CIGNA CORPORATION INVESTOR PRESENTATION May 5, 2017 1
Forward looking statements CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This presentation, and oral statements made with respect to information contained in this release, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on Cigna's current expectations and projections about future trends, events and uncertainties. These statements are not historical facts. Forward-looking statements may include, among others, statements concerning our projected adjusted income (loss) from operations outlook for 2017, on both a consolidated and segment basis; projected total revenue growth and global medical customer growth, each over year end 2016; projected medical care and operating expense ratios and medical cost trends; future financial or operating performance, including our ability to deliver personalized and innovative solutions for our customers and clients and future growth, business strategy, strategic or operational initiatives; economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas; financing or capital deployment plans and amounts available for future deployment; our prospects for growth in the coming years; statements regarding the proposed merger between Cigna and Anthem, Inc. (Anthem) and the litigation related thereto; statements regarding the timing of resolution of the issues raised by CMS; and other statements regarding Cigna's future beliefs, expectations, plans, intentions, financial condition or performance. You may identify forward-looking statements by the use of words such as believe, expect, plan, intend, anticipate, estimate, predict, potential, may, should, will or other words or expressions of similar meaning, although not all forward-looking statements contain such terms. Forward-looking statements are subject to risks and uncertainties, both known and unknown, that could cause actual results to differ materially from those expressed or implied in forward-looking statements. Such risks and uncertainties include, but are not limited to: our ability to achieve our financial, strategic and operational plans or initiatives; our ability to predict and manage medical costs and price effectively and develop and maintain good relationships with physicians, hospitals and other health care providers; the impact of modifications to our operations and processes, including those in our disability business; our ability to identify potential strategic acquisitions or transactions and realize the expected benefits of such transactions; the substantial level of government regulation over our business and the potential effects of new laws or regulations or changes in existing laws or regulations; the outcome of litigation, regulatory audits including the CMS review and sanctions, investigations, actions and/or guaranty fund assessments; uncertainties surrounding participation in government-sponsored programs such as Medicare; the effectiveness and security of our information technology and other business systems; unfavorable industry, economic or political conditions including foreign currency movements; acts of war, terrorism, natural disasters or pandemics; any ongoing litigation with respect to the ruling of the District Court enjoining the merger and the U.S. Court of Appeals decision affirming that ruling; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement of the ruling enjoining the merger; uncertainty as to litigation with respect to the termination of the merger agreement, the reverse termination fee, declaratory judgments with respect to the foregoing and/or contract and non-contract damages for claims filed against Anthem; the risk that a government entity or court of competent jurisdiction, in any litigation, arbitration or other forum, finds in any binding or non-binding decision that Cigna has not complied, in full or in part, with its obligations under the merger agreement or that Cigna is liable for any breach, willful or otherwise, of the merger agreement; uncertainty as to whether and, if so, when Anthem will pay the reverse termination fee; uncertainty as to litigation with respect to the suit initiated by Anthem against Cigna, including for damages with respect to the transactions contemplated in the merger agreement; competitive responses to the ruling; the inability to retain key personnel; the timing and likelihood of completion of the proposed merger, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals for the proposed merger that could reduce anticipated benefits or cause the parties to abandon the transaction; if the merger is completed, the possibility that the expected synergies and value creation from the proposed merger will not be realized or will not be realized within the expected time period; if the merger is completed, the risk that the businesses of Cigna and Anthem will not be integrated successfully; disruption from the proposed merger making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred; the possibility that the proposed merger does not close, including due to the failure to satisfy the closing conditions; the risk that financing for the proposed merger may not be available on favorable terms, as well as more specific risks and uncertainties discussed in our most recent report on Form 10-K and subsequent reports on Forms 10-Q and 8-K available on the Investor Relations section of www.cigna.com as well as on Anthem's most recent report on Form 10-K and subsequent reports on Forms 10-Q and 8-K available on the Investor Relations section of www.antheminc.com. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance or results, and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Cigna undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law. 2
