primarily represent contracts for certain outsourced business processes
additional information on guarantees.
and IT maintenance and support. The Company generally has the
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Investment Assets
The Company’s investment assets do not include separate account hypothetical market participant would use to determine a current
assets. Additional information regarding the Company’s investment transaction price. These valuation techniques involve some level of
assets and related accounting policies is included in Notes 2, 11, 12, estimation and judgment that becomes significant with increasingly
13, 14, 15 and 18 to the Consolidated Financial Statements. complex instruments or pricing models.
The Company is responsible for determining fair value, as well as the
Fixed Maturities appropriate level within the fair value hierarchy as defined in Note 11
to the Consolidated Financial Statements, based on the significance of
Investments in fixed maturities include publicly traded and privately
unobservable inputs. The Company reviews methodologies and
placed debt securities, mortgage and other asset-backed securities,
processes of third-party pricing services and compares prices on a test
preferred stocks redeemable by the investor and hybrid and trading
basis to those obtained from other external pricing sources or internal
securities. The Company estimates fair values using prices from third
estimates. The Company performs ongoing analyses of both prices
parties or internal pricing methods. Fair value estimates received from
received from third-party pricing services and those developed
third-party pricing services are based on reported trade activity and
internally to determine that they represent appropriate estimates of
quoted market prices when available, and other market information
fair value. These analyses include reviewing to ensure that prices do
that a market participant may use to estimate fair value. Internal
not become stale and whether changes from prior valuations are
pricing methods are performed by the Company’s investment
reasonable or require additional review. The Company also performs
professionals, and generally involve using discounted cash flow
sample testing of sales values to confirm the accuracy of prior fair
analyses, incorporating current market inputs for similar financial
value estimates. Exceptions identified during these processes indicate
instruments with comparable terms and credit quality, as well as other
that adjustments to prices are infrequent and do not significantly
qualitative factors. In instances where there is little or no market
impact valuations.
activity for the same or similar instruments, fair value is estimated
using methods, models and assumptions that the Company believes a
The Company’s fixed maturity portfolio continues to be diversified by issuer and industry type with the consumer sector representing the largest
single industry concentration of approximately 10% of total invested assets as of December 31, 2012.
(In millions) 2012 2011
Federal government and agency $ 902 $ 958
State and local government 2,437 2,456
Foreign government 1,322 1,274
Corporate 11,896 10,513
Federal agency mortgage-backed 122 9
Other mortgage-backed 89 80
Other asset-backed 937 927
TOTAL $ 17,705 $ 16,217
As of December 31, 2012, $15.9 billion, or 90%, of the fixed on publicly-traded bonds with comparable credit risk. The Company
maturities in the Company’s investment portfolio were investment performs a credit analysis of each issuer, diversifies investments by
grade (Baa and above, or equivalent), and the remaining $1.8 billion industry and issuer and requires financial and other covenants that
were below investment grade. The majority of the bonds that are allow the Company to monitor issuers for deteriorating financial
below investment grade are rated at the higher end of the strength and pursue remedial actions, if warranted. Also included in
non-investment grade spectrum. These quality characteristics have corporate fixed maturities are investments in companies that are
not materially changed during the year. domiciled or have significant business interests in European countries
with the most significant political or economic concerns (Portugal,
The net appreciation of the Company’s fixed maturity portfolio
Italy, Ireland, Greece and Spain). Fixed maturity investments in these
increased $264 million during 2012, driven by a decrease in market
companies represent approximately $400 million at December 31,
yields. Although asset values are well in excess of amortized cost, there
2012, have an average quality rating of BAA and are diversified by
are specific securities with amortized cost in excess of fair value by
industry sector. Financial institutions comprised less than 2% of
approximately $30 million in aggregate as of December 31, 2012. See
investments in these companies.
Note 12 to the Consolidated Financial Statements for further
information. The Company invests in high quality foreign government obligations,
with an average quality rating of AA as of December 31, 2012. These
Corporate fixed maturities includes private placement investments of
investments are primarily concentrated in Asia consistent with the
$5.4 billion, which are generally less marketable than publicly-traded
geographic distribution of the international business operations,
bonds, but yields on these investments tend to be higher than yields
including government obligations of South Korea, Indonesia, Taiwan
56 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
and Hong Kong. Foreign government obligations also include $1 million in countries with the most significant political or economic
$167 million of investments in European sovereign debt, including concerns.
The Company’s investment in state and local government securities is diversified by issuer and geography with no single exposure greater than
$34 million. The Company assesses each issuer’s credit quality based on a fundamental analysis of underlying financial information and does not
rely solely on statistical rating organizations or monoline insurer guarantees. As of December 31, 2012, 97% of the Company’s investments in
these securities were rated A3 or better excluding guarantees by monoline bond insurers, consistent with December 31, 2011. As of December 31,
2012, approximately 63% or $1,538 million of the Company’s total investments in state and local government securities were guaranteed by
monoline bond insurers, providing additional credit quality support. The quality ratings of these investments with and without this guaranteed
support as of December 31, 2012 were as follows:
As of December 31, 2012
Fair Value
(In millions) Quality Rating With Guarantee Without Guarantee
State and local governments Aaa $ 131 $ 130
Aa1-Aa3 1,108 1,037
A1-A3 259 328
Baa1-Baa3 40 20
Ba1-Ba3 – 23
Not available – –
TOTAL STATE AND LOCAL GOVERNMENTS $ 1,538 $ 1,538
As of December 31, 2012, the Company’s investments in other asset rating of BAA- that are guaranteed by monoline bond insurers.
and mortgage-backed securities totaling $1,148 million included Quality ratings without considering the guarantees for these other
$508 million of private placement securities with an average quality asset-backed securities were not available.
As of December 31, 2012, the Company had no direct investments in monoline bond insurers. Guarantees provided by various monoline bond
insurers for certain of the Company’s investments in state and local governments and other asset-backed securities as of December 31, 2012 were:
As of December 31, 2012
Guarantor
(In millions) Indirect Exposure
National Public Finance Guarantee $ 1,240
Assured Guaranty Municipal Corp 583
AMBAC 185
Financial Guaranty Insurance Co. 38
TOTAL $ 2,046
Commercial Mortgage Loans
The Company’s commercial mortgage loans are fixed rate loans, inspection of the property and other pertinent factors. Based on
diversified by property type, location and borrower to reduce exposure property values and cash flows estimated as part of this review and
to potential losses. Loans are secured by high quality commercial subsequent portfolio activity, the overall health of the portfolio
properties and are generally made at less than 75% of the property’s improved from the 2011 review, consistent with recovery in many
value at origination of the loan. In addition to property value, debt commercial real estate markets. The portfolio’s average loan-to-value
service coverage, building tenancy and stability of cash flows are all improved to 65% at December 31, 2012, decreasing from 70% as of
important financial underwriting considerations. Property type, December 31, 2011, due primarily to increased valuations for the
location, quality, and borrower are all important underwriting majority of the underlying properties. Valuation changes varied by
considerations as well. The Company holds no direct residential property type as office properties and apartments demonstrated the
mortgage loans and generally does not securitize or service mortgage strongest recovery, hotel and retail properties showed modest
loans. improvement while industrial properties exhibited a decline,
indicative of a slower recovery for rental rates and demand. The
The Company completed its annual in depth review of its commercial
portfolio’s average debt service coverage ratio was estimated to be 1.56
mortgage loan portfolio during the second quarter of 2012. This
at December 31, 2012, substantially higher than 1.40 as of
review included an analysis of each property’s year-end 2011 financial
December 31, 2011, including improvement across all property types.
statements, rent rolls, operating plans and budgets for 2012, a physical
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ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Commercial real estate capital markets remain most active for well leased, quality commercial real estate located in strong institutional investment
markets. The vast majority of properties securing the mortgages in the Company’s mortgage portfolio possess these characteristics. While
commercial real estate fundamentals continued to improve, the improvement has varied across geographies and property types. A broad recovery
is dependent on continued improvement in the national economy.
The following table reflects the commercial mortgage loan portfolio as of December 31, 2012, summarized by loan-to-value ratio based on the
annual loan review completed during the second quarter of 2012.
LOAN-TO-VALUE DISTRIBUTION
Amortized Cost
Loan-to-Value Ratios Senior Subordinated Total % of Mortgage Loans
Below 50% $ 293 $ 62 $ 355 12%
50% to 59% 795 – 795 28%
60% to 69% 679 24 703 25%
70% to 79% 475 14 489 17%
80% to 89% 267 27 294 10%
90% to 99% 102 – 102 4%
100% or above 113 – 113 4%
TOTALS $ 2,724 $ 127 $ 2,851 100%
As summarized above, $127 million or 4% of the commercial the capital structure of these underlying entities, the Company
mortgage loan portfolio is comprised of subordinated notes that were assumes a higher level of risk for higher expected returns. To mitigate
fully underwritten and originated by the Company using its standard risk, investments are diversified across approximately 80 separate
underwriting procedures and are secured by first mortgage loans. partnerships, and approximately 50 general partners who manage one
Senior interests in these first mortgage loans were then sold to other or more of these partnerships. Also, the funds’ underlying investments
institutional investors. This strategy allowed the Company to are diversified by industry sector or property type, and geographic
effectively utilize its origination capabilities to underwrite high quality region. No single partnership investment exceeds 7% of the
loans, limit individual loan exposures, and achieve attractive risk Company’s securities and real estate partnership portfolio.
adjusted yields. In the event of a default, the Company would pursue
Although the total fair values of investments exceeded their carrying
remedies up to and including foreclosure jointly with the holders of
values as of December 31, 2012, the fair value of the Company’s
the senior interest, but would receive repayment only after satisfaction
ownership interest in certain funds that are carried at cost was less
of the senior interest.
than carrying value by $39 million. Fund investment values continued
In the table above, there are two loans in the ‘‘100% or above’’ to improve, but remained at depressed levels reflecting the impact of
category with an aggregate carrying value of $47 million that exceed declines in value experienced predominantly during 2008 and 2009
the value of their underlying properties by $5 million. Both of these due to economic weakness and disruption in the capital markets,
loans have current debt service coverage of 1.0 or greater, along with particularly in the commercial real estate market. The Company
significant borrower commitment. expects to recover its carrying value over the average remaining life of
these investments of approximately 5 years. Given the current
The commercial mortgage portfolio contains approximately 140
economic environment, future impairments are possible; however,
loans. Four impaired loans with a carrying value of $125 million are
management does not expect those losses to have a material effect on
classified as problem or potential problem loans, including two loans
the Company’s results of operations, financial condition or liquidity.
totaling $60 million that are current based on restructured terms and
two loans totaling $65 million, net of reserves, that are current but full
collection of principal is not expected. All of the remaining loans Problem and Potential Problem Investments
continue to perform under their contractual terms. The Company has
‘‘Problem’’ bonds and commercial mortgage loans are either
$419 million of loans maturing in the next twelve months. Given the
delinquent by 60 days or more or have been restructured as to terms,
quality and diversity of the underlying real estate, positive debt service
which could include concessions by the Company for modification of
coverage and significant borrower cash investment averaging nearly
interest rate, principal payment or maturity date. ‘‘Potential problem’’
30%, the Company remains confident that the vast majority of
bonds and commercial mortgage loans are considered current (no
borrowers will continue to perform as expected under the contract
payment more than 59 days past due), but management believes they
terms.
have certain characteristics that increase the likelihood that they may
become problems. The characteristics management considers include,
Other Long-term Investments but are not limited to, the following:
The Company’s other long-term investments include $1,166 million request from the borrower for restructuring;
in security partnership and real estate funds as well as direct
principal or interest payments past due by more than 30 but fewer
investments in real estate joint ventures. The funds typically invest in
than 60 days;
mezzanine debt or equity of privately held companies (securities
partnerships) and equity real estate. Given its subordinate position in downgrade in credit rating;
58 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
collateral losses on asset-backed securities; and
for commercial mortgages, deterioration of debt service coverage below 1.0 or value declines resulting in estimated loan-to-value ratios
increasing to 100% or more.
The Company recognizes interest income on problem bonds and commercial mortgage loans only when payment is actually received because of
the risk profile of the underlying investment. The amount that would have been reflected in net income if interest on non-accrual investments had
been recognized in accordance with the original terms was not significant for 2012 or 2011.
The following table shows problem and potential problem investments at amortized cost, net of valuation reserves and write-downs:
December 31, 2012 December 31, 2011
(In millions) Gross Reserve Net Gross Reserve Net
Problem bonds $ 35 $ (17) $ 18 $ 40 $ (13) $ 27
Problem commercial mortgage loans (1) 104 (16) 88 224 (19) 205
Foreclosed real estate 29 – 29 34 – 34
TOTAL PROBLEM INVESTMENTS $ 168 $ (33) $ 135 $ 298 $ (32) $ 266
Potential problem bonds $ 30 $ (9) $ 21 $ 36 $ (10) $ 26
Potential problem commercial mortgage loans 162 (7) 155 141 – 141
TOTAL POTENTIAL PROBLEM INVESTMENTS $ 192 $ (16) $ 176 $ 177 $ (10) $ 167
(1) At December 31, 2012, included $29 million and at December 31, 2011, included $10 million of restructured loans classified in Other long-term investments that were previously reported
in commercial mortgage loans.
Net problem investments represent less than 1% of total investments Commercial mortgage loans are considered impaired when it is
excluding policy loans at December 31, 2012. Net problem probable that the Company will not collect all amounts due according
investments decreased by $131 million during 2012, primarily due to to the terms of the original loan agreement. In the above table,
a substantial paydown on a prior period problem mortgage loan and problem and potential problem commercial mortgage loans totaling
the subsequent reclassification of the remaining balance of that loan to $125 million (net of valuation reserves) at December 31, 2012, are
good standing based on the results of the annual loan review considered impaired. During 2012, the Company recorded a
completed during the second quarter of 2012. $10 million pre-tax ($7 million after-tax) increase to valuation
reserves on impaired commercial mortgage loans. See Note 12 to the
Net potential problem investments represent less than 1% of total
Consolidated Financial Statements of this Form 10-K for additional
investments excluding policy loans at December 31, 2012. Net
information regarding impaired commercial mortgage loans.
potential problem investments increased by $9 million in 2012,
primarily due to the addition of two mortgage loans.
Included in after-tax realized investment gains (losses) were changes in valuation reserves related to commercial mortgage loans and
other-than-temporary impairments on fixed maturity securities as follows:
(In millions) 2012 2011
Credit-related (1) $ (13) $ (18)
Other (1) (16)
TOTAL $ (14) $ (34)
(1) Credit-related losses include other-than-temporary declines in fair value of fixed maturities and equity securities and changes in valuation reserves and asset write-downs related to commercial
mortgage loans and investments in real estate entities. There were no credit losses on fixed maturities for which a portion of the impairment was recognized in other comprehensive income.
portion of these assets for the long term. Future credit-related lossesInvestment Outlook
are not expected to have a material adverse effect on the Company’s
The financial markets continue to be impacted by economic financial condition or liquidity.
uncertainty in the United States and Europe, however, asset values
While management believes the commercial mortgage loan portfolioincreased during 2012, reflecting a decrease in market yields. Future
is positioned to perform well due to its solid aggregate loan-to-valuerealized and unrealized investment results will be impacted largely by
ratio, strong debt service coverage and minimal underwater positions,market conditions that exist when a transaction occurs or at the
broad commercial real estate market fundamentals continue to bereporting date. These future conditions are not reasonably
under stress reflecting a slow economic recovery. Should thesepredictable. Management believes that the vast majority of the
conditions remain for an extended period or worsen substantially, itCompany’s fixed maturity investments will continue to perform under
could result in an increase in problem and potential problem loans.their contractual terms, and that declines in their fair values below
Given the current economic environment, future impairments arecarrying value are temporary. Based on the strategy to match the
possible; however, management does not expect those losses to have aduration of invested assets to the duration of insurance and
material adverse effect on the Company’s financial condition orcontractholder liabilities, the Company expects to hold a significant
liquidity.
CIGNA CORPORATION – 2012 Form 10-K 59
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Market Risk
Use of derivatives. The Company generally uses derivativeFinancial Instruments
financial instruments to minimize certain market risks.
The Company’s assets and liabilities include financial instruments
See Notes 2(C) and 13 to the Consolidated Financial Statements forsubject to the risk of potential losses from adverse changes in market
additional information about financial instruments, includingrates and prices. Subsequent to the reinsurance transaction entered
derivative financial instruments.into on February 4, 2013 as further discussed in Note 25 to the
Consolidated Financial Statements, the Company’s primary market
risk exposures are: Effect of Market Fluctuations on the Company
Interest-rate risk on fixed-rate, medium-term instruments. The examples that follow illustrate the adverse effect of hypothetical
Changes in market interest rates affect the value of instruments that changes in market rates or prices on the fair value of certain financial
promise a fixed return and the Company’s employee pension instruments including:
liabilities.
a hypothetical increase in market interest rates, primarily for fixed
Foreign currency exchange rate risk of the U.S. dollar primarily to maturities and commercial mortgage loans, partially offset by
the South Korean won, Euro, British pound, Taiwan dollar, and liabilities for long-term debt and, in 2011, GMIB contracts;
Turkish lira. An unfavorable change in exchange rates reduces the
a hypothetical strengthening of the U.S. dollar to foreign currencies,carrying value of net assets denominated in foreign currencies.
primarily for the net assets of foreign subsidiaries denominated in a
Equity price risk for domestic equity securities and the plan assets foreign currency; and
of the Company’s employee pension plans.
a hypothetical decrease in market prices for equity exposures,
primarily for equity securities and, in 2011, GMIB contracts.
The Company’s Management of Market Risks
Management believes that actual results could differ materially from
The Company predominantly relies on three techniques to manage its these examples because:
exposure to market risk:
these examples were developed using estimates and assumptions;
Investment/liability matching. The Company generally selects
changes in the fair values of all insurance-related assets and liabilitiesinvestment assets with characteristics (such as duration, yield,
have been excluded because their primary risks are insurance rathercurrency and liquidity) that correspond to the underlying
than market risk;characteristics of its related insurance and contractholder liabilities
so that the Company can match the investments to its obligations. changes in the fair values of investments recorded using the equity
Shorter-term investments support generally shorter-term life and method of accounting and liabilities for pension and other
health liabilities. Medium-term, fixed-rate investments support postretirement and postemployment benefit plans (and related
interest-sensitive and health liabilities. Longer-term investments assets) have been excluded, consistent with the disclosure guidance;
generally support products with longer pay out periods such as and
annuities and long-term disability liabilities.
changes in the fair values of other significant assets and liabilities
Use of local currencies for foreign operations. The Company such as goodwill, deferred policy acquisition costs, taxes, and various
generally conducts its international business through foreign accrued liabilities have been excluded; because they are not financial
operating entities that maintain assets and liabilities in local instruments, their primary risks are other than market risk.
currencies. While this technique does not reduce the Company’s
foreign currency exposure of its net assets, it substantially limits
exchange rate risk to those net assets.
The effects of hypothetical changes in market rates or prices on the fair values of certain of the Company’s financial instruments, subject to the
exclusions noted above (particularly insurance liabilities), would have been as follows as of December 31(the effects of the GMIB business are
presented as though the Company’s 2013 reinsurance agreement was effective as of December 31, 2012):
Loss in fair value
Market scenario for certain non-insurance financial instruments (in millions) 2012 2011
100 basis point increase in interest rates $ 685 $ 575
10% strengthening in U.S. dollar to foreign currencies $ 275 $ 220
10% decrease in market prices for equity exposures $ 10 $ 30
The effect of a hypothetical increase in interest rates was determined models, primarily duration modeling. The impact of a hypothetical
by estimating the present value of future cash flows using various increase to interest rates at December 31, 2012 was greater than that
60 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
at December 31, 2011 reflecting the reinsurance of the remaining net In 2012, the primary effect of a hypothetical decrease in the market
prices of equity exposures was a 10% decrease in the value of equityGMIB liability in 2013.
securities reported as investment assets because the equity exposures of
The effect of a hypothetical strengthening of the U.S. dollar relative to
the Company’s GMIB contracts were significantly reduced by the
the foreign currencies held by the Company was estimated to be 10%
2013 reinsurance agreement.
of the U.S. dollar equivalent fair value. The Company’s foreign
In 2011, the effect of a hypothetical decrease in the market prices ofoperations hold investment assets, such as fixed maturities, cash, and
equity exposures was estimated based on a 10% decrease in mutualcash equivalents, that are generally invested in the currency of the
fund values underlying GMIB contracts and the equity futuresrelated liabilities. Due to the increase in the fair value of these
contracts used to partially hedge these GMIB equity exposures, as wellinvestments in 2012, that are primarily denominated in the South
as the value of equity securities held by the Company.Korean won, the effect of a hypothetical 10% strengthening in U.S.
dollar to foreign currencies at December 31, 2012 was greater than As noted above, the Company manages its exposures to market risk by
that effect at December 31, 2011. matching investment characteristics to its obligations.
Cautionary Statement for Purposes of the ‘‘Safe Harbor’’ Provisions of the Private
Securities Litigation Reform Act of 1995
Cigna Corporation and its subsidiaries (the ‘‘Company’’) and its risks associated with pending and potential state and federal class
representatives may from time to time make written and oral forward- action lawsuits, disputes regarding reinsurance arrangements,
looking statements, including statements contained in press releases, other litigation and regulatory actions challenging the
in the Company’s filings with the Securities and Exchange Company’s businesses, including disputes related to payments to
Commission, in its reports to shareholders and in meetings with health care professionals, government investigations and
analysts and investors. Forward-looking statements may contain proceedings, tax audits and related litigation, and regulatory
information about financial prospects, economic conditions, trends market conduct and other reviews, audits and investigations,
and other uncertainties. These forward-looking statements are based including the possibility that the acquired HealthSpring business
on management’s beliefs and assumptions and on information may be adversely affected by potential changes in risk adjustment
available to management at the time the statements are or were made. data validation audit and payment adjustment methodology;
Forward-looking statements include, but are not limited to, the
challenges and risks associated with implementing improvementinformation concerning possible or assumed future business strategies,
initiatives and strategic actions in the ongoing operations of thefinancing plans, competitive position, potential growth opportunities,
businesses, including those related to: (i) growth in targetedpotential operating performance improvements, trends and, in
geographies, product lines, buying segments and distributionparticular, the Company’s strategic initiatives, litigation and other
channels, (ii) offering products that meet emerging marketlegal matters, operational improvement initiatives in the health care
needs, (iii) strengthening underwriting and pricing effectiveness,operations, and the outlook for the Company’s full year 2013 and
(iv) strengthening medical cost results and a growing medicalbeyond results. Forward-looking statements include all statements
customer base, (v) delivering quality service to members andthat are not historical facts and can be identified by the use of forward-
health care professionals using effective technology solutions,looking terminology such as the words ‘‘believe’’, ‘‘expect’’, ‘‘plan’’,
and (vi) lowering administrative costs;‘‘intend’’, ‘‘anticipate’’, ‘‘estimate’’, ‘‘predict’’, ‘‘potential’’, ‘‘may’’,
‘‘should’’ or similar expressions. the unique political, legal, operational, regulatory and other
challenges associated with expanding our business globally;By their nature, forward-looking statements: (i) speak only as of the
date they are made, (ii) are not guarantees of future performance or challenges and risks associated with the successful management
results and (iii) are subject to risks, uncertainties and assumptions that of the Company’s outsourcing projects or key vendors;
are difficult to predict or quantify. Therefore, actual results could
the ability of the Company to execute its growth plans bydiffer materially and adversely from those forward-looking statements
successfully leveraging capabilities and integrating acquiredas a result of a variety of factors. Some factors that could cause actual
businesses, including the HealthSpring businesses by, amongresults to differ materially from the forward-looking statements
include: other things, operating Medicare Advantage plans and
HealthSpring’s prescription drug plan, retaining and growing the
health care reform legislation, as well as additional changes in
customer base, realizing revenue, expense and other synergies,
state or federal regulation, that could, among other items, affect
renewing contracts on competitive terms or maintaining
the way the Company does business, increase costs, limit the
performance under Medicare contracts, successfully leveraging
ability to effectively estimate, price for and manage medical
the information technology platform of the acquired businesses,costs, and affect the Company’s products, services, market
and retaining key personnel;segments, technology and processes;
risks associated with security or interruption of informationadverse changes in state, federal and international laws and
systems, that could, among other things, cause operationalregulations, including increased medical, administrative,
disruption;technology or other costs resulting from new legislative and
regulatory requirements imposed on the Company’s businesses;
CIGNA CORPORATION – 2012 Form 10-K 61
3.
4.
5.
6.
7.
1.
8.2.

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
risks associated with the Company’s information technology pharmacy costs and mortality experience to rise significantly, and
strategy, including that the failure to make effective investments cause operational disruption, depending on the severity of the
or execute improvements may impede the Company’s ability to event and number of individuals affected.
deliver services efficiently;
This list of important factors is not intended to be exhaustive. Other
the failure to maintain effective prevention, detection and sections of the Form 10-K, including the ‘‘Risk Factors’’ section, and
control systems for regulatory compliance and detection of fraud other documents filed with the Securities and Exchange Commission
and abuse; include both expanded discussion of these factors and additional risk
factors and uncertainties that could preclude the Company from
risks associated with the Company’s mail order pharmacy
realizing the forward-looking statements. The Company does not
business that, among other things, includes any potential
assume any obligation to update any forward-looking statements,
operational deficiencies or service issues as well as loss or
whether as a result of new information, future events or otherwise,
suspension of state pharmacy licenses;
except as required by law.
liability associated with the Company’s operations of onsite
clinics and medical facilities, including the health care centers Management’s Annual Report on Internal
operated by the HealthSpring business;
Control over Financial Reporting
heightened competition, particularly price competition, that
Management of Cigna Corporation is responsible for establishing andcould reduce product margins and constrain growth in the
maintaining adequate internal controls over financial reporting. TheCompany’s businesses, primarily the Global Health Care
Company’s internal controls were designed to provide reasonablebusiness;
assurance to the Company’s management and Board of Directors that
significant stock market declines, that could, among other the Company’s consolidated published financial statements for
things, impact the Company’s pension plans in future periods as external purposes were prepared in accordance with generally accepted
well as the recognition of additional pension obligations; accounting principles. The Company’s internal control over financial
reporting include those policies and procedures that:significant changes in market interest rates or sustained
deterioration in the commercial real estate markets that could pertain to the maintenance of records that, in reasonable detail,
reduce the value of the Company’s investment assets; accurately and fairly reflect the transactions and dispositions of
the assets and liabilities of the Company;downgrades in the financial strength ratings of the Company’s
insurance subsidiaries, that could, among other things, adversely provide reasonable assurance that transactions are recorded as
affect new sales and retention of current business or limit the necessary to permit preparation of financial statements in
subsidiaries’ ability to dividend capital to the parent company, accordance with generally accepted accounting principles, and
resulting in changes in statutory reserve or capital requirements that receipts and expenditures of the Company are being made
or other financial constraints; only in accordance with authorization of management and
directors of the Company; andsignificant deterioration in global market economic conditions
and market volatility, that could have an adverse effect on the provide reasonable assurance regarding prevention or timely
Company’s investments, liquidity and access to capital markets; detection of unauthorized acquisitions, use or disposition of the
Company’s assets that could have a material effect on theunfavorable developments in economic conditions, that could,
financial statements.among other things, have an adverse effect on the impact on the
businesses of our customers (including the amount and type of Because of its inherent limitations, internal control over financial
health care services provided to their workforce, loss in workforce reporting may not prevent or detect misstatements.
and ability to pay their obligations), the businesses of hospitals
Management assessed the effectiveness of the Company’s internaland other providers (including increased medical costs) or state
controls over financial reporting as of December 31, 2012. In makingand federal budgets for programs, such as Medicare or social
this assessment, Management used the criteria set forth by thesecurity, resulting in a negative impact to the Company’s
Committee of Sponsoring Organizations of the Treadwayrevenues or results of operations;
Commission (‘‘COSO’’) in Internal Control-Integrated Framework.
risks associated with the Company’s reinsurance arrangements Based on management’s assessment and the criteria set forth by
for the run-off retirement benefits business, individual life COSO, it was determined that the Company’s internal controls over
insurance and annuity business, variable annuity death benefits financial reporting are effective as of December 31, 2012.
and guaranteed minimum income benefits businesses, including
Our evaluation of the effectiveness of internal control over financialbut not limited to, failure by reinsurers to meet their reinsurance
reporting as of December 31, 2012 did not include an evaluation ofobligations or that the reinsurance arrangements do not
the internal control over financial reporting of the Great Americanotherwise provide adequate protection; or
Supplemental Benefits Group. We excluded the Great American
potential public health epidemics, pandemics, natural disasters Supplemental Benefits Group from our assessment of internal control
and bio-terrorist activity, that could, among other things, cause over financial reporting as of December 31, 2012 because it was
the Company’s covered medical and disability expenses,
62 CIGNA CORPORATION – 2012 Form 10-K
9.
10.
11.
12.
13.
14.
15.
(i)
16.
(ii)
17.
(iii)
18.
19.
20.

PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
acquired in a purchase business combination consummated on The Company’s independent registered public accounting firm,
August 31, 2012. Great American Supplemental Benefits Group’s PricewaterhouseCoopers, has audited the effectiveness of the
total assets acquired represent approximately 2% of consolidated total Company’s internal control over financial reporting, as stated in their
assets as of December 31, 2012; total revenues acquired represent less report located on page 126 in this Form 10-K.
than 1% of consolidated total revenues for the year ended
December 31, 2012.
Quantitative and Qualitative Disclosures About
Market Risk
The information contained under the caption ‘‘Market Risk’’ in the MD&A section of this Form 10-K is incorporated by reference.
CIGNA CORPORATION – 2012 Form 10-K 63
ITEM 7A

PART II
ITEM 8 Financial Statements and Supplementary Data
Financial Statements and Supplementary Data
Cigna Corporation
Consolidated Statements of Income
For the years ended December 31,
(In millions, except per share amounts) 2012 2011 2010
Revenues
Premiums and fees $ 26,187 $ 18,966 $ 18,274
Net investment income 1,144 1,146 1,105
Mail order pharmacy revenues 1,623 1,447 1,420
Other revenues 121 244 254
Realized investment gains (losses):
Other-than-temporary impairments on fixed maturities, net (11) (26) (1)
Other realized investment gains 55 88 76
Total realized investment gains 44 62 75
TOTAL REVENUES 29,119 21,865 21,128
Benefits and Expenses
Global Health Care medical claims expense 14,228 9,125 9,222
Other benefit expenses 3,672 3,365 3,011
Mail order pharmacy cost of goods sold 1,328 1,203 1,169
GMIB fair value (gain) loss (41) 234 55
Other operating expenses 7,455 6,062 5,869
TOTAL BENEFITS AND EXPENSES 26,642 19,989 19,326
Income before Income Taxes 2,477 1,876 1,802
Income taxes:
Current 719 398 331
Deferred 134 217 188
TOTAL TAXES 853 615 519
Net Income 1,624 1,261 1,283
Less: Net Income Attributable to Redeemable Noncontrolling Interest 1 – –
Less: Net Income Attributable to Other Noncontrolling Interest – 1 4
SHAREHOLDERS’ NET INCOME $ 1,623 $ 1,260 $ 1,279
Shareholders’ Net Income Per Share:
Basic $ 5.70 $ 4.65 $ 4.69
Diluted $ 5.61 $ 4.59 $ 4.65
Dividends Declared Per Share $ 0.04 $ 0.04 $ 0.04
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
64 CIGNA CORPORATION – 2012 Form 10-K
ITEM 8

PART II
ITEM 8 Financial Statements and Supplementary Data
Cigna Corporation
Consolidated Statements of Comprehensive Income
For the year ended December 31,
(In millions, except per share amounts) 2012 2011 2010
Shareholders’ net income $ 1,623 $ 1,260 $ 1,279
Shareholders’ other comprehensive income (loss):
Net unrealized appreciation (depreciation) on securities:
Fixed maturities 144 210 151
Equity securities 3 (2) (1)
Net unrealized appreciation (depreciation) on securities 147 208 150
Net unrealized appreciation (depreciation), derivatives (5) 1 6
Net translation of foreign currencies 66 (22) 33
Postretirement benefits liability adjustment (92) (360) (189)
Shareholders’ other comprehensive income (loss) 116 (173) –
Shareholders’ comprehensive income 1,739 1,087 1,279
Comprehensive income attributable to noncontrolling interest:
Net income attributable to redeemable noncontrolling interest 1 – –
Net income attributable to other noncontrolling interest – 1 4
Other comprehensive income attributable to redeemable noncontrolling interest 2 – –
Other comprehensive income attributable to other noncontrolling interest – – 2
TOTAL COMPREHENSIVE INCOME $ 1,742 $ 1,088 $ 1,285
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
CIGNA CORPORATION – 2012 Form 10-K 65

PART II
ITEM 8 Financial Statements and Supplementary Data
Cigna Corporation
Consolidated Balance Sheets
As of December 31,
(In millions, except per share amounts) 2012 2011
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost, $15,481; $14,257) $ 17,705 $ 16,217
Equity securities, at fair value (cost, $121; $124) 111 100
Commercial mortgage loans 2,851 3,301
Policy loans 1,501 1,502
Real estate 83 87
Other long-term investments 1,255 1,058
Short-term investments 154 225
Total investments 23,660 22,490
Cash and cash equivalents 2,978 4,690
Accrued investment income 258 252
Premiums, accounts and notes receivable, net 1,777 1,358
Reinsurance recoverables 6,256 6,256
Deferred policy acquisition costs 1,198 817
Property and equipment 1,120 1,024
Deferred income taxes, net 374 803
Goodwill 6,001 3,164
Other assets, including other intangibles 2,355 1,750
Separate account assets 7,757 8,093
TOTAL ASSETS $ 53,734 $ 50,697
LIABILITIES
Contractholder deposit funds $ 8,508 $ 8,553
Future policy benefits 9,265 8,593
Unpaid claims and claim expenses 4,062 3,936
Global Health Care medical claims payable 1,856 1,305
Unearned premiums and fees 549 502
Total insurance and contractholder liabilities 24,240 22,889
Accounts payable, accrued expenses and other liabilities 6,667 6,627
Short-term debt 201 104
Long-term debt 4,986 4,990
Separate account liabilities 7,757 8,093
TOTAL LIABILITIES 43,851 42,703
Contingencies — Note 24
Redeemable noncontrolling interest 114 –
SHAREHOLDERS’ EQUITY
Common stock (par value per share, $0.25; shares issued, 366; authorized, 600) 92 92
Additional paid-in capital 3,295 3,188
Net unrealized appreciation, fixed maturities $ 883 $ 739
Net unrealized appreciation, equity securities 4 1
Net unrealized depreciation, derivatives (28) (23)
Net translation of foreign currencies 69 3
Postretirement benefits liability adjustment (1,599) (1,507)
Accumulated other comprehensive loss (671) (787)
Retained earnings 12,330 10,787
Less: treasury stock, at cost (5,277) (5,286)
TOTAL SHAREHOLDERS’ EQUITY 9,769 7,994
Total liabilities and equity $ 53,734 $ 50,697
SHAREHOLDERS’ EQUITY PER SHARE $ 34.18 $ 28.00
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
66 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
Cigna Corporation
Statement of Changes in Total Equity
Accumulated
Additional Other Redeemable
Common Paid-in Comprehensive Retained Treasury Shareholders’ Noncontrolling Total NoncontrollingFor the year ended December 31,
(In millions, except per share amounts) Stock Capital Loss Earnings Stock Equity Interest Equity Interest
Balance at January 1, 2010, as previously
reported $ 88 $ 2,514 $ (618) $ 8,625 $ (5,192) $ 5,417 $ 12 $ 5,429 $ –
Cumulative effect of amended accounting
guidance for deferred policy acquisition
costs 4 (223) (219) (219)
BALANCE AT JANUARY 1, 2010, as
retrospectively adjusted 88 2,514 (614) 8,402 (5,192) 5,198 12 5,210 –
2010 Activity:
Effect of issuing stock for employee
benefit plans 20 (80) 151 91 91
Other comprehensive income – – 2 2
Net income 1,279 1,279 4 1,283
Common dividends declared (per share:
$0.04) (11) (11) (11)
Repurchase of common stock (201) (201) (201)
BALANCE AT DECEMBER 31, 2010 88 2,534 (614) 9,590 (5,242) 6,356 18 6,374 –
2011 Activity:
Issuance of common stock 4 625 629 629
Effect of issuing stock for employee
benefit plans 27 (52) 181 156 156
Effects of acquisition of noncontrolling
interest 2 2 (19) (17)
Other comprehensive (loss) (173) (173) (173)
Net income 1,260 1,260 1 1,261
Common dividends declared (per share:
$0.04) (11) (11) (11)
Repurchase of common stock (225) (225) (225)
BALANCE AT DECEMBER 31, 2011 92 3,188 (787) 10,787 (5,286) 7,994 – 7,994 –
2012 Activity:
Effect of issuing stock for employee
benefit plans 107 (69) 217 255 255
Effects of acquisition of joint venture – – – 111
Other comprehensive income 116 116 116 2
Net income 1,623 1,623 1,623 1
Common dividends declared (per share:
$0.04) (11) (11) (11)
Repurchase of common stock (208) (208) (208)
BALANCE AT DECEMBER 31, 2012 $ 92 $ 3,295 $ (671) $ 12,330 $(5,277) $ 9,769 $ – $9,769 $ 114
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
CIGNA CORPORATION – 2012 Form 10-K 67

