-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DALdZzLuX+fkFjnXJCC1syAazQDpkRzAC1h6RbX/fFwoJ0lgcRNvKQOoI1eEz5ij oNBKmU33SSkAFTX7jaRA/w== /in/edgar/work/20000627/0000950159-00-000257/0000950159-00-000257.txt : 20000920 0000950159-00-000257.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950159-00-000257 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000627 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIGNA CORP CENTRAL INDEX KEY: 0000701221 STANDARD INDUSTRIAL CLASSIFICATION: [6324 ] IRS NUMBER: 061059331 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-08323 FILM NUMBER: 661217 BUSINESS ADDRESS: STREET 1: ONE LIBERTY PLACE STREET 2: 1650 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19192-1550 BUSINESS PHONE: 2157611000 MAIL ADDRESS: STREET 1: TWO LIBERTY PLACE 48TH FLOOR CITY: PHILADELPHIA STATE: PA ZIP: 19192 11-K 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number 1-8323 ----------------------------------------------- A. Full title of the plan and the address of the plan, if different from that of the issuer named below: CIGNA 401(k) Plan Two Liberty Place, 17th Floor 1601 Chestnut Street Philadelphia, PA 19192 B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: CIGNA Corporation One Liberty Place 1650 Market Street Philadelphia, PA 19192 Required Information -------------------- Financial statements and schedule for the CIGNA 401(k) Plan, prepared in accordance with the financial reporting requirements of the Employee Retirement Income Security Act of 1974, are contained in this Annual Report on Form 11-K. Exhibits -------- Exhibits are listed in the Index to Exhibits. CIGNA 401(k) PLAN Financial Statements and Supplemental Schedule December 31, 1999 and 1998 CIGNA 401(k) PLAN TABLE OF CONTENTS Page ---- Report of Independent Accountants 1 Financial Statements Statements of Net Assets Available for Benefits 2 Statements of Changes in Net Assets Available for Benefits 3 Notes to Financial Statements 4 Supplemental Schedule Schedule of Assets Held for Investment Purposes 11 REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Administrator of the CIGNA 401(k) Plan In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the CIGNA 401(k) Plan (the Plan) at December 31, 1999 and 1998, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ PricewaterhouseCoopers LLP Philadelphia, Pennsylvania June 27, 2000 CIGNA 401(k) PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS As of December 31, 1999 1998 ------ ------ (In thousands) Assets Investments $2,070,569 $1,961,823 Employer contribution receivable 12,170 8,939 Dividends receivable 1,140 914 ---------- ---------- Net assets available for benefits $2,083,879 $1,971,676 ========== ========== The Notes to Financial Statements are an integral part of these statements. -2- CIGNA 401(k) PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Years Ended December 31, 1999 1998 ------ ------ (In thousands) Investment income Net appreciation in fair value of investments $ 146,927 $ 193,602 Interest 69,998 63,273 Dividends 4,325 3,480 ----------- ----------- Total investment income 221,250 260,355 ----------- ----------- Contributions Employee contributions 85,932 84,173 Employer contributions 41,699 38,279 Rollover contributions 8,227 6,259 ----------- ----------- Total contributions 135,858 128,711 ----------- ----------- Benefits paid (244,920) (137,294) ----------- ----------- Net increase 112,188 251,772 Transfers from other plans 15 46,237 Net assets available for benefits Beginning of year 1,971,676 1,673,667 ----------- ----------- End of year $ 2,083,879 $ 1,971,676 =========== ===========
The Notes to Financial Statements are an integral part of these statements. -3- CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS Note 1 - Description of the Plan The following description of the CIGNA 401(k) Plan (the Plan) provides general information only. A more complete explanation of the features and benefits available under the Plan is contained in the Summary Plan Description and Prospectus. Generally, all domestic employees of CIGNA Corporation (CIGNA) and its participating subsidiaries can participate in the Plan, a defined contribution plan. Effective January 1, 1999, newly hired employees may enroll in the Plan immediately. However, only participants who have completed one year of eligible service may receive employer-matching contributions, as described below. Employee Contributions - ---------------------- The Plan permits tax-deferred contributions to a maximum of 16% of a participant's eligible earnings. Tax-deferred contributions are accomplished by means of an employee's election, pursuant to Section 401(k) of the Internal Revenue Code (IRC), to have an amount withheld by the employer from the employee's compensation, and for the employer to remit to the employee's plan account an amount equal to such withholding. Tax-deferred contributions are also referred to as "employee contributions." Employee contributions may be invested in any combination of several funds. Contributions are subject to certain limitations to comply with the IRC. Employer Contributions - ---------------------- CIGNA offers two kinds of matching contributions - the regular match, which is a 50% match of any participant's contributions up to 6% of eligible earnings and the variable match, which is determined annually and is discretionary. The variable match may be up to 2% of a participant's eligible earnings and is invested in the CIGNA Stock Fund. Effective April 1, 1999, half of the regular matching contributions for most participants are invested in the CIGNA Stock Fund. Employer contributions that are required to be invested in the CIGNA Stock Fund (i.e. nonparticipant-directed contributions) and the related investment earnings cannot be transferred to any of the Plan's other investment funds until termination of employment or attainment of age 55. The portion of matching contributions which are not required to be invested in the CIGNA Stock Fund are invested automatically in the same manner as employee