Non-GAAP measures NON-GAAP MEASURES AND FINANCIAL INFORMATION The Company uses adjusted income from operations as the principal measure of performance when describing its financial results and outlook. On a consolidated basis, adjusted income from operations is not determined in accordance with accounting principles generally accepted in the United States of America ( GAAP ). Adjusted income from operations is defined as shareholders net income (loss) excluding after-tax realized investment results, net amortization of other acquired intangible assets and special items. Management uses adjusted income from operations to measure financial performance because it presents underlying results of operations and permits analysis of trends in underlying revenue, expenses and shareholders net income. On a consolidated basis, adjusted income from operations should not be viewed as a substitute for the most directly comparable GAAP measure - shareholders net income. The measure operating revenues is not determined in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be viewed as a substitute for the most directly comparable GAAP measure, total revenues. Management defines operating revenues as total revenues excluding realized investment results. Realized investment results are excluded from this measure because portfolio managers may sell investments based on factors largely unrelated to the underlying business purposes of each segment. As a result, gains or losses created in this process may not be indicative of past or future underlying performance of the business. Financial information is provided as of the dates referenced herein only. Cigna does not undertake to revise or update this information. *In this presentation, the term earnings means adjusted income from operations and earnings per share means adjusted income from operations on a fully diluted per share basis. The appendix to this presentation contains reconciliations of adjusted income from operations on a consolidated basis to shareholders net income, the most directly comparable GAAP measures. Management is not able to provide a reconciliation to shareholders net income (loss) on a forward-looking basis because we are unable to predict, without unreasonable effort, certain components thereof including (i) future net realized investment results and (ii) future special items. These items are inherently uncertain and depend on various factors, many of which are beyond our control. As such, any associated estimate and its impact on shareholders net income could vary materially. 3
Table of contents Strategic focus Business segment profile Key capabilities Outlook and investor considerations 4
Mission and Strategic Focus Our Mission To improve the health, well-being and sense of security of the people we serve Our Strategy Go Deep within existing geographies and products, Go Global to offer solutions in adjacent and new markets and Go Individual to serve the holistic needs of an individual How we will win Customer Centricity Affordability Strategic Imperatives Personalization Enablers Insights Focus Brand Localization Execution Talent Value-based solutions with aligned incentives 5
Global footprint USA Canada U.K. Belgium Ireland Spain Portugal France Netherlands Denmark, Norway, Sweden Germany Italy Turkey China South Korea Switzerland Saudi Arabia Kuwait Bahrain UAE Oman Hong Kong India Thailand Taiwan Operating in 30+ countries/jurisdictions More than 41,000 employees Over 95 million customer relationships Indonesia Singapore Australia New Zealand Well established in attractive geographies 6
Strong track record in a challenging market 8-Year* Revenue CAGR 11% 8-Year* EPS CAGR 11% (in $ billions) $41.1 $39.7 $37.9 $32.4 $34.9 $29.1 (in $ billions) $9.50 $8.66 $7.29 $7.87 $8.10 $6.49 $21.1 $21.9 $18.3 $5.11 $4.53 $4.07 2009 2010 2011 2012 2013 2014 2015 2016 2017 ** Total Revenue 2009 2010 2011 2012 2013 2014 2015 2016 2017** Earnings Per Share*** * 8-year CAGR includes 2017 projected Total Revenue and projected Earnings Per Share ** 2017 Total Revenue and 2017 Earnings Per Share represent the mid-point of the guidance Cigna issued on May 5, 2017 *** See page 3 for definition of earnings per share Double-digit top-line and bottom-line growth over an 8-year period 7
2016 Business segment profile Operating Revenue * Global Health Care Operating Revenue * Earnings * * 11% 1% 4% 4% 1% 5% 9% 13% 21% 79% 70% 82% Global Health Care Global Supplemental Benefits Group Disability and Life Other Commercial Medicare Part D Other Medicare Medicaid Global Health Care Global Supplemental Benefits Group Disability and Life *See page 3 for a definition of operating revenue **Excludes Corporate and Other earnings see page 3 for definition of earnings 8
Global Health Care - Commercial Business overview / How we win Focus on health improvement and risk management, including a broad portfolio of health & wellness services which engage individuals to improve their health and productivity Partnering, providing information, and incentivizing physicians to drive better, more costeffective health outcomes for individuals Leading expatriate benefits provider with integrated health & wellness products, supported by strong service delivery and the world s largest proprietary network Differentiated customer experience for the Individual market, including tailored network and product solutions through a variety of distribution channels Product portfolio / Customer profile Products & Services Funding Types Medical Customers** Medical Stop Loss Pharmacy Behavioral Admin. Services Only (ASO) Experience Rated Over 13.7M U.S. customers Over 2M customers in collaborative arrangements Dental Health Advocacy & Coaching Guaranteed Cost ~85% of U.S. customers in ASO arrangements ** As of 03/31/17 9
Global Health Care - Government Medicare Advantage Business overview / How we win Over 85% of customers participate in our unique model focused on physician engagement and risk sharing arrangements Strong clinical capabilities and extensive experience in care coordination Top 3 market presence in our established MA markets Ongoing member satisfaction and high quality programs MA Part D strong networks and formularies with focus on improving total pharmacy costs Medicaid focused on high acuity populations: Duals, SNP, and ABD populations Product portfolio / customer profile Medicare Advantage Presence in 17 states 441,000 customers* MA Part D 853,000 customers* Medicaid Dual Eligibles ABD and DSNP Presence in Texas and Illinois * As of 03/31/17 10
