10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003
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

CIGNA Corporation
(Exact name of registrant as specified in its charter)

Delaware	06-1059331
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
One Liberty Place, Philadelphia, Pennsylvania	19192
(Address of principal executive offices)	(Zip code)
Registrant's telephone number, including area code (215) 761-1000
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.
Preferred Stock	Pacific Exchange, Inc.
Purchase Rights	Philadelphia Stock Exchange, Inc.
Securities registered pursuant to section 12(g) of the Act:
None

        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 X  No   

        Indicate by check mark 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. [X]

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes X  No   

        The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2003, was approximately $6.4 billion.

        As of January 31, 2004, 140,973,691 shares of the registrant’s Common Stock were outstanding.

        Parts I and II of this Form 10-K incorporate by reference information from the registrant’s annual report to shareholders for the year ended December 31, 2003. Part III of this Form 10-K incorporates by reference information from the registrant’s proxy statement to be dated on or about March 26, 2004.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business
	A.   Description of Business	3
	B.   Financial Information about Industry Segments	4
	C.   Health Care	5
	D.   Disability & Life	15
	E.   Retirement	17
	F.   International	24
	G.   Run-off Reinsurance	27
	H.   Other Operations	29
	I.    Investments and Investment Income	30
	J.    Regulation	35
	K.   Ratings	39
	L.   Miscellaneous	41
Item 2.	Properties	41
Item 3.	Legal Proceedings	41
Item 4.	Submission of Matters to a Vote of Security Holders	42
Executive Officers of the Registrant		43
PART II
Item 5.	Market for Registrant's Common Equity and Related Stockholder Matters	43
Item 6.	Selected Financial Data	43
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of
	Operations	44
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	44
Item 8.	Financial Statements and Supplementary Data	44
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial
	Disclosure	44
Item 9A.	Controls and Procedures	44
PART III
Item 10.	Directors and Executive Officers of the Registrant	44
	A.   Directors of the Registrant	44
	B.   Executive Officers of the Registrant	44
	C.   Code of Ethics and Other Corporate Governance Disclosures	44
Item 11.	Executive Compensation	45
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	46
Item 13.	Certain Relationships and Related Transactions	46
Item 14.	Principal Accounting Fees and Services	46
PART IV
Item 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	46
Signatures		48
Index to Financial Statement Schedules		FS-1
Index to Exhibits		E-1

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PART I

Item 1. BUSINESS

A. Description of Business

        CIGNA Corporation had consolidated shareholders’ equity of $4.5 billion and assets of $91.0 billion as of December 31, 2003, and revenues of $18.8 billion for the year then ended. CIGNA Corporation and its subsidiaries constitute one of the largest investor-owned employee benefits organizations in the United States. Its subsidiaries are major providers of employee benefits offered through the workplace, including health care products and services, group life, accident and disability insurance, retirement products and services and investment management. CIGNA’s major insurance subsidiary, Connecticut General Life Insurance Company (“CG Life”), traces its origins to 1865. CIGNA Corporation was incorporated in the State of Delaware in 1981.

        As used in this document, “CIGNA” and the “Company” may refer to CIGNA Corporation itself, one or more of its subsidiaries, or CIGNA Corporation and its consolidated subsidiaries. CIGNA Corporation is a holding company and is not an insurance company. Its subsidiaries conduct various businesses, which are described in this document.

        In 2003, CIGNA changed its segment presentation to report its health care operations and its separately managed group disability and life insurance operations as two discrete segments. Previously, results from these operations were combined as a single segment. CIGNA also renamed its segments as listed below.

        CIGNA’s revenues are derived principally from premiums and fees, and investment income. The financial results of the operating divisions are reported in the following segments, as shown:

•   Health Care Segment

• CIGNA HealthCare

• Disability and Life Segment

• CIGNA Group Insurance

• Retirement Segment

• CIGNA Retirement & Investment Services

• International Segment

• CIGNA International

• Run-off Reinsurance Segment

• CIGNA Reinsurance

• Other Operations consists of:

• deferred gains recognized from the 1998 sale of the individual life insurance and annuity business;

• corporate life insurance on which policy loans are outstanding;

• settlement annuity business; and

• certain investment management services.

        Investment results produced by CIGNA Retirement & Investment Services on behalf of CIGNA’s insurance operations are reported in each segment’s results.

Sale of Retirement Business

        In November 2003, CIGNA entered into an agreement to sell its retirement business, excluding its corporate life insurance unit, to Prudential Financial, Inc. (“Prudential”) for $2.1 billion in cash. CIGNA expects the sale, which is subject to regulatory approvals and other conditions prior to closing, to be completed around the end of the first quarter of 2004. The agreement provides that the sale price will be reduced by $250 million if the financial strength rating of Connecticut General Life Insurance Company, a CIGNA subsidiary

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that underwrites much of the business sold by CIGNA’s retirement benefits business, is downgraded to certain levels by Standard and Poor’s and Moody’s before the sale closes. CIGNA considers downgrades to these levels to be unlikely. For additional information, see “Sale of Retirement Business” in Management’s Discussion and Analysis (“MD&A”) and Note 4(A) to the Financial Statements included in CIGNA’s 2003 Annual Report to Shareholders (“Annual Report”).

New Strategic Focus

        The pending sale of the retirement business positions CIGNA for its new strategic focus, which is to be a leading provider of health care and related benefits. This strategy builds on CIGNA’s existing capabilities of medical, pharmacy, behavioral health, clinical information management, dental and vision benefits, case and disease management, and disability, life and accident products. CIGNA is realigning the organization and consolidating support functions to increase efficiency and responsiveness to customers. For additional information, see “Restructuring Programs” under “Other Matters” in the MD&A included in CIGNA’s Annual Report.

Available Information

        CIGNA’s Internet address is http://www.cigna.com. CIGNA’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports are available through CIGNA’s website as soon as reasonably practicable after the filing or furnishing of such material with the Securities and Exchange Commission. See “Code of Ethics and Other Corporate Governance Disclosures” in Part III, Item 10 of this Form 10-K regarding additional available information.

B. Financial Information about Industry Segments

        Financial information in the tables that follow is presented in conformity with generally accepted accounting principles (“GAAP”), unless otherwise indicated. Certain reclassifications have been made to prior years’ financial information to conform to the 2003 presentation. Industry rankings and percentages set forth below are for the year ended December 31, 2002, unless otherwise indicated. Unless otherwise noted, statements set forth in this document concerning CIGNA’s rank or position in an industry or particular line of business have been developed internally, based on publicly available information.

        Financial data for each of CIGNA’s business segments is set forth in Note 20 and financial information for foreign operations is set forth in Note 21 to the Financial Statements included in CIGNA’s Annual Report.

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C. Health Care

Principal Products and Markets

        CIGNA’s Health Care operations offer a wide range of managed care and indemnity products and services primarily to meet the needs of employers of all sizes and their employees and dependents. These operations also provide disability and life insurance products which were historically sold in connection with certain experience-rated medical accounts and continue to be managed by CIGNA’s health care business. These products and services are provided by subsidiaries of CIGNA Corporation.

        The customers of these operations range in size from some of the largest United States corporations to small enterprises, and include employers, multiple employer groups, unions, government-sponsored programs and other groups. Products are marketed in all 50 states, the District of Columbia and Puerto Rico.

        The following table sets forth the net premiums and fees for this segment by principal product categories (described beginning on page 6) and by funding arrangements (described beginning on page 11).

Premiums and Fees	As of December 31,
	2003		2002		2001
	(In millions)
By Product:
Managed Care:
Medical	$	6,173	$	6,496	$	5,845
Dental		396		408		412
Total Managed Care		6,569		6,904		6,257
Indemnity:
Medical		4,510		4,475		3,982
Dental		548		535		516
Life		582		673		734
Disability and other		56		37		89
Total Indemnity		5,696		5,720		5,321
Total	$	12,265	$	12,624	$	11,578
By Funding Arrangement:
Guaranteed Cost	$	6,015	$	6,343	$	5,734
Retrospectively Experience-Rated		4,316		4,330		3,945
Administrative Services Only		1,682		1,664		1,643
Minimum Premium		252		287		256
Total	$	12,265	$	12,624	$	11,578

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Products and Services

        CIGNA’s Health Care operations provide a wide array of products and services to satisfy the benefit needs of employers and their employees and dependents, as described below:

• managed care products and services, such as:

•  medical health maintenance organizations (“HMOs”),

• point-of-service (“POS”) medical plans,

• managed dental programs,

• managed behavioral health care services and employee assistance programs,

• medical cost and utilization management, and

• managed pharmacy programs and pharmaceutical fulfillment services; and

• indemnity products and services, such as:

• medical and dental preferred provider organizations (“PPOs”),

• traditional medical and dental indemnity,

• indemnity pharmacy programs, and

• disability and life insurance products historically sold in connection with certain experience-rated medical accounts.

Managed Care Products and Services

        Managed care products provide for an effective, efficient use of health care services by coordinating utilization of care and controlling unit costs through provider contracts. Managed care products and services include those described below.

        Medical Health Maintenance Organizations. HMOs generally offer the most cost-efficient form of health care coverage. Members typically choose a primary care physician from CIGNA’s provider network. Primary care physicians are responsible for the member’s primary medical and preventive care. In some cases, a member must receive a referral from his or her primary care physician to receive services from a participating specialist or medical facility that are covered under the member’s plan.

        CIGNA also provides an open access HMO product. This product offers the member an HMO network of providers without the requirement of a referral from the primary care physician in order to have services provided by a participating specialist or medical facility covered under the member’s plan.

        CIGNA delivers its medical HMOs principally through individual practice association (“IPA”) models.

        Under an IPA model, the HMO contracts with independent physicians and hospitals to provide services to members. IPA models typically cover wide geographic areas and have low fixed costs. They rely on cost-effective contracts with providers and appropriate medical cost and utilization management to deliver quality medical care at an appropriate cost. CIGNA has one medical HMO that offers the consumer both an IPA model and a staff model. In a staff model, physicians and certain other providers are employees of the medical HMO.

        The IPA model typically offers broader provider choice to the consumer, whereas the staff model generally offers more limited provider choice but lower costs.

        As of December 31, 2003, CIGNA’s HMO networks included approximately 275,000 physicians and 2,700 hospitals.

        Currently, many contracted providers are compensated by CIGNA on a discounted fee-for-service or other service-specific basis (such as hospital per diems) for health care services provided to the member. Certain of CIGNA’s HMO providers receive a monthly predetermined fee (capitation) from CIGNA to cover the cost of certain services available to each HMO member, regardless of the medical services actually provided to each member. Capitation arrangements shift some of the financial risk from CIGNA to the providers.

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        In some cases, capitated providers subcontract with other providers for certain health care services. In the event that the capitated provider is paid but fails to pay its subcontracted providers, the subcontracted providers or regulators may attempt to look to the CIGNA HMO for payment. The CIGNA HMO may, in some cases, voluntarily make additional payments directly to the subcontracted providers to ensure continuity of care to its members through the provider network. A few states have adopted laws or regulations requiring that HMOs pay subcontracted providers in this situation. CIGNA HMOs typically require a satisfactory letter of credit or other financial guarantee from the capitated provider to protect CIGNA from this possible exposure, although not all capitated arrangements have this protection.

        CIGNA contracts with the federal Centers for Medicare and Medicaid Services (“CMS”) to provide Medicare HMO coverage for eligible individuals in Arizona. The contract provides for a fixed per member per month premium from CMS, based upon a formula that calculates the projected cost of providing services for each Medicare member. Premium amounts are updated annually. Members generally receive enhanced benefits over standard Medicare fee-for-service coverage, including prescription drug and vision coverage, and pay lower, fixed co-payments for services used. Depending on the plan benefits selected, members may be required to pay an additional premium to CIGNA for their HMO coverage.

        CIGNA is also a participating provider in the fee-for-service Medicare program, furnishing outpatient care to Medicare beneficiaries through CIGNA subsidiaries.

        Reimbursement for inpatient and outpatient services is made by CMS pursuant to laws and regulations governing the Medicare program. Currently, CMS reimburses outpatient services in accordance with payment classification groups based on historical cost information filed by the participating CIGNA subsidiary.

        Until the fourth quarter of 2003, CIGNA also contracted with the Office of Personnel Management for the federal employees program and with one state agency to offer coverage for individuals eligible for Medicaid.

        Point-of-Service Medical Plans. Under POS medical plans, participants generally pay an HMO-type fixed co-payment or co-insurance amount to use CIGNA’s managed care network providers. Alternatively, participants may choose to go to non-network providers. Use of non-network providers is subject to certain deductibles and cost sharing provisions, which result in a higher cost to participants than if they used network providers. Participants in point-of-service plans are considered managed care members for purposes of the table on page 10.

        CIGNA also provides an Open Access POS product. This product allows access to specialist providers without the requirement of a referral from the primary care physician.

        Managed Dental Programs. CIGNA offers managed dental care products through a network of independent providers in most states. CIGNA contracts with dentists to provide services to members. Most network dentists receive a monthly predetermined fee (capitation) for each covered member. Network dentists may also receive additional fees for certain services. Generally, members are responsible for a fixed co-payment for certain covered services provided by a network dentist.

        Managed Behavioral Health. CIGNA also provides managed behavioral health care services and employee assistance programs. CIGNA provides its behavioral health care coverage through a national network of independent behavioral health providers and facilities that are paid on a contracted fee-for-service basis. Members pay a fixed co-payment for most of these services.

        Medical Cost and Utilization Management. In addition, CIGNA provides medical cost containment and disability management services to help insurers and employers optimize the quality relative to the cost of certain of their benefit programs.

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        Managed Pharmacy Programs. CIGNA also provides managed pharmacy benefit programs to HMO and POS members through participating national and independent pharmacies. Members typically pay a fixed co-payment for these services.

        CIGNA also offers mail order, telephone and on-line pharmaceutical fulfillment services through its CIGNA Tel-Drug operation. Tel-Drug offers to managed care and PPO participants a cost-effective alternative to other participating pharmacies at the same benefit levels offered by the consumer’s underlying medical benefits plan.

Credentialing and Quality Management

        CIGNA promotes the delivery of quality care under its managed care products in part through the credentialing of medical providers and facilities, using quality criteria which meet or exceed external accreditation or state regulatory agency standards, or both.

        CIGNA’s practitioner credentialing criteria include verification of a current unrestricted professional license, a valid and unrestricted license to prescribe drugs (as appropriate), board certification or other appropriate training and hospital privileges (as appropriate) at a CIGNA participating facility. In addition, CIGNA queries the National Practitioner Data Bank to obtain information about the practitioner’s malpractice experience and also obtains Medicare sanction activity. CIGNA expects practitioners to demonstrate an acceptable history of malpractice claim experience, adequacy of malpractice insurance coverage and an acceptable work history. Typically, most practitioners are recredentialed every three years.

        To be credentialed, CIGNA requires the medical facilities with which it contracts to have an unrestricted state license, no sanctions by the Department of Health and Human Services, accreditation by an approved accrediting organization and adequate malpractice and general liability coverage. Typically, most medical facilities are recredentialed every three years.

        CIGNA also encourages the delivery of quality care through its internal quality program. Accreditation by the National Committee for Quality Assurance (“NCQA”) of CIGNA’s medical HMOs validates CIGNA’s quality program. The NCQA is a nationally recognized independent, not-for-profit organization dedicated to assessing, measuring and reporting on the quality of managed care plans. As of December 31, 2003, 71% of CIGNA’s U.S. plan locations are NCQA accredited and 100% of these have received Excellent or Commendable accreditation for HMO and POS products. The remainder of CIGNA’s U.S. plan locations are scheduled to complete NCQA accreditation by May 2004.

        In addition, CIGNA participates in NCQA’s Health Plan Employer Data and Information Set (HEDIS) Quality Compass Report. HEDIS Effectiveness of Care measures are a standard set of metrics to evaluate the effectiveness of managed care organization clinical programs. CIGNA’s national results compare favorably to industry averages.

Indemnity Products and Services

        Preferred Provider Organizations. CIGNA has contractual arrangements with certain physicians, hospitals and other independent providers that comprise medical and dental PPO networks. Under a typical PPO plan, a participant may elect (with certain exceptions) to receive care from any health care provider. Within applicable state requirements and restrictions, CIGNA reimburses PPO participants at a higher percentage for the costs of care obtained from contracted providers, who are generally paid on a discounted basis, than it does for care obtained from non-contracted providers. As of December 31, 2003, 2002 and 2001, CIGNA had 141, 140 and 139 medical PPO networks. As of the same dates, CIGNA’s national dental PPO network had approximately 62,000, 57,000 and 54,000 participating dentists.

        Some of CIGNA’s medical PPO networks, called “Gatekeeper PPOs”, use contracted primary care physicians to make referrals to specialists and other health care providers.

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Under a Gatekeeper PPO, the higher reimbursement level is usually available only if participants obtain a referral from their primary care physicians before using other contracted providers. As of December 31, 2003, 2002 and 2001, CIGNA had 48 Gatekeeper PPO networks, in addition to its medical PPO networks that do not require referrals from the primary care physician.

        Participants in Gatekeeper PPOs are considered managed care members for the purposes of the covered lives table on page 10.

        Traditional Medical and Dental Indemnity. Traditional medical and dental indemnity products generally do not restrict selection of providers or vary their insureds’ cost sharing obligations depending on the providers chosen. The costs of traditional indemnity products to customers are higher than managed care products, due to the limited number of negotiated fee arrangements with physicians and hospitals to control unit costs and limited influence over the utilization of services. Under indemnity arrangements, insureds usually pay deductibles and coinsurance, subject to annual out-of-pocket maximums.

        Indemnity Pharmacy Programs. CIGNA also provides pharmacy programs to its PPO and traditional medical indemnity participants. Participants may choose to pay the retail price of prescriptions, or obtain prescriptions at a lower price from the program’s participating pharmacies. As stated above, PPO participants also have access to mail order, telephone and on-line pharmaceutical fulfillment services through Tel-Drug, which is a cost-effective alternative to other participating pharmacies.

Covered Lives

        CIGNA’s medical and dental managed care and indemnity products and services and managed behavioral health care services applied to the following approximate number of lives for the periods presented:

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Approximate Number of Covered Lives
	As of December 31,
	2003		2002		2001
	(In thousands)
Medical Covered Lives
Managed Care:
Guaranteed Cost:
Commercial		1,332		1,752		2,016
Medicare and Medicaid		42		113		84
Experience-rated, ASO and Minimum Premium
(including POS and Gatekeeper PPOs)		4,612		4,885		4,709
Total Managed Care		5,986		6,750		6,809
Indemnity (estimated):
Medical		826		995		1,089
Medical PPO (excluding Gatekeeper PPOs)		4,723		5,346		5,352
Total Indemnity		5,549		6,341		6,441
Total Medical Covered Lives		11,535		13,091		13,250
Behavioral Care * (estimated)		14,189		14,113		13,346
Dental Covered Lives*:
Managed Care		2,358		2,559		2,756
Indemnity and Dental PPO (estimated)		9,791		10,458		10,600
Total Dental Covered Lives		12,149		13,017		13,356
Pharmacy *		8,933		9,773		9,356

_________________

* Reflects members enrolled in CIGNA’s behavioral care, dental or managed pharmacy programs, which provide access to services through a nationwide network. These members may also be Managed care or Indemnity members, or they may have stand-alone behavioral, dental or pharmacy coverage.

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        Disability and Life. CIGNA also reports in this segment group disability and life insurance products which were historically sold in connection with certain experience-rated medical accounts and continue to be managed with the health care business.

        Approximately 570 group life insurance policies covering approximately 12.4 million lives were outstanding as of December 31, 2003.

Distribution

        CIGNA employs group sales representatives to distribute the managed care and indemnity products and services of this segment through insurance brokers, insurance consultants and directly to employers. CIGNA also employs representatives to sell medical cost containment, managed behavioral health care and employee assistance services, and disability management programs directly to insurance companies, HMOs, third party administrators and employer groups. As of December 31, 2003, the field sales force for the products and services of this segment consisted of approximately 490 sales representatives in 65 field locations.

Funding Arrangements

        The segment’s managed care and indemnity products and services are offered through guaranteed cost, retrospectively experience-rated, administrative services only (“ASO”) and minimum premium funding arrangements. Customers may combine funding arrangements to benefit from the features of more than one.

        Under guaranteed cost funding arrangements, CIGNA charges a fixed premium and bears the risk for costs incurred in excess of the premium.

        Under retrospectively experience-rated funding arrangements, a premium that typically includes a margin to partially protect against adverse claim fluctuations is determined at the beginning of the policy period and may be adjusted at the end of the policy period based on the actual incurred costs over the policy period. CIGNA generally bears the risk for costs incurred in excess of premiums, but has the potential to recover this excess from policyholders that renew their experience-rated contracts with CIGNA. For additional discussion, see “Pricing, Reserves and Reinsurance” below.

        Under ASO funding arrangements, the customer may self-fund all or a portion of its claims, and the customer or plan sponsor, rather than CIGNA, assumes the risk for claim costs incurred. CIGNA provides claims processing, health quality and medical cost containment services (through its provider networks) or utilization management programs, or a combination of these services, in exchange for an administrative service fee. The plan sponsor is responsible for self-funding all claims, but may purchase stop-loss insurance from CIGNA or other insurers for claims in excess of some predetermined amount in total or for specific types of claims or both.

        Minimum premium funding arrangements combine insurance protection with an element of self-funding. The policyholder assumes the risk for, and self-funds, claim costs up to a predetermined aggregate, maximum amount, and CIGNA bears the risk for claim costs incurred in excess of that amount, but has the potential to recover this excess from policyholders that renew their minimum premium contracts with CIGNA. Accordingly, minimum premium funding arrangements have a risk profile similar to retrospectively experience-rated funding arrangements.

Pricing, Reserves and Reinsurance

        Premiums and fees charged for most insured managed care and indemnity products are generally set in advance of the policy period and are guaranteed for a one-year duration. Premiums and fees charged for disability and life insurance products are often guaranteed for one year, but contracts may be subject to termination.

        Premium rates are established either on a guaranteed cost basis or on a retrospectively experience-rated basis.

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        Charges to customers established on a guaranteed cost basis at the beginning of the policy period cannot be adjusted to reflect actual claim experience during the policy period. A guaranteed cost pricing methodology reflects assumptions about future claims, expenses, credit risk, enrollment mix, investment returns, competitive considerations and profit margins. Claim and expense assumptions may be based in whole or in part on prior experience of the account or on a pool of accounts, depending on the group size and the statistical credibility of the experience. Generally, guaranteed cost groups are smaller and less statistically credible than retrospectively experience-rated groups. In addition, pricing for health care products that use networks of contracted providers also reflects assumptions about the impact of provider contracts on future claims. Premium rates may vary among accounts to reflect the anticipated contract mix, family size, industry, renewal date, and other cost-predictive factors. In some states, premium rates must be approved by the state insurance departments, and state laws may restrict or limit the use of rating methods.

        Premiums established for retrospectively experience-rated business may be adjusted for the actual claim and administrative cost experience of the account through an experience settlement process subsequent to the policy period. To the extent that the cost experience is favorable in relation to the prospectively determined premium rates, a portion of the initial premiums may be credited to the policyholder as an experience refund. If claim experience is adverse in relation to the initial premiums, the resulting experience deficit may be recoverable, according to contractual provisions, through future premiums and experience settlements, provided the contract remains in force.

        CIGNA contracts on an ASO basis with customers who fund their own claims. CIGNA charges these customers administrative fees based on the expected cost of administering their self-funded programs. These fees reflect anticipated or actual experience with respect to claim volumes, expenses, competitive considerations, and profit margins. In some cases, CIGNA provides performance guarantees related to administrative performance standards or CIGNA’s ability to manage customers’ medical costs, or both. If these standards are not met, CIGNA may be financially at risk up to a percentage of the contracted fee or a stated dollar amount.

        In addition to paying current benefits and expenses, CIGNA establishes reserves in amounts estimated to be sufficient to settle reported claims not yet paid, as well as claims incurred but not yet reported. Also, liabilities are established for estimated experience refunds based on the results of retrospectively experience-rated policies.

        As of December 31, 2003, approximately $3.3 billion, or 72%, of the reserves of this segment comprise liabilities that are likely to be paid within one year, primarily for medical and dental managed care and indemnity claims, as well as certain group disability and life insurance claims. Of this reserve amount, $1.2 billion relates to amounts recoverable from ASO policyholders and is offset by a receivable. The remaining reserves are primarily longer term and include liabilities for group long-term disability insurance benefits and group life insurance benefits for disabled and retired individuals, benefits paid in the form of both life and non-life contingent annuities to survivors, and investment contract liabilities.

        CIGNA credits interest on fund balances to retrospectively experience-rated policyholders through rates that are either set at CIGNA’s discretion or based on actual investment performance. Generally, for interest-crediting rates set at CIGNA’s discretion, higher rates are credited to funds with longer terms reflecting the fact that higher yields are generally available on investments with longer maturities. For 2003, the rates of interest credited ranged from 1.75% to 5.50%, with a weighted average rate of 3.04%.

        The profitability of indemnity products depends on the adequacy of premiums charged relative to claims and expenses. For medical and dental indemnity and managed

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care products, profitability reflects the accuracy of cost projections for health care (unit costs and utilization), the adequacy of fees charged for administration and risk assumption and effective medical cost and utilization management.

        CIGNA reduces its exposure to large catastrophe losses under group life, disability and accidental death contracts by purchasing reinsurance from unaffiliated reinsurers.

Competition

        Managed care and indemnity businesses are highly competitive. Recent industry consolidation (particularly among Blue Cross and Blue Shield companies) and the development of PPO products that are competitive with CIGNA’s have exacerbated this already competitive business environment. While no one competitor or small number of competitors dominates the health care market, a trend of continued consolidation in the industry could change this situation. Also, in certain geographic locations some health care companies may have significant market share positions. A large number of health care companies and other entities compete in offering similar products. Competition in the health care market exists both for employer-policyholders and for the employees in those instances where the employer offers its employees the choice of products of more than one health care company. Most group policies are subject to annual review by the policyholder, which may seek competitive quotations prior to renewal.

        The principal competitive factors that affect this segment are quality of service; scope, cost-effectiveness and quality of provider networks for health care products; product responsiveness to the needs of customers and their employees; cost-containment services; technology; price; and effectiveness of marketing and sales. In addition, financial strength of the insurer, as indicated by ratings issued by nationally recognized rating agencies, is also a competitive factor. For more information concerning insurance ratings, see “Ratings” beginning on page 39.

        CIGNA believes that its national scope, product breadth, funding options and ability to offer non-medical products (e.g., dental, vision, managed behavioral health care, medical cost and utilization management and pharmacy programs) with its medical offerings are strategic competitive advantages. These advantages allow CIGNA to respond to the diverse needs of its customer base in each market in which it operates.

        The principal competitors of CIGNA’s managed care and indemnity businesses are:

• other large insurance companies that provide group health and life insurance products;

• Blue Cross and Blue Shield organizations;

• stand-alone HMOs and PPOs;

• HMOs affiliated with major insurance companies and hospitals; and

• national managed pharmacy, behavioral health and cost containment services companies.

        Competition also arises from smaller regional or specialty companies with strength in a particular geographic area or product line, administrative service firms and, indirectly, self-insurers. In addition to these traditional competitors, a new group of competitors is emerging. These new competitors are focused on delivering employee benefits and services through Internet-enabled technology that allow consumers to take a more active role in the management of their health. This is accomplished primarily through financial incentives and access to enhanced medical quality data. Management believes that it has the capabilities to allow it to compete against both the traditional and new competitors.

        CIGNA is one of the largest investor-owned managed care companies, based on the number of members, and one of the largest investor-owned providers of group life and health indemnity insurance, based on premiums.

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Technology

        CIGNA’s myCIGNA.com consumer Internet portal provides personalized web pages to CIGNA customers for health and financial benefits information for its members. The portal is personalized to each member’s specific CIGNA medical, dental and pharmacy plan information (as well as financial information described in Section E, “Retirement” on page 23). In 2003, CIGNA introduced interactive online tools allowing members to compare hospital quality information and prescription drug choices, assess and reduce personal health risks and access information on many medical topics. CIGNA also made its online provider directory available in Spanish in 2003, and introduced its new employer portal, CIGNAaccess.com, which provides self-service capabilities to plan administrators and benefit managers. In addition, CIGNA provides a package of web-based self-service tools for physicians and other providers.

        Among other things, the technology efforts of this business are intended to enhance customer service, improve operating efficiency and facilitate regulatory compliance.

Health Care Regulation

        The business of administering and insuring employee benefit programs, particularly health care programs, is heavily regulated by federal and state laws and administrative agencies, such as state departments of insurance and the federal Departments of Labor and Justice, as well as the courts. Health care regulation in its various forms could have an adverse effect on CIGNA’s health care operations if it inhibits CIGNA’s ability to respond to market demands or results in increased medical or administrative costs without improving the quality of care or services.

        For more information regarding the effect of regulation on the health care business, see Section J, “Regulation” and Item 3, “Legal Proceedings” on pages 35 and 41, as well as “Regulatory and Industry Developments” in the MD&A section of CIGNA’s Annual Report.

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D. Disability and Life

Principal Products and Markets

        CIGNA’s Group Insurance operations provide the following insurance products and their related services: long- and short-term disability insurance, group life insurance, and accident and specialty insurance. These products and services are provided by subsidiaries of CIGNA Corporation. CIGNA markets these group insurance products and services to employers, employees, professional and other associations and other groups.

        The following table sets forth the net premiums and fees for this segment by its principal products.

	Year Ended December 31,
	2003		2002		2001
	(In millions)
Life	$	977	$	914	$	964
Disability		538		507		621
Other		292		291		296
Total	$	1,807	$	1,712	$	1,881

Disability Insurance

        CIGNA markets group long-term and short-term disability insurance products in all states and statutorily required disability insurance plans in certain states. These products generally provide a fixed level of income to replace a portion of wages lost because of disability. They also provide assistance to the employee in returning to work and assistance to the employer in managing the cost of employee disability.

        CIGNA’s disability insurance products may be coordinated with behavioral programs, workers’ compensation, medical programs, social security advocacy, and the Family and Medical Leave Act and leave of absence administration. This integration provides customers with increased efficiency and effectiveness in disability claims management.

Life Insurance

        Group life insurance products include group term life, group universal life and group variable universal life insurance. Group term life insurance may be employer-paid basic life insurance or employee-paid supplemental life insurance.

        Group universal life insurance is a voluntary life insurance product in which the owner may accumulate cash value. The cash value earns interest at rates declared from time to time, subject to a minimum guaranteed rate, and may be borrowed, withdrawn, or used to fund future life insurance coverage. With group variable universal life insurance, the cash value varies directly with the performance of the underlying investments and neither the return nor the principal is guaranteed.

        Approximately 4,500 group life insurance policies covering approximately 5.4 million lives were outstanding as of December 31, 2003.

Other

        CIGNA offers personal accident insurance coverage, which consists primarily of accidental death and dismemberment and travel accident insurance to employers. Group accident insurance may be employer-paid or employee-paid.

        CIGNA also offers specialty insurance services that consist primarily of life, accident and disability insurance to professional associations, financial institutions, schools and participant organizations.

Distribution

        CIGNA employs group sales representatives to distribute the products and services of this segment through insurance brokers and consultants. As of December 31, 2003, the field sales force for the products and services of this segment consisted of approximately 170 sales representatives in 32 field locations.

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Pricing, Reserves and Reinsurance

        Premiums and fees charged for disability and life insurance products are generally established in advance of the policy period and are often guaranteed for two years, and occasionally for three years, but contracts may be subject to termination.

        Premium rates reflect assumptions about future claims, expenses, credit risk, investment returns, competitive considerations and profit margins. Claim and expense assumptions may be based in whole or in part on prior experience of the account or on a pool of accounts, depending on the group size and the statistical credibility of the experience.

        Fees for universal life insurance products consist of mortality, administrative and surrender charges assessed against the contractholder’s fund balance. Interest credited and mortality charges for universal life, and mortality charges on variable universal life, may be adjusted prospectively to reflect expected interest and mortality experience.

        In addition to paying current benefits and expenses, CIGNA establishes reserves in amounts estimated to be sufficient to settle reported claims not yet paid, as well as claims incurred but not yet reported. For long-term liabilities, such as long-term disability, reserves represent the present value of future expected payments. CIGNA discounts these reserves based on interest rate assumptions. The annual effective interest rate assumption used in determining reserves for most of the long-term disability insurance business is 4.25% for claims that were incurred in 2003 and 5.5% for claims that were incurred in prior years. For universal life insurance, CIGNA establishes reserves for deposits received and interest credited to the contractholder, less mortality and administrative charges assessed against the contractholder’s fund balance.

        The profitability of this segment’s products depends on the adequacy of premiums charged relative to claims and expenses. Profitability of disability insurance products is impacted by the effectiveness of return to work programs as well as adequate return on invested assets. For life insurance products, profitability is affected by the degree to which future experience deviates from mortality, morbidity and expense assumptions.

        CIGNA reduces its exposure to large individual and catastrophe losses under group life, disability and accidental death contracts by purchasing reinsurance from unaffiliated reinsurers.

Competition

        The principal competitive factors that affect the products of the Disability and Life segment are underwriting and pricing, relative operating efficiency, distribution methodologies and producer relations, variety of products and services offered, and the quality of customer service and claims management.

        For certain products with longer-term liabilities, such as group long-term disability insurance, financial strength of the insurer, as indicated by ratings issued by nationally recognized rating agencies, is also a competitive factor. For more information concerning insurance ratings, see Section K, “Ratings” beginning on page 39.