PART II
ITEM 8 Financial Statements and Supplementary Data
Cigna Corporation
Consolidated Statements of Cash Flows
For the years ended December 31,
(In millions) 2012 2011 2010
Cash Flows from Operating Activities
Net income $ 1,624 $ 1,261 $ 1,283
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 560 345 292
Realized investment gains (44) (62) (75)
Deferred income taxes 134 217 188
Gains on sales of businesses (excluding discontinued operations) (18) (25) (13)
Net changes in assets and liabilities, net of non-operating effects:
Premiums, accounts and notes receivable (71) (50) 62
Reinsurance recoverables 62 19 37
Deferred policy acquisition costs (159) (129) (94)
Other assets 31 (307) 3
Insurance liabilities 245 154 325
Accounts payable, accrued expenses and other liabilities (132) 344 (272)
Current income taxes 29 (246) 2
Proceeds from sales of mortgage loans held for sale 61 – –
Other, net 28 (30) 5
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,350 1,491 1,743
Cash Flows from Investing Activities
Proceeds from investments sold:
Fixed maturities 583 830 822
Equity securities 8 46 4
Commercial mortgage loans 380 253 63
Other (primarily short-term and other long-term investments) 831 1,915 1,102
Investment maturities and repayments:
Fixed maturities 1,507 1,265 1,084
Commercial mortgage loans 342 385 70
Investments purchased:
Fixed maturities (2,326) (2,877) (2,587)
Equity securities (8) (20) (12)
Commercial mortgage loans (364) (487) (239)
Other (primarily short-term and other long-term investments) (821) (2,056) (810)
Property and equipment purchases (408) (422) (300)
Acquisitions and dispositions, net of cash acquired (3,581) (102) (539)
NET CASH USED IN INVESTING ACTIVITIES (3,857) (1,270) (1,342)
Cash Flows from Financing Activities
Deposits and interest credited to contractholder deposit funds 1,337 1,323 1,295
Withdrawals and benefit payments from contractholder deposit funds (1,264) (1,178) (1,205)
Change in cash overdraft position 25 (1) 59
Net change in short-term debt 98 – –
Net proceeds on issuance of long-term debt – 2,676 543
Repayment of long-term debt (326) (451) (270)
Repurchase of common stock (208) (225) (201)
Issuance of common stock 121 734 64
Common dividends paid (11) (11) (11)
NET CASH (USED IN) / PROVIDED BY FINANCING ACTIVITIES (228) 2,867 274
Effect of foreign currency rate changes on cash and cash equivalents 23 (3) 6
Net increase (decrease) in cash and cash equivalents (1,712) 3,085 681
Cash and cash equivalents, beginning of year 4,690 1,605 924
Cash and cash equivalents, end of year $ 2,978 $ 4,690 $ 1,605
Supplemental Disclosure of Cash Information:
Income taxes paid, net of refunds $ 655 $ 633 $ 326
Interest paid $ 248 $ 185 $ 180
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
68 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
Notes to the Consolidated Financial Statements
Description of Business
Cigna Corporation was incorporated in the State of Delaware in security. Its insurance subsidiaries are major providers of medical,
1981. Various businesses that are described in this Annual Report on dental, disability, life and accident insurance and related products and
Form 10-K for the fiscal year ended December 31, 2012 services, the majority of which are offered through employers and
(‘‘Form 10-K’’) are conducted by its insurance and other subsidiaries. other groups (e.g. governmental and non-governmental organizations,
As used in this document, ‘‘Cigna’’, the ‘‘Company’’, ‘‘we’’ and ‘‘our’’ unions and associations). Cigna also offers Medicare and Medicaid
may refer to Cigna Corporation itself, one or more of its subsidiaries, products and health, life and accident insurance coverages primarily to
or Cigna Corporation and its consolidated subsidiaries. individuals in the U.S. and selected international markets. In addition
to its ongoing operations described above, Cigna also has certainThe Company is a global health services organization with a mission
run-off operations, including a Run-off Reinsurance segment.to help its customers improve their health, well-being and sense of
Summary of Significant Accounting Policies
The Consolidated Financial Statements include the accounts of Cigna
Corporation and its significant subsidiaries. Intercompany
Fees Paid to the Federal Government by Health Insurers
transactions and accounts have been eliminated in consolidation.
(Accounting Standards Update (‘‘ASU’’) 2011-06). In 2011, the
These Consolidated Financial Statements were prepared in Financial Accounting Standards Board (‘‘FASB’’) issued accounting
conformity with accounting principles generally accepted in the guidance for a health insurance industry assessment (the ‘‘fee’’)
United States of America (‘‘GAAP’’). Amounts recorded in the mandated by the Patient Protection and Affordable Care Act of 2010
Consolidated Financial Statements necessarily reflect management’s (‘‘Health Care Reform’’). This fee will be levied on health insurers
estimates and assumptions about medical costs, investment valuation, beginning in 2014 based on a ratio of an insurer’s net health insurance
interest rates and other factors. Significant estimates are discussed premiums written for the previous calendar year compared to the U.S.
throughout these Notes; however, actual results could differ from health insurance industry total. In addition, because these fees will
those estimates. The impact of a change in estimate is generally generally not be tax deductible, the Company’s effective tax rate is
included in earnings in the period of adjustment. expected to be adversely impacted in future periods. Under the
guidance, the liability for the fee will be estimated and recorded in fullIn preparing these Consolidated Financial Statements, the Company
each year beginning in 2014 when health insurance is first provided. Ahas evaluated events that occurred between the balance sheet date and
corresponding deferred cost will be recorded and amortized over theFebruary 28, 2013.
calendar year. The amount of these fees is expected to be material,
Certain reclassifications have been made to prior year amounts to
although the Company is unable to estimate the impact of these fees
conform to the current presentation. In particular, as a result of the
on shareholders’ net income and the effective tax rate because
changes in segment reporting discussed further in Note 23, benefits
guidance from the federal department of Health and Human Services
expense amounts previously reported in Other Benefits Expense for
for these calculations has not been finalized.
the international health care business have been reclassified to Global
Health Care Medical Claims Expense in the Consolidated Statements Deferred acquisition costs. Effective January 1, 2012, the
of Income. Similarly, insurance liabilities previously classified as Company adopted the FASB’s amended guidance (ASU 2010-26) on
Unpaid Claims for the international health care business have been accounting for costs to acquire or renew insurance contracts. This
reclassified to Global Health Care Medical Claims Payable in the guidance requires certain sales compensation and telemarketing costs
Consolidated Balance Sheets. related to unsuccessful efforts and any indirect costs to be expensed as
incurred. The Company’s deferred acquisition costs arise from sales
Variable interest entities. As of December 31, 2012 and 2011 the
and renewal activities primarily in its Global Supplemental Benefits
Company determined it was not a primary beneficiary in any material
segment. This amended guidance was implemented through
variable interest entities.
retrospective adjustment of comparative prior periods. Summarized
below are the effects of this amended guidance on previously reported
amounts as of December 31, 2011 and for the years ended
December 31, 2011 and 2010. Previously reported amounts
presented below include certain immaterial reclassifications.
CIGNA CORPORATION – 2012 Form 10-K 69
NOTE 1
NOTE 2
A. Basis of Presentation B. Changes in Accounting
Pronouncements

PART II
ITEM 8 Financial Statements and Supplementary Data
Year Ended December 31
Effect of amended
As previously accounting As retrospectively
reported guidance adjusted
Condensed Consolidated Statement of Income
(In millions) 2011 2010 2011 2010 2011 2010
Revenues, excluding other revenues $ 21,621 $ 20,874 $ – $ – $ 21,621 $ 20,874
Other revenues 254 260 (10) (6) 244 254
TOTAL REVENUES 21,875 21,134 (10) (6) 21,865 21,128
Benefits and expenses, excluding other operating expenses 13,927 13,457 – – 13,927 13,457
Other operating expenses 5,980 5,807 82 62 6,062 5,869
TOTAL BENEFITS AND EXPENSES 19,907 19,264 82 62 19,989 19,326
Income before Income Taxes 1,968 1,870 (92) (68) 1,876 1,802
Current income taxes 398 331 – – 398 331
Deferred income taxes 242 190 (25) (2) 217 188
TOTAL TAXES 640 521 (25) (2) 615 519
Discontinued Operations – – – – – –
Net income 1,328 1,349 (67) (66) 1,261 1,283
Less: Net income attributable to Noncontrolling Interest 1 4 – – 1 4
SHAREHOLDERS’ NET INCOME $ 1,327 $ 1,345 $ (67) $ (66) $ 1,260 $ 1,279
Earnings per share:
Basic $ 4.90 $ 4.93 $ (0.25) $ (0.24) $ 4.65 $ 4.69
Diluted $ 4.84 $ 4.89 $ (0.25) $ (0.24) $ 4.59 $ 4.65
As of December 31
Effect of amended
As previously accounting As retrospectively
reported guidance adjusted
Condensed Consolidated Balance Sheet
(In millions) 2011 2011 2011
Deferred policy acquisition costs $ 1,312 $ (495) $ 817
Deferred income taxes, net 632 171 803
Other assets, including other intangibles 1,776 (26) 1,750
All other assets 47,327 – 47,327
TOTAL ASSETS $ 51,047 $ (350) $ 50,697
Net translation of foreign currencies $ (3) $ 6 $ 3
Retained earnings 11,143 (356) 10,787
Other shareholders’ equity (2,796) – (2,796)
TOTAL SHAREHOLDERS’ EQUITY $ 8,344 $ (350) $ 7,994
Presentation of Comprehensive Income. Effective January 1, 2012, measurement principles and expands required disclosures to include
the Company adopted the FASB’s amended guidance (ASU 2011-05) quantitative and qualitative information about unobservable inputs in
that requires presenting net income and other comprehensive income Level 3 measurements and leveling for financial instruments not
in either a single continuous statement or in two separate, but carried at fair value in the financial statements. Upon adoption, there
consecutive statements. Neither measurement of comprehensive were no effects on the Company’s fair value measurements. See
income nor disclosure requirements for reclassification adjustments Note 11 for expanded fair value disclosures.
between other comprehensive income and net income were affected
Troubled debt restructurings. Effective July 1, 2011, the Companyby this amended guidance. The Company has elected to present a
adopted the FASB’s updated guidance (ASU 2011-02) to clarify forseparate statement of comprehensive income following the statement
lenders that a troubled debt restructuring occurs when a debtof income and has retrospectively adjusted prior periods to conform to
modification is a concession to the borrower and the borrower isthe new presentation, as required.
experiencing financial difficulties. This guidance was required to be
Amendments to Fair Value Measurement and Disclosure. Effective applied retrospectively for restructurings occurring on or after
January 1, 2012, the Company adopted the FASB’s amended January 1, 2011. The amendment also required new disclosures to be
guidance on fair value measurement and disclosure (ASU 2011-04) provided beginning in the third quarter of 2011 addressing certain
on a prospective basis. A key objective was to achieve common fair troubled debt restructurings. Adoption of the new guidance did not
value measurement and disclosure requirements between U.S. GAAP have a material effect to the Company’s results of operations or
and IFRS. The amended guidance changes certain fair value
70 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
financial condition. See Note 12 for additional information related to discounted cash flow analyses. Certain commercial mortgage loans
commercial mortgage loans. without valuation reserves are considered impaired because the
Company will not collect all interest due according to the terms of the
original agreements. However, the Company expects to recover theirC. Investments
remaining carrying value primarily because it is less than the fair value
of the underlying real estate.The Company’s accounting policies for investment assets are discussed
below:
Policy loans. Policy loans are carried at unpaid principal balances plus
accumulated interest. The loans are collateralized by insurance policyFixed maturities and equity securities. Most fixed maturities
cash values and therefore have no exposure to credit loss.(including bonds, mortgage and other asset-backed securities and
preferred stocks redeemable by the investor) and some equity
Real estate. Investment real estate can be ‘‘held and used’’ or ‘‘held forsecurities are classified as available for sale and are carried at fair value
sale’’. As of December 31, 2012 and 2011, all of the Company’s realwith changes in fair value recorded in accumulated other
estate is classified as ‘‘held and used’’. Such real estate is expected to becomprehensive income (loss) within shareholders’ equity. The
held longer than one year and includes real estate acquired throughCompany accounts for fixed maturities with fair value below
the foreclosure of commercial mortgage loans. The Company carriesamortized cost as follows:
real estate held and used at depreciated cost less any write-downs to
The Company first assesses its intent to sell or whether it is more fair value due to impairment and assesses impairment when cash flows
likely than not to be required to sell such fixed maturities before indicate that the carrying value may not be recoverable. The
their fair values recover. Company estimates the fair value of impaired real estate using internal
valuations generally based on discounted cash flow analyses.If either of those conditions is met, an impairment loss is recognized
Depreciation is generally calculated using the straight-line methodin net income for the excess of the amortized cost over fair value.
based on the estimated useful life of the particular real estate asset. At
Even when there is no intent or requirement to sell the fixed the time of foreclosure, properties are reclassified from commercial
maturity, if the Company determines that it does not expect to mortgage loans to real estate or other long-term investments
recover the amortized cost basis of fixed maturities the credit depending on the ownership of the underlying assets.
portion of the impairment loss is recognized in net income and the
Other long-term investments. Other long-term investments includenon-credit portion, if any, is recognized in accumulated other
investments in unconsolidated entities. These entities include certaincomprehensive income.
limited partnerships and limited liability companies holding real
The credit portion is the difference between amortized cost and the estate, securities or loans. These investments are carried at cost plus
net present value of its projected future cash flows. Projected future the Company’s ownership percentage of reported income or loss in
cash flows are based on qualitative and quantitative factors, cases where the Company has significant influence, otherwise the
including the probability of default, and the estimated timing and investment is carried at cost. Income from certain entities is reported
amount of recovery. For mortgage and asset-backed securities, on a one quarter lag depending on when their financial information is
estimated future cash flows are also based on assumptions about the received. Also included in other long-term investments are loans to
collateral attributes including prepayment speeds, default rates and unconsolidated real estate entities secured by the equity interests of
changes in value. these real estate entities, that are carried at unpaid principal balances
(mezzanine loans). These other long-term investments are consideredFixed maturities and equity securities also include trading and certain
impaired, and written down to their fair value, when cash flowshybrid securities that are carried at fair value with changes in fair value
indicate that the carrying value may not be recoverable. Fair value isreported in realized investment gains and losses. The Company has
generally determined based on a discounted cash flow analysis.irrevocably elected the fair value option for these securities to simplify
accounting and mitigate volatility in results of operations and Additionally, other long-term investments include interest rate and
financial condition. Hybrid securities include certain preferred stock foreign currency swaps carried at fair value. See Note 13 for
and debt securities with call or conversion options. information on the Company’s accounting policies for these derivative
financial instruments.
Commercial mortgage loans. Mortgage loans held by the Company
are made exclusively to commercial borrowers at a fixed rate of Short-term investments. Investments with maturities of greater than
interest. Commercial mortgage loans are carried at unpaid principal 90 days but less than one year from time of purchase are classified as
balances or, if impaired, the lower of unpaid principal or fair value of short-term, available for sale and carried at fair value, which
the underlying real estate. If the fair value of the underlying real estate approximates cost.
is less than unpaid principal, a valuation reserve is recorded and
Derivative financial instruments. The Company applies hedgeadjusted each period for changes in fair value. Commercial mortgage
accounting when derivatives are designated, qualify and are highlyloans are considered impaired when it is probable that the Company
effective as hedges. Effectiveness is formally assessed and documentedwill not collect amounts due according to the terms of the original
at inception and each period throughout the life of a hedge usingloan agreement. The Company monitors credit risk and assesses the
various quantitative methods appropriate for each hedge, includingimpairment of loans individually and on a consistent basis for all loans
regression analysis and dollar offset. Under hedge accounting, thein the portfolio. The Company estimates the fair value of the
changes in fair value of the derivative and the hedged risk are generallyunderlying real estate using internal valuations generally based on
CIGNA CORPORATION – 2012 Form 10-K 71
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PART II
ITEM 8 Financial Statements and Supplementary Data
recognized together and offset each other when reported in E. Premiums, Accounts and Notes
shareholders’ net income.
Receivable and Reinsurance
The Company accounts for derivative instruments as follows: Recoverables
Derivatives are reported on the balance sheet at fair value with
Premiums, accounts and notes receivable are reported net of an
changes in fair values reported in shareholders’ net income or
allowance for doubtful accounts of $51 million as of December 31,
accumulated other comprehensive income.
2012 and $45 million as of December 31, 2011. Reinsurance
Changes in the fair value of derivatives that hedge market risk recoverables are estimates of amounts that the Company will receive
related to future cash flows and that qualify for hedge accounting are from reinsurers and are recorded net of an allowance for unrecoverable
reported in a separate caption in accumulated other comprehensive reinsurance of $4 million as of December 31, 2012 and $5 million as
income. These hedges are referred to as cash flow hedges. of December 31, 2011. The Company estimates these allowances for
doubtful accounts for premiums, accounts and notes receivable, as
A change in the fair value of a derivative instrument may not always
well as for reinsurance recoverables, using management’s best estimate
equal the change in the fair value of the hedged item; this difference
of collectibility, taking into consideration the aging of these amounts,
is referred to as hedge ineffectiveness. Where hedge accounting is
historical collection patterns and other economic factors.
used, the Company reflects hedge ineffectiveness in shareholders’
net income (generally as part of realized investment gains and
losses). F. Deferred Policy Acquisition Costs
On early termination, the changes in fair value of derivatives that Acquisition costs relate to the successful acquisition of new or renewal
qualified for hedge accounting are reported in shareholders’ net insurance contracts. Costs eligible for deferral include incremental,
income (generally as part of realized investment gains and losses). direct costs of contract acquisition and other costs directly related to
successful contract acquisition. Examples of deferrable costs include
Net investment income. When interest and principal payments on commissions, sales compensation and benefits, policy issuance and
investments are current, the Company recognizes interest income underwriting costs and premium taxes. The Company records
when it is earned. The Company stops recognizing interest income acquisition costs differently depending on the product line.
when interest payments are delinquent based on contractual terms or Acquisition costs for:
when certain terms (interest rate or maturity date) of the investment
Universal life products are deferred and amortized in proportion tohave been restructured. Net investment income on these investments
the present value of total estimated gross profits over the expectedis only recognized when interest payments are actually received.
lives of the contracts.Interest and dividends on trading and hybrid securities and
prepayment penalties on mortgage loans are included in net Supplemental health, life and accident insurance (primarily
investment income when they are earned. individual products) and group health and accident insurance
products are deferred and amortized, generally in proportion to theInvestment gains and losses. Realized investment gains and losses are
ratio of periodic revenue to the estimated total revenues over thebased on specifically identified assets and result from sales, investment
contract periods.asset write-downs, changes in the fair values of trading and hybrid
securities and certain derivatives, changes in valuation reserves and Other products are expensed as incurred.
prepayment penalties on fixed maturities.
Deferred acquisition costs also include an intangible asset that
Unrealized gains and losses on fixed maturities and equity securities primarily represents the value of business acquired by the Company
carried at fair value (excluding trading and hybrid securities) and with the purchase of the supplemental benefits business in 2012. See
certain derivatives are included in accumulated other comprehensive Note 3 for additional information. There are no deferred policy
income (loss), net of: acquisition costs attributable to the sold individual life insurance and
annuity and retirement businesses or the run-off reinsurance andamounts required to adjust future policy benefits for the run-off
settlement annuity operations.settlement annuity business; and
For universal life and other individual products, managementdeferred income taxes.
estimates the present value of future revenues less expected payments.
For group health and accident insurance products, management
D. Cash and Cash Equivalents estimates the sum of unearned premiums and anticipated net
investment income less future expected claims and related costs. IfCash equivalents consist of short-term investments with maturities of
management’s estimates of these sums are less than the deferred costs,three months or less from the time of purchase that are classified as
the Company reduces deferred policy acquisition costs and records anheld to maturity and carried at amortized cost. The Company
expense. The Company recorded amortization for policy acquisitionreclassifies cash overdraft positions to accounts payable, accrued
costs of $218 million in 2012, $259 million in 2011 and $251 millionexpenses and other liabilities when the legal right of offset does not
in 2010 in other operating expenses.exist.
72 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 8 Financial Statements and Supplementary Data
intangibles on an accelerated or straight-line basis over periods from 1G. Property and Equipment
to 30 years. Management revises amortization periods if it believes
Property and equipment is carried at cost less accumulated there has been a change in the length of time that an intangible asset
depreciation. When applicable, cost includes interest, real estate taxes will continue to have value. Costs incurred to renew or extend the
and other costs incurred during construction. Also included in this terms of these intangible assets are generally expensed as incurred. See
category is internal-use software that is acquired, developed or Notes 9 and 11 for additional information.
modified solely to meet the Company’s internal needs, with no plan to
market externally. Costs directly related to acquiring, developing or
J. Separate Account Assets and Liabilitiesmodifying internal-use software are capitalized.
Separate account assets and liabilities are contractholder fundsThe Company calculates depreciation and amortization principally
maintained in accounts with specific investment objectives. The assetsusing the straight-line method generally based on the estimated useful
of these accounts are legally segregated and are not subject to claimslife of each asset as follows: buildings and improvements, 10 to
that arise out of any of the Company’s other businesses. These separate40 years; purchased software, one to five years; internally developed
account assets are carried at fair value with equal amounts for relatedsoftware, three to seven years; and furniture and equipment (including
separate account liabilities. The investment income, gains and lossescomputer equipment), three to 10 years. Improvements to leased
of these accounts generally accrue to the contractholders and, togetherfacilities are depreciated over the remaining lease term or the
with their deposits and withdrawals, are excluded from the Company’sestimated life of the improvement. The Company considers events
Consolidated Statements of Income and Cash Flows. Fees and chargesand circumstances that would indicate the carrying value of property,
earned for asset management or administrative services and mortalityequipment or capitalized software might not be recoverable. If the
risks are reported in premiums and fees.Company determines the carrying value of a long-lived asset is not
recoverable, an impairment charge is recorded. See Note 9 for
additional information. K. Contractholder Deposit Funds
Liabilities for contractholder deposit funds primarily include deposits
H. Goodwill received from customers for investment-related and universal life
products and investment earnings on their fund balances. TheseGoodwill represents the excess of the cost of businesses acquired over
liabilities are adjusted to reflect administrative charges and, forthe fair value of their net assets. Goodwill primarily relates to the
universal life fund balances, mortality charges. In addition, thisGlobal Health Care segment ($5.7 billion) and, to a lesser extent, the
caption includes premium stabilization reserves that are insuranceGlobal Supplemental Benefits segment ($350 million). The Company
experience refunds for group contracts that are left with the Companyevaluates goodwill for impairment at least annually during the third
to pay future premiums, deposit administration funds that are used toquarter at the reporting unit level, based on discounted cash flow
fund nonpension retiree insurance programs, retained asset accountsanalyses and writes it down through results of operations if impaired.
and annuities or supplementary contracts without significant lifeConsistent with prior years, the Company’s evaluations of goodwill
contingencies. Interest credited on these funds is accrued ratably overassociated with these segments used the best information available at
the contract period.the time, including reasonable assumptions and projections consistent
with those used in its annual planning process. The discounted cash
flow analyses used a range of discount rates that correspond with the L. Future Policy Benefits
reporting unit’s weighted average cost of capital, consistent with that
Future policy benefits are liabilities for the present value of estimatedused for investment decisions considering the specific and detailed
future obligations under long-term life and supplemental healthoperating plans and strategies within the reporting units. The
insurance policies and annuity products currently in force. Theseresulting discounted cash flow analyses indicated estimated fair values
obligations are estimated using actuarial methods and primarilyfor the reporting units exceeding their carrying values, including
consist of reserves for annuity contracts, life insurance benefits,goodwill and other intangibles. Finally, after reallocating goodwill in
guaranteed minimum death benefit (‘‘GMDB’’) contracts (see Note 7conjunction with the resegmentation at December 31, 2012, the
for additional information) and certain health, life, and accidentCompany determined that no events or circumstances have occurred
insurance products in our Global Supplemental Benefits segment.that would more likely than not reduce the fair values of the reporting
units below their carrying values. See Note 9 for additional Obligations for annuities represent specified periodic benefits to be
information. paid to an individual or groups of individuals over their remaining
lives. Obligations for life insurance policies represent benefits to be
paid to policyholders, net of future premiums to be received.I. Other Assets, including Other
Management estimates these obligations based on assumptions as to
Intangibles premiums, interest rates, mortality and surrenders, allowing for
adverse deviation. Mortality, morbidity, and surrender assumptionsOther assets consist of various insurance-related assets and the gain
are based on either the Company’s own experience or actuarial tables.position of certain derivatives, primarily guaranteed minimum
Interest rate assumptions are based on management’s judgmentincome benefits (‘‘GMIB’’) assets. The Company’s other intangible
considering the Company’s experience and future expectations, andassets include purchased customer and producer relationships,
range from 1% to 10%. Obligations for the run-off settlementprovider networks, and trademarks. The Company amortizes other
CIGNA CORPORATION – 2012 Form 10-K 73

PART II
ITEM 8 Financial Statements and Supplementary Data
annuity business include adjustments for investment returns statutory disability or other group disability benefit plans. For awards
consistent with requirements of GAAP when a premium deficiency of such offsets that have not been finalized, the Company estimates
exists. the probability and amount of the offset based on the Company’s
experience over the past three to five years.
Certain reinsurance contracts contain GMDB under variable
annuities issued by other insurance companies. These obligations The Company discounts certain claim liabilities related to group
represent the guaranteed death benefit in excess of the contractholder’s long-term disability and workers’ compensation because benefit
account values (based on underlying equity and bond mutual fund payments may be made over extended periods. Discount rate
investments). These obligations are estimated based on assumptions assumptions are based on projected investment returns for the asset
regarding lapse, partial surrenders, mortality, interest rates (mean portfolios that support these liabilities and range from 1.83% to
investment performance and discount rate), market volatility as well 6.25%. When estimates change, the Company records the adjustment
as investment returns and premiums, consistent with the in benefits and expenses in the period in which the change in estimate
requirements of GAAP when a premium deficiency exists. Lapse, is identified. Discounted liabilities associated with the long-term
partial surrenders, mortality, interest rates and volatility are based on disability and certain workers’ compensation businesses were
management’s judgment considering the Company’s experience and $3.2 billion at December 31, 2012 and 2011.
future expectations. The results of futures and swap contracts used in
the GMDB equity and growth interest rate hedge programs are N. Global Health Care Medical Claims
reflected in the liability calculation as a component of investment
Payablereturns. See also Note 7 for additional information.
Medical claims payable for the Global Health Care segment include
both reported claims and estimates for losses incurred but not yetM. Unpaid Claims and Claims Expenses
reported including amounts owed for services from providers and
Liabilities for unpaid claims and claim expenses are estimates of under risk-sharing and quality management arrangements with
payments to be made under insurance coverages (primarily long-term providers. The Company develops estimates for Global Health Care
disability, workers’ compensation and life and health) for reported medical claims payable using actuarial principles and assumptions
claims and for losses incurred but not yet reported. consistently applied each reporting period, and recognizes the
actuarial best estimate of the ultimate liability within a level ofThe Company develops these estimates for losses incurred but not yet
confidence, as required by actuarial standards of practice, whichreported using actuarial principles and assumptions based on
require that the liabilities be adequate under moderately adversehistorical and projected claim incidence patterns, claim size,
conditions.subrogation recoveries and the length of time over which payments are
expected to be made. The Company consistently applies these The liability is primarily calculated using ‘‘completion factors’’ (a
actuarial principles and assumptions each reporting period, with measure of the time to process claims), which are developed by
consideration given to the variability of these factors, and recognizes comparing the date claims were incurred, generally the date services
the actuarial best estimate of the ultimate liability within a level of were provided, to the date claims were paid. The Company uses
confidence, as required by actuarial standards of practice, that require historical completion factors combined with an analysis of current
the liabilities to be adequate under moderately adverse conditions. trends and operational factors to develop current estimates of
completion factors. The Company estimates the liability for claimsThe Company’s estimate of the liability for disability claims reported
incurred in each month by applying the current estimates ofbut not yet paid is primarily calculated as the present value of expected
completion factors to the current paid claims data. This approachbenefit payments to be made over the estimated time period that a
implicitly assumes that historical completion rates will be a usefulpolicyholder remains disabled. The Company estimates the expected
indicator for the current period. It is possible that the actualtime period that a policyholder may be disabled by analyzing the rate
completion rates for the current period will develop differently fromat which an open claim is expected to close (claim resolution rate).
historical patterns, which could have a material impact on theClaim resolution rates may vary based upon the length of time a
Company’s medical claims payable and shareholders’ net income.policyholder is disabled, the covered benefit period, cause of disability,
benefit design and the policyholder’s age, gender and income level. Completion factors are impacted by several key items including
The Company uses historical resolution rates combined with an changes in: 1) electronic (auto-adjudication) versus manual claim
analysis of current trends and operational factors to develop current processing, 2) provider claims submission rates, 3) membership and
estimates of resolution rates. The reserve for the gross monthly 4) the mix of products. As noted, the Company uses historical
disability benefits due to a policyholder is reduced (offset) by the completion factors combined with an analysis of current trends and
income that the policyholder receives under other benefit programs, operational factors to develop current estimates of completion factors.
such as Social Security Disability Income, workers’ compensation,
74 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
In addition, for the more recent months, the Company also relies on postemployment benefits (see Note 10), the loss position of certain
medical cost trend analysis, which reflects expected claim payment derivatives, primarily for GMIB contracts (see Note 13), self-insured
patterns and other relevant operational considerations. Medical cost exposures, management compensation and various insurance-related
trend is primarily impacted by medical service utilization and unit items, including experience rated refunds, the minimum medical loss
costs, which are affected by changes in the level and mix of medical ratio rebate accrual under Health Care Reform, amounts related to
benefits offered, including inpatient, outpatient and pharmacy, the reinsurance contracts and insurance-related assessments that
impact of copays and deductibles, changes in provider practices and management can reasonably estimate. Accounts payable, accrued
changes in consumer demographics and consumption behavior. expenses and other liabilities also include certain overdraft positions.
Legal costs to defend the Company’s litigation and arbitration mattersDespite reflecting both historical and emerging trends in setting
are expensed when incurred in cases that the Company cannotreserves, it is possible that the actual medical trend for the current
reasonably estimate the ultimate cost to defend. In cases that theperiod will develop differently from expectations, which could have a
Company can reasonably estimate the cost to defend, these costs arematerial impact on the Company’s medical claims payable and
recognized when the claim is reported.shareholders’ net income.
For each reporting period, the Company evaluates key assumptions by
R. Translation of Foreign Currenciescomparing the assumptions used in establishing the medical claims
payable to actual experience. When actual experience differs from the The Company generally conducts its international business through
assumptions used in establishing the liability, medical claims payable foreign operating entities that maintain assets and liabilities in local
are increased or decreased through current period shareholders’ net currencies, which are generally their functional currencies. The
income. Additionally, the Company evaluates expected future Company uses exchange rates as of the balance sheet date to translate
developments and emerging trends which may impact key assets and liabilities into U.S. dollars. Translation gains or losses on
assumptions. The estimation process involves considerable judgment, functional currencies, net of applicable taxes, are recorded in
reflecting the variability inherent in forecasting future claim accumulated other comprehensive income (loss). The Company uses
payments. These estimates are highly sensitive to changes in the average monthly exchange rates during the year to translate revenues
Company’s key assumptions, specifically completion factors, and and expenses into U.S. dollars.
medical cost trends.
S. Premiums and Fees, Revenues and
O. Unearned Premiums and Fees Related Expenses
Premiums for life, accident and health insurance are recognized as
Premiums for group life, accident and health insurance and managed
revenue on a pro rata basis over the contract period. Fees for mortality
care coverages are recognized as revenue on a pro rata basis over the
and contract administration of universal life products are recognized
contract period. Benefits and expenses are recognized when incurred.
ratably over the coverage period. The unrecognized portion of these
Premiums and fees include revenue from experience-rated contracts
amounts received is recorded as unearned premiums and fees.
that is based on the estimated ultimate claim, and in some cases,
administrative cost experience of the contract. For these contracts,
premium revenue includes an adjustment for experience-rated refundsP. Redeemable Noncontrolling Interest
which is calculated according to contract terms and using the
The redeemable noncontrolling interest comprises the preferred and
customer’s experience (including estimates of incurred but not
common stock interests not purchased by the Company in its
reported claims). Beginning in 2011, premium revenue also includes
acquisition of Finans Emeklilik in 2012 (see Note 3A for further
an adjustment to reflect the estimated effect of rebates due to
information.) This redeemable noncontrolling interest relates to the
customers under the minimum medical loss ratio provisions of Health
right of the holder to require the Company to purchase the holder’s
Care Reform.
49% interest at a redemption value equal to its net assets in Finans
Premiums for individual life, accident and supplemental healthEmklilik and the value of its inforce business in 15 years. Cigna also
insurance and annuity products, excluding universal life andhas the right to require the holder to sell its 49% interest to Cigna for
investment-related products, are recognized as revenue when due.the same value in 15 years. The redeemable noncontrolling interest
Benefits and expenses are matched with premiums.was recorded at fair value on the date of purchase. Subsequently, if the
estimated redemption value exceeds the recorded value for the Premiums and fees received for the Company’s Medicare Advantage
redeemable noncontrolling interest, an adjustment to increase the Plans and Medicare Part D products from customers and the Centers
redeemable noncontrolling interest will be recorded and impact for Medicare and Medicaid Services (CMS) are recognized as revenue
income available to common shareholders. ratably over the contract period. CMS provides risk adjusted premium
payments for the Medicare Advantage Plans and Medicare Part D
products, based on the demographics and health severity of enrollees.Q. Accounts Payable, Accrued Expenses
The Company recognizes periodic changes to risk adjusted premiumsand Other Liabilities
as revenue when the amounts are determinable and collection is
Accounts payable, accrued expenses and other liabilities consist reasonably assured. Additionally, Medicare Part D includes payments
principally of liabilities for pension, other postretirement and from CMS for risk sharing adjustments. The risk sharing adjustments,
CIGNA CORPORATION – 2012 Form 10-K 75

PART II
ITEM 8 Financial Statements and Supplementary Data
that are estimated quarterly based on claim experience, compare adjusted regardless of the final outcome. For strategic performance
actual incurred drug benefit costs to estimated costs submitted in shares with payment dependent on performance conditions, expense
original contracts and may result in more or less revenue from CMS. is initially accrued based on the most likely outcome, but evaluated for
Final revenue adjustments are determined through an annual adjustment each period for updates in the expected outcome. At the
settlement with CMS that occurs after the contract year. end of the performance period, expense is adjusted to the actual
outcome (number of shares awarded times the share price at the grantRevenue for investment-related products is recognized as follows:
date).
Net investment income on assets supporting investment-related
products is recognized as earned.
U. Participating Business
Contract fees, that are based upon related administrative expenses,
The Company’s participating life insurance policies entitleare recognized in premiums and fees as they are earned ratably over
policyholders to earn dividends that represent a portion of thethe contract period.
earnings of the Company’s life insurance subsidiaries. Participating
Benefits and expenses for investment-related products consist insurance accounted for approximately 1% of the Company’s total life
primarily of income credited to policyholders in accordance with insurance in force at the end of 2012, 2011 and 2010.
contract provisions.
Revenue for universal life products is recognized as follows: V. Income Taxes
Net investment income on assets supporting universal life products
The Company and its domestic subsidiaries file a consolidated United
is recognized as earned.
States federal income tax return. The Company’s foreign subsidiaries
Fees for mortality and surrender charges are recognized as assessed, file tax returns in accordance with foreign law. U.S. taxation of these
that is as earned. foreign subsidiaries may differ in timing and amount from taxation
under foreign laws. Reportable U.S. taxable income for theseAdministration fees are recognized as services are provided.
subsidiaries is reflected in the U.S. tax return of the affiliates’ domestic
Benefits and expenses for universal life products consist of benefit parent.
claims in excess of policyholder account balances. Expenses are
The Company recognizes deferred income taxes when the financialrecognized when claims are submitted, and income is credited to
statement and tax-based carrying values of assets and liabilities arepolicyholders in accordance with contract provisions.
different. In addition, deferred income tax liabilities are recognized on
Contract fees and expenses for administrative services only programs the unremitted earnings of foreign subsidiaries that are not
and pharmacy programs and services are recognized as services are permanently invested overseas. For subsidiaries whose earnings are
provided net of estimated refunds under performance guarantees. In considered permanently invested overseas, income taxes are accrued at
some cases, the Company provides performance guarantees associated the local foreign tax rate. The Company establishes valuation
with meeting certain service standards, clinical outcomes or financial allowances against deferred tax assets if it is determined more likely
metrics. If these service standards, clinical outcomes or financial than not that the deferred tax asset will not be realized. The need for a
metrics are not met, the Company may be financially at risk up to a valuation allowance is determined based on the evaluation of various
stated percentage of the contracted fee or a stated dollar amount. The factors, including expectations of future earnings and management’s
Company establishes deferred revenues for estimated payouts judgment. Note 20 contains detailed information about the
associated with these performance guarantees. Approximately 16% of Company’s income taxes.
ASO fees reported for the year ended December 31, 2012 were at risk,
The Company recognizes interim period income taxes by determiningwith reimbursements estimated to be approximately 1%.
an estimated annual effective tax rate and applying that rate to
Mail order pharmacy revenues and cost of goods sold are recognized as year-to-date pretax results. The estimated annual effective tax rate is
each prescription is shipped. updated periodically based on revised projections of full year income.
Although the effective tax rate approach is generally used for interim
periods, taxes on significant, unusual and infrequent items areT. Stock Compensation
recognized at the statutory tax rate entirely in the period the amounts
The Company records compensation expense for stock awards and are realized.
options over their vesting periods primarily based on the estimated fair
value at the grant date. Compensation expense is recorded for stock
W. Earnings Per Shareoptions over their vesting period based on fair value at the grant date
which is calculated using an option-pricing model. Compensation The Company computes basic earnings per share using the weighted-
expense is recorded for restricted stock grants and units over their average number of unrestricted common and deferred shares
vesting periods based on fair value, which is equal to the market price outstanding. Diluted earnings per share also includes the dilutive
of the Company’s common stock on the date of grant. Compensation effect of outstanding employee stock options and unvested restricted
expense for strategic performance shares is recorded over the stock granted after 2009 using the treasury stock method and the
performance period. For strategic performance shares with payment effect of strategic performance shares.
dependent on market condition, fair value is determined at the grant
date using a Monte Carlo simulation model and not subsequently
76 CIGNA CORPORATION – 2012 Form 10-K
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•
•
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•

PART II
ITEM 8 Financial Statements and Supplementary Data
Acquisitions and Dispositions
The Company may from time to time acquire or dispose of assets, allocated to the tangible and intangible net assets acquired based on
subsidiaries or lines of business. Significant transactions are described management’s preliminary estimates of their fair value and may
below. change as additional information becomes available over the next
several months. Accordingly, approximately $117 million was
allocated to identifiable intangible assets, primarily a distributionA. Joint Venture Agreement with
relationship and the value of business acquired (‘‘VOBA’’) that
Finansbank represents the present value of the estimated net cash flows from the
long duration contracts in force, with the remaining $113 millionOn November 9, 2012, the Company acquired 51% of the total
allocated to goodwill. The identifiable intangible assets will beshares of Finans Emeklilik ve Hayat A.S. (‘‘Finans Emeklilik’’), a
amortized over an estimated useful life of approximately 10 years.Turkish insurance company, from Finansbank A.S. (‘‘Finansbank’’), a
Goodwill has been provisionally allocated to the Global SupplementalTurkish retail bank, for a cash purchase price of approximately
Benefits segment and is not deductible for federal income tax$116 million. Finansbank continues to hold 49% of the total shares.
purposes.Finans Emeklilik operates in life insurance, accident insurance and
pension product markets. The acquisition provides Cigna The redeemable noncontrolling interest is classified as temporary
opportunities to reach and serve the growing middle class market in equity in the Company’s Consolidated Balance Sheet because
Turkey through Finansbank’s network of retail banking branches. Finansbank has the right to require the Company to purchase its 49%
In accordance with GAAP, the total purchase price, including the interest in the value of its net assets and the inforce business in
redeemable noncontrolling interest of $111 million, has been 15 years.
The condensed balance sheet at the acquisition date was as follows:
(In millions)
Investments $ 23
Cash and cash equivalents 54
Value of business acquired (reported in Deferred policy acquisition costs in the Consolidated Balance Sheet) 28
Goodwill 113
Separate account assets 99
Other assets, including other intangibles 100
Total assets acquired 417
Insurance liabilities 58
Accounts payable, accrued expenses and other liabilities 33
Separate account liabilities 99
Total liabilities acquired 190
Redeemable noncontrolling interest 111
Net assets acquired $ 116
The results of Finans Emeklilik are included in the Company’s In accordance with GAAP, the total purchase price has been allocated
Consolidated Financial Statements from the date of acquisition. The to the tangible and intangible net assets acquired based on
pro forma effects on total revenues and net income assuming the management’s preliminary estimates of their fair value and may
acquisition had occurred as of January 1, 2011 were not material to change as additional information becomes available over the next
the Company for the years ended December 31, 2012 and 2011. several months. The Company updated its allocation of the purchase
price in the fourth quarter of 2012 with the completion of fair
valuation procedures for insurance liabilities and the resolution ofB. Acquisition of Great American
certain tax matters. These changes resulted in an increase in the
Supplemental Benefits Group allocation to the insurance liabilities by $73 million to $707 million
On August 31, 2012, the Company acquired Great American and to the VOBA asset by $73 million to $144 million. In addition,
Supplemental Benefits Group, one of the largest providers of the allocation to tax accounts was increased by $15 million to a
supplemental health insurance products in the U.S. with cash from $7 million asset. Approximately $168 million was allocated to
internal resources. The Company finalized the purchase price in the intangible assets, primarily the VOBA asset that will be amortized in
first quarter of 2013 that resulted in an increase of $19 million to proportion to premium recognized over the life of the contracts that is
$326 million. The acquisition provides the Company with an estimated to be 30 years. Amortization is expected to be higher in
increased presence in the Medicare supplemental benefits market. It early years and decline as policies lapse. Goodwill has been allocated to
also extends the Company’s global direct-to-consumer retail channel the Global Supplemental Benefits segment as of December 31, 2012.
as well as further enhances its distribution network of agents and Substantially all of the goodwill is tax deductible and will be
brokers. Subsequent to the segment reporting changes in 2012, results amortized over the next 15 years for federal income tax purposes.
of this business are reported in the Global Supplemental Benefits
segment.
CIGNA CORPORATION – 2012 Form 10-K 77
NOTE 3