Global Supplemental Benefits Business overview / How we win Leveraging deep consumer insights to drive product innovation and optimize distribution Meeting the rapidly growing demand for health protection needs Targeting the growing middle class and seniors populations globally Leading innovative, direct to consumer distribution capabilities (over 140 affinity partners) Easy to understand, affordable products that are designed to fill in gaps in coverage Locally licensed and managed by strong, locally developed talent 12.6 million policies** in force both overseas and in the U.S. Delivered 17% total revenue growth / 23% earnings* growth CAGR over the last 6 years Product portfolio Fixed cash payments Health Other Hospitalization Medicare Supplement Travel Critical Illness Personal Accident Individual Private Medical Dental Term Life Variable Life *See page 3 for definitions of earnings ** As of 03/31/17 11
Group Disability and Life Business overview / How we win Disability absence management model that reduces overall costs to employers Integration of disability products with medical and specialty offerings, promoting health, wellness and optimizing employee productivity Complementary portfolio of group disability, life and accident offerings Best-in-class return to work results that enhance work-force productivity for employers Short-term Long-term FMLA Disability Product portfolio Life Basic-term Voluntary term Group universal Accident Personal basic / voluntary Business travel Critical Illness / Accident Indemnity 12
Key themes of our strategy Go Deep Go Global Go Individual Focused on market needs Leveraging key capabilities Strong margins and effective capital deployment Competitively superior revenue and earnings growth Growth drivers and new opportunities Expect 10% 13% EPS growth on average per year * See page 3 for definition of earnings per share 13
Our customer focus access quality affordability CUSTOMERS Want high-quality, accessible personalized and affordable health care Want a healthy, productive and engaged workforce CLIENTS 15
Meeting customer needs solutions for individuals Focus on engagement, aligned incentives and support for our customers and their providers Best in industry COST AND QUALITY TOOLS CUSTOMERS PROVIDERS EMPLOYERS as recognized by leading independent consumer research organization Deliver highly personalized benefits and services for individuals at the local level 16
Solutions for providers Collaborative accountable care (CAC) arrangements IA 175 large physician group relationships 69 specialist groups in five disciplines 1 128 hospital system arrangements 4 delivery system joint ventures Serving over 2M customers in CAC relationships Large physician group Specialist group Hospital Delivery system joint venture Figures as of 05/01/17
Solutions for providers Athena Health PayerView 2016 survey Cigna ranked first for provider satisfaction among 214 companies surveyed 18
Capital deployment priorities Reinvest in core businesses M&A and partnerships to accelerate growth Return capital to shareholders Flexibility driven by considerable free cash flow generated from businesses 19
Capital deployment position* When we are no longer bound by the merger agreement - we would expect to have Parent Company cash for deployment in 2017 as follows: Deployable Capital in 2017 All Share Repurchase All M&A > $5B ~$7B ~$14B Mid-20% leverage ratio Mid-30% leverage ratio Low-40% leverage ratio $7 to $14 billion available for deployment * As of 03/31/17 and reflects receipt of the reverse termination fee 20
2017 Outlook** Earnings* 2017 Outlook Global Health Care $2,065 - $2,135 Global Supplemental Benefits $295 - $315 Group Disability and Life $230 - $260 Ongoing Businesses $2,590 - $2,710 Consolidated $2,410 - $2,530 Earnings Per Share* $9.25 - $9.75 Ongoing contributions across a diversified portfolio of businesses * See page 3 for definitions of earnings and earnings per share ** Outlook provided in Cigna s earnings release on May 5, 2017 and excludes the potential effects of future capital deployment and additional prior year reserve development 21
Investor considerations Solid track record and strong momentum Attractive EPS growth expectations Focused execution Capital flexibility Strong customer growth Greater shareholder value Competitively attractive long term outlook Capital flexibility 22
Appendix Reconciliation of GAAP to Non-GAAP Financial Measures (Dollars in millions, except per share amounts) YEAR ENDED 12/31/2009 12/31/2010 12/31/2011 12/31/2012 EPS (FULLY DILUTED): Shareholders' net income $ 4.69 4.65 4.59 5.61 Results of guaranteed minimum income benefits (0.76) 0.09 0.49 (0.10) Net realized investment losses (gains) 0.09 (0.18) (0.15) (0.11) Amortization of other acquired intangible assets 0.13 0.13 0.15 0.50 Special items (0.08) (0.16) 0.03 0.59 Adjusted income from operations $ 4.07 4.53 5.11 6.49 YEAR ENDED 12/31/2013 12/31/2014 12/31/2015 12/31/2016 EPS (FULLY DILUTED): Shareholders' net income $ 5.18 7.83 8.04 7.19 Results of guaranteed minimum income benefits (0.09) - - - Net realized investment losses (gains) (0.49) (0.40) (0.15) (0.42) Amortization of other acquired intangible assets 0.51 0.44 0.30 0.36 Special items 2.18-0.47 0.97 Adjusted income from operations $ 7.29 7.87 8.66 8.10 23
Offered by: Connecticut General Life Insurance Company or Cigna Health and Life Insurance Company. Cigna and the Tree of Life logo are registered service marks, and Together, all the way. is a service mark, of Cigna Intellectual Property, Inc., licensed for use by Cigna Corporation and its operating subsidiaries. All products and services are provided by or through such operating subsidiaries, including Connecticut General Life Insurance Company and Cigna Health and Life Insurance Company, and not by Cigna Corporation. All models are used for illustrative purposes only. 878576 11/14. Some content provided under license. 24