        The principal competitors of CIGNA’s group disability, life and accident businesses are other large and regional insurance companies that market and distribute these products.

        CIGNA is one of the top five providers of group disability, life and accident insurance, based on premiums.

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E. Retirement

General

        CIGNA’s Retirement operations provide investment products and professional services to sponsors of qualified and non-qualified pension, profit sharing and retirement savings plans. This segment’s businesses also offer corporate life insurance, principally to Fortune 1000 companies, and operate a retail broker-dealer operation and a federal savings bank. Except for certain investment management services provided by unaffiliated entities, as described below, the products and services related to this segment are provided by CIGNA subsidiaries.

        As noted in Section A, “Description of Business” on page 3, CIGNA has agreed to sell the businesses of this segment, excluding the corporate life insurance unit. CIGNA expects the sale, which is subject to regulatory approvals and other conditions prior to closing, to be completed around the end of the first quarter of 2004. For additional information about this transaction, see “Sale of Retirement Business” in the MD&A section of, and Note 4 to CIGNA’s 2003 Financial Statements included in, the Annual Report.

        Deposits and assets under management for this segment (“Retirement Assets under Management”) for the year ended December 31 were as follows:

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	2003		2002		2001
	(In millions)
Deposits:
Defined Contribution	$	5,232	$	5,581	$	6,125
Defined Benefit		1,103		1,993		2,708
Other, including GICs(1)		179		61		688
Corporate Life Insurance(2)		449		865		570
Investment Advisory Accounts(3)		361		272		58
Total Deposits	$	7,324	$	8,772	$	10,149
Retirement Assets Under Management:
By Account:
General Account(4):
Fully Guaranteed	$	3,816	$	3,817	$	3,857
Experience-rated		17,106		19,050		17,128
		20,922		22,867		20,985
Separate Accounts		30,378		25,453		29,391
Corporate Life Insurance(2)		4,782		4,281		3,943
Investment Advisory Accounts(3)		1,465		1,156		987
Total	$	57,547	$	53,757	$	55,306
By Plan Type:
Defined Contribution	$	30,819	$	28,062	$	29,853
Defined Benefit		18,767		18,547		18,690
Other, including GICs(1)		1,714		1,711		1,833
Corporate Life Insurance(2)		4,782		4,281		3,943
Investment Advisory Accounts(3)		1,465		1,156		987
Total	$	57,547	$	53,757	$	55,306

Assets under management include assets managed by third-party managers.
(1)	This category also supports defined benefit and defined contribution plans.

(2) Corporate Life Insurance consists of general and separate account assets. Corporate Life Insurance excludes corporate life insurance business on which policy loans are outstanding. For a discussion of corporate life insurance business on which policy loans are outstanding, see Section H, "Other Operations" on page 29.

(3) Investment advisory accounts include assets for individual retirement account investments and retail brokerage services provided through the broker dealer operation, as well as advisory accounts sold by Retirement personnel.

(4) General Account assets under management (Defined Contribution, Defined Benefit and Other, including guaranteed investment contracts ("GICs")) reflect adjustments to fair value on fixed income and certain other investments of $769 million as of December 31, 2003, $872 million as of December 31, 2002 and $256 million as of December 31, 2001.

Principal Products and Markets

        CIGNA offers a broad range of products to both defined benefit and defined contribution pension plans, profit-sharing plans and retirement savings plans. The largest category of Retirement Assets under Management relates to defined contribution plans, which provide participant accounts with benefits based upon the value of contributions to, and investment returns on, the individual’s account. This has been the fastest growing portion of the pension marketplace for a number of years. Defined contribution plan assets amounted to 54% of Retirement Assets under Management as of December 31, 2003, compared with 52% as of December 31, 2002. The second largest category of Retirement Assets under Management relates to defined benefit plans, under which annual retirement benefits are fixed or defined by a benefit formula.

        CIGNA sells investment products and investment management services, either separately or as full-service packages with

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administrative and other professional services, to corporate pension plan sponsors and Taft-Hartley trustees. CIGNA markets full-service products that include investment management and pension services to small, middle and large market customers. In addition, CIGNA sells products to sponsors of larger plans that look to more than one entity to provide actuarial, administrative or investment services and products, or combinations thereof.

        CIGNA markets a Total Retirement Services^® offering, which integrates tax qualified and non-qualified defined contribution and defined benefit products and services. Non-qualified plans are primarily used to provide supplemental retirement benefits to highly compensated employees in addition to the benefits offered under the qualified plan. Total Retirement Services^® plans accounted for approximately 23% of Retirement Assets under Management as of December 31, 2003 compared with 24% as of December 31, 2002. The assets of the pension plans and 401(k) plans for CIGNA employees are included in Total Retirement Services^® plans. If the impact of those plans is excluded, Total Retirement Services^® plans accounted for approximately 17% of Retirement Assets under Management as of December 31, 2003 compared with 18% as of December 31, 2002.

        For defined contribution plans, principally 401(k) plans, CIGNA markets products that offer investment services, participant recordkeeping and plan administrator support services. CIGNA’s defined contribution plans also offer employee communications, enrollment, plan design, technological support and other consulting services. For defined benefit plans, CIGNA offers investment services and administrative and professional services, including recordkeeping, plan administrator support services, plan documentation, and actuarial valuation and advice.

        CIGNA also provides retail brokerage and banking products and services. A primary focus of the retail operation is offering individual retirement account rollover products and related banking and brokerage services to terminating plan participants. A federal savings bank subsidiary offers retail banking products, including certificates of deposit and individual retirement accounts. In addition, CIGNA’s broker-dealer operation manages a self-directed brokerage account feature in CIGNA-administered 401(k) plans as well as other retail brokerage accounts.

        CIGNA also offers single premium annuities on both guaranteed and experience-rated bases, and guaranteed investment contracts (“GICs”), which provide guarantees of principal and interest with a fixed maturity date.

        CIGNA manages Retirement Assets under Management either directly or through contractual arrangements under which CIGNA selects and oversees sub-advisors who invest assets based on guidelines determined by CIGNA (“Sub-advisory Arrangements”). In addition, a portion of the Retirement Assets under Management is invested in retail funds managed by third-party mutual fund managers, including Fidelity Investments, Janus and Invesco, under guidelines determined by the mutual fund managers (“Independent Funds”). CIGNA monitors the Independent Funds on behalf of its customers. The table below shows the percentage of Retirement Assets under Management managed through each of these methods as of December 31:

	2003	2002
Direct	69%	70%
Sub-advisory	15%	11%
Independent	16%	19%

        For additional information about CIGNA’s investment operations, see Section I, “Investments and Investment Income” on page 30.

        Both defined benefit and defined contribution pension products are supported by the general asset account (“General Account”) and segregated accounts (“Separate Accounts”).

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The General Account

        The General Account primarily invests in fixed income assets, and supports both fully guaranteed and experience-rated contracts. As of December 31, 2003, the General Account-supported contracts accounted for 33% of the underlying investments in defined benefit plans and 42% in defined contribution plans, compared with 39% in defined benefit plans and 50% in defined contribution plans as of December 31, 2002.

        Fully guaranteed contracts consist of single premium annuities and GICs. Single premium annuities accounted for $2.1 billion of this segment’s General Account assets under management as of December 31, 2003 and 2002. GICs and other guaranteed products accounted for $1.7 billion as of December 31, 2003 and 2002.

        For 2003, the interest rate on reserves or the interest rate credited on fully guaranteed products ranged from 0.5% to 12.76%, with a weighted average of 6.63%, compared with a range from 0.8% to 12.76% with a weighted average of 6.71% in 2002. CIGNA’s single premium annuities and GICs generally do not permit withdrawal by the plan sponsor prior to maturity, except that GICs permit withdrawal at market value in the event of plan termination. None of the GICs include renewal clauses. Payouts associated with GICs have not been material to CIGNA’s liquidity or capital resources.

        Experience-rated contracts that are supported by the General Account have no fixed maturity dates and generally provide for crediting of net investment experience (including impairments and non-accruals) to contractholders through credited interest and termination provisions, subject to a guarantee of a minimum level of benefits.

        Credited interest rates for pooled, experience-rated defined contribution contracts are declared in advance for six months and may be changed at the expiration of the six-month period. Pooled contracts are contracts that are combined for purposes of crediting interest rates and tracking investment performance. Credited interest rates on other experience-rated contracts supported by the General Account are generally declared annually in advance and may be changed prospectively by CIGNA from time to time. Credited interest rates reflect investment income and realized gains and losses (including the effect of non-accruals and impairments). Credited interest rates for 2003 ranged from 3.90% to 7.00% compared to a range of 4.65% to 8.00% for 2002. The weighted average rate was 4.29% for 2003 compared with 5.75% for 2002.

        The termination provisions of $3.2 billion, or 100%, of CIGNA’s liability for experience-rated defined benefit contracts supported by the General Account that are subject to withdrawal, and the termination provisions of $4.5 billion, or 37%, of CIGNA’s liability for experience-rated defined contribution contracts supported by the General Account, generally provide the contractholder with two options for withdrawal of assets upon election to terminate: (a) a lump sum at market value; or (b) annual installments.

        Under the market value option, CIGNA determines the market value of the underlying investments by use of public information or by discounting expected future investment cash flows from investment income (including the effect of non-accruals) and repayment of principal, including the effect of impaired assets. The discount rate is based on current market interest rates.

        Under the installment option, 100% of the contractholder book value is paid, usually over not more than 10 years. Interest is credited over the installment period under a formula designed to pass investment income and gains and losses (reflecting non-accruals and impairments) through to contractholders.

        The termination provisions of the remaining $7.7 billion, or 63%, of CIGNA’s liability for experience-rated defined contribution contracts (all of which are pooled) supported by the General Account contain a book value mechanism for withdrawal at contractholder termination. Under certain circumstances, payout of book value is subject to deferral over a period of

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five to ten years, depending on the policy form.

Separate Accounts

        Separate Account assets are contractholder funds maintained in accounts with specific investment objectives. The assets of these accounts are legally segregated and are not subject to claims that arise out of any of CIGNA’s other businesses. The investment income, gains and losses of these accounts generally accrue to the contractholders and are not included in CIGNA’s revenues and expenses. CIGNA earns fee income for the investment management and other services it provides for Separate Account contractholders. The Separate Accounts allow contractholders the flexibility to invest in specific portfolios and participate directly in the investment results. Investment options include publicly traded bonds, private placement bonds, equities, mortgage loans, real estate, short-term securities, mutual funds and funds managed by third-party managers.

        As of December 31, 2003, Separate Account investments accounted for 67% of the underlying investments in defined benefit plans and 59% in defined contribution plans, compared with 61% for defined benefit plans and 50% for defined contribution plans as of December 31, 2002. As of December 31, 2003 approximately $25.1 billion, or 82%, of the assets in the Separate Accounts supported contracts under which the risks and benefits of investment performance generally accrue to the contractholders, compared with approximately $20.6 billion, or 81%, of Separate Account assets as of December 31, 2002.

        The remaining assets in the Separate Accounts are held under experience-rated contracts that guarantee a minimum level of benefits. As of December 31, 2003 the amount of minimum benefit guarantees under these contracts was $5.3 billion compared with $4.9 billion as of December 31, 2002. CIGNA establishes a liability if management believes that CIGNA will be required to make a payment under a Separate Account guarantee. For additional information, see “Liquidity and Capital Resources” in the MD&A section of, and Note 22 to CIGNA’s 2003 Financial Statements included in its Annual Report.

Persistency

        CIGNA monitors contract termination experience on an ongoing basis. Of those defined contribution and defined benefits assets under management subject to withdrawal, persistency was 87.7% for 2003, 92.3% for 2002 and 92.7% for 2001.

Corporate Life Insurance

        Corporate life insurance products are permanent life insurance contracts sold to corporations to provide coverage on the lives of certain of their employees. Permanent life insurance, which is non-participating, provides coverage that when adequately funded does not expire after a term of years and builds a cash value that may equal the full policy amount if the insured is alive on the policy maturity date. Non-participating insurance does not pay dividends, but deviations from assumed experience may be reflected in future policy values.

        Corporate life insurance products include universal life and variable universal life. Universal life policies typically provide flexible coverage and flexible premium payments. Universal life cash values fluctuate with the amount of the premiums paid, mortality and expense charges made, and interest credited to the policy. Variable universal life policies are universal life contracts where the cash values vary directly with the performance of the investments underlying the policy.

        Interest is credited on most nonvariable universal life products at a declared rate equal to or above a minimum guaranteed rate. Credited interest rates vary with the characteristics of each product and the anticipated investment results of the assets backing these products. Where the credited interest rate exceeds the guaranteed rate, the excess is used to purchase additional insurance or increase cash values. Credited interest rates on these products for 2003 ranged from 0.80% to 7.03%, with a weighted

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average rate of 5.41%, compared with a range from 1.11% to 7.14% for 2002, with a weighted average rate of 5.13%.

        In lieu of credited interest rates, holders of certain nonvariable universal life contracts may select the option of receiving credited income based on changes in an equity index, such as the S&P 500^®. If such an equity index is used, CIGNA may purchase derivative options to minimize the effect of the income credited for such contracts.

        In 1996, Congress passed tax legislation that has affected premium and earnings growth of certain corporate life insurance business on which policy loans are outstanding. The corporate life insurance business affected by the 1996 legislation is reported in Section H, “Other Operations” on page 29.

        The Internal Revenue Service recently issued regulations that will treat premiums for corporate life insurance policies issued with certain “split-dollar” arrangements as loans to the covered employees. Under split-dollar arrangements, corporate purchasers are reimbursed for premium payments from policy proceeds. In addition, in 2002 Congress passed the Sarbanes-Oxley Act, which contains a provision that prohibits public companies from making personal loans to directors and executives.

        Since such split-dollar arrangements may be construed to constitute loans to employees under the Sarbanes-Oxley Act, these developments may cause policies issued with these split-dollar arrangements to be less attractive and lead to withdrawals of assets, policy terminations and fewer sales of new policies. Approximately $330 million in Retirement Assets under Management are attributable to these split-dollar contracts.

Distribution

        CIGNA’s retirement products and services are distributed primarily through a salaried direct sales force, pension plan consultants and brokers, investment advisors and other service providers. As of December 31, 2003, the sales organization consisted of 24 salaried sales associates and 46 client service representatives located in offices across the United States. In addition, CIGNA’s bank and broker-dealer operations offer benefit plan participants and other customers a range of IRA rollover investments and retail banking and brokerage services through 29 registered representatives. Corporate life insurance products are sold primarily through a limited number of specialty brokers.

Pricing, Reserves and Reinsurance

        Premiums for single premium annuities and corporate life insurance are based on assumptions about mortality, persistency, expenses, target profit margins, interest rates and competitive considerations. The long-term profitability of single premium annuities and corporate life insurance products is affected by the degree to which future experience deviates from these assumptions. Fees for universal life insurance products consist of mortality, administrative and surrender charges assessed against the contractholder’s fund balance. Interest credited and mortality charges for universal life, and mortality charges on variable universal life, may be adjusted prospectively to reflect expected interest and mortality experience.

        CIGNA establishes reserves for experience-rated contracts in an amount equivalent to the contractholder funds on deposit with it, adjusted for estimated investment and mortality experience. Profitability on these contracts is based primarily on margins from charges for investment and administrative services and risk assumption. For fully guaranteed contracts, the reserve established is the present value of expected future obligations based on assumptions about mortality, investment returns, expenses and target profits, with a margin for adverse deviation. Profitability on fully guaranteed contracts is affected by the degree to which future experience deviates from these assumptions.

        For corporate life insurance, CIGNA establishes reserves for deposits received and interest credited to the contractholder, less mortality and administrative charges assessed

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against the contractholder’s fund balance. In addition, CIGNA establishes loss reserves for losses incurred but not paid, based on prior claim experience.

        CIGNA reduces its exposure to large single life losses and to multiple losses arising out of a single occurrence under corporate life insurance contracts by purchasing reinsurance from unaffiliated reinsurers.

Competition

        The retirement plan marketplace is highly competitive. CIGNA’s competitors include mutual fund companies, insurance companies, banks, investment advisors, and certain service and professional organizations. Competition focuses on service, technology, cost, variety of investment options, investment performance and financial strength, as indicated for CIGNA’s retirement business by ratings of CG Life by nationally recognized rating agencies.

        The largest single retirement plan manager holds an 8% market share, as measured by assets under management. Based on a survey published in “Pensions & Investments,” CIGNA estimates that its Retirement Assets under Management placed it 36th among retirement plan managers overall, in terms of pension and employee retirement savings plan assets under management.

        The corporate life insurance marketplace is also highly competitive. CIGNA principally competes with a significant number of the largest domestic life insurance companies that may offer one or more corporate life insurance products. Competition in this market focuses primarily on product design, underwriting, price, administrative servicing capabilities and insurer financial strength, as indicated by ratings issued by nationally recognized agencies.

        For more information concerning insurance ratings, see Section K, “Ratings” on page 39 and the discussion of Ratings in the MD&A section of the Annual Report.

Technology

        CIGNA’s Retirement businesses are highly dependent on automated systems and systems applications. These businesses have worked to improve their system infrastructure. In addition, CIGNA has developed integrated offerings across its retirement services products. These offerings include Internet access to retirement account information, self-service advisory and financial planning capabilities and integrated financial statements. These offerings are available on the myCIGNA.com consumer portal, which provides personalized web pages to customers. The portal also offers access to health care information, which is described in Section C, “Health Care” on page 14.

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F. International

Principal Products and Markets

        CIGNA’s International operations (“International”) provide various coverages, products and services in selected markets outside the United States, principally in Asia (mainly South Korea, Hong Kong and Taiwan) and Europe (mainly the United Kingdom and Spain). In addition, CIGNA provides group benefits products in numerous markets for expatriate employees of multinational companies.

        The coverages, products and services of this segment, which are provided by subsidiaries of CIGNA Corporation, include individual and group life, accident and health and health care products.

        The following table sets forth the principal lines of business of this segment and their related net earned premiums and fees:

	Year Ended December 31,
	2003		2002		2001
	(In millions)
Life, Accident and Health	$	430	$	355	$	342
Health Care		425		456		446
Total Premiums and Fees	$	855	$	811	$	788

        Life, accident and health products are designed to meet the insurance, savings and investment needs of consumers in selected markets outside of U.S. insurance markets. These products are marketed on both group and individual bases. Life insurance products include term, whole life, endowment and variable universal life. Supplemental products include accidental death, medical, hospitalization, dread disease and cancer coverages.

        The health care products of the International segment are primarily indemnity insurance coverages, with some products having managed care or administrative service aspects. These products generally provide an alternative or supplement to government programs. Health care includes life and medical insurance products that are provided through group benefits programs as well as medical insurance products that are marketed directly to individuals.

        Health care also includes global group benefits products for employees of multinational companies (primarily U.S. and European multinational companies) who work outside of their country of citizenship. This product group includes medical, dental, vision, life, accidental death and dismemberment and disability coverages, as well as primary medical and dental benefits for international travelers.

        CIGNA received formal approval to enter the Chinese life insurance market from the China Insurance Regulatory Commission in 2002 and formed a joint venture to sell insurance products in Shenzhen, China, in 2003. Certain risks are inherent in expanding in emerging markets and these investments are routinely monitored for impairment.

        In 2003, CIGNA sold its Brazilian health care and pension operations and its Japanese pension operation. For more information regarding these divestitures, see, “Other Acquisitions and Dispositions” in the MD&A section of, and Note 4 to CIGNA’s 2003 Financial Statements included in its Annual Report.

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        CIGNA generally conducts its international businesses through foreign operating entities that maintain assets and liabilities in local currencies, which reduces the exposure to economic loss resulting from unfavorable exchange rate movements. For information on the effect of foreign exchange exposure, see “Market Risk” in the MD&A section of, and Notes 2(Q) and 21 to CIGNA’s 2003 Financial Statements included in its Annual Report.

Distribution

        International distributes its products through a combination of independent brokers and agents, agents of strategic partners, financial institutions and various direct marketing channels. Life, accident and health products are primarily distributed through direct marketing, including telemarketing and direct mail under a variety of sponsored arrangements; the Internet; and agents and financial institutions. Health care products are distributed through independent brokers and agents as well as the company’s own sales personnel.

Pricing, Reserves and Reinsurance

        Premiums for life, accident and health insurance products are based on assumptions about mortality, morbidity, persistency, expenses and target profit margins, as well as interest rates and competitive considerations. The profitability of these products is affected by the degree to which future experience deviates from these assumptions.

        Fees for variable universal life insurance products consist of mortality, administrative and surrender charges assessed against the contractholder’s fund balance. Mortality charges on variable universal life may be adjusted prospectively to reflect expected mortality experience.

        Premiums and fees for health care products reflect assumptions about future claims, expenses, investment returns, competitive considerations and profit margins. For products using networks of contracted providers, premiums reflect assumptions about the impact of provider contracts and utilization management on future claims. Most of the premium volume for the medical indemnity business is on a guaranteed cost basis. Other premiums are established on an experience-rated basis. Most contracts permit rate changes at least annually.

        The profitability of health care products is dependent upon the accuracy of projections for health care inflation (unit cost and utilization), the adequacy of fees charged for administration and risk assumption and, in the case of managed care products, effective medical cost management.

        In addition to paying current benefits and expenses, CIGNA establishes reserves in amounts estimated to be sufficient to settle reported claims not yet paid, as well as claims incurred but not yet reported. Additionally, for individual life insurance products, CIGNA establishes policy reserves that reflect the present value of expected future obligations less the present value of expected future premiums.

        CIGNA reduces its exposure to large and/or multiple losses arising out of a single occurrence by purchasing reinsurance from unaffiliated reinsurers.

Competition

        The principal competitive factors that affect the International operations are underwriting and pricing, relative operating efficiency, relative effectiveness in medical cost management, quality of provider networks and relationships, product innovation and differentiation, distribution methodologies and producer relations, and the quality of claims and policyholder services. In most overseas markets, perception of financial strength is also an important competitive factor.

        International’s primary competitors include U.S.-based companies with global operations, as well as other, non-U.S., global carriers and indigenous companies in regional and local markets. For the life, accident and health lines of business, locally based competitors are primarily indigenous life

25

insurance companies, but also include financial institutions and insurance subsidiaries of banks. CIGNA expects that the competitive environment will intensify as U.S. and Europe-based insurance and financial services providers pursue global expansion opportunities.

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G. Run-off Reinsurance

Principal Products and Markets

        Until June of 2000, CIGNA offered reinsurance coverage for part or all of the risks written by other insurance companies under life and annuity policies (both group and individual); accident policies (personal accident, catastrophe and workers’ compensation coverages); and health policies. These products were sold principally in North America and Europe through a small sales force and through intermediaries.

        In 2000, CIGNA sold its U.S. individual life, group life and accidental death reinsurance business. CIGNA placed its remaining reinsurance businesses (including its accident, domestic health, international life and health, and specialty life reinsurance businesses) into run-off as of June 1, 2000, and stopped underwriting new reinsurance business.

        For the run-off reinsurance business, CIGNA has established policy reserves that reflect the present value of expected future obligations less the present value of expected premiums. In addition, CIGNA establishes loss reserves for claims received but not yet paid, based on the amount of the claim received, and for losses incurred but not reported, based on prior claim experience.

Specialty Life Reinsurance Contracts

        Guaranteed Minimum Death Benefit Contracts. CIGNA’s reinsurance operations reinsured a guaranteed minimum death benefit under certain variable annuities issued by other insurance companies. These variable annuities are essentially investments in mutual funds combined with a death benefit. CIGNA has equity market risks as a result of this product.

        In 2002, CIGNA strengthened reserves related to these guaranteed minimum death benefits and adopted a program to substantially reduce equity market risks related to these contracts by selling exchange-traded futures contracts, which are expected to rise in value as the equity market declines and decline in value as the equity market rises. During 2003, CIGNA added foreign-denominated, exchange-traded futures contracts and foreign currency forward contracts to reduce international equity market risks associated with this business. CIGNA expects to adjust the futures and forward contract positions and enter into other positions over time, to reflect changing equity market levels and changes in the investment mix of the underlying variable annuity investments.

        The purpose of this program is to substantially reduce the adverse effects of potential future domestic and international stock market declines on CIGNA’s liabilities for guaranteed minimum death benefit contracts, as increases in liabilities under the contracts from a declining market will be substantially offset by gains on the futures contracts. A consequence of this program is that it also substantially reduces the positive effects of potential future equity market increases, as reductions in liabilities under these contracts from improved equity market conditions will be substantially offset by losses on the futures contracts.

        The determination of reserves for these contracts requires CIGNA to make critical accounting estimates, as discussed in the table on page 7 in the MD&A section of CIGNA’s Annual Report.

        For additional information about guaranteed minimum death benefit contracts, see “Other Matters” under “Run-off Reinsurance” in the MD&A section of, and Note 5(A) to CIGNA’s 2003 Financial Statements included in its Annual Report.

        Guaranteed Minimum Income Benefit Contracts. CIGNA’s reinsurance business also wrote reinsurance contracts with issuers of variable annuity contracts that provide annuitants with certain guarantees related to minimum income benefits. When annuitants elect to receive these minimum income benefits, CIGNA may be required to make payments based on changes in underlying mutual fund values and interest rates.

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        CIGNA has purchased reinsurance from third parties, which covers 80% of the exposures of these contracts. CIGNA has revised credit risk assumptions for about 25% of the exposures on these contracts. CIGNA estimates the fair value of the assets and liabilities associated with these contracts using assumptions as to equity market returns, volatility of the underlying equity and bond mutual fund investments, interest rates, mortality, annuity election rates, policy surrenders and credit risk.

        For additional information about guaranteed minimum income benefit contracts, see “Other Matters” under “Run-off Reinsurance” and “Guaranteed minimum income benefit” under “Guarantees and Contractual Obligations” in the MD&A section of, and Note 18 to CIGNA’s 2003 Financial Statements included in CIGNA’s Annual Report.

Unicover and Other Run-off Reinsurance

        The Run-off Reinsurance operation participates in a workers’ compensation reinsurance pool, which ceased accepting new risks in early 1999. This pool was formerly managed by Unicover Managers, Inc. Although an arbitration over the most significant reinsurance (retrocessional) contracts for the pool was completed in 2002, some disputes over collection of amounts due CIGNA from the retrocessionaires continue and may require further arbitration actions to resolve. Also disputes and arbitrations regarding other reinsurance (retrocessional) contracts for the pool remain and may not be resolved for some time.

        The Run-off Reinsurance operation also manages other workers’ compensation reinsurance contracts, as well as personal accident reinsurance contracts, including contracts assumed in the London market. CIGNA obtained retrocessional reinsurance coverage for a significant portion of the claims under these contracts. Some of these retrocessionaires have disputed the validity of their contracts with CIGNA and arbitration over some of these disputes has commenced. CIGNA bears the risk of the financial condition of its retrocessionaires and their ability to meet their reinsurance obligations to CIGNA.

        The retrocessional disputes are not expected to be resolved for some time. In addition, unfavorable claims experience related to workers’ compensation and personal accident exposures is possible and could result in future losses, including losses attributable to the inability to recover amounts from retrocessionaires (either due to disputes with the retrocessionaires or their financial condition).

        CIGNA’s reserves for workers’ compensation and personal accident reinsurance obligations, and its reserves for amounts recoverable from retrocessionaires, are considered appropriate as of December 31, 2003, based on current information. However, it is possible that future developments could have a material adverse effect on CIGNA’s consolidated results of operations, and, in certain situations, could have a material adverse effect on CIGNA’s financial condition.

        For more information see “Run-off Reinsurance” in the MD&A section of, and Note 18 to CIGNA’s 2003 Financial Statements included in its Annual Report.

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H. Other Operations

        Other Operations consists of:

• deferred gains recognized from the 1998 sale of the individual life insurance and annuity business;

• corporate life insurance on which policy loans are outstanding (“leveraged corporate life insurance”);

• settlement annuity business; and

• certain investment management services.

        The products and services related to these operations are offered by subsidiaries of CIGNA Corporation.

        CIGNA sold its individual life insurance and annuity business in 1998. A portion of the gain was deferred because the principal agreement to sell this business was an indemnity reinsurance arrangement. The deferred portion is being recognized at the rate that earnings from the sold business would have been expected to emerge, primarily over 15 years on a declining basis. Because it was an indemnity reinsurance transaction, CIGNA is not relieved of liability for the reinsured business.

        In 1996, Congress passed legislation implementing a three-year phase-out period for tax deductibility of policy loan interest for most leveraged corporate life insurance products. There have been no sales of this product since 1997. In 2001, the Internal Revenue Service (“IRS”) implemented an initiative for leveraged corporate life insurance plans purchased after June 20, 1986, that permitted policyholders to settle tax disputes related to these plans. This IRS initiative expired in 2003. Some customers accepted the IRS settlement offer and surrendered their policies in 2003.

        The full effect of the 1996 legislation and the 2001 IRS settlement offer on customers’ decisions to maintain these policies is uncertain. However, management expects earnings associated with these products to continue to decline. For additional information on the impact of the legislation, see “Other Operations” in the MD&A section of CIGNA’s Annual Report.

        CIGNA’s settlement annuity business is a run-off block of contracts. These contracts are primarily liability settlements with the majority of payments guaranteed and not contingent on survivorship.

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I. Investments and Investment Income

        CIGNA’s investment operations provide investment management and related services in the United States and certain other countries for CIGNA’s corporate and insurance-related invested assets and for group pension plan sponsors, institutions, international investors and individual investors. CIGNA acquires or originates, directly or through intermediaries, various investments including private placements, public securities, mortgage loans, real estate and short-term investments. CIGNA’s investment operations also develop structured investment products. The products and services for CIGNA’s investment operations are provided by CIGNA subsidiaries.

        As shown in the chart below, CIGNA’s assets under management at December 31, 2003 totaled $86.3 billion. These assets consist of the following:

• Invested Assets. These include the insurance and retirement-related assets that CIGNA holds in the General Account and other corporate invested assets.

• Advisory Portfolio Assets. These include:

• Separate Account Assets, which are contractholder funds maintained in accounts with specific investment objectives, principally for CIGNA’s defined contribution and defined benefit customers. Although Separate Account Assets are separately presented on CIGNA’s balance sheet, the investment income, gains and losses on Separate Accounts generally accrue to the contractholders and are not included in CIGNA’s revenues and expenses.

• Third Party Account Assets, which are customer assets that CIGNA manages, but for which the customer retains title. These assets are not reflected in CIGNA’s balance sheet, and investment income, gains and losses are not included in CIGNA’s revenues and expenses.

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ASSETS UNDER MANAGEMENT DECEMBER 31, 2003 (In millions)
Invested Assets
Health Care	$	5,201
Disability and Life		4,303
Retirement		23,386
International		955
Run-Off Reinsurance		1,847
Other Operations		3,961
Corporate		5
Total Invested Assets					$	39,658
Advisory Portfolio Assets
Separate Accounts
Health Care		882
Disability and Life		14
Retirement		33,481
International		179
Other Operations		837
Total Separate Accounts			$	35,393
Third Party Accounts (1)				11,291
Total Advisory Portfolio Assets						46,684
Total Assets Under Management					$	86,342

________________________
(1)	Amounts in Third Party Accounts are not included in CIGNA's Consolidated Balance Sheets and include investment advisory assets managed by the Retirement segment.

        Assets under management for CIGNA include $57.5 billion in assets under management for the Retirement segment. For additional information about the assets under management for that segment, and additional information about General and Separate Accounts, see Section E, “Retirement —Principal Products and Markets” beginning on page 18.

        CIGNA’s investment operations directly manage substantially all of the Invested Assets. CIGNA manages a portion of the Advisory Portfolio Assets directly and a portion through Sub-advisory Arrangements. Third-party retail mutual fund managers also manage a portion of the Advisory Portfolio Assets in Independent Funds. The table below shows the percentage of Advisory Portfolio Assets managed through each of these methods as of December 31:

	2003	2002
Direct	53%	56%
Sub-advisory	19%	15%
Independent	28%	29%

Types of Investments

        CIGNA invests in a broad range of asset classes, including domestic and international fixed maturities and common stocks,

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mortgage loans, real estate and short-term investments. Fixed maturity investments include publicly traded and private placement corporate bonds, government bonds, publicly traded and private placement asset-backed securities, and redeemable preferred stocks.

Domestic Employee Benefits Investments

        The major portfolios under management in CIGNA’s General Account consist of the combined assets of the Health Care, Disability and Life, Retirement, Run-off Reinsurance and Other Operations segments (collectively, “Domestic Employee Benefits portfolios”). As of December 31, 2003 and 2002, the Domestic Employee Benefits portfolios had $38.7 and $39.5 billion, respectively, in assets under management.

        CIGNA generally manages the characteristics of these assets to reflect the underlying characteristics of related insurance and contractholder liabilities, as well as regulatory and tax considerations pertaining to those liabilities. CIGNA’s domestic insurance and contractholder liabilities as of December 31, 2003, excluding liabilities of businesses sold through use of reinsurance, were associated with the following products: experience-rated pension, 44%; fully guaranteed investment and annuity, 19%; interest-sensitive life insurance, 13%; and other life and health, 24%. These products, and the investment assets supporting them, are described below.

        Experience-rated pension products primarily consist of defined benefit and defined contribution pension products. Investments for these products are selected to support the yield and liquidity needs of the products and are principally fixed income investments.