PART II
ITEM 8 Financial Statements and Supplementary Data
The condensed balance sheet at the acquisition date was as follows:
(In millions)
Investments $ 211
Cash and cash equivalents 36
Reinsurance recoverables 448
Goodwill 168
Value of business acquired (reported in Deferred policy acquisition costs in the Consolidated Balance Sheet) 144
Other assets, including other intangibles 35
Total assets acquired 1,042
Insurance liabilities 707
Accounts payable, accrued expenses and other liabilities 9
Total liabilities acquired 716
Net assets acquired $ 326
The results of this business have been included in the Company’s the District of Columbia, as well as a large, national stand-alone
Consolidated Financial Statements from the date of acquisition. The Medicare prescription drug business. The acquisition of HealthSpring
pro forma effects on total revenues and net income assuming the strengthens the Company’s ability to serve individuals across their life
acquisition had occurred as of January 1, 2011 were not material to stages as well as deepens its presence in a number of geographic
the Company for the years ended December 31, 2012 and 2011. markets. The addition of HealthSpring brings industry leading
physician partnership capabilities and creates the opportunity to
deepen the Company’s existing client and customer relationships, asC. Acquisition of HealthSpring, Inc.
well as facilitates a broader deployment of its range of health and
On January 31, 2012 the Company acquired the outstanding shares wellness capabilities and product offerings. The Company funded the
of HealthSpring, Inc. (‘‘HealthSpring’’) for $55 per share in cash and acquisition with internal cash resources.
Cigna stock awards, representing a cost of approximately $3.8 billion.
HealthSpring provides Medicare Advantage coverage in 13 states and
Merger consideration: The estimated merger consideration of $3.8 billion was determined as follows:
(In millions, except per share amounts)
HealthSpring, Inc. common shares outstanding at January 30, 2012 67.8
Less: common shares outstanding not settled in cash (0.1)
Common shares settled in cash 67.7
Price per share $ 55
Cash consideration for outstanding shares $ 3,725
Fair value of share-based compensation awards 65
Additional cash and equity consideration 21
TOTAL MERGER CONSIDERATION $ 3,811
Fair value of share-based compensation awards. On the date of were generally consistent with those disclosed in Note 21 to the
the acquisition, HealthSpring employees’ awards of options and Company’s 2012 Consolidated Financial Statements, except the
restricted shares of HealthSpring stock were rolled over to Cigna stock expected life assumption of these options ranged from 1.8 to 4.8 years
options and restricted stock. Each holder of a HealthSpring stock and the exercise price did not equal the market value at the grant date.
option or restricted stock award received 1.24 Cigna stock options or Fair value of the new stock options approximated intrinsic value
restricted stock awards. The conversion ratio of 1.24 at the date of because the exercise price at the acquisition date for substantially all of
acquisition was determined by dividing the acquisition price of the options was significantly below Cigna’s stock price.
HealthSpring shares of $55 per share by the price of Cigna stock on The fair value of these options and restricted stock awards was
January 31, 2012 of $44.43. The Cigna stock option exercise price included in the purchase price to the extent that services had been
was determined by using this same conversion ratio. Vesting periods provided prior to the acquisition based on the grant date of the
and the remaining life of the options rolled over with the original original HealthSpring awards and vesting periods. The remaining fair
HealthSpring awards. value not included in the purchase price will be recorded as
The Company valued the share-based compensation awards as of the compensation expense in future periods over the remaining vesting
acquisition date using Cigna’s stock price for restricted stock and a periods. Most of the expense is expected to be recognized in 2012 and
Black-Scholes pricing model for stock options. The assumptions used 2013.
78 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
The following table summarizes the effect of these rollover awards for former HealthSpring employees.
Compensation
Number of Average exercise/ Fair value Included in expense
(Awards in thousands, dollars in millions, except per share amounts) awards award price of awards purchase price post-acquisition
Vested options 589 $ 14.04 $ 18 $ 18 $ –
Unvested options 1,336 $ 16.21 37 28 9
Restricted stock 786 $ 44.43 35 19 16
TOTAL 2,711 $ 90 $ 65 $ 25
Purchase price allocation. In accordance with GAAP, the total purchase price has been allocated to the tangible and intangible net assets
acquired based on management’s estimates of their fair values. Subsequent to the segment reporting changes in 2012, goodwill has been allocated
to the Government operating segment as of December 31, 2012 and is not deductible for federal income tax purposes. The condensed balance
sheet of HealthSpring at the acquisition date was as follows:
(In millions)
Investments $ 612
Cash and cash equivalents 492
Premiums, accounts and notes receivable 320
Goodwill 2,541
Intangible assets 795
Other 96
TOTAL ASSETS ACQUIRED 4,856
Insurance liabilities 505
Deferred income taxes 214
Debt 326
TOTAL LIABILITIES ACQUIRED 1,045
NET ASSETS ACQUIRED $ 3,811
In accordance with debt covenants, HealthSpring’s debt obligation reported as a financing activity in the statement of cash flows for the
was paid immediately following the acquisition. This repayment is year ended December 31, 2012.
The estimated fair values and useful lives for intangible assets are as follows:
Estimated Estimated Useful Life
(Dollars in millions) Fair Value (In Years)
Customer relationships $ 711 8
Other 84 3-10
TOTAL OTHER INTANGIBLE ASSETS $ 795
The fair value of the customer relationship and the amortization The results of HealthSpring have been included in the Company’s
method were determined using an income approach that relies on Consolidated Financial Statements from the date of the acquisition.
projected future net cash flows including key assumptions for the Revenues of HealthSpring included in the Company’s results for the
customer attrition rate and discount rate. The estimated weighted year ended December 31, 2012 were approximately $5.4 billion.
average useful life reflects the time period and pattern of use that During 2012, the Company recorded $53 million pre-tax
Cigna expects for over 90% of the projected benefits. Accordingly, ($40 million after-tax) of acquisition-related costs in other operating
amortization was recorded on an accelerated basis in 2012 and will expenses.
decline in subsequent years.
Pro forma information. The following table presents selected unaudited pro forma information for the Company assuming the acquisition of
HealthSpring had occurred as of January 1, 2011. This pro forma information does not purport to represent what the Company’s actual results
would have been if the acquisition had occurred as of the date indicated or what such results would be for any future periods.
Year Ended December 31,
(In millions, except per share amounts) 2012 2011
Total revenues $ 29,608 $ 27,461
Shareholders’ net income $ 1,633 $ 1,456
Earnings per share:
Basic $ 5.73 $ 5.11
Diluted $ 5.63 $ 5.02
CIGNA CORPORATION – 2012 Form 10-K 79

PART II
ITEM 8 Financial Statements and Supplementary Data
The Company believes that the risk of loss beyond this maximumD. Acquisition of FirstAssist
aggregate is remote. The reinsurance arrangement is secured by assets
In November 2011, the Company acquired FirstAssist Group held in trust. Cash consideration paid to the reinsurer was
Holdings Limited (‘‘FirstAssist’’) for approximately $115 million in $190 million. The net effect of this transaction was an after-tax loss of
cash. FirstAssist is based in the United Kingdom and provides travel $20 million ($31 million pre-tax), primarily reported in other
and protection insurance services that the Company expects will operating expenses in the Run-off Reinsurance segment.
enhance its individual business in the U.K. and around the world.
In accordance with GAAP, the total purchase price has been allocated F. Acquisition of Vanbreda International
to the tangible and intangible net assets acquired based on
On August 31, 2010, the Company acquired 100% of the votingmanagement’s estimates of their fair values. During 2012, the
stock of Vanbreda International NV (Vanbreda International), basedCompany updated its allocation of the purchase price based on
in Antwerp, Belgium for a cash purchase price of $412 million.additional information. Accordingly, the allocation to identifiable
Vanbreda International specializes in providing worldwide medicalintangible assets was decreased by $18 million to $40 million. The
insurance and employee benefits to intergovernmental andallocation to goodwill was increased by $8 million to $64 million.
non-governmental organizations, including internationalSubsequent to the segment reporting changes in 2012, goodwill has
humanitarian operations, as well as corporate clients. Vanbredabeen reported in the Global Supplemental Benefits segment.
International’s market leadership in the intergovernmental segment
The results of FirstAssist are included in the Company’s Consolidated complements the Company’s position in providing global health
Financial Statements from the date of acquisition. The pro forma benefits primarily to multinational companies and organizations and
effects on total revenues and net income assuming the acquisition had their globally mobile employees in North America, Europe, the
occurred as of January 1, 2011 were not material to the Company for Middle East and Asia.
the year ended December 31, 2011.
In accordance with GAAP, the total purchase price has been allocated
to the tangible and intangible net assets acquired based on
E. Reinsurance of Run-off Workers’ management’s estimates of their fair values. Accordingly,
approximately $210 million was allocated to intangible assets,Compensation and Personal Accident
primarily customer relationships. The weighted average amortizationBusiness
period is 15 years.
On December 31, 2010, the Company essentially exited from its
Subsequent to the segment reporting changes in 2012, goodwill has
workers’ compensation and personal accident reinsurance business by
been allocated to the Commercial operating segment. For foreign tax
purchasing retrocessional coverage from a Bermuda subsidiary of
purposes, the acquisition of Vanbreda International was treated as a
Enstar Group Limited and transferring administration of this business
stock purchase. Accordingly, goodwill and other intangible assets will
to the reinsurer. Under the reinsurance agreement, Cigna is
not be amortized for foreign tax purposes but may reduce the
indemnified for liabilities with respect to its workers’ compensation
taxability of earnings repatriated to the U.S. by Vanbreda
and personal accident reinsurance business to the extent that these
International.
liabilities do not exceed 190% of the December 31, 2010 net reserves.
80 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
Earnings Per Share
Basic and diluted earnings per share were computed as follows:
Effect of
(Dollars in millions, except per share amounts) Basic Dilution Diluted
2012
Shareholders’ net income $ 1,623 $ – $ 1,623
Shares (in thousands):
Weighted average 284,819 – 284,819
Common stock equivalents 4,711 4,711
Total shares 284,819 4,711 289,530
EPS $ 5.70 $ (0.09) $ 5.61
2011
Shareholders’ net income $ 1,260 $ – $ 1,260
Shares (in thousands):
Weighted average 270,691 – 270,691
Common stock equivalents 3,558 3,558
Total shares 270,691 3,558 274,249
EPS $ 4.65 $ (0.06) $ 4.59
2010
Shareholders’ net income $ 1,279 $ – $ 1,279
Shares (in thousands):
Weighted average 272,866 – 272,866
Common stock equivalents 2,421 2,421
Total shares 272,866 2,421 275,287
EPS $ 4.69 $ (0.04) $ 4.65
The following outstanding employee stock options were not included in the computation of diluted earnings per share because their effect would
have increased diluted earnings per share (antidilutive) as their exercise price was greater than the average share price of the Company’s common
stock for the period.
(In millions) 2012 2011 2010
Antidilutive options 2.5 3.7 6.3
Global Health Care Medical Claims Payable
Medical claims payable for the Global Health Care segment reflects business (primarily the global health benefits business previously
estimates of the ultimate cost of claims that have been incurred but reported in the former International segment). As a result of the
not yet reported, those which have been reported but not yet paid segment reporting change, insurance liabilities of the international
(reported claims in process) and other medical expense payable, which health care business previously classified as Unpaid Claims have been
comprises accruals primarily for provider incentives and other reclassified to Global Health Care Medical Claims Payable in the
amounts payable to providers. Consolidated Balance Sheets, and corresponding amounts in the
Statement of Income previously reported as Other Benefits Expense
As discussed further in Notes 2 and 23¸ effective December 31, 2012,
have been reclassified to Global Health Care Medical Claims Expense.
Cigna changed its external reporting segments. The Global Health
Prior year amounts have been conformed to this new presentation.
Care segment now includes most of Cigna’s international health care
CIGNA CORPORATION – 2012 Form 10-K 81
NOTE 4
NOTE 5

PART II
ITEM 8 Financial Statements and Supplementary Data
Incurred but not yet reported comprises the majority of the reserve balance as follows:
(In millions) 2012 2011
Incurred but not yet reported $ 1,541 $ 1,059
Reported claims in process 243 232
Other medical expense payable 72 14
MEDICAL CLAIMS PAYABLE $ 1,856 $ 1,305
Activity in medical claims payable was as follows:
(In millions) 2012 2011 2010
Balance at January 1, $ 1,305 $ 1,400 $ 1,045
Less: Reinsurance and other amounts recoverable 249 284 257
Balance at January 1, net 1,056 1,116 788
Acquired net: 504 – –
Incurred claims related to:
Current year 14,428 9,265 9,337
Prior years (200) (140) (115)
Total incurred 14,228 9,125 9,222
Paid claims related to:
Current year 12,854 8,227 8,217
Prior years 1,320 958 677
Total paid 14,174 9,185 8,894
Balance at December 31, net 1,614 1,056 1,116
Add: Reinsurance and other amounts recoverable 242 249 284
Balance at December 31, $ 1,856 $ 1,305 $ 1,400
Reinsurance and other amounts recoverable reflect amounts due from actuarial standards of practice, that require the liabilities be adequate
reinsurers and policyholders to cover incurred but not reported and under moderately adverse conditions. As the Company establishes the
pending claims for minimum premium products and certain liability for each incurral year, the Company ensures that its
administrative services only business where the right of offset does not assumptions appropriately consider moderately adverse conditions.
exist. See Note 8 for additional information on reinsurance. For the When a portion of the development related to the prior year incurred
year ended December 31, 2012, actual experience differed from the claims is offset by an increase determined appropriate to address
Company’s key assumptions resulting in favorable incurred claims moderately adverse conditions for the current year incurred claims,
related to prior years’ medical claims payable of $200 million, or 2.2% the Company does not consider that offset amount as having any
of the current year incurred claims as reported for the year ended impact on shareholders’ net income.
December 31, 2011. Actual completion factors accounted for
Second, as a result of the adoption of the commercial minimum
$91 million, or 1.0% of the favorability, while actual medical cost
medical loss ratio (MLR) provisions of the Patient Protection and
trend resulted in the remaining $109 million, or 1.2%.
Affordable Care Act in 2011, changes in medical claim estimates due
For the year ended December 31, 2011, actual experience differed to prior year development may be partially offset by a change in the
from the Company’s key assumptions, resulting in favorable incurred MLR rebate accrual.
claims related to prior years’ medical claims payable of $140 million,
Third, changes in reserves for the Company’s retrospectively
or 1.5% of the current year incurred claims as reported for the year
experience-rated business do not always impact shareholders’ net
ended December 31, 2010. Actual completion factors resulted in
income. For the Company’s retrospectively experience-rated business
$96 million, or 1.0% of the favorability, while actual medical cost
only adjustments to medical claims payable on accounts in deficit
trend resulted in the remaining $44 million, or 0.5%.
affect shareholders’ net income. An increase or decrease to medical
The corresponding impact of prior year development on shareholders’ claims payable on accounts in deficit, in effect, accrues to the
net income was $66 million for the year ended December 31, 2012 Company and directly impacts shareholders’ net income. An account
compared with $49 million for the year ended December 31, 2011. is in deficit when the accumulated medical costs and administrative
The favorable effects of prior year development on net income in charges, including profit charges, exceed the accumulated premium
2012 and 2011 primarily reflect low medical services utilization trend. received. Adjustments to medical claims payable on accounts in
The change in the amount of the incurred claims related to prior years surplus accrue directly to the policyholder with no impact on the
in the medical claims payable liability does not directly correspond to Company’s shareholders’ net income. An account is in surplus when
an increase or decrease in the Company’s shareholders’ net income the accumulated premium received exceeds the accumulated medical
recognized for the following reasons. costs and administrative charges, including profit charges.
First, the Company consistently recognizes the actuarial best estimate
of the ultimate liability within a level of confidence, as required by
82 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
Realignment and Efficiency Plan
During the third quarter of 2012, the Company, in connection with Global Health Care segment reported $65 million pre-tax
the execution of its strategy, committed to a series of actions to further ($42 million after-tax) of the charge. The remainder was reported as
improve its organizational alignment, operational effectiveness, and follows: $9 million pre-tax ($6 million after-tax) in Global
efficiency. As a result, the Company recognized charges in other Supplemental Benefits and $3 million pre-tax ($2 million after-tax) in
operating expenses of $77 million pre-tax ($50 million after-tax) in Group Disability and Life.
the third quarter of 2012 consisting primarily of severance costs. The
Summarized below is activity for 2012.
(In millions) Severance Real estate Total
Third quarter 2012 charge $ 72 $ 5 $ 77
less: Fourth quarter 2012 payments 5 1 6
Balance, December 31, 2012 $ 67 $ 4 $ 71
The severance costs are expected to be substantially paid in 2013.
Guaranteed Minimum Death Benefit Contracts
As discussed in Note 25, the Company reinsured the guaranteed (mean investment performance and discount rate) and volatility.
minimum death benefit (‘‘GMDB’’) business on February 4, 2013. These assumptions are based on the Company’s experience and future
expectations over the long-term period, consistent with the long-term
The Company’s reinsurance operations, that were discontinued in
nature of this product. The Company regularly evaluates these
2000 and are now an inactive business in run-off mode, reinsured a
assumptions and changes its estimates if actual experience or other
GMDB, also known as variable annuity death benefits (‘‘VADBe’’),
evidence suggests that assumptions should be revised.
under certain variable annuities issued by other insurance companies.
These variable annuities are essentially investments in mutual funds The following provides information about the Company’s reserving
combined with a death benefit. The Company has equity and other methodology and assumptions for GMDB as of December 31, 2012:
market exposures as a result of this product. In periods of declining
The reserves represent estimates of the present value of net amounts
equity markets and in periods of flat equity markets following a
expected to be paid, less the present value of net future premiums.
decline, the Company’s liabilities for these guaranteed minimum
Included in net amounts expected to be paid is the excess of the
death benefits increase. Conversely, in periods of rising equity
guaranteed death benefits over the values of the contractholders’
markets, the Company’s liabilities for these guaranteed minimum
accounts (based on underlying equity and bond mutual fund
death benefits decrease.
investments).
In 2000, the Company determined that the GMDB reinsurance
The reserves include an estimate for partial surrenders (that allow
business was premium deficient because the recorded future policy
most contractholders to withdraw substantially all of their mutual
benefit reserve was less than the expected present value of future
fund investments while retaining the death benefit coverage in effect
claims and expenses less the expected present value of future
at the time of the withdrawal, essentially locking in the death benefit
premiums and investment income using revised assumptions based on
for a particular policy) based on annual election rates that vary from
actual and expected experience. The Company tests for premium
0% to 13% depending on the net amount at risk for each policy and
deficiency by reviewing its reserve each quarter using current market
whether surrender charges apply.
conditions and its long-term assumptions. Under premium deficiency
The assumed mean investment performance (‘‘growth interest rate’’)accounting, if the recorded reserve is determined to be insufficient, an
for the underlying equity mutual funds for the portion of theincrease to the reserve is reflected as a charge to current period income.
liability that is covered by the Company’s growth interest rate hedgeConsistent with GAAP, the Company does not recognize gains on
program is based on the market-observable LIBOR swap curve. Thepremium deficient long duration products.
assumed mean investment performance for the remainder of the
See Note 13 for further information on the Company’s dynamic
underlying equity mutual funds considers the Company’s GMDB
hedge programs. These programs were used to reduce certain equity
equity hedge program using futures contracts, and is based on the
and interest rate exposures associated with this business and were
Company’s view that short-term interest rates will average 4% over
discontinued after February 4, 2013.
future periods, but considers that current short-term rates are less
The determination of liabilities for GMDB requires the Company to than 4%. The mean investment performance assumption for the
make critical accounting estimates. The Company estimates its underlying fixed income mutual funds (bonds and money market)
liabilities for GMDB exposures with an internal model using many is 5% based on a review of historical returns. The investment
scenarios and based on assumptions regarding lapse, future partial performance for underlying equity and fixed income mutual funds
surrenders, claim mortality (deaths that result in claims), interest rates is reduced by fund fees ranging from 1% to 3% across all funds.
CIGNA CORPORATION – 2012 Form 10-K 83
NOTE 6
NOTE 7
•
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PART II
ITEM 8 Financial Statements and Supplementary Data
Market volatility refers to market fluctuation. The volatility Reserve Strengthening: In each of the three years presented, the
assumption is based on a review of historical monthly returns for Company completed its normal review of reserves (including
each key index (e.g. S&P 500) over a period of at least ten years. assumptions), and recorded additional other benefits expense to
Volatility represents the dispersion of historical returns compared to strengthen GMDB reserves. The amounts and primary drivers of the
the average historical return (standard deviation) for each index. reserve strengthening in each year were:
The assumption is 18% to 24%, varying by equity fund type; 5% to
2012: Reserve strengthening of $43 million ($27 million after-tax)7%, varying by bond fund type; and 0% to 1% for money market
was primarily due to reductions to the lapse rate assumptions, adversefunds. These volatility assumptions are used along with the mean
interest rate impacts, and, to a lesser extent, an increase in theinvestment performance assumption to project future return
volatility and correlation assumptions, partially offset by favorablescenarios.
equity market conditions. The adverse interest rate impacts reflect
The discount rate is 5.75%, which is determined based on the management’s consideration of the anticipated impact of continued
underlying and projected yield of the portfolio of assets supporting low short-term interest rates. This evaluation also led management to
the GMDB liability. lower the mean investment performance for equity funds from 4.75%
to 4.00% for those funds not subject to the growth interest rate hedgeThe claim mortality assumption is 65% to 89% of the 1994 Group
program.Annuity Mortality table, with 1% annual improvement beginning
January 1, 2000. The assumption reflects that for certain contracts, 2011: Reserve strengthening of $70 million ($45 million after-tax)
a spousal beneficiary is allowed to elect to continue a contract by was driven primarily by volatility-related impacts due to turbulent
becoming its new owner, thereby postponing the death claim rather equity market conditions, adverse interest rate impacts, and adverse
than receiving the death benefit currently. For certain issuers of impacts of overall market declines in the third quarter that include an
these contracts, the claim mortality assumption depends on age, increase in the provision for expected future partial surrenders and
gender, and net amount at risk for the policy. declines in the value of contractholders’ non-equity investments.
The lapse rate assumption (full surrender of an annuity prior to a
2010: Reserve strengthening of $52 million pre-tax ($34 million
contractholder’s death) is 0% to 11%, depending on contract type,
after-tax) was primarily due to adverse interest rate impacts, and to a
policy duration and the ratio of the net amount at risk to account
lesser extent, an update to the lapse assumption for policies that have
value.
already taken or may take a significant partial withdrawal.
Activity in future policy benefit reserves for these GMDB contracts was as follows:
(In millions) 2012 2011 2010
Balance at January 1, $ 1,170 $ 1,138 $ 1,285
Add: Unpaid claims 40 37 36
Less: Reinsurance and other amounts recoverable 53 51 53
Balance at January 1, net 1,157 1,124 1,268
Add: Incurred benefits 17 138 (20)
Less: Paid benefits 102 105 124
Ending balance, net 1,072 1,157 1,124
Less: Unpaid claims 24 40 37
Add: Reinsurance and other amounts recoverable 42 53 51
Balance at December 31, $ 1,090 $ 1,170 $ 1,138
Benefits paid and incurred are net of ceded amounts. Incurred benefits death benefit, the Company is liable to the extent the highest
reflect the favorable or unfavorable impact of a rising or falling equity historical anniversary account value exceeds the fair value of the
market on the liability, and include the charges discussed above. related mutual fund investments at the time of a contractholder’s
Losses or gains have been recorded in other revenues as a result of the death. Other annuity designs that the Company reinsured guarantee
GMDB equity and growth interest rate hedge programs to reduce that the benefit received at death will be:
equity market and certain interest rate exposures.
the contractholder’s account value as of the last anniversary date
The majority of the Company’s exposure arises under annuities that (anniversary reset); or
guarantee that the benefit received at death will be no less than the
no less than net deposits paid into the contract accumulated at a
highest historical account value of the related mutual fund
specified rate or net deposits paid into the contract.
investments on a contractholder’s anniversary date. Under this type of
The table below presents the account value, net amount at risk and average attained age of underlying contractholders for guarantees in the event
of death, by type of benefit as of December 31. The net amount at risk is the death benefit coverage in force or the amount that the Company
would have to pay if all contractholders died as of the specified date, and represents the excess of the guaranteed benefit amount over the fair value
84 CIGNA CORPORATION – 2012 Form 10-K
•
•
•
•
•
•

PART II
ITEM 8 Financial Statements and Supplementary Data
of the underlying mutual fund investments. This data does not reflect the impacts of reinsurance in place as of December 31, 2012 nor the
reinsurance placed on February 4, 2013.
(Dollars in millions, excludes impact of reinsurance ceded) 2012 2011
Highest anniversary annuity value
Account value $ 10,485 $ 10,801
Net amount at risk $ 3,303 $ 4,487
Average attained age of contractholders (weighted by exposure) 72 71
Anniversary value reset
Account value $ 1,183 $ 1,184
Net amount at risk $ 22 $ 56
Average attained age of contractholders (weighted by exposure) 65 63
Other
Account value $ 1,635 $ 1,768
Net amount at risk $ 693 $ 834
Average attained age of contractholders (weighted by exposure) 71 70
Total
Account value $ 13,303 $ 13,753
Net amount at risk $ 4,018 $ 5,377
Average attained age of contractholders (weighted by exposure) 72 71
Number of contractholders (approx.) 435,000 480,000
The Company has also written reinsurance contracts with issuers of policies also have a GMDB benefit reinsured by the Company. See
variable annuity contracts that provide annuitants with certain Note 11 for further information.
guarantees related to minimum income benefits. All reinsured GMIB
Reinsurance
The Company’s insurance subsidiaries enter into agreements with December 31, 2012, the fair value of trust assets exceeded the
other insurance companies to assume and cede reinsurance. reinsurance recoverable.
Reinsurance is ceded primarily to limit losses from large exposures and
Individual life and annuity reinsurance. The Company hadto permit recovery of a portion of direct losses. Reinsurance is also
reinsurance recoverables of $4.0 billion as of December 31, 2012 andused in acquisition and disposition transactions where the
$4.2 billion as of December 31, 2011 from The Lincoln National Lifeunderwriting company is not being acquired. Reinsurance does not
Insurance Company and Lincoln Life & Annuity of New Yorkrelieve the originating insurer of liability. The Company regularly
resulting from the 1998 sale of the Company’s individual lifeevaluates the financial condition of its reinsurers and monitors its
insurance and annuity business through indemnity reinsuranceconcentrations of credit risk.
arrangements. The Lincoln National Life Insurance Company and
Supplemental benefits business. The Company had reinsurance Lincoln Life & Annuity of New York must maintain a specified
recoverables of approximately $402 million as of December 31, 2012 minimum credit or claims paying rating or they will be required to
from Great American Life Insurance Company. The life insurance and fully secure the outstanding recoverable balance. As of December 31,
annuity lines of business written by the acquired legal entities were 2012, both companies had ratings sufficient to avoid triggering a
fully reinsured by the seller prior to the acquisition of their contractual obligation.
supplemental benefits business by the Company on August 31, 2012.
The resulting reinsurance recoverables are secured primarily by fixed Other Ceded and Assumed Reinsurance
maturities whose book value is equal to or greater than 100% of the
reinsured policy liabilities. These fixed maturities are held in a trust Ceded Reinsurance: Ongoing operations. The Company’s insurance
established for the benefit of the Company. subsidiaries have reinsurance recoverables from various reinsurance
arrangements in the ordinary course of business for its Global Health
Retirement benefits business. The Company had reinsurance Care, Group Disability and Life, and Global Supplemental Benefits
recoverables of $1.3 billion as of December 31, 2012, and $1.6 billion segments as well as the corporate-owned life insurance business.
as of December 31, 2011 from Prudential Retirement Insurance and Reinsurance recoverables are $345 million as of December 31, 2012,
Annuity Company resulting from the 2004 sale of the retirement with 16% of the recoverable balance protected by collateral.
benefits business, that was primarily in the form of a reinsurance
The Company reviews its reinsurance arrangements and establishesarrangement. The reinsurance recoverable, that is reduced as the
reserves against the recoverables in the event that recovery is notCompany’s reinsured liabilities are paid or directly assumed by the
considered probable. As of December 31, 2012, the Company’sreinsurer, is secured primarily by fixed maturities equal to or greater
recoverables related to these segments were net of a reserve ofthan 100% of the reinsured liabilities. These fixed maturities are held
$4 million.in a trust established for the benefit of the Company. As of
CIGNA CORPORATION – 2012 Form 10-K 85
NOTE 8

PART II
ITEM 8 Financial Statements and Supplementary Data
Assumed and Ceded reinsurance: Run-off Reinsurance segment. The Company reviews its reinsurance arrangements and establishes
The Company’s Run-off Reinsurance operations assumed risks related reserves against the recoverables in the event that recovery is not
to GMDB contracts, GMIB contracts, workers’ compensation, and considered probable. As of December 31, 2012, the Company’s
personal accident business. The Run-off Reinsurance operations also recoverables related to this segment were net of a reserve of $1 million.
purchased retrocessional coverage to reduce the risk of loss on these
The Company’s payment obligations for underlying reinsurance
contracts. In December 2010, the Company entered into reinsurance
exposures assumed by the Company under these contracts are based
arrangements to transfer the remaining liabilities and administration
on the ceding companies’ claim payments. For GMDB, claim
of the workers’ compensation and personal accident businesses to a
payments vary because of changes in equity markets and interest rates,
subsidiary of Enstar Group Limited. Under this arrangement, the new
as well as mortality and contractholder behavior. Any of these claim
reinsurer also assumes the future risk of collection from prior
payments can occur many years into the future, and the amount of the
reinsurers. On February 4, 2013, the Company entered into a
ceding companies’ ultimate claims, and therefore, the amount of the
reinsurance arrangement related to its GMDB and GMIB contracts.
Company’s ultimate payment obligations and corresponding ultimate
See Note 25 for further details regarding these arrangements.
collection from retrocessionaires, may not be known with certainty for
Liabilities related to GMDB, workers’ compensation and personal some time.
accident are included in future policy benefits and unpaid claims.
Summary. The Company’s reserves for underlying reinsuranceBecause the GMIB contracts are treated as derivatives under GAAP,
exposures assumed by the Company, as well as for amountsthe asset related to GMIB is recorded in the Other assets, including
recoverable from reinsurers/retrocessionaires for both ongoingother intangibles caption and the liability related to GMIB is recorded
operations and the run-off reinsurance operation, are consideredin Accounts payable, accrued expenses, and other liabilities on the
appropriate as of December 31, 2012, based on current information.Company’s Consolidated Balance Sheets (see Notes 11 and 24 for
The Company bears the risk of loss if its retrocessionaires do not meetadditional discussion of the GMIB assets and liabilities).
or are unable to meet their reinsurance obligations to the Company.
The reinsurance recoverables for GMDB, workers’ compensation, and
personal accident total $170 million as of December 31, 2012. Of this
amount, approximately 97% are secured by assets in trust or letters of
credit.
In the Company’s Consolidated Income Statements, Premiums and fees were presented net of ceded premiums, and Total benefits and expenses
were presented net of reinsurance recoveries, in the following amounts:
(In millions) 2012 2011 2010
Premiums and Fees
Short-duration contracts:
Direct $ 23,954 $ 17,300 $ 16,492
Assumed 382 158 496
Ceded (217) (185) (187)
24,119 17,273 16,801
Long-duration contracts:
Direct 2,234 1,919 1,687
Assumed 86 36 36
Ceded:
Individual life insurance and annuity business sold (186) (203) (195)
Other (66) (59) (55)
2,068 1,693 1,473
TOTAL $ 26,187 $ 18,966 $ 18,274
Reinsurance recoveries
Individual life insurance and annuity business sold $ 316 $ 310 $ 321
Other 201 213 156
TOTAL $ 517 $ 523 $ 477
The increase in direct premiums in 2012 as compared to 2011 as compared to 2010 primarily reflects the effect of the Company’s
primarily reflects the Company’s acquisitions of HealthSpring and exit from a large, low-margin assumed government life insurance
Great American Supplemental Benefits as well as the conversion of program. The effects of reinsurance on written premiums and fees for
Vanbreda business from service to insurance contracts in 2012. The short-duration contracts were not materially different from the
increase in assumed premiums in 2012 largely results from the recognized premium and fee amounts shown in the table above.
acquisition of FirstAssist. The decrease in assumed premiums in 2011
86 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
Goodwill, Other Intangibles, and Property and Equipment
Effective December 31, 2012, the Company changed its external reporting segments. See Note 23 for further information. Goodwill primarily
relates to the Global Health Care segment ($5.7 billion) and, to a lesser extent, the Global Supplemental Benefits segment ($350 million) and
increased during 2012 primarily as a result of the acquisitions of HealthSpring ($2.5 billion) and, to a lesser extent, Great American Supplemental
Benefits and Finans Emeklilik ($300 million).
Activity in Goodwill during 2012 and 2011 was as follows:
(In millions) 2012 2011
Balance at January 1, $ 3,164 $ 3,119
Goodwill acquired:
FirstAssist 7 57
HealthSpring 2,541 –
Great American Supplement Benefits 168 –
Finans Emeklilik 113 –
Goodwill sold:
Cigna Government Services – (6)
Impact of foreign currency translation 8 (6)
Balance at December 31, $ 6,001 $ 3,164
Other intangible assets were comprised of the following at December 31:
Weighted Average
Accumulated Net Carrying Amortization
(Dollars in millions) Cost Amortization Value Period (Years)
2012
Customer relationships $ 1,278 $ 466 $ 812 10
Other 328 80 248 11
Total reported in other assets, including other intangibles 1,606 546 1,060
Value of business acquired (reported in deferred policy acquisition
costs) 172 2 170 26
Internal-use software (reported in property and equipment) 1,738 1,191 547 5
TOTAL OTHER INTANGIBLE ASSETS $ 3,516 $ 1,739 $ 1,777
2011
Customer relationships $ 583 $ 313 $ 270 13
Other 127 27 100 12
Total reported in other assets, including other intangibles 710 340 370
Internal-use software (reported in property and equipment) 1,600 1,054 546 5
TOTAL OTHER INTANGIBLE ASSETS $ 2,310 $ 1,394 $ 916
The increase in intangible assets in 2012 relates primarily to the acquisitions of HealthSpring and, to a lesser extent, Great American
Supplemental Benefits and Finans Emeklilik.
Property and equipment was comprised of the following as of December 31:
Accumulated Net Carrying
(Dollars in millions) Cost Amortization Value
2012
Internal-use software $ 1,738 $ 1,191 $ 547
Other property and equipment 1,415 842 573
TOTAL PROPERTY AND EQUIPMENT $ 3,153 $ 2,033 $ 1,120
2011
Internal-use software $ 1,600 $ 1,054 $ 546
Other property and equipment 1,285 807 478
TOTAL PROPERTY AND EQUIPMENT $ 2,885 $ 1,861 $ 1,024
CIGNA CORPORATION – 2012 Form 10-K 87
NOTE 9

PART II
ITEM 8 Financial Statements and Supplementary Data
Depreciation and amortization was comprised of the following for the years ended December 31:
(Dollars in millions) 2012 2011 2010
Internal-use software $ 209 $ 187 $ 161
Other property and equipment 144 117 99
Value of business acquired (reported in deferred policy acquisition costs) 2 – –
Other intangibles 205 41 32
TOTAL DEPRECIATION AND AMORTIZATION $ 560 $ 345 $ 292
The increase in amortization of other intangibles in 2012 relates years to be as follows: $415 million in 2013, $368 million in 2014,
primarily to the acquisitions of HealthSpring and, to a lesser extent, $312 million in 2015, $262 million in 2016, and $213 million in
Great American Supplemental Benefits and Finans Emeklilik. 2017.
The Company estimates annual pre-tax amortization for intangible
assets, including internal-use software, over the next five calendar
Pension and Other Postretirement Benefit Plans
The Company and certain of its subsidiaries provide pension, health postretirement benefit plans is immaterial to the Company’s results of
care and life insurance defined benefits to eligible retired employees, operations, liquidity and financial position. Effective July 1, 2009, the
spouses and other eligible dependents through various domestic and Company froze its primary domestic defined benefit pension plans.
foreign plans. The effect of its foreign pension and other
The Company measures the assets and liabilities of its domestic pension and other postretirement benefit plans as of December 31. The following
table summarizes the projected benefit obligations and assets related to the Company’s domestic and international pension and other
postretirement benefit plans as of, and for the year ended, December 31:
Other Postretirement
Pension Benefits Benefits
(In millions) 2012 2011 2012 2011
Change in benefit obligation
Benefit obligation, January 1 $ 5,067 $ 4,691 $ 452 $ 444
Service cost 3 2 2 2
Interest cost 198 228 16 20
(Gain) loss from past experience 283 453 (2) 16
Benefits paid from plan assets (256) (273) (3) (2)
Benefits paid – other (28) (34) (23) (28)
Benefit obligation, December 31 5,267 5,067 442 452
Change in plan assets
Fair value of plan assets, January 1 3,298 3,163 22 23
Actual return on plan assets 370 156 1 1
Benefits paid (256) (273) (3) (2)
Contributions 253 252 – –
Fair value of plan assets, December 31 3,665 3,298 20 22
Funded Status $ (1,602) $ (1,769) $ (422) $ (430)
The postretirement benefits liability adjustment included in accumulated other comprehensive loss consisted of the following as of December 31:
Other Postretirement
Pension Benefits Benefits
(In millions) 2012 2011 2012 2011
Unrecognized net loss $ (2,450) $ (2,331) $ (28) $ (30)
Unrecognized prior service cost (5) (5) 23 35
POSTRETIREMENT BENEFITS LIABILITY ADJUSTMENT $ (2,455) $ (2,336) $ (5) $ 5
88 CIGNA CORPORATION – 2012 Form 10-K
NOTE 10
A. Pension and Other Postretirement Benefit Plans

