Keith GulledgeConsultantAcumen Learning, LLC

August 16, 2013

Cigna Q2-2013 Cigna Q2-2013 Quarterly Conference Call ReviewQuarterly Conference Call Review

and and

Follow-up fromFollow-up fromBuilding Business Acumen ClassBuilding Business Acumen Class

In conjunction with

Keith Gulledge

Q2-2013–Earnings Call Review

• Thank you for joining us!

• Call will last approximately one hour.

• Preparation:

1) Listen to the Q2-2013 Earnings Call conducted on August 1, 2013

2) Fill out the Conference Call worksheet

3) Print off any documents that would be helpful as a reference (Investor Relations webpage contains the Cigna quarterly and annual financial information)

2nd Quarter 2013 Earnings Call Review Notes

Agenda – 1 HourAgenda – 1 Hour

Introduction & Review 5 Drivers 3 min.

Key Messages & Financial Analysis 50 min. Overview Performance: Cash, Profit, Asset, Growth, People, other factors Analyst Questions & Discussion Outlook and Guidance for 2013

Wrap up – Q&A 7 min.

Earnings Call ParticipantsEarnings Call Participants

David M. Cordani—Cigna President and CEO

Thomas A. McCarthy—Cigna CFO and Executive VP

Edwin J. (“Ted”) Detrick—Cigna VP of Investor Relations

13 analysts from: Goldman Sachs

JPMorgan Chase

Bank of America Merrill Lynch

Barclays Capital

Cowen and Company

Dowling & Partners Securities

Citigroup Inc.

Deutsche Bank

Jefferies LLC

Credit Suisse AG

Monness, Crespi, Hardt & Co.

Susquehanna Financial Group

USB Investment Bank

5 Key Drivers: Review5 Key Drivers: Review

Why is CASH important?• Invest back into the

business• Pay Overhead Costs• Acquisitions• Capital

Expenditures• Return value to

Shareholders• Dividend payments• Stock Repurchases

Cash Balance and

Cash Flow (NOT same as Profit)

Profit = Revenue ▬ ExpenseIndicators:•MCR•Operating Profit•Net Margin•EPS

Profit is acalculation perGAAP for financial and tax reporting to match Revenue and Expense

MEET, EXCEED, then ANTICIPATE Customer Needs

Strength•Liquidity•Equity to Assets

Utilization•ROA•ROE•ROI

Asset Balance

Employees&

Customers,Clients

Growth is a MEASURE and a STRATEGY2 Types of Growth:

Organic & Inorganic

Importance:• Investors expect• Employees energized• Customers attracted• Executives measured

CEO’s #1 Job:Grow shareholder value

Overview of Earnings CallOverview of Earnings Call

David Cordani followed by Thomas McCarthy—Q2-2013 results and operations, and Full Year 2013 outlook.

9 or 31% PROFIT – Revenue, Costs—always in context of GROWTH 4 or 14% GROWTH STRATEGY – context of PROFITS & CUSTOMERS,

including questions around Segment growth, ASO & CAC, international

5 or 17% PEOPLE – Customers & Physicians, reporting segments, ASO, marketing strategies, Medicare Advantage membership

1 or 4% ASSETS – A few questions, other than about Capital deployment 2 or 7% CASH – Stock buy-back, capital deployment, investments 3 or 10% COMPETITORS – comparative marketing, cost structures 5 or 17% EXTERNAL FACTORS – Exchanges, regulations

Breakdown of analysts’ questions by topics & subjects (several questions addressed more than one Driver):

13 analysts asked @ 29 questions Dominant questions and discussion:

PROFITABLE GROWTH driven by PEOPLE (Customers, Physicians, Markets)

5 Driver Integration: Discussion5 Driver Integration: Discussion

CASH as an ASSET usually discussed in context of reserves, capital deployment, stock

buy-back or investment for future GROWTH PEOPLE include customers, clients,

marketing strategy, and market segments—always in context of driving revenue and

containing costs for PROFITABLE GROWTH ASSETS are referenced as investments, reserves, or portfolio of

products and services, or units such as HealthSpring—and always in the

context of future contribution to revenue and EPS GROWTH PROFITS discussed in context of revenue (rates) and cost categories,

especially MCR and operating expense trends, always with respect to past

and future GROWTH of revenue, profits and EPS

COMPETITORS & EXTERNAL FACTORS—impact on the above

Dominant Drivers: Dominant Drivers: GROWTH of PROFITS, MARKETSGROWTH of PROFITS, MARKETS