        Fully guaranteed products primarily include guaranteed investment contracts (“GICs”), single premium annuity products and settlement annuities. Because these products generally do not permit withdrawal by policyholders prior to maturity, the amount and timing of future benefit cash flows can be reasonably estimated. Funds supporting these products are invested in fixed income investments that generally match the aggregate duration of the investment portfolio with that of the related benefit cash flows. As of December 31, 2003, the duration of assets that supported these liabilities was approximately 2 years for GICs, 9 years for single premium annuities, and 11 years for settlement annuities.

        Interest-sensitive products primarily consist of corporate life insurance products. Invested assets supporting these products are primarily fixed income investments and policy loans. Fixed income investments emphasize investment yield while meeting the liquidity requirements of the related liabilities.

        Other life and health insurance products consist of various group and individual life, health and disability insurance products. The supporting invested assets are structured to emphasize investment income, and the necessary liquidity is provided through cash flow, short-term investments and public securities. Assets supporting longer-term group disability insurance benefits and group life waiver of premium benefits are generally managed to an aggregate duration similar to that of the related benefit cash flows.

Investment Strategy

        Investment strategy and results are affected by the amount and timing of cash available for investment, competition for investments (especially in private asset classes), economic conditions, interest rates and asset allocation decisions.

        CIGNA routinely monitors and evaluates the status of its investments in light of current economic conditions, trends in capital markets and other factors. Such factors include industry sector considerations for fixed maturity investments, and geographic and property-type considerations for mortgage loan and real estate investments. Most international fixed maturity investments are government-backed.

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Fixed Maturities

        As of December 31, 2003, CIGNA’s fixed maturity investments, including those supporting experience-rated pension products, constituted 71% of the Domestic Employee Benefits portfolios. As of that date, approximately 41% of these investments was attributable to experience-rated pension contracts. For information about the categorization of certain fixed maturity investments as “securities supporting experience-rated pension policyholder contracts”, see Note 2(B) to CIGNA’s 2003 Financial Statements included in its Annual Report.

        CIGNA invests primarily in investment grade fixed maturities rated by rating agencies (for public investments) and by CIGNA (for private investments). For information about below investment grade holdings, see “Investment Assets” in the MD&A section of CIGNA’s Annual Report.

Mortgages and Real Estate

        CIGNA’s mortgage loan investments, including policyholder share, constituted 22% of the Domestic Employee Benefits portfolios as of December 31, 2003. As of that date, approximately 54% of mortgage loan investments was attributable to experience-rated pension contracts. Mortgage loan investments are subject to underwriting criteria addressing loan-to-value ratio, debt service coverage, cash flow, tenant quality, leasing, market, location and borrower’s financial strength. Such investments consist primarily of first mortgage loans on commercial properties and are diversified by property type, location and borrower. CIGNA invests in fully completed and substantially leased commercial properties. Virtually all of CIGNA’s mortgage loans are bullet or balloon payment loans, under which all or a substantial portion of the loan principal is due at the end of the loan term.

        CIGNA’s real estate investments, including policyholder share, constituted less than 1% of the Domestic Employee Benefits portfolios as of December 31, 2003. As of that date, 46% of real estate investments was attributable to experience-rated pension contracts.

        Real estate investments purchased by CIGNA are actively managed to maximize income. These investments consist primarily of stabilized commercial properties and are diversified relative to property type and location. CIGNA also acquires real estate through foreclosure of mortgage loans. CIGNA rehabilitates, re-leases and sells foreclosed properties, a process that usually takes from two to four years unless management considers a near-term sale preferable. CIGNA sold $64 million of foreclosed properties in 2003 and $78 million in 2002 and expects to sell an additional foreclosed property in 2004.

Derivative Instruments

        CIGNA generally uses derivative financial instruments to minimize its exposure to certain market risks. CIGNA has also written derivative instruments to minimize insurance customers’ market risks. For information about CIGNA’s use of derivative financial instruments, see Notes 2(B) and 8(H) to CIGNA’s 2003 Financial Statements included in its Annual Report.

        See “Investment Assets” in the MD&A section of, and Notes 2, 8, 9 and 10 to CIGNA’s 2003 Financial Statements included in its Annual Report for additional information about CIGNA’s investments.

Net Investment Income

        The following table summarizes the net investment income from investments attributable to CIGNA’s Domestic Employee Benefits portfolios.

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Net Investment Income for Domestic Employee Benefits Investments	Year ended December 31,
	2003			2002			2001
	(In millions)
Fixed maturities	$	1,566		$	1,723		$	1,676
Securities supporting experience-rated
pension policyholder contracts(1)		171			-			-
Equity securities		9			8			9
Mortgage loans		641			707			772
Policy loans		136			177			208
Real estate		72			62			94
Other investments		53			66			101
Total		2,648			2,743			2,860
Less investment expenses		103			83			91
Net investment income, pre-tax	$	2,545		$	2,660		$	2,769
Net investment yield(2)		6.75	%		7.05	%		7.58	%

________________________
(1)	In the fourth quarter of 2003, CIGNA reclassified these securities to trading, and now reports them in a separate balance sheet caption. See Note 2(B) to CIGNA's 2003 financial statements included in the Annual Report.

(2) The net investment yield is equal to (a) net investment income multiplied by two, divided by (b) the sum, at the beginning and end of the year, of cash, invested assets (at cost or amortized cost less impairments) and investment income due and accrued, less borrowed money, less net investment income.

International and Corporate Investments

        In addition to the Domestic Employee Benefits portfolios, CIGNA has a portfolio for the International segment. Invested assets for International and unallocated corporate investments totaled $960 million as of December 31, 2003, $850 million as of December 31, 2002 and $779 million as of December 31, 2001. Investments include U.S. and international fixed maturities, policy loans, mortgage loans and short-term investments. Net investment income from these investments and from cash and cash equivalents was $49 million for 2003, $56 million for 2002 and $73 million for 2001.

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J. Regulation

        CIGNA’s subsidiaries, depending on the type and location of their business activities, may be subject to federal, state and foreign regulation. CIGNA’s insurance subsidiaries and HMOs are licensed to do business in, and are subject to regulation and supervision by, state regulatory authorities as well as authorities in the District of Columbia, certain U.S. territories and various foreign jurisdictions.

        The extent of regulation of insurance subsidiaries and HMOs varies. Licensing of insurers, HMOs and their agents and the approval of coverage and provider contract forms are usually required.

        Most jurisdictions have laws and regulations governing rates, solvency, standards of conduct and various insurance and investment products. States often regulate standards for HMO quality assurance programs, minimum levels of benefits that must be offered and requirements for availability and continuity of care. Increasingly, states also are regulating the relationship between HMOs and their contracted providers, and are requiring submission of reports on medical utilization and other matters for managed care products. Most states have enacted laws requiring the payment of interest on claims paid late and state regulators have recently begun imposing substantial penalties for late payment even where interest is properly paid on late claim payments.

        The form and content of statutory financial statements and the type and concentration of investments are also regulated. Each insurance and HMO subsidiary is required to file periodic financial reports with supervisory agencies in most of the jurisdictions in which it does business, and its operations and accounts are subject to examination by such agencies at regular intervals.

        Insurance risk selection is a concern of regulators. For example, some states have imposed restrictions on the use of underwriting criteria related to AIDS, domestic abuse and credit reports. Also, various interpretations under the Americans with Disabilities Act may affect the provision of insurance benefits under certain types of policies.

        Most states and certain foreign jurisdictions require licensed insurance companies to support guaranty associations or indemnity funds, which are organized to pay claims on behalf of insolvent insurance companies. In the United States, these associations levy assessments on member insurers in a particular state to pay such claims. These assessments are levied in proportion to the member insurers’ relative shares of the lines of business that had been written by the insolvent insurer. The maximum assessment permitted by law in any one year is generally 2% of annual premiums written by each member in a particular state with respect to the categories of business involved and may be offset in some states over a five-year period against premium taxes payable.

        In addition, insurance companies are subject to a variety of assessments to fund insurance-related activities such as medical risk pools and operating expenses of state regulatory bodies. These assessments are levied on various bases, including companies’ proportionate shares of aggregate written premiums and aggregate incurred or paid losses.

        Several states also require HMOs to participate in guaranty funds, special risk pools and administrative funds. CIGNA expects additional states to consider revising their solvency standards and guaranty fund legislation to encompass HMOs. For additional information about guaranty fund and other assessments, see Note 22 to CIGNA’s 2003 Financial Statements included in its Annual Report.

        Some states require health insurers and HMOs to participate in assigned risk plans, joint underwriting authorities, pools or other residual market mechanisms to insure risks

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not acceptable under normal underwriting standards.

        The National Association of Insurance Commissioners (“NAIC”) has developed model solvency-related laws that many states have adopted. The NAIC also has developed risk-based capital rules (“RBC rules”) for life and health insurance companies and HMOs that have been adopted by many states.

        The NAIC is considering changing RBC rules and statutory reserving rules for variable annuities, with a possible effective date as early as December 31, 2004. Any changes would apply to CIGNA’s specialty life reinsurance contracts.

        The RBC rules recommend a minimum level of capital depending on the types and quality of investments held, the types of business written and the types of liabilities maintained. Depending on the ratio of the insurer’s adjusted surplus to its risk-based capital, the insurer could be subject to various regulatory actions ranging from increased scrutiny to conservatorship.

        In addition, various foreign jurisdictions prescribe minimum surplus requirements that are based upon liquidity and reserve coverage measures. CIGNA’s life and health insurance and HMO subsidiaries were adequately capitalized during 2003 under applicable RBC and foreign surplus rules.

        CIGNA’s insurance subsidiaries are subject to state laws regulating insurers that are subsidiaries of insurance holding companies. Under such laws, certain dividends, distributions and other transactions between an insurance subsidiary and the holding company or its other subsidiaries may require notification to, or be subject to the approval of, one or more state insurance commissioners.

        State and federal regulatory scrutiny of life and health insurance company and HMO marketing and advertising practices, including the adequacy of disclosure regarding products and their future performance, may result in increased regulation. States have responded to concerns about marketing, advertising and administration of insurance by increasing the number and frequency of market conduct examinations and imposing larger penalties for violations of laws and regulations pertaining to these functions.

        CIGNA sells its products and services to sponsors of employee health care benefit plans that are typically governed by the Employment Retirement Income Security Act (“ERISA”) and, therefore, may be subject to requirements imposed by ERISA on plan fiduciaries and parties in interest, including regulations affecting claims and appeals procedures for life, accident and disability and health care claims.

        CIGNA also provides Medicare HMO coverage for individuals in Arizona. In addition, CIGNA has contractual arrangements with the federal government by which CIGNA provides claims processing and other administrative services to the government with respect to certain Medicare claims.

        CIGNA has ended its participation in other federal government programs. As of October 1, 2003, CIGNA’s remaining contract with a state agency to offer Medicaid coverage expired. In addition, CIGNA’s contract to participate in the Federal Employee Health Benefits Program in selected markets expired as of December 31, 2003.

        Participation in government sponsored health care programs subjects CIGNA to a variety of federal laws and regulations and risks associated with audits conducted under the programs (which may occur in years subsequent to when CIGNA provides the applicable services). These risks include reimbursement claims as well as potential fines and penalties.

        For example, under Office of Personnel Management rules, CIGNA HMOs that contract to cover federal employees may be required to reimburse the federal government if, following an audit, it is determined that a federal employee group did not receive the

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benefit of a discount offered by a CIGNA HMO to one of the two groups closest in size to the federal employee group. The federal government also requires Medicare and Medicaid providers to file detailed cost reports for health care services provided. These reports may also be audited in subsequent years. See Section C, “Health Care” beginning on page 5 for additional information about CIGNA’s participation in government health-related programs.

        The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and other federal statutes subject health care insurers and HMOs to federal regulation. HIPAA imposes guaranteed issuance (for groups with 50 or fewer lives), renewal and portability requirements on health care insurers.

        HIPAA, through its “Administrative Simplification” provisions, also establishes new rules to standardize the electronic transmission of data and the codes relating to enrollment, eligibility, payment of claims and coordination of benefits among insurers, providers and health care clearinghouses.

        The compliance date for implementing these electronic transaction standards and code sets was October 16, 2003 for CIGNA. CIGNA implemented appropriate compliance initiatives, including significant systems enhancements, to implement the electronic transaction and code set requirements.

        Regulations issued in February 2003 set standards for the security of electronic health information, and must be implemented by CIGNA by April 2005. The new regulations specify a series of administrative, technical and physical security safeguards. CIGNA has implemented certain security measures and planned others in anticipation of these rules.

        Final regulations pursuant to HIPAA providing standards for the assignment of a unique national identifier for providers were finalized in January 2004 and must be implemented by May 2005. Final regulations requiring a unique national identifier for employer groups must be implemented by July 2004. CIGNA is planning to implement the administrative changes, systems enhancements and training necessary to satisfy these requirements.

        Compliance with the privacy regulations under HIPAA was required by April 2003. These regulations cover all aspects of the health care delivery system, and address the use and disclosure of individually identifiable health care information. CIGNA implemented appropriate compliance initiatives, including significant systems enhancements, training and administrative efforts as well as modifications of contracts and interactions with its customers regarding the exchange of individually identifiable health care information.

        In addition, increasing numbers of federal, state and foreign lawmakers and regulators have imposed or are seeking to impose new privacy standards. These standards affect how identifiable information about individuals may be handled, used and disclosed. State regulators have commenced reviewing the privacy law compliance of insurance companies.

        The business of administering and insuring employee benefit programs, particularly health care programs, is heavily regulated by federal and state laws and administrative agencies, such as state departments of insurance and the federal Departments of Labor and Justice, as well as the courts. See “Regulatory and Industry Developments” in the MD&A section of CIGNA’s Annual Report for additional information.

        The “Gramm-Leach-Bliley Financial Modernization Act,” enacted in 1999, removed many of the restrictions on affiliations among firms in different financial services businesses, notably banking, securities and insurance. Although no significant additional competition for CIGNA’s businesses has resulted from the Act to date, it is too early to assess the Act’s long-range effects. The Act also contains provisions to protect the privacy of certain information held by insurance companies and financial

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institutions, and requires such companies to inform individuals of their practices in handling individually identifiable information.

        The extent of insurance regulation varies significantly among the countries in which CIGNA conducts its international operations. In many countries, foreign insurers are faced with greater restrictions than domestic competitors. These may include discriminatory licensing procedures, compulsory cessions of reinsurance, required localization of records and funds, higher premium and income taxes, and requirements for local participation in an insurer’s ownership.

        Depending upon their nature, CIGNA’s investment management activities and products with United States jurisdictional contacts and its broker-dealer activities are subject to U.S. federal securities laws, ERISA, and other federal and state laws governing investment-related activities and products. CIGNA expects increased regulation of the retirement plan service business, particularly in connection with plan participant trading of mutual fund shares. Investments made by United States insurance companies are subject to state insurance laws. Investment management activities and products outside the United States, and investments made by non-U.S. insurance companies outside the United States, are subject to local regulation. In many cases, the investment management activities and investments of individual insurance companies are subject to regulation by multiple jurisdictions. In addition, a CIGNA subsidiary operates a federal savings bank, which is subject to federal regulation.

        CIGNA is also subject to Presidential Executive Order 13224 which prohibits U.S. entities from doing business with persons and entities (including terrorists) on a list maintained by the Office of Foreign Asset Control.

        Federal regulation and taxation may affect CIGNA’s operations in a variety of ways. In addition to proposals discussed above related to increased regulation of the health care industry, current and proposed federal measures that may significantly affect CIGNA’s operations include pension and other employee benefit regulation, tax legislation and Social Security legislation.

        The economic and competitive effects on CIGNA’s business operations of the legislative and regulatory proposals discussed above will depend upon the final form any such legislation or regulation may take.

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K. Ratings

        CIGNA and certain of its insurance subsidiaries are rated by nationally recognized rating agencies. The significance of individual ratings varies from agency to agency. However, companies assigned ratings at the top end of the range have, in the opinion of the rating agency, the strongest capacity for repayment of debt or payment of claims, while companies at the bottom end of the range have the weakest capacity.

        Insurance ratings represent the opinions of the rating agencies on the financial strength of a company and its capacity to meet the obligations of insurance policies. The principal agencies that rate CIGNA’s insurance subsidiaries characterize their insurance rating scales as follows:

• A.M. Best Company, Inc. (“A.M. Best”), A++ to S (“Superior” to “Suspended”);

• Moody’s Investors Service (“Moody’s”), Aaa to C (“Exceptional” to “Lowest”);

• Standard & Poor’s Corp. (“S&P”), AAA to R (“Extremely Strong” to “Regulatory Action”); and

• Fitch, Inc. (“Fitch”), AAA to D (“Exceptionally Strong” to “Order of Liquidation”).

        As of February 26, 2004, the insurance financial strength ratings for CG Life were as follows:

	CG Life
	Insurance Ratings(1)
A.M. Best	A-
	(“Excellent,”
	4th of 16)
Moody’s	A3
	(“Good,”
	7th of 21)
S&P	A
	(“Strong,”
	6th of 21)
Fitch	A+
	(“Strong,”
	5th of 24)

________________________
(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., CG Life's rating by A.M. Best is the 4th highest rating awarded in its scale of 16).

        As of February 26, 2004, the insurance financial strength rating for Life Insurance Company of North America assigned by A.M. Best was A- (“Excellent,” 4^th of 16), and by Moody’s was A3 (“Good,” 7^th of 21).

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        Debt ratings are assessments of the likelihood that a company will make timely payments of principal and interest. The principal agencies that rate CIGNA’s senior debt characterize their rating scales as follows:

• Moody’s, Aaa to C (“Exceptional” to “Lowest”);

• S&P, AAA to D (“Extremely Strong” to “Default”); and

• Fitch, AAA to D (“Highest” to “Default”).

        The commercial paper rating scales for those agencies are as follows:

• Moody’s, Prime-1 to Not Prime (“Superior” to “Not Prime”);

• S&P, A-1+ to D (“Extremely Strong” to “Default”); and

• Fitch, F-1+ to D (“Very Strong” to “Distressed”).

        As of February 26, 2004, the debt ratings obtained from the following agencies were as follows:

Debt Ratings(1)     CIGNA CORPORATION
	Senior Debt	Commercial Paper
Moody's	Baa3	Prime-3
	(“Adequate,”	(“Acceptable,”
	10th of 21)	3rd of 4)
S&P	BBB	A-2
	(“Adequate,”	(“Good,”
	9th of 22)	3rd of 7)
Fitch	BBB+	F-2
	(“Good,”	(“Moderately Strong,”
	8th of 24)	3rd of 7)

________________________
(1)	Includes the rating assigned, the agency's characterization of the rating and the position of the rating in the applicable agency's rating scale.

        Ratings are reviewed routinely by the rating agencies and may be changed at their discretion. Following the announcement that CIGNA has agreed to sell its retirement business, Moody’s and A.M. Best downgraded by one notch the financial strength rating of CG Life. Also, Moody’s downgraded by one notch the senior debt and commercial paper ratings of CIGNA. CIGNA anticipates one notch downgrades in CG Life’s rating from Standard and Poor’s and Fitch, and in CIGNA’s senior debt rating from Fitch, when the sale of the Retirement business is final. These downgrades reflect the reduced earnings available to the parent company following the sale. CIGNA is committed to maintaining appropriate levels of capital in its subsidiaries to support ratings that meet customers’ expectations, and to improving the earnings of the health care business. Lower ratings at the parent company level increase the cost to borrow funds. Lower ratings of CG Life could adversely affect new sales and retention of current business.

40

L. Miscellaneous

        Portions of CIGNA’s insurance business are seasonal in nature. Reported claims under group health products are generally higher in the first quarter.

        CIGNA and its principal subsidiaries are not dependent on business from one or a few customers. No customer accounted for 10% or more of CIGNA’s consolidated revenues in 2003. CIGNA and its principal subsidiaries are not dependent on business from one or a few brokers or agents. In addition, CIGNA’s insurance businesses are generally not committed to accept a fixed portion of the business submitted by independent brokers and agents, and generally all such business is subject to its approval and acceptance.

        CIGNA had approximately 32,700, 41,200 and 44,600 employees as of December 31, 2003, 2002 and 2001, respectively.

Item 2. PROPERTIES

        CIGNA’s headquarters are located in approximately 50,000 square feet of leased office space at One Liberty Place, Philadelphia, Pennsylvania. CIGNA Group Insurance, CIGNA International, portions of CIGNA HealthCare and CIGNA’s staff support operations are located in leased premises of approximately 635,000 square feet at Two Liberty Place, Philadelphia. CIGNA HealthCare is the primary occupant of a complex of buildings owned by CIGNA, aggregating approximately 1.5 million square feet of office space, located at 900-950 Cottage Grove Road, Bloomfield, Connecticut. CIGNA Retirement & Investment Services leases approximately 336,000 square feet at 280 Trumbull Street, Hartford, Connecticut and approximately 35,000 square feet at Four Times Square, New York, New York. In addition, CIGNA owns or leases office buildings, or parts thereof, throughout the United States and in other countries. For additional information concerning leases and property, see Notes 2(H) and 19 to CIGNA’s 2003 Financial Statements included in its Annual Report. This paragraph does not include information on investment properties.

Item 3. LEGAL PROCEEDINGS

        Various CIGNA entities are defendants in several proposed class action lawsuits brought in federal and state courts against the managed care industry alleging violations under one or more of the Employment Retirement Income Security Act (“ERISA”), the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and various state laws.  A Florida federal court is handling this multi-district litigation, which included the federal cases Shane v. Humana, Inc., et al. (CIGNA subsidiaries added as defendants in August 2000) and Mangieri v. CIGNA Corporation (filed December 7, 1999 in the United States District Court for the Northern District of Alabama), as well as the Illinois state suit Kaiser and Corrigan v. CIGNA Corporation, et al. (class of health care providers certified on March 29, 2001).  In January 2004, the Florida federal court  approved a settlement agreement between the physician class and CIGNA, and dismissed all claims by class members against CIGNA.  In February 2004, some class members filed a notice of appeal of the court’s approval of the settlement. If affirmed on appeal, the settlement would resolve for the Company and the plaintiffs all physician claims reflected in the multi-district litigation. 

        The U.S. Attorney’s Office for the Eastern District of Pennsylvania is investigating compliance with federal laws in connection with pharmaceutical companies’ marketing practices and their impact on prices paid by the government to pharmaceutical companies for products under federal health programs. As part of this investigation, CIGNA is responding to subpoenas concerning contractual relationships between pharmaceutical companies and CIGNA’s health care operations.

        In late 2002, several purported class action lawsuits were filed against CIGNA and certain of its officers by individuals seeking to represent a class of purchasers of CIGNA securities from May 2, 2001 to October 24,

41

2002. The complaints allege, among other things, that the defendants violated Section 10(b) of, and Rule 10b-5 under, the Securities Exchange Act of 1934 by misleading CIGNA shareholders with respect to the company’s performance during the class period. Plaintiffs seek compensatory damages and attorneys’ fees. In 2003, these suits were consolidated in the United States District Court for the Eastern District of Pennsylvania as In re CIGNA Corp. Securities Litigation. In January 2004, the court granted in part and denied in part defendants’ motion to dismiss, and narrowed the scope of the case.

        On November 7, 2002, a purported shareholder derivative complaint nominally on behalf of CIGNA was filed in the United States District Court for the Eastern District of Pennsylvania by Evelyn Hobbs. The complaint alleges breaches of fiduciary duty by CIGNA’s directors, including, among other things, their “failure to monitor, investigate and oversee Cigna’s management information system” and seeks compensatory and punitive damages. A similar complaint, filed on November 19, 2002 in the New Castle County (Delaware) Chancery Court by Jack Scott was dismissed by the plaintiff and refiled in the United States District Court for the Eastern District of Pennsylvania. The Hobbs and Scott cases are being coordinated in the United States District Court for the Eastern District of Pennsylvania by the same judge handling the In re CIGNA Corp. Securities Litigation.

        In December 2002 and February 2003, purported class action lawsuits were filed against CIGNA and certain officers by individuals seeking to represent a class of participants in the CIGNA 401(k) Plan who allegedly suffered losses on investments in CIGNA stock from May 2, 2001 to the present. The complaints assert, among other things, that the same actions alleged in the shareholder suits violated ERISA. Plaintiffs seek compensatory damages, attorneys’ fees and injunctive relief. In 2003, these actions were consolidated in the United States District Court for the Eastern District of Pennsylvania as In re CIGNA Corp. ERISA Litigation, and CIGNA has filed a motion to dismiss this case. The court has not certified a class in this matter.

        On December 18, 2001, Janice Amara filed a purported class action lawsuit in the United States District Court for the District of Connecticut against CIGNA Corporation and the CIGNA Pension Plan on behalf of herself and other similarly situated participants in the CIGNA Pension Plan who earned certain Plan benefits prior to 1998. The plaintiffs allege, among other things, that the Plan violated ERISA by impermissibly conditioning certain post-1997 benefit accruals on the amount of pre-1998 benefit accruals, that these conditions are not adequately disclosed to plan participants, and that the Plan’s cash balance formula discriminates against older employees. The plaintiffs were granted class certification on December 20, 2002, and seek equitable relief.

        See “Unicover and Other Run-off Reinsurance” on page 28 for a description of legal matters arising out of the run-off reinsurance operations.

        CIGNA is routinely involved in numerous claims, lawsuits, regulatory audits, investigations and other legal matters arising, for the most part, in the ordinary course of the business of administering and insuring employee benefit programs. An increasing number of claims are being made for substantial non-economic, extra-contractual or punitive damages. The outcome of litigation and other legal matters is always uncertain, and outcomes that are not justified by the evidence can occur. CIGNA believes that it has valid defenses to the legal matters pending against it and is defending itself vigorously. Nevertheless, it is possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to CIGNA’s consolidated results of operations, liquidity or financial condition.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None.

42

Executive Officers of the Registrant

        All officers are elected to serve for a one-year term or until their successors are elected. Principal occupations and employment during the past five years are listed.

ANDREA ANANIA, 51, Executive Vice President, Systems, beginning February 2001; Chief Information Officer since 1998; and Senior Vice President, Systems, from 1998 until February 2001.

MICHAEL W. BELL, 40, Executive Vice President and Chief Financial Officer of CIGNA beginning December 2002; Chief Financial Officer-elect from October 2002 until December 2002; President of CIGNA Group Insurance from July 2000 until October 2002; and Vice President of CIGNA Corporate Accounting and Planning from February 1997 until July 2000.

H. EDWARD HANWAY, 52, Chairman of CIGNA since December 2000; Chief Executive Officer of CIGNA since January 2000; President and a Director of CIGNA since January 1999; Chief Operating Officer of CIGNA from January 1999 until January 2000; and President of CIGNA HealthCare from February 1996 until January 1999. Mr. Hanway reassumed direct management of CIGNA’s health care operations in July 2003.

TERRY L. KENDALL, 57, President of CIGNA International since January 1999.

JOHN Y. KIM, 43, President of CIGNA Retirement and Investment Services since February 2002; President and Chief Executive Officer of BondBook LLC from January 2001 until February 2002; and President and Chief Executive Officer and Chief Investment Officer of Aeltus Investment Management from October 1995 until January 2001. BondBook LLC was an electronic corporate bond trading firm. Aeltus Investment Management is an investment management subsidiary of ING Group.

JOHN MURABITO, 45, Executive Vice President of CIGNA beginning August 2003, with responsibility for Human Resources and Services. Previously held positions at Monsanto Company included Senior Vice President, Human Resources and Corporate Services from March 2000 until August 2003; and Vice President of Human Resources, Agriculture & Nutrition from November 1998 until February 2000. Monsanto Company is a leading provider of agricultural products and integrated solutions.

JUDITH E. SOLTZ, 57, Executive Vice President and General Counsel beginning February 2001; Senior Vice President and Associate General Counsel, 1998 until February 2001.

GREGORY H. WOLF, 47, President of CIGNA Group Insurance beginning October 2002; President of CIGNA Small Case Business Development from September 2001 until October 2002; Chairman and Chief Executive Officer of nextHR.com from January 2000 until July 2001; and President, Chief Executive Officer and Director of Humana, Inc. from December 1997 until August 1999. Humana, Inc. is a provider of managed health care products and services.

PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        The information under the caption “Quarterly Financial Data — Stock and Dividend Data” and under the caption “Stock Listing” in CIGNA’s Annual Report is incorporated by reference, as is the information from Note 13 to CIGNA’s 2003 Financial Statements and the number of shareholders of record as of December 31, 2003 under the caption “Highlights” in CIGNA’s Annual Report.

Item 6. SELECTED FINANCIAL DATA

        The five-year financial information under the caption “Highlights” in CIGNA’s Annual Report is incorporated by reference.

43

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The information contained in the MD&A Section of CIGNA’s Annual Report is incorporated by reference.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The information under the caption “Market Risk” in the MD&A section of CIGNA’s Annual Report is incorporated by reference.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        CIGNA’s Consolidated Financial Statements and the report of its independent auditors in CIGNA’s Annual Report are incorporated by reference, as is the unaudited information set forth under the caption “Quarterly Financial Data — Consolidated Results”.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

      None.

Item 9A. CONTROLS AND PROCEDURES

        Based on an evaluation of the effectiveness of CIGNA’s disclosure controls and procedures, CIGNA’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, CIGNA’s disclosure controls and procedures are effective to ensure that information required to be disclosed by CIGNA in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

        There have been no changes in CIGNA’s internal control over financial reporting identified in connection with the evaluation described in the above paragraph that have materially affected, or are reasonably likely to materially affect, CIGNA’s internal control over financial reporting.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

A. Directors of the Registrant

        The information under the captions “Management’s nominees for terms to expire in April 2007”, “Management’s nominee for a term to expire in April 2006”, “Directors who will continue in office”, and “Board of directors and committee meetings, membership and attendance” (as it relates to Audit Committee disclosure) in CIGNA’s proxy statement to be dated on or about March 26, 2004 is incorporated by reference.

B. Executive Officers of the Registrant

        See PART I – “Executive Officers of the Registrant.”

C. Code of Ethics and Other Corporate Governance Disclosures

        CIGNA’s Code of Ethics and Compliance is the Company’s code of business conduct and ethics, and applies to CIGNA’s directors, officers (including the chief executive officer, chief financial officer and chief accounting officer) and employees. The Code of Ethics and Compliance policies are posted on the Corporate Governance section of the Company’s website, www.cigna.com. In the event the Company substantively amends its Code of Ethics and Compliance 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 as well.

44

        In addition, the Company’s corporate governance guidelines (Board Practices) and the charters of its board committees (audit, corporate governance, executive, finance and people resources) are available on the Corporate Governance section of the Company’s website. These corporate governance documents, as well as the Code of Ethics and Compliance policies, are available in print to any shareholder who requests them.

Item 11. EXECUTIVE COMPENSATION

        The information under the captions “Executive Compensation” and “Non-employee director compensation” in CIGNA’s proxy statement to be dated on or about March 26, 2004 is incorporated by reference.

45

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

        The information under the captions “Stock held by directors and executive officers as of January 31, 2004” and “Largest Security Holders” in CIGNA’s proxy statement to be dated on or about March 26, 2004 is incorporated by reference.

        The following table presents information regarding CIGNA’s equity compensation plans as of December 31, 2003:

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans
approved by security holders	15,782,000	$79.51	11,270,000	(1)
Equity compensation plans not
approved by security holders	0	N/A	N/A
Total	15,782,000	$79.51	11,270,000	(1)

________________________
(1)	New directors of CIGNA are entitled to receive 4,500 shares of restricted CIGNA common stock, which shares do not reduce the number of shares available for future issuance under any equity compensation plan.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        The information under the caption “Transactions with affiliates” in CIGNA’s proxy statement to be dated on or about March 26, 2004 is incorporated by reference.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

        The information under the captions “Policy for the pre-approval of audit and non-audit services” and “Fees billed by independent auditors” in CIGNA’s proxy statement to be dated on or about March 26, 2004 is incorporated by reference.

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

        A. (1) The following financial statements have been incorporated by reference from CIGNA’s Annual Report:

46

        Consolidated Statements of Income for the years ended December 31, 2003, 2002 and 2001.

        Consolidated Balance Sheets as of December 31, 2003 and 2002.

        Consolidated Statements of Comprehensive Income and Changes in Shareholders’ Equity for the years ended December 31, 2003, 2002 and 2001.

        Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001.

        Notes to the Financial Statements.

        Report of Independent Auditors, PricewaterhouseCoopers LLP.

        (2) The financial statement schedules are listed in the Index to Financial Statement Schedules on page FS-1.

        (3) The exhibits are listed in the Index to Exhibits beginning on page E-1.

        B. During the last quarter of the fiscal year ended December 31, 2003, the registrant filed a Report on Form 8-K dated October 31, 2003 regarding its third quarter 2003 results; a Report on Form 8-K dated November 18, 2003 announcing CIGNA’s agreement to sell its Retirement Benefits business to Prudential; a Form 8-K dated December 3, 2003 regarding a Regulation FD disclosure; and a Form 8-K dated December 11, 2003 regarding a Regulation FD disclosure.

47

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 its undersigned, thereunto duly authorized.

Date: February 27, 2004
	CIGNA Corporation
	By: /s/ Michael W. Bell
	Michael W. Bell 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 and on the dates indicated.