PART II
ITEM 8 Financial Statements and Supplementary Data
During 2012, the Company’s postretirement benefits liability The Company funds its qualified pension plans at least at the
adjustment increased by $129 million pre-tax ($92 million after-tax) minimum amount required by the Employee Retirement Income
resulting in a decrease to shareholders’ equity. The increase in the Security Act of 1974 and the Pension Protection Act of 2006. For
liability was primarily due to a decrease in the discount rate, partially 2013, the Company expects to make minimum required and
offset by actual investment returns greater than expected in 2012. voluntary contributions totaling approximately $250 million. Future
years’ contributions will ultimately be based on a wide range of factors
Pension benefits. The Company’s pension plans were underfunded including but not limited to asset returns, discount rates, and funding
by $1.6 billion in 2012 and $1.8 billion in 2011 and had related targets.
accumulated benefit obligations of $5.3 billion as of December 31,
2012 and $5.1 billion as of December 31, 2011.
Components of net pension cost for the years ended December 31 were as follows:
(In millions) 2012 2011 2010
Service cost $ 3 $ 2 $ 2
Interest cost 198 228 240
Expected long-term return on plan assets (270) (267) (253)
Amortization of:
Net loss from past experience 58 38 28
Settlement loss 6 – –
NET PENSION COST $ (5) $ 1 $ 17
The Company expects to recognize pre-tax losses of $75 million in Other postretirement benefits. Unfunded retiree health benefit plans
2013 from amortization of past experience. This estimate is based on a had accumulated benefit obligations of $294 million at December 31,
weighted average amortization period for the frozen and inactive plans 2012, and $302 million at December 31, 2011. Retiree life insurance
of approximately 28 years, that is based on the average expected plans had accumulated benefit obligations of $148 million as of
remaining life of plan participants. December 31, 2012 and $150 million as of December 31, 2011.
Components of net other postretirement benefit cost for the years ended December 31 were as follows:
(In millions) 2012 2011 2010
Service cost $ 2 $ 2 $ 1
Interest cost 16 20 22
Expected long-term return on plan assets (1) (1) (1)
Amortization of:
Prior service cost (12) (16) (18)
NET OTHER POSTRETIREMENT BENEFIT COST $ 5 $ 5 $ 4
The Company expects to recognize in 2013 pre-tax gains of employees associated with the other postretirement benefit plans of
$9 million related to amortization of prior service cost and no pre-tax approximately 11 years. The weighted average remaining
losses from amortization of past experience. The original amortization amortization period for prior service cost is approximately 2.5 years.
period is based on an average remaining service period of active
The estimated rate of future increases in the per capita cost of health care benefits is 7.5% in 2013, decreasing by 0.5% per year to 5% in 2018 and
beyond. This estimate reflects the Company’s current claim experience and management’s estimate that rates of growth will decline in the future.
A 1% increase or decrease in the estimated rate would have changed 2012 reported amounts as follows:
(In millions) Increase Decrease
Effect on postretirement benefit obligation $ 12 $ 10
Plan assets. The Company’s current target investment allocation would expect to gradually reduce the allocation to equity securities
percentages (37% equity securities, 30% fixed income, 15% securities and move into fixed income to mitigate the volatility in returns, while
partnerships, 10% hedge funds and 8% real estate) are developed by also providing adequate liquidity to fund benefit distributions. The
management as guidelines, although the fair values of each asset timing of any updates in allocation is not certain.
category are expected to vary as a result of changes in market
As of December 31, 2012, pension plan assets included $3.4 billion
conditions. The pension plan asset portfolio has continued to include
invested in the separate accounts of Connecticut General Life
a significant allocation of equity securities, consisting of domestic and
Insurance Company (‘‘CGLIC’’) and Life Insurance Company of
international investments, in an effort to earn a higher rate of return
North America, that are subsidiaries of the Company, as well as an
on pension plan investments over the long-term payout period of the
additional $300 million invested directly in funds offered by the buyer
pension benefit obligations. As funding levels improve, the Company
of the retirement benefits business.
CIGNA CORPORATION – 2012 Form 10-K 89

PART II
ITEM 8 Financial Statements and Supplementary Data
The fair values of plan assets by category and by the fair value hierarchy as defined by GAAP are as follows. See Note 11 for a description of how
fair value is determined, including the level within the fair value hierarchy and the procedures the Company uses to validate fair value
measurements.
Quoted Prices in Significant
Active Markets for Significant Other Unobservable
Identical Assets Observable Inputs InputsDecember 31, 2012
(In millions) (Level 1) (Level 2) (Level 3) Total
Plan assets at fair value:
Fixed maturities:
Federal government and agency $ – $ 4 $ – $ 4
Corporate – 416 27 443
Mortgage and other asset-backed – 8 5 13
Fund investments and pooled separate accounts (1) – 519 3 522
TOTAL FIXED MATURITIES – 947 35 982
Equity securities:
Domestic 1,202 4 10 1,216
International, including funds and pooled separate accounts (1) 158 149 – 307
TOTAL EQUITY SECURITIES 1,360 153 10 1,523
Real estate and mortgage loans, including pooled separate
accounts (1) – – 351 351
Securities partnerships – – 328 328
Hedge funds – – 327 327
Guaranteed deposit account contract – – 47 47
Cash equivalents – 107 – 107
TOTAL PLAN ASSETS AT FAIR VALUE $ 1,360 $ 1,207 $ 1,098 $ 3,665
(1) A pooled separate account has several participating benefit plans and each owns a share of the total pool of investments.
Quoted Prices in Significant
Active Markets for Significant Other Unobservable
Identical Assets Observable Inputs InputsDecember 31, 2011
(In millions) (Level 1) (Level 2) (Level 3) Total
Plan assets at fair value:
Fixed maturities:
Federal government and agency $ – $ 5 $ – $ 5
Corporate – 332 7 339
Mortgage and other asset-backed – 8 2 10
Fund investments and pooled separate accounts (1) – 546 3 549
TOTAL FIXED MATURITIES – 891 12 903
Equity securities:
Domestic 1,153 1 14 1,168
International, including funds and pooled separate accounts (1) 141 137 – 278
TOTAL EQUITY SECURITIES 1,294 138 14 1,446
Real estate and mortgage loans, including pooled separate
accounts (1) – – 303 303
Securities partnerships – – 314 314
Hedge Fund – – 148 148
Guaranteed deposit account contract – – 39 39
Cash equivalents – 145 – 145
TOTAL PLAN ASSETS AT FAIR VALUE $ 1,294 $ 1,174 $ 830 $ 3,298
(1) A pooled separate account has several participating benefit plans and each owns a share of the total pool of investments.
Plan assets in Level 1 include exchange-listed equity securities. Level 2 Because many fixed maturities do not trade daily, fair values are often
assets primarily include: derived using recent trades of securities with similar features and
characteristics. When recent trades are not available, pricing models
fixed income and international equity funds priced using their daily
are used to determine these prices. These models calculate fair values
net asset value that is the exit price; and
by discounting future cash flows at estimated market interest rates.
fixed maturities valued using recent trades of similar securities or Such market rates are derived by calculating the appropriate spreads
pricing models as described below.
90 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 8 Financial Statements and Supplementary Data
over comparable U.S. Treasury securities, based on the credit quality, plan’s ownership share of the equity of the investee including changes
industry and structure of the asset. in the fair values of its underlying investments.
Plan assets classified in Level 3 include securities partnerships, equity
real estate and hedge funds generally valued based on the pension
The following table summarizes the changes in pension plan assets classified in Level 3 for the years ended December 31, 2012 and December 31,
2011. Actual return on plan assets in this table may include changes in fair value that are attributable to both observable and unobservable inputs.
Fixed Guaranteed
Maturities Real Estate Deposit
& Equity & Mortgage Securities Account
(In millions) Securities Loans Partnerships Hedge Funds Contract Total
Balance at January 1, 2012 $ 26 $ 303 $ 314 $ 148 $ 39 $ 830
Actual return on plan assets:
Assets still held at the reporting date – 38 18 10 3 69
Assets sold during the period – – – – – –
TOTAL ACTUAL RETURN ON PLAN ASSETS – 38 18 10 3 69
Purchases, sales, settlements, net 5 11 (4) 169 5 186
Transfers into/out of Level 3 13 – – – – 13
Balance at December 31, 2012 $ 44 $ 352 $ 328 $ 327 $ 47 $ 1,098
Fixed Guaranteed
Maturities Real Estate Deposit
& Equity & Mortgage Securities Account
(In millions) Securities Loans Partnerships Hedge Fund Contract Total
Balance at January 1, 2011 $ 46 $ 240 $ 347 $ – $ 24 $ 657
Actual return on plan assets:
Assets still held at the reporting date 1 44 66 (2) 3 112
Assets sold during the period 18 – – – – 18
TOTAL ACTUAL RETURN ON PLAN ASSETS 19 44 66 (2) 3 130
Purchases, sales, settlements, net (33) 21 (99) 150 12 51
Transfers into/out of Level 3 (6) (2) – – – (8)
Balance at December 31, 2011 $ 26 $ 303 $ 314 $ 148 $ 39 $ 830
The assets related to other postretirement benefit plans are invested in they are classified as Level 3. During 2012, these assets earned a return
deposit funds with interest credited based on fixed income of $1 million, offset by a net withdrawal from the fund of $3 million,
investments in the general account of CGLIC. As there are significant while during 2011, they earned a return of $1 million, offset by a net
unobservable inputs used in determining the fair value of these assets, withdrawal of $2 million.
Assumptions for pension and other postretirement benefit plans. Management determined the present value of the projected benefit obligation
and the accumulated other postretirement benefit obligation and related benefit costs based on the following weighted average assumptions as of
and for the years ended December 31:
2012 2011
Discount rate:
Pension benefit obligation 3.50% 4.00%
Other postretirement benefit obligation 3.25% 3.75%
Pension benefit cost 4.00% 5.00%
Other postretirement benefit cost 3.75% 4.75%
Expected long-term return on plan assets:
Pension benefit cost 8.00% 8.00%
Other postretirement benefit cost 5.00% 5.00%
In measuring the 2012 benefit obligations, the Company set discount Company believes that the Citigroup Above-Median Pension Liability
rates by applying actual annualized yields at various durations from curve is more representative of the yields that the Company is able to
the Citigroup Above-Median Pension Liability curve to the expected achieve in its plan asset investment strategy. The curve uses an array of
cash flows of the postretirement benefits liabilities. Prior to 2012, the bonds in various industries throughout the domestic market for high
Company used the broader Cititgroup Pension Liability curve. The quality bonds, but only selects those for the curve that have an above
CIGNA CORPORATION – 2012 Form 10-K 91

PART II
ITEM 8 Financial Statements and Supplementary Data
median return at each duration. As with the broader curve, Citigroup domestic and foreign GDP growth, employment levels and inflation.
monitors the bond portfolio to ensure that only high quality issues are Based on the Company’s current outlook, the expected return
included. In setting its discount rate for 2012, the Company reviewed assumption is considered reasonable.
alternative indices and determined that they were not materially
To measure pension costs, the Company uses a market-related asset
different than the result produced by the Citigroup Above-Median
valuation for domestic pension plan assets invested in non-fixed
curve.
income investments. The market-related value of these pension assets
Expected long-term rates of return on plan assets were developed recognizes the difference between actual and expected long-term
considering actual long-term historical returns, expected long-term returns in the portfolio over 5 years, a method that reduces the
market conditions, plan asset mix and management’s investment short-term impact of market fluctuations on pension cost. At
strategy, that continues a significant allocation to domestic and December 31, 2012, the market-related asset value was approximately
foreign equity securities as well as real estate, securities partnerships $3.5 billion compared with a market value of approximately
and hedge funds. Expected long-term market conditions take into $3.6 billion.
consideration certain key macroeconomic trends including expected
Benefit payments. The following benefit payments, including expected future services, are expected to be paid in:
Other
Postretirement
(In millions) Pension Benefits Benefits
2013 $ 396 $ 35
2014 $ 342 $ 36
2015 $ 333 $ 36
2016 $ 331 $ 35
2017 $ 332 $ 34
2018-2022 $ 1,630 $ 149
the Company increased its matching contributions to 401(k) planB. 401(k) Plans
participants.
The Company sponsors a 401(k) plan in which the Company
The Company may elect to increase its matching contributions if thematches a portion of employees’ pre-tax contributions. Another
Company’s annual performance meets certain targets. A substantial401(k) plan with an employer match was frozen in 1999. Participants
amount of the Company’s matching contributions are invested in thein the active plan may invest in various funds that invest in the
Company’s common stock. The Company’s expense for these plansCompany’s common stock, several diversified stock funds, a bond
was $78 million for 2012, $72 million for 2011 and $69 million forfund or a fixed-income fund. In conjunction with the action to freeze
2010.the domestic defined benefit pension plans, effective January 1, 2010,
Fair Value Measurements
The Company carries certain financial instruments at fair value in the unobservable inputs were significant to the instrument’s fair value,
financial statements including fixed maturities, equity securities, even though the measurement may be derived using inputs that are
short-term investments and derivatives. Other financial instruments both observable (Levels 1 and 2) and unobservable (Level 3).
are measured at fair value under certain conditions, such as when
The Company estimates fair values using prices from third parties or
impaired.
internal pricing methods. Fair value estimates received from third-
Fair value is defined as the price at which an asset could be exchanged party pricing services are based on reported trade activity and quoted
in an orderly transaction between market participants at the balance market prices when available, and other market information that a
sheet date. A liability’s fair value is defined as the amount that would market participant may use to estimate fair value. The internal pricing
be paid to transfer the liability to a market participant, not the methods are performed by the Company’s investment professionals,
amount that would be paid to settle the liability with the creditor. and generally involve using discounted cash flow analyses,
incorporating current market inputs for similar financial instruments
The Company’s financial assets and liabilities carried at fair value have
with comparable terms and credit quality, as well as other qualitative
been classified based upon a hierarchy defined by GAAP. The
factors. In instances where there is little or no market activity for the
hierarchy gives the highest ranking to fair values determined using
same or similar instruments, fair value is estimated using methods,
unadjusted quoted prices in active markets for identical assets and
models and assumptions that the Company believes a hypothetical
liabilities (Level 1) and the lowest ranking to fair values determined
market participant would use to determine a current transaction price.
using methodologies and models with unobservable inputs (Level 3).
These valuation techniques involve some level of estimation and
An asset’s or a liability’s classification is based on the lowest level of
judgment that becomes significant with increasingly complex
input that is significant to its measurement. For example, a financial
instruments or pricing models.
asset or liability carried at fair value would be classified in Level 3 if
92 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 8 Financial Statements and Supplementary Data
The Company is responsible for determining fair value, as well as the appropriate estimates of fair value. These analyses include reviewing
appropriate level within the fair value hierarchy, based on the to ensure that prices do not become stale and whether changes from
significance of unobservable inputs. The Company reviews prior valuations are reasonable or require additional review. The
methodologies and processes of third-party pricing services and Company also performs sample testing of sales values to confirm the
compares prices on a test basis to those obtained from other external accuracy of prior fair value estimates. Exceptions identified during
pricing sources or internal estimates. The Company performs ongoing these processes indicate that adjustments to prices are infrequent and
analyses of both prices received from third-party pricing services and do not significantly impact valuations.
those developed internally to determine that they represent
Financial Assets and Financial Liabilities Carried at Fair Value
The following tables provide information as of December 31, 2012 and December 31, 2011 about the Company’s financial assets and liabilities
carried at fair value. Similar disclosures for separate account assets, that are also recorded at fair value on the Company’s Consolidated Balance
Sheets, are provided separately as gains and losses related to these assets generally accrue directly to policyholders. In addition, Note 10 contains
similar disclosures for the Company’s pension plan assets.
Quoted Prices in Significant
Active Markets for Significant Other Unobservable
Identical Assets Observable Inputs InputsDecember 31, 2012
(In millions) (Level 1) (Level 2) (Level 3) Total
Financial assets at fair value:
Fixed maturities:
Federal government and agency $ 156 $ 746 $ – $ 902
State and local government – 2,437 – 2,437
Foreign government – 1,298 24 1,322
Corporate – 11,201 695 11,896
Federal agency mortgage-backed – 122 – 122
Other mortgage-backed – 88 1 89
Other asset-backed – 340 597 937
Total fixed maturities (1) 156 16,232 1,317 17,705
Equity securities 4 73 34 111
Subtotal 160 16,305 1,351 17,816
Short-term investments – 154 – 154
GMIB assets (2) – – 622 622
Other derivative assets (3) – 41 – 41
TOTAL FINANCIAL ASSETS AT FAIR VALUE,
EXCLUDING SEPARATE ACCOUNTS $ 160 $ 16,500 $ 1,973 $ 18,633
Financial liabilities at fair value:
GMIB liabilities $ – $ – $ 1,170 $ 1,170
Other derivative liabilities (3) – 31 – 31
TOTAL FINANCIAL LIABILITIES AT FAIR VALUE $ – $ 31 $ 1,170 $ 1,201
(1) Fixed maturities included $875 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $108 million of appreciation for
securities classified in Level 3.
(2) The GMIB assets represent retrocessional contracts in place from two external reinsurers that cover 55% of the exposures on these contracts. Effective February 4, 2013, the Company
reinsured the remaining 45% of the exposures on these contracts.
(3) Other derivative assets included $5 million of interest rate and foreign currency swaps qualifying as cash flow hedges and $36 million of interest rate swaps not designated as accounting
hedges. Other derivative liabilities reflected foreign currency and interest rate swaps qualifying as cash flow hedges. See Note 13 for additional information.
CIGNA CORPORATION – 2012 Form 10-K 93

PART II
ITEM 8 Financial Statements and Supplementary Data
Quoted Prices in Significant
Active Markets for Significant Other Unobservable
Identical Assets Observable Inputs InputsDecember 31, 2011
(In millions) (Level 1) (Level 2) (Level 3) Total
Financial assets at fair value:
Fixed maturities:
Federal government and agency $ 217 $ 738 $ 3 $ 958
State and local government – 2,456 – 2,456
Foreign government – 1,251 23 1,274
Corporate – 10,132 381 10,513
Federal agency mortgage-backed – 9 – 9
Other mortgage-backed – 79 1 80
Other asset-backed – 363 564 927
Total fixed maturities (1) 217 15,028 972 16,217
Equity securities 3 67 30 100
Subtotal 220 15,095 1,002 16,317
Short-term investments – 225 – 225
GMIB assets (2) – – 712 712
Other derivative assets (3) – 45 – 45
TOTAL FINANCIAL ASSETS AT FAIR VALUE, EXCLUDING
SEPARATE ACCOUNTS $ 220 $ 15,365 $ 1,714 $ 17,299
Financial liabilities at fair value:
GMIB liabilities $ – $ – $ 1,333 $ 1,333
Other derivative liabilities (3) – 30 – 30
TOTAL FINANCIAL LIABILITIES AT FAIR VALUE $ – $ 30 $ 1,333 $ 1,363
(1) Fixed maturities included $826 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $115 million of appreciation for
securities classified in Level 3.
(2) The GMIB assets represent retrocessional contracts in place from two external reinsurers which cover 55% of the exposures on these contracts.
(3) Other derivative assets included $10 million of interest rate and foreign currency swaps qualifying as cash flow hedges and $35 million of interest rate swaps not designated as accounting
hedges. Other derivative liabilities reflected foreign currency and interest rate swaps qualifying as cash flow hedges. See Note 13 for additional information.
Because many fixed maturities do not trade daily, third-party pricingLevel 1 Financial Assets
services and internal methods often use recent trades of securities with
Inputs for instruments classified in Level 1 include unadjusted quoted similar features and characteristics. When recent trades are not
prices for identical assets in active markets accessible at the available, pricing models are used to determine these prices. These
measurement date. Active markets provide pricing data for trades models calculate fair values by discounting future cash flows at
occurring at least weekly and include exchanges and dealer markets. estimated market interest rates. Such market rates are derived by
calculating the appropriate spreads over comparable U.S. TreasuryAssets in Level 1 include actively-traded U.S. government bonds and
securities, based on the credit quality, industry and structure of theexchange-listed equity securities. Given the narrow definition of
asset. Typical inputs and assumptions to pricing models include, butLevel 1 and the Company’s investment asset strategy to maximize
are not limited to, a combination of benchmark yields, reportedinvestment returns, a relatively small portion of the Company’s
trades, issuer spreads, liquidity, benchmark securities, bids, offers,investment assets are classified in this category.
reference data, and industry and economic events. For mortgage-
backed securities, inputs and assumptions may also include
Level 2 Financial Assets and Financial Liabilities characteristics of the issuer, collateral attributes, prepayment speeds
and credit rating.
Inputs for instruments classified in Level 2 include quoted prices for
similar assets or liabilities in active markets, quoted prices from those Nearly all of these instruments are valued using recent trades or
willing to trade in markets that are not active, or other inputs that are pricing models. Less than 1% of the fair value of investments classified
market observable or can be corroborated by market data for the term in Level 2 represents foreign bonds that are valued, consistent with
of the instrument. Such other inputs include market interest rates and local market practice, using a single unadjusted market-observable
volatilities, spreads and yield curves. An instrument is classified in input derived by averaging multiple broker-dealer quotes.
Level 2 if the Company determines that unobservable inputs are
Short-term investments are carried at fair value, that approximates
insignificant.
cost. On a regular basis the Company compares market prices for
these securities to recorded amounts to validate that current carryingFixed maturities and equity securities. Approximately 91% of the
amounts approximate exit prices. The short-term nature of theCompany’s investments in fixed maturities and equity securities are
investments and corroboration of the reported amounts over theclassified in Level 2 including most public and private corporate debt
holding period support their classification in Level 2.and equity securities, federal agency and municipal bonds,
non-government mortgage-backed securities and preferred stocks.
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PART II
ITEM 8 Financial Statements and Supplementary Data
Other derivatives classified in Level 2 represent over-the-counter Level 3 Financial Assets and Financial Liabilities
instruments such as interest rate and foreign currency swap contracts.
Certain inputs for instruments classified in Level 3 are unobservableFair values for these instruments are determined using market
(supported by little or no market activity) and are significant to theirobservable inputs including forward currency and interest rate curves
resulting fair value measurement. Unobservable inputs reflect theand widely published market observable indices. Credit risk related to
Company’s best estimate of what hypothetical market participantsthe counterparty and the Company is considered when estimating the
would use to determine a transaction price for the asset or liability atfair values of these derivatives. However, the Company is largely
the reporting date.protected by collateral arrangements with counterparties, and
determined that no adjustment for credit risk was required as of The Company classifies certain newly-issued, privately-placed,
December 31, 2012 or December 31, 2011. The nature and use of complex or illiquid securities, as well as assets and liabilities relating to
these other derivatives are described in Note 13. GMIB, in Level 3.
Fixed maturities and equity securities. Approximately 8% of fixed maturities and equity securities are priced using significant unobservable
inputs and classified in this category, including:
December 31, December 31,
(In millions) 2012 2011
Other asset and mortgage-backed securities – valued using pricing models $ 598 $ 565
Corporate and government fixed maturities – valued using pricing models 596 335
Corporate fixed maturities – valued at transaction price 123 72
Equity securities – valued at transaction price 34 30
TOTAL $ 1,351 $ 1,002
Fair values of other asset and mortgage-backed securities, corporate developed directly by the Company as of December 31, 2012. The
and government fixed maturities are primarily determined using range and weighted average basis point amounts reflect the
pricing models that incorporate the specific characteristics of each Company’s best estimates of the unobservable adjustments a market
asset and related assumptions including the investment type and participant would make to the market observable spreads (adjustment
structure, credit quality, industry and maturity date in comparison to to discount rates) used to calculate the fair values in a discounted cash
current market indices, spreads and liquidity of assets with similar flow analysis.
characteristics. For other asset and mortgage-backed securities, inputs
Other asset and mortgage-backed securities. The significantand assumptions to pricing may also include collateral attributes and
unobservable inputs used to value the following other asset andprepayment speeds. Recent trades in the subject security or similar
mortgage-backed securities are liquidity and weighting of creditsecurities are assessed when available, and the Company may also
spreads. An adjustment for liquidity is made as of the measurementreview published research, as well as the issuer’s financial statements,
date when there is limited trading activity for the security thatin its evaluation. Approximately 10% of fixed maturities classified in
considers current market conditions, issuer circumstances andlevel 3 represent single, unadjusted, non-binding broker quotes that
complexity of the security structure. An adjustment to weight creditare not considered market observable. Certain subordinated corporate
spreads is needed to value a more complex bond structure withfixed maturities and private equity investments, representing
multiple underlying collateral with no standard market valuationapproximately 10% of securities included in level 3, are valued at
technique. The weighting of credit spreads is primarily based on thetransaction price in the absence of market data indicating a change in
underlying collateral’s characteristics and their proportional cash flowsthe estimated fair values.
supporting the bond obligations. The resulting wide range of
unobservable adjustments in the table below is due to the varying
Quantitative Information about Unobservable Inputs liquidity and quality of the underlying collateral, ranging from high
credit quality to below investment grade.The following table summarizes the fair value and significant
unobservable inputs used in pricing Level 3 securities that were
Corporate and government fixed maturities. The significant unobservable input used to value the following corporate and government fixed
maturities is an adjustment for liquidity. When there is limited trading activity for the security, an adjustment is needed to reflect current market
conditions and issuer circumstances.
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PART II
ITEM 8 Financial Statements and Supplementary Data
Unobservable Adjustment
to Discount Rates Range
Unobservable (Weighted Average) inAs of December 31, 2012
(In millions except basis points) Fair Value Input Basis Points
Other asset and mortgage-backed securities $ 584 Liquidity 60 – 410 (140)
Weighting of credit spreads 50 – 4,540 (410)
Corporate and government fixed maturities $ 439 Liquidity 20 – 640 (190)
Significant increases in any of these inputs would result in a lower fair Assumptions based on observable inputs:
value measurement while decreases in these inputs would result in a
The market return and discount rate assumptions are based on thehigher fair value measurement. Generally, the unobservable inputs are
market-observable LIBOR swap curve.not interrelated and a change in the assumption used for one
unobservable input is not accompanied by a change in the other The projected interest rate used to calculate the reinsured income
unobservable input. The table does not include all of the Level 3 benefits is indexed to the 7-year Treasury Rate at the time of
securities because information about specific unobservable inputs annuitization (claim interest rate) based on contractual terms. That
used in pricing all of these securities was not reasonably available to rate was 1.18% at December 31, 2012 and must be projected for
the Company. See preceding discussion regarding the Company’s future time periods. These projected rates vary by economic
valuation processes and controls. scenario and are determined by an interest rate model using current
interest rate curves and the prices of instruments available in the
Guaranteed minimum income benefit contracts. The Company
market including various interest rate caps and zero-coupon bonds.
reports liabilities and assets as derivatives at fair value because the cash
For a subset of the business, there is a contractually guaranteed floor
flows of these contracts are affected by equity markets and interest
of 3% for the claim interest rate.
rates but are without significant life insurance risk and are settled in
lump sum payments. The Company estimates the fair value of the The market volatility assumptions for annuitants’ underlying
assets and liabilities for GMIB contracts using assumptions regarding mutual fund investments that are modeled based on the S&P 500,
capital markets (including market returns, interest rates and market Russell 2000 and NASDAQ Composite are based on the market-
volatilities of the underlying equity and bond mutual fund implied volatility for these indices for three to seven years grading to
investments), future annuitant behavior (including mortality, lapse, historical volatility levels thereafter. For the remaining 50% of
and annuity election rates), and non-performance risk, as well as risk underlying mutual fund investments modeled using other indices
and profit charges. As certain assumptions used to estimate fair values (with insufficient market-observable data), volatility is based on the
for these contracts are largely unobservable, the Company classifies average historical level for each index over the past 10 years. Using
GMIB assets and liabilities in Level 3. The Company considered the this approach, volatility ranges from 18% to 28% for equity funds,
following in determining the view of a hypothetical market 6% to 8% for bond funds, and 0% to 1% for money market funds.
participant:
that the most likely transfer of these assets and liabilities would be Assumptions based on unobservable inputs:
through a reinsurance transaction with an independent insurer; and
The mortality assumption is 70% of the 1994 Group Annuity
that because this block of contracts is in run-off mode, an insurer Mortality table, with 1% annual improvement beginning January 1,
looking to acquire these contracts would have similar existing 2000.
contracts with related administrative and risk management
The annual lapse rate assumption reflects experience that differs bycapabilities
the company issuing the underlying variable annuity contracts,
These GMIB assets and liabilities are calculated with a complex ranges from 0% to 12% at December 31, 2012, and depends on the
internal model using many scenarios to determine the fair value of net time since contract issue and the relative value of the guarantee. The
amounts estimated to be paid, less the fair value of net future weighted average annual lapse rate is 1.8%.
premiums estimated to be received, adjusted for risk and profit
The annual annuity election rate assumption reflects experience thatcharges that the Company anticipates a hypothetical market
differs by the company issuing the underlying variable annuityparticipant would require to assume this business. Net amounts
contracts and depends on the annuitant’s age, the relative value ofestimated to be paid represent the excess of the anticipated value of the
the guarantee and whether a contractholder has had a previousincome benefits over the values of the annuitants’ accounts at the time
opportunity to elect the benefit. Immediately after the expiration ofof annuitization. Assumptions related to future annuitant behavior
the waiting period, the assumed probability that an individual willreflect the Company’s belief that a hypothetical market participant
annuitize their variable annuity contract is up to 80%. For thewould consider the actual and expected experience of the Company as
second and subsequent annual opportunities to elect the benefit, thewell as other relevant and available industry resources in setting
assumed probability of election is up to 20%. The weighted averagepolicyholder behavior assumptions. The significant assumptions used
annual annuity election rate is 9%.to value the GMIB assets and liabilities as of December 31, 2012 were
as follows:
96 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 8 Financial Statements and Supplementary Data
The nonperformance risk adjustment is incorporated by adding The Company regularly evaluates each of the assumptions used in
spread to the discount rate in the calculation of both (1) the GMIB establishing these assets and liabilities by considering how a
liability to reflect a hypothetical market participant’s view of the risk hypothetical market participant would set assumptions at each
of the Company not fulfilling its GMIB obligations, and (2) the valuation date. Capital markets assumptions are expected to change at
GMIB asset to reflect a hypothetical market participant’s view of the each valuation date reflecting currently observable market conditions.
reinsurers’ credit risk, after considering collateral. The estimated Other assumptions may also change based on a hypothetical market
market-implied spread is company-specific for each party involved participant’s view of actual experience as it emerges over time or other
to the extent that company-specific market data is available and is factors that impact the net liability. The significant unobservable
based on industry averages for similarly-rated companies when inputs used in the fair value measurement of the GMIB assets and
company-specific data is not available. The spread is impacted by liabilities are lapse rates, annuity election rates, and spreads used to
the credit default swap spreads of the specific parent companies, calculate nonperformance risk. Significant decreases in assumed lapse
adjusted to reflect subsidiaries’ credit ratings relative to their parent rates or spreads used to calculate nonperformance risk, or increases in
company and any available collateral. The additional spread over assumed annuity election rates would result in higher fair value
LIBOR incorporated into the discount rate ranged from 5 to 140 measurements. Generally, a change in one of these assumptions is not
basis points for the GMIB liability with a weighted average of 55 necessarily accompanied by a change in another assumption.
basis points and ranged from 15 to 100 basis points for the GMIB
GMIB liabilities are reported in the Company’s Consolidated Balance
reinsurance asset with a weighted average of 65 basis points for that
Sheets in Accounts payable, accrued expenses and other liabilities.
portion of the interest rate curve most relevant to these policies.
GMIB assets associated with these contracts represent net receivables
The risk and profit charge assumption is based on the Company’s in connection with reinsurance that the Company has purchased from
estimate of the capital and return on capital that would be required two external reinsurers and are reported in the Company’s
by a hypothetical market participant. The assumed return on capital Consolidated Balance Sheets in Other assets, including other
is 10% after-tax. intangibles.
Changes in Level 3 Financial Assets and Financial Liabilities Carried at Fair Value
The following tables summarize the changes in financial assets and financial liabilities classified in Level 3 for the years ended December 31, 2012
and 2011. These tables exclude separate account assets as changes in fair values of these assets accrue directly to policyholders. Gains and losses
reported in this table may include net changes in fair value that are attributable to both observable and unobservable inputs.
Fixed
Maturities &
(In millions) Equity Securities GMIB Assets GMIB Liabilities GMIB Net
Balance at January 1, 2012 $ 1,002 $ 712 $ (1,333) $ (621)
Gains (losses) included in shareholders’ net income:
GMIB fair value gain/(loss) – (55) 96 41
Other 13 – – –
Total gains (losses) included in shareholders’ net income 13 (55) 96 41
Gains included in other comprehensive income 8 – – –
Losses required to adjust future policy benefits for settlement
annuities (1) (10) – – –
Purchases, issuances, settlements:
Purchases 188 – – –
Sales (1) – – –
Settlements (88) (35) 67 32
Total purchases, sales and settlements 99 (35) 67 32
Transfers into/(out of ) Level 3:
Transfers into Level 3 283 – – –
Transfers out of Level 3 (44) – – –
Total transfers into/(out of ) Level 3 239 – – –
Balance at December 31, 2012 $ 1,351 $ 622 $ (1,170) $ (548)
Total gains (losses) included in shareholders’ net income attributable to
instruments held at the reporting date $ (1) $ (55) $ 96 $ 41
(1) Amounts do not accrue to shareholders.
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PART II
ITEM 8 Financial Statements and Supplementary Data
Fixed
Maturities &
(In millions) Equity Securities GMIB Assets GMIB Liabilities GMIB Net
Balance at January 1, 2011 $ 933 $ 480 $ (903) $ (423)
Gains (losses) included in shareholders’ net income:
GMIB fair value gain/(loss) – 270 (504) (234)
Other 10 – – –
Total gains (losses) included in shareholders’ net income 10 270 (504) (234)
Gains included in other comprehensive income 7 – – –
Gains required to adjust future policy benefits for settlement annuities (1) 41 – – –
Purchases, issuances, settlements:
Purchases 129 – – –
Sales (20) – – –
Settlements (61) (38) 74 36
Total purchases, sales, and settlements 48 (38) 74 36
Transfers into/(out of ) Level 3:
Transfers into Level 3 81 – – –
Transfers out of Level 3 (118) – – –
Total transfers into/(out of ) Level 3 (37) – – –
Balance at December 31, 2011 $ 1,002 $ 712 $ (1,333) $ (621)
Total gains (losses) included in shareholders’ net income attributable to
instruments held at the reporting date $ 6 $ 270 $ (504) $ (234)
(1) Amounts do not accrue to shareholders.
As noted in the tables above, total gains and losses included in reinsurance arrangements when annuitants lapse, die, elect their
shareholders’ net income are reflected in the following captions in the benefit, or reach the age after which the right to elect their benefit
Consolidated Statements of Income: expires.
Realized investment gains (losses) and net investment income for Under FASB’s guidance for fair value measurements, the Company’s
amounts related to fixed maturities and equity securities; and GMIB assets and liabilities are expected to be volatile in future periods
because the underlying capital markets assumptions will be based
GMIB fair value (gain) loss for amounts related to GMIB assets and
largely on market observable inputs at the close of each reporting
liabilities.
period including interest rates and market implied volatilities.
In the tables above, gains and losses included in other comprehensive
Beginning in February 2011, the Company implemented a dynamic
income are reflected in Net unrealized appreciation (depreciation) on
equity hedge program to reduce a portion of the equity market
securities in the Consolidated Statements of Other Comprehensive
exposures related to GMIB contracts (‘‘GMIB equity hedge
Income.
program’’) by entering into exchange-traded futures contracts. The
Company also entered into a dynamic interest rate hedge programReclassifications impacting Level 3 financial instruments are reported
that reduces a portion of the interest rate exposure related to GMIBas transfers into or out of the Level 3 category as of the beginning of
contracts (‘‘GMIB growth interest rate hedge program’’) using LIBORthe quarter in which the transfer occurs. Therefore gains and losses in
swap contracts and exchange-traded treasury futures contracts. Inincome only reflect activity for the quarters the instrument was
June 2012, the GMIB equity hedge program was expanded. Theseclassified in Level 3.
hedges were terminated after February 4, 2013 as a result of the
Transfers into or out of the Level 3 category occur when unobservable
reinsurance agreement for the remaining 45% of the risk. See
inputs, such as the Company’s best estimate of what a market
Notes 25 and 13 for further information.
participant would use to determine a current transaction price,
GMIB fair value gains of $41 million for 2012 were primarily due tobecome more or less significant to the fair value measurement. For the
the effect of increases in underlying account values due to favorableyears ended December 31, 2012 and 2011, transfer activity between
equity markets, updates in the claim exposure calculation based on aLevel 3 and Level 2 primarily reflects changes in the level of
review of actual claim amounts compared to projected values in theunobservable inputs used to value certain public and private corporate
fair value model and a reduction in the annuitization rates. Thesebonds, principally related to liquidity of the securities and credit risk
favorable effects were partially offset by a reduction in lapse rates andof the issuers.
general declines in interest rates.
Because GMIB reinsurance arrangements remain in effect at the
GMIB fair value losses of $234 million for 2011 were primarily due toreporting date, the Company has reflected the total gain or loss for the
a decline in both the interest rate used for projecting claim exposureperiod as the total gain or loss included in income attributable to
(7-year Treasury rates) and the rate used for projecting market returnsinstruments still held at the reporting date. However, the Company
and discounting (LIBOR swap curve).reduces the GMIB assets and liabilities resulting from these
98 CIGNA CORPORATION – 2012 Form 10-K
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PART II
ITEM 8 Financial Statements and Supplementary Data
Separate account assets
Fair values and changes in the fair values of separate account assets generally accrue directly to the policyholders and are excluded from the
Company’s revenues and expenses. At December 31, separate account assets were as follows:
Quoted Prices in Significant
Active Markets for Significant Other Unobservable
Identical Assets Observable Inputs Inputs2012
(In millions) (Level 1) (Level 2) (Level 3) Total
Guaranteed separate accounts (See Note 24) $ 245 $ 324 $ – $ 569
Non-guaranteed separate accounts (1) 1,925 4,258 1,005 7,188
TOTAL SEPARATE ACCOUNT ASSETS $ 2,170 $ 4,582 $ 1,005 $ 7,757
(1) As of December 31, 2012, non-guaranteed separate accounts included $3.4 billion in assets supporting the Company’s pension plans, including $956 million classified in Level 3.
Quoted Prices in Significant
Active Markets for Significant Other Unobservable
Identical Assets Observable Inputs Inputs2011
(In millions) (Level 1) (Level 2) (Level 3) Total
Guaranteed separate accounts (See Note 24) $ 249 $ 1,439 $ – $ 1,688
Non-guaranteed separate accounts (1) 1,804 3,851 750 6,405
TOTAL SEPARATE ACCOUNT ASSETS $ 2,053 $ 5,290 $ 750 $ 8,093
(1) As of December 31, 2011, non-guaranteed separate accounts included $3.0 billion in assets supporting the Company’s pension plans, including $702 million classified in Level 3.
Separate account assets in Level 1 include exchange-listed equity actively-traded institutional and retail mutual fund investments and
securities. Level 2 assets primarily include: separate accounts priced using the daily net asset value that is the
exit price.
corporate and structured bonds valued using recent trades of similar
securities or pricing models that discount future cash flows at Separate account assets classified in Level 3 include investments
estimated market interest rates as described above; and primarily in securities partnerships, real estate and hedge funds
generally valued based on the separate account’s ownership share of
the equity of the investee including changes in the fair values of its
underlying investments.
The following tables summarize the change in separate account assets reported in Level 3 for the years ended December 31, 2012 and 2011.
(In millions)
Balance at January 1, 2012 $ 750
Policyholder gains (1) 55
Purchases, issuances, settlements:
Purchases 283
Sales (6)
Settlements (90)
Total purchases, sales and settlements 187
Transfers into/(out of ) Level 3:
Transfers into Level 3 17
Transfers out of Level 3 (4)
Total transfers into/(out of ) Level 3: 13
Balance at December 31, 2012 $ 1,005
(1) Included in this amount are gains of $49 million attributable to instruments still held at the reporting date.
CIGNA CORPORATION – 2012 Form 10-K 99
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PART II
ITEM 8 Financial Statements and Supplementary Data
(In millions)
Balance at January 1, 2011 $ 594
Policyholder gains (1) 114
Purchases, issuances, settlements:
Purchases 257
Sales (51)
Settlements (152)
Total purchases, sales and settlements 54
Transfers into/(out of ) Level 3:
Transfers into Level 3 4
Transfers out of Level 3 (16)
Total transfers into/(out of ) Level 3: (12)
Balance at December 31, 2011 $ 750
(1) Included in this amount are gains of $96 million attributable to instruments still held at the reporting date.
down to their fair values, resulting in realized investment losses ofAssets and Liabilities Measured at Fair Value under
$15 million after-tax.Certain Conditions
Some financial assets and liabilities are not carried at fair value each
Fair Value Disclosures for Financial Instruments Notreporting period, but may be measured using fair value only under
certain conditions, such as investments in real estate entities and Carried at Fair Value
commercial mortgage loans when they become impaired. During
Most financial instruments that are subject to fair value disclosure
2012, impaired commercial mortgage loans representing less than 1%
requirements are carried in the Company’s Consolidated Financial
of total investments were written down to their fair values, resulting in
Statements at amounts that approximate fair value. The following
realized investment losses of $7 million after-tax.
table provides the fair values and carrying values of the Company’s
During 2011, impaired commercial mortgage loans and real estate financial instruments not recorded at fair value that are subject to fair
entities representing less than 1% of total investments were written value disclosure requirements at December 31, 2012 and
December 31, 2011.
December 31, 2012 December 31, 2011Classification in
Fair Value Fair Carrying Fair Carrying
(In millions) Hierarchy Value Value Value Value
Commercial mortgage loans Level 3 $ 2,999 $ 2,851 $ 3,380 $ 3,301
Contractholder deposit funds, excluding universal life products Level 3 $ 1,082 $ 1,056 $ 1,056 $ 1,035
Long-term debt, including current maturities, excluding capital leases Level 2 $ 5,821 $ 4,986 $ 5,319 $ 4,984
The fair values presented in the table above have been estimated using amount estimated to be payable to the customer as of the reporting
market information when available. The following is a description of date, which is generally the carrying value. Most of the remaining
the valuation methodologies and inputs used by the Company to contractholder deposit funds are reinsured by the buyers of the
determine fair value. individual life and annuity and retirement benefits businesses. The
fair value for these contracts is determined using the fair value of these
Commercial mortgage loans. The Company estimates the fair value buyers’ assets supporting these reinsured contracts. The Company had
of commercial mortgage loans generally by discounting the a reinsurance recoverable equal to the carrying value of these reinsured
contractual cash flows at estimated market interest rates that reflect contracts. These instruments were classified in Level 3 because certain
the Company’s assessment of the credit quality of the loans. Market inputs are unobservable (supported by little or no market activity) and
interest rates are derived by calculating the appropriate spread over significant to their resulting fair value measurement.
comparable U.S. Treasury rates, based on the property type, quality
rating and average life of the loan. The quality ratings reflect the Long-term debt, including current maturities, excluding capital
relative risk of the loan, considering debt service coverage, the leases. The fair value of long-term debt is based on quoted market
loan-to-value ratio and other factors. Fair values of impaired mortgage prices for recent trades. When quoted market prices are not available,
loans are based on the estimated fair value of the underlying collateral fair value is estimated using a discounted cash flow analysis and the
generally determined using an internal discounted cash flow model. Company’s estimated current borrowing rate for debt of similar terms
The fair value measurements were classified in Level 3 because the and remaining maturities. These measurements were classified in
cash flow models incorporate significant unobservable inputs. Level 2 because the fair values are based on quoted market prices or
other inputs that are market observable or can be corroborated by
Contractholder deposit funds, excluding universal life products. market data.
Generally, these funds do not have stated maturities. Approximately
Fair values of off-balance-sheet financial instruments were not55% of these balances can be withdrawn by the customer at any time
material.without prior notice or penalty. The fair value for these contracts is the
100 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
Investments
Securities in the following table are included in fixed maturities and equity securities on the Company’s Consolidated Balance Sheets. The
Company’s hybrid investments include certain preferred stock or debt securities with call or conversion features.
(In millions) 2012 2011
Included in fixed maturities:
Trading securities (amortized cost: $1; $2) $ 1 $ 2
Hybrid securities (amortized cost: $15; $26) 15 28
TOTAL $ 16 $ 30
Included in equity securities:
Hybrid securities (amortized cost: $84; $90) $ 70 $ 65
Fixed maturities included federal government securities of $54 million at December 31, 2012 and $79 million at December 31, 2011, that were
pledged as collateral to brokers as required under certain futures contracts.
The following information about fixed maturities excludes trading and hybrid securities. The amortized cost and fair value by contractual
maturity periods for fixed maturities were as follows at December 31, 2012:
Amortized Fair
(In millions) Cost Value
Due in one year or less $ 1,121 $ 1,141
Due after one year through five years 5,211 5,633
Due after five years through ten years 5,283 5,973
Due after ten years 2,850 3,796
Mortgage and other asset-backed securities 1,000 1,146
TOTAL $ 15,465 $ 17,689
Actual maturities could differ from contractual maturities because issuers may have the right to call or prepay obligations, with or without
penalties. Also, in some cases the Company may extend maturity dates.
Gross unrealized appreciation (depreciation) on fixed maturities by type of issuer is shown below (excluding trading securities and hybrid
securities with a fair value of $16 million at December 31, 2012 and $30 million at December 31, 2011).
December 31, 2012
Amortized Unrealized Unrealized Fair
(In millions) Cost Appreciation Depreciation Value
Federal government and agency $ 509 $ 393 $ – $ 902
State and local government 2,169 270 (2) 2,437
Foreign government 1,197 126 (1) 1,322
Corporate 10,590 1,308 (17) 11,881
Federal agency mortgage-backed 121 1 – 122
Other mortgage-backed 82 11 (4) 89
Other asset-backed 797 145 (6) 936
TOTAL $ 15,465 $ 2,254 $ (30) $ 17,689
CIGNA CORPORATION – 2012 Form 10-K 101
NOTE 12
A. Fixed Maturities and Equity Securities