Initial SEC DisclaimersInitial SEC Disclaimers

1. Non-GAAP financial measures are used

2. “adjusted income from operations”

3. “adjusted earnings per share”

4. Reconciliation with GAAP measures

5. “Forward looking comments”—risk factors. • “Guidance” or “outlook” not “forecasts” or

“projections”• Management is held accountable for its outlook

Formality: Ted Detrick makes standard financial disclaimers at the beginning of every call per SEC regs:

Key Messages: Outline to AnalystsKey Messages: Outline to Analysts

1. Review of key Q2-2013 results

2. How Cigna’s broad portfolio if differentiated solutions creates value for our clients, customers and shareholders

3. Forces of change and disruption

4. Overall strategies

5. Outlook and expectations for balance of 2013

6. Long-term outlook and strategies—3 to 5 years

─ David Cordani, CEO—Q2-2013 Earnings Call

“We delivered strong second quarter results in each of Cigna's ongoing businesses.”

“…“We are creating value for our customers and clients in each of our business segments through sustained investments in capabilities and innovation to deliver on our ongoing commitment to quality, service and affordability. Our performance this quarter continues Cigna’s track record

of attractive financial results driven by the effective execution of our strategy across all of our business lines. Our performance this quarter continues Cigna’s track record of attractive financial results driven by the effective execution of our strategy across all of our business lines.”

─ David Cordani, CEO

Q2-2013 Press Release

Q2-2013 SummaryQ2-2013 Summary

Cigna Q2-2013 and Past PerformanceRevenues UP 8% to $8.0 billionPremiums and fees UP 8% to $7.2 billion Adjusted Income from Operations per share UP 19% to $1.78 ($512 million total)Global Medical Customer base UP by 443,000 people, or 3% to 14.3 million Customers over Q2-2012

Overview of Q2-2013Overview of Q2-2013

Cigna 2013 Outlook—IncreasedAdjusted Income from Operations— $1.8 to $1.9 B or $6.25 to $6.65 per shareAdjusted Earnings per Share—$6.25 to $6.65

Update on Key Recent EventsStrategic partnering agreement with Catamaran for our PBM business1.2 million monthly visitors to myCigna websiteGlobal Supplement expansion: rollout of new Medicare supplemental products in US; encouraging results from TurkeyAMA’s National Health Insurer Report Card—Cigna ranks highest among the 7 leading commercial insurers

Overall: Tom McCarthy, CFO Overall: Tom McCarthy, CFO

“Overall, this quarter is another example of the effective execution of our focus strategy and demonstrates the strong fundamentals of each of our operating businesses. The strength of these results provides us with good momentum and confidence to increase our full year financial outlook in 2013.”

“Our second quarter 2013 consolidated results reflect the strength of our global portfolio of businesses and a continued track record of effective execution of our focus strategy. The fundamentals in our business remainedstrong as evidenced by our second quarter results, which reflected attractive growth in revenue and earnings in each of our ongoing businesses to finalization of the strategic pharmacy benefits arrangement to deliver market-leading value to customers and continued targeted strategic investments, which will enable sustained growth into the future.”