Principal Executive Officer:	Directors:*
H. Edward Hanway*	Robert H. Campbell
Chairman, Chief Executive Officer	Peter N. Larson
and a Director	Joseph Neubauer
	Charles R. Shoemate
	Louis W. Sullivan, M.D.
	Harold A. Wagner
	Carol Cox Wait
	Marilyn Ware
Principal Accounting Officer:
/s/ Annmarie T. Hagan
Annmarie T. Hagan
Vice President and
Chief Accounting Officer
Date: February 27, 2004
	*By:	/s/ Carol J. Ward
		Carol J. Ward
		Attorney-in-Fact
		Date: February 27, 2004

48

CIGNA CORPORATION AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENT SCHEDULES

	PAGE
Report of Independent Auditors on Financial Statement Schedules	FS-2
Schedules
I    Summary of Investments—Other Than Investments in Related Parties as of December 31, 2003	FS-4
II   Condensed Financial Information of CIGNA Corporation (Registrant)	FS-6
III  Supplementary Insurance Information	FS-12
IV  Reinsurance	FS-14
V   Valuation and Qualifying Accounts and Reserves	FS-15

        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, which are incorporated by reference from CIGNA’s Annual Report.

FS-1

Report of Independent Auditors on
Financial Statement Schedules

To the Board of Directors
of CIGNA Corporation

Our audits of the consolidated financial statements referred to in our report dated February 5, 2004 appearing in the 2003 Annual Report to Shareholders of CIGNA Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedules listed in the index on page FS-1 of this Form 10-K. In our opinion, these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

As discussed in Note 2 to the consolidated financial statements referred to above, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” effective January 1, 2002.

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 5, 2004

FS-2

(THIS PAGE INTENTIONALLY LEFT BLANK)

FS-3

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE I
SUMMARY OF INVESTMENTS — OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 2003
(In millions)

Type of Investment	Cost		Fair Value		Amount at which shown in the consolidated balance sheet
Fixed maturities:
Bonds:
United States government and government
agencies and authorities	$	645	$	816	$	816
States, municipalities and political subdivisions		2,061		2,227		2,227
Foreign governments		700		752		752
Public utilities		1,078		1,167		1,167
All other corporate bonds		9,144		9,924		9,924
Asset-backed securities:
United States government agencies,
mortgage-backed		249		250		250
Other mortgage-backed		645		672		672
Other asset-backed		1,136		1,193		1,193
Redeemable preferred stocks		114		120		120
Total fixed maturities available for sale		15,772		17,121		17,121
Securities supporting experience-rated pension
policyholder contracts:
Bonds:
United States government and government
agencies and authorities		173		174		174
States, municipalities and political subdivisions		157		163		163
Foreign governments		117		132		132
Public utilities		739		797		797
All other corporate bonds		6,781		7,284		7,284
Asset-backed securities:
United States government agencies,
mortgage-backed		587		597		597
Other mortgage-backed		1,288		1,328		1,328
Other asset-backed		714		742		742
Total fixed maturities		10,556		11,217		11,217
Equity securities:
Industrial, miscellaneous and all other		2		5		5
Total Securities supporting experience rated
Pension policy holder contracts		10,558		11,222		11,222

FS-4

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE I (continued)
SUMMARY OF INVESTMENTS — OTHER THAN INVESTMENTS IN RELATED PARTIES DECEMBER 31, 2003
(In millions)

Type of Investment	Cost		Fair Value		Amount at which shown in the consolidated balance sheet
Equity securities:
Common stocks:
Industrial, miscellaneous and all other		40		71		71
Banks, trust and insurance companies		2		2		2
Public utilities		1		2		2
Non-redeemable preferred stocks		4		3		3
Total equity securities		47		78		78
Mortgage loans on real estate		8,655				8,655
Policy loans		1,572				1,572
Real estate investments (including $94 million of
real estate acquired in satisfaction of debt)		146				146
Other long-term investments		702				717
Short-term investments		147				147
Total investments	$	37,599			$	39,658

FS-5

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION
(REGISTRANT)
STATEMENTS OF INCOME
(In millions)

	For the year ended December 31,
	2003			2002			2001
Intercompany income	$	-			-		$	1
Total revenues		-			-			1
Operating expenses:
Interest		111			120			117
Intercompany interest		64			95			176
Other		32			(4	)		24
Total operating expenses		207			211			317
Loss before income taxes		(207	)		(211	)		(316	)
Income tax benefit		(52	)		(68	)		(98	)
Loss of parent company		(155	)		(143	)		(218	)
Equity in income (loss) of subsidiaries from
continuing operations		775			(254	)		1,189
Income (loss) from continuing operations		620			(397	)		971
Income (loss) from discontinued operations		48			(1	)		18
Net income (loss)	$	668		$	(398	)	$	989

See Notes to Condensed Financial Statements on pages FS-9 and FS-10.

FS-6

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION
(REGISTRANT)
BALANCE SHEETS
(In millions)

				As of December 31,
				2003						2002
Assets:
Cash and cash equivalents				$	1					$	1
Investments in subsidiaries from continuing
operations					11,261						10,818
Other assets					393						443
Net assets of discontinued operations					-						125
Total assets				$	11,655					$	11,387
Liabilities:
Intercompany				$	4,020					$	4,040
Short-term debt					-						126
Long-term debt					1,500						1,500
Other liabilities					1,616						1,854
Total liabilities					7,136						7,520
Shareholders' Equity:
Common stock (shares issued, 275; 273)					69						68
Additional paid-in capital					3,279						3,212
Net unrealized appreciation-- fixed maturities	$	610					$	512
Net unrealized appreciation-- equity securities		29						26
Net unrealized appreciation (depreciation)--
derivatives		(12	)					6
Net translation of foreign currencies		(14	)					(32	)
Minimum pension liability adjustment		(667	)					(714	)
Accumulated other comprehensive loss					(54	)					(202	)
Retained earnings					9,782						9,299
Less treasury stock, at cost					(8,557	)					(8,510	)
Total shareholders' equity					4,519						3,867
Total liabilities and shareholders' equity				$	11,655					$	11,387

See Notes to Condensed Financial Statements on pages FS-9 and FS-10.

FS-7

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION
(REGISTRANT)
STATEMENTS OF CASH FLOWS
(In millions)

	For the year ended December 31,
	2003			2002			2001
Cash Flows from Operating Activities:
Income (loss) from continuing operations	$	620		$	(397	)	$	971
Adjustments to reconcile income (loss) from continuing operations
to net cash provided by operating activities:
Equity in (income) loss of subsidiaries - continuing
operations		(775	)		254			(1,189	)
Dividends received from subsidiaries - continuing
operations		608			700			874
Other liabilities		(155	)		345			250
Other, net		17			14			(50	)
Net cash provided by operating activities of continuing
operations		315			916			856
Cash Flows from Investing Activities:
Capital contributions to subsidiaries - continuing
operations		-			-			(6	)
Other, net		10			15			11
Net cash provided by investing activities of
continuing operations		10			15			5
Cash Flows from Financing Activities:
Net change in intercompany debt		(20	)		(423	)		82
Issuance of long-term debt		-			-			493
Repayment of long-term debt		(126	)		(36	)		(145	)
Repurchase of common stock		-			(355	)		(1,139	)
Issuance of common stock		6			68			38
Common dividends paid		(185	)		(185	)		(190	)
Net cash used in financing activities of		(325	)		(931	)		(861	)
continuing operations
Net increase in cash and cash equivalents		-			-			-
Cash and cash equivalents, beginning of year		1			1			1
Cash and cash equivalents, end of year	$	1		$	1		$	1

See Notes to Condensed Financial Statements on pages FS-9 and FS-10.

FS-8

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF CIGNA CORPORATION
(REGISTRANT)

NOTES TO CONDENSED FINANCIAL STATEMENTS

        The accompanying condensed financial statements should be read in conjunction with the Consolidated Financial Statements and the accompanying notes thereto in the Annual Report.

Note 1—For purposes of these condensed financial statements, CIGNA Corporation’s wholly owned subsidiaries are recorded using the equity basis of accounting.

Note 2—Short-term and long-term debt consisted of the following at December 31:

(In millions)		2003		2002
Short-term
Current maturities of long-term debt		-		126
Total short-term debt	$	-	$	126
Long-term
Uncollateralized debt:
6 3/8% Notes due 2006	$	100	$	100
7.4% Notes due 2007		300		300
81/4% Notes due 2007		100		100
7% Notes due 2011		250		250
6.375% Notes due 2011		250		250
7.65% Notes due 2023		100		100
8.3% Notes due 2023		17		17
7 7/8% Debentures due 2027		300		300
8.3% Step Down Notes due 2033		83		83
Total long-term debt	$	1,500	$	1,500

As of December 31, 2003, CIGNA Corporation had available $260 million in committed lines of credit provided by U.S. Banks. These lines of credit typically have terms ranging from one to three years and are paid for with a combination of fees and bank balances. Interest that CIGNA Corporation incurs for using these lines of credit is generally LIBOR plus a predetermined spread. Approximately $160 million of CIGNA Corporation’s available lines of credit will expire within the next twelve months.

As of December 31, 2003, CIGNA Corporation had $500 million remaining under an effective shelf registration statement filed with the Securities and Exchange Commission, which may be issued as debt securities, equity securities or both.

Maturities of long-term debt are as follows (in millions): none in 2004 and 2005, $100 in 2006, $400 in 2007, and the remainder in years after 2007.

Interest paid on short- and long-term debt amounted to $114 million, $120 million and $109 million for 2003, 2002 and 2001, respectively.

FS-9

Note 3—As of December 31, 2003, CIGNA Corporation had guarantees and similar agreements in place to secure payment obligations or solvency requirements of certain wholly owned subsidiaries as follows:

• In May 2003, CIGNA Corporation entered into a syndicated bank letter of credit agreement of $433 million in support of a potential internal reinsurance arrangement associated with obligations of a subsidiary. A letter of credit in a nominal amount is currently issued under the new agreement.

• CIGNA Corporation has arranged for bank letters of credit in support of CIGNA Global Reinsurance Company, an indirect wholly owned subsidiary, in the amount of $185 million. These letters of credit secure the payment of insureds' claims from run-off reinsurance operations. CIGNA Corporation has agreed to indemnify the banks providing the letters of credit in the event of any draw. As of December 31, 2003 approximately $140 million of the letters of credit are issued.

• Various indirect, wholly owned subsidiaries have obtained surety bonds in the normal course of business. If there is a claim on a surety bond and the subsidiary is unable to pay, CIGNA Corporation guarantees payment to the company issuing the surety bond. The aggregate amount of such surety bonds as of December 31, 2003 was approximately $7 million.

• CIGNA Corporation is obligated under a $25 million letter of credit required by the insurer of its high-deductible self-insurance programs to indemnify the insurer for claim liabilities that fall within deductible amounts for policy years dating back to 1994.

• CIGNA Corporation also provides solvency guarantees aggregating approximately $60 million under state and federal regulations in support of its indirect wholly owned medical HMOs in several states.

Through December 31, 2003, no payments have been made on these guarantees and none are pending. CIGNA Corporation provided other guarantees to subsidiaries that, in the aggregate, do not represent a material risk to CIGNA Corporation’s results of operations, liquidity or financial condition.

FS-10

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FS-11

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION
(In millions)

Segment	Deferred policy acquisition costs		Future policy benefits and contractholder deposit funds		Unpaid claims and claim expenses
Year Ended December 31, 2003:
Health Care	$	25	$	1,465	$	3,162
Disability and Life		15		2,875		523
Retirement		223		21,898		37
International		311		715		140
Run-off Reinsurance		-		1,409		695
Other Operations		6		10,162		151
Corporate		-		-		-
Total	$	580	$	38,524	$	4,708
Year Ended December 31, 2002:
Health Care	$	30	$	1,574	$	2,976
Disability and Life		15		2,906		490
Retirement		214		23,208		35
International		229		632		135
Run-off Reinsurance		-		1,702		759
Other Operations		6		11,200		140
Corporate		-		-		-
Total	$	494	$	41,222	$	4,535
Year Ended December 31, 2001:
Health Care	$	27	$	1,630	$	2,473
Disability and Life		17		2,920		475
Retirement		209		22,264		20
International		188		508		139
Run-off Reinsurance		-		555		709
Other Operations		7		11,607		134
Corporate		-		-		-
Total	$	448	$	39,484	$	3,950

FS-12

Unearned premiums		Premiums and fees (1)		Net investment income (2)		Benefits, losses and settlement expenses (1)		Policy acquisition expenses		Other operating expenses
$	110	$	12,265	$	283	$	8,684	$	62	$	4,266
	101		1,807		250		1,458		6		412
	2		340		1,574		1,062		28		321
	111		855		49		482		144		204
	2		84		82		116		-		39
	-		90		356		418		1		128
	-		-		-		-		-		74
$	326	$	15,441	$	2,594	$	12,220	$	241	$	5,444
$	120	$	12,624	$	298	$	8,899	$	60	$	4,187
	104		1,712		260		1,411		7		390
	3		336		1,649		1,315		57		286
	13		811		51		472		121		223
	3		138		44		1,761		-		70
	-		116		409		456		1		134
	-		-		5		-		-		67
$	243	$	15,737	$	2,716	$	14,314	$	246	$	5,357
$	119	$	11,578	$	335	$	7,870	$	19	$	3,657
	99		1,881		264		1,618		7		453
	1		322		1,668		1,338		49		294
	14		788		49		481		161		196
	4		148		52		154		-		78
	-		143		450		515		1		158
	-		-		24		-		-		89
$	237	$	14,860	$	2,842	$	11,976	$	237	$	4,925

_________________

(1) Amounts presented are shown net of the effects of reinsurance. See Note 18 to the Financial Statements included in CIGNA’s 2003 Annual Report.

(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.

FS-13

CIGNA CORPORATION AND SUBSIDIARIES

SCHEDULE IV
REINSURANCE
(In millions)

	Gross amount		Ceded to other companies		Assumed from other companies		Net amount		Percentage of amount assumed to net
Year Ended December 31, 2003:
Life insurance in force	$	323,241	$	52,511	$	136,754	$	407,484		33.6	%
Premiums and fees:
Life insurance and annuities		2,115		397		495		2,213		22.4	%
Accident and health insurance		13,309		122		41		13,228		.3
Total		15,424		519		536		15,441		3.5	%
Year Ended December 31, 2002:
Life insurance in force	$	334,831	$	59,752	$	181,830	$	456,909		39.8	%
Premiums and fees:
Life insurance and annuities	$	2,205	$	464	$	536	$	2,277		23.5	%
Accident and health insurance		13,483		84		61		13,460		.5
Total	$	15,688	$	548	$	597	$	15,737		3.8	%
Year Ended December 31, 2001:
Life insurance in force	$	437,592	$	69,833	$	172,378	$	540,137		31.9	%
Premiums and fees:
Life insurance and annuities	$	2,331	$	473	$	592	$	2,450		24.2	%
Accident and health insurance		12,497		239		152		12,410		1.2
Total	$	14,828	$	712	$	744	$	14,860		5.0	%

FS-14

CIGNA CORPORATION

SCHEDULE V
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In millions)

Description	Balance at beginning of period		Charged (Credited) to costs and expenses			Charged (Credited) to other accounts -describe(1)			Other deductions -describe(2)			Balance at end of period
2003:
Investment asset valuation reserves:
Mortgage loans	$	11	$	3		$	5		$	-		$	19
Real estate		21		1			1			(23	)		-
Allowance for doubtful accounts:
Premiums, accounts and notes
receivable		55		42			(2	)		(14	)		81
Deferred tax asset valuation
allowance		204		28			-			(9	)		223
Reinsurance recoverables		149		19			-			8			176
2002:
Investment asset valuation reserves:
Mortgage loans	$	15	$	9		$	14		$	(27	)	$	11
Real estate		45		17			24			(65	)		21
Allowance for doubtful accounts:
Premiums, accounts and notes
receivable		43		36			-			(24	)		55
Deferred tax asset valuation
allowance		150		54			-			-			204
Reinsurance recoverables		-		150			-			(1	)		149
2001:
Investment asset valuation reserves:
Mortgage loans	$	37	$	2		$	3		$	(27	)	$	15
Real estate		22		12			27			(16	)		45
Allowance for doubtful accounts:
Premiums, accounts and notes
receivable		54		(2	)		4			(13	)		43
Deferred tax asset valuation
Allowance (3)		152		(2	)		-			-			150
Reinsurance recoverables		-		-			-			-			-

_________________

(1) Change in valuation reserves attributable to policyholder contracts.

(2) Reflects transfer of reserves to other investment asset categories as well as charge-offs upon sales, repayments and other. The change in the deferred tax asset valuation allowance primarily reflects activity in discontinued operations. The change in reinsurance recoverable reflects a reclassification of the gross reinsurance recoverable, with no effect on the net reinsurance recoverable.

(3) Change in beginning balance, as of January 1, 2001, primarily reflects a reclassification to include the valuation allowance associated with state deferred tax assets. Previously, it had been included in other components of the deferred tax asset. There was no change to the total net deferred tax asset.

FS-15

INDEX TO EXHIBITS

Number		Description	Method of Filing
3.1		Restated Certificate of Incorporation of the registrant as last amended July 22, 1998	Filed herewith.
3.2		By-Laws of the registrant as last amended and restated December 11, 2000	Filed as Exhibit 3.2 to the registrant's Form 10-K for the year ended December 31, 2000 and incorporated herein by reference.
4	(a)	Amended and Restated Shareholder Rights Agreement dated as of July 22, 1998 between CIGNA Corporation and First Chicago Trust Company of New York	Filed herewith.
	(b)	Amendment No. 1 dated as of December 14, 1998 to the Amended and Restated Shareholder Rights Agreement	Filed herewith.
	(c)	Amendment No. 2 dated as of December 31, 2001 to the Amended and Restated Shareholder Rights Agreement	Filed as Exhibit 10.1 to the registrant's Form 10-K for the year ended December 31, 2001 and incorporated herein by reference.
Exhibits 10.1 through 10.23 are identified as management contracts or compensatory plans or arrangements pursuant to Item 15 of Form 10-K.
10.1		Deferred Compensation Plan for Directors of CIGNA Corporation, as amended and restated January 1, 1997	Filed as Exhibit 10.1 to the registrant's Form 10-K for the year ended December 31, 2001 and incorporated herein by reference.
10.2		Restated Restricted Stock Plan for Non-Employee Directors of CIGNA Corporation dated as of October 23, 2003	Filed herewith.
10.3		Description of Compensation Plan for Non-Employee Directors of CIGNA Corporation, as amended and restated effective October 1, 2003	Filed as Exhibit 10 to the registrant's Form 10-Q for the quarter ended June 30, 2003 and incorporated herein by reference.
10.4		CIGNA Corporation Stock Plan, as amended and restated through July 2000	Filed herewith.
10.5	(a)	CIGNA Executive Severance Benefits Plan effective as of January 1, 1997	Filed as Exhibit 10.7(a) to the registrant's Form 10-K for the year ended December 31, 2001 and incorporated herein by reference.

E-1

Number		Description	Method of Filing
	(b)	Amendment No. 1 effective February 23, 2000 to the CIGNA Executive Severance Benefits Plan	Filed as Exhibit 10.7(b) to the registrant's Form 10-K for the year ended December 31, 1999 and incorporated herein by reference.
10.6		CIGNA Executive Incentive Plan, as amended and restated January 1, 2002	Filed as Exhibit 10 to the registrant's Form 10-Q for the quarter ended March 31, 2002 and incorporated herein by reference.
10.7	(a)	CIGNA Long-Term Incentive Plan, as amended and restated January 1, 2000	Filed as Appendix A to the registrant's Definitive Proxy Statement on Schedule 14A dated March 22, 2000 and incorporated herein by reference.
	(b)	Amendment No. 1 dated as of July 31, 2000 to the CIGNA Long-Term Incentive Plan	Filed as Exhibit 10.2 to the registrant's Form 10-Q for the quarter ended September 30, 2000 and incorporated herein by reference.
10.8		CIGNA Deferred Compensation Plan, as amended and restated October 24, 2001	Filed as Exhibit 10 to the registrant's Form 10-Q for the quarter ended September 30, 2001 and incorporated herein by reference.
10.9	(a)	CIGNA Supplemental Pension Plan, as amended and restated August 1, 1998	Filed herewith.
	(b)	Amendment No. 1 dated December 21, 1999 to the CIGNA Supplemental Pension Plan, as amended and restated effective August 1, 1998	Filed as Exhibit 10.11(b) to the registrant's Form 10-K for the year ended December 31, 1999 and incorporated herein by reference.
	(c)	Amendment No. 2 dated December 6, 2000 to the CIGNA Supplemental Pension Plan as amended and restated August 1, 1998	Filed as Exhibit 10.11(c) to the registrant's Form 10-K for the year ended December 31, 2001 and incorporated herein by reference.
10.10		Description of CIGNA Corporation Financial Services Program	Filed herewith.
10.11		Description of Mandatory Deferral of Non-Deductible Executive Compensation Arrangement	Filed as Exhibit 10.17 to the registrant's Form 10-K for the year ended December 31, 2001 and incorporated herein by reference.
10.12		Form of Non-Compete Agreement dated December 8, 1997 with Messrs. Hanway and Levinson	Filed as Exhibit 10.15 to the registrant's Form 10-K for the year ended December 31, 2002 and incorporated herein by reference.
10.13		Special Incentive Agreement with Mr. Hanway dated March 17, 1998	Filed as Exhibit 10.19 to the registrant's Form 10-K for the period ended December 31, 2002 and incorporated herein by reference.
10.14		Special Retention Agreement dated March 27, 1996 with Mr. Levinson	Filed as Exhibit 10.15 to the registrant's Form 10-K for the year ended December 31, 2003 and incorporated herein by reference.

E-2

Number	Description	Method of Filing
10.15	Special Incentive Agreement with Mr. Levinson dated March 17, 1998	Filed as Exhibit 10.18 to the registrant's Form 10-K for the period ended December 31, 2002 and incorporated herein by reference.
10.16	Agreement and Release with Mr. Levinson dated October 21, 2003	Filed herewith.
10.17	Arrangements relating to Mr. Welch's compensation and pension	Filed as Exhibit 10.22 to the registrant's Form 10-K for the period ended December 31, 2002 and incorporated herein by reference.
10.18	Agreement and Release dated August 22, 2003 with Mr. Welch	Filed as Exhibit 10.4 to the registrant's Form 10-Q for the period ended September 30, 2003 and incorporated herein by reference.
10.19	Arrangements relating to Mr. Kim's compensation	Filed as Exhibit 10.24 to the registrant's Form 10-K for the period ended December 31, 2002 and incorporated herein by reference.
10.20	Retention Agreement dated July 23, 2003 with Mr. Kim	Filed as Exhibit 10.2 to the registrant's Form 10-Q for the period ended September 30, 2003 and incorporated herein by reference.
10.21	Restricted Stock Unit Agreement dated July 23, 2003 with Mr. Kim	Filed as Exhibit 10.3 to the registrant's Form 10-Q for the period ended September 30, 2003 and incorporated herein by reference.
10.22	Schedule regarding Deferred Stock Unit Agreements dated August 6, 2003 with Messrs. Hanway, Bell and Wolf and Ms. Soltz and Form of Deferred Stock Unit Agreement	Filed herewith.
10.23	Description of Arrangement regarding Unit-based Long-Term Incentive Compensation	Filed as Exhibit 10.5 to the registrant's Form 10-Q for the period ended September 30, 2003 and incorporated herein by reference.
12	Computation of Ratios of Earnings to Fixed Charges	Filed herewith.
13	Portions of registrant's 2003 Annual Report to Shareholders (Entire Annual Report bound in printed versions of Form 10-K)	Filed herewith.
21	Subsidiaries of the Registrant	Filed herewith.
23	Consent of Independent Accountants	Filed herewith.
24.1	Powers of Attorney	Filed herewith.
24.2	Certified Resolutions	Filed herewith.

E-3

Number	Description	Method of Filing
31.1	Certification of Chief Executive Officer of CIGNA Corporation pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934	Filed herewith.
31.2	Certification of Chief Financial Officer of CIGNA Corporation pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934	Filed herewith.
32.1	Certification of Chief Executive Officer of CIGNA Corporation pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350	Filed herewith.
32.2	Certification of Chief Financial Officer of CIGNA Corporation pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350	Filed herewith.

        The registrant will furnish to the Commission upon request a copy of any of the registrant’s agreements with respect to its long-term debt.

        Shareholders may obtain copies of exhibits by writing to CIGNA Corporation, Shareholder Services Department, 1650 Market Street, OL57B, Philadelphia, PA 19192.

E-4

EX-3

                                                                     Exhibit 3.1

                      RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                                CIGNA CORPORATION

           (Originally incorporated on November 3, 1981 under the name
                       North American General Corporation)

         First:  The name of the Corporation is CIGNA Corporation.
         -----

         Second: The address of the Corporation's registered office in the State
         ------
of  Delaware  is 1209  Orange  Street in the City of  Wilmington,  County of New
Castle,  Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.

         Third:  The nature of the  business  or  purposes  to be  conducted  or
         -----
promoted is to engage in any lawful act or activity for which  corporations  may
be organized under the General Corporation Law of the State of Delaware.

         Fourth:  The total  number of shares of all  classes of  capital  stock
         ------
which the  Corporation  shall have the authority to issue is 625,000,000  shares
divided into two classes as follows:  600,000,000  shares of Common Stock of the
par value of $.25 per share and 25,000,000  shares of Preferred Stock of the par
value of $1.00 per share.

         A.       PREFERRED STOCK

                  The Board of Directors is expressly  authorized to provide for
the issue of all or any shares of the  Preferred  Stock,  in one or more series,
and to fix for each such  series  such voting  powers,  full or  limited,  or no
voting powers, and such designations,  preferences and relative,  participating,
optional  or other  special  rights  and  such  qualifications,  limitations  or
  thereof,  as shall be stated and  expressed in the  resolution  or
resolutions  adopted by the Board of Directors  providing  for the issue of such
series and as may be  permitted by the General  Corporation  Law of the State of
Delaware,  including, without limitation, the authority to provide that any such
series may be (i) subject to  redemption at such time or times and at such price
or prices;  (ii)  entitled  to receive  dividends  (which may be  cumulative  or
non-cumulative)  at such  rates,  on such  conditions,  and at such  times,  and
payable in preference  to, or in such relation to, the dividends  payable on any
other class or classes or any other series;  (iii)  entitled to such rights upon
the dissolution of, or upon any  distribution of the assets of, the Corporation;
or (iv)  convertible  into, or  exchangeable  for,  shares of any other class or
classes  of  stock,  or of any other  series  of the same or any other  class or
classes of stock, of the Corporation at such price or prices or at such rates of
exchange and with such  adjustments;  all as may be stated in such resolution or
resolutions.

         1.       Junior Participating Preferred Stock, Series D.
                  -----------------------------------------------

                  Section 1. Designation and Amount.  There shall be a series of
                             ----------------------
the Preferred Stock of the Corporation  which shall be designated as the "Junior
Participating  Preferred  Stock,  Series D," $1.00 par value,  and the number of
shares constituting such series shall be 6,000,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors;  provided,  that
no decrease shall reduce the number


of shares of Junior  Participating  Preferred Stock,  Series D, to a number less
than that of the shares then outstanding plus the number of shares issuable upon
exercise  of  outstanding  rights,  options or warrants  or upon  conversion  of
outstanding securities issued by the Corporation.

                  Section 2.        Dividends and Distributions.
                                    ----------------------------

                  (A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred  Stock  ranking  prior and superior to the
shares of Junior  Participating  Preferred  Stock,  Series  D, with  respect  to
dividends, the holders of shares of Junior Participating Preferred Stock, Series
D, in preference  to the holders of shares of Common Stock,  par value $0.25 per
share (the "Common Stock"), of the Corporation and any other junior stock, shall
be entitled to receive,  when,  as and if declared by the Board of Directors out
of funds legally available for that purpose, quarterly dividends payable in cash
on the 10th day of  January,  April,  July and October in each year (or, in each
case, if not a date on which the Corporation is open for business, the next date
on which the Corporation is so open) (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment  Date  after the first  issuance  of a share or  fraction  of a share of
Junior Participating  Preferred Stock, Series D, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $100.00,  or (b) 1000 times the
aggregate per share amount of all cash  dividends,  and 1000 times the aggregate
per  share  amount  (payable  in  kind)  of  all  non-cash  dividends  or  other
distributions  other  than a  dividend  payable  in shares of Common  Stock or a
subdivision of the outstanding  shares of Common Stock (by  reclassification  or
otherwise),  declared  on the  Common  Stock,  since the  immediately  preceding
Quarterly  Dividend  Payment  Date,  or,  with  respect  to the first  Quarterly
Dividend  Payment Date,  since the first  issuance of any share or fraction of a
share of Junior Participating Preferred Stock, Series D.

                  (B) The  Corporation  shall declare a dividend or distribution
on the Junior Participating  Preferred Stock, Series D, as provided in paragraph
(A) above immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock);  provided that,
in the event no dividend or distribution  shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent  Quarterly  Dividend Payment Date, a dividend of $100.00 per share on
the  Junior  Participating  Preferred  Stock,  Series D, shall  nevertheless  be
payable on such subsequent Quarterly Dividend Payment Date.

                  (C)  Dividends  shall  begin to accrue  and be  cumulative  on
outstanding shares of Junior  Participating  Preferred Stock, Series D, from the
Quarterly  Dividend Payment Date next preceding the date of issue of such shares
of Junior  Participating  Preferred Stock, Series D, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such  shares,  or unless the date of issue is a  Quarterly  Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Junior Participating Preferred Stock, Series D, entitled to receive
a quarterly  dividend and before such Quarterly  Dividend Payment Date in either
of which events such dividends shall begin to accrue and be cumulative from

                                      -2-

such Quarterly  Dividend  Payment Date.  Accrued but unpaid  dividends shall not
bear interest.  Dividends paid on the shares of Junior  Participating  Preferred
Stock,  Series D, in an amount less than the total  amount of such  dividends at
the time  accrued and payable on such shares  shall be  allocated  pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors  may fix a record date for the  determination  of holders of shares of
Junior Participating Preferred Stock, Series D, entitled to receive payment of a
dividend or distribution  declared  thereon,  which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.

                  Section  3.  Voting  Rights.  The  holders of shares of Junior
                               ---------------
Participating Preferred Stock, Series D shall have the following voting rights:

                  (A) Each share of Junior Participating Preferred Stock, Series
D, shall entitle the holder thereof to 1000 votes on all matters  submitted to a
vote of the stockholders of the Corporation.

                  (B) Except as otherwise provided herein or by law, the holders
of shares of Junior Participating  Preferred Stock, Series D, and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.

                  (C) (i) If at any time  dividends on any Junior  Participating
Preferred  Stock,  Series D, shall be in  arrears in an amount  equal to six (6)
quarterly  dividends thereon,  the occurrence of such contingency shall mark the
beginning  of a period  (herein  called a "default  period")  which shall extend
until such time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly  dividend period on all shares of
Junior Participating Preferred Stock, Series D, then outstanding shall have been
declared and paid or set apart for  payment.  During each  default  period,  all
holders of  Preferred  Stock  (including  holders  of the  Junior  Participating
Preferred  Stock,  Series D) with dividends in arrears in an amount equal to six
(6) quarterly  dividends  thereon,  voting as a class,  irrespective  of series,
shall have the right to elect two (2) directors.

                     (ii) During any default  period,  such voting  right of the
holders of Junior  Participating  Preferred  Stock,  Series D, may be  exercised
initially at a special  meeting called  pursuant to  subparagraph  (iii) of this
Section 3(C) or at any annual meeting of stockholders,  and thereafter at annual
meetings of stockholders,  provided that neither such voting right nor the right
of the holders of any other series of Preferred  Stock, if any, to increase,  in
certain cases, the authorized  number of directors shall be exercised unless the
holders of ten percent (10%) in number of shares of Preferred Stock  outstanding
shall be present in person or by proxy.  The  absence of a quorum of the holders
of Common Stock shall not affect the exercise by the holders of Preferred  Stock
of such voting  right.  At any meeting at which the holders of  Preferred  Stock
shall exercise such voting right  initially  during an existing  default period,
they shall have the right,  voting as a class,  to elect  directors to fill such
vacancies,  if any,  in the Board of  Directors  as may then exist up to two (2)
directors,  or if such right is exercised at an annual meeting, to elect two (2)
directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall have the
right to make such  increase in the number of directors as shall be

                                      -3-

necessary  to permit the  election  by them of the  required  number.  After the
holders  of the  Preferred  Stock  shall  have  exercised  their  right to elect
directors in any default period and during the  continuance of such period,  the
number of directors  shall not be  increased or decreased  except by vote of the
holders of Preferred  Stock as herein  provided or pursuant to the rights of any
equity securities ranking senior to or pari passu with the Junior  Participating
Preferred Stock, Series D.

                     (iii) Unless the holders of Preferred  Stock shall,  during
an existing  default  period,  have  previously  exercised  their right to elect
directors,  the Board of Directors may order, or any stockholder or stockholders
owning in the  aggregate  not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding,  irrespective of series, may request, the
calling of a special  meeting of the holders of Preferred  Stock,  which meeting
shall thereupon be called by the Chairman,  President,  a Vice-President  or the
Corporate Secretary of the Corporation. Notice of such meeting and of any annual
meeting at which  holders of Preferred  Stock are  entitled to vote  pursuant to
this  paragraph  (C)(iii)  shall be given to each holder of record of  Preferred
Stock by  mailing a copy of such  notice to him at his last  address as the same
appears on the books of the Corporation. Such meeting shall be called for a time
not earlier  than 10 days and not later than 60 days after such order or request
or in default of the calling of such meeting  within 60 days after such order or
request,  such  meeting may be called on similar  notice by any  stockholder  or
stockholders  owning in the  aggregate  not less than ten  percent  (10%) of the
total  number of shares of  Preferred  Stock  outstanding.  Notwithstanding  the
provisions of this paragraph  (C)(iii),  no such special meeting shall be called
during the period  within 60 days  immediately  preceding the date fixed for the
next annual meeting of the stockholders.