contributions. These matching contributions are collectively referred to as "employer contributions." Rollover Contributions - ---------------------- The Plan may accept rollover contributions. Rollover contributions represent distributions received from other employer-sponsored, tax qualified pension or profit sharing plans. Distributions from other plans are subject to certain conditions to be eligible for rollover into the Plan. -4- CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS Vesting - ------- Employee contributions, including related investment earnings, are fully vested at all times. Employer contributions and related investment earnings vest 20% for each year of vesting service. Participants earn a year of vesting service if they have at least 1,000 hours of service during the calendar year period. Early vesting rules may apply upon joining the Plan if the participant was previously employed by a CIGNA company or had an account in certain plans that have since merged into the Plan. Employer contributions and related investment earnings are fully vested upon an employee's attainment of age 65, death or total and permanent disability. Full vesting would also occur if a participating CIGNA company is sold and does not maintain a successor plan, if CIGNA discontinues matching contributions or if the Plan is terminated. On July 2, 1999, CIGNA sold its domestic and international property and casualty businesses to ACE Limited (ACE). Participants who became employees of ACE under the terms of the sale became 100% vested in their Plan accounts. Upon termination of a participant's employment, that portion of employer contributions and related investment earnings which are not vested are forfeited. Forfeited amounts are used to reduce future employer contributions. Forfeitures of approximately $912,000 and $1.2 million were used to reduce employer contributions in 1999 and 1998, respectively. Participant Loans - ----------------- The Plan permits participants to borrow a portion of their account, subject to certain limitations, at an annual rate of interest with a specified repayment period. The minimum amount that can be borrowed is $1,000; the maximum total loan amount is the lesser of $50,000 or 50% of the participant's vested account balance. A participant may have no more than two outstanding loans. Loan terms range from 12 to 60 months or up to 120 months if the loan is used to buy or build a participant's primary residence. Loan interest rates remain fixed during the term of the loan. The loan is secured by the participant's account balance. Payment of Benefits - ------------------- Participants may withdraw funds subject to the requirements of the Plan. On termination of employment due to death, disability, retirement or other reasons, a participant may elect to receive either a lump-sum amount equal to the value of the participant's vested account balance, monthly installments for up to 30 years, an annuity, or a combination of these forms. To the extent amounts are invested in the CIGNA Stock Fund, a participant may elect to receive such amounts in shares of CIGNA common stock. Transfers from Other Plans - -------------------------- In February 1998, assets of approximately $46 million were transferred into the Plan from the Healthsource Retirement Savings Plan and Trust as a result of the merger of the plans. -5- CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS Plan Termination - ---------------- CIGNA intends to continue the Plan indefinitely, but reserves the right to discontinue contributions or terminate the Plan in whole or in part at any time. If contributions are discontinued or the Plan is terminated, affected participants will become fully vested. Upon Plan termination, net assets of the Plan will be distributed in the manner CIGNA elects and in accordance with the Employee Retirement Income Security Act of 1974 (ERISA) and its related regulations. Plan Trustee - ------------ Mellon Bank (East) N.A., Philadelphia, Pennsylvania is the Trustee for the Plan. Note 2 - Significant Accounting Policies Basis of Presentation - --------------------- The financial statements have been prepared on the accrual basis of accounting in conformity with generally accepted accounting principles. Certain reclassifications have been made to prior year amounts to conform with the 1999 presentation. Valuation of Investments - ------------------------ Plan investments are reported at fair value. The fair value of the Fixed Income Fund is equivalent to its contract value. Contract value represents the aggregate amount on deposit, including accumulated interest. The fair value of CIGNA common stock is based upon quoted market price. Fair value of Connecticut General Life insurance Company's (CGLIC) separate accounts is measured by the net unit value, which is based on the fair value of the underlying assets of the account. Payment of Benefits - ------------------- Benefits are recorded when paid. Plan Expenses - ------------- The investment results of all funds except for the CIGNA Stock Fund are net of management fees, investment expenses, risk charges and administrative costs charged by CGLIC. Brokers' commissions resulting from buying or selling stock in the CIGNA Stock Fund are paid from the participants' accounts and have been reflected as a reduction of the CIGNA Stock Fund's investment income in these financial statements. Other costs associated with the operation of the Plan, including trustee and legal fees, are paid by CIGNA. -6- CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS Note 3 - Investments The Plan's investment options include a fixed group annuity contract with CGLIC that provides an annual fixed rate of interest, subject to change, a CIGNA company stock fund that invests in CIGNA common stock, and several CGLIC separate accounts that invest in a variety of funds. Participants may transfer assets among the investment options, subject to certain restrictions. The following presents investments that represent 5% or more of the Plan's net assets.