Segment Review: Q2-2013Segment Review: Q2-20131. Global Health Care: 78% of Rev. fr. Ongoing Ops.

a. Strong performance, all markets

b. U.S. Seniors business—HealthSpring healthy

c. Premiums and fees up 5% to $5.7 billion

d. Adj. Earnings fr. Ops: up 10% to $403 million—favorable medical costs, strong revenue growth, operating expense efficiencies

e. 14.3 million global Medical customers, up 2% or 241,000 customers

f. Medical costs: Lower utilization trend. U.S. Commercial guaranteed MCR 78.7% (or 79.5% excl. prior year reserve dev.)

g. 85% of US Commercial customers are ASO—trend continues

h. Seniors medical costs: MCR for Medicare Advantage—82.9% (or 83.3% excluding prior year reserve development)

i. Commercial & Seniors risk business: “Strong pricing, disciplined underwriting, effective medical mgt. & phys. engagement”

Segment Review: Q2-2013Segment Review: Q2-2013

2. Global Supplemental Benefits

a. Substantial revenue and earnings growth

b. Recent acquisitions, organic growth, leverage differentiated distribution capabilities

c. Premiums & fees UP 35% to $613 mill. Acquisitions: Great American Supplemental Benefits; Turkey—Finansbank JV

d. Adj. Earnings fr. Ops: $49 million, 81% increase over depressed Q2-2012

3. Group Disability and Life—strong results

a. Premiums & fees UP 10% to $846 million

b. Adj. Earnings fr. Ops: UP 14% to $104 million. $27 mill. Favorable claims impact from reserve study on Group Disability

4. Remaining Operations

a. Run-off Reinsurance, Other and Corporate: $44 million loss after tax—primarily interest expense in Corporate

b. Performance consistent with expectations

Key Messages: CASH – Q2-2013Key Messages: CASH – Q2-2013

“As a result of the continued effective execution of our strategy, our second quarter results reflect strong revenue and earnings contributions from each on our ongoing businesses, as well as significant free cash flow.”

“…Overall, our capital position and updated outlook are strong and reflects the underlying performance of our operating segments, and our capital deployment strategies and priorities remain unchanged.”

─ Tom McCarthy, CFO —Q2-2013 Earnings Call

CASH: Capital Management ReportCASH: Capital Management Report

Q2-2013 Capital Deployment & 2013 Outlook

Q2-2013 ending Parent company Cash: $575 M$575 M

Liquidity needs set aside $250 M$250 M

Repurchased 7.2 mill. shares of stock thru July: $500 M$500 M

Parent company Cash—expected end of 2013: $500 M$500 M

Expect 2013 Cash for deployment—rest of 2013: $ 1.0 B $ 1.0 B

Reinsurance premium paid to Berkshire Hathaway: $ 2.2 B$ 2.2 B

Operating Cash Flow is 1.6X adjusted inc. fr. ops. $803 M$803 M

“Overall, we continue to have good financial flexibility. Our subsidiaries remain well capitalized and are generating significant free cash flow to the parent, with strong return on capital in each of our ongoing businesses.” ―Tom McCarthy, CFO

CASH: Discussion TopicsCASH: Discussion Topics

1. Cash available rest of 2013 to fuel M&A Growth—$1.0 billion, net of pension funding

2. M&A strategy: Capital deployment strategy unchanged: operations, M&A, stock buy-backs to return capital to investors.

3. Healthy free cash flow to Parent

CASH PerformanceCASH Performance

CIGNA 6-30-13 12-31-12 CHGCash & Cash Equivalents $ 3,209 $ 2,978 8%

Short-Term Investments $ 296 $ 154 92%Cash + S-T Investments $ 3,505 $ 3,132 12%

6 mos. ended:: 6-30-13 6-30-12 CHGCF fr. Ops.-Bef. Special Item $ 1,473 $ 1,877 (22%)

Special Item1 ($2,196) -- --

Cash Flow from Operations ($ 723) $ 1,877 (139%)

GROWTHGROWTHConsolidated from all Segments

1 Special Item is cash paid to Berkshire Hathaway to effectively exit the Run-off Reinsurance business.

PROFIT: Discussion Topics PROFIT: Discussion Topics

1. Favorable development in medical costs and disability reserves

2. Special after-tax charge of $24 million in transaction costs for Catamaran partnering agreement. Excluded from adjusted inc. ops.

3. ASO growth, profitability, trends

4. Earnings will be lower Q3 & Q4 due to “increased strategic spending”: telemarketing, affinity partners. No specifics.

5. 2014 outlook: no specifics. Results expected to be “competitively attractive for both revenue and earnings.”