                     (iv) In any default  period,  the holders of Common  Stock,
and other classes of stock of the  Corporation if applicable,  shall continue to
be  entitled  to elect  the whole  number of  directors  until  the  holders  of
Preferred  Stock shall have  exercised  their  right to elect two (2)  directors
voting as a class,  after the  exercise  of which  right  (x) the  directors  so
elected by the holders of Preferred  Stock shall  continue in office until their
successors  shall have been elected by such holders or until the  expiration  of
the default period, and (y) any vacancy in the Board of Directors may (except as
provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority
of the remaining  directors  theretofore  elected by the holders of the class of
stock  which  elected  the  director  whose  office  shall have  become  vacant.
References  in this  paragraph  (C) to  directors  elected  by the  holders of a
particular class of stock shall include  directors  elected by such directors to
fill vacancies as provided in clause (y) of the foregoing sentence.

                     (v)  Immediately  upon the expiration of a default  period,
(x) the right of the holders of Preferred  Stock,  as a class to elect directors
shall cease,  (y) the term of any directors  elected by the holders of Preferred
Stock as a class shall terminate,  and (z) the number of directors shall be such
number as may be provided for in, or pursuant to, the  Restated  Certificate  of
Incorporation  or Bylaws  irrespective  of any  increase  made  pursuant  to the
provisions of paragraph  (C) (ii) of this Section 3 (such number being  subject,
however to change  thereafter  in any manner  provided by law or in the Restated
Certificate of Incorporation or Bylaws). Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and (z) in the preceding  sentence may
be filled by a majority  of the  remaining  directors,  even  though less than a
quorum.

                                      -4-


                  (D)   Except  as  set   forth   herein,   holders   of  Junior
Participating Preferred Stock, Series D, shall have no special voting rights and
their consent  shall not be required  (except to the extent they are entitled to
vote with holders of Common Stock as set forth  herein) for taking any corporate
action.

                  Section 4.        Certain Restrictions.
                                    ---------------------

                  (A)  Whenever  quarterly   dividends  or  other  dividends  or
distributions payable on the Junior Participating  Preferred Stock, Series D, as
provided  in Section 2 are in  arrears,  thereafter  and until all  accrued  and
unpaid dividends and distributions, whether or not declared, on shares of Junior
Participating  Preferred Stock,  Series D,  outstanding  shall have been paid in
full, the Corporation shall not:

                           (i)  declare  or pay  dividends  on,  make any  other
         distributions  on, or redeem  or  purchase  or  otherwise  acquire  for
         consideration  any  shares  of  stock  ranking  junior  (either  as  to
         dividends or upon liquidation, dissolution or winding up) to the Junior
         Participating Preferred Stock, Series D;

                           (ii)  declare or pay  dividends  on or make any other
         distributions  on any shares of stock ranking on a parity (either as to
         dividends or upon  liquidation,  dissolution  or winding up),  with the
         Junior  Participating  Preferred Stock, Series D, except dividends paid
         ratably on the Junior Participating  Preferred Stock, Series D, and all
         such  parity  stock on which  dividends  are  payable  or in arrears in
         proportion to the total amounts of which the holders of all such shares
         are then entitled;

                           (iii)  redeem or  purchase or  otherwise  acquire for
         consideration  shares of any stock  ranking  on a parity  (either as to
         dividends  or upon  liquidation,  dissolution  or winding  up) with the
         Junior  Participating  Preferred  Stock,  Series D,  provided  that the
         Corporation  may at any time  redeem,  purchase  or  otherwise  acquire
         shares of any such parity  stock in exchange for shares of any stock of
         the  Corporation  ranking  junior  (either  as  to  dividends  or  upon
         dissolution,  liquidation  or winding  up) to the Junior  Participating
         Preferred Stock, Series D; or

                           (iv) purchase or otherwise  acquire for consideration
         any shares of Junior  Participating  Preferred Stock,  Series D, or any
         shares  of stock  ranking  on a parity  with the  Junior  Participating
         Preferred  Stock,  Series D, except in accordance with a purchase offer
         made in  writing  or by  publication  (as  determined  by the  Board of
         Directors)  to all  holders of such shares upon such terms as the Board
         of Directors,  after  consideration  of the respective  annual dividend
         rates and other  relative  rights  and  preferences  of the  respective
         series and classes,  shall  determine in good faith will result in fair
         and equitable treatment among the respective series of classes.

                  (B) The  Corporation  shall not permit any  subsidiary  of the
Corporation  to purchase or otherwise  acquire for  consideration  any shares of
stock of the Corporation  unless the Corporation  could,  under paragraph (A) of
this Section 4,  purchase or  otherwise  acquire such shares at such time and in
such manner.

                                      -5-


                  Section   5.   Reacquired   Shares.   Any   shares  of  Junior
                                 --------------------
Participating  Preferred Stock, Series D, purchased or otherwise acquired by the
Corporation  in any manner  whatsoever  shall be retired and cancelled  promptly
after the  acquisition  thereof.  All such shares shall upon their  cancellation
become  authorized but unissued shares of Preferred Stock and may be reissued as
part  of a new  series  of  Preferred  Stock  to be  created  by  resolution  or
resolutions   of  the  Board  of  Directors,   subject  to  the  conditions  and
restrictions on issuance set forth herein.

                  Section 6.  Liquidation,  Dissolution  or Winding Up. (A) Upon
                              -----------------------------------------
any  liquidation  (voluntary  or  otherwise),  dissolution  or winding up of the
Corporation,  no  distribution  shall be made to the  holders of shares of stock
ranking  junior  (either as to dividends  or upon  liquidation,  dissolution  or
winding up) to the Junior Participating Preferred Stock, Series D, unless, prior
thereto, the holders of shares of Junior  Participating  Preferred Stock, Series
D,  shall have  received  $1000 per share  plus an amount  equal to accrued  and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series D Liquidation  Preference").  Following the payment
of the  full  amount  of the  Series D  Liquidation  Preference,  no  additional
distributions  shall be made to the  holders  of shares of Junior  Participating
Preferred  Stock,  Series D,  unless,  prior  thereto,  the holders of shares of
Common Stock shall have  received an amount per share (the "Common  Adjustment")
equal  to the  quotient  obtained  by  dividing  (i) the  Series  D  Liquidation
Preference by (ii) 1000 (such number in clause (ii), the  "Adjustment  Number").
Following the payment of the full amount of the Series D Liquidation  Preference
and the  Common  Adjustment  in  respect  of all  outstanding  shares  of Junior
Participating  Preferred Stock,  Series D, and holders of shares of Common Stock
shall receive their ratable and  proportionate  share of the remaining assets to
be distributed  in the ratio of the Adjustment  Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.

                  (B) In the event there are not sufficient  assets available to
permit  payment  in  full  of  the  Series  D  Liquidation  Preference  and  the
liquidation  preferences of all other series of Preferred  Stock,  if any, which
rank on a parity with the Junior  Participating  Preferred Stock, Series D, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation  preferences.  In the event
there are not  sufficient  assets  available  to permit  payment  in full of the
Common  Adjustment,  then such remaining assets shall be distributed  ratably to
the holders of Common Stock.

                  Section 7. Consolidation, Merger, etc. In case the Corporation
                             ---------------------------
shall enter into any consolidation,  merger, combination or other transaction in
which the shares of Common Stock are  exchanged  for or changed into other stock
or securities,  cash and/or any other property, then in any such case the shares
of Junior  Participating  Preferred  Stock,  Series D, shall at the same time be
similarly  exchanged  or changed in an amount per share  equal to 1000 times the
aggregate amount of stock,  securities,  cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged.

                  Section  8.  Redemption.  The  shares of Junior  Participating
                               -----------
Preferred Stock, Series D, shall not be redeemable.


                                      -6-

                  Section 9. Ranking. The Junior Participating  Preferred Stock,
                             --------
Series D, shall rank junior to all other series of the  Corporation's  Preferred
Stock as to the payment of dividends and the distribution of assets,  unless the
terms of any such series shall provide otherwise.

                  Section   10.   Amendment.   The   Restated   Certificate   of
                                  ---------
Incorporation  of the  Corporation  shall not be  further  amended in any manner
which would materially alter or change the powers, preferences or special rights
of the Junior  Participating  Preferred  Stock,  Series D, so as to affect  them
adversely without the affirmative vote of the holders of at least two-thirds (66
2/3%) of the outstanding shares of Junior Participating  Preferred Stock, Series
D, voting separately as a class.

                  Section 11. Fractional Shares. Junior Participating  Preferred
                              ------------------
Stock,  Series  D,  may be  issued  in  fractions  of a  share,  which  are  one
one-thousandths or integral  multiples of one  one-thousandths of a share, which
shall entitle the holder, in proportion to such holder's  fractional  shares, to
exercise voting rights,  receive dividends,  participate in distributions and to
have the  benefit  of all  other  rights  of  holders  of  Junior  Participating
Preferred Stock, Series D.

         B.       COMMON STOCK

                  1.  Voting   Rights.   Except  as  provided  by  law  or  this
                      ----------------
Certificate of Incorporation, each holder of Common Stock shall have one vote in
respect  of each  share  of  stock  held by him of  record  on the  books of the
Corporation for the election of directors and on all matters submitted to a vote
of stockholders of the Corporation.

                  2.  Dividends.  Subject  to  the  preferential  rights  of the
                      ----------
Preferred  Stock,  the  holders of shares of Common  Stock  shall be entitled to
receive,  when and if declared by the Board of  Directors,  out of the assets of
the Corporation which are by law available therefor, dividends payable either in
cash, in property, or in shares of capital stock.

                  3. Dissolution, Liquidation or Winding Up. In the event of any
                     ---------------------------------------
dissolution,  liquidation or winding up of the affairs of the Corporation, after
distribution in full of the preferential  amounts,  if any, to be distributed to
the  holders of shares of  Preferred  Stock,  holders of Common  Stock  shall be
entitled to receive all of the remaining  assets of the  Corporation of whatever
kind available for  distribution  to  stockholders  ratably in proportion to the
number  of  shares  of  Common  Stock  held by them  respectively.  The Board of
Directors may  distribute in kind to the holders of Common Stock such  remaining
assets of the Corporation or may sell,  transfer or otherwise  dispose of all or
any part of such  remaining  assets  to any  other  corporation,  trust or other
entity and receive payment  therefor in cash, stock or obligations of such other
corporation,  trust or entity, or any combination  thereof,  and may sell all or
any part of the  consideration so received and distribute any balance thereof in
kind to holders of Common  Stock.  Neither  the merger or  consolidation  of the
Corporation  into or with any  other  corporation,  nor the  merger of any other
corporation  into it, nor any purchase or  redemption  of shares of stock of the
Corporation of any class,  shall be deemed to be a  dissolution,  liquidation or
winding up of the Corporation for the purpose of this paragraph.

                                      -7-


         Fifth:  The  By-Laws  of the  Corporation  may be  adopted,  amended or
         -----
repealed  (a) by action of the holders of at least eighty  percent  (80%) of the
voting power of all  outstanding  Voting Stock (as defined in Article  Tenth) of
the  Corporation  entitled to vote generally at any annual or special meeting of
stockholders  or (b) by action of the Board of Directors at a regular or special
meeting  thereof.  Any By-Laws made by the Board of Directors  may be amended or
repealed by action of the  stockholders by the vote required by (a) above at any
annual or special meeting of stockholders.

         Sixth:  Elections of directors need not be by written ballot unless the
         -----
by-laws of the Corporation shall otherwise provide.

         Seventh:  Notwithstanding  any provision of the General Corporation Law
         --------
of the State of  Delaware,  no  action  may be taken by  stockholders  without a
meeting,  without  prior notice and without a vote,  unless a consent in writing
setting  forth the  action so taken  shall be signed by the  holders  of all the
outstanding stock who would be entitled to vote thereon.

         Eighth:  Whenever a compromise or arrangement is proposed  between this
         -------
Corporation  and  its  creditors  or any  class  of  them  and/or  between  this
Corporation  and its  stockholders  or any class of them, any court of equitable
jurisdiction  within the State of Delaware may, on the  application in a summary
way of this  Corporation  or of any  creditor or  stockholder  thereof or on the
application of any receiver or receivers  appointed for this  Corporation  under
the  provisions  of  Section  291 of  Title  8 of the  Delaware  Code  or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this  Corporation  under the  provisions  of  Section  279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors,  and/or of
the stockholders or class of stockholders of this  Corporation,  as the case may
be, to be summoned in such  manner as the said court  directs.  If a majority in
number  representing  three-fourths  in  value  of the  creditors  or  class  of
creditors,  and/or  of  the  stockholders  or  class  of  stockholders  of  this
Corporation,  as the case may be, agree to any compromise or arrangement  and to
any  reorganization  of this  Corporation as  consequence of such  compromise or
arrangement,  the said  compromise or  arrangement  and the said  reorganization
shall,  if sanctioned by the court to which the said  application has been made,
be  binding on all the  creditors  or class of  creditors,  and/or on all of the
stockholders or class of stockholders,  of this Corporation, as the case may be,
and also on this Corporation.

         Ninth: The Corporation  reserves the right to amend,  alter,  change or
         -----
repeal any provision  contained in this  Certificate  of  Incorporation,  in the
manner now or hereafter  prescribed by statute,  and all rights  conferred  upon
stockholders herein are granted subject to this reservation.

         Tenth: 1. Higher Vote for Certain Business Combinations. In addition to
         ------    ----------------------------------------------
any  affirmative  vote of holders  of a class or series of capital  stock of the
Corporation  required by law or this  Certificate,  a Business  Combination  (as
hereinafter defined) with or upon a proposal by a Related Person (as hereinafter
defined)  shall require the  affirmative  vote of the holders of at least eighty
percent  (80%)  of  the  voting  power  of  all  outstanding  Voting  Stock  (as
hereinafter defined) of the Corporation, voting together as a single class. Such
affirmative votes shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by law or the Board.


                                      -8-

                  2. When Higher Vote Is Not  Required.  The  provisions of this
                     ----------------------------------
Article shall not be applicable to a particular Business  Combination,  and such
Business  Combination shall require only such affirmative vote as is required by
law  and  any  other  provision  of  this  Certificate  or  the  By-Laws  of the
Corporation,  if all of the  conditions  specified  in any one of the  following
Paragraphs (A), (B) or (C) are met:

                      (A) Approval by Directors.  The Business  Combination  has
                          ----------------------
been  approved  by a vote of a  majority  of all the  Continuing  Directors  (as
hereinafter defined); or

                      (B) Combination with Subsidiary.  The Business Combination
                          ---------------------------
is solely between the  Corporation  and a subsidiary of the Corporation and such
Business  Combination  does not have the direct or indirect  effect set forth in
Paragraph 3(B)(v) of this Article Tenth; or

                      (C) Price and Procedural Conditions. The proposed Business
                          --------------------------------
Combination  will be  consummated  within three years after the date the Related
Person  became  a  Related  Person  (the  "Determination  Date")  and all of the
following conditions have been met:

                         (i) The  aggregate  amount  of (x)  cash  and (y)  fair
market value (as of the date of the consummation of the Business Combination) of
consideration  other than cash,  to be received per share of Common or Preferred
Stock of the  Corporation in such Business  Combination by holders thereof shall
be at least  equal to the  highest  per share  price  (including  any  brokerage
commissions,  transfer taxes and  soliciting  dealers' fees) paid by the Related
Person for any shares of such class or series of stock acquired by it; provided,
that if either  (a) the  highest  preferential  amount  per share of a series of
Preferred  Stock to which the holders  thereof would be entitled in the event of
any  voluntary or  involuntary  liquidation,  dissolution  or  winding-up of the
affairs of the Corporation (regardless of whether the Business Combination to be
consummated  constitutes  such an event) or (b) the highest reported sales price
per share for any  shares of such  series  of  Preferred  Stock on any  national
securities exchange on which such series is traded and if not traded on any such
exchange,  the highest  reported closing bid quotation per share with respect to
shares of such series on the National  Association of Securities  Dealers,  Inc.
Automated  Quotation  System or on any system then in use, at any time after the
Related  Person became a holder of any shares of Common  Stock,  is greater than
such aggregate  amount,  holders of such series of Preferred Stock shall receive
an amount for each such share at least equal to the greater of (a) or (b).

                         (ii) The  consideration  to be received by holders of a
particular class or series of outstanding  Common or Preferred Stock shall be in
cash or in the same form as the Related Person has previously paid for shares of
such class or series of stock.  If the Related Person has paid for shares of any
class or  series  of stock  with  varying  forms of  consideration,  the form of
consideration  given  for  such  class  or  series  of  stock  in  the  Business
Combination  shall be either cash or the form used to acquire the largest number
of shares of such class or series of stock previously acquired by it.

                         (iii) No Extraordinary  Event (as hereinafter  defined)
occurs  after  the  Determination  Date  and  prior to the  consummation  of the
Business Combination.

                                      -9-


                         (iv) A proxy or  information  statement  describing the
proposed  Business  Combination  and  complying  with  the  requirements  of the
Securities  Exchange  Act of 1934,  as  amended,  and the rules and  regulations
thereunder  (or  any  subsequent   provisions   replacing  such  Act,  rules  or
regulations)  is mailed to public  stockholders  of the  Corporation at least 30
days prior to the consummation of such Business Combination (whether or not such
proxy or  information  statement is required  pursuant to such Act or subsequent
provisions).

                  3. Certain Definitions. For purposes of this Article Tenth:
                     --------------------

                      (A)  A   "person"   shall  mean  any   individual,   firm,
corporation or other entity,  or a group of "persons"  acting or agreeing to act
together in the manner set forth in Rule 13d-5 under the Securities Exchange Act
of 1934, as in effect on April 24, 1985.

                      (B) The term "Business  Combination" shall mean any of the
following transactions,  when entered into by the Corporation or a subsidiary of
the Corporation with, or upon a proposal by, a Related Person:

                         (i) the merger or  consolidation  of the Corporation or
any subsidiary of the Corporation; or

                         (ii)  the  sale,  lease,  exchange,  mortgage,  pledge,
transfer or other disposition (in one or a series of transactions) of any assets
of the Corporation or any subsidiary of the Corporation having an aggregate fair
market value of $100 million or more; or

                         (iii) the  issuance or transfer by the  Corporation  or
any  subsidiary  of the  Corporation  (in one or a series  of  transactions)  of
securities of the Corporation or any subsidiary  having an aggregate fair market
value of $50 million or more; or

                         (iv)  the  adoption  of a  plan  or  proposal  for  the
liquidation or dissolution of the Corporation; or

                         (v) the  reclassification  of  securities  (including a
reverse stock split),  recapitalization,  consolidation or any other transaction
(whether  or not  involving a Related  Person)  which has the direct or indirect
effect of increasing  the voting power,  whether or not then  exercisable,  of a
Related Person in any class or series of capital stock of the Corporation or any
subsidiary of the Corporation; or

                         (vi)  any  agreement,  contract  or  other  arrangement
providing directly or indirectly for any of the foregoing.

                      (C) The term "Related Person" shall mean any person (other
than  the  Corporation,  a subsidiary of the  Corporation or any profit sharing,
employee stock ownership or other employee benefit plan of the Corporation or of
a subsidiary of the  Corporation  or any trustee of or fiduciary with respect to
any such plan acting in such capacity) that is the direct or indirect beneficial
owner (as defined in Rule 13d-3 and Rule

                                      -10-


13d-5 under the Securities Exchange Act of 1934, as in effect on April 24, 1985)
of  more  than  ten  percent  (10%)  of  the  outstanding  Voting  Stock  of the
Corporation, and any Affiliate or Associate of any such person.

                      (D) The term  "Continuing  Director" shall mean any member
of the Board of Directors who is not  affiliated  with a Related  Person and who
was a member of the Board of  Directors  immediately  prior to the time that the
Related  Person  became a Related  Person,  and any  successor  to a  Continuing
Director who is not  affiliated  with the Related  Person and is  recommended to
succeed a Continuing Director by a majority of Continuing Directors who are then
members of the Board of Directors.

                      (E) "Affiliate" and "Associate"  shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Securities  Exchange Act
of 1934, as in effect on April 24, 1985.

                      (F) The term  "Extraordinary  Event" shall mean, as to any
Business Combination and Related Person, any of the following events that is not
approved by a majority of all Continuing Directors:

                         (i) any failure to declare and pay at the regular  date
therefor any full quarterly  dividend (whether or not cumulative) on outstanding
Preferred Stock; or

                         (ii) any reduction in the annual rate of dividends paid
on the Common  Stock  (except as  necessary  to reflect any  subdivision  of the
Common Stock); or

                         (iii)  any  failure  to  increase  the  annual  rate of
dividends paid on the Common Stock as necessary to reflect any  reclassification
(including  any reverse stock split),  recapitalization,  reorganization  or any
similar  transaction  that has the effect of reducing the number of  outstanding
shares of the Common Stock; or

                         (iv) the  receipt  by the  Related  Person,  after  the
Determination Date, of a direct or indirect benefit (except proportionately as a
stockholder) from any loans,  advances,  guarantees,  pledges or other financial
assistance  or  any  tax  credits  or  other  tax  advantages  provided  by  the
Corporation or any subsidiary of the Corporation,  whether in anticipation of or
in connection with the Business Combination or otherwise.

                      (G) A majority of all Continuing  Directors shall have the
power to make all determinations with respect to this Article Tenth,  including,
without limitation, the transactions that are Business Combinations, the persons
who are Related  Persons,  the time at which a Related  Person  became a Related
Person,  and the fair market value of any assets,  securities or other property,
and any such determinations of such directors shall be conclusive and binding.

                      (H) The term  "Voting  Stock"  shall mean all  outstanding
shares of the Common or  Preferred  Stock of the  Corporation  entitled  to vote
generally  and each  reference  to a  proportion  of Voting Stock shall refer to
shares having such proportion of the number of shares entitled to be cast.

                                      -11-


                  4. No Effect on  Fiduciary  Obligations  of  Related  Persons.
                     -----------------------------------------------------------
Nothing  contained  in this  Article  Tenth  shall be  construed  to relieve any
Related Person from any fiduciary obligation imposed by law.

                  5. Amendment, Repeal, etc. The affirmative vote of the holders
                     -----------------------
of at least eighty percent (80%) of the voting power of all  outstanding  Voting
Stock of the Corporation,  voting together as a single class,  shall be required
in order to amend, repeal or adopt any provision  inconsistent with this Article
Tenth.

         Eleventh:  To the fullest extent  permitted by the General  Corporation
         --------
Law of the State of Delaware as the same exists or may hereafter be amended,  no
director  of  the  Corporation  shall  be  liable  to  the  Corporation  or  its
stockholders  for monetary  damages for breach of fiduciary  duty as a director.
Any repeal or modification of the preceding  sentence shall not adversely affect
any right or  protection  of a director  existing  at the time of such repeal or
modification.


                                      -12-



         IN  WITNESS   WHEREOF,   the   Corporation  has  caused  this  Restated
Certificate  of  Incorporation  which only restates and  integrates and does not
further amend the  provisions of the Restated  Certificate of  Incorporation  of
this Corporation as heretofore amended or supplemented,  and which has been duly
adopted by the  Corporation's  Board of Directors in accordance with Section 245
of the Delaware General Corporation Law to be signed in its name by its Chairman
of the  Board and Chief  Executive  Officer  and  attested  to by its  Corporate
Secretary this 22nd day of July, 1998.



                             /s/ Wilson H. Taylor
                             -------------------------
                             Wilson H. Taylor
                             Chairman of the Board and
                             Chief Executive Officer


Attest:


/s/ Carol J. Ward
- - -----------------
Carol J. Ward
Corporate Secretary





                                      -13-

EX-4

                                                                    Exhibit 4(a)

                        CIGNA CORPORATION


                               and


            FIRST CHICAGO TRUST COMPANY OF NEW YORK,

                         as Rights Agent

              Amended and Restated Rights Agreement

                    Dated as of July 22, 1998


________________________________________________________________




                        TABLE OF CONTENTS

                                                             Page


Section 1.  Certain Definitions................................2
Section 2.  Appointment of Rights Agent........................6
Section 3.  Issue of Rights Certificates.......................6
Section 4.  Form of Rights Certificate.........................8
Section 5.  Countersignature and Registration..................9
Section 6.  Transfer, Split-Up, Combination and Exchange
              of Rights Certificate Mutilated, Destroyed,
              Lost or Stolen Rights Certificates...............10
Section 7.  Exercise of Rights; Purchase Price;
              Expiration Date of Rights........................10
Section 8.  Cancellation and Destruction of Rights
              Certificates.....................................13
Section 9.  Reservation and Availability of Preferred
              Stock............................................13
Section 10. Preferred Shares Record Date.......................14
Section 11. Adjustment of Purchase Price, Number and
              Kind of Shares or Number of Rights...............15
Section 12. Certificate of Adjusted Purchase Price or
              Number of Shares.................................23
Section 13. Consolidation, Merger or Sale or Transfer
              of Assets or Earning Power.......................23
Section 14. Fractional Rights and Fractional Shares............26
Section 15. Rights of Action...................................27
Section 16. Agreement of Rights Holders........................28
Section 17. Rights Certificate Holder Not Deemed a
              Shareholder......................................28
Section 18. Concerning the Rights Agent........................29
Section 19. Merger or Consolidation or Change of
              Name of Rights Agent.............................29
Section 20. Duties of Rights Agent.............................30

                               -i-


Section 21. Change of Rights Agent.............................32
Section 22. Issuance of New Rights Certificates................33
Section 23. Redemption and Termination.........................33
Section 24. Exchange...........................................35
Section 25. Notice of Certain Events...........................36
Section 26. Notices............................................37
Section 27. Supplements and Amendments.........................38
Section 28. Determination and Actions by the Board
              of Directors, etc................................38
Section 29. Successors.........................................39
Section 30. Benefits of this Agreement.........................39
Section 31. Severability.......................................39
Section 32. Governing Law......................................39
Section 33. Counterparts.......................................39
Section 34. Descriptive Headings...............................40

                              -ii-



               Defined Term Cross Reference Sheet

Acquiring Person              Section 1(a)
Act                           Section 1(b)
Adjustment Shares             Section 11(a)(ii)
Adjusted Number of Shares     Section 11(a)(iii)
Adjusted Purchase Price       Section 11(a)(iii)
Affiliate                     Section 1(c)
Agreement                     Preface
Associate                     Section 1(c)
Beneficial Owner              Section 1(d)
beneficially own              Section 1(d)
Business Day                  Section 1(e)
capital stock equivalent      Section 11(a)(iii)
Close of business             Section 1(f)
Common Shares                 Section 1(g)
Company                       Preface
current per share
  market price                Section 11(d)(i)
Disinterested Director        Section 1(h)
Distribution Date             Section 3(a)
Effective Date                Preface
equivalent preferred shares   Section 11(b)
Exchange Act                  Section 1(c)
Exchange Ratio                Section 24(a)
Final Expiration Date         Section 7(a)
Interested Shareholder        Section 1(k)
Nasdaq                        Section 11(d)(i)
Permitted Offer               Section 1(l)
Person                        Section 1(m)
Preferred Shares              Section 1(n)
Principal Party               Section 13(b)
Proration Factor              Section 11(a)(iii)
Purchase Price                Section 4(a)
Redemption Date               Section 7(a)
Redemption Price              Section 23(a)(i)
Right                         Preface
Rights Certificate            Section 3(a)
Rights Agent                  Preface
Rights Agreement              Section 3(c)

                              -iii-


Section 11(a)(ii) Event       Section 11(a)(ii)
Section 13 Event              Section 13
Security                      Section 11(d)(i)
Shares Acquisition Date       Section 1(r)
Subsidiary                    Section 1(s)
Summary of Rights             Section 3(b)
then outstanding              Section 1(d)(iii)
Trading Day                   Section 11(d)(i)
Triggering Event              Section 1(t)
voting securities             Section 13(a)

                              -iv-




                        CIGNA CORPORATION


              AMENDED AND RESTATED RIGHTS AGREEMENT



     This Amended and Restated Rights Agreement, dated as of July 22, 1998
(the "AGREEMENT"), between CIGNA Corporation, a Delaware
corporation (the "COMPANY"), and First Chicago Trust Company of
New York (the "RIGHTS AGENT"), amends and restates the Rights
Agreement, dated as of July 23, 1997 (the "ORIGINAL AGREEMENT"),
between the Company and the Rights Agent.

                            WITNESSETH:

     WHEREAS, on July 23, 1997, the Board of Directors of the Company
authorized and declared a dividend of one preferred share
purchase right (a "RIGHT") for each Common Share (as hereinafter
defined) of the Company outstanding at the close of business on
August 4, 1997 (the "EFFECTIVE DATE"), each Right representing
the right to purchase one one-hundredth of a share of Junior
Participating Preferred Stock, Series D, $1.00 par value, of the
Company, having the rights, powers and preferences set forth in
the Amended Certificate of Designations, filed with the Secretary
of the State of Delaware on August 4, 1997 and further authorized
and directed the issuance of one Right with respect to each
Common Share issued between the Effective Date and the
Distribution Date (as such terms are hereinafter defined),
provided, however, that Rights may be issued with respect to
Common Shares that shall become outstanding after the
Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date in accordance with the provisions
of Section 22 of this Agreement;


     WHEREAS, as a result of a 3-for-1 stock split with respect to the
Common Shares issued and outstanding as of May 4, 1998, and
pursuant to Section 7(b) of the Original Agreement, each
outstanding Common Share continues to have associated with it one
Right to purchase one one-hundredth of a Preferred Share (as
hereafter defined);

     WHEREAS, to ensure that the Company has sufficient Preferred
Shares to permit the full exercise of the Rights upon a
Triggering Event (as hereafter defined), the Board has deemed it
appropriate to modify the fraction of a Preferred Share issuable
upon exercise of a Right from one one-hundredth to one one-
thousandth;

     WHEREAS, pursuant to Section 7(b) of the Original Agreement,
the Board of Directors desires to adjust the Purchase Price (as
hereafter defined) from $780 to $260 to reflect the 3-for-1 stock
split;



     WHEREAS, the Board of Directors also desires to adjust the
Redemption Price (as hereafter defined) from $.01 to $.0033 to
reflect the 3-for-1 stock split;


     WHEREAS, pursuant to Section 27 of the Original Agreement, prior
to the Distribution Date, the Company and the Rights Agent shall,
if the Company so directs upon the approval of a majority of the
Disinterested Directors (as hereafter defined), supplement or
amend any provision of the Original Agreement without the
approval of any holders of Rights Certificates; and


     WHEREAS, a majority of the Disinterested Directors has authorized
this Agreement and determined that the amendments contained in
this Agreement are in the best interests of the Company and its
shareholders;


     NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as
follows:


     Section 1. CERTAIN DEFINITIONS.  For purposes of this Agreement,
the following terms have the meanings indicated:


            (a) "ACQUIRING PERSON" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 10% or more of the then outstanding Common
Shares (other than as a result of a Permitted Offer (as
hereinafter defined)) or was such a Beneficial Owner at any time
after the date hereof, whether or not such Person continues to be
the Beneficial Owner of 10% or more of the then outstanding
Common Shares.  Notwithstanding the foregoing, (A) the term
"Acquiring Person" shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company, or (iv) any Person
or entity organized, appointed or established by the Company for
or pursuant to the terms of any such plan, and (B) no Person
shall become an "Acquiring Person" (i) as a result of the
acquisition of Common Shares by the Company which, by reducing
the number of Common Shares outstanding, increases the
proportional number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person,
provided that if (1) a Person would become an Acquiring Person
(but for the operation of this subclause (i)) as a result of the
acquisition of Common Shares by the Company, and (2) after such
share acquisition by the Company, such Person, or an Affiliate or
Associate of such Person, becomes the Beneficial Owner of any
additional Common Shares, then such Person shall be deemed an
Acquiring Person or; (ii) if (1) within five Business Days after
such Person would otherwise have become an Acquiring Person (but
for the operation of this subclause (ii)), such Person notifies
the Board of Directors that such Person did so inadvertently, and

                               -2-



(2) within two Business Days after such notification (or such
greater period of time as may be determined by action of the
Board of Directors, but in no event greater than five Business
Days), such Person divests itself of a sufficient number of
Common Shares so that such Person is the Beneficial Owner of less
than 10% of the outstanding Common Shares.


            (b) "ACT" shall mean the Securities Act of 1933, as amended
and as in effect on the date of this Agreement.


            (c) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended
and in effect on the date of this Agreement (the "EXCHANGE ACT").


            (d) A Person shall be deemed the "BENEFICIAL OWNER" of and
shall be deemed to "BENIFICIALLY OWN," any securities:


               (i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly;


               (ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right or obligation to acquire (whether such
right or obligation is exercisable or effective immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise
of conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report); or


               (iii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in
writing) (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of

                               -3-



securities) relating to the acquisition, holding, voting (except
to the extent contemplated by the proviso to Section l(d)(ii)(B))
or disposing of any securities of the Company.


     Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when
used with reference to a Person's Beneficial Ownership of
securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.


            (e) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday, federal holiday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.


            (f) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M.,
Philadelphia time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., Philadelphia
time, on the next succeeding Business Day.