PART II
ITEM 8 Financial Statements and Supplementary Data
December 31, 2011
Amortized Unrealized Unrealized Fair
(In millions) Cost Appreciation Depreciation Value
Federal government and agency $ 552 $ 406 $ – $ 958
State and local government 2,185 274 (3) 2,456
Foreign government 1,173 103 (2) 1,274
Corporate 9,460 1,070 (45) 10,485
Federal agency mortgage-backed 9 – – 9
Other mortgage-backed 73 10 (4) 79
Other asset-backed 777 160 (11) 926
TOTAL $ 14,229 $ 2,023 $ (65) $ 16,187
The above table includes investments with a fair value of $3.1 billion Review of declines in fair value. Management reviews fixed
supporting the Company’s run-off settlement annuity business, with maturities with a decline in fair value from cost for impairment based
gross unrealized appreciation of $883 million and gross unrealized on criteria that include:
depreciation of $8 million at December 31, 2012. Such unrealized
length of time and severity of decline;
amounts are required to support future policy benefit liabilities of this
business and, as such, are not included in accumulated other financial health and specific near term prospects of the issuer;
comprehensive income. At December 31, 2011, investments
changes in the regulatory, economic or general market environment
supporting this business had a fair value of $3 billion, gross unrealized
of the issuer’s industry or geographic region; and
appreciation of $851 million and gross unrealized depreciation of
$25 million. the Company’s intent to sell or the likelihood of a required sale prior
to recovery.
As of December 31, 2012, the Company had commitments to
purchase $58 million of fixed maturities, most of which bear interest
at a fixed market rate.
Excluding trading and hybrid securities, as of December 31, 2012, fixed maturities with a decline in fair value from amortized cost (primarily
corporate, and other asset and mortgage-backed securities) were as follows, including the length of time of such decline:
December 31, 2012
Fair Amortized Unrealized Number
(Dollars in millions) Value Cost Depreciation of Issues
Fixed maturities:
One year or less:
Investment grade $ 488 $ 494 $ (6) 200
Below investment grade $ 123 $ 125 $ (2) 67
More than one year:
Investment grade $ 195 $ 207 $ (12) 39
Below investment grade $ 26 $ 36 $ (10) 14
As of December 31, 2012, the unrealized depreciation of investment grade fixed maturities is primarily due to increases in market yields since
purchase. Excluding trading and hybrid securities, equity securities with a fair value lower than cost were not material at December 31, 2012.
B. Commercial Mortgage Loans
Mortgage loans held by the Company are made exclusively to commercial borrowers and are diversified by property type, location and borrower.
Loans are secured by high quality, primarily completed and substantially leased operating properties.
102 CIGNA CORPORATION – 2012 Form 10-K
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•
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PART II
ITEM 8 Financial Statements and Supplementary Data
At December 31, commercial mortgage loans were distributed among the following property types and geographic regions:
(In millions) 2012 2011
Property type
Office buildings $ 866 $ 1,014
Apartment buildings 571 705
Industrial 532 670
Hotels 463 542
Retail facilities 346 297
Other 73 73
TOTAL $ 2,851 $ 3,301
Geographic region
Pacific $ 966 $ 893
South Atlantic 730 870
New England 387 450
Central 352 511
Middle Atlantic 300 391
Mountain 116 186
TOTAL $ 2,851 $ 3,301
At December 31, 2012, scheduled commercial mortgage loan the annual portfolio loan review. The Company monitors credit
maturities were as follows (in millions): $419 in 2013, $290 in 2014, quality on an ongoing basis, classifying each loan as a loan in good
$318 in 2015, $791 in 2016 and $1,033 thereafter. Actual maturities standing, potential problem loan or problem loan.
could differ from contractual maturities for several reasons: borrowers
Quality ratings are based on internal evaluations of each loan’s specific
may have the right to prepay obligations, with or without prepayment
characteristics considering a number of key inputs, including real
penalties; the maturity date may be extended; and loans may be
estate market-related factors such as rental rates and vacancies, and
refinanced.
property-specific inputs such as growth rate assumptions and lease
As of December 31, 2012, the Company had commitments to extend rollover statistics. However, the two most significant contributors to
credit under commercial mortgage loan agreements of $6 million. the credit quality rating are the debt service coverage and
loan-to-value ratios. The debt service coverage ratio measures the
Credit quality. The Company applies a consistent and disciplined amount of property cash flow available to meet annual interest and
approach to evaluating and monitoring credit risk, beginning with the principal payments on debt. A debt service coverage ratio below 1.0
initial underwriting of a mortgage loan and continuing throughout indicates that there is not enough cash flow to cover the loan
the investment holding period. Mortgage origination professionals payments. The loan-to-value ratio, commonly expressed as a
employ an internal rating system developed from the Company’s percentage, compares the amount of the loan to the fair value of the
experience in real estate investing and mortgage lending. A quality underlying property collateralizing the loan.
rating, designed to evaluate the relative risk of the transaction, is
assigned at each loan’s origination and is updated each year as part of
The following tables summarize the credit risk profile of the Company’s commercial mortgage loan portfolio using carrying values classified based
on loan-to-value and debt service coverage ratios, as of December 31, 2012 and 2011:
December 31, 2012
Debt Service Coverage Ratio
Loan-to-Value Ratios
(In millions) 1.30x or Greater 1.20x to 1.29x 1.10x to 1.19x 1.00x to 1.09x Less than 1.00x Total
Below 50% $ 297 $ 8 $ – $ 50 $ – $ 355
50% to 59% 614 104 25 52 – 795
60% to 69% 562 75 – 66 – 703
70% to 79% 194 143 132 4 16 489
80% to 89% 45 42 131 18 58 294
90% to 99% 14 30 – – 58 102
100% or above – – 30 17 66 113
TOTAL $ 1,726 $ 402 $ 318 $ 207 $ 198 $ 2,851
CIGNA CORPORATION – 2012 Form 10-K 103

PART II
ITEM 8 Financial Statements and Supplementary Data
December 31, 2011
Debt Service Coverage Ratio
Loan-to-Value Ratios
(In millions) 1.30x or Greater 1.20x to 1.29x 1.10x to 1.19x 1.00x to 1.09x Less than 1.00x Total
Below 50% $ 225 $ 55 $ 3 $ 50 $ 9 $ 342
50% to 59% 444 47 26 – 53 570
60% to 69% 646 140 42 – 77 905
70% to 79% 117 132 120 159 33 561
80% to 89% 99 81 79 72 71 402
90% to 99% 36 35 30 58 116 275
100% or above – 10 50 51 135 246
TOTAL $ 1,567 $ 500 $ 350 $ 390 $ 494 $ 3,301
The Company’s annual in-depth review of its commercial mortgage During 2011, the Company restructured a $65 million potential
loan investments is the primary mechanism for identifying emerging problem loan into two notes carried at $55 million and $10 million.
risks in the portfolio. The most recent review was completed by the This modification was considered a troubled debt restructuring
Company’s investment professionals in the second quarter of 2012 because the borrower was experiencing financial difficulties and an
and included an analysis of each underlying property’s most recent interest rate concession was granted. No valuation reserve was
annual financial statements, rent rolls, operating plans, budgets, a required because the fair value of the underlying property exceeded
physical inspection of the property and other pertinent factors. Based the carrying value of the outstanding loan. As a part of this
on historical results, current leases, lease expirations and rental restructuring, the borrowers and the Company have committed to
conditions in each market, the Company estimates the current year fund additional capital for leasing and capital requirements.
and future stabilized property income and fair value, and categorizes
Other loans were modified during 2012 and 2011, but were not
the investments as loans in good standing, potential problem loans or
considered troubled debt restructures. The impact of modifications to
problem loans. Based on property valuations and cash flows estimated
these loans was not material to the Company’s results of operations,
as part of this review, and considering updates for loans where material
financial condition or liquidity.
changes were subsequently identified, the portfolio’s average
loan-to-value ratio improved to 65% at December 31, 2012, Potential problem mortgage loans are considered current (no payment
decreasing from 70% as of December 31, 2011. The portfolio’s more than 59 days past due), but exhibit certain characteristics that
average debt service coverage ratio was estimated to be 1.56 at increase the likelihood of future default. The characteristics
December 31, 2012, a significant improvement from 1.40 at management considers include, but are not limited to, the
December 31, 2011. deterioration of debt service coverage below 1.0, estimated
loan-to-value ratios increasing to 100% or more, downgrade in
Quality ratings are adjusted between annual reviews if new property
quality rating and request from the borrower for restructuring. In
information is received or events such as delinquency or a borrower’s
addition, loans are considered potential problems if principal or
request for restructure cause management to believe that the
interest payments are past due by more than 30 but less than 60 days.
Company’s estimate of financial performance, fair value or the risk
Problem mortgage loans are either in default by 60 days or more or
profile of the underlying property has been impacted.
have been restructured as to terms, which could include concessions
During 2012, the Company restructured a $119 million problem on interest rate, principal payment or maturity date. The Company
mortgage loan, net of a valuation reserve, into two notes carried at monitors each problem and potential problem mortgage loan on an
$100 million and $19 million. The $100 million note was reclassified ongoing basis, and updates the loan categorization and quality rating
to impaired commercial mortgage loans with no valuation reserves when warranted.
and the $19 million note was classified as another long-term
Problem and potential problem mortgage loans, net of valuation
investment. This modification was considered a troubled debt
reserves, totaled $215 million at December 31, 2012 and
restructuring because the borrower was experiencing financial
$336 million at December 31, 2011. At December 31, 2012,
difficulties and an interest rate concession was granted. No valuation
mortgage loans located in the South Atlantic region represented the
reserve was required because the fair value of the underlying property
most significant component of problem and potential problem
equaled the carrying value of the outstanding loan. Following the
mortgage loans, with no significant concentration by property type.
restructuring, the $100 million note was paid down by $46 million
At December 31, 2011, mortgage loans collateralized by industrial
with the remaining $54 million note reclassified to good standing due
properties represent the most significant component of problem and
to an improved quality rating based on significant improvements in its
potential problem mortgage loans, with no significant concentration
loan-to-value and debt service coverage ratios resulting from the
by geographic region.
annual loan review.
104 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
Impaired commercial mortgage loans. The carrying value of the Company’s impaired commercial mortgage loans and related valuation reserves
were as follows:
2012 2011
(In millions) Gross Reserves Net Gross Reserves Net
Impaired commercial mortgage loans
with valuation reserves $ 72 $ (7) $ 65 $ 154 $ (19) $ 135
Impaired commercial mortgage loans
with no valuation reserves 60 – 60 60 – 60
TOTAL $ 132 $ (7) $ 125 $ 214 $ (19) $ 195
During 2012, the Company recorded a $10 million pre-tax underlying investment. Additional interest income that would have
($7 million after-tax) increase in valuation reserves on three impaired been reflected in net income if interest on non-accrual commercial
commercial mortgage loans collateralized by industrial properties and mortgage loans had been received in accordance with the original
one impaired commercial mortgage loan collateralized by a retail terms was not significant for 2012 or 2011. Interest income on
property. The average recorded investment in impaired loans was impaired commercial mortgage loans was not significant for 2012 or
$167 million during 2012 and $176 million during 2011. The 2011. See Note 2 for further information on impaired commercial
Company recognizes interest income on problem mortgage loans only mortgage loans.
when payment is actually received because of the risk profile of the
The following table summarizes the changes in valuation reserves for commercial mortgage loans:
(In millions) 2012 2011
Reserve balance, January 1, $ 19 $ 12
Increase in valuation reserves 10 16
Charge-offs upon sales and repayments, net of recoveries (3) (1)
Transfers to other long-term investments (16) –
Transfers to foreclosed real estate (3) (8)
RESERVE BALANCE, DECEMBER 31, $ 7 $ 19
C. Real Estate
As of December 31, 2012 and 2011, real estate investments consisted primarily of office and industrial buildings in California. Investments with a
carrying value of $49 million as of December 31, 2012 and 2011 were non-income producing during the preceding twelve months. As of
December 31, 2012, the Company had commitments to contribute additional equity of $7 million to real estate investments.
D. Other Long-Term Investments
As of December 31, other long-term investments consisted of the following:
(In millions) 2012 2011
Real estate entities $ 823 $ 665
Securities partnerships 343 298
Interest rate and foreign currency swaps 6 12
Mezzanine loans 31 31
Other 52 52
TOTAL $ 1,255 $ 1,058
Investments in real estate entities and securities partnerships with a $312 million to entities that hold securities diversified by issuer and
carrying value of $199 million at December 31, 2012 and maturity date.
$171 million at December 31, 2011 were non-income producing
The Company expects to disburse approximately 50% of the
during the preceding twelve months.
committed amounts in 2013.
As of December 31, 2012, the Company had commitments to
contribute:
$197 million to limited liability entities that hold either real estate
or loans to real estate entities that are diversified by property type
and geographic region; and
CIGNA CORPORATION – 2012 Form 10-K 105
•
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PART II
ITEM 8 Financial Statements and Supplementary Data
market funds of $40 million. The decrease during 2012 is primarilyE. Short-Term Investments and Cash
due to funds used to acquire HealthSpring. See Note 3 for further
Equivalents information.
Short-term investments and cash equivalents included corporate
securities of $1.1 billion, federal government securities of F. Concentration of Risk
$167 million and money market funds of $217 million as of
As of December 31, 2012 and 2011, the Company did not have aDecember 31, 2012. The Company’s short-term investments and cash
concentration of investments in a single issuer or borrower exceedingequivalents as of December 31, 2011 included corporate securities of
10% of shareholders’ equity.$4.1 billion, federal government securities of $164 million and money
Derivative Financial Instruments
The Company has written and purchased reinsurance contracts under variable annuity account values compared with a contractually
its Run-off Reinsurance segment that are accounted for as free guaranteed amount (‘‘GMIB liabilities’’). According to the contractual
standing derivatives. The Company also uses derivative financial terms of the written reinsurance contracts, payment by the Company
instruments to manage the equity, foreign currency, and certain depends on the actual account value in the underlying mutual funds
interest rate risk exposures of its Run-off Reinsurance segment. In and the level of interest rates when the contractholders elect to receive
addition, the Company uses derivative financial instruments to minimum income payments. The Company has purchased
manage the characteristics of investment assets to meet the varying retrocessional coverage for 55% of these contracts to reduce a portion
demands of the related insurance and contractholder liabilities. See of the risks assumed (‘‘GMIB assets’’). Effective February 4, 2013, the
Note 2 for information on the Company’s accounting policy for Company reinsured the remainder of the exposures on these
derivative financial instruments. Derivatives in the Company’s contracts. See Note 25 for additional information.
separate accounts are excluded from the following discussion because
Accounting policy. The Company accounts for these GMIB liabilities
associated gains and losses generally accrue directly to separate
and assets as written and purchased options at fair value because cash
account policyholders.
flows are affected by equity markets and interest rates, but are without
Collateral and termination features. The Company routinely significant life insurance risk and are settled in lump sum payments.
monitors exposure to credit risk associated with derivatives and These derivatives are not designated as hedges and their fair values are
diversifies the portfolio among approved dealers of high credit quality reported in other liabilities (GMIB liability) and other assets (GMIB
to minimize this risk. Certain of the Company’s over-the-counter asset), with changes in fair value reported in GMIB fair value (gain)
derivative instruments contain provisions requiring either the loss.
Company or the counterparty to post collateral or demand immediate
Cash flows. Under the terms of these written and purchased contracts,
payment depending on the amount of the net liability position and
the Company periodically receives and pays fees based on either
predefined financial strength or credit rating thresholds. Collateral
contractholders’ account values or their deposits increased at a
posting requirements vary by counterparty. The net liability positions
contractual rate. The Company will also pay and receive cash
of these derivatives were not material as of December 31, 2012 or
depending on changes in account values and interest rates when
2011.
contractholders first elect to receive minimum income payments.
These cash flows are reported in operating activities.
Derivative instruments associated with the Company’s
Volume of activity. The potential undiscounted future payments for
Run-off Reinsurance segment. the written options (GMIB liability, as defined in Note 24) was
$1,065 million as of December 31, 2012 and $1,244 million as of
December 31, 2011. The potential undiscounted future receipts for
Purpose. The Company has written reinsurance contracts with issuers
the purchased options (GMIB asset) was $586 million as of
of variable annuity contracts that provide annuitants with certain
December 31, 2012 and $684 million as of December 31, 2011.
guarantees of minimum income benefits resulting from the level of
The following table provides the effect of these derivative instruments on the financial statements for the indicated periods:
Fair Value Effect on the Financial Statements (In millions)
Other Assets, Accounts Payable, Accrued Expenses
including other intangibles and Other Liabilities GMIB Fair Value (Gain) Loss
As of December 31, As of December 31, For the years ended December 31,
Instrument 2012 2011 2012 2011 2012 2011
Written options (GMIB liability) $ 1,170 $ 1,333 $ (96) $ 504
Purchased options (GMIB asset) $ 622 $ 712 55 (270)
TOTAL $ 622 $ 712 $ 1,170 $ 1,333 $ (41) $ 234
106 CIGNA CORPORATION – 2012 Form 10-K
NOTE 13
Guaranteed Minimum Income Benefits (GMIB)

PART II
ITEM 8 Financial Statements and Supplementary Data
interest rate swap contracts. These contracts are generally expected toGMDB and GMIB Hedge Programs
rise in value as equity markets and interest rates decline, and decline in
Purpose. The Company uses derivative financial instruments under a value as equity markets and interest rates rise.
dynamic hedge program designed to substantially reduce domestic
Accounting policy. These hedge programs are not designated asand international equity market exposures resulting from changes in
accounting hedges. Although these hedge programs effectively reducevariable annuity account values based on underlying mutual funds for
equity market, foreign currency, and interest rate exposures, changescertain reinsurance contracts that guarantee minimum death benefits
in the fair values of these futures and swap contracts may not exactly(‘‘GMDB’’). During the second quarter of 2012, the Company
offset changes in the portions of the GMDB and GMIB liabilitiesexpanded this hedge program to cover approximately one-half of the
covered by these hedges, in part because the market does not offerequity market exposures associated with its GMIB business, increasing
contracts that exactly match the targeted exposure profile. Changes inthe covered exposure from approximately one-quarter. The Company
fair value of these futures contracts, as well as interest income andalso operates a dynamic hedge program to reduce the exposure to
interest expense relating to the swap contracts are reported in otherchanges in interest rate levels on the growth rate for approximately
revenues. The fair values of the interest rate swaps are reported inone-third of its GMDB and one-quarter of its GMIB businesses
other assets and other liabilities. Amounts reflecting corresponding(‘‘GMDB and GMIB growth interest rate hedge program’’). These
changes in liabilities for GMDB contracts are included in benefits andhedge programs are dynamic because the Company will regularly
expenses.rebalance the hedging instruments within established parameters as
equity and interest rate exposures of these businesses change. These Cash flows. The Company receives or pays cash daily in the amount of
hedge programs were terminated after February 4, 2013 as a result of the change in fair value of the futures contracts. The Company
the Company’s agreement to reinsure the remainder of GMDB and periodically exchanges cash flows between variable and fixed interest
GMIB businesses. See Notes 7 and 11 for further details regarding rates under the interest rate swap contracts. Cash flows relating to
these businesses. these contracts are included in operating activities.
The Company manages these hedge programs using exchange-traded
equity, foreign currency, and interest rate futures contracts, as well as
Volume of activity. The notional values of futures and swap contracts used in the GMDB and GMIB equity and growth interest rate hedge
programs are included in the following table. Equity futures consist primarily of S&P 500, S&P 400, Russell 2000, NASDAQ, TOPIX
(Japanese), EUROSTOXX and FTSE (British) equity indices. Currency futures consist of Euros, Japanese yen and British pounds.
Notional Amount (In millions)
Instrument As of December 31, 2012 As of December 31, 2011
Equity and currency futures – equity hedge $ 777 $ 994
Interest rate swaps – growth interest rate hedge 240 240
U.S. Treasury futures – growth interest rate hedge 16 29
Eurodollar futures – growth interest rate hedge 482 598
TOTAL $ 1,515 $ 1,861
The following tables provide the effect of these derivative instruments on the financial statements for the indicated periods:
Fair Value Effect on the Financial Statements (In millions)
Other Revenues
For the years ended December 31,
2012 2011
Equity and currency futures for GMDB exposures $ (110) $ (45)
Equity and currency futures for GMIB exposures (16) 4
TOTAL EQUITY AND CURRENCY FUTURES (1) $ (126) $ (41)
Other Assets,
including other intangibles Other Revenues
As of December 31, For the years ended December 31,
2012 2011 2012 2011
Interest rate swaps $ 35 $ 33 $ 8 $ 39
Interest rate futures (1) – – (1) (2)
TOTAL INTEREST RATE SWAPS AND FUTURES $ 35 $ 33 $ 7 $ 37
Interest rate derivatives for GMDB exposures $ 5 $ 31
Interest rate derivatives for GMIB exposures 2 6
TOTAL INTEREST RATE SWAPS AND FUTURES $ 7 $ 37
(1) Balance sheet presentation of amounts receivable or payable relating to futures daily variation margin are excluded from this table.
CIGNA CORPORATION – 2012 Form 10-K 107

PART II
ITEM 8 Financial Statements and Supplementary Data
Accounting policy. Using cash flow hedge accounting, fair values areDerivative instruments used in the Company’s
reported in other long-term investments or other liabilities andinvestment risk management.
accumulated other comprehensive income and amortized into net
Derivative financial instruments are also used by the Company as a investment income or reported in other realized investment gains and
part of its investment strategy to manage the characteristics of losses as interest or principal payments are received.
investment assets (such as duration, yield, currency and liquidity) to
Cash flows. Under the terms of these various contracts, the Companymeet the varying demands of the related insurance and contractholder
periodically exchanges cash flows between variable and fixed interestliabilities (such as paying claims, investment returns and withdrawals).
rates and/or between two currencies for both principal and interest.Derivatives are typically used in this strategy to reduce interest rate
Foreign currency swaps are primarily Euros, Australian dollars,and foreign currency risks.
Canadian dollars, Japanese yen, and British pounds, and have terms
for periods of up to 9 years. Net interest cash flows are reported in
Investment Cash Flow Hedges operating activities.
Purpose. The Company uses interest rate, foreign currency, and
combination (interest rate and foreign currency) swap contracts to
hedge the interest and foreign currency cash flows of its fixed maturity
bonds to match associated insurance liabilities.
Volume of activity. The following table provides the notional values of these derivative instruments for the indicated periods:
Notional Amount (In millions)
As of December 31,
Instrument 2012 2011
Interest rate swaps $ 58 $ 134
Foreign currency swaps 133 134
Combination interest rate and foreign currency swaps 64 64
TOTAL $ 255 $ 332
The following table provides the effect of these derivative instruments on the financial statements for the indicated periods:
Fair Value Effect on the Financial Statements (In millions)
Accounts Payable, Accrued Gain (Loss) Recognized in
Other Long-Term Expenses Other
Investments and Other Liabilities Comprehensive Income (1)
For the years ended
As of December 31, As of December 31, December 31,
Instrument 2012 2011 2012 2011 2012 2011
Interest rate swaps $ 4 $ 7 $ – $ – $ (3) $ (3)
Foreign currency swaps 1 3 18 19 (3) (1)
Combination interest rate and foreign
currency swaps – – 13 11 (2) 1
TOTAL $ 5 $ 10 $ 31 $ 30 $ (8) $ (3)
(1) Other comprehensive income for foreign currency swaps excludes amounts required to adjust future policy benefits for the run-off settlement annuity business.
For the years ended December 31, 2012 and 2011, the amount of recognized due to ineffectiveness was not material and there were no
gains (losses) reclassified from accumulated other comprehensive amounts excluded from the assessment of hedge effectiveness.
income into income was not material. The amount of gains (losses)
108 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
Variable Interest Entities
When the Company becomes involved with a variable interest entity provide health care services to the Medicare Advantage customers and
and when the nature of the Company’s involvement with the entity the Company provides medical management and administrative
changes, in order to determine if the Company is the primary services to the IPAs.
beneficiary and must consolidate the entity, it evaluates: The Company is not the primary beneficiary and does not consolidate
the structure and purpose of the entity; these entities because either:
the risks and rewards created by and shared through the entity; and it had no power to direct the activities that most significantly impact
the entities’ economic performance; orthe entity’s participants’ ability to direct its activities, receive its
benefits and absorb its losses. Participants include the entity’s it had neither the right to receive benefits nor the obligation to
sponsors, equity holders, guarantors, creditors and servicers. absorb losses that could be significant to these variable interest
entities.In the normal course of its investing activities, the Company makes
passive investments in securities that are issued by variable interest The Company has not provided, and does not intend to provide,
entities for which the Company is not the sponsor or manager. These financial support to these entities that it is not contractually required
investments are predominantly asset-backed securities primarily to provide. The Company performs ongoing qualitative analyses of its
collateralized by foreign bank obligations or mortgage-backed involvement with these variable interest entities to determine if
securities. The asset-backed securities largely represent fixed-rate debt consolidation is required. The Company’s maximum potential
securities issued by trusts that hold perpetual floating-rate exposure to loss related to the investment entities is limited to the
subordinated notes issued by foreign banks. The mortgage-backed carrying amount of its investment reported in fixed maturities and
securities represent senior interests in pools of commercial or equity securities, and its aggregate ownership interest is insignificant
residential mortgages created and held by special-purpose entities to relative to the total principal amount issued by these entities. The
provide investors with diversified exposure to these assets. The Company’s maximum exposure to loss related to the IPA
Company owns senior securities issued by several entities and receives arrangements is limited to the liability for incurred but not reported
fixed-rate cash flows from the underlying assets in the pools. claims for the Company’s Medicare Advantage customers. These
liabilities are not material and are generally secured by depositsIn order to provide certain services to its Medicare Advantage
maintained by the IPAs.customers, the Company contracts with independent physician
associations (IPAs) that are variable interest entities. Physicians
Investment Income and Gains and Losses
The components of pre-tax net investment income for the years ended December 31 were as follows:
(In millions) 2012 2011 2010
Fixed maturities $ 843 $ 817 $ 788
Equity securities 4 6 6
Commercial mortgage loans 192 218 221
Policy loans 74 86 90
Real estate (2) (2) (2)
Other long-term investments 59 48 29
Short-term investments and cash 14 10 11
1,184 1,183 1,143
Less investment expenses 40 37 38
NET INVESTMENT INCOME $ 1,144 $ 1,146 $ 1,105
CIGNA CORPORATION – 2012 Form 10-K 109
NOTE 14
•
• •
•
•
NOTE 15
A. Net Investment Income

PART II
ITEM 8 Financial Statements and Supplementary Data
Net investment income for separate accounts (that is not reflected in the Company’s revenues) was $181 million for 2012, $207 million for 2011,
and $163 million for 2010.
B. Realized Investment Gains and Losses
The following realized gains and losses on investments for the years ended December 31 exclude amounts required to adjust future policy benefits
for the run-off settlement annuity business.
(In millions) 2012 2011 2010
Fixed maturities $ 48 $ 50 $ 87
Equity securities 4 (1) 5
Commercial mortgage loans (9) (16) (23)
Real estate (1) (6) 3
Other investments, including derivatives 2 35 3
Realized investment gains (losses), before income taxes 44 62 75
Less income taxes (benefits) 13 21 25
NET REALIZED INVESTMENT GAINS (LOSSES) $ 31 $ 41 $ 50
Included in pre-tax realized investment gains (losses) above were asset write-downs and changes in valuation reserves as follows:
(In millions) 2012 2011 2010
Credit related (1) $ (20) $ (28) $ (38)
Other (2) (25) (1)
TOTAL $ (22) $ (53) $ (39)
(1) Credit-related losses include other-than-temporary declines in fair value of fixed maturities and equity securities and changes in valuation reserves and asset write-downs related to
commercial mortgage loans and investments in real estate entities. There were no credit losses on fixed maturities for which a portion of the impairment was recognized in other
comprehensive income.
The Company recognized pre-tax gains of $5 million in 2012, compared with pre-tax losses of $7 million in 2011 and pre-tax gains of $7 million
in 2010 on hybrid securities.
Realized investment gains in 2011 in other investments, including derivatives, represent primarily gains on sale of real estate properties held in
joint ventures.
Realized investment gains that are not reflected in the Company’s revenues for the years ended December 31 were as follows:
(In millions) 2012 2011 2010
Separate accounts $ 206 $ 210 $ 191
Investment gains required to adjust future policy benefits for the run-off settlement annuity business $ 21 $ 8 $ 18
Sales information for available-for-sale fixed maturities and equity securities, for the years ended December 31 were as follows:
(In millions) 2012 2011 2010
Proceeds from sales $ 591 $ 876 $ 826
Gross gains on sales $ 37 $ 53 $ 46
Gross losses on sales $ (2) $ (7) $ (3)
110 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
Debt
(In millions) 2012 2011
Short-term:
Commercial paper $ 200 $ 100
Current maturities of long-term debt 1 4
TOTAL SHORT-TERM DEBT $ 201 $ 104
Long-term:
Uncollateralized debt:
2.75% Notes due 2016 $ 600 $ 600
5.375% Notes due 2017 250 250
6.35% Notes due 2018 131 131
8.5% Notes due 2019 251 251
4.375% Notes due 2020 249 249
5.125% Notes due 2020 299 299
6.37% Notes due 2021 78 78
4.5% Notes due 2021 299 298
4% Notes due 2022 743 743
7.65% Notes due 2023 100 100
8.3% Notes due 2023 17 17
7.875% Debentures due 2027 300 300
8.3% Step Down Notes due 2033 83 83
6.15% Notes due 2036 500 500
5.875% Notes due 2041 298 298
5.375% Notes due 2042 750 750
Other 38 43
TOTAL LONG-TERM DEBT $ 4,986 $ 4,990
As described in Note 3, the Company acquired HealthSpring on interest rate of 4% ($743 million, net of discount, with an effective
January 31, 2012. At the acquisition date, HealthSpring had interest rate of 4.346% per year) and $750 million of 30-Year Notes
$326 million of debt outstanding. In accordance with debt covenants, due February 15, 2042 at a stated interest rate of 5.375%
HealthSpring’s debt obligation was paid immediately following the ($750 million, net of discount, with an effective interest rate of
acquisition. This repayment is reported as a financing activity in the 5.542% per year). Interest is payable on May 15 and November 15 of
statement of cash flows for the year ended December 31, 2012. each year beginning May 15, 2012 for the 5-Year Notes and
February 15 and August 15 of each year beginning February 15, 2012
In December 2012, the Company extended the life of its June 2011
for the 10-Year and 30-Year Notes. The proceeds of this debt were
five-year revolving credit and letter of credit agreement for
used to fund the HealthSpring acquisition in January 2012.
$1.5 billion, that permits up to $500 million to be used for letters of
credit. This agreement is diversified among 16 banks, with 3 banks The Company may redeem these Notes, at any time, in whole or in
each having 12% of the commitment and the remainder spread part, at a redemption price equal to the greater of:
among 13 banks. The credit agreement includes options that are
100% of the principal amount of the Notes to be redeemed; or
subject to consent by the administrative agent and the committing
banks, to increase the commitment amount to $2 billion and to the present value of the remaining principal and interest payments
extend the term past December 2017. The credit agreement is on the Notes being redeemed discounted at the applicable Treasury
available for general corporate purposes, including as a commercial rate plus 30 basis points (5-Year 2.75% Notes due 2016), 35 basis
paper backstop and for the issuance of letters of credit. This agreement points (10-Year 4% Notes due 2022), or 40 basis points (30-Year
has certain covenants, including a financial covenant requiring the 5.375% Notes due 2042).
Company to maintain a total debt-to-adjusted capital ratio at or
In March 2011, the Company issued $300 million of 10-Year Notes
below 0.50 to 1.00. As of December 31, 2012, the Company had
due March 15, 2021 at a stated interest rate of 4.5% ($298 million,
$5.3 billion of borrowing capacity within the maximum debt coverage
net of discount, with an effective interest rate of 4.683% per year) and
covenant in the agreement in addition to the $5.2 billion of debt
$300 million of 30-Year Notes due March 15, 2041 at a stated interest
outstanding. There were letters of credit of $66 million issued as of
rate of 5.875% ($298 million, net of discount, with an effective
December 31, 2012.
interest rate of 6.008% per year). Interest is payable on March 15 and
On November 10, 2011, the Company issued $2.1 billion of September 15 of each year beginning September 15, 2011. The
long-term debt as follows: $600 million of 5-Year Notes due proceeds of this debt were used for general corporate purposes,
November 15, 2016 at a stated interest rate of 2.75% ($600 million, including the repayment of debt maturing in 2011.
net of discount, with an effective interest rate of 2.936% per year),
$750 million of 10-Year Notes due February 15, 2022 at a stated
CIGNA CORPORATION – 2012 Form 10-K 111
NOTE 16
•
•