6. Main factors to drive 100 bps reduction in medical cost trend: outpatient utilization

7. Guaranteed cost business: Pass through industry fee? Have disciplined pricing and underwriting; already considered

PROFIT: Discussion Topics—cont’d. PROFIT: Discussion Topics—cont’d.

9. Disability and Life: Disability reserve study benefits. Timing in Group Disability creates “mischief.”

10. Earnings sustainability in experience-related business? Don’t give that level of detailed results. No expected change.

10. MA MLR for Q2. Most of the MLR was anticipated, planned. Anticipated conscious program changes.

PROFIT PerformancePROFIT Performance

Q2-2013 Q2-2012 CHG

Total Revenues 7,980 7,422 8%

Tot. Benefits & Exp. 7,213 6,834 6%

Adj. Inc. from Ops. 512 434 18%

S/H Net Income 505 380 33%

S/H Net Inc.—EPS $1.76 $1.31 34%

Adj. Inc. fr. Ops.—EPS $1.78 $1.49 19%

Earnings per Share (EPS) are diluted GROWTHGROWTH

6 mos. ended: 6-30-13 6-30-12 CHG

Total Revenues $16,163 $14,176 14%

Tot. Benefits & Exp. $ 15,322 $13,036 18%

Adj. Inc. from Ops. $ 1,009 $ 793 27%

S/H Net Income $ 562 $ 751 (25%)

S/H Net Inc.—EPS $1.95 $2.59 (25%)

Adj. Inc. fr. Ops.—EPS $3.50 $2.74 28%

PROFIT PerformancePROFIT Performance

Special Items incurred in 6 months ended 6-30-13

Pre-tax charge related to PBM partnering agreement with Catamaran $ 37 m

Pre-tax charge to exit the Run-off Reinsurance business (Berkshire transaction) $ 781 m

Disability claims regulatory matter—Group Disability & Life seg. (pre-tax charge) $ 77 m

Total Special Items in 6 months ended 6-30-13 $ 895 m

Reconciliation: Adjusted EPS for 6 months ended 6-30-13

Adjusted income (loss) from operations $ 3.50

Results of GMIB business $ 0.09

Special items (after tax) ($ 2.02)

Net realized investment gains (after tax) $ 0.38

Shareholders’ net income $ 1.95

Special Cash item incurred in 6 months ended 6-30-13

Cash used to exit Run-off Reinsurance business (incl. Berkshire Hathaway) $2,196 m

ASSETS: Discussion TopicsASSETS: Discussion Topics

1. Pleased with results of $2.6 billion commercial loan portfolio

2. Annual review: improvement in loan-to-value ratio at 64% and improvement in debt service coverage ratios

3. Success of start-up operations in Turkey with Finansbank: “very pleased with the first year progress there.” Positive outlook. No meaningful contribution to profit for 2013.

ASSETS PerformanceASSETS Performance

As of: 6-30-13 12-31-12 CHG

Assets $53,829 $53,734 0.2%

Liabilities $43,953 $43,851 0.2%

Equity $ 9,775 $ 9,769 --

Equity Ratio 18.2% 18.2% --

ROE 20.6% 16.2% 440 bps

Adj. Inc.-Op. $ 2,018 $ 1,586 27%

Equity Ratio = Equity ÷ AssetsROE uses Adj. Inc. fr. Operations

GROWTHGROWTH

When Analysts talk about Cigna’s Assets, they are usually referring to the business portfolio of products and services, or to the business units, such as HealthSpring.

2Adj. Inc.-Op. is annualized for ROE calculation: 6 mos. ended:6-30-13 = $1,0096-30-12 = $ 793

2

11Liabilities includes redeemable non-controlling interests of Finansbank

““We continue to see an attractive growth We continue to see an attractive growth outlook for Cigna over the long term.”outlook for Cigna over the long term.”

Overall Long-term Strategy: GROWTHOverall Long-term Strategy: GROWTH

GROWTHGROWTH

Virtually every question, statement or comment was made in the context and consideration of its possible

impact on PROFITPROFIT and GROWTHGROWTH, including future conditions. future conditions.