            (g) "COMMON SHARES" when used with reference to the Company
shall mean the shares of Common Stock, par value $0.25 per share, of
the Company or, in the event of a subdivision, combination or
consolidation with respect to such shares of Common Stock, the
shares of Common Stock resulting from such subdivision,
combination or consolidation.  "COMMON SHARES" when used with
reference to any Person other than the Company shall mean the
capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control
such first-mentioned Person.


            (h) "DISINTERESTED DIRECTOR" means any director of the Board of
Directors of the Company who is not (a) an officer or employee of
the Company, (b) a Person proposing or attempting to effect a
business combination or similar transaction with the Company
(including, without limitation, a merger, tender offer or
exchange offer, sale of substantially all of the Company's
assets, or liquidation of the Company's assets) or any Affiliate
or Associate of such Person or Person acting directly or
indirectly on behalf of, or as a representative of, or in concert
with, any such Person, Affiliate or Associate, (c) an Acquiring
Person, an Affiliate or Associate of an Acquiring Person, or a
Person acting directly or indirectly on behalf of, or as a
representative of, or in concert with, an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, or (d) any Person
who was directly or indirectly proposed or nominated as a
director of the Company by an Acquiring Person.

                               -4-




            (i) "DISTRIBUTION DATE" shall have the meaning set forth
in Section 3 hereof.


            (j) "FINAL EXPIRATION DATE" shall have the meaning set forth in
Section 7 hereof.


            (k) "INTERESTED SHAREHOLDER" shall mean any Acquiring Person or
any Affiliate or Associate of an Acquiring Person or any other Person
in which any such Acquiring Person, Affiliate or Associate has an
interest which represents in excess of 5% of the total combined
economic or voting power of such Person, or any other Person
acting directly or indirectly on behalf of, or in concert with,
any such Acquiring Person, Affiliate or Associate.


            (l) "PERMITTED OFFER" shall mean a tender or exchange offer
for all outstanding Common Shares at a price and on terms determined,
prior to the purchase of shares under such tender or exchange
offer, by at least a majority of the Disinterested Directors to
be adequate (taking into account all factors that such directors
deem relevant) and otherwise in the best interests of the Company
and its shareholders (other than the Person or any Affiliate or
Associate thereof on whose behalf the offer is being made) taking
into account all factors that such directors may deem relevant.


            (m) "PERSON" shall mean any individual, firm, partnership,
corporation, limited liability company, trust, association, joint
venture or other entity, and shall include any successor (by
merger or otherwise) of such entity.


            (n) "PREFERRED SHARES" shall mean the Junior Participating
Preferred Stock, Series D, $1.00 par value, of the Company, having the
rights, powers and preferences set forth in the form of an
Amended Certificate of Designations attached hereto as Exhibit A.


            (o) "REDEMPTION DATE" shall have the meaning set forth in
Section 7 hereof.


            (p) "SECTION 11(A)(II) EVENT" shall mean any event described in
Section 11(a)(ii) hereof.


            (q) "SECTION 13 EVENT" shall mean any event described in clause
(x), (y) or (z) of Section 13(a) hereof.


            (r) "SHARES ACQUISITION DATE" shall mean the first date of
public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to the
Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such; provided that if such Person is
determined not to

                               -5-



have become an Acquiring Person pursuant to Section 1(a) hereof,
then no Shares Acquisition Date shall be deemed to have occurred.


            (s) "SUBSIDIARY" of any Person shall mean any corporation
or other Person of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or
indirectly, by such Person, or which is otherwise controlled by
such Person.


            (t) "TRIGGERING EVENT" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.


     Section 2. APPOINTMENT OF RIGHTS AGENT.  The Company hereby
appoints the Rights Agent to act as agent for the Company and the
holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of
Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.  In the event the Company
appoints one or more Co-Rights Agents, the respective duties of
the Rights Agents and any Co-Rights Agents shall be as the
Company shall determine.


     Section 3. ISSUE OF RIGHTS CERTIFICATES.  (a)  Until the earlier
of (i) the Shares Acquisition Date or (ii) the close of business
on the tenth day (or such later date as may be determined by
action of the Company's Board of Directors) after the date of the
commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any Person or
entity organized, appointed or established by the Company or of
any Subsidiary of the Company for or pursuant to the terms of any
such plan) of, or of the first public announcement of the
intention of any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company or any Person or entity organized,
appointed or established by the Company or of any Subsidiary of
the Company for or pursuant to the terms of any such plan) to
commence (which intention to commence remains in effect for five
Business Days after such announcement), a tender or exchange
offer the consummation of which would result in any Person
becoming an Acquiring Person (including, in the case of both (i)
and (ii), any such date which is after the date of this Agreement
and prior to the issuance of the Rights), the earlier of such
dates being herein referred to as the "DISTRIBUTION DATE", (x)
the Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which
certificates shall also be deemed to be Rights Certificates) and
not by separate Rights Certificates, and (y) the right to receive
Rights Certificates will be transferable only in connection with
the transfer of the underlying Common Shares (including a
transfer to the Company); provided, however, that if a tender
offer is terminated prior to the occurrence

                               -6-



of a Distribution Date, then no Distribution Date shall occur as
a result of such tender offer.  As soon as practicable after the
Distribution Date, the Company will prepare and execute, the
Rights Agent will countersign, and the Company will send or cause
to be sent by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the
records of the Company, a Rights Certificate, in substantially
the form of Exhibit B hereto (a "RIGHTS CERTIFICATE"), evidencing
one Right for each Common Share so held.  As of and after the
Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.


            (b) Following the Effective Date, the Company sent a copy of a
Summary of Rights to Purchase Preferred Shares, by first-class,
postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Effective Date, at the address of
such holder shown on the records of the Company.  Upon execution
and delivery of this Agreement, or as soon as practicable
thereafter, the Company shall file with the Securities and
Exchange Commission the full text of this Agreement and a revised
summary thereof, which revised summary shall be in substantially
the form of Exhibit C hereto (the "Summary of Rights").  With
respect to certificates for Common Shares outstanding as of the
Effective Date, until the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights
attached thereto.  Until the Distribution Date (or the earlier of
the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for Common Shares outstanding on
the Effective Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of
the Rights associated with such Common Shares. As a result of the
execution of the Original Agreement on July 23, 1997, each Common
Share outstanding as of the Close of Business on August 4, 1997
also represents, subject to the terms and conditions of this
Agreement, one Right, and subject to the terms and conditions of
this Agreement, represents the right to purchase one
one-thousandth of a share of Preferred Stock.


            (c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred
to in the last sentence of this paragraph (c)) after the
Effective Date but prior to the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date shall be
deemed also to be certificates for Rights and shall bear the
following legend:

          This certificate also evidences and
          entitles the holder hereof to certain
          Rights as set forth in an Amended and
          Restated Rights Agreement between CIGNA
          Corporation and First Chicago Trust
          Company of New York, dated as of July
          22, 1998 (the "RIGHTS AGREEMENT"), as
          amended from time to time, the terms

                               -7-



          of which are hereby incorporated herein
          by reference and a copy of which is on
          file at the principal offices of CIGNA
          Corporation.  Under certain
          circumstances, as set forth in the
          Rights Agreement, such Rights will be
          evidenced by separate certificates and
          will no longer be evidenced by this
          certificate.  CIGNA Corporation will
          mail to the holder of this certificate a
          copy of the Rights Agreement without
          charge after receipt of a written
          request therefor.  Under certain
          circumstances set forth in the Rights
          Agreement, Rights issued to, or held by,
          any Person who is, was or becomes an
          Acquiring Person or an Affiliate or
          Associate thereof (as defined in the
          Rights Agreement) and certain related
          persons, whether currently held by or on
          behalf of such Person or by any
          subsequent holder, may become null and
          void.

With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby.  In the event that the Company purchases or
acquires any Common Shares after the Effective Date but prior to
the Distribution Date, any Rights associated with such Common
Shares shall be deemed cancelled and retired so that the Company
shall not be entitled to exercise any Rights associated with the
Common Shares which are no longer outstanding.


     Section 4.  FORM OF RIGHTS CERTIFICATE.  (a)  The Rights
Certificates (and the forms of election to purchase shares and of
assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or
to conform to usage.  Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Effective Date, and on their face shall
entitle the holders thereof to purchase such number of one one-
thousandths of a Preferred Share as shall be set forth therein at
the price per one one-thousandth of a Preferred Share set forth
therein (the "PURCHASE PRICE"), but the amount and type of
securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided
herein.

                               -8-




            (b) Any Rights Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights which are null and void pursuant
to Section 7(e) of this Agreement and any Rights Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:

          The Rights represented by this Rights
          Certificate are or were beneficially
          owned by a Person who was or became an
          Acquiring Person or an Affiliate or
          Associate of an Acquiring Person (as
          such terms are defined in the Rights
          Agreement) or certain related persons.
          Accordingly, this Rights Certificate and
          the Rights represented hereby are null
          and void.

The provisions of Section 7(e) of this Rights Agreement shall be
operative whether or not the foregoing legend is contained on any
such Rights Certificate.


     Section 5.  COUNTERSIGNATURE AND REGISTRATION.  The Rights
Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer, either
manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested
by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature.  The Rights Certificates
shall be countersigned by the Rights Agent and shall not be valid
for any purpose unless so countersigned.  In case any officer of
the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who
signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of
the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although
at the date of the execution of this Rights Agreement any such
person was not such an officer.


     Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated as the appropriate
place for surrender of such Rights Certificate for transfer,
books for registration and transfer of the Rights Certificates
issued hereunder.  Such books shall show the names and addresses
of the respective holders of the Rights Certificates, the number
of Rights evidenced on its face by each of the Rights
Certificates and the certificate number and the date of each of
the Rights Certificates.

                               -9-




     Section 6.  TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF
RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS
CERTIFICATES.  Subject to the provisions of Section 4(b), Section
7(e) and Section 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close
of business on the earlier of the Redemption Date or the Final
Expiration Date, any Rights Certificate or Rights Certificates
may be transferred, split up, combined or exchanged for another
Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of one one-
thousandths of a Preferred Share (or, following a Triggering
Event, other securities, as the case may be) as the Rights
Certificate or Rights Certificates surrendered then entitled such
holder (or former holder in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Rights Certificates shall make
such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such
purpose.  Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.  Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as
so requested.  The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split-up, combination or
exchange of Rights Certificates.

     Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction
or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.


     Section 7.  EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS.  (a)  Subject to Section 7(e) hereof, the registered
holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole
or in part at any time after the Distribution Date upon surrender
of the Rights Certificate, with the appropriate form of election
to purchase and the certificate on the reverse side

                              -10-



thereof duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price
for the total number of one one-thousandths of a Preferred Share
(or other securities, as the case may be) as to which such
surrendered Rights are exercised, at or prior to the earliest of
(i) the close of business on August 4, 2007 (the "FINAL
EXPIRATION DATE"), (ii) the time at which the Rights are redeemed
as provided in Section 23 hereof (the "REDEMPTION DATE"), (iii)
the time at which the Rights are exchanged as provided in Section
24 hereof, or (iv) the consummation of a transaction contemplated
by Section 13(d) hereof.


            (b) The Purchase Price for each one one-thousandth of a
Preferred Share pursuant to the exercise of a Right shall be $260, shall be
subject to adjustment from time to time as provided in the next
sentence and in Sections 11 and 13(a) hereof and shall be payable
in accordance with paragraph (c) below.  Anything in this
Agreement to the contrary notwithstanding, in the event that, at
any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or
(ii) effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment
of dividends in Common Shares) into a greater or lesser number of
Common  Shares, then in any such case, each Common Share
outstanding following such subdivision, combination or
consolidation shall continue to have a Right associated therewith
and the Purchase Price following any such event shall be
proportionately adjusted to equal the result obtained by
multiplying the Purchase Price immediately prior to such event by
a fraction the numerator of which shall be the total number of
Common Shares outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number
of Common Shares outstanding immediately following the occurrence
of such event.  The adjustment provided for in the preceding
sentence shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or
consolidation is effected.


            (c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the appropriate form of election to purchase and
the certificate duly executed, accompanied by payment of the Purchase
Price for the Preferred Shares (or other securities, as the case
may be) to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Rights
Certificate in accordance with Section 6 hereof by certified
check, cashier's check or money order payable to the order of the
Company, the Rights Agent shall, subject to Section 20(k),
thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Shares (or make available, if the Rights Agent is
the transfer agent) certificates for the number of Preferred
Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests,
or (B) if the Company, in its sole discretion, shall have elected
to deposit the Preferred Shares issuable upon exercise of the
Rights hereunder into

                              -11-



a depositary, requisition from the depositary agent depositary
receipts representing such number of one one-thousandths of a
Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with
such requests, (ii) when appropriate, requisition from the Company the
amount of cash, if any, to be paid in lieu of issuance of fractional shares
in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after
receipt thereof, deliver such cash to or upon the order of the
registered holder of such Rights Certificate.  In the event that
the Company is obligated to issue other securities (including
Common Shares) of the Company pursuant to Section 11(a) hereof,
the Company will make all arrangements necessary so that such
other securities are available for distribution by the Rights
Agent, if and when appropriate.

     In addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii), the Rights Agent shall return such
Rights Certificate to the registered holder thereof after
imprinting, stamping or otherwise indicating thereon that the
rights represented by such Rights Certificate no longer include
the rights provided by Section 11(a)(ii) of the Rights Agreement
and if less than all the Rights represented by such Rights
Certificate were so exercised, the Rights Agent shall indicate on
the Rights Certificate the number of Rights represented thereby
which continue to include the rights provided by Section
11(a)(ii).


            (d) In case the registered holder of any Rights Certificate
shall exercise (except pursuant to Section 11(a)(ii)) less than all the
Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to the registered holder
of such Rights Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof, or the Rights
Agent shall place an appropriate notation on the Rights
Certificate with respect to those Rights exercised.


            (e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any Affiliate or Associate thereof)
who becomes a transferee after the Acquiring Person becomes such,
or (iii) a transferee of an Acquiring Person (or of any Affiliate
or Associate thereof) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom the
Acquiring Person has a continuing agreement, arrangement or
understanding regarding

                              -12-



the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and
void without any further action and no holder of such Rights
shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise.  The
Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of
Rights Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or
its Affiliates, Associates or transferees hereunder.


            (f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section
7 unless such registered holder shall have (i) completed and
signed the certificate contained in the appropriate form of
election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.


     Section 8.  CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise
(other than a partial exercise), transfer, split up, combination
or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be
canceled by it, and no Rights Certificates shall be issued in
lieu thereof except as expressly permitted by any of the
provisions of this Rights Agreement.  The Company shall deliver
to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof.  The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.


     Section 9.  RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
The Company covenants and agrees that at all times prior to the
occurrence of a Section 11(a)(ii) Event it will cause to be
reserved and kept available out of its authorized and unissued
Preferred Shares, or any authorized and issued Preferred Shares
held in its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding
Rights and, after the occurrence of a Section 11(a)(ii) Event,
shall, to the extent reasonably practicable, so reserve and keep
available a sufficient number of Common Shares (and/or other
securities) which may be required to permit the exercise in full
of the Rights pursuant to this Agreement.

                              -13-



     So long as the Preferred Shares (and, after the occurrence of a
Section 11(a)(ii) Event, Common Shares or any other securities)
issuable upon the exercise of the Rights may be listed on any
national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become
exercisable, all shares (or other securities) reserved for such
issuance to be listed on such exchange upon official notice of
issuance upon such exercise.

     The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares (or Common
Shares and/or other securities, as the case may be) delivered
upon exercise of Rights shall, at the time of delivery of the
certificates for such shares or other securities (subject to
payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and non-assessable shares or
securities.

     The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or
delivery of the Rights Certificates or of any Preferred Shares
(or Common Shares and/or other securities, as the case may be)
upon the exercise of Rights.  The Company shall not, however, be
required to pay any transfer tax which may be payable in respect
of any transfer or delivery of Rights Certificates to a person
other than, or the issuance or delivery of certificates or
depositary receipts for the Preferred Shares (or Common Shares
and/or other securities, as the case may be) in a name other than
that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise, or to issue or
deliver any certificates for Preferred Shares or depositary
receipts for Preferred Shares (or other securities, as the case
may be) upon the exercise of any Rights, until any such tax shall
have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such
tax is due.

     The Company shall use its best efforts to (i) file, as soon as
practicable following the Shares Acquisition Date (or, if
required by law, at such earlier time following the Distribution
Date as so required), a registration statement under the Act,
with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Act and the rules and regulations thereunder)
until the date of the expiration of the rights provided by
Section 11(a)(ii).  The Company will also take such action as may
be appropriate under the blue sky laws of the various states.


     Section 10.  PREFERRED SHARES RECORD DATE.  Each person in whose
name any certificate for Preferred Shares (or Common Shares
and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have

                              -14-



become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that, if the date of
such surrender and payment is a date upon which the Preferred
Shares (or Common Shares and/or other securities, as the case may
be) transfer books of the Company are closed, such person shall
be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day
on which the Preferred Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are
open.


     Section 11.  ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
SHARES OR NUMBER OF RIGHTS.  The Purchase Price, the number and
kind of shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.


            (a)  (i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred
Shares or (C) combine the outstanding Preferred Shares into a
smaller number of Preferred Shares or (D) issue any shares of its
capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Shares
transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate
par value of the shares of capital stock of the Company issuable
upon exercise of one Right.  If an event occurs which would
require an adjustment under both Section 11(a)(i) and Section
11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).


                 (ii) In the event that any Person, alone or together
with its Affiliates and Associates, shall become an Acquiring Person,
then proper provision shall be made so that each holder of a Right (except
as provided below and in Section 7(e) hereof) shall, for a period of
60 days after the later of the occurrence of any such event or

                              -15-



the effective date of an appropriate registration statement under
the Act pursuant to Section 9 hereof, have a right to receive,
upon exercise thereof at a price equal to the then current
Purchase Price, in accordance with the terms of this Agreement,
such number of Common Shares (or, in the discretion of the Board
of Directors, one one-thousandths of a Preferred Share) as shall
equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event, and
(y) dividing that product by 50% of the then current per share
market price of the Company's Common Shares (determined pursuant
to Section 11(d) hereof) on the date of such first occurrence
(such number of shares being referred to as the "ADJUSTMENT
SHARES"); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject
to the provisions of Section 13 hereof, then only the provisions
of Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii);


                 (iii) In the event that there shall not be sufficient
treasury shares or authorized but unissued (and unreserved) Common Shares
to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) and the Rights become so exercisable
(and the Board has determined to make the Rights exercisable into
fractions of a Preferred Share), notwithstanding any other
provision of this Agreement, to the extent necessary and
permitted by applicable law, each Right shall thereafter
represent the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this
Agreement, (x) a number of (or fractions of) Common Shares (up to
the maximum number of Common Shares which may permissibly be
issued) and (y) one one-thousandth of a Preferred Share or a
number of (or fractions of) other equity securities of the
Company (or, in the discretion of the Board of Directors, debt)
which the Board of Directors of the Company has determined to
have the same aggregate current market value (determined pursuant
to Sections 11(d)(i) and (ii) hereof, to the extent applicable)
as one Common Share (such number of, or fractions of, Preferred
Shares (or other equity securities or debt of the Company) being
referred to as a "CAPITAL STOCK EQUIVALENT"), equal in the
aggregate to the number of Adjustment Shares; provided, however,
if sufficient Common Shares and/or capital stock equivalents are
unavailable, then the Company shall, to the extent permitted by
applicable law, take all such action as may be necessary to
authorize additional Common Shares or capital stock equivalents
for issuance upon exercise of the Rights, including the calling
of a meeting of shareholders; and provided, further, that if the
Company is unable to cause sufficient Common Shares and/or
capital stock equivalents to be available for issuance upon
exercise in full of the Rights, then each Right shall thereafter
represent the right to receive the Adjusted Number of Shares upon
exercise at the Adjusted Purchase Price (as such terms are
hereinafter defined).  As used herein, the term "ADJUSTED NUMBER
OF SHARES" shall be equal to that number of (or fractions of)
Common Shares (and/or capital stock equivalents) equal to the
product of (x) the number of Adjustment Shares and (y) a
fraction, the numerator of which is the number of Common Shares
(and/or capital stock

                              -16-



equivalents) available for issuance upon exercise of the Rights
and the denominator of which is the aggregate number of
Adjustment Shares otherwise issuable upon exercise in full of all
Rights (assuming there were a sufficient number of Common Shares
available) (such fraction being referred to as the "PRORATION
FACTOR").  The "ADJUSTED PURCHASE PRICE" shall mean the product
of the Purchase Price and the Proration Factor.  The Board of
Directors may, but shall not be required to, establish procedures
to allocate the right to receive Common Shares and capital stock
equivalents upon exercise of the Rights among holders of Rights.


            (b) In case the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all
holders of Preferred Shares entitling them (for a period expiring
within 45 calendar days after such record date) to subscribe for
or purchase Preferred Shares (or shares having the same rights
and privileges as the Preferred Shares ("EQUIVALENT PREFERRED
SHARES")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or
equivalent preferred share (or having a conversion price per
share, if a security convertible into Preferred Shares or
equivalent preferred shares (or having a conversion price per
share, if a security convertible into Preferred Shares or
equivalent preferred shares) less than the then current per share
market price of the Preferred Shares (as determined pursuant to
Section 11(d) hereof) on such record date, the Purchase Price to
be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the number of Preferred Shares outstanding on such record date
plus the number of Preferred Shares which the aggregate offering
price of the total number of Preferred Shares and/or equivalent
preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered)
would purchase at such current per share market price, and the
denominator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered
for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon the
exercise of one Right.  In case such subscription price may be
paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be
determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights
Agent.  Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any
such computation.  Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that

                              -17-



such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.


            (c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares (including
any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the then current per share market price (as determined pursuant
to Section 11(d) hereof) of the Preferred Shares on such record
date, less the fair market value (as determined in good faith by
the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share
and the denominator of which shall be such current per share
market price of the Preferred Shares; provided, however, that in
no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of one
Right.  Such adjustments shall be made successively whenever such
a record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record
date had not been fixed.


            (d)  (i) For the purpose of any computation hereunder, the
"CURRENT PER SHARE MARKET PRICE" of any security (a "SECURITY" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be the
average of the daily closing prices per share of such Security
for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market
price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security
or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and
prior to the expiration of thirty (30) Trading Days after the ex-
dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then,
and in each such case, the current per share market price shall
be appropriately adjusted to reflect the current market price per
share equivalent of such Security.  The closing price for each
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting

                              -18-



system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the Security is not listed
or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted
to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated
Quotations System ("Nasdaq") or such other exchange or market
system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of
Directors of the Company.  If on any such date no such market
maker is making a market in the Security, the fair value of the
Security on such date as determined in good faith by the Board of
Directors of the Company shall be used.  The term "TRADING DAY"
shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading
is open for the transaction of business or, if the Security is
not listed or admitted to trading on any national securities
exchange, a Business Day. Subject to Section 11(d)(ii) hereof, if
any Security is not publicly held or so listed or traded, the
"current per share market price" of such Security shall mean the
fair market value per share as determined in good faith by the
Board, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights
Agent.


                 (ii) For the purpose of any computation hereunder,
the "CURRENT PER SHARE MARKET PRICE" of the Preferred Shares (or one
one-thousandth of a Preferred Share) shall be determined in accordance
with the method set forth in Section 11(d)(i).  If the Preferred Shares
are not publicly traded, the "current per share market price" of
the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as determined
pursuant to Section 11(d)(i) (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring
after the date hereof), multiplied by one thousand.  If neither
the Common Shares nor the Preferred Shares are publicly held or
so listed or traded, "current per share market price" shall mean
the fair value per share as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent.


            (e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.  All
calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-thousandth of a

                              -19-



Preferred Share, or one ten-thousandth of any other share or
security, as the case may be.  Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from
the date of the transaction which mandates such adjustment or
(ii) the Final Expiration Date.


            (f) If, as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock of the Company other than Preferred Shares, thereafter the
number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in
Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares
shall apply on like terms to any such other shares.


            (g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number
of one one-thousandths of a Preferred Share purchasable from time
to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.


            (h) Unless the Company shall have exercised its election
as provided in Section 11(i) hereof, upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and
11(c) hereof, each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a Preferred Share (calculated to the nearest
one ten-thousandth of a Preferred Share) obtained by
(i) multiplying (x) the number of Preferred Shares covered by a
Right immediately prior to this adjustment of the Purchase Price
by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.


            (i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
lieu of any adjustment in the number of one one-thousandths of a Preferred
Share purchasable upon the exercise of a Right.  Each of the
Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately
prior to such adjustment.  Each Right held of record prior to
such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one ten-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price.  The Company
shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for

                              -20-



the adjustment, and, if known at the time, the amount of the
adjustment to be made.  This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement.  If Rights
Certificates have been issued, upon each adjustment of the number
of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled
after such adjustment.  Rights Certificates so to be distributed
shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company,
the adjusted Purchase Price) and shall be registered in the names
of the holders of record of Rights Certificates on the record
date specified in the public announcement.


            (j) Irrespective of any adjustment or change in the
Purchase Price or the number of Preferred Shares issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the
number of shares which were expressed in the initial Rights
Certificates issued hereunder.


            (k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
number of one one-thousandths of a Preferred Share, Common Shares
or other securities issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may
validly and legally issue such number of fully paid and non-
assessable one one-thousandths of a Preferred Share, Common
Shares or other securities at such adjusted Purchase Price.


            (1) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until
the occurrence of such event the issuance to the holder of any
Right exercised after such record date the number of one one-
thousandths of a Preferred Share, Common Shares or other
securities of the Company, if any, issuable upon such exercise
over and above the number of one one-thousandths of a Preferred
Share, Common Shares or other securities of the Company, if any,
issuable upon exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive
such additional shares upon the occurrence of the event requiring
such adjustment.

                              -21-




            (m) Anything to the contrary in this Section 11
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that (i) any
consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of Preferred Shares at less than the
current market price, (iii) issuance wholly for cash of Preferred
Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) stock dividends, or (v)
issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such shareholders.


            (n) The Company covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which
does not violate Section 11(o) hereof), (ii) merge with or into
any other Person (other than a Subsidiary of the Company in a
transaction which does not violate Section 11(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or
more transactions each of which does not violate Section 11(o)
hereof), if (x) at the time of or immediately after such
consolidation, merger, sale or transfer there are any charter or
bylaw provisions or any rights, warrants or other instruments or
securities outstanding or agreements in effect or other actions
taken, which would materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation,
merger or sale, the shareholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of
Section 13 hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates.  The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the
Company and such other Person shall have executed and delivered
to the Rights Agent a supplemental agreement evidencing
compliance with this Section 11(n).


            (o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
or Section 27 hereof, take (or permit any Subsidiary to take) any
action the purpose of which is to, or if at the time such action is
taken it is reasonably foreseeable that the effect of such action is to,
materially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights.


            (p) The exercise of Rights under Section 11(a)(ii) shall
only result in the loss of rights under Section 11(a)(ii) to the extent so
exercised and shall not otherwise

                              -22-



affect the rights represented by the Rights under this Rights
Agreement, including the rights represented by Section 13.


     Section 12.  CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES.  Whenever an adjustment is made as provided in Section 11
or 13 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment, and a brief statement
of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares
and the Preferred Shares a copy of such certificate and (c) mail
a brief summary thereof to each holder of a Rights Certificate in
accordance with Section 26 hereof.  The Rights Agent shall be
fully protected in relying on any such certificate and on any
adjustment therein contained.


     Section 13.  CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS
OR EARNING POWER.  (a)  In the event that, on or following the
Shares Acquisition Date, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any Interested
Shareholder, or if in such merger or consolidation all holders of
Common Shares are not treated alike, any other Person, (y) the
Company shall consolidate with, or merge with, any Interested
Shareholder or, if in such merger or consolidation all holders of
Common Shares are not treated alike, any other Person, and the
Company shall be the continuing or surviving corporation of such
consolidation or merger (other than, in a case of any transaction
described in (x) or (y), a merger or consolidation which would
result in all of the securities generally entitled to vote in the
election of directors ("VOTING SECURITIES") of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
securities of the surviving entity) all of the voting securities
of the Company or such surviving entity outstanding immediately
after such merger or consolidation and the holders of such
securities not having changed as a result of such merger or
consolidation), or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Interested Shareholder or
Persons or, if in such transaction all holders of Common Shares
are not treated alike, any other Person, (other than the Company
or any Subsidiary of the Company in one or more transactions each
of which does not violate Section 11(o) hereof), then, and in
each such case (except as provided in Section 13(d) hereof),
proper provision shall be made so that (i) each holder of a
Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof
at a price equal to the then current Purchase Price, in
accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of freely tradable Common Shares of
the Principal Party (as hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by (A) multiplying the
then current Purchase Price by the number of one one-thousandths
of a Preferred Share for which a Right is then exercisable
(without taking

                              -23-



into account any adjustment previously made pursuant to Section
11(a)(ii)) hereof and dividing that product by (B) 50% of the
then current per share market price of the Common Shares of such
Principal Party (determined pursuant to Section 11(d) hereof) on
the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume,
by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; and (iv)
such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common
Shares) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to the Common Shares thereafter deliverable
upon the exercise of the Rights.


            (b) "PRINCIPAL PARTY" shall mean


                 (i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which Common Shares of the Company are
converted in such merger or consolidation, and if no securities
are so issued, the Person that is the other party to such merger
or consolidation (including, if applicable, the Company if it is
the surviving corporation); and


                 (ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions; provided, however,
that in any of the foregoing cases, (1) if the Common Shares of
such Person are not at such time and have not been continuously
over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Shares of which
are and have been so registered, "Principal Party" shall refer to
such other Person; (2) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common
Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Shares having the greatest aggregate market
value; and (3) in case such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that
are not owned, directly or indirectly, by the same Person, the
rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as
if such party were a "Subsidiary" of both or all of such joint
venturers and the Principal Parties in each such chain shall bear
the obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the
total of such interests.

                              -24-




            (c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of its authorized Common Shares which have not been issued
or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of
this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or
transfer mentioned in paragraph (a) of this Section 13, the
Principal Party at its own expense shall:


                 (i) prepare and file a registration statement under the
Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and use its best
efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the
requirements of the Act) until the Final Expiration Date;


                 (ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under
the blue sky laws of such jurisdictions as may be necessary or
appropriate; and


                 (iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all material respects with the requirements for registration
on Form 10 under the Exchange Act.

     The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.  The
rights under this Section 13 shall be in addition to the rights
to exercise Rights and adjustments under Section 11(a)(ii) and
shall survive any exercise thereunder.


            (d) Notwithstanding anything in this Agreement to the contrary,
the provisions of this Section 13 shall not be applicable to a
transaction described in clauses (x) and (y) of Section 13(a) if:
(i) such transaction is consummated with a Person or Persons who
acquired Common Shares pursuant to a Permitted Offer (or a wholly
owned Subsidiary of any such Person or Persons); (ii) the price
per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose
shares were purchased pursuant to such Permitted Offer; and (iii)
the form of consideration offered in such transaction is the same
as the form of consideration paid pursuant to such Permitted
Offer.  Upon consummation of any such transaction contemplated by
this Section 13(d), all Rights hereunder shall expire.

                              -25-




     Section 14.  FRACTIONAL RIGHTS AND FRACTIONAL SHARES.  (a)  The
Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to
which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market
value of a whole Right.  For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise
issuable.  The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-
counter market, as reported by Nasdaq or such other system then
in use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in the Rights selected by the Board of Directors of the
Company.  If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date
as determined in good faith by the Board of Directors of the
Company shall be used and shall be binding on the Rights Agent.


            (b) The Company shall not be required to issue fractions
of Preferred Shares (other than fractions which are one one-thousandths
or integral multiples of one one-thousandth of a Preferred Share)
upon exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions which
are integral multiples of one one-thousandth of a Preferred
Share).  Fractions of Preferred Shares in integral multiples of
one one-thousandths of a Preferred Share may, at the election of
the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that
the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such
depositary receipts.  In lieu of fractional Preferred Shares that
are not one one-thousandths or integral multiples of one one-
thousandth of a Preferred Share, the Company may pay to the
registered holders of Rights Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred Share.
For purposes of this Section

                              -26-



14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior
to the date of such exercise.


            (c) Following the occurrence of one of the transactions or
events specified in Section 11 giving rise to the right to receive
Common Shares, capital stock equivalents (other than Preferred
Shares) or other securities upon the exercise of a Right, the
Company shall not be required to issue fractions of shares or
units of such Common Shares, capital stock equivalents or other
securities upon exercise of the Rights or to distribute
certificates which evidence fractions of such Common Shares,
capital stock equivalents or other securities.  In lieu of
fractional shares or units of such Common Shares, capital stock
equivalents or other securities, the Company may pay to the
registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of a share or unit of
such Common Shares, capital stock equivalents or other
securities.  For purposes of this Section 14(c), the current
market value shall be determined in the manner set forth in
Section 11(d) hereof for the Trading Day immediately prior to the
date of such exercise and, if such capital stock equivalent is
not traded, each such capital stock equivalent shall have the
value of one one-thousandth of a Preferred Share.


            (d) The holder of a Right by the acceptance of the Right
expressly waives the right to receive any fractional Rights or any
fractional share upon exercise of a Right (except as provided above).


     Section 15.  RIGHTS OF ACTION.  All rights of action in respect
of this Agreement, excepting the rights of action given to the
Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise
act in respect of, his right to exercise the Rights evidenced by
such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement.  Without limiting the
foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement
and shall be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this
Agreement.