As of December 31, 1999 1998 ------ ------ ($ in thousands) Fixed Income Fund $1,032,935 $ 935,011 CIGNA Stock Fund (3,784,968 and 3,204,934 shares, respectively) 304,971 247,821 CGLIC separate accounts: Charter Large Company Stock Index Fund 333,173 226,927 Charter Large Company Growth Fund 190,214 -- Fidelity Advisor Growth Opportunities Fund -- 341,284
The CIGNA Stock Fund includes nonparticipant-directed investments of $14.9 million at December 31, 1999. During 1999 and 1998, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows:
For the Years Ended December 31, 1999 1998 -------- -------- (In thousands) CGLIC separate accounts $140,941 $134,792 CIGNA common stock 5,986 58,810 -------- -------- $146,927 $193,602 ======== ========
-7- CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS Note 4 - Nonparticipant-Directed Investments Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows:
As of December 31, 1999 1998 ------- ------- (In thousands) Net Assets: CIGNA Stock Fund $14,888 $ -- Employer contribution receivable 12,170 8,939 Dividends receivable 58 -- ------- ------- $27,116 $ 8,939 ======= =======
For the Years Ended December 31, 1999 1998 -------- -------- (In thousands) Changes in Net Assets: Contributions $ 21,035 $ 8,939 Dividends and loan interest 180 -- Net depreciation in fair value of investment (870) -- Benefits paid (1,211) -- Loan activity (net) (645) -- Transfers to participant-directed investments (312) -- -------- -------- $ 18,177 $ 8,939 ======== ========
-8- CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS Note 5 - Tax Status A favorable determination letter was received from the Internal Revenue Service (IRS) for the Plan and all Plan amendments through December 31, 1994, indicating that the Plan was in compliance with the applicable requirements of the IRC. The Plan has been amended since receiving the determination letter. However, management believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. Note 6 - Related Party Transactions There are transactions between the Plan and CIGNA and its affiliates which, in the opinion of Plan management, are exempt from detailed reporting under Title I of ERISA. Investments in CGLIC's separate accounts represent investments for which CGLIC (a CIGNA subsidiary) has fiduciary responsibility. Investment in the Fixed Income Fund represents participation in the general account assets of CGLIC. CGLIC is the Plan's recordkeeper. -9- SUPPLEMENTAL SCHEDULE CIGNA 401 (k) PLAN SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES As of December 31, 1999 (In thousands)
Identity Current of Party Description Value - -------------- --------------------------------------------------- ------------ * CGLIC Fixed Income Fund $ 1,032,935 * CIGNA CIGNA Stock Fund CIGNA common stock (cost, $219,490) 304,926 Short-term investments (cost, $45) 45 CGLIC separate accounts: * CGLIC Charter Large Company Stock Index Fund 333,173 * CGLIC Charter Large Company Growth Fund 190,214 * CGLIC Barclays Equity Market Index Fund 36,923 * CGLIC Charter Small Company Growth Fund 36,042 * CGLIC State Street Global Advisors EAFE Index Fund 28,699 * CGLIC Charter Midsize Company Growth Fund 18,744 * CGLIC Charter Foreign Stock II Fund 18,143 * CGLIC Charter Small Company Value Fund 15,847 * CGLIC Charter High Yield Bond Fund 8,179 Participant Loans 5.14% to 12.95%; maturity 2000-2009 46,699 ----------- Total assets held for investment purposes $ 2,070,569 ===========
* indicates party-in-interest to the Plan -11- Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. CIGNA 401(k) PLAN Date: June 27, 2000 By: /s/ Stewart M. Beltz ---------------------------- Stewart M. Beltz Plan Administrator Index to Exhibits ----------------- Number Description Method of Filing - ------ ----------- ---------------- 23 Consent of Filed herewith Independent Accountants EX-23 2 0002.txt Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 33-51791 and No. 333-64207) of CIGNA Corporation of our report dated June 27, 2000, relating to the financial statements of the CIGNA 401(k) Plan, which appears in this Form 11-K. /s/ PricewaterhouseCoopers LLP Philadelphia, Pennsylvania June 27, 2000 -----END PRIVACY-ENHANCED MESSAGE-----