GROWTH StrategiesGROWTH Strategies

1. Positioned to win in a rapidly changing marketplace

2. “Global forces of change”—demographic, economic, legislative

3. Overall strategies: Solutions offering differentiated value Targeted investments for sustained future growth

4. More specifically: Enhancements to innovative solutions

and tools—PBM expansion, Catamaran Connect to retail customer markets Expand into new global geographies Expand customer technology tools Global Supplemental business—Medicare supplement products, in U.S.; Turkey is encouraging Continued efficiencies for physician engagement partnering CAC expansion—over 60 now. “Triple aim”: improve clinical

quality, customer satisfaction, affordability

GROWTH: Discussion TopicsGROWTH: Discussion Topics

1. M&A priorities: Global portfolio; Seniors market, including duals; expand retail portfolio of capabilities (“retail” rather than “individual”)

2. ASO business: Competitors? Good growth over last couple of years. Over 80% of portfolio is ASO. Employers want a “more engaged wellness preventative care model with their employees.”

3. Competition in ASO business, impact on Cigna’s future? We’ll continue to be innovative. “Down market” of smaller employers—delivery platform different. See strong growth opportunities.

4. Distribution, beyond private exchanges. Movement from group to individual. Growth opportunity in supplemental and voluntary benefits—direct sales, affinity partners. We have both wholesale and retail experience.

5. Relative advantages in this market of life or health players, or both? “Don’t want to speculate.”

PEOPLE: Discussion TopicsPEOPLE: Discussion Topics

1. Ability to grow Medicare Advantage membership next year

with impact of rates

2. ASO National Account membership up or down end of year? Range from minus 1% or 2%, to plus 1%.

3. Pace of ASO conversions, 5 mos. before 2014? No meaningful employer acceleration.

4. Existing markets for seniors business. See exit (attrition) of 2% to 3% of current MA covered lives.

5. Targets for CAC expansion. 1 million lives now. Do not aggregate medical costs flowing through it. Been in space 6 years and 10 years with HealthSpring. Use CAC as preferred network in Go Deep markets. Will grow significantly.

• Global Supplemental Benefits: Percent Turkey? Minimal in 2013. Will become big to rival Korea.

GROWTH & PEOPLEGROWTH & PEOPLE

Global Health Care 6-30-13 6-30-12 CHG Premiums & Fees $11,511 $10,267 12%

Adj. Inc. fr. Ops. After Tax $ 830 $ 664 25%Adjusted Margin* 6.6% 5.9% 70 bps

Tot. Medical Customers 14,286 13,843 3%

Group Disability and Life 6-30-13 6-30-12 CHGPremiums & Fees $ 1,704 $ 1,530 11%

Adj. Inc. fr. Ops. After Tax $ 153 $ 159 (4%)Adjusted Margin* 8.2% 9.5% (130 bps)

Covered Lives (est.) 12,100 11,000 10%Total Customer Relationships 80,774 74,151 9%

Global Supplemental Benefits 6-30-13 6-30-12 CHGPremiums & Fees $ 1,217 $ 899 35%

Adj. Inc. fr. Ops. After Tax $ 104 $ 70 49%Adjusted Margin* 8.0% 7.3% 70 bps

Global Supple. Benefits Pols. 11,798 8,954 32%

* Adjusted Margin After Tax = Adj. Inc. fr. Ops After Tax ÷ Segment Revenues

Performance by SegmentsPerformance by Segments 6 mos6 mos. ended:. ended:Policies & Lives in 000’s

PEOPLEPEOPLE

PEOPLEPEOPLE

Medical customers up by 443,000 in last 12 mos.

PEOPLEPEOPLE

Benefits + Op. Exp. UP 18.5%

EXTERNAL FACTORS: Discussion TopicsEXTERNAL FACTORS: Discussion Topics

1. Environment for international business. Slowdown. Have two international businesses: globally mobile population—products to corporations, government /quasi-governmental organizations (IGOs, NGOs) and targeted high net-worth individuals; and Global Supplemental business.

2. Impact of environment on small group ability to self-insure. We are highly engaged but not a targeted business for Cigna (under 50).