                              -27-




     Section 16.  AGREEMENT OF RIGHTS HOLDERS.  Every holder of a
Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:

            (a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;


            (b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office or offices of the Rights Agent designated
for such purpose, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate form fully
executed;


            (c) subject to Section 6 and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose
name the Rights Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Rights Certificate or the associated Common Shares certificate
made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof, shall
be required to be affected by any notice to the contrary; and


            (d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or a beneficial interest in a Right or
other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction or by a governmental, regulatory
or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation.


     Section 17.  RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Shares or any other securities of the
Company which may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such any of the rights of a
shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 25 hereof),
or to receive dividends or other distributions or to exercise any
preemptive or subscription rights, or otherwise, until the Right
or Rights

                              -28-



evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.


     Section 18.  CONCERNING THE RIGHTS AGENT.  The Company agrees to
pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder.  The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising
therefrom, directly or indirectly.

     The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common Shares or
for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.


     Section 19.  MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT.  Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
stock transfer or all or substantially all of the corporate trust
business of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof.  In case at the time
such successor Rights Agent shall succeed to the agency created
by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.

                              -29-



     In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of
the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in
its prior name or in its changed name; and in all such cases such
Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.


     Section 20.  DUTIES OF RIGHTS AGENT.  The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and
the holders of Rights Certificates, by their acceptance thereof,
shall be bound:


            (a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and
in accordance with such opinion.


            (b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of an
Acquiring Person and the determination of the current per share
market price of any Security) be proved or established by the
Company prior to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.


            (c) The Rights Agent shall be liable hereunder only for
its own negligence, bad faith or willful misconduct.


            (d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement
or in the Rights Certificates (except its countersignature on such
Rights Certificates) or be required to verify the same, but all
such statements and recitals are and shall be deemed to have been
made by the Company only.


            (e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and delivery
hereof (except the due

                              -30-



execution hereof by the Rights Agent) or in respect of the validity
or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void
pursuant to Section 7(e) hereof) or any adjustment required under
the provisions of Section 11 or 13 hereof or responsible for the
manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt of the certificate
described in Section 12 hereof); nor shall it by any act
hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Preferred Shares, Common
Shares or other securities to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any
Preferred Shares, Common Shares or other securities will, when
issued, be validly authorized and issued, fully paid and
nonassessable.


            (f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the
provisions of this Agreement.


            (g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder and certificates delivered pursuant to any provision
hereof from any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and is authorized to apply to
such officers for advice or instructions in connection with its
duties, and shall not be liable for any action taken or suffered
by it in good faith or lack of action in accordance with
instructions of any such officer.


            (h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested
in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this
Agreement.  Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other
legal entity.


            (i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, omission,
default, neglect or misconduct of any such attorneys or agents or for any

                              -31-



loss to the Company resulting from any such act, omission, default, neglect
or misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.


            (j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder
or in the exercise of its rights hereunder if there shall be reasonable
grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably
assured to it.


            (k) If, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate attached
to the form of assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise
of transfer without first consulting with the Company.


     Section 21.  CHANGE OF RIGHTS AGENT.  The Rights Agent or any
successor Rights Agent may resign and be discharged from its
duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Shares or Preferred Shares by registered or certified mail, and
to the holders of the Rights Certificates by first-class mail.
The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' notice in writing, mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to holders of the Rights
Certificates by first-class mail.  If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within
a period of 30 days after giving notice of such removal or after
it has been notified in writing of such resignation or incapacity
by the resigning or incapacitated Rights Agent or by the holder
of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the
registered holder of any Rights Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent.  Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States
or of any other state of the United States, so long as such
corporation complies with the applicable rules and requirements
of the New York Stock Exchange, as such rules and requirements
may be amended or modified from time to time, is authorized to
exercise stock transfer or corporate trust powers and is subject
to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 (or such
lower number as approved by the Board), or (b) an affiliate of a
corporation described in clause (a) of this sentence.

                              -32-



After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act
or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares or
Preferred Shares and mail a notice thereof in writing to the
registered holders of the Rights Certificates.  Failure to give
any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.


     Section 22.  ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of
this Agreement.

     In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the earliest
of the Redemption Date, the Final Expiration Date and the
consummation of a transaction contemplated by Section 13(d)
hereof, the Company (a) shall with respect to Common Shares so
issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities, notes or debentures issued
by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale;
provided, however, that no Rights Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.


     Section 23.  REDEMPTION AND TERMINATION.  (a)  (i)  Subject to
Section 23(a)(iii), the Board of Directors of the Company may, at
its option, redeem all, but not less than all, the then
outstanding Rights at a redemption price of $.0033 per Right, as
such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to
as the "REDEMPTION PRICE"), at any time prior to the earlier of
(x) a Section 11(a)(ii) Event, or (y) the Final Expiration Date.
The Company may, at its option, pay the Redemption Price either
in Common Shares (based on the "current per share market price,"
as defined in Section 11(d)(i) hereof, of the Common Shares at
the time of redemption) or cash; provided that if the Company
elects to pay the Redemption

                              -33-



Price in Common Shares, the Company shall not be required to
issue any fractional Common Shares and the number of Common
Shares issuable to each holder of Rights shall be rounded down to
the next whole share.


                 (ii) In addition, subject to Section 23(a)(iii), the
Board of Directors of the Company may, at its option, at any time following
a Shares Acquisition Date but prior to any Section 13 Event, redeem all,
but not less than all, of the then outstanding Rights at the
Redemption Price in connection with any merger, consolidation,
sale or other transfer (in one transaction or in a series of
related transactions) of assets or earning power aggregating 50%
or more of the earning power of the Company and its Subsidiaries
(taken as a whole) in which all holders of Common Shares are
treated alike and not involving (other than as a holder of Common
Shares being treated like all other such holders) an Interested
Shareholder.


                 (iii) The Board of Directors of the Company may only
redeem Rights pursuant to Section 23(a)(i) or 23(a)(ii) hereof if a
majority of the Disinterested Directors authorizes such redemption.


            (b) In the case of a redemption permitted under Section
23(a)(i), immediately upon the date for redemption set forth (or determined
in the manner specified in) in a resolution of the Board of
Directors of the Company ordering the redemption of the Rights,
evidence of which shall have been filed with the Rights Agent,
and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held.  In the case of a
redemption permitted only under Section 23(a)(ii), evidence of
which shall have been filed with the Rights Agent, the right to
exercise the Rights will terminate and represent only the right
to receive the Redemption Price upon the later of ten Business
Days following the giving of such notice or the expiration of any
period during which the rights under Section 11(a)(ii) may be
exercised.  The Company shall promptly give public notice of any
such redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of
such redemption.  Within ten days after such date for redemption
set forth in a resolution of the Board of Directors ordering the
redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at
their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares.  Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.  Neither the
Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any
manner other than that specifically set

                              -34-



forth in this Section 23 and other than in connection with the
purchase of Common Shares prior to the Distribution Date.


            (c) The Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights in accordance with this
Agreement and (ii) mailing payment of the Redemption Price to the
registered holders of the Rights at their last addresses as they
appear on the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent of
the Common Shares, and upon such action, all outstanding Rights
and Rights Certificates shall be null and void without any
further action by the Company.


     Section 24.  EXCHANGE.  (a)  Subject to Section 24(e), the Board
of Directors of the Company may, at its option, at any time after
any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions
of Sections 7(e) and 11(a)(ii) hereof) for Common Shares of the
Company at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction involving either the Common Shares or the
Preferred Shares occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not
be empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary, any
entity holding Common Shares for or pursuant to the terms of any
such plan or any trustee, administrator or fiduciary of such a
plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common
Shares then outstanding.


            (b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to Section
24(a) hereof and without any further action and without any
notice, the right to exercise such rights shall terminate and the
only right thereafter of a holder of such Rights shall be to
receive that number of Common Shares equal to the number of such
rights held by such holder multiplied by the Exchange Ratio.  The
Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange.  The
Company promptly shall mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent.  Any notice
which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice.  Each such
notice of exchange will state the method by which the exchange of
the Common Shares for Rights will be effected and, in the event
of any partial exchange, the number of Rights which will be
exchanged.  Any partial exchange shall be effected pro

                              -35-



rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Sections 7(e) and
11(a)(ii) hereof) held by each holder of Rights.


            (c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Shares (or equivalent preferred
shares, as such term is defined in Section 11(b) hereof) for some
or all of the Common Shares exchangeable for Rights, at the
initial rate of one one-thousandth of a Preferred Share (or
equivalent preferred share) for each Common Share, as
appropriately adjusted to reflect adjustments in the voting
rights of the Preferred Shares pursuant to the terms thereof, so
that the fraction of a Preferred Share delivered in lieu of each
Common Share shall have the same voting rights as one Common
Share.


            (d) The Board shall not authorize any exchange transaction
referred to in Section 24(a) hereof unless at the time such exchange is
authorized there shall be sufficient Common Shares or Preferred
Shares issued but not outstanding, or authorized but unissued, to
permit the exchange of Rights as contemplated in accordance with
this Section 24.


            (e) The Board of Directors may only exchange Rights pursuant
to Section 24(a) hereof if a majority of the Disinterested Directors
authorizes such exchange.


     Section 25.  NOTICE OF CERTAIN EVENTS.  (a)  In case the Company
shall propose (i) to pay any dividend payable in stock of any
class to the holders of its Preferred Shares or to make any other
distribution to the holders of Preferred Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of
its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of
any class or any other securities, rights or options, (iii) to
effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the
Company in a transaction which does not violate Section 11(o)
hereof), or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other
transfer) in one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more
transactions each of which does not violate Section 11(o)
hereof), or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall
give to each holder of a Rights Certificate, in accordance with
Section 26 hereof, a notice of such proposed action to the extent
feasible and file a certificate with the Rights Agent to that
effect, which shall specify the record date for the purposes of
such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation,

                              -36-



dissolution, or winding up is to take place and the date of
participation therein by the holders of the Preferred Shares, if
any such date is to be fixed, and such notice shall be so given
in the case of any action covered by clause (i) or (ii) above at
least twenty (20) days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Preferred
Shares, whichever shall be the earlier.


            (b) In case of a Section 11(a)(ii) Event, then (i) the
Company shall as soon as practicable thereafter give to each holder
of a Rights Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such
event and the consequences of such event to holders of Rights
under Section 11(a)(ii) hereof and (ii) all references in the
preceding Section 25(a) to Preferred Shares shall be deemed
thereafter to refer also, if appropriate, to Common Shares
and/or, if appropriate, other securities of the Company.


     Section 26.  NOTICES.  Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the
holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:

               CIGNA Corporation
               One Liberty Place
               1650 Market Street
               P.O. Box 7716
               Philadelphia, Pennsylvania  19192-1550
               Attention:  Corporate Secretary


Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Rights Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:

               First Chicago Trust Company of New York
               Tenders & Exchanges
               525 Washington Boulevard
               Suite 4660
               Jersey City, NJ  07303
               Attention:  Tenders & Exchanges Administration

                              -37-



Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate or, if prior to the Distribution Date, to the
holder of certificates representing Common Shares shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.


     Section 27.  SUPPLEMENTS AND AMENDMENTS.  (a)  Prior to the
Distribution Date, subject to Section 27(b) hereof, the Company
and the Rights Agent shall, if the Company so directs, supplement
or amend any provision of this Agreement without the approval of
any holders of certificates representing Common Shares.  From and
after the Distribution Date, subject to Section 27(b) hereof, the
Company and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any
holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of
the holders of Rights Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person);
provided, however, that this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights.  Upon the delivery of a
certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment, provided that such supplement or
amendment does not adversely affect the rights or obligations of
the Rights Agent under Section 18 or Section 20 of this
Agreement.  Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests
of the holders of Common Shares.


            (b) The Company shall not supplement or amend any provision
of this Agreement unless a majority of the Disinterested Directors
authorizes such supplement or amendment.


     Section 28.  DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC.  Subject to Sections 1(m), 23(a)(iii), 24(e) and 27(b)
hereof, the Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board,
or the Company, or as may be necessary or advisable in the
administration of this

                              -38-



Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation,
a determination to redeem or not redeem the Rights or to amend
the Agreement and whether any proposed amendment adversely
affects the interests of the holders of Rights Certificates).
For all purposes of this Agreement, any calculation of the number
of Common Shares or other securities outstanding at any
particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares or any
other securities of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-
3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement.  All
such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board in
good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights Certificates
and all other parties, and (y) not subject the Board to any
liability to the holders of the Rights Certificates.


     Section 29.  SUCCESSORS.  All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.


     Section 30.  BENEFITS OF THIS AGREEMENT.  Nothing in this
Agreement shall be construed to give to any person or corporation
other than the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common
Shares).


     Section 31.  SEVERABILITY.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.


     Section 32.  GOVERNING LAW.  This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts to be made and
performed entirely within such State.


     Section 33.  COUNTERPARTS.  This Agreement may be executed in any
number of counterparts and each of such counterparts shall for
all purposes be deemed to be an

                              -39-



original, and all such counterparts shall together constitute but
one and the same instrument.


     Section 34.  DESCRIPTIVE HEADINGS.  Descriptive headings of the
several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction
of any of the provisions hereof.

                              -40-



     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the date and year first
above written.



                                      CIGNA CORPORATION


                                      By:/s/ Wilson H. Taylor
                                         --------------------
                                         Name: Wilson H. Taylor
                                         Title: Chairman of the Board and
                                                  Chief Executive Officer




                                      FIRST CHICAGO TRUST COMPANY
                                      OF NEW YORK


                                      By:/s/ Joanne Gorostiola
                                         ---------------------
                                         Name: Joanne Gorostiola
                                         Title: Assistant Vice President

                              -41-




                            Exhibit A


                   FORM OF AMENDED CERTIFICATE
             OF DESIGNATIONS, PREFERENCES AND RIGHTS
        OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES D

                               of

                        CIGNA CORPORATION

     Pursuant to Section 151 of the General Corporation Law
                    of the State of Delaware


     We, Wilson H. Taylor, Chairman of the Board and Chief Executive
Officer, and Carol J. Ward, Corporate Secretary, of CIGNA
Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of Section 103
thereof, DO HEREBY CERTIFY:

     1. No shares of the Corporation's Junior Participating Preferred
Stock, Series D, have been issued.

     2. That pursuant to the authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of the
Corporation, the Board of Directors on July 22, 1998, adopted the
following resolution amending the Certificate of Designations,
Preferences and Rights filed with the Secretary of State of the
State of Delaware on August 4, 1997 that sets forth the terms of
a series of preferred stock designated as Junior Participating
Preferred Stock, Series D:


     RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by Article FOURTH of the Restated
Certificate of Incorporation, the Certificate of Designations,
Preferences and Rights filed with the Secretary of State of the
State of Delaware on August 4, 1997, that sets forth the terms of
a series of preferred stock designated as "Junior Participating
Preferred Stock, Series D" of the Corporation be, and it hereby
is, amended, and that the designation and amount thereof and the
powers, preferences and relative, participating, optional and
other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as
follows:

                               A1



     Section 1. DESIGNATION AND AMOUNT.  There shall be a series of the
Preferred Stock of the Corporation which shall be designated as the "Junior
Participating Preferred Stock, Series D," $1.00 par value, and
the number of shares constituting such series shall be 6,000,000.
Such number of shares may be increased or decreased by resolution
of the Board of Directors; provided, that no decrease shall
reduce the number of shares of Junior Participating Preferred
Stock, Series D, to a number less than that of the shares then
outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.


     Section 2. DIVIDENDS AND DISTRIBUTIONS.

     (A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and
superior to the shares of Junior Participating Preferred Stock,
Series D, with respect to dividends, the holders of shares of
Junior Participating Preferred Stock, Series D, in preference to
the holders of shares of Common Stock, par value $0.25 per share
(the "Common Stock"), of the Corporation and any other junior
stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for that
purpose, quarterly dividends payable in cash on the 10th day of
January, April, July and October in each year (or, in each case,
if not a date on which the Corporation is open for business, the
next date on which the Corporation is so open) (each such date
being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Junior
Participating Preferred Stock, Series D, in an amount per share
(rounded to the nearest cent) equal to the greater of (a)
$100.00, or (b) 1000 times the aggregate per share amount of all
cash dividends, and 1000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock,
since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of
Junior Participating Preferred Stock, Series D.


     (B) The Corporation shall declare a dividend or distribution on the
Junior Participating Preferred Stock, Series D, as provided in
paragraph (A) above immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable
in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $100.00 per share on the Junior Participating
Preferred

                               A2



Stock, Series D, shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.


     (C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Participating Preferred Stock, Series D, from
the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Junior Participating Preferred Stock,
Series D, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Junior
Participating Preferred Stock, Series D, entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment
Date in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment
Date.  Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Junior Participating Preferred
Stock, Series D, in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.  The Board of Directors may fix a
record date for the determination of holders of shares of Junior
Participating Preferred Stock, Series D, entitled to receive
payment of a dividend or distribution declared thereon, which
record date shall be no more than 30 days prior to the date fixed
for the payment thereof.


     Section 3. VOTING RIGHTS.  The holders of shares of Junior Participating
Preferred Stock, Series D shall have the following voting rights:

     (A) Each share of Junior Participating Preferred Stock, Series D,
shall entitle the holder thereof to 1000 votes on all matters
submitted to a vote of the stockholders of the Corporation.

     (B) Except as otherwise provided herein or by law, the holders of
shares of Junior Participating Preferred Stock, Series D, and the
holders of shares of Common Stock shall vote together as one
class on all matters submitted to a vote of stockholders of the
Corporation.

     (C)  (i)  If at any time dividends on any Junior Participating
Preferred Stock, Series D, shall be in arrears in an amount equal to six
(6) quarterly dividends thereon, the occurrence of such contingency
shall mark the beginning of a period (herein called a "default
period") which shall extend until such time when all accrued and
unpaid dividends for all previous quarterly dividend periods and
for the current quarterly dividend period on all shares of Junior
Participating Preferred Stock, Series D, then outstanding shall
have been declared and paid or set apart for payment.  During
each

                               A3



default period, all holders of Preferred Stock (including holders
of the Junior Participating Preferred Stock, Series D) with
dividends in arrears in an amount equal to six (6) quarterly
dividends thereon, voting as a class, irrespective of series,
shall have the right to elect two (2) directors.


          (ii) During any default period, such voting right of the holders
of Junior Participating Preferred Stock, Series D, may be exercised
initially at a special meeting called pursuant to subparagraph
(iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to
increase, in certain cases, the authorized number of directors
shall be exercised unless the holders of ten percent (10%) in
number of shares of Preferred Stock outstanding shall be present
in person or by proxy.  The absence of a quorum of the holders of
Common Stock shall not affect the exercise by the holders of
Preferred Stock of such voting right.  At any meeting at which
the holders of Preferred Stock shall exercise such voting right
initially during an existing default period, they shall have the
right, voting as a class, to elect directors to fill such
vacancies, if any, in the Board of Directors as may then exist up
to two (2) directors, or if such right is exercised at an annual
meeting, to elect two (2) directors.  If the number which may be
so elected at any special meeting does not amount to the required
number, the holders of the Preferred Stock shall have the right
to make such increase in the number of directors as shall be
necessary to permit the election by them of the required number.
After the holders of the Preferred Stock shall have exercised
their right to elect directors in any default period and during
the continuance of such period, the number of directors shall not
be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of
any equity securities ranking senior to or pari passu with the
Junior Participating Preferred Stock, Series D.


          (iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
directors, the Board of Directors may order, or any stockholder
or stockholders owning in the aggregate not less than ten percent
(10%) of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of
a special meeting of the holders of Preferred Stock, which
meeting shall thereupon be called by the Chairman, President, a
Vice-President or the Corporate Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which holders
of Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to him at his
last address as the same appears on the books of the Corporation.
Such meeting shall be called for a time not earlier than 10 days
and not later than 60 days after such order or request or in
default of the calling of such meeting within 60 days after such
order or request, such meeting may be called on

                               A4



similar notice by any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding.  Notwithstanding the
provisions of this paragraph (C)(iii), no such special meeting
shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the
stockholders.


          (iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue
to be entitled to elect the whole number of directors until the
holders of Preferred Stock shall have exercised their right to
elect two (2) directors voting as a class, after the exercise of
which right (x) the directors so elected by the holders of
Preferred Stock shall continue in office until their successors
shall have been elected by such holders or until the expiration
of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (C)(ii) of this
Section 3) be filled by vote of a majority of the remaining
directors theretofore elected by the holders of the class of
stock which elected the director whose office shall have become
vacant.  References in this paragraph (C) to directors elected by
the holders of a particular class of stock shall include
directors elected by such directors to fill vacancies as provided
in clause (y) of the foregoing sentence.


          (v) Immediately upon the expiration of a default period,
(x) the right of the holders of Preferred Stock, as a class to elect
directors shall cease, (y) the term of any directors elected by
the holders of Preferred Stock as a class shall terminate, and
(z) the number of directors shall be such number as may be
provided for in, or pursuant to, the Restated Certificate of
Incorporation or Bylaws irrespective of any increase made
pursuant to the provisions of paragraph (C) (ii) of this Section
3 (such number being subject, however to change thereafter in any
manner provided by law or in the Restated Certificate of
Incorporation or Bylaws).  Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in
the preceding sentence may be filled by a majority of the
remaining directors, even though less than a quorum.

     (D) Except as set forth herein, holders of Junior Participating
Preferred Stock, Series D, shall have no special voting rights
and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.


     Section 4. CERTAIN RESTRICTIONS.

     (A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Participating Preferred Stock, Series D, as
provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or

                               A5



not declared, on shares of Junior Participating Preferred Stock,
Series D, outstanding shall have been paid in full, the
Corporation shall not:


          (i) declare or pay dividends on, make any other distributions
      on, or redeem or purchase or otherwise acquire for
      consideration any shares of stock ranking junior (either as
      to dividends or upon liquidation, dissolution or winding up)
      to the Junior Participating Preferred Stock, Series D;


          (ii) declare or pay dividends on or make any other distributions
      on any shares of stock ranking on a parity (either as to
      dividends or upon liquidation, dissolution or winding up),
      with the Junior Participating Preferred Stock, Series D,
      except dividends paid ratably on the Junior Participating
      Preferred Stock, Series D, and all such parity stock on
      which dividends are payable or in arrears in proportion to
      the total amounts of which the holders of all such shares
      are then entitled;


          (iii) redeem or purchase or otherwise acquire for consideration
      shares of any stock ranking on a parity (either as to
      dividends or upon liquidation, dissolution or winding up)
      with the Junior Participating Preferred Stock, Series D,
      provided that the Corporation may at any time redeem,
      purchase or otherwise acquire shares of any such parity
      stock in exchange for shares of any stock of the Corporation
      ranking junior (either as to dividends or upon dissolution,
      liquidation or winding up) to the Junior Participating
      Preferred Stock, Series D; or


          (iv) purchase or otherwise acquire for consideration any shares
      of Junior Participating Preferred Stock, Series D, or any
      shares of stock ranking on a parity with the Junior
      Participating Preferred Stock, Series D, except in
      accordance with a purchase offer made in writing or by
      publication (as determined by the Board of Directors) to all
      holders of such shares upon such terms as the Board of
      Directors, after consideration of the respective annual
      dividend rates and other relative rights and preferences of
      the respective series and classes, shall determine in good
      faith will result in fair and equitable treatment among the
      respective series of classes.

      (B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.


     Section 5. REACQUIRED SHARES.  Any shares of Junior Participating
Preferred Stock, Series D, purchased or otherwise acquired by the
Corporation in any manner

                               A6



whatsoever shall be retired and cancelled promptly after the
acquisition thereof.  All such shares shall upon their
cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred
Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance
set forth herein.


     Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.  (A)  Upon any
liquidation (voluntary or otherwise), dissolution or winding up
of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior
Participating Preferred Stock, Series D, unless, prior thereto,
the holders of shares of Junior Participating Preferred Stock,
Series D, shall have received $1000 per share plus an amount
equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series
D Liquidation Preference").  Following the payment of the full
amount of the Series D Liquidation Preference, no additional
distributions shall be made to the holders of shares of Junior
Participating Preferred Stock, Series D, unless, prior thereto,
the holders of shares of Common Stock shall have received an
amount per share (the "Common Adjustment") equal to the quotient
obtained by dividing (i) the Series D Liquidation Preference by
(ii) 1000 (such number in clause (ii), the "Adjustment Number").
Following the payment of the full amount of the Series D
Liquidation Preference and the Common Adjustment in respect of
all outstanding shares of Junior Participating Preferred Stock,
Series D, and holders of shares of Common Stock shall receive
their ratable and proportionate share of the remaining assets to
be distributed in the ratio of the Adjustment Number to 1 with
respect to such Preferred Stock and Common Stock, on a per share
basis, respectively.

     (B) In the event there are not sufficient assets available to
permit payment in full of the Series D Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock,
if any, which rank on a parity with the Junior Participating
Preferred Stock, Series D, then such remaining assets shall be
distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences.  In the
event there are not sufficient assets available to permit payment
in full of the Common Adjustment, then such remaining assets
shall be distributed ratably to the holders of Common Stock.


     Section 7. CONSOLIDATION, MERGER, ETC.  In case the Corporation
shall enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property,
then in any such case the shares of Junior Participating
Preferred Stock, Series D, shall at the same time be similarly
exchanged or changed in an amount per share equal to 1000 times
the aggregate amount of stock, securities, cash and/or any

                               A7



other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged.


     Section 8. REDEMPTION.  The shares of Junior Participating Preferred
Stock, Series D, shall not be redeemable.


     Section 9. RANKING.  The Junior Participating Preferred Stock, Series
D, shall rank junior to all other series of the Corporation's
Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall
provide otherwise.


     Section 10. AMENDMENT.  The Restated Certificate of Incorporation of
the Corporation shall not be further amended in any manner which
would materially alter or change the powers, preferences or
special rights of the Junior Participating Preferred Stock,
Series D, so as to affect them adversely without the affirmative
vote of the holders of at least two-thirds (66 2/3%) of the
outstanding shares of Junior Participating Preferred Stock,
Series D, voting separately as a class.


     Section 11. FRACTIONAL SHARES.  Junior Participating Preferred Stock,
Series D, may be issued in fractions of a share, which are one
one-thousandths or integral multiples of one one-thousandths of a
share, which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit
of all other rights of holders of Junior Participating Preferred
Stock, Series D.

                               A8



     IN WITNESS WHEREOF, we have executed and subscribed this Certificate
as of this 22nd day of July, 1998.



                                      _______________________
                                      Name: Wilson H. Taylor
                                      Title: Chairman of the Board and
                                               Chief Executive Officer

Attest:


_____________________________
Name: Carol J. Ward
Title: Corporate Secretary

                               A9




                            Exhibit B


                  [Form of Rights Certificate]

Certificate No. R-                          ____________ Rights

          NOT EXERCISABLE AFTER AUGUST 4, 2007, OR
          EARLIER  IF  NOTICE  OF  REDEMPTION   OR
          EXCHANGE   IS  GIVEN.  THE  RIGHTS   ARE
          SUBJECT TO REDEMPTION, AT THE OPTION  OF
          THE COMPANY, AT $0.0033 PER RIGHT ON THE
          TERMS  SET  FORTH  IN  THE  AMENDED  AND
          RESTATED  RIGHTS AGREEMENT.  THE  RIGHTS
          ARE  SUBJECT TO EXCHANGE, AT THE  OPTION
          OF  THE COMPANY, AT ONE COMMON SHARE PER
          RIGHT  ON  THE  TERMS SET FORTH  IN  THE
          AMENDED  AND RESTATED RIGHTS  AGREEMENT.
          [THE  RIGHTS REPRESENTED BY THIS  RIGHTS
          CERTIFICATE  ARE  OR  WERE  BENEFICIALLY
          OWNED  BY A PERSON WHO WAS OR BECAME  AN
          ACQUIRING  PERSON  OR  AN  ASSOCIATE  OR
          AFFILIATE  OF  AN ACQUIRING  PERSON  (AS
          SUCH  TERMS  ARE DEFINED IN  THE  RIGHTS
          AGREEMENT).   ACCORDINGLY,  THIS  RIGHTS
          CERTIFICATE  AND THE RIGHTS  REPRESENTED
          HEREBY  MAY  BECOME VOID TO  THE  EXTENT
          PROVIDED  IN AND UNDER THE CIRCUMSTANCES
          SPECIFIED IN SECTION 7(e) OF THE AMENDED
          AND RESTATED RIGHTS AGREEMENT.]*

Rights Certificate


- - ------------------------------------------------------------------
* The portion of the legend in brackets shall be inserted
  only if applicable and shall replace the preceding sentences.

                               B1



CIGNA Corporation

     This certifies that ________________, or _______ registered
assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to
the terms, provisions and conditions of the Amended and Restated
Rights Agreement dated as of July 22, 1998 (the "Rights
Agreement") between CIGNA Corporation, a Delaware corporation
(the "Company"), and First Chicago Trust Company of New York (the
"Rights Agent"), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (Philadelphia, PA time) on
August 4, 2007 at the office of the Rights Agent in New York, New
York, one one-thousandth of a fully-paid, nonassessable share of
Junior Participating Preferred Stock, Series D (the "Preferred
Stock") of the Company, at a purchase price of $260 per one one-
thousandth of a share (the "Purchase Price"), upon presentation
and surrender of this Rights Certificate with the appropriate
Form of Election to Purchase duly executed.  The number of Rights
evidenced by this Rights Certificate (and the number of shares
which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and
Purchase Price as of July 22, 1998, based on the Preferred Stock
as constituted at such date.  As provided in the Rights
Agreement, the Purchase Price and the number of shares of
Preferred Stock or other securities which may be purchased upon
the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of
certain events.

     This Rights Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a
part hereof and to which Rights Agreement reference is hereby
made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent,
the Company and the holders of the

                               B2


Rights Certificates.  Copies of the Rights Agreement are on file
at the principal office of the Company and are also available
upon written request to the Company.

     This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office of the Rights Agent, may
be exercised for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling
the holder to purchase a like aggregate number of shares of
Preferred Stock as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such
holder to purchase.  If this Rights Certificate shall be
exercised (other than pursuant to Section 11(a)(ii) of the Rights
Agreement) in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.  If
this Rights Certificate shall be exercised in whole or in part
pursuant to Section 11(a)(ii) of the Rights Agreement, the holder
shall be entitled to receive this Rights Certificate duly marked
to indicate that such exercise has occurred as set forth in the
Rights Agreement.

     Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at
its option at a redemption price of $.0033 per Right, and the
redemption price may be satisfied by issuing Common Shares
(pursuant to Section 23(a)(i) of the Rights Agreement).  In
addition, the Rights evidenced by this Certificate may be
exchanged by the Company at its option at an exchange ratio of
one Common Share per Right.

     No fractional shares of Preferred Stock will be issued upon the
exercise of any Rights or Rights evidenced hereby (other than
fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock, which may, at the election of the
Company, be evidenced by depository receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.

     No holder, as such, of any Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose
the holder of the Preferred Shares or any other securities of the
Company which may at any time be issuable on the exercise of the

                               B3



Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 25 of the
Rights Agreement), or to receive dividends or other
distributions, or otherwise, until the Right or Rights evidenced
by such Rights Certificate shall have been exercised.

     This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.

                               B4




     WITNESS the facsimile signature of the proper officers of the

Company and its corporate seal.



Dated:  _____________________

ATTEST:                                CIGNA CORPORATION


__________________________             __________________________
Name: Carol J. Ward                    Name:
Title: Corporate Secretary             Title:




Countersigned:




___________________________
Authorized Signature

                               B5





         [Form of Reverse Side of Rights Certificate]

                      FORM OF ASSIGNMENT

    (To be executed by the registered holder if such holder
         desires to transfer the Rights Certificate.)


    FOR VALUE RECEIVED _____________________ hereby sells, assigns and
transfers unto _______________________________________________________
______________________________________________________________________
       (Please print name and address of transferee)
______________________________________________________________________
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint __________
Attorney, to transfer the within Rights Certificate on the books of
the within-named Company, with full power of substitution.


Dated:  _______________

                                      _________________________
                                      Signature


Signature Guaranteed:


- - ----------------------------

Signatures must be guaranteed by a member firm of a registered
national stock exchange, a member of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States.

                               B6





                           Certificate


     The undersigned hereby certifies by checking the appropriate boxes
that:

     (1) this Rights Certificate [   ] is [   ] is not being sold,
assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the
Rights Agreement);

     (2) after due inquiry and to the best knowledge of the undersigned,
it [   ] did [   ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.


Dated:  _______________

                                          ________________________
                                          Signature


Signature Guaranteed:


_____________________________

Signatures must be guaranteed by a member firm of a registered
national stock exchange, a member of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States.


                             NOTICE

     The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or
enlargement or any change whatsoever.

                               B7




                  FORM OF ELECTION TO PURCHASE
      (To be executed if holder desires to exercise Rights
             represented by the Rights Certificate.)