PART II
ITEM 8 Financial Statements and Supplementary Data
The Company may redeem these Notes, at any time, in whole or in $198 million, including accrued interest and expenses, to settle the
part, at a redemption price equal to the greater of: Notes, resulting in an after-tax loss on early debt extinguishment of
$18 million.100% of the principal amount of the Notes to be redeemed; or
In December 2010, the Company issued $250 million of 4.375%the present value of the remaining principal and interest payments
Notes ($249 million net of debt discount, with an effective intereston the Notes being redeemed discounted at the applicable Treasury
rate of 5.1%). Interest is payable on June 15 and December 15 ofrate plus 20 basis points (10-Year 4.5% Notes due 2021) or 25 basis
each year beginning December 15, 2010. These Notes will maturepoints (30-Year 5.875% Notes due 2041).
on December 15, 2020. The proceeds of this debt were used to fund
During 2011, the Company repaid $449 million in maturing the tender offer for the 8.5% Senior Notes due 2019 and the 6.35%
long-term debt. Senior Notes due 2018 described above.
In the fourth quarter of 2010, the Company entered into the In May 2010, the Company issued $300 million of 5.125% Notes
following transactions related to its long-term debt: ($299 million, net of debt discount, with an effective interest rate of
5.36% per year). Interest is payable on June 15 and December 15 ofIn December 2010 the Company offered to settle its 8.5% Notes
each year beginning December 15, 2010. These Notes will mature ondue 2019, including accrued interest from November 1 through the
June 15, 2020. The proceeds of this debt were used for generalsettlement date. The tender price equaled the present value of the
corporate purposes.remaining principal and interest payments on the Notes being
redeemed, discounted at a rate equal to the 10-year Treasury rate
The Company may redeem the Notes issued in 2010 at any time, in
plus a fixed spread of 100 basis points. The tender offer priced at a
whole or in part, at a redemption price equal to the greater of:
yield of 4.128% and principal of $99 million was tendered, with
100% of the principal amount of the Notes to be redeemed; or$251 million remaining outstanding. The Company paid
$130 million, including accrued interest and expenses, to settle the the present value of the remaining principal and interest payments
Notes, resulting in an after-tax loss on early debt extinguishment of on the Notes being redeemed discounted at the applicable Treasury
$21 million. rate plus 25 basis points.
In December 2010 the Company offered to settle its 6.35% Notes
Maturities of debt and capital leases are as follows (in millions): $1 in
due 2018, including accrued interest from September 16 through
2013, $23 in 2014, none in 2015, $600 in 2016, $250 in 2017 and
the settlement date. The tender price equaled the present value of
the remainder in years after 2017. Interest expense on long-term debt,
the remaining principal and interest payments on the Notes being
short-term debt and capital leases was $268 million in 2012,
redeemed, discounted at a rate equal to the 10-year Treasury rate
$202 million in 2011, and $182 million in 2010.
plus a fixed spread of 45 basis points. The tender offer priced at a
The Company was in compliance with its debt covenants as ofyield of 3.923% and principal of $169 million was tendered, with
$131 million remaining outstanding. The Company paid December 31, 2012.
Common and Preferred Stock
As of December 31, the Company had issued the following shares:
(Shares in thousands) 2012 2011
Common: Par value $0.25 600,000 shares authorized
Outstanding – January 1 285,533 271,880
Issuance of common stock – 15,200
Issued for stock option and other benefit plans 4,695 3,735
Repurchase of common stock (4,399) (5,282)
Outstanding – December 31 285,829 285,533
Treasury stock 80,316 80,612
ISSUED – DECEMBER 31 366,145 366,145
On November 16, 2011, the Company issued 15.2 million shares of During 2012, and through February 28, 2013, the Company
its common stock at $42.75 per share. Proceeds of $650 million repurchased 4.4 million shares for $208 million. On February 27,
($629 million net of underwriting discount and fees) were used to 2013, the Company’s Board of Directors increased share repurchase
partially fund the HealthSpring acquisition in January 2012. authority by $500 million. Accordingly, the total remaining share
repurchase authorization as of February 28, 2013 was $815 million.The Company maintains a share repurchase program, which was
The Company repurchased 5.3 million shares for $225 million duringauthorized by its Board of Directors. The decision to repurchase
2011.shares depends on market conditions and alternative uses of capital.
The Company has, and may continue from time to time, to The Company has authorized a total of 25 million shares of $1 par
repurchase shares on the open market through a Rule 10b5-1 plan value preferred stock. No shares of preferred stock were outstanding at
that permits a company to repurchase its shares at times when it
December 31, 2012 or 2011.
otherwise might be precluded from doing so under insider trading
laws or because of self-imposed trading blackout periods.
112 CIGNA CORPORATION – 2012 Form 10-K
•
••
•
•
•
•
NOTE 17

PART II
ITEM 8 Financial Statements and Supplementary Data
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) excludes amounts required to adjust future policy benefits for the run-off settlement annuity
business.
Changes in accumulated other comprehensive income (loss) were as follows:
Tax
2012 (Expense) After-
(In millions) Pre-Tax Benefit Tax
Net unrealized appreciation, securities:
Net unrealized appreciation on securities arising during the year $ 271 $ (90) $ 181
Reclassification adjustment for losses (gains) included in shareholders’ net income (52) 18 (34)
Net unrealized appreciation, securities $ 219 $ (72) $ 147
Net unrealized depreciation, derivatives $ (7) $ 2 $ (5)
Net translation of foreign currencies $ 78 $ (12) $ 66
Postretirement benefits liability adjustment:
Reclassification adjustment for amortization of net losses from past experience and prior service costs,
and settlement charges $ 52 $ (18) $ 34
Net change arising from assumption and plan changes and experience (181) 55 (126)
Net postretirement benefits liability adjustment $ (129) $ 37 $ (92)
Tax
2011 (Expense) After-
(In millions) Pre-Tax Benefit Tax
Net unrealized appreciation, securities:
Net unrealized appreciation on securities arising during the year $ 366 $ (127) $ 239
Reclassification adjustment for (gains) included in net income (49) 18 (31)
Net unrealized appreciation, securities $ 317 $ (109) $ 208
Net unrealized appreciation, derivatives $ 1 $ – $ 1
Net translation of foreign currencies $ (21) $ (1) $ (22)
Postretirement benefits liability adjustment:
Reclassification adjustment for amortization of net losses from past experience and prior service costs $ 22 $ (7) $ 15
Net change arising from assumption and plan changes and experience (580) 205 (375)
Net postretirement benefits liability adjustment $ (558) $ 198 $ (360)
Tax
2010 (Expense) After-
(In millions) Pre-Tax Benefit Tax
Net unrealized appreciation, securities:
Net unrealized appreciation on securities arising during the year $ 319 $ (109) $ 210
Reclassification adjustment for (gains) included in net income (92) 32 (60)
Net unrealized appreciation, securities $ 227 $ (77) $ 150
Net unrealized appreciation, derivatives $ 8 $ (2) $ 6
Net translation of foreign currencies $ 40 $ (7) $ 33
Postretirement benefits liability adjustment:
Reclassification adjustment for amortization of net losses from past experience and prior service costs $ 10 $ (4) $ 6
Net change arising from assumption and plan changes and experience (311) 116 (195)
Net postretirement benefits liability adjustment $ (301) $ 112 $ (189)
Shareholders’ Equity and Dividend Restrictions
State insurance departments and foreign jurisdictions that regulate certain of the Company’s subsidiaries prescribe accounting practices (which
differ in some respects from GAAP) to determine statutory net income and surplus. The Company’s life insurance and HMO company
CIGNA CORPORATION – 2012 Form 10-K 113
NOTE 18
NOTE 19

PART II
ITEM 8 Financial Statements and Supplementary Data
subsidiaries are regulated by such statutory requirements. The statutory net income for the years ended, and statutory surplus as of, December 31
of the Company’s life insurance and HMO subsidiaries were as follows:
(In millions) 2012 2011 2010
Net income $ 1,520 $ 953 $ 1,697
Surplus $ 6,109 $ 5,286 $ 5,107
The minimum statutory surplus required by regulators for the annual dividends or other distributions (such as loans or cash
Company’s life insurance and HMO company subsidiaries was advances) insurance companies may extend to the parent company
approximately $1.7 billion as of December 31, 2012. As of without prior approval of regulatory authorities. The maximum
December 31, 2012, statutory surplus for each of the Company’s life dividend distribution that the Company’s life insurance and HMO
insurance and HMO subsidiaries is sufficient to meet the minimum subsidiaries may make during 2013 without prior approval is
required by regulators. As of December 31, 2012, the Company’s life approximately $1.1 billion. Restricted net assets of the Company as of
insurance and HMO subsidiaries had investments on deposit with December 31, 2012, were approximately $8.7 billion. Certain life
state departments of insurance with statutory carrying values of insurance subsidiaries of the Company are permitted to loan up to
$337 million. The Company’s life insurance and HMO subsidiaries $750 million to the parent company without prior approval.
are also subject to regulatory restrictions that limit the amount of
Income Taxes
The components of income taxes for the years ended December 31 were as follows:
(In millions) 2012 2011 2010
Current taxes
U.S. income $ 604 $ 320 $ 267
Foreign income 72 58 45
State income 43 20 19
719 398 331
Deferred taxes (benefits)
U.S. income 131 193 187
Foreign income 4 23 8
State income (1) 1 (7)
134 217 188
TOTAL INCOME TAXES $ 853 $ 615 $ 519
Total income taxes for the years ended December 31 were different from the amount computed using the nominal federal income tax rate of 35%
for the following reasons:
(In millions) 2012 2011 2010
Tax expense at nominal rate $ 867 $ 657 $ 631
Tax-exempt interest income (28) (29) (31)
Effect of permanently invested foreign earnings (37) (17) (11)
Dividends received deduction (3) (4) (3)
Resolution of federal tax matters – (30) –
State income tax (net of federal income tax benefit) 28 14 9
Change in valuation allowance 6 5 (93)
Other 20 19 17
TOTAL INCOME TAXES $ 853 $ 615 $ 519
Commencing in the first quarter of 2012, the Company began usingEffect of Permanently Invested Foreign Earnings
this approach to compute income taxes attributable to its China and
The Company provides for income taxes on the undistributed Indonesia operations, based upon a determination that the related
earnings of certain foreign operations using the foreign jurisdictions’ earnings would be permanently invested overseas. The Company
tax rate, as compared to the higher U.S. statutory tax rate.
114 CIGNA CORPORATION – 2012 Form 10-K
NOTE 20
A. Income Tax Expense

PART II
ITEM 8 Financial Statements and Supplementary Data
continues to evaluate the permanent investment of foreign earnings liability includes an increase of $10 million associated with
for additional jurisdictions. unrecorded deferred tax liabilities reported through other
comprehensive income.
Shareholders’ net income for the year ended December 31, 2012
increased by $37 million related to this method of providing for
income taxes including $13 million attributable to the first quarter Change in Valuation Allowance
implementation of this method for the Company’s China and
The significant decline in the 2010 valuation allowance primarilyIndonesia operations. Permanent investment of foreign operation
reflects the resolution of a disputed federal income tax matter specificearnings has resulted in cumulative unrecognized deferred tax
to the run-off reinsurance operations.liabilities of $116 million through December 31, 2012. The
year-to-date change in the cumulative unrecognized deferred tax
B. Deferred Income Taxes
Deferred income tax assets and liabilities as of December 31 are shown below.
(In millions) 2012 2011
Deferred tax assets
Employee and retiree benefit plans $ 765 $ 829
Investments, net 95 108
Other insurance and contractholder liabilities 486 443
Deferred gain on sale of businesses 28 46
Policy acquisition expenses 147 151
Loss carryforwards 9 8
Other accrued liabilities 164 109
Bad debt expense 21 17
Other 33 37
Deferred tax assets before valuation allowance 1,748 1,748
Valuation allowance for deferred tax assets (42) (45)
Deferred tax assets, net of valuation allowance 1,706 1,703
Deferred tax liabilities
Depreciation and amortization 704 377
Foreign operations, net 147 128
Unrealized appreciation on investments and foreign currency translation 481 395
Total deferred tax liabilities 1,332 900
NET DEFERRED INCOME TAX ASSETS $ 374 $ 803
Management believes consolidated taxable income expected to be The Company’s deferred tax asset is net of federal, state, and foreign
generated in the future will be sufficient to support realization of the valuation allowances. The foreign valuation allowance was initially
Company’s net deferred tax assets. This determination is based upon recorded in connection with the Company’s 2011 acquisition of
the Company’s consistent overall earnings history and future earnings FirstAssist, for which there was a year over year decline of $7 million.
expectations. Other than deferred tax benefits attributable to This reduction did not impact shareholder’s net income. The
operating loss carryforwards, there are no time constraints within valuation allowance reflects management’s assessment that certain
which the Company’s deferred tax assets must be realized. deferred tax assets may not be realizable.
C. Uncertain Tax Positions
A reconciliation of unrecognized tax benefits for the years ended December 31 is as follows:
(In millions) 2012 2011 2010
Balance at January 1, $ 52 $ 177 $ 214
Decrease due to prior year positions (5) (113) (55)
Increase due to current year positions 7 7 34
Reduction related to settlements with taxing authorities – (17) (13)
Reduction related to lapse of applicable statute of limitations (3) (2) (3)
BALANCE AT DECEMBER 31, $ 51 $ 52 $ 177
CIGNA CORPORATION – 2012 Form 10-K 115

PART II
ITEM 8 Financial Statements and Supplementary Data
There was minimal change in the level of unrecognized tax benefits for certain reinsurance contracts. Trial was held before the United
during 2012. States Tax Court for the 2004 tax year in September 2011. Prior to
trial, the IRS conceded the underlying adjustments but continued to
The December 31, 2012 unrecognized tax benefit balance included
challenge the Company’s reserve methodology as a matter of law. The
$29 million that would increase shareholders’ net income if
United States Tax Court issued its opinion for the 2004 year on
recognized. The Company has determined it is at least reasonably
September 13, 2012. While declining to rule on the broader legal
possible that within the next twelve months there could be a
issue, the opinion confirmed the Company’s tax reserve calculation
significant change in the level of unrecognized tax benefits specific to
and referenced an IRS representation that it would not challenge the
development in ongoing IRS examinations. These changes are not
Company’s reserving methodology in future tax years, thereby
expected to have a material impact on shareholders’ net income.
providing certainty that the Company may continue to use its current
reserve methodology prospectively. Tax computations for the 2004 taxThe Company classifies net interest expense on uncertain tax
year have been reviewed by the staff of the Joint Committee ofpositions and any applicable penalties as a component of income tax
Taxation and the parties are currently awaiting entry of the Taxexpense, but excludes these amounts from the liability for uncertain
Court’s decision, that is expected shortly. On January 9, 2013 the Taxtax positions. The Company’s liability for net interest and penalties
Court entered its decision on this issue for the 2005 and 2006 taxwas $3 million at December 31, 2012, $2 million at December 31,
years, ordering and deciding that the Company has no tax deficiency.2011 and $14 million at December 31, 2010. The 2011 decline
included $11 million associated with the completion of the 2007 and
The IRS continues to be engaged in its examination of the Company’s
2008 IRS examinations.
2009 and 2010 consolidated federal income tax returns. This review is
expected to be competed in 2013, and is not expected to have aDuring the first quarter of 2011, the IRS completed its examination
material impact on shareholder’s net income. The Company conductsof the Company’s 2007 and 2008 consolidated federal income tax
business in numerous state and foreign jurisdictions, and may bereturns, resulting in an increase to shareholders’ net income of
engaged in multiple audit proceedings at any given time. Generally,$24 million ($33 million reported in income tax expense, partially
no further state audit activity is expected for tax years prior to 2008,offset by a $9 million pre-tax charge). The increase in shareholders’
and prior to 2001 for foreign audit activity.net income included a reduction in net unrecognized tax benefits of
$11 million and a reduction of interest expense of $11 million
The American Taxpayer Act of 2012 was signed into law on January 2,
(reported in income tax expense).
2013. This legislation retroactively extended for 2012, as well as for
2013, several otherwise expired corporate tax provisions from which
the Company benefits. Tax benefits specific to extension of theseD. Federal Income Tax Examinations,
provisions for 2012 will be recorded in the first quarter of 2013, andLitigation and Other Matters
are not expected to have a material impact on shareholder’s net
income.
The Company has had a continuing dispute with the IRS for tax years
2004 through 2006 regarding the appropriate reserve methodology
Employee Incentive Plans
The People Resources Committee (‘‘the Committee’’) of the Board of As explained further in Note 3, in connection with the HealthSpring
Directors awards stock options, restricted stock, deferred stock and, acquisition on January 31, 2012, HealthSpring employees’ awards of
beginning in 2010, strategic performance shares to certain employees. options and restricted shares of HealthSpring stock were rolled over to
To a very limited extent, the Committee has issued common stock Cigna stock options and restricted stock. Unless otherwise indicated,
instead of cash compensation and dividend equivalent rights as part of information in this footnote includes the effect of the HealthSpring
restricted and deferred stock units. The Company issues shares from rollover awards.
Treasury stock for option exercises, awards of restricted stock and
payment of deferred and restricted stock units.
Compensation cost and related tax benefits for these awards were as follows:
(In millions) 2012 2011 2010
Compensation cost $ 98 $ 61 $ 49
Tax benefits $ 26 $ 14 $ 12
The Company had the following number of shares of common stock grant date. Options vest over periods ranging from one to five years
available for award at December 31: 8.4 million in 2012, 11.7 million and expire no later than 10 years from grant date.
in 2011 and 7.5 million in 2010.
Stock options. The Company awards options to purchase the
Company’s common stock at the market price of the stock on the
116 CIGNA CORPORATION – 2012 Form 10-K
NOTE 21

PART II
ITEM 8 Financial Statements and Supplementary Data
The table below shows the status of, and changes in, common stock options during the last three years:
2012 2011 2010
Weighted Average Weighted Average Weighted Average
(Options in thousands) Options Exercise Price Options Exercise Price Options Exercise Price
Outstanding – January 1 9,581 $ 33.92 12,093 $ 31.10 13,751 $ 29.34
Granted 3,446 $ 28.29 1,546 $ 42.36 1,846 $ 34.64
Exercised (3,740) $ 22.72 (3,480) $ 27.93 (2,565) $ 24.31
Expired or canceled (336) $ 37.85 (578) $ 33.61 (939) $ 30.86
OUTSTANDING – DECEMBER 31 8,951 $ 36.29 9,581 $ 33.92 12,093 $ 31.10
Options exercisable at year-end 5,731 $ 34.93 6,147 $ 34.94 7,656 $ 34.42
Compensation expense of $20 million related to unvested stock options at December 31, 2012 will be recognized over the next two years
(weighted average period).
The table below summarizes information for stock options exercised during the last three years:
(In millions) 2012 2011 2010
Intrinsic value of options exercised $ 95 $ 53 $ 30
Cash received for options exercised $ 85 $ 97 $ 62
Excess tax benefits realized from options exercised $ 15 $ 10 $ 5
The following table summarizes information for outstanding common stock options at December 31, 2012:
Options Options
(Dollars in millions, except per share amounts) Outstanding Exercisable
Number (in thousands) 8,951 5,731
Total intrinsic value $ 154 $ 106
Weighted average exercise price $ 36.29 $ 34.93
Weighted average remaining contractual life 6.3 yrs 5.1 yrs
Excluding the HealthSpring rollover options, the weighted average fair value of options granted under employee incentive plans was $14.99 for
2012, $13.96 for 2011 and $11.56 for 2010, using the Black-Scholes option-pricing model and the assumptions presented in the following table.
See Note 3 for additional information regarding the valuation of the HealthSpring rollover awards.
2012 2011 2010
Dividend yield 0.1% 0.1% 0.1%
Expected volatility 40.0% 40.0% 40.0%
Risk-free interest rate 0.8% 1.7% 1.9%
Expected option life 4.5 years 4 years 4 years
The expected volatility reflects the Company’s past daily stock price widely used form of restricted stock awards and are used for
volatility. The Company does not consider volatility implied in the substantially all U.S.-based employees receiving such awards.
market prices of traded options to be a good indicator of future Recipients of restricted stock grants are entitled to earn dividends and
volatility because remaining maturities of traded options are less than to vote during the vesting period, but forfeit their awards if their
one year. The risk-free interest rate is derived using the four-year U.S. employment terminates before the vesting date. Awards of restricted
Treasury bond yield rate as of the award date for the primary grant. stock units are generally limited to international employees. A
Expected option life reflects the Company’s historical experience. restricted stock unit represents a right to receive a common share of
stock when the unit vests. Recipients of restricted stock units are
Restricted stock. The Company awards restricted stock to its entitled to receive hypothetical dividends, but cannot vote during the
employees or directors with vesting periods ranging from two to five vesting period. They forfeit their units if their employment terminates
years. These awards are generally in one of two forms: restricted stock before the vesting date.
grants or restricted stock units. Restricted stock grants are the most
CIGNA CORPORATION – 2012 Form 10-K 117

PART II
ITEM 8 Financial Statements and Supplementary Data
The table below shows the status of, and changes in, restricted stock grants and units during the last three years:
2012 2011 2010
Weighted Average Weighted Average Weighted Average
Fair Value at Fair Value at Fair Value at
(Awards in thousands) Grants/Units Award Date Grants/Units Award Date Grants/Units Award Date
Outstanding – January 1 4,246 $ 28.88 4,306 $ 27.70 4,113 $ 27.65
Awarded 1,563 $ 44.37 945 $ 42.62 1,155 $ 34.63
Vested (1,485) $ 27.60 (564) $ 42.79 (541) $ 40.87
Forfeited (260) $ 33.61 (441) $ 28.99 (421) $ 29.28
OUTSTANDING – DECEMBER 31 4,064 $ 35.00 4,246 $ 28.88 4,306 $ 27.70
The fair value of vested restricted stock was: $66 million in 2012, generally with a performance period of three years. Strategic
$24 million in 2011 and $18 million in 2010. performance shares are divided into two broad groups: 50% are
subject to a market condition (total shareholder return relative to
At the end of 2012, approximately 3,200 employees held 4.1 million
industry peer companies) and 50% are subject to performance
restricted stock grants and units with $69 million of related
conditions (revenue growth and cumulative adjusted net income).
compensation expense to be recognized over the next three years
These targets are set by the Committee. At the end of the performance
(weighted average period).
period, holders of strategic performance shares will be awarded
anywhere from 0 to 200% of the original grant of strategicStrategic Performance Shares. The Company awards strategic
performance shares in Cigna common stock.performance shares to executives and certain other key employees
The table below shows the status of, and changes in, strategic performance shares during the last three years:
2012 2011 2010
Weighted Average Weighted Average Weighted Average
Fair Value at Fair Value at Fair Value at
(Awards in thousands) Grants/Units Award Date Grants/Units Award Date Grants/Units Award Date
Outstanding – January 1 834 $ 39.45 430 $ 34.73 $
Awarded 842 $ 44.49 529 $ 42.92 480 $ 34.73
Forfeited (76) $ 43.39 (125) $ 37.92 (50) $ 34.65
OUTSTANDING – DECEMBER 31 1,600 $ 41.92 834 $ 39.45 430 $ 34.73
At the end of 2012, approximately 955 employees held 1.6 million strategic performance shares subject to a performance condition, the
strategic performance shares and $26 million of related compensation amount of expense may vary based on actual performance in 2013
expense was expected to be recognized over the next two years. For and 2014.
Leases, Rentals and Outsourced Service Arrangements
The Company has several operating leases, primarily for office space, The Company also has several outsourced service arrangements with
with a weighted average term of approximately 9 years. Some of these third parties, primarily for human resource and information
leases include renewal options and other incentives that are amortized technology support services. The initial service periods under these
over the life of the lease. Rental expenses for operating leases arrangements range from seven to eight years and their related costs
amounted to $130 million in 2012, $115 million in 2011 and are reported consistent with operating leases over the service period
$127 million in 2010. As of December 31, 2012, future net based on the pattern of use. The Company recorded in other
minimum rental payments under non-cancelable operating leases operating expenses $86 million in 2012, $116 million in 2011 and
were approximately $570 million, payable as follows (in millions): $114 million in 2010 for these arrangements.
$116 in 2013, $108 in 2014, $82 in 2015, $65 in 2016, $43 in 2017
and $156 thereafter.
118 CIGNA CORPORATION – 2012 Form 10-K
NOTE 22

PART II
ITEM 8 Financial Statements and Supplementary Data
Segment Information
Effective December 31, 2012, Cigna changed its external reporting markets, primarily in Asia as well as Medicare supplemental coverage
segments to reflect the Company’s realignment of its businesses to following the 2012 acquisition of Great American Supplemental
better leverage distribution and service delivery capabilities for the Benefits.
benefit of our global clients and customers. Management believes the
Group Disability and Life represents group disability, life and
realignment of its businesses will enable the Company to more
accident insurance products, including certain disability and life
effectively address global health services challenges by leveraging best
insurance business previously reported in the former Health Care
practices across geographies to improve the health, well being and
segment.
sense of security of the global customers that the Company serves.
The changes in the Company’s internal financial reporting structure, Run-off Reinsurance is predominantly comprised of GMDB and
to support this realignment, took effect on December 31, 2012 and GMIB business. On December 31, 2010, the Company essentially
resulted in changes to our external reporting segments. The exited from its workers’ compensation and personal accident
Company’s results are now aggregated based on the nature of the reinsurance business by purchasing retrocessional coverage from a
Company’s products and services, rather than its geographies. Bermuda subsidiary of Enstar Group Limited and transferring the
ongoing administration of this business to the reinsurer.
The primary segment reporting change is that the two businesses that
comprised the former International segment (international health care The Company also reports results in two other categories.
and supplemental health, life and accident) are now reported as
Other Operations consist of:
follows:
corporate-owned life insurance (‘‘COLI’’);
substantially all of the international health care business (comprised
primarily of the global health benefits business) is now reported deferred gains recognized from the 1998 sale of the individual life
with the former Health Care segment and renamed Global Health insurance and annuity business and the 2004 sale of the retirement
Care; and benefits business; and
the supplemental health, life and accident business becomes a run-off settlement annuity business.
separate reporting segment named Global Supplemental Benefits.
Corporate reflects amounts not allocated to other segments, such as
As a result of these changes, the financial results of Cigna’s businesses net interest expense (defined as interest on corporate debt less net
are now reported in the following segments: investment income on investments not supporting segment
operations), interest on uncertain tax positions, certain litigation
Global Health Care aggregates the following two operating
matters, intersegment eliminations, compensation cost for stock
segments:
options and certain corporate overhead expenses such as directors’
The Commercial operating segment includes both the U.S. expenses.
commercial and international health care businesses that offer
In 2010, the Company began reporting the expense associated with its
insured and self-insured medical, dental, behavioral health, vision,
frozen pension plans in Corporate. Prior periods were not restated as
and prescription drug benefit plans, health advocacy programs and
the effect on prior periods was not material.
other products and services that may be integrated to provide
comprehensive global health care benefit programs to employers The Company measures the financial results of its segments using
and their employees, including globally mobile individuals. Cigna, ‘‘segment earnings (loss)’’, which is defined as shareholders’ income
either directly or through its partners, offers some or all of these (loss) from continuing operations before after-tax realized investment
products and services in all 50 states, the District of Columbia, the results. The Company determines segment earnings (loss) consistent
U.S. Virgin Islands, Canada, Europe, the Middle East, and Asia. with accounting policies used in preparing the consolidated financial
Cigna services its globally mobile customers virtually everywhere in statements, except that amounts included in Corporate are not
the world. These products and services are offered through a variety allocated to segments. The Company allocates certain other operating
of funding arrangements such as administrative services only (ASO), expenses, such as systems and other key corporate overhead expenses,
guaranteed cost and retrospectively experience rated. on systematic bases. Income taxes are generally computed as if each
segment were filing a separate income tax return. The Company does
The Government operating segment offers Medicare Advantage
not report total assets by segment since this is not a metric used to
plans to seniors in 13 states and the District of Columbia, Medicare
allocate resources or evaluate segment performance.
Part D plans in all 50 states and the District of Columbia and
Medicaid plans.
Global Supplemental Benefits includes supplemental health, life
and accident insurance products offered in the U.S. and foreign
CIGNA CORPORATION – 2012 Form 10-K 119
NOTE 23
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• •
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•

PART II
ITEM 8 Financial Statements and Supplementary Data
Summarized segment financial information for the years ended December 31 was as follows:
(In millions) 2012 2011 2010
Global Health Care
Premiums and fees:
Medical:
Guaranteed cost (1) $ 4,256 $ 4,176 $ 3,929
Experience-rated (2) 2,022 1,934 1,823
Stop loss 1,672 1,451 1,287
International health care 1,648 1,344 976
Dental 1,005 894 804
Medicare 4,969 489 1,470
Medicaid 207 – –
Medicare Part D 1,421 685 615
Other 677 600 543
Total medical 17,877 11,573 11,447
Fees (3) 3,096 2,870 2,687
Total premiums and fees 20,973 14,443 14,134
Mail order pharmacy revenues 1,623 1,447 1,420
Other revenues 225 236 269
Net investment income 259 263 230
Segment revenues $ 23,080 $ 16,389 $ 16,053
Depreciation and amortization $ 500 $ 297 $ 255
Income taxes $ 793 $ 616 $ 520
Segment earnings $ 1,418 $ 1,105 $ 940
(1) Excludes the international health care business.
(2) Includes minimum premium business that has a risk profile similar to experience-rated funding arrangements. The risk portion of minimum premium revenue is reported in experience-rated
medical premium whereas the self funding portion of minimum premium revenue is reported in fees. Also includes certain non-participating cases for which special customer level reporting of
experience is required.
(3) Includes fees related to the international health care business. Fees related to Medicare Part D of $61 million in 2011 and $57 million in 2010 have been reclassified to premiums to conform
to current presentation.
120 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
(In millions) 2012 2011 2010
Group Disability and Life
Premiums and fees:
Life $ 1,426 $ 1,333 $ 1,341
Disability 1,413 1,268 1,167
Other 270 256 262
Total 3,109 2,857 2,770
Other revenues – – 123
Net investment income 300 291 287
Segment revenues $ 3,409 $ 3,148 $ 3,180
Depreciation and amortization $ 10 $ 10 $ 8
Income taxes $ 116 $ 113 $ 127
Segment earnings $ 279 $ 295 $ 305
Global Supplemental Benefits
Premiums and fees $ 1,984 $ 1,528 $ 1,231
Other revenues 21 15 22
Net investment income 90 83 69
Segment revenues $ 2,095 $ 1,626 $ 1,322
Depreciation and amortization $ 28 $ 13 $ 8
Income taxes $ 36 $ 36 $ 42
Equity in income of investees $ 10 $ 15 $ 18
Segment earnings $ 142 $ 97 $ 84
Run-off Reinsurance
Premiums and fees and other revenues $ (98) $ 20 $ (133)
Net investment income 102 103 114
Segment revenues $ 4 $ 123 $ (19)
Income tax benefits $ – $ (99) $ (136)
Segment earnings (loss) $ – $ (183) $ 26
Other Operations
Premiums and fees and other revenues $ 155 $ 169 $ 174
Net investment income 388 400 404
Segment revenues $ 543 $ 569 $ 578
Depreciation and amortization $ 22 $ 25 $ 21
Income taxes $ 43 $ 29 $ 39
Segment earnings $ 82 $ 89 $ 85
Corporate
Other revenues and eliminations $ (61) $ (58) $ (62)
Net investment income 5 6 1
Segment revenues $ (56) $ (52) $ (61)
Income tax benefits $ (148) $ (101) $ (98)
Segment loss $ (329) $ (184) $ (211)
Realized investment gains
Realized investment gains $ 44 $ 62 $ 75
Income taxes 13 21 25
Realized investment gains net of taxes and noncontrolling interest $ 31 $ 41 $ 50
Total
Premiums and fees and other revenues $ 26,308 $ 19,210 $ 18,528
Mail order pharmacy revenues 1,623 1,447 1,420
Net investment income 1,144 1,146 1,105
Realized investment gains 44 62 75
Total revenues $ 29,119 $ 21,865 $ 21,128
Depreciation and amortization $ 560 $ 345 $ 292
Income taxes $ 853 $ 615 $ 519
Segment earnings $ 1,592 $ 1,219 $ 1,229
Realized investment gains, net of taxes and noncontrolling interest $ 31 $ 41 $ 50
Shareholders’ net income $ 1,623 $ 1,260 $ 1,279
CIGNA CORPORATION – 2012 Form 10-K 121

PART II
ITEM 8 Financial Statements and Supplementary Data
Premiums and fees, mail order pharmacy revenues and other revenues by product type were as follows for the years ended December 31:
(In millions) 2012 2011 2010
Medical $ 20,973 $ 14,443 $ 14,134
Disability 1,413 1,268 1,167
Supplemental Health, Life, and Accident 3,680 3,117 2,834
Mail order pharmacy 1,623 1,447 1,420
Other 242 382 393
TOTAL $ 27,931 $ 20,657 $ 19,948
Premiums and fees, mail order pharmacy revenues and other revenues by geographic location were as follows for the years ended December 31:
(In millions) 2012 2011 2010
U.S. $ 25,217 $ 18,522 $ 18,326
South Korea 1,076 909 717
All other foreign 1,638 1,226 905
TOTAL $ 27,931 $ 20,657 $ 19,948
Consolidated pre-tax income from continuing operations is primarily segment’s earnings in 2012. Due to the concentration of business in
attributable to domestic operations. Consolidated pre-tax income South Korea, the Global Supplemental Benefits segment is exposed to
from continuing operations generated by the Company’s foreign potential losses resulting from economic and geopolitical
operations was approximately 8% in 2012, 10% in 2011 and 9% in developments in that country, as well as foreign currency movements
2010. affecting the South Korean currency, that could have a significant
impact on the segment’s results and the Company’s consolidated
Concentration of risk. For the Company’s Global Supplemental financial results.
Benefits segment, South Korea is the single largest geographic market.
South Korea generated 54% of the segment’s revenues and 90% of the
Contingencies and Other Matters
The Company, through its subsidiaries, is contingently liable for varies depending on the asset class within a sponsoring employer’s
various guarantees provided in the ordinary course of business. portfolio (for example, a bond fund would require a lower percentage
than a riskier equity fund) and thus will vary as the composition of the
portfolio changes. If employers do not maintain the required levels ofA. Financial Guarantees Primarily
separate account assets, the Company or an affiliate of the buyer has
Associated with the Sold Retirement the right to redirect the management of the related assets to provide
for benefit payments. As of December 31, 2012, employersBenefits Business
maintained assets that exceeded the benefit obligations. Benefit
Separate account assets are contractholder funds maintained in obligations under these arrangements were $559 million as of
accounts with specific investment objectives. The Company records December 31, 2012. As of December 31, 2012, approximately 21%
separate account liabilities equal to separate account assets. In certain of these guarantees are reinsured by an affiliate of the buyer of the
cases, primarily associated with the sold retirement benefits business retirement benefits business. The remaining guarantees are provided
(that was sold in April 2004), the Company guarantees a minimum by the Company with minimal reinsurance from third parties. There
level of benefits for retirement and insurance contracts written in were no additional liabilities required for these guarantees as of
separate accounts. The Company establishes an additional liability if December 31, 2012. Separate account assets supporting these
management believes that the Company will be required to make a guarantees are classified in Levels 1 and 2 of the GAAP fair value
payment under these guarantees. hierarchy. See Note 11 for further information on the fair value
hierarchy.The Company guarantees that separate account assets will be
sufficient to pay certain retiree or life benefits. The sponsoring The Company does not expect that these financial guarantees will
employers are primarily responsible for ensuring that assets are have a material effect on the Company’s consolidated results of
sufficient to pay these benefits and are required to maintain assets that operations, liquidity or financial condition.
exceed a certain percentage of benefit obligations. This percentage
122 CIGNA CORPORATION – 2012 Form 10-K
NOTE 24