3. Private exchanges: many questions, much discussion—outlook over 3-5 years? Two early to tell. We will be a player. Size of market, nature of coverage, self-insured, full risk. Will take many different forms.

4. Rollout of public exchanges under ACA: opportunities? Don’t play under 50 life or individual guarantee cost market. Pilots for last 3 years, 10 cities. Learned much.

COMPETITORS: Discussion TopicsCOMPETITORS: Discussion Topics

1. Competitive landscape for ASO? No broad change. Pricing might become more competitive.

2. Medicare Advantage: Market exits due to competition? We will grow our customer base in 2014. Will see 2% to 3% exit of our covered lives.

3. Guaranteed Cost business: Pricing from competitors. No dramatic change seen.

3- to 5- Year Outlook and Strategies3- to 5- Year Outlook and Strategies

3. Opportunities in U.S. retail market and global business market

4. Largest network of health care professionals in the world

5. Our “differentiated value proposition” is being well received and implemented—leverage marketing and distribution capabilities

6. Our markets: U.S. Health U.S. Seniors Global Employer Group Disability and Life Global businesses, mobile population

7. U.S. Seniors: 10,000 people daily into Medicare--our “differentiated physician partnership model positions us to excel over long term”

1. Well positioned for future growth

2. Target annual EPS growth over next 3-5 years of 10-13%

3. Will continue our Go Deep, Go Global and Go Individual strategies

4. We will make targeted acquisitions, globally and in the US

Outlook for 2013 again increasedOutlook for 2013 again increased

“We have increased our outlook for 2013 again this quarter. The strength of our second quarter and our track record of effective execution of our strategy gives me confidence that we will achieve our full year outlook.

“Further, our broad portfolio of products with differentiated capabilities, position in global markets with attractive growth potential gives us confidence that we will deliver competitively attractive revenue and earnings performance in 2014.”

─ David Cordani, CEO

Q2-2013 Earnings Call

2013 Outlook: Revised upward from Q1-20132013 Outlook: Revised upward from Q1-2013

1. Revenue Growth: UP 9% to 11% over 2012

2. Adjusted Income from Operations: $1.8 B to $1.9 B

3. Adjusted EPS: $6.25 to $6.65 (UP $0.20 to $0.25 per share)

4. Global Health Care—Earnings: $1.50 B to $1.57 B (UP $0.20 to $0.25 p.s.)

1.Medical Customers UP 1% to 2%

5. Medical Cost trend—US Commercial UP 5% to 6% (100 bps lower)

6. MCR—US Commercial guaranteed: UP 81.5% to 82.5% (100 bps lower)

7. Seniors—Medicare Advantage: MCR—82% to 83%

8. Operating Expense Ratio: DN 50 bps to 22.1% (from 22.6% in 2012)

9. Global Supplemental Benefits: Strong top line growth; Earnings $180-$200 million (UP 22% to 25% over 2012). Strategic increase in operating expenses.

10.Group Disability and Life: Earnings $280 to $300 million (UP $10 million)

Summary: Cigna Q2-2013Summary: Cigna Q2-2013

“We're pleased with our strong second quarter results. They reinforce consistent, effective execution of our Go Deep, Go Global, and Go Individual strategy, which guides our 35,000-plus Cigna colleagues around the world who work each and every day to help our customers. The combination of our clear strategy, consistent execution, outstanding team and sustained investments and capabilities positions us well to deliver competitively attractive results for the remainder of 2013 and beyond.”

─ David Cordani, CEO—Q2-2013 Earnings Call

Thank you for joining the Business Acumen Earnings Call review.

Encouragement & ChallengeEncouragement & Challenge

My encouragement and challenge to continue to sharpen your Business Acumen:

Quarterly review of Cigna’s financial performance— Investor Relations section of website, financial information, press release & other materials provided

Listen to quarterly Earnings Call or review transcript Quarterly reviews of competitors, industry, economy Continue to watch stock performance thru 2013 Implement Action Items to drive business value Teach your teams

QUESTIONS & COMMENTS?QUESTIONS & COMMENTS?