To: CIGNA CORPORATION

     The undersigned hereby irrevocably elects to exercise _____
Rights represented by this Rights Certificate to purchase the
shares of Preferred Stock or Common Stock issuable upon the
exercise of the Rights (or such other securities of the Company
or of any other person which may be issuable upon the exercise in
the Rights) and requests that certificates for such shares be
issued in the name of and deliverable to:

  _____________________________________________________________
   (Please insert social security or other identifying number)

  _____________________________________________________________

  _____________________________________________________________

 ______________________________________________________________
                 (Please print name and address)

     If such number of Rights shall not be all the Rights evidenced by
this Rights Certificate, a new Rights Certificate for the balance
of such Rights shall be registered in the name of and delivered
to:
  _____________________________________________________________
   (Please insert social security or other identifying number)

  _____________________________________________________________

  _____________________________________________________________

 ______________________________________________________________
                 (Please print name and address)
Dated: ____________________

                                       ________________________
                                       Signature
Signature Guaranteed:

_______________________________

Signatures must be guaranteed by a member firm of a registered
national stock exchange, a member of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States.

                               B8






                           Certificate


     The undersigned hereby certifies by checking the appropriate boxes
that:

     (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the
Rights Agreement);

     (2) the Rights evidenced by this Rights Certificate are [ ] are not
[ ] being sold, assigned or transferred by or on behalf of a Person
who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person;

     (3) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person.



Dated: _______________


                                         ________________________
                                         Signature

Signature Guaranteed:

____________________________________

Signatures must be guaranteed by a member firm of a registered
national stock exchange, a member of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States.


                             NOTICE

     The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.


                               B9




                            Exhibit C

                        CIGNA CORPORATION
     REVISED SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES

          On July 23, 1997, the Board of Directors of CIGNA
Corporation, a Delaware corporation (the "Company"), declared a
dividend of one preferred share purchase right (a "Right") for
each outstanding share of Common Stock of the Company.  The
dividend was paid to the shareholders of record as of 5:00 P.M.,
Philadelphia time, on August 4, 1997 (the "Effective Date"), and
either was paid or is payable with respect to Common Shares
issued thereafter until the Distribution Date (as hereinafter
defined) and, in certain circumstances, with respect to Common
Shares issued after the Distribution Date.

          As a result of a 3-for-1 stock split with respect to
the Common Shares issued and outstanding as of May 4, 1998, the
terms of the Rights were amended on July 22, 1998, so that each
Right, when exercisable, represents the Right to purchase one one-
thousandth of a share of Junior Participating Preferred Stock,
Series D, par value $1.00 per share (the "Preferred Shares") at a
purchase price of $260 (the "Purchase Price"), subject to
adjustment.  The description and terms of the Rights are set
forth in an Amended and Restated Rights Agreement, dated as of
July 22, 1998 (the "Rights Agreement"), between the Company and
First Chicago Trust Company of New York (the "Rights Agent").


          A. ISSUE OF RIGHT CERTIFICATES

          The Rights are attached to all certificates
representing outstanding Common Shares, and no separate Right
Certificates (as hereinafter defined) have been distributed.  The
Rights will separate from the Common Shares on the earlier to
occur of (i) the first date of public announcement that a Person
(defined in Section 1(m) of the Rights Agreement), alone or
together with its Affiliates and Associates (defined in Section
1(c) of the Rights Agreement), has acquired beneficial ownership
(as defined in Section 1(d) of the Rights Agreement) of 10% or
more of the outstanding Common Shares (except pursuant to a
Permitted Offer, as hereinafter defined); or (ii) the close of
business on the tenth (10th) business day (or such later date as
the Board of Directors of the Company may determine) following
the commencement of, or announcement of an intention to commence,
a tender or exchange offer the consummation of which would result
in any Person becoming an Acquiring Person (as hereinafter
defined), including, in the case of both (i) and (ii), any such
date which is after the date of the Rights Agreement and prior to
the issuance of the Rights (the earliest of such dates being
called the "Distribution Date").  A Person, alone or together
with its Affiliates and Associates, whose acquisition

                               C1



of Common Shares causes a Distribution Date pursuant to clause
(i) above is an "Acquiring Person."  The first date of public
announcement that a Person, alone or together with its Affiliates
and Associates, has become an Acquiring Person is the "Shares
Acquisition Date."


          The Rights Agreement provides that until the
Distribution Date the Rights will be transferred with and only
with the Common Shares.  Until the Distribution Date (or earlier
redemption, exchange, or expiration of the Rights), new Common
Share certificates issued after the Effective Date upon transfer
or new issuance of Common Shares will contain a notation
incorporating the Rights Agreement by reference.  Until the
Distribution Date (or earlier redemption, exchange, or expiration
of the Rights), the surrender for transfer of any certificates
for Common Shares outstanding as of the Effective Date, even
without such notation or a copy of the Summary of Rights to
Purchase Preferred Shares being attached thereto, will also
constitute the transfer of the Rights associated with the Common
Shares represented by such certificate.  As promptly as
practicable following the Effective Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of
business on the Distribution Date (and to each initial record
holder of certain Common Shares issued after the Distribution
Date), and such separate Right Certificates alone will evidence
the Rights.


          B. EXERCISE OF RIGHTS; FINAL EXPIRATION DATE OF RIGHTS

          The Rights are not exercisable until the Distribution
Date and will expire at 5:00 P.M., Philadelphia time, on
August 4, 2007, unless earlier redeemed or exchanged by the
Company as described below.


          C. FLIP-IN PROVISION

          In the event that any Person becomes an Acquiring Person (except
pursuant to a "Permitted Offer" as hereinafter defined), each
holder of a Right will have (subject to the terms of the Rights
Agreement) the right to receive upon exercise the number of
Common Shares, or, in the discretion of the Board of Directors of
the Company, the number of one one-thousandths of a Preferred
Share (or, in certain circumstances, other securities of the
Company) having a value (immediately prior to such "Triggering
Event," as defined in Section 1(t) of the Rights Agreement) equal
to two times the Purchase Price (the "Flip-In Right").
Notwithstanding the foregoing, following the occurrence of the
event described above, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any Affiliate or
Associate thereof will be null and void.  A "Permitted Offer"
shall mean a tender or exchange offer for all outstanding Common
Shares at a price and on terms determined, prior to the purchase
of shares under such

                               C2



tender or exchange offer, by at least a majority of the
Disinterested Directors to be adequate (taking into account all
factors that such directors deem relevant) and otherwise in the
best interests of the Company and its shareholders (other than
the Person or any Affiliate or Associate thereof on whose behalf
the offer is being made) taking into account all factors that
such directors may deem relevant.  "Disinterested Directors" are
directors of the Company who are not officers or employees of the
Company and who are not Acquiring Persons or Affiliates or
Associates thereof, or representatives of any of them, or any
person who was directly or indirectly proposed or nominated as a
director of the Company by an Acquiring Person.


          D. FLIP-OVER PROVISION

          In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction in which the holders of
all of the outstanding Common Shares immediately prior to the
consummation of the transaction are not the holders of all of the
surviving corporation's voting power, or (ii) more than 50% of
the Company's assets or earning power is sold or transferred, in
either case with or to an Acquiring Person or any Affiliate or
Associate thereof, or any other person in which such Acquiring
Person, Affiliate or Associate has an interest, or any person
acting on behalf of or in concert with such Acquiring Person,
Affiliate or Associate, or, if in such transaction all holders of
Common Shares are not treated alike, any other person, then each
holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right (the
"Flip-Over Right") to receive, upon exercise, common shares of
the acquiring company having a value equal to two times the
Purchase Price.  The holder of a Right will continue to have the
Flip-Over Right whether or not such holder exercises or surrenders
the Flip-In Right.


          E. ADJUSTMENT OF PURCHASE PRICE

          The Purchase Price payable, and the number of one
one-thousandths of a Preferred Share or other securities
issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification
of, the Preferred Shares, (ii) upon the grant to holders of the
Preferred Shares of certain rights or warrants to subscribe for
or purchase Preferred Shares at a price, or securities
convertible into Preferred Shares with a conversion price, less
than the then current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness or assets (excluding regular quarterly
cash dividends or a dividend payable in preferred shares) or of
subscription rights or warrants (other than "equivalent preferred
shares," as defined in Section 11(b) of the Rights Agreement).

                               C3



          The Purchase Price is also subject to adjustment in the
event of a stock split of the Common Shares, or a stock dividend
on the Common Shares payable in Common Shares, or subdivisions,
consolidations or combinations of the Common Shares occurring, in
any such case, prior to the Distribution Date.


          With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price.  No fractional
one-thousandths of a Preferred Share will be issued, and in lieu
thereof, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior to
the date of exercise.


          F. REDEMPTION OF RIGHTS

          At any time prior to the earlier to occur of (i) a
person becoming an Acquiring Person or (ii) the expiration of the
Rights, the Company may redeem the Rights in whole, but not in
part, at a price of $.0033 per Right (the "Redemption Price"),
which redemption shall be effective upon the action of the Board
of Directors of the Company.  Additionally, the Company may redeem the
then outstanding Rights in whole, but not in part, at the Redemption
Price after the triggering of the Flip-In Right and before the
expiration of any period during which the Flip-In Right may be
exercised in connection with a merger or other business
combination transaction or series of transactions involving the
Company in which all holders of Common Shares are treated alike
but not involving (other than as a holder of Common Shares being
treated like all other such holders) any Person acting directly
or indirectly on behalf of, or in concert with, any Acquiring
Person, or its Affiliates or Associates.  The Board of Directors may
only redeem Rights if a majority of the Disinterested Directors authorize
such redemption.  Upon the effective date of the redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.


          G. EXCHANGE OF RIGHTS

          At any time after a Person becomes an Acquiring Person
but before such Acquiring Person, together with all Affiliates
and Associates of such Person, becomes the "Beneficial Owner"
(defined in Section 1(d) of the Rights Agreement) of 50% or more
of the Common Shares then outstanding, the Company may, at its
option, exchange all or part of the then outstanding and
exercisable Rights (other than those owned by the Acquiring
Person, together with any Affiliates and Associates of such
Acquiring Person, which have become null and void) at an exchange
ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
involving either the Common Shares or the Preferred Shares
occurring after the date hereof (the "Exchange Ratio").  The Board of
Directors may only exchange Rights if a

                               C4



majority of the Disinterested Directors authorizes such exchange.
Immediately upon the action of the Board of Directors ordering the
exchange of any Rights and without any further action and without
any notice, the right to exercise such rights shall terminate and the
only right thereafter of a holder of such Rights shall be to receive
that number of Common Shares equal to the number of such rights held
by such holder multiplied by the Exchange Ratio.


          H. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER

          Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive
dividends.  While the distribution of the Rights will not be taxable to
shareholders of the Company, shareholders may, depending upon the
circumstances, recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events thereafter.


          I. COPY AVAILABLE

          A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an exhibit to an amendment
to the Company's Registration Statement on Form 8-A.  A copy of
the Rights Agreement is available upon request free of charge
from the Company.  This summary description of the Rights does
not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement.

                               C5

EX-4

                                                                    Exhibit 4(b)

                        CIGNA CORPORATION
                        -----------------


               AMENDMENT NO. 1 TO RIGHTS AGREEMENT
               -----------------------------------




     THIS AMENDMENT No. 1, dated as of December 14, 1998 (the
"Amendment"), to the Amended and Restated Rights Agreement, dated
as of July 22, 1998 (the "Rights Agreement"), between CIGNA
Corporation, a Delaware corporation (the "Company") and First
Chicago Trust Company of New York (the "Rights Agent").

     WHEREAS, pursuant to Section 27 of the Rights Agreement, the
Company and the Rights Agent may from time to time supplement or
amend any provision of the Rights Agreement in accordance with
the terms of Section 27; and

     WHEREAS, this Amendment is intended to delete from the
Rights Agreement all requirements that a majority of the
Disinterested Directors (as defined in the Rights Agreement)
approve certain actions with respect to the Rights Agreement.

     NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto hereby
agree as follows:

     1.   The Rights Agreement is hereby amended by deleting the
definition of "Disinterested Director" from Section 1(h) and
replacing it with the word "Reserved" and deleting the reference
to "Disinterested Directors" in the Defined Term Cross-Reference
Sheet and replacing it with the word "Reserved."

     2.   Section 1(l) of the Rights Agreement is hereby amended
by deleting the words "Disinterested Directors" therefrom and
substituting therefor the words "members of the Board of
Directors."

     3.   Section 23(a)(iii) of the Rights Agreement is hereby
amended by deleting the words "Disinterested Directors" therefrom
and substituting therefor the words "members of the Board of
Directors."

     4.   Section 24(e) of the Rights Agreement is hereby amended
by deleting the words "Disinterested Directors" therefrom and
substituting therefor the words "members of the Board of
Directors."



     5.   Section 27(b) of the Rights Agreement is hereby amended
by deleting the words "Disinterested Directors" therefrom and
substituting therefor the words "members of the Board of
Directors."

     6.   Section 28 of the Rights Agreement is hereby amended by
deleting the reference to "Section 1(m)" from the following
clause contained in the first sentence: "Subject to Sections
1(m), 23(a)(iii), 24(e) and 27(b) hereof."

     7.   Exhibit C (the "Summary of Rights") to the Rights
Agreement is hereby amended:

          (a)  by deleting in its entirety the second sentence of
               the second paragraph thereof, which begins "The
               description and terms of the Rights";

          (b)  by inserting immediately after the second
               paragraph thereof the following new paragraph:

               On December 14, 1998, the Company and the Rights
               Agent again amended the terms of the Rights to
               eliminate the requirement that certain actions
               with respect to the Rights be approved by a
               majority of Disinterested Directors, including
               redeeming the Rights, exchanging the Rights,
               amending the Rights Agreement, and determining
               what constitutes a "Permitted Offer" under the
               Rights Agreement.  The description and terms of
               the Rights are set forth in an Amended and
               Restated Rights Agreement, dated as of December
               16, 1998 (the "Rights Agreement"), between the
               Company and the Rights Agent.

          (c)  by deleting from Section C thereof the words
               "Disinterested Directors" the first time such
               words appear and substituting therefor the words
               "members of the Company's Board of Directors";

          (d)  by deleting from Section C thereof the last
               sentence, which begins "Disinterested Directors
               are directors of the Company," in its entirety;

          (e)  by inserting in the first sentence of Section F thereof the
               words "a majority of the members of" immediately before the
               phrase "the Board of Directors of the Company";

          (f)  by deleting from Section F thereof the third
               sentence, which begins "The Board of Directors may
               only redeem Rights," in its entirety;

                                      -2-


          (g)  by deleting from Section G thereof the second
               sentence, which begins "The Board of Directors may
               only exchange Rights", in its entirety; and

          (h)  by inserting in the third sentence of Section G
               thereof the words "a majority of the members of"
               immediately before the phrase "the Board of
               Directors."

     This Amendment may be executed in any number of counterparts, and
each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall constitute one and the same
instrument.

                                      -3-


     IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed, all as of the date and year first
above written.


                              CIGNA CORPORATION

                                   /s/ Wilson H. Taylor
                              By: ________________________________
                                   Wilson H. Taylor
                                   Chairman of the Board and
                                    Chief Executive Officer



                              FIRST CHICAGO TRUST COMPANY
                              OF NEW YORK

                                   /s/ Joanne Gorostiola
                             By:________________________________
                                   Name:  Joanne Gorostiola
                                   Title: Assistant Vice President


                                      -4-

EX-10

Exhibit 10.2

RESTATED RESTRICTED STOCK PLAN FOR NON-EMPLOYEE
DIRECTORS OF CIGNA CORPORATION
October 23, 2003

1. Purpose.

        The Restricted Stock Plan for Non-Employee Directors of CIGNA Corporation (the “Plan”) is intended to provide directors of CIGNA Corporation (the “Company”) with a proprietary interest in the Company’s success and progress by granting them shares of the Company’s Common Stock (“Common Stock”) which are restricted in accordance with the terms and conditions set forth below (“Restricted Shares”). The Plan is intended to increase the alignment of personal economic interest between directors and shareholders generally and to strengthen the Company’s ability to continue attracting and retaining highly qualified directors.

2. Administration.

        The Plan is to be administered by the Corporate Governance Committee (the “Committee”) of the Company’s Board of Directors (the “Board”) or any successor committee with responsibility for compensation of directors.

3. Eligibility and Grants.

        All current and subsequently elected members of the Company’s Board of Directors who have served as directors for at least six months and at the time such service began were not, and for the preceding ten years had not been, officers or employees of the Company or any of its subsidiaries (“Eligible Directors”) shall be eligible to participate in the Plan.

        Each director who is an Eligible Director on the effective date of the Plan (the “Effective Date”) shall be granted 4,500 Restricted Shares, effective as of the Effective Date. Each director who becomes an Eligible Director after the Effective Date shall be granted 4,500 Restricted Shares, effective as of the date such director becomes an Eligible Director.

4. Terms and Conditions of Restricted Shares.

        (a) General. Subject to the provisions of Section 4(c) below, the restrictions set forth in Section 4(b) shall apply to each grant of Restricted Shares for a period (the “Restricted Period”) from the date of grant until the later of the expiration of the six-month period immediately following the date of grant or the date on which the Eligible Director’s service as a director of the Company terminates.

        (b) Restrictions. A stock certificate representing the number of Restricted Shares granted shall be registered in each Eligible Director’s name but shall be held in custody by the Company for the Eligible Director’s account. The Eligible Director shall have all rights and privileges of a shareholder as to such Restricted Shares, including the right to receive dividends and the right to vote such Restricted Shares, except that the following restrictions shall apply: (i) the Eligible Director shall not be entitled to delivery of the certificate until the expiration of the Restricted Period, (ii) none of the Restricted Shares may be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of during the Restricted Period, and (iii) except as provided in Section 4(c), all of the Restricted Shares shall be forfeited and all rights of the Eligible Director to such Restricted Shares shall terminate without further obligation on the part of the Company upon the Eligible Director’s ceasing to be a director of the Company.

        (c) Termination of Directorship.

      (i) Vesting of Shares. If an Eligible Director ceases to be a director of the Company by reason of Disability, Death, Retirement or Change of Control, the Restricted Shares granted to such Eligible Director shall immediately vest. If an Eligible Director ceases to be a director of the Company for any other reason, the Eligible Director shall immediately forfeit all Restricted Shares, except to the extent that a majority of the Board other than the Eligible Director approves the vesting of such Restricted Shares. Upon vesting, except as provided in Section 5, all restrictions applicable to such Restricted Shares shall lapse and a certificate for such shares shall be delivered to the Eligible Director, or the Eligible Director’s beneficiary or estate, in accordance with Section 4(d).

      (ii) Disability. For purposes of this Section 4(c), “Disability” shall mean a permanent and total disability as defined in Section 22(e)(3) of the Internal Revenue Code.

      (iii) Retirement. For purposes of this Section 4(c), “Retirement” shall mean ceasing to be a director of the Company (i) on or after age 72, or (ii) on or after age 65 with the consent of a majority of the members of the Board other than the Eligible Director.

     (iv) Change of Control. For purposes of this Section 4(c), “Change of Control” shall mean:

      (A) a corporation, person or group acting in concert as described in Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), holds or acquires beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act of a number of preferred or common shares of the Company having voting power which is either (i) more than 50% of the voting power of the shares which voted in the election of directors of the Company at the shareholders’ meeting immediately preceding such determination, or (ii) more than 25% of the voting power of the Company’s outstanding common shares; or

      (B) as a result of a merger or consolidation to which the Company is a party, either (i) the Company is not the surviving corporation or (ii) Directors of the Company immediately prior to the merger or consolidation constitute less than a majority of the Board of Directors of the surviving corporation; or

     (C) a change occurs in the composition of the Board at any time during any consecutive 24-month period such that the “Continuity Directors” cease for any reason to constitute a majority of the Board. For purposes of the preceding sentence “Continuity Directors” shall mean those members of the Board who either: (i) were directors at the beginning of such consecutive 24-month period; or (ii) were elected by, or on nomination or recommendation of, at least a majority (consisting of at least nine directors) of the Board.

        (d) Delivery of Restricted Shares. At the end of the Restricted Period a stock certificate for the number of Restricted Shares which have vested shall be delivered free of all such restrictions to the Eligible Director or the Eligible Director’s beneficiary or estate, as the case may be.

5. Regulatory Compliance.

        No Common Stock granted pursuant to this Plan shall be sold or distributed by an Eligible Director or an Eligible Director’s beneficiary or estate until all appropriate listing, registration and qualification requirements and consents and approvals have been satisfied or obtained, free of any condition unacceptable to the Board of Directors.

6. Adjustment in Event of Changes in Capitalization.

        In the event of a recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation, rights offering, separation, reorganization or liquidation, or any other change in the corporate structure or shares of the Company, the Committee may make such equitable adjustments, to prevent dilution or enlargement of rights, as it may deem appropriate in the number and class of shares authorized to be granted as Restricted Shares. Shares issued as a consequence of any such change in the corporate structure or shares of the Company shall be issued subject to the same restrictions and provisions applicable to the Restricted Shares with respect to which they are issued.

7. Termination or Amendment of the Plan.

        The Board may at any time terminate the Plan and may from time to time alter or amend the Plan or any part hereof (including any amendment deemed necessary to ensure that the Company may comply with any regulatory requirement referred to in Section 5) without shareholder approval, unless otherwise required by law or by the rules of the Securities and Exchange Commission or New York Stock Exchange. No termination or amendment of the Plan may, without the consent of an Eligible Director, impair the rights of such director with respect to shares of Common Stock granted under the Plan. Notwithstanding the foregoing provisions of this Section 7, the provisions of the Plan governing eligibility of a director and the amount, timing and pricing of an award hereunder shall not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder.

8. Miscellaneous.

        (a) Nothing in the Plan shall be deemed to create any obligation on the part of the Board to nominate any director for reelection by the Company’s shareholders.

        (b) The Company shall have the right to require, prior to the issuance or delivery of any Restricted Shares, payment by an Eligible Director of any taxes required by law with respect to the issuance or delivery of such shares, or the lapse of restrictions thereon.

        (c) The shares of Common Stock granted as Restricted Shares under the Plan may be either authorized but unissued shares or shares which have been or may be reacquired by the Company, as determined from time to time by the Board.

9. Effective Date.

        Provided that the Company’s Shareholders shall have approved the Plan at the Company’s 1989 Annual Meeting of Shareholders, the Plan shall become effective as of September 30, 1989, or such later date as may be fixed by the Board.

END OF DOCUMENT

EX-10

Exhibit 10.4

CIGNA CORPORATION
STOCK PLAN
(As Amended through July 2000)

ARTICLE 1
Statement of Purpose

The CIGNA Corporation Stock Plan (the “Plan”) is intended to reward and provide incentives for key employees of CIGNA Corporation and its Subsidiaries by providing them with an opportunity to acquire an equity interest in CIGNA Corporation, thereby increasing their personal interest in its continued success and progress. It also is intended to aid the Company in attracting key personnel of exceptional ability.

ARTICLE 2
Definitions

2.2 Defined Terms. For all purposes of this Plan, except as otherwise expressly provided or defined herein or unless the context otherwise requires, the terms defined in this Article shall have the following meanings:

"Board of Directors” means either the board of directors of CIGNA Corporation or any duly authorized committee of that board.

"Change of Control" means:

(i) a corporation, person or group acting in concert as described in Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), holds or acquires beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act of a number of preferred or common shares of CIGNA Corporation having voting power which is either (I) more than 50% of the voting power of the shares which voted in the election of directors of CIGNA Corporation at the shareholders’ meeting immediately preceding such determination, or (ii) more than 25% of the voting power of CIGNA Corporation’s outstanding common shares; or

(ii) as a result of a merger or consolidation to which CIGNA Corporation is a party, either (I) CIGNA Corporation is not the surviving corporation or (ii) Directors of CIGNA Corporation immediately prior to the merger or consolidation constitute less than a majority of the Board of Directors of the surviving corporation; or

1

(iii) a change occurs in the composition of the Board at any time during any consecutive 24-month period such that the “Continuity Directors” cease for any reason to constitute a majority of the Board. For purposes of the preceding sentence “Continuity Directors” shall mean those members of the Board who either: (I) were directors at the beginning of such consecutive 24-month period; or (ii) were elected by, or on nomination or recommendation of, at least a majority (consisting of at least nine directors) of the Board.

“Committee” means the People Resources Committee of the Board of Directors or any successor committee with responsibility for compensation. The number of Committee members and their qualifications shall at all times be sufficient to meet the requirements of Securities and Exchange Commission Rule 16b-3 as in effect from time to time.

“Common Stock” means the common stock, par value $1 per share, of CIGNA Corporation.

“Company” means CIGNA Corporation, a Delaware corporation, and/or its Subsidiaries.

“Deferred Compensation Account” means a separate account established pursuant to a Deferred Compensation Plan.

“Deferred Compensation Plan” means and refers to a deferred compensation plan of the Company which has been designated by the Committee as a “Deferred Compensation Plan” for purposes of this Plan.

“Disability” means permanent and total disability as defined in Section 22(e)(3) of the Internal Revenue Code.

“Early Retirement” means a Termination of Employment, after appropriate notice to the Company, (I) on or after age 55 and before age 65 with eligibility for immediate annuity benefits under a qualified pension or retirement plan of the Company, or (ii) upon such terms and conditions approved by the Committee or officers of the Company designated by the Board of Directors or the Committee.

“Eligible Employee” means a salaried officer or other key employee of the Company who (I) occupies a position with the Company that has been designated by the Committee as an eligible position for participation in this Plan or (ii) has been specifically authorized or designated by the Committee to participate in this Plan.

2

“Fair Market Value” means the mean between the highest and lowest quoted selling prices as reported on the Composite Tape (or other successor means of publishing stock prices) on the date as of which any determination of such value is or is required to be made, or, if the Composite Tape or such successor publication is not published on such date, on the next preceding date of publication. In the absence of such sales, Fair Market Value shall be determined by the Committee, which shall take into account all relevant facts and circumstances.

“Incentive Stock Option” means a stock option granted in accordance with Section 422A of the Internal Revenue Code.

“Participant” means an Eligible Employee to whom any one or more of the awards authorized in this Plan shall have been granted.

“Payment Date” means the date that payment of an award pursuant to a Qualifying Incentive Plan, or of a benefit pursuant to a Qualifying Supplemental Benefit Plan, is made or would have been made but for deferral pursuant to Section 3.7(b).

“Qualifying Incentive Plan” means any Company bonus plan, short-term or long-term incentive compensation plan or any other incentive compensation arrangement, including but not limited to the Company’s Performance Recognition Award Program.

“Qualifying Supplemental Benefit Plan” means any plan of the Company pursuant to which benefits which would have been paid under a tax qualified retirement plan but for legal limitations are payable in cash to eligible employees of the Company.

“Retirement” means a Termination of Employment, after appropriate notice to the Company, (I) on or after age 65 with eligibility for immediate annuity benefits under a qualified pension or retirement plan of the Company, or (ii) upon such terms and conditions approved by the Committee, or officers of the Company designated by the Board of Directors or the Committee.

“Subsidiary” means any corporation of which more than 50% of the total combined voting power of all classes of stock entitled to vote, or other equity interest, is directly or indirectly owned by CIGNA Corporation; or a partnership, joint venture or other unincorporated entity of which more than a 50% interest in the capital, equity or profits is directly or indirectly owned by CIGNA Corporation.

“Termination for Cause” means a Termination of Employment initiated by the Company on account of the conviction of Participant of a felony involving fraud or dishonesty directed against the Company.

“Termination of Employment” means the termination of the Participant’s active

3

employment relationship with the Company, unless otherwise expressly provided by the Committee, or the occurrence of a transaction by which the Participant’s employing Company ceases to be a Subsidiary.

“Termination Upon a Change of Control” means a Termination of Employment upon or within two years after a Change of Control (I) initiated by the Company or a successor corporation other than pursuant to Termination for Cause or (ii) initiated by the Participant and pursuant to the Participant’s certification that the Change of Control has rendered him unable to perform the duties and responsibilities of the position he held immediately prior to the Change of Control by adverse changes in his authority, compensation, office location, duties, responsibilities, or title.

2.2 General. Certain terms are defined in other Articles of this Plan. The terms defined in this Article and elsewhere in this Plan shall include the feminine as well as the masculine gender and the plural as well as the singular, as the context in which they are used requires.

ARTICLE 3
Authorized Stock Incentive Awards

3.1 Authorized Awards. The awards authorized are as follows:

(a) stock options,

(b) stock appreciation rights,

(c) restricted stock grants,

(d) dividend equivalent rights, and

(e) Common Stock in lieu of cash or other awards payable under a Qualifying Incentive Plan or Qualifying Supplemental Benefit Plan.

3.2 General Powers of the Committee. Subject to the provisions of this Plan, the Committee is authorized and empowered in its sole discretion to select Participants and to grant to them any one or more of the awards authorized above in such amounts and combinations and upon such terms and conditions as it shall determine.

3.3 Stock Options. (Paragraphs (d), (f), (g) and (h) below apply only to options granted on or after February 24, 1999.) The Committee shall have the authority to grant Eligible Employees options to purchase Common Stock upon such terms and conditions as it shall establish, including restrictions on the right to exercise options, subject in all events to the following limitations and provisions of general application:

4

(a) The option price per share of any option shall not be less than the Fair Market Value on the date of grant. The option price may be paid in cash or, if the Committee so provides, in Common Stock (including Common Stock subject to a Restricted Period pursuant to Section 3.5(a)). Common Stock used to pay the option price shall be valued using the Fair Market Value on the date of exercise. To the extent the option price is paid in shares of restricted stock, an equal number of the shares of Common Stock purchased upon exercise of the option shall be subject to identical restrictions which shall continue in effect for the remaining part of the Restricted Period applicable to the restricted stock used to pay the option price.

(b) No option shall be for a term of more than 10 years from the date of grant.

(c) No option may be exercised during a leave of absence except to the extent exercisable immediately prior to commencement of the leave of absence, unless otherwise expressly provided by the Committee.

(d) Except as provided elsewhere in this Section 3.3, in the event of Termination of Employment (including termination during an approved leave of absence) for any reason of a Participant holding an outstanding option, the term of the option shall expire on the earlier of the date of Termination of Employment or the expiration date set forth in the option.

(e) In the event of Termination of Employment due to death or Disability (including death or Disability during an approved leave of absence) of a Participant holding an outstanding Incentive Stock Option, the option shall be fully exercisable immediately and the term of the option shall expire on the earlier of 12 months from the date of Termination of Employment or the expiration date set forth in the option.

(f) Any outstanding option granted on or after July 26, 2000 and held by a Participant at Termination of Employment due to death, Disability, Early Retirement or Retirement shall become or remain exercisable in accordance with the terms and conditions established by the Committee at the time of grant.

(g) In the event of Termination of Employment due to Early Retirement or Retirement (including during an approved leave of absence) of a Participant holding an outstanding Incentive Stock Option or Termination of Employment Upon a Change of Control of a Participant holding an outstanding option, the term of the option shall expire on the earlier of 3 months from the date of Termination of Employment or the expiration date set forth in the option.

(h) Notwithstanding the provisions of Section 3.3(f), in the event of a Termination of Employment due to Early Retirement (including during an approved leave of absence) of a Participant holding an outstanding option, the Committee or its designee may, in its or his sole discretion, curtail the exercise period of the option from the expiration date set forth in the option to any earlier date up to and including the date of Participant’s Termination of Employment.

5

3.4 Stock Appreciation Rights. The Committee shall have the authority to grant stock appreciation rights to Eligible Employees who are granted options under this Plan upon such terms and conditions as it shall establish, subject in all events to the following limitations and provisions of general application:

(a) Each right shall relate to a specific option granted under this Plan and shall be granted to the optionee either concurrently with the grant of such option or at such later time as determined by the Committee.

(b) The right shall entitle an optionee to receive a number of shares of Common Stock, without payment to the Company, determined by dividing — (1) the total number of shares which the optionee is eligible to purchase as of the exercise date under the related option multiplied by the amount by which the Fair Market Value of a share of Common Stock on the exercise date of the right exceeds the Fair Market Value of a share of Common Stock on the date, as determined by the Committee, that the right or related option was granted to the optionee; by (2) the Fair Market Value of a share of Common Stock on the exercise date.

(c) In lieu of issuing shares on an exercise of a right, the Committee may elect to pay the cash equivalent of the Fair Market Value on the date of exercise of any or all the shares which would otherwise be issuable pursuant to such exercise.

(d) Shares under an option to which a right is related shall be used not more than once to calculate a number of shares or cash to be received pursuant to an exercise of such right.

(e) The number of shares which may be purchased pursuant to an exercise of the related option will be reduced to the extent such shares are used in calculating the number of shares or cash to be received pursuant to an exercise of a related right.

(f) In the event of Termination of Employment of a Participant holding an outstanding right, the right shall be exercisable only to the extent and upon the conditions that its related option is exercisable.

3.5 Restricted Stock Grants. The Committee shall have the authority to award Common Stock to Eligible Employees by grant (a “Grant”) upon such terms and conditions as it shall establish, subject in all events to the following limitations, restrictions and provisions of general application:

(a) Except as expressly provided below, the Common Stock awarded by a Grant shall not be sold, transferred, assigned, pledged or otherwise disposed of by the Participant during the period or periods established by the Committee (each such period, a “Restricted Period”). Common Stock subject to a Restricted Period may be used to exercise options pursuant to Section 3.3(a). The Committee may establish different Restricted Periods applicable to such number of the shares of Common Stock evidenced by a single Grant as it deems appropriate.

(b) The Common Stock awarded by a Grant shall be issued by the Company as of the date of the Grant. During the Restricted Period, the Participant shall be entitled to vote the shares. Shares issued as a consequence of stock dividends, splits or reclassifications shall be issued subject to the same limitations, restrictions and provisions applicable to the Common Stock with respect to which they are issued.

6

(c) In the event of Termination of Employment of a Participant during a Restricted Period, except Termination Upon