PART II
ITEM 8 Financial Statements and Supplementary Data
representations or covenants provided by the Company, such asB. Guaranteed Minimum Income Benefit
representations for the presentation of financial statements, the filing
Contracts of tax returns, compliance with law or the identification of
outstanding litigation. These obligations are typically subject toSee Notes 11 (fair value) and 13 (derivatives) for further information
various time limitations, defined by the contract or by operation ofon GMIB contracts. Under these guarantees, the future payment
law, such as statutes of limitation. In some cases, the maximumamounts are dependent on equity and bond fund market and interest
potential amount due is subject to contractual limitations based on arate levels prior to and at the date of annuitization election, that must
percentage of the transaction purchase price, while in other casesoccur within 30 days of a policy anniversary, after the appropriate
limitations are not specified or applicable. The Company does notwaiting period. Therefore, the future payments are not fixed and
believe that it is possible to determine the maximum potential amountdeterminable under the terms of the contract. Accordingly, the
due under these obligations, since not all amounts due under theseCompany’s maximum potential undiscounted future payment of
indemnification obligations are subject to limitation. There were no$1.1 billion was determined using the following hypothetical
liabilities for these indemnification obligations as of December 31,assumptions:
2012.no annuitants surrendered their accounts;
The Company does not expect that these guarantees will have aall annuitants lived to elect their benefit;
material adverse effect on the Company’s consolidated results of
all annuitants elected to receive their benefit on the next available operations, financial condition or liquidity.
date (2013 through 2018); and
all underlying mutual fund investment values remained at the D. Regulatory and Industry Developments
December 31, 2012 value of $1.1 billion with no future returns.
Employee benefits regulation. The business of administering andThe Company has retrocessional coverage in place from two external
insuring employee benefit programs, particularly health carereinsurers that covers 55% of the exposures on these contracts. The
programs, is heavily regulated by federal and state laws andCompany reinsured the remainder of the exposures on these contracts
administrative agencies, such as state departments of insurance andeffective February 4, 2013. The Company bears the risk of loss if its
the Federal Departments of Labor and Justice, as well as the courts.retrocessionaires do not meet or are unable to meet their reinsurance
Regulation, legislation and judicial decisions have resulted in changesobligations to the Company.
to industry and the Company’s business practices and will continue to
do so in the future. In addition, the Company’s subsidiaries areC. Certain Other Guarantees
routinely involved with various claims, lawsuits and regulatory and
The Company had indemnification obligations to lenders of up to IRS audits and investigations that could result in financial liability,
$331 million as of December 31, 2012, related to borrowings by changes in business practices, or both.
certain real estate joint ventures that the Company either records as an
Health care regulation and legislation in its various forms, including
investment or consolidates. These borrowings, that are nonrecourse to
the implementation of the Patient Protection and Affordable Care Act
the Company, are secured by the joint ventures’ real estate properties
(including the Reconciliation Act) that was signed into law during the
with fair values in excess of the loan amounts and mature at various
first quarter of 2010 and found to be constitutional by the U.S.
dates beginning in 2013 through 2042. The Company’s
Supreme Court in June of 2012, could have a material adverse effect
indemnification obligations would require payment to lenders for any
on the Company’s health care operations if it inhibits the Company’s
actual damages resulting from certain acts such as unauthorized
ability to respond to market demands, adversely affects the way the
ownership transfers, misappropriation of rental payments by others or
Company does business, or results in increased medical or
environmental damages. Based on initial and ongoing reviews of
administrative costs without improving the quality of care or services.
property management and operations, the Company does not expect
Other possible regulatory and legislative changes or judicial decisionsthat payments will be required under these indemnification
that could have an adverse effect on the Company’s employee benefitsobligations. Any payments that might be required could be recovered
businesses include:through a refinancing or sale of the assets. In some cases, the
Company also has recourse to partners for their proportionate share of additional mandated benefits or services that increase costs;
amounts paid. There were no liabilities required for these
legislation that would grant plan participants broader rights to sue
indemnification obligations as of December 31, 2012.
their health plans;
As of December 31, 2012, the Company guaranteed that it would
changes in public policy and in the political environment, that
compensate the lessors for a shortfall of up to $41 million in the
could affect state and federal law, including legislative and
market value of certain leased equipment at the end of the lease.
regulatory proposals related to health care issues, that could increase
Guarantees of $16 million expire in 2016 and $25 million expire in
cost and affect the market for the Company’s health care products
2025. The Company had liabilities for these guarantees of $2 million
and services;
as of December 31, 2012.
changes in Employee Retirement Income Security Act of 1974
The Company had indemnification obligations as of December 31,
(‘‘ERISA’’) regulations resulting in increased administrative burdens
2012 in connection with acquisition and disposition transactions.
and costs;
These indemnification obligations are triggered by the breach of
CIGNA CORPORATION – 2012 Form 10-K 123
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PART II
ITEM 8 Financial Statements and Supplementary Data
additional restrictions on the use of prescription drug formularies services business, including payments to providers and benefit level
and rulings from pending purported class action litigation, that disputes. Such legal matters include benefit claims, breach of contract
could result in adjustments to or the elimination of the average claims, tort claims, disputes regarding reinsurance arrangements,
wholesale price of pharmaceutical products as a benchmark in employment related suits, employee benefit claims, wage and hour
establishing certain rates, charges, discounts, guarantees and fees for claims, and intellectual property and real estate related disputes.
various prescription drugs; Litigation of income tax matters is accounted for under FASB’s
accounting guidance for uncertainty in income taxes. Furtheradditional privacy legislation and regulations that interfere with the
information can be found in Note 20. The outcome of litigation andproper use of medical information for research, coordination of
other legal matters is always uncertain, and unfavorable outcomes thatmedical care and disease and disability management;
are not justified by the evidence can occur. The Company believes
additional variations among state laws mandating the time periods that it has valid defenses to the legal matters pending against it and is
and administrative processes for payment of health care provider defending itself vigorously.
claims;
When the Company (in the course of its regular review of pending
legislation that would exempt independent physicians from litigation and legal matters) has determined that a material loss is
antitrust laws; and reasonably possible, the matter is disclosed including an estimate or
range of loss or a statement that such an estimate cannot be made. Inchanges in federal tax laws, such as amendments that could affect
many proceedings, however, it is inherently difficult to determinethe taxation of employer provided benefits.
whether any loss is probable or even possible or to estimate theThe employee benefits industry remains under scrutiny by various
amount or range of any loss. In accordance with applicable accountingstate and federal government agencies and could be subject to
guidance, when litigation and regulatory matters present lossgovernment efforts to bring criminal actions in circumstances that
contingencies that are both probable and estimable, the Companycould previously have given rise only to civil or administrative
accrues the estimated loss by a charge to income. The amount accruedproceedings.
represents the Company’s best estimate of the probable loss. If only a
Guaranty fund assessments. The Company operates in a regulatory range of estimated losses can be determined, the Company accrues an
environment that may require the Company to participate in amount within the range that, in the Company’s judgment, reflects
assessments under state insurance guaranty association laws. The the most likely outcome; if none of the estimates within that range is a
Company’s exposure for certain obligations of insolvent insurance better estimate than any other amount, the Company accrues at the
companies to policyholders and claimants to assessments is based on low end of the range. In cases that the Company has accrued an
its share of business it writes in the relevant jurisdictions. For the years estimated loss, the accrued amount may differ materially from the
ended December 31, 2012, 2011, and 2010, charges related to ultimate amount of the relevant costs.
guaranty fund assessments were not material to the Company’s results
The Company increased its reserves by $124 million pre-tax
of operations.
($81 million after-tax) during 2012, primarily relating to
The Company is aware of an insurer that is in rehabilitation, an developments in the Amara matter as discussed below, resulting in
intermediate action before insolvency. On May 3, 2012, the state pre-tax reserves for these matters of $189 million ($123 million
court denied the regulator’s amended petitions for liquidation and set after-tax) as of December 31, 2012. Due to numerous uncertain
forth specific requirements and a deadline for the regulator to develop factors presented in these cases, it is not possible to estimate an
a plan of rehabilitation without liquidating the insurer. On May 14, aggregate range of loss (if any) for these matters at this time.
2012 the regulator filed a post-trial motion requesting the court to
Except as otherwise noted, the Company believes that the legal
reconsider its decision. On September 28, 2012, an Order of
actions, proceedings and investigations currently pending against it
Judgment was entered finalizing the court’s opinion that the insurer is
should not have a material adverse effect on the Company’s results of
not insolvent and remains in rehabilitation. The regulator has
operations, financial condition or liquidity based upon current
appealed the court’s decision. If the state court’s decision is reversed
knowledge and taking into consideration current accruals. However,
and the insurer is declared insolvent and placed in liquidation, the
in light of the uncertainties involved in these matters, there is no
Company and other insurers may be required to pay a portion of
assurance that their ultimate resolution will not exceed the amounts
policyholder claims through guaranty fund assessments from various
currently accrued by the Company and that an adverse outcome in
states in which the Company’s insurance subsidiaries write premiums.
one or more of these matters could be material to the Company’s
Based on current information available, in the event of a reversal of the
results of operation, financial condition or liquidity for any particular
state court decision and liquidation of the insurer, the Company has
period.
estimated that potential future assessments could result in future
Amara cash balance pension plan litigation. On December 18,charges totaling approximately $60 million after-tax. The Company
2001, Janice Amara filed a class action lawsuit, captioned Janice C.will continue to monitor the outcome of the court’s deliberations.
Amara, Gisela R. Broderick, Annette S. Glanz, individually and on
behalf of all others similarly situated v. Cigna Corporation and CignaE. Litigation and Other Legal Matters
Pension Plan, in the United States District Court for the District of
The Company is routinely involved in numerous claims, lawsuits, Connecticut against Cigna Corporation and the Cigna Pension Plan
regulatory and IRS audits, investigations and other legal matters on behalf of herself and other similarly situated participants in the
arising, for the most part, in the ordinary course of managing a health Cigna Pension Plan affected by the 1998 conversion to a cash balance
124 CIGNA CORPORATION – 2012 Form 10-K
•
•
•
•
•

PART II
ITEM 8 Financial Statements and Supplementary Data
formula. The plaintiffs allege various ERISA violations including, 2012. The Company will continue to vigorously defend its position in
among other things, that the Plan’s cash balance formula discriminates this case.
against older employees; the conversion resulted in a wear away period
Ingenix. On February 13, 2008, State of New York Attorney General
(when the pre-conversion accrued benefit exceeded the
Andrew M. Cuomo announced an industry-wide investigation into
post-conversion benefit); and these conditions are not adequately
the use of data provided by Ingenix, Inc., a subsidiary of
disclosed in the Plan.
UnitedHealthcare, used to calculate payments for services provided by
In 2008, the court issued a decision finding in favor of Cigna out-of-network providers. The Company received four subpoenas
Corporation and the Cigna Pension Plan on the age discrimination from the New York Attorney General’s office in connection with this
and wear away claims. However, the court found in favor of the investigation and responded appropriately. On February 17, 2009, the
plaintiffs on many aspects of the disclosure claims and ordered an Company entered into an Assurance of Discontinuance resolving the
enhanced level of benefits from the existing cash balance formula for investigation. In connection with the industry-wide resolution, the
the majority of the class, requiring class members to receive their Company contributed $10 million to the establishment of a new
frozen benefits under the pre-conversion Cigna Pension Plan and their non-profit company that now compiles and provides the data
post-1997 accrued benefits under the post-conversion Cigna Pension formerly provided by Ingenix.
Plan. The court also ordered, among other things, pre-judgment and
The Company was named as a defendant in a number of putative
post-judgment interest.
nationwide class actions asserting that due to the use of data from
Both parties appealed the court’s decisions to the United States Court Ingenix, Inc., the Company improperly underpaid claims, an
of Appeals for the Second Circuit that issued a decision on October 6, industry-wide issue. All of the class actions were consolidated into
2009 affirming the District Court’s judgment and order on all issues. Franco v. Connecticut General Life Insurance Company et al., that is
On January 4, 2010, both parties filed separate petitions for a writ of pending in the United States District Court for the District of New
certiorari to the United States Supreme Court. Cigna’s petition was Jersey. The consolidated amended complaint, filed on August 7, 2009,
granted, and on May 16, 2011, the Supreme Court issued its Opinion asserts claims under ERISA, the RICO statute, the Sherman Antitrust
in which it reversed the lower courts’ decisions and remanded the case Act and New Jersey state law on behalf of subscribers, health care
to the trial judge for reconsideration of the remedy. The Court providers and various medical associations.
unanimously agreed with the Company’s position that the lower
On September 23, 2011, the court granted in part and denied in part
courts erred in granting a remedy for an inaccurate plan description
the Company’s motion to dismiss the consolidated amended
under an ERISA provision that allows only recovery of plan benefits.
complaint. The court dismissed all claims by the health care provider
However, the decision identified possible avenues of ‘‘appropriate
and medical association plaintiffs for lack of standing to sue, and as a
equitable relief ’’ that plaintiffs may pursue as an alternative remedy.
result the case will proceed only on behalf of subscribers. In addition,
The case was returned to the trial court and hearings took place on
the court dismissed all of the antitrust claims, the ERISA claims based
December 9, 2011 and March 29-30, 2012. Over the summer, the
on disclosure and the New Jersey state law claims. The court did not
trial judge passed away after a long illness and the case was re-assigned.
dismiss the ERISA claims for benefits and claims under the RICO
On December 20, 2012, the new trial judge issued a decision statute.
awarding equitable relief to the class. The court’s order requires the
Plaintiffs filed a motion to certify a nationwide class of subscriber
Company to reform the pension plan to provide a substantially
plaintiffs on December 19, 2011, which was denied on January 16,
identical remedy to that ordered by the first trial judge in 2008. Both
2013. Plaintiffs petitioned for an immediate appeal of the order
parties appealed the order and the judge stayed implementation of the
denying class certification, that the Company opposed.
order pending resolution of the appeals. In light of the re-affirmed
It is reasonably possible that others could initiate additional litigationremedy ordered by the District Court, the Company was required to
or additional regulatory action against the Company with respect tore-evaluate its reserve for this case. Due to the current economic
use of data provided by Ingenix, Inc. The Company denies theenvironment of low interest rates that have a significant impact on the
allegations asserted in the investigations and litigation and willvaluation of potential future pension benefits, the Company was
vigorously defend itself in these matters.required to increase its reserve for this matter in the fourth quarter of
Subsequent Event – Reinsurance of GMDB and GMIB Business
Effective February 4, 2013, the Company entered into an agreement future claims of approximately $4 billion to be covered by the
with Berkshire Hathaway Life Insurance Company of Nebraska agreement.
(Berkshire) to reinsure the GMDB and GMIB businesses. Berkshire This reinsurance premium will be recorded in the first quarter of 2013
will reinsure 100% of the Company’s future claim payments, net of resulting in an after-tax impact to shareholders’ net income of
retrocessional arrangements in place prior to February 4, 2013, for a approximately $500 million. Premium of $725 million was paid on
reinsurance premium of $2.2 billion. The reinsurance agreement is February 4, 2013 with the remainder to be paid by April 30, 2013.
subject to an overall limit of approximately $3.8 billion plus future This premium will ultimately be funded from the sale or internal
premiums collected under the contracts being reinsured that will be transfer of investment assets that were supporting this book of
paid to Berkshire. The Company estimates that these future premium business, as well as tax benefits related to the transaction, and cash.
amounts will be from $0.1 to $0.3 billion and, accordingly, expects
CIGNA CORPORATION – 2012 Form 10-K 125
NOTE 25

5MAY201113444704
PART II
ITEM 8 Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
insurance companies that can be capitalized in connection withTo the Board of Directors
acquiring or renewing insurance contracts.and Shareholders of Cigna Corporation
A company’s internal control over financial reporting is a processIn our opinion, the accompanying consolidated balance sheets and
designed to provide reasonable assurance regarding the reliability ofthe related consolidated statements of income, comprehensive income
financial reporting and the preparation of financial statements forand changes in total equity and cash flows present fairly, in all material
external purposes in accordance with generally accepted accountingrespects, the financial position of Cigna Corporation and its
principles. A company’s internal control over financial reportingsubsidiaries (‘‘the Company’’) at December 31, 2012 and
includes those policies and procedures that (i) pertain to theDecember 31, 2011, and the results of their operations and their cash
maintenance of records that, in reasonable detail, accurately and fairlyflows for each of the three years in the period ended December 31,
reflect the transactions and dispositions of the assets of the company;2012 in conformity with accounting principles generally accepted in
(ii) provide reasonable assurance that transactions are recorded asthe United States of America. Also in our opinion, the Company
necessary to permit preparation of financial statements in accordancemaintained, in all material respects, effective internal control over
with generally accepted accounting principles, and that receipts andfinancial reporting as of December 31, 2012, based on criteria
expenditures of the company are being made only in accordance withestablished in Internal Control—Integrated Framework issued by the
authorizations of management and directors of the company; andCommittee of Sponsoring Organizations of the Treadway
(iii) provide reasonable assurance regarding prevention or timelyCommission (COSO). The Company’s management is responsible
detection of unauthorized acquisition, use, or disposition of thefor these financial statements, for maintaining effective internal
company’s assets that could have a material effect on the financialcontrol over financial reporting and for its assessment of the
statements.effectiveness of internal control over financial reporting, included in
Management’s Annual Report on Internal Control over Financial Because of its inherent limitations, internal control over financial
Reporting. Our responsibility is to express opinions on these financial reporting may not prevent or detect misstatements. Also, projections
statements and on the Company’s internal control over financial of any evaluation of effectiveness to future periods are subject to the
reporting based on our integrated audits. We conducted our audits in risk that controls may become inadequate because of changes in
accordance with the standards of the Public Company Accounting conditions, or that the degree of compliance with the policies or
Oversight Board (United States). Those standards require that we plan procedures may deteriorate.
and perform the audits to obtain reasonable assurance about whether
As described in Management’s Annual Report on Internal Controlthe financial statements are free of material misstatement and whether
over Financial Reporting, management has excluded Great Americaneffective internal control over financial reporting was maintained in all
Supplemental Benefits Group from its assessment of internal controlmaterial respects. Our audits of the financial statements included
over financial reporting as of December 31, 2012 because it wasexamining, on a test basis, evidence supporting the amounts and
acquired by the Company in a purchase business combination duringdisclosures in the financial statements, assessing the accounting
the year ended December 31, 2012. We have also excluded Greatprinciples used and significant estimates made by management, and
American Supplemental Benefits Group from our audit of internalevaluating the overall financial statement presentation. Our audit of
control over financial reporting. Great American Supplementalinternal control over financial reporting included obtaining an
Benefits Group’s total assets acquired represent approximately 2% ofunderstanding of internal control over financial reporting, assessing
consolidated total assets as of December 31, 2012; total revenuesthe risk that a material weakness exists, and testing and evaluating the
acquired represent less than 1% of consolidated total revenues for thedesign and operating effectiveness of internal control based on the
year ended December 31, 2012.assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We
/s/ PricewaterhouseCoopers LLPbelieve that our audits provide a reasonable basis for our opinions.
Philadelphia, Pennsylvania
As discussed in Note 2 to the consolidated financial statements, as of
February 28, 2013
January 1, 2012, the Company retrospectively adopted a new
accounting standard that amends the accounting for costs incurred by
126 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 8 Financial Statements and Supplementary Data
Quarterly Financial Data (unaudited)
The following unaudited quarterly financial data is presented on a consolidated basis for each of the years ended December 31, 2012 and
December 31, 2011. Quarterly financial results necessarily rely heavily on estimates. This and certain other factors, such as the seasonal nature of
portions of the insurance business, suggest the need to exercise caution in drawing specific conclusions from quarterly consolidated results.
Certain reclassifications have been made to previously reported quarterly amounts to conform to the current presentation. See Note 2 to the
Consolidated Financial Statements for additional information.
Three Months Ended
(In millions, except per share amounts) March 31 June 30 Sept. 30 Dec. 31
Consolidated Results
2012
Total revenues $ 6,754 $ 7,422 $ 7,323 $ 7,620
Income from continuing operations before income taxes 552 588 718 619
Shareholders’ net income 371 (1) 380 (2) 466 (3) 406 (4)
Shareholders’ net income per share: 1
Basic 1.30 1.33 1.64 1.43
Diluted 1.28 1.31 1.61 1.41
2011
Total revenues $ 5,387 $ 5,479 $ 5,574 $ 5,425
Income from continuing operations before income taxes 579 592 273 432
Shareholders’ net income 413 (5) 391 (6) 183 (7) 273 (8)
Shareholders’ net income per share:
Basic 1.53 1.46 0.68 0.99
Diluted 1.51 1.43 0.67 0.98
Stock and Dividend Data
2012
Price range of common stock – high $ 49.89 $ 49.63 $ 47.92 $ 54.53
– low $ 41.27 $ 42.21 $ 39.34 $ 47.31
Dividends declared per common share $ 0.04 $ – $ – $ –
2011
Price range of common stock – high $ 44.29 $ 51.81 $ 52.95 $ 47.61
– low $ 36.76 $ 42.80 $ 40.24 $ 38.82
Dividends declared per common share $ 0.04 $ – $ – $ –
(1) The first quarter of 2012 includes an after-tax gain of $41 million for the GMIB business, an after-tax charge of $28 million for costs associated with acquisitions, and an after-tax charge of
$13 million for costs associated a litigation matter in Global Health Care.
(2) The second quarter of 2012 includes an after-tax loss of $51 million for the GMIB business.
(3) The third quarter of 2012 includes an after-tax gain of $32 million for the GMIB business, an after-tax charge of $12 million for costs associated with acquisitions, and an after-tax charge
of $50 million for costs associated with a realignment and efficiency plan.
(4) The fourth quarter of 2012 includes an after-tax gain of $7 million for the GMIB business and an after-tax charge of $68 million for litigation matters.
(5) The first quarter of 2011 includes an after-tax gain of $13 million for the GMIB business and a net tax benefit of $24 million related to the resolution of a Federal tax matter.
(6) The second quarter of 2011 includes an after-tax loss of $21 million for the GMIB business.
(7) The third quarter of 2011 includes an after-tax loss of $134 million for the GMIB business.
(8) The fourth quarter of 2011 includes an after-tax gain of $7 million for the GMIB business and, an after-tax charge of $31 million for costs associated with acquisitions.
CIGNA CORPORATION – 2012 Form 10-K 127

21FEB201301140543
PART II
ITEM 8 Financial Statements and Supplementary Data
Five Year Cumulative Total Shareholder Return*
December 31, 2007 – December 31, 2012
$50
$100
$150
$0
S&P 500 Index
S&P Managed Health Care, Life & Health Ins. Indexes**
Cigna
12/31/0812/31/07 12/31/09 12/31/10 12/30/11 12/31/12
12/31/07 12/31/08 12/31/09 12/31/10 12/30/11 12/31/12
Cigna $ 100 $ 31 $ 66 $ 69 $ 79 $ 100
S&P 500 Index $ 100 $ 63 $ 80 $ 92 $ 94 $ 109
S&P Mgd. Health Care, Life & Health Ins. Indexes** $ 100 $ 47 $ 58 $ 66 $ 78 $ 84
* Assumes that the value of the investment in Cigna common stock and each index was $100 on December 31, 2007 and that all dividends were reinvested.
** Weighted average of S&P Managed Health Care (75%) and Life & Health Insurance (25%) Indexes.
128 CIGNA CORPORATION – 2012 Form 10-K

PART II
ITEM 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
None.
Controls and Procedures
Disclosure Controls and Procedures
Based on an evaluation of the effectiveness of Cigna’s disclosure procedures are effective to ensure that information required to be
controls and procedures conducted under the supervision and with disclosed by Cigna in the reports that it files or submits under the
the participation of Cigna’s management, Cigna’s Chief Executive Exchange Act is recorded, processed, summarized and reported,
Officer and Chief Financial Officer concluded that, as of the end of within the time periods specified in the SEC’s rules and forms.
the period covered by this report, Cigna’s disclosure controls and
Internal Control Over Financial Reporting
The Company’s management report on internal control over financial During the period covered by this report, other than the changes
reporting under the caption ‘‘Management’s Annual Report on resulting from the HealthSpring, Inc. acquisition discussed below,
Internal Control over Financial Reporting’’ on page 62 in this there have been no changes in Cigna’s internal control over financial
Form 10-K. reporting that have materially affected, or are reasonably likely to
materially affect, Cigna’s internal control over financial reporting.
On January 31, 2012, the Company acquired HealthSpring, Inc. The
Company is in the process of integrating HealthSpring, Inc.
operations, processes and internal controls. See Note 3 to the
The attestation report of Cigna’s independent registered public Consolidated Financial Statements for additional information related
accounting firm, on the effectiveness of Cigna’s internal control over to the HealthSpring, Inc. acquisition.
financial reporting appears under the caption ‘‘Report of Independent
Registered Public Accounting Firm’’ on page 126 of this Form 10-K.
Other Information
None.
CIGNA CORPORATION – 2012 Form 10-K 129
ITEM 9
ITEM 9A
A.
B.
Management’s Annual Report on Internal Changes in Internal Control Over Financial
Control over Financial Reporting Reporting
Attestation Report of the Registered Public
Accounting Firm
ITEM 9B

PART III
Directors and Executive Officers of the
Registrant
Directors of the Registrant
The information under the captions ‘‘The Board of Directors’ Nominees for Terms to Expire in April 2016,’’ ‘‘Directors Who Will Continue in
Office,’’ ‘‘Board of Directors and Committee Meetings, Membership, Attendance and Independence’’ (as it relates to Audit Committee
disclosure), and ‘‘Section 16(a) Beneficial Ownership Reporting Compliance’’ in Cigna’s proxy statement to be dated on or about March 15, 2013
is incorporated by reference.
Executive Officers of the Registrant
See PART I – ‘‘Executive Officers of the Registrant on page 29 in this Form 10-K.’’
Code of Ethics and Other Corporate Governance Disclosures
Cigna’s Code of Ethics is the Company’s code of business conduct and In addition, the Company’s corporate governance guidelines (Board
ethics, and applies to Cigna’s directors, officers (including the chief Practices) and the charters of its board committees (audit, corporate
executive officer, chief financial officer and chief accounting officer) governance, executive, finance and people resources) are available on
and employees. The Code of Ethics is posted on the Corporate the Corporate Governance section of the Company’s website. These
Governance section found on the ‘‘About Cigna’’ page of the corporate governance documents, as well as the Code of Ethics, are
Company’s website, www.cigna.com. In the event the Company available in print to any shareholder who requests them.
substantively amends its Code of Ethics or waives a provision of the
Code, Cigna intends to disclose the amendment or waiver on the
Corporate Governance section of the Company’s website.
Executive Compensation
The information under the captions ‘‘Director Compensation,’’ ‘‘Report of the People Resources Committee,’’ ‘‘Compensation Discussion and
Analysis’’ and ‘‘Executive Compensation’’ in Cigna’s proxy statement to be dated on or about March 15, 2013 is incorporated by reference.
130 CIGNA CORPORATION – 2012 Form 10-K
ITEM 10
A.
B.
C.
ITEM 11

PART III
ITEM 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Security Ownership of Certain Beneficial
Owners and Management and Related
Stockholder Matters
The following table presents information regarding Cigna’s equity compensation plans as of December 31, 2012:
(c) (3)
Securities Remaining(b) (2)
Weighted Average Available For Future(a) (1)
Securities To Be Issued Exercise Price Per Issuance Under Equity
Upon Exercise Of Share Of Compensation Plans
Outstanding Options, Outstanding Options, (Excluding Securities
Plan Category Warrants And Rights Warrants And Rights Reflected In Column (a))
Equity Compensation Plans Approved by Security Holders 12,393,377 $ 36.29 8,845,753
Equity Compensation Plans Not Approved by Security
Holders – – –
TOTAL 12,393,377 $ 36.29 8,845,753
(1) Includes, in addition to outstanding stock options, 129,951 restricted stock units, 99,177 deferred shares, 12,739 director deferred share units that settle in shares, and 3,200,998 strategic
performance shares, which are reported at the maximum 200% payout rate. Also includes 919,158 shares of common stock underlying stock option awards granted under the
HealthSpring, Inc. Amended and Restated 2006 Equity Incentive Plan and 26,304 shares of common stock underlying stock option awards granted under the NewQuest Holdings, Inc.
2005 Stock Option Plan, each of which was approved by the applicable company’s shareholders before Cigna’s acquisition of HealthSpring in January 2012.
(2) The weighted-average exercise price is based only on outstanding stock options. The outstanding stock options assumed due to Cigna’s acquisition of HealthSpring, Inc. have a weighted-
average exercise price of $16.79. Excluding these assumed options results in a weighted-average exercise price of $38.59.
(3) Includes 399,038 shares of common stock available as of the close of business December 31, 2012 for future issuance under the Cigna Directors Equity Plan and 8,446,715 shares of
common stock available as of the close of business on December 31, 2012 for future issuance under the Cigna Long-Term Incentive Plan as shares of restricted stock, strategic performance
shares, shares in payment of dividend equivalent rights, shares in lieu of cash payable under the Company’s other short- and long-term incentive compensation plans and non-tax qualified
supplemental retirement benefit plans, or shares in payment of SPSs or SPUs.
The information under the captions ‘‘Stock held by Directors, Nominees and Executive Officers’’ and ‘‘Largest Security Holders’’ in Cigna’s proxy
statement to be dated on or about March 15, 2013 is incorporated by reference.
Certain Relationships and Related Transactions
The information under the caption ‘‘Certain Transactions’’ in Cigna’s proxy statement to be dated on or about March 15, 2013 is incorporated by
reference.
Principal Accounting Fees and Services
The information under the captions ‘‘Policy for the Pre-Approval of Audit and Non-Audit Services’’ and ‘‘Fees to Independent Registered Public
Accounting Firm’’ in Cigna’s proxy statement to be dated on or about March 15, 2013 is incorporated by reference.
CIGNA CORPORATION – 2012 Form 10-K 131
ITEM 12
ITEM 13
ITEM 14

PART IV
Exhibits and Financial Statement Schedules
(1) The following Financial Statements appear on pages 64 Consolidated Statements of Changes in Total Equity for the
through 126: years ended December 31, 2012, 2011 and 2010.
Consolidated Statements of Income for the years ended Consolidated Statements of Cash Flows for the years ended
December 31, 2012, 2011 and 2010. December 31, 2012, 2011 and 2010.
Consolidated Statements of Comprehensive Income for the Notes to the Consolidated Financial Statements.
years ended December 31, 2012, 2011 and 2010.
Report of Independent Registered Public Accounting Firm.
Consolidated Balance Sheets as of December 31, 2012 and
(2) The financial statement schedules are listed in the Index to
2011.
Financial Statement Schedules on page FS-1.
132 CIGNA CORPORATION – 2012 Form 10-K
ITEM 15
(a)

PART IV
ITEM 15 Signatures
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CIGNA CORPORATION
Date: February 28, 2013
By: /s/ Ralph J. Nicoletti
Ralph J. Nicoletti
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of February 28, 2013.
Signature Title
/s/ David M. Cordani Chief Executive Officer and Director (Principal Executive Officer)
David M. Cordani
/s/ Ralph J. Nicoletti Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Ralph J. Nicoletti
/s/ Mary T. Hoeltzel Vice President and Chief Accounting Officer (Principal Accounting Officer)
Mary T. Hoeltzel
/s/ Eric J. Foss Director
Eric J. Foss
/s/ Isaiah Harris, Jr. Chairman of the Board
Isaiah Harris, Jr.
/s/ Jane E. Henney, M.D. Director
Jane E. Henney, M.D.
/s/ Roman Martinez IV Director
Roman Martinez IV
/s/ John M. Partridge Director
John M. Partridge
/s/ James E. Rogers Director
James E. Rogers
/s/ Joseph P. Sullivan Director
Joseph P. Sullivan
/s/ Eric C. Wiseman Director
Eric C. Wiseman
/s/ Donna F. Zarcone Director
Donna F. Zarcone
/s/ William D. Zollars Director
William D. Zollars
CIGNA CORPORATION – 2012 Form 10-K 133

INDEX TO FINANCIAL STATEMENT SCHEDULES
ITEM 15 Exhibits and Financial Statement Schedules
INDEX TO FINANCIAL STATEMENT
SCHEDULES
PAGE
Report of Independent Registered Public Accounting Firm on Financial Statement Schedules …………………………………….. FS-2
Schedules
I – Summary of Investments – Other Than Investments in Related Parties as of December 31, 2012 ………………………….. FS-3
II – Condensed Financial Information of Cigna Corporation (Registrant)…………………………………………………………………. FS-4
III – Supplementary Insurance Information …………………………………………………………………………………………………………… FS-9
IV – Reinsurance……………………………………………………………………………………………………………………………………………….. FS-11
V – Valuation and Qualifying Accounts and Reserves ……………………………………………………………………………………………. FS-12
Schedules other than those listed above are omitted because they are not required or are not applicable, or the required information is shown in
the financial statements or notes thereto.
CIGNA CORPORATION – 2012 Form 10-K FS-1

PART IV
ITEM 15 Report of Independent Registered Public Accounting Firm on Financial Statement Schedules
Report of Independent Registered Public Accounting Firm
on Financial Statement Schedules
To the Board of Directors and Shareholders of Cigna Corporation
Our audits of the consolidated financial statements and of the As described in Management’s Annual Report on Internal Control
effectiveness of internal control over financial reporting referred to in over Financial Reporting, management has excluded Great American
our report dated February 28, 2013 (which report and consolidated Supplemental Benefits Group from its assessment of internal control
financial statements are included under Item 8 in this Annual Report over financial reporting as of December 31, 2012 because it was
on Form 10-K) also included an audit of the financial statement acquired by the Company in a purchase business combination during
schedules listed in Item 15(a)(2) of this Form 10-K. In our opinion, the year ended December 31, 2012. We have also excluded Great
these financial statement schedules present fairly, in all material American Supplemental Benefits Group from our audit of internal
respects, the information set forth therein when read in conjunction control over financial reporting. Great American Supplemental
with the related consolidated financial statements. Benefits Group’s total assets acquired represent approximately 2% of
consolidated total assets as of December 31, 2012; total revenues
As discussed in Note 2 to the consolidated financial statements, as of
acquired represent less than 1% of consolidated total revenues for the
January 1, 2012, the Company retrospectively adopted a new
year ended December 31, 2012.
accounting standard that amends the accounting for costs incurred by
insurance companies that can be capitalized in connection with
acquiring or renewing insurance contracts.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 28, 2013
FS-2 CIGNA CORPORATION – 2012 Form 10-K

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Cigna Corporation and Subsidiaries
Schedule I – Summary of Investments – Other Than Investments in Related Parties
December 31, 2012
Amount at
which shown in
Fair the ConsolidatedType of Investment
(In millions) Cost Value Balance Sheet
Fixed maturities:
Bonds:
United States government and government agencies and authorities $ 509 $ 902 $ 902
States, municipalities and political subdivisions 2,169 2,437 2,437
Foreign governments 1,197 1,322 1,322
Public utilities 102 106 106
All other corporate bonds 10,466 11,752 11,752
Asset backed securities:
United States government agencies mortgage-backed 121 122 122
Other mortgage-backed 82 89 89
Other asset-backed 798 937 937
Redeemable preferred stocks 37 38 38
TOTAL FIXED MATURITIES 15,481 17,705 17,705
Equity securities:
Common stocks:
Industrial, miscellaneous and all other 28 33 33
Non redeemable preferred stocks 93 78 78
TOTAL EQUITY SECURITIES 121 111 111
Commercial mortgage loans on real estate 2,851 2,851
Policy loans 1,501 1,501
Real estate investments 83 83
Other long-term investments 1,213 1,255
Short-term investments 154 154
TOTAL INVESTMENTS $ 21,404 $ 23,660
CIGNA CORPORATION – 2012 Form 10-K FS-3

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Cigna Corporation and Subsidiaries
Schedule II – Condensed Financial Information of Cigna Corporation – (Registrant)
For the year ended December 31,
(in millions) 2012 2011 2010
Operating expenses:
Interest $ 262 $ 195 $ 176
Intercompany interest – 19 26
Other 190 92 129
TOTAL OPERATING EXPENSES 452 306 331
Loss before income taxes (452) (306) (331)
Income tax benefit (143) (107) (106)
Loss of parent company (309) (199) (225)
Equity in income of subsidiaries 1,932 1,459 1,504
SHAREHOLDERS’ NET INCOME 1,623 1,260 1,279
Shareholders’ other comprehensive income (loss):
Net unrealized appreciation (depreciation) on securities:
Fixed maturities 144 210 151
Equity securities 3 (2) (1)
Net unrealized appreciation on securities 147 208 150
Net unrealized appreciation (depreciation), derivatives (5) 1 6
Net translation of foreign currencies 66 (22) 33
Postretirement benefits liability adjustment (92) (360) (189)
Shareholders’ other comprehensive income (loss) 116 (173) –
SHAREHOLDERS’ COMPREHENSIVE INCOME $ 1,739 $ 1,087 $ 1,279
See Notes to Financial Statements on the following pages.
FS-4 CIGNA CORPORATION – 2012 Form 10-K
Statements of Income

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Cigna Corporation and Subsidiaries
Schedule II – Condensed Financial Information of Cigna Corporation (Registrant)
As of December 31,
(In millions) 2012 2011
ASSETS:
Cash and cash equivalents $ 115 $ –
Investments in subsidiaries 16,125 14,606
Intercompany 37 29
Other assets 729 793
TOTAL ASSETS $ 17,006 $ 15,428
LIABILITIES:
Intercompany $ 289 $ 489
Short-term debt 200 100
Long-term debt 4,870 4,869
Other liabilities 1,878 1,976
TOTAL LIABILITIES 7,237 7,434
SHAREHOLDERS’ EQUITY:
Common stock (shares issued, 366; authorized, 600) 92 92
Additional paid-in capital 3,295 3,188
Net unrealized appreciation – fixed maturities $ 883 $ 739
Net unrealized appreciation – equity securities 4 1
Net unrealized depreciation – derivatives (28) (23)
Net translation of foreign currencies 69 3
Postretirement benefits liability adjustment (1,599) (1,507)
Accumulated other comprehensive loss (671) (787)
Retained earnings 12,330 10,787
Less treasury stock, at cost (5,277) (5,286)
TOTAL SHAREHOLDERS’ EQUITY 9,769 7,994
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 17,006 $ 15,428
See Notes to Financial Statements on the following pages.
CIGNA CORPORATION – 2012 Form 10-K FS-5
Balance Sheets

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Cigna Corporation and Subsidiaries
Schedule II – Condensed Financial Information of Cigna Corporation (Registrant)
For the year ended December 31,
(in millions) 2012 2011 2010
Cash Flows from Operating Activities:
Shareholders’ Net Income $ 1,623 $ 1,260 $ 1,279
Adjustments to reconcile shareholders’ net income to net cash provided by operating activities:
Equity in income of subsidiaries (1,932) (1,459) (1,504)
Dividends received from subsidiaries 671 1,135 1,050
Other liabilities (213) (296) (294)
Other, net 191 (92) 158
Net cash provided by operating activities 340 548 689
Cash Flows from Investing Activities:
Other, net (19) – –
Net cash used in investing activities (19) – –
Cash Flows from Financing Activities:
Net change in intercompany debt (208) (3,258) (816)
Net change in short-term debt 100 – –
Net proceeds on issuance of long-term debt – 2,661 543
Repayment of long-term debt – (449) (268)
Issuance of common stock 121 734 64
Common dividends paid (11) (11) (11)
Repurchase of common stock (208) (225) (201)
Net cash used in financing activities (206) (548) (689)
Net increase in cash and cash equivalents 115 – –
Cash and cash equivalents, end of year $ 115 $ – $ –
See Notes to Financial Statements on the following pages.
FS-6 CIGNA CORPORATION – 2012 Form 10-K
Statements of Cash Flows

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Cigna Corporation and Subsidiaries
Schedule II – Condensed Financial Information of Cigna Corporation (Registrant)
The accompanying condensed financial statements’ prior periods have Note 1 – For purposes of these condensed financial statements, Cigna
been updated to reflect the changes resulting from the retrospective Corporation’s (the Company) wholly owned and majority owned
adoption of amended accounting guidance for deferred policy subsidiaries are recorded using the equity basis of accounting. Certain
acquisition costs effective January 1, 2012. See Note 2 to the reclassifications have been made to prior years’ amounts to conform to
Consolidated Financial Statements within this Form 10-K for the 2012 presentation.
additional information. These statements should be read in
conjunction with the Consolidated Financial Statements and the
accompanying notes thereto contained in this Form 10-K.
Note 2 – Short-term and long-term debt consisted of the following at December 31:
(In millions) December 31, 2012 December 31, 2011
Short-term:
Commercial Paper $ 200 $ 100
TOTAL SHORT-TERM DEBT $ 200 $ 100
Long-term:
Uncollateralized debt:
2.75% Notes due 2016 $ 600 $ 600
5.375% Notes due 2017 250 250
6.35% Notes due 2018 131 131
8.5% Notes due 2019 251 251
4.375% Notes due 2020 249 249
5.125% Notes due 2020 299 299
4.5% Notes due 2021 299 298
4% Notes due 2022 743 743
7.65% Notes due 2023 100 100
8.3% Notes due 2023 17 17
7.875% Debentures due 2027 300 300
8.3% Step Down Notes due 2033 83 83
6.15% Notes due 2036 500 500
5.875% Notes due 2041 298 298
5.375% Notes due 2042 750 750
TOTAL LONG-TERM DEBT $ 4,870 $ 4,869
In December 2012, the Company extended the life of its June 2011 outstanding. There were letters of credit of $66 million issued as of
five-year revolving credit and letter of credit agreement for December 31, 2012.
$1.5 billion, that permits up to $500 million to be used for letters of
On November 10, 2011, the Company issued $2.1 billion of
credit. This agreement is diversified among 16 banks, with 3 banks
long-term debt as follows: $600 million of 5-Year Notes due
each having 12% of the commitment and the remainder spread
November 15, 2016 at a stated interest rate of 2.75% ($600 million,
among 13 banks. The credit agreement includes options that are
net of discount, with an effective interest rate of 2.936% per year),
subject to consent by the administrative agent and the committing
$750 million of 10-Year Notes due February 15, 2022 at a stated
banks, to increase the commitment amount to $2 billion and to
interest rate of 4% ($743 million, net of discount, with an effective
extend the term past December 2017. The credit agreement is
interest rate of 4.346% per year) and $750 million of 30-Year Notes
available for general corporate purposes, including as a commercial
due February 15, 2042 at a stated interest rate of 5.375%
paper backstop and for the issuance of letters of credit. This agreement
($750 million, net of discount, with an effective interest rate of
includes certain covenants, including a financial covenant requiring
5.542% per year). Interest is payable on May 15 and November 15 of
the Company to maintain a total debt-to-adjusted capital ratio at or
each year beginning May 15, 2012 for the 5-Year Notes and
below 0.50 to 1.00. As of December 31, 2012, the Company had
February 15 and August 15 of each year beginning February 15, 2012
$5.3 billion of borrowing capacity within the maximum debt coverage
for the 10-Year and 30-Year Notes. The proceeds of this debt were
covenant in the agreement in addition to the $5.2 billion of debt
used to reduce the intercompany payable balance with Cigna
CIGNA CORPORATION – 2012 Form 10-K FS-7
Notes to Condensed Financial Statements

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Holdings and ultimately used to fund the HealthSpring acquisition in was accrued at an average monthly rate of 0.71% for 2012 and 0.63%
2012. for 2011.
The Company may redeem these Notes, at any time, in whole or in Note 4 – As of December 31, 2012, the Company had guarantees and
part, at a redemption price equal to the greater of: similar agreements in place to secure payment obligations or solvency
requirements of certain wholly owned subsidiaries as follows:
100% of the principal amount of the Notes to be redeemed; or
The Company has arranged for bank letters of credit in the amount
the present value of the remaining principal and interest payments
of $3 million to provide collateral in support of its indirect wholly
on the Notes being redeemed discounted at the applicable Treasury
owned subsidiaries.
Rate plus 30 basis points (5-Year 2.75% Notes due 2016), 35 basis
points (10-Year 4% Notes due 2022), or 40 basis points (30-Year Various indirect, wholly-owned subsidiaries have obtained surety
5.375% Notes due 2042). bonds in the normal course of business. If there is a claim on a surety
bond and the subsidiary is unable to pay, the Company guarantees
In March 2011, the Company issued $300 million of 10-Year Notes
payment to the company issuing the surety bond. The aggregate
due March 15, 2021 at a stated interest rate of 4.5% ($298 million,
amount of such surety bonds as of December 31, 2012 was
net of discount, with an effective interest rate of 4.683% per year) and
$28 million.
$300 million of 30-Year Notes due March 15, 2041 at a stated interest
rate of 5.875% ($298 million, net of discount, with an effective The Company is obligated under a $12 million letter of credit
interest rate of 6.008% per year). Interest is payable on March 15 and required by the insurer of its high-deductible self-insurance
September 15 of each year beginning September 15, 2011. The programs to indemnify the insurer for claim liabilities that fall
proceeds of this debt were used for general corporate purposes, within deductible amounts for policy years dating back to 1994.
including the repayment of debt maturing in 2011.
The Company also provides solvency guarantees aggregating
The Company may redeem these Notes, at any time, in whole or in $34 million under state and federal regulations in support of its
part, at a redemption price equal to the greater of: indirect wholly-owned medical HMOs in several states.
100% of the principal amount of the Notes to be redeemed; or The Company has arranged a $50 million letter of credit in support
of Cigna Europe Insurance Company, an indirect wholly-owned
the present value of the remaining principal and interest payments
subsidiary. The Company has agreed to indemnify the banks
on the Notes being redeemed discounted at the applicable Treasury
providing the letters of credit in the event of any draw. Cigna
Rate plus 20 basis points (10-Year 4.5% Notes due 2021) or 25 basis
Europe Insurance Company is the holder of the letters of credit.
points (30-Year 5.875% Notes due 2041).
The Company has agreed to indemnify payment of losses included
Maturities of debt are as follows (in millions): none in 2013, 2014,
in Cigna Europe Insurance Company’s reserves on the assumed
2015, $600 in 2016, $250 in 2017 and the remainder in years after
reinsurance business transferred from ACE. As of December 31,
2017. Interest expense on long-term and short-term debt was
2012, the reserve was $43 million.
$262 million in 2012, $195 million in 2011, and $176 million in
2010. Interest paid on long-term and short-term debt was In 2012, no payments have been made on these guarantees and none
$242 million in 2012, $179 million in 2011, and $175 million in are pending. The Company provided other guarantees to subsidiaries
2010. that, in the aggregate, do not represent a material risk to the
Company’s results of operations, liquidity or financial condition.
Note 3 – Intercompany liabilities consist primarily of loans payable to
Cigna Holdings, Inc. of $ 289 million as of December 31, 2012 and Note 5 – On November 16, 2011, the Company issued 15.2 million
$489 million as of December 31, 2011. The proceeds of the debt shares of its common stock at $42.75 per share. Proceeds were
issuance in November 2011 of $2.1 billion (see Note 2) and the equity $650 million ($629 million net of underwriting discount and fees)
issuance of $629 million (see Note 5) were used to reduce the and used to reduce the intercompany loan payable balance with Cigna
intercompany loan payable balance with Cigna Holdings and Holdings and ultimately used to fund the HealthSpring acquisition in
ultimately used to fund the HealthSpring acquisition in 2012. Interest January 2012.
FS-8 CIGNA CORPORATION – 2012 Form 10-K
•
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PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Cigna Corporation and Subsidiaries
Schedule III – Supplementary Insurance Information
Future policy
Deferred benefits and Medical claims
policy contractholder payable and Unearned
acquisition deposit unpaid premiumsSegment
(In millions) costs funds claims and fees
Year Ended December 31, 2012:
Global Health Care $ 19 $ 175 $ 1,856 $ 111
Group Disability and Life 1 1,599 3,482 26
Global Supplemental Benefits 1,113 2,227 306 388
Run-off Reinsurance – 1,094 153 –
Other Operations 65 12,678 142 24
Corporate – – (21) –
TOTAL $ 1,198 $ 17,773 $ 5,918 $ 549
Year Ended December 31, 2011:
Global Health Care $ 19 $ 170 $ 1,443 $ 103
Group Disability and Life 1 1,572 3,228 26
Global Supplemental Benefits 729 1,255 177 346
Run-off Reinsurance – 1,172 240 –
Other Operations 68 12,977 160 27
Corporate – – (7) –
TOTAL $ 817 $ 17,146 $ 5,241 $ 502
Year Ended December 31, 2010:
Global Health Care $ 22 $ 178 $ 1,555 $ 87
Group Disability and Life 2 1,464 3,201 27
Global Supplemental Benefits 609 1,085 112 271
Run-off Reinsurance – 1,139 244 –
Other Operations 68 12,790 159 31
Corporate – – (8) –
TOTAL $ 701 $ 16,656 $ 5,263 $ 416
CIGNA CORPORATION – 2012 Form 10-K FS-9

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Amortization
of deferred
Net policy Other
Premiums investment Benefit acquisition operating
and fees (1) income (2) expenses (1)(3) expenses expenses (4)
Year Ended December 31, 2012:
Global Health Care $ 20,973 $ 259 $ 14,228 $ 68 $ 6,573
Group Disability and Life 3,109 300 2,290 3 721
Global Supplemental Benefits 1,984 90 1,005 141 770
Run-off Reinsurance 21 102 16 – (12)
Other Operations 100 388 361 6 51
Corporate – 5 – – 421
TOTAL $ 26,187 $ 1,144 $ 17,900 $ 218 $ 8,524
Year Ended December 31, 2011:
Global Health Care $ 14,443 $ 263 $ 9,125 $ 139 $ 5,404
Group Disability and Life 2,857 291 2,086 4 650
Global Supplemental Benefits 1,528 83 754 110 628
Run-off Reinsurance 24 103 140 – 265
Other Operations 114 400 385 6 60
Corporate – 6 – – 233
TOTAL $ 18,966 $ 1,146 $ 12,490 $ 259 $ 7,240
Year Ended December 31, 2010:
Global Health Care $ 14,134 $ 230 $ 9,222 $ 155 $ 5,216
Group Disability and Life 2,770 287 2,035 6 707
Global Supplemental Benefits 1,231 69 603 84 505
Run-off Reinsurance 25 114 (22) – 113
Other Operations 114 404 395 6 53
Corporate – 1 – – 248
TOTAL $ 18,274 $ 1,105 $ 12,233 $ 251 $ 6,842
Effective December 31, 2012, Cigna changed its reporting segments. Prior period information has been conformed to the current reporting segments. Prior periods for certain information in this
Schedule III (Deferred policy acquisition costs, Amortization of deferred policy acquisition costs, and Other operating expenses) have been updated to reflect changes resulting from the retrospective
adoption of amended accounting guidance for deferred policy acquisition costs effective January 1, 2012. See Note 2 to the Consolidated Financial Statements included in this Form 10-K for
additional information.
(1) Amounts presented are shown net of the effects of reinsurance. See Note 8 to the Consolidated Financial Statements included in this Form 10-K.
(2) The allocation of net investment income is based upon the investment year method, the identification of certain portfolios with specific segments, or a combination of both.
(3) Benefit expenses include Global Health Care medical claims expense and other benefit expenses.
(4) Other operating expenses include mail order pharmacy cost of goods sold, GMIB fair value (gain) loss and other operating expenses, and excludes amortization of deferred policy acquisition
expenses.
FS-10 CIGNA CORPORATION – 2012 Form 10-K

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Cigna Corporation and Subsidiaries
Schedule IV – Reinsurance
Percentage
Ceded to other Assumed from of amount
(In millions) Gross amount companies other companies Net amount assumed to net
Year Ended December 31, 2012:
Life insurance in force $ 710,140 $ 52,435 $ 8,168 $ 665,873 1.2%
Premiums and fees:
Life insurance and annuities $ 2,025 $ 268 $ 29 $ 1,786 1.6%
Accident and health insurance 24,163 201 439 24,401 1.8%
TOTAL $ 26,188 $ 469 $ 468 $ 26,187 1.8%
Year Ended December 31, 2011:
Life insurance in force $ 606,587 $ 53,088 $ 9,163 $ 562,662 1.6%
Premiums and fees:
Life insurance and annuities $ 1,990 $ 280 $ 40 $ 1,750 2.3%
Accident and health insurance 17,229 167 154 17,216 0.9%
TOTAL $ 19,219 $ 447 $ 194 $ 18,966 1.0%
Year Ended December 31, 2010:
Life insurance in force $ 566,841 $ 44,335 $ 9,734 $ 532,240 1.8%
Premiums and fees:
Life insurance and annuities $ 2,026 $ 264 $ 107 $ 1,869 5.7%
Accident and health insurance 16,153 173 425 16,405 2.6%
TOTAL $ 18,179 $ 437 $ 532 $ 18,274 2.9%
CIGNA CORPORATION – 2012 Form 10-K FS-11

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Cigna Corporation and Subsidiaries
Schedule V – Valuation and Qualifying Accounts and Reserves
Charged Charged
Balance at (Credited) (Credited) Other
Description beginning of to costs and to other deductions Balance at
(in millions) period(4) expenses(1) accounts(2) -describe(3) end of period
2012:
Investment asset valuation reserves: Commercial mortgage loans $ 19 $ 10 $ $ (22) $ 7
Allowance for doubtful accounts: Premiums, accounts and notes
receivable $ 45 $ 4 $ 1 $ 1 $ 51
Deferred tax asset valuation allowance $ 45 $ 4 $ (7) $ – $ 42
Reinsurance recoverables $ 5 $ (1) $ – $ – $ 4
2011:
Investment asset valuation reserves: Commercial mortgage loans $ 12 $ 16 $ – $ (9) $ 19
Allowance for doubtful accounts: Premiums, accounts and notes
receivable $ 49 $ 4 $ (1) $ (7) $ 45
Deferred tax asset valuation allowance $ 26 $ 4 $ 15 $ – $ 45
Reinsurance recoverables $ 10 $ (5) $ – $ – $ 5
2010:
Investment asset valuation reserves: Commercial mortgage loans $ 17 $ 24 $ – $ (29) $ 12
Allowance for doubtful accounts: Premiums, accounts and notes
receivable $ 43 $ 11 $ – $ (5) $ 49
Deferred tax asset valuation allowance $ 117 $ (91) $ – $ – $ 26
Reinsurance recoverables $ 15 $ (5) $ – $ – $ 10
Prior periods for the deferred tax valuation allowance were updated to reflect changes resulting from the retrospective adoption of amended accounting guidance for deferred policy acquisition costs
effective January 1, 2012. See Note 2 to the Consolidated Financial Statements in the Form 10-K for additional information.
(1) 2010 amount for deferred tax asset valuation allowance primarily reflects the resolution of a federal tax matter. See Note 20 to the Consolidated Financial Statements.
(2) 2011 increase to deferred tax asset valuation allowance reflects effects of the acquisition of First Assist in November 2011.
(3) Amounts for commercial mortgage loans primarily reflects charge-offs upon sales and repayments, as well as transfers to foreclosed real estate. 2012 amount also includes restructures
reclassified to Other Long-term Investments.
FS-12 CIGNA CORPORATION – 2012 Form 10-K

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Index to Exhibits
Number Description Method of Filing
2.1 Agreement and Plan of Merger dated as of October 24, 2011 by Filed as Exhibit 2.1 to the registrant’s Form 8-K on October 27,
and among Cigna Corporation, Cigna Magnolia Corp. and 2011 and incorporated herein by reference.
HealthSpring, Inc.*
2.2 Voting Agreement dated as of October 24, 2011 among Cigna Filed as Exhibit 2.3 to the registrant’s Form 8-K on October 27,
Corporation and Herbert A. Fritch 2011 and incorporated herein by reference.
3.1 Restated Certificate of Incorporation of the registrant as last Filed as Exhibit 3.1 to the registrant’s Form 10-Q for the quarterly
amended October 28, 2011 period ended September 30, 2011and incorporated herein by
reference.
3.2 By-Laws of the registrant as last amended and restated December 6, Filed herewith.
2012
4.1 (a) Indenture dated August 16, 2006 between Cigna Corporation and Filed herewith.
U.S. Bank National Association
(b) Supplemental Indenture No. 1 dated November 11, 2006 between Filed herewith.
Cigna Corporation and U.S. Bank National Association
(c) Supplemental Indenture No. 2 dated March 15, 2007 between Filed as Exhibit 4.1(c) to the registrant’s Form 10-Q for the
Cigna Corporation and U.S. Bank National Association quarterly period ended March 31, 2011 and incorporated herein by
reference
(d) Supplemental Indenture No. 3 dated March 7, 2008 between Cigna Filed as Exhibit 4.1 to the registrant’s Form 8-K on March 10,
Corporation and U.S. Bank National Association 2008 and incorporated herein by reference.
(e) Supplemental Indenture No. 4 dated May 7, 2009 between Cigna Filed as Exhibit 99.2 to the registrant’s Form 8-K on May 12, 2009
Corporation and U.S. Bank National Association and incorporated herein by reference.
(f ) Supplemental Indenture No. 5 dated May 17, 2010 between Cigna Filed as Exhibit 99.2 to the registrant’s Form 8-K on May 28, 2010
Corporation and U.S. Bank National Association and incorporated herein by reference.
(g) Supplemental Indenture No. 6 dated December 8, 2010 between Filed as Exhibit 99.2 to the registrant’s Form 8-K on December 9,
Cigna Corporation and U.S. Bank National Association 2010 and incorporated herein by reference.
(h) Supplemental Indenture No. 7 dated March 7, 2011 between Cigna Filed as Exhibit 4.1 to the registrant’s Form 8-K on March 8, 2011
Corporation and U.S. Bank National Association and incorporated herein by reference.
(i) Supplemental Indenture No. 8 dated November 10, 2011 between Filed as Exhibit 4.1 to the registrant’s Form 8-K on November 14,
Cigna Corporation and U.S. Bank National Associated 2011 and incorporated herein by reference.
4.2 Indenture dated January 1, 1994 between Cigna Corporation and Filed as Exhibit 4.2 to the registrant’s Form 10-K for the year ended
Marine Midland Bank December 31, 2009 and incorporated herein by reference.
4.3 Indenture dated June 30, 1988 between Cigna Corporation and Filed as Exhibit 4.3 to the registrant’s Form 10-K for the year ended
Bankers Trust December 31, 2009 and incorporated herein by reference.
Exhibits 10.1 through 10.28 are identified as compensatory plans, management contracts or arrangements pursuant to Item 15 of Form 10-K.
10.1 Deferred Compensation Plan for Directors of Cigna Corporation, as Filed as Exhibit 10.1 to the registrant’s Form 10-K for the year
amended and restated January 1, 1997 ended December 31, 2011 and incorporated herein by reference.
10.2 Deferred Compensation Plan of 2005 for Directors of Cigna Filed as Exhibit 10.2 to the registrant’s Form 10-K for the year
Corporation, Amended and Restated effective April 28, 2010 ended December 31, 2010 and incorporated herein by reference.
10.3 Cigna Corporation Non-Employee Director Compensation Program Filed as Exhibit 10.3 to the registrant’s Form 10-K for the year
amended and restated effective January 1, 2012 ended December 31, 2011 and incorporated herein by reference.
10.4 Cigna Restricted Share Equivalent Plan for Non-Employee Directors Filed herewith.
as amended and restated effective January 1, 2008
10.5 Cigna Corporation Directors Equity Plan Filed as Exhibit 10.3 to the registrant’s Form 10-Q for the quarterly
period ended March 31, 2010 and incorporated herein by reference.
10.6 Cigna Corporation Compensation Program for Independent Vice Filed as Exhibit 10.1 to the registrant’s Form 10-Q for the quarterly
Chairman/Chairman of the Board of Directors period ended September 30, 2009 and incorporated herein by
reference.
10.7 Cigna Corporation Stock Plan, as amended and restated through Filed as Exhibit 10.7 to the registrant’s Form 10-K for the year
July 2000 ended December 31, 2009 and incorporated herein by reference.
10.8 (a) Cigna Stock Unit Plan, as amended and restated effective July 22, Filed as Exhibit 10.1 to the registrant’s Form 10-Q for the quarterly
2008 period ended September 30, 2008 and incorporated herein by
reference.
(b) Amendment No. 1 to the Cigna Stock Unit Plan, as amended and Filed as Exhibit 10.3 to the registrant’s Form 10-Q for the quarterly
restated effective July 22, 2008 period ended June 30, 2010 and incorporated herein by reference.
CIGNA CORPORATION – 2012 Form 10-K E-1

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Number Description Method of Filing
10.9 Cigna Executive Severance Benefits Plan as amended and restated Filed as Exhibit 10.2 to the registrant’s Form 10-Q for the quarterly
effective April 27, 2010 period ended June 30, 2010 and incorporated herein by reference.
10.10 Description of Severance Benefits for Executives in Non-Change of Filed as Exhibit 10.10 to the registrant’s Form 10-K for the year
Control Circumstances ended December 31, 2009 and incorporated herein by reference.
10.11 Description of Cigna Corporation Strategic Performance Share Filed as Exhibit 10.1 to the registrant’s Form 10-Q for the quarterly
Program period ended June 30, 2012 and incorporated herein by reference.
10.12 Cigna Executive Incentive Plan amended and restated as of Filed as Exhibit 10.1 to the registrant’s Form 10-Q for the year
January 12, 2012 ended March 31, 2012 and incorporated herein by reference.
10.13 (a) Cigna Long-Term Incentive Plan as amended and restated effective Filed as Exhibit 10.2 to the registrant’s Form 10-Q for the quarterly
as of April 28, 2010 period ended March 31, 2010 and incorporated herein by reference.
(b) Amendment No. 1 to the Cigna Long-Term Incentive Plan as Filed as Exhibit 10.1 to the registrant’s Form 10-Q for the quarterly
amended and restated effective as of April 28, 2010 period ended June 30, 2010 and incorporated herein by reference.
(c) Amendment No. 2 to the Cigna Long-Term Incentive Plan as Filed as Exhibit 10.1 to the registrant’s Form 10-Q for the quarterly
amended and restated effective as of April 28, 2010 period ended March 31, 2011 and incorporated herein by reference.
10.14 Cigna Deferred Compensation Plan, as amended and restated Filed as Exhibit 10.14 to the registrant’s Form 10-K for the year
October 24, 2001 ended December 31, 2011 and incorporated herein by reference.
10.15 Cigna Deferred Compensation Plan of 2005 effective as of Filed herewith.
January 1, 2005
10.16 (a) Cigna Supplemental Pension Plan as amended and restated effective Filed as Exhibit 10.15(a) to the registrant’s Form 10-K for the year
August 1, 1998 ended December 31, 2009 and incorporated herein by reference.
(b) Amendment No. 1 to the Cigna Supplemental Pension Plan, Filed as Exhibit 10.15(b) to the registrant’s Form 10-K for the year
amended and restated effective as of September 1, 1999 ended December 31, 2009 and incorporated herein by reference.
(c) Amendment No. 2 dated December 6, 2000 to the Cigna Filed as Exhibit 10.16(c) to the registrant’s Form 10-K for the year
Supplemental Pension ended December 31, 2011 and incorporated herein by reference.
10.17 (a) Cigna Supplemental Pension Plan of 2005 effective as of January 1, Filed as Exhibit 10.15 to the registrant’s Form 10-K for the year
2005 ended December 31, 2007 and incorporated herein by reference.
(b) Amendment No. 1 to the Cigna Supplemental Pension Plan of Filed as Exhibit 10.1 to the registrant’s Form 10-Q for the quarterly
2005 period ended June 30, 2009 and incorporated herein by reference.
10.18 Cigna Supplemental 401(k) Plan effective January 1, 2010 Filed as Exhibit 10.17 to the registrant’s Form 10-K for the year
ended December 31, 2009 and incorporated herein by reference.
10.19 Description of Cigna Corporation Financial Services Program Filed as Exhibit 10.18 to the registrant’s Form 10-K for the year
ended December 31, 2009 and incorporated herein by reference.
10.20 Schedule regarding Amended Deferred Stock Unit Agreements Filed as Exhibit 10.20 to the registrant’s Form 10-K for the year
effective December 31, 2008 with Mr. Murabito and Form of ended December 31, 2008 and incorporated herein by reference.
Amended Deferred Stock Unit Agreement
10.21 Form of Cigna Long-Term Incentive Plan: Nonqualified Stock Filed as Exhibit 10.21 to the registrant’s Form 10-K for the year
Option and Grant Letter ended December 31, 2011 and incorporated herein by reference.
10.22 Form of Cigna Long-Term Incentive Plan: Restricted Stock Grant Filed as Exhibit 10.22 to the registrant’s Form 10-K for the year
and Grant Letter ended December 31, 2011 and incorporated herein by reference.
10.23 Form of Cigna Long-Term Incentive Plan: Restricted Stock Unit Filed as Exhibit 10.27 to the registrant’s Form 10-K for the year
Grant and Grant Letter ended December 31, 2010 and incorporated herein by reference.
10.24 Agreement and Release dated April 27, 2011 with Carol Ann Petren Filed as Exhibit 99.1 to the registrant’s Form 8-K filed on May 3,
2011 and incorporated herein by reference.
10.25 Ralph Nicoletti’s Offer of Employment dated April 27, 2011 Filed as Exhibit 10.1 to the registrant’s Form 8-K filed on May 31,
2011 and incorporated herein by reference.
10.26 Nicole Jones’ Offer of Employment dated April 27, 2011 Filed as Exhibit 10.2 to the registrant’s Form 10-Q for the period
ended March 31, 2012 and incorporated herein by reference.
10.27 Agreement and Release executed December 9, 2011 with Bertram Filed as Exhibit 10.1 to the registrant’s Form 8-K filed on
L. Scott December 13, 2011 and incorporated herein by reference.
10.28 Matthew Manders’ Promotion Letter dated November 18, 2011 Filed herewith.
10.29 Master Transaction Agreement, dated February 4, 2013, among Filed herewith.
Connecticut General Life Insurance Company, Berkshire Hathaway
Life Insurance Company of Nebraska and, solely for purposes of
Sections 3.10, 6.1, 6.4, 6.6 and 6.9 and Articles II, V, VII and VIII
thereof, National Indemnity Company (including the Forms of
Retrocession Agreement, the Collateral Trust Agreement, the
Security and Control Agreement, the Surety Policy and the ALC
Model Purchase Option Agreement, as exhibits).
12 Computation of Ratios of Earnings to Fixed Charges Filed herewith.
21 Subsidiaries of the Registrant Filed herewith.
23 Consent of Independent Registered Public Accounting Firm Filed herewith.
31.1 Certification of Chief Executive Officer of Cigna Corporation Filed herewith.
pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities
Exchange Act of 1934
31.2 Certification of Chief Financial Officer of Cigna Corporation Filed herewith.
pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities
Exchange Act of 1934
E-2 CIGNA CORPORATION – 2012 Form 10-K

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Number Description Method of Filing
32.1 Certification of Chief Executive Officer of Cigna Corporation Furnished herewith.
pursuant to 18 U.S.C. Section 1350
32.2 Certification of Chief Financial Officer of Cigna Corporation Furnished herewith.
pursuant to 18 U.S.C. Section 1350
* Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted
schedule upon request.
The registrant will furnish to the Commission upon request of any other instruments defining the rights of holders of long-term debt.
Shareholders may obtain copies of exhibits by writing to Cigna Corporation, Shareholder Services Department, 1601 Chestnut Street,
Philadelphia, PA 19192.
CIGNA CORPORATION – 2012 Form 10-K E-3

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 12 Cigna Corporation – Computation of Ratio of Earnings to Fixed Charges
Year Ended December 31,
(Dollars in millions) 2012 2011 2010 2009 2008
Income before income taxes $ 2,477 $ 1,876 $ 1,802 $ 1,853 $ 329
Adjustments:
Income from equity investee (10) (15) (18) (19) (11)
Income attributable to redeemable noncontrolling interest (1) – – – –
Income attributable to other noncontrolling interest – (1) (4) (3) (2)
Income before income taxes, as adjusted $ 2,466 $ 1,860 $ 1,780 $ 1,831 $ 316
Fixed charges included in income:
Interest expense $ 268 $ 202 $ 182 $ 166 $ 146
Interest portion of rental expense 43 38 42 46 43
Interest credited to contractholders 4 5 5 3 6
$ 315 $ 245 $ 229 $ 215 $ 195
Income available for fixed charges $ 2,781 $ 2,105 $ 2,009 $ 2,046 $ 511
RATIO OF EARNINGS TO FIXED CHARGES: 8.8 8.6 8.8 9.5 2.6
This Exhibit 12 has been updated from the Company’s 2011 Form 10-K to reflect changes resulting from the retrospective adoption of amended accounting guidance for deferred
policy acquisition costs, effective January 1, 2012. See Note 2 to the Consolidated Financial Statements within this Form 10-K for additional information.
E-4 CIGNA CORPORATION – 2012 Form 10-K

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 21 Subsidiaries of the Registrant
Listed below are subsidiaries of Cigna Corporation as of December 31, 2012 with their jurisdictions of organization shown in parentheses. Those
subsidiaries not listed would not, in the aggregate, constitute a ‘‘significant subsidiary’’ of Cigna Corporation, as that term is defined in
Rule 1-02(w) of Regulation S-X.
Cigna Holdings, Inc. (Delaware)
I. Connecticut General Corporation (Connecticut)
A. Benefits Management Corp. (Montana)
i. Allegiance Life & Health Insurance Company, Inc. (Montana)
ii. Allegiance Re, Inc. (Montana)
B. Cigna Arbor Life Insurance Company (Connecticut)
C. Cigna Behavioral Health, Inc. (Minnesota)
i. Cigna Behavioral Health of California, Inc. (California)
ii. Cigna Behavioral Health of Texas, Inc. (Texas)
iii. MCC Independent Practice Association of New York, Inc. (New York)
D. Cigna Dental Health, Inc. (Florida)
i. Cigna Dental Health of California, Inc. (California)
ii. Cigna Dental Health of Colorado, Inc. (Colorado)
iii. Cigna Dental Health of Delaware, Inc. (Delaware)
iv. Cigna Dental Health of Florida, Inc. (Florida)
v. Cigna Dental Health of Illinois, Inc. (Illinois)
vi. Cigna Dental Health of Kansas, Inc. (Kansas)
vii. Cigna Dental Health of Kentucky, Inc. (Kentucky)
viii. Cigna Dental Health of Maryland, Inc. (Maryland)
ix. Cigna Dental Health of Missouri, Inc. (Missouri)
x. Cigna Dental Health of New Jersey, Inc. (New Jersey)
xi. Cigna Dental Health of North Carolina, Inc. (North Carolina)
xii. Cigna Dental Health of Ohio, Inc. (Ohio)
xiii. Cigna Dental Health of Pennsylvania, Inc. (Pennsylvania)
xiv. Cigna Dental Health of Texas, Inc. (Texas)
xv. Cigna Dental Health of Virginia, Inc. (Virginia)
xvi. Cigna Dental Health Plan of Arizona, Inc. (Arizona)
E. Cigna Health Corporation (Delaware)
i. Healthsource, Inc. (New Hampshire)
a. Cigna Healthcare of Arizona, Inc. (Arizona)
b. Cigna Healthcare of California, Inc. (California)
c. Cigna Healthcare of Colorado, Inc. (Colorado)
d. Cigna Healthcare of Connecticut, Inc. (Connecticut)
e. Cigna Healthcare of Florida, Inc. (Florida)
f. Cigna Healthcare of Georgia, Inc. (Georgia)
g. Cigna Healthcare of Illinois, Inc. (Illinois)
h. Cigna Healthcare of Indiana, Inc. (Indiana)
i. Cigna Healthcare of Maine, Inc. (Maine)
j. Cigna Healthcare of Massachusetts, Inc. (Massachusetts)
k. Cigna Healthcare Mid-Atlantic, Inc. (Maryland)
l. Cigna Healthcare of New Hampshire, Inc. (New Hampshire)
m. Cigna Healthcare of New Jersey, Inc. (New Jersey)
n. Cigna Healthcare of New York, Inc. (New York)
o. Cigna Healthcare of North Carolina, Inc. (North Carolina)
p. Cigna Healthcare of Pennsylvania, Inc. (Pennsylvania)
q. Cigna Healthcare of South Carolina, Inc. (South Carolina)
r. Cigna Healthcare of St. Louis, Inc. (Missouri)
s. Cigna Healthcare of Tennessee, Inc. (Tennessee)
t. Cigna Healthcare of Texas, Inc. (Texas)
u. Cigna Healthcare of Utah, Inc. (Utah)
CIGNA CORPORATION – 2012 Form 10-K E-5

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
v. Cigna Insurance Services Company (South Carolina)
w. Temple Insurance Company Limited (Bermuda)
F. Cigna Healthcare Holdings, Inc. (Colorado)
i. Great-West Healthcare – Illinois (Illinois)
G. Cigna Health Management, Inc. (Delaware)
H. Cigna Life Insurance Company of Canada (Canada)
I. Cigna Life Insurance Company of New York (New York)
J. Connecticut General Life Insurance Company (Connecticut)
i. Cigna Health and Life Insurance Company (Connecticut)
a. Cigna Corporate Services, LLC (Delaware)
b. Loyal American Life Insurance Company (Ohio)
i. American Retirement Life Insurance Company (Ohio)
c. Ceres Sales of Ohio, LLC (Ohio)
d. Central Reserve Life Insurance Company (Ohio)
i. Provident American Life and Health Insurance Company (Ohio)
ii. United Benefit Life Insurance Company (Ohio)
ii. Tel Drug of Pennsylvania, LLC (Pennsylvania)
K. HealthSpring, Inc. (Delaware)
i. NewQuest, LLC (Texas)
a. Bravo Health, LLC (Delaware)
i. Bravo Health of Pennsylvania, Inc. (Pennsylvania)
ii. Bravo Health Mid-Atlantic, Inc. (Maryland)
b. HealthSpring Management, Inc. (Tennessee)
i. HealthSpring of Tennessee, Inc. (Tennessee)
c. HealthSpring of Alabama, Inc. (Alabama)
d. HealthSpring of Florida, Inc. (Florida)
e. HealthSpring Life & Health Insurance Company, Inc. (Texas)
f. HealthSpring Management of America, LLC (Delaware)
g. HealthSpring USA, LLC (Tennessee)
h. NewQuest Management of Alabama, LLC (Alabama)
i. NewQuest Management of Florida, LLC (Florida)
ii. HouQuest, LLC (Delaware)
a. GulfQuest, LP (Texas)
L. Life Insurance Company of North America (Pennsylvania)
i. Cigna & CMC Life Insurance Company Limited (China)
ii. LINA Life Insurance Company of Korea (Korea)
M. Tel Drug, Inc. (South Dakota)
N. Vielife Holdings Limited (United Kingdom)
i. Vielife Limited (United Kingdom)
II. Cigna Investment Group, Inc. (Delaware)
A. Cigna Investments, Inc. (Delaware)
i. Cigna Benefits Financing, Inc. (Delaware)
III. Cigna Global Holdings, Inc. (Delaware)
A. Cigna International Corporation, Inc. (Delaware)
B. Cigna Global Reinsurance Company, Ltd. (Bermuda)
i. Cigna Holdings Overseas, Inc. (Delaware)
a. Cigna Apac Holdings Limited (New Zealand)
i. Cigna Hong Kong Holdings Company Limited (Hong Kong)
a. Cigna Data Services (Shanghai) Company Limited (China)
b. Cigna HLA Technology Services Company Limited (Hong Kong)
c. Cigna Worldwide General Insurance Company Limited (Hong Kong)
d. Cigna Worldwide Life Insurance Company Limited (Hong Kong)
ii. Cigna Life Insurance New Zealand Limited (New Zealand)
iii. Cigna Taiwan Life Assurance Company Limited (Taiwan)
b. Cigna Europe Insurance Company S.A.-N.V. (Belgium)
c. Cigna European Services (UK) Limited (United Kingdom)
d. Cigna Global Insurance Company Limited (Guernsey, C.I.)
e. Cigna Hayat Sigorta A.S. (Turkey)
f. Cigna Health Solutions India Pvt. Ltd. (India)
g. Cigna International Services Australia Pty. Ltd. (Australia)
h. Cigna Life Insurance Company of Europe S.A.- N.V. (Belgium)
i. Cigna Nederland Alpha Cooperatief U.A. (Netherlands)
i. Cigna Nederland Beta N.V. (Netherlands)
E-6 CIGNA CORPORATION – 2012 Form 10-K

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
a. Cigna Nederland Gamma N.V. (Netherlands)
i. Finans Emeklilik ve Hayat A.S. (Turkey)
j. FirstAssist Group Holdings Limited (United Kingdom)
i. FirstAssist Group Limited (United Kingdom)
a. FirstAssist Legal Protection Limited (United Kingdom)
ii. FirstAssist Insurance Services Limited (United Kingdom)
k. RHP ThailandLimited (Thailand)
i. Cigna Brokerage Services (Thailand) Limited (Thailand)
ii. Cigna Non-Life Insurance Brokerage (Thailand)
iii. KDM Thailand Limited (Thailand)
a. Cigna Insurance Public Company Limited (Thailand)
l. Vanbreda International N.V. (Belgium)
i. Vanbreda International SDN.BHD (Malaysia)
ii. Vanbreda International LLC (Flordia)
ii. Cigna Worldwide Insurance Company (Delaware)
a. PT. Asuransi Cigna (Indonesia)
CIGNA CORPORATION – 2012 Form 10-K E-7

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 23 Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the No. 033-60053 and No. 033-51791) of Cigna Corporation of our
Registration Statement on Form S-3 (No. 333-183238) and Form S-8 reports dated February 28, 2013 relating to the financial statements,
(No. 333-179307, No. 333-166583, No. 333-163899, the financial statement schedules and the effectiveness of internal
No. 333-147994, No. 333-64207, No. 333-129395, control over financial reporting, which appear in this Form 10-K.
No. 333-107839, No. 333-90785, No. 333-31903, No. 333-22391,
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 28, 2013
E-8 CIGNA CORPORATION – 2012 Form 10-K

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 31.1 Certification
I, DAVID M. CORDANI, certify that:
I have reviewed this Annual Report on Form 10-K of Cigna the preparation of financial statements for external
Corporation; purposes in accordance with generally accepted accounting
principles;
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact evaluated the effectiveness of the registrant’s disclosure
necessary to make the statements made, in light of the controls and procedures and presented in this report our
circumstances under which such statements were made, not conclusions about the effectiveness of the disclosure
misleading with respect to the period covered by this report; controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all disclosed in this report any change in the registrant’s
material respects the financial condition, results of operations internal control over financial reporting that occurred
and cash flows of the registrant as of, and for, the periods during the registrant’s most recent fiscal quarter (the
presented in this report; registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
The registrant’s other certifying officer(s) and I are responsible
materially affect, the registrant’s internal control over
for establishing and maintaining disclosure controls and
financial reporting; and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as The registrant’s other certifying officer(s) and I have disclosed,
defined in Exchange Act Rules 13a-15(f ) and 15d-15(f )) for the based on our most recent evaluation of internal control over
registrant and have: financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons
designed such disclosure controls and procedures, or caused
performing the equivalent functions):
such disclosure controls and procedures to be designed
under our supervision, to ensure that material information all significant deficiencies and material weaknesses in the
relating to the registrant, including its consolidated design or operation of internal control over financial
subsidiaries, is made known to us by others within those reporting which are reasonably likely to adversely affect the
entities, particularly during the period in which this report registrant’s ability to record, process, summarize and report
is being prepared; financial information; and
designed such internal control over financial reporting, or any fraud, whether or not material, that involves
caused such internal control over financial reporting to be management or other employees who have a significant role
designed under our supervision, to provide reasonable in the registrant’s internal control over financial reporting.
assurance regarding the reliability of financial reporting and
/s/ David M. Cordani
Chief Executive Officer
Date: February 28, 2013
CIGNA CORPORATION – 2012 Form 10-K E-9
1.
2.
c)
3.
d)
4.
5.
a)
a)
b) b)

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 31.2 Certification
I, RALPH J. NICOLETTI, certify that:
I have reviewed this Annual Report on Form 10-K of Cigna the preparation of financial statements for external
Corporation; purposes in accordance with generally accepted accounting
principles;
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact evaluated the effectiveness of the registrant’s disclosure
necessary to make the statements made, in light of the controls and procedures and presented in this report our
circumstances under which such statements were made, not conclusions about the effectiveness of the disclosure
misleading with respect to the period covered by this report; controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all disclosed in this report any change in the registrant’s
material respects the financial condition, results of operations internal control over financial reporting that occurred
and cash flows of the registrant as of, and for, the periods during the registrant’s most recent fiscal quarter (the
presented in this report; registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
The registrant’s other certifying officer(s) and I are responsible
materially affect, the registrant’s internal control over
for establishing and maintaining disclosure controls and
financial reporting; and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as The registrant’s other certifying officer(s) and I have disclosed,
defined in Exchange Act Rules 13a-15(f ) and 15d-15(f )) for the based on our most recent evaluation of internal control over
registrant and have: financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons
designed such disclosure controls and procedures, or caused
performing the equivalent functions):
such disclosure controls and procedures to be designed
under our supervision, to ensure that material information all significant deficiencies and material weaknesses in the
relating to the registrant, including its consolidated design or operation of internal control over financial
subsidiaries, is made known to us by others within those reporting which are reasonably likely to adversely affect the
entities, particularly during the period in which this report registrant’s ability to record, process, summarize and report
is being prepared; financial information; and
designed such internal control over financial reporting, or any fraud, whether or not material, that involves
caused such internal control over financial reporting to be management or other employees who have a significant role
designed under our supervision, to provide reasonable in the registrant’s internal control over financial reporting.
assurance regarding the reliability of financial reporting and
/s/ Ralph J. Nicoletti
Chief Financial Officer
Date: February 28, 2013
E-10 CIGNA CORPORATION – 2012 Form 10-K
1.
2.
c)
3.
d)
4.
5.
a)
a)
b) b)

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 32.1 Certification of Chief Executive Officer of Cigna Corporation pursuant
to 18 U.S.C. Section 1350
I certify that, to the best of my knowledge and belief, the Annual Report on Form 10-K of Cigna Corporation for the fiscal period ending
December 31, 2012 (the ‘‘Report’’):
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Cigna
Corporation.
/s/ David M. Cordani
David M. Cordani
Chief Executive Officer
February 28, 2013
CIGNA CORPORATION – 2012 Form 10-K E-11
(1)
(2)

PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 32.2 Certification of Chief Financial Officer of Cigna Corporation pursuant
to 18 U.S.C. Section 1350
I certify that, to the best of my knowledge and belief, the Annual Report on Form 10-K of Cigna Corporation for the fiscal period ending
December 31, 2012 (the ‘‘Report’’):
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Cigna
Corporation.
/s/ Ralph J. Nicoletti
Ralph J. Nicoletti
Chief Financial Officer
February 28, 2013
E-12 CIGNA CORPORATION – 2012 Form 10-K
(1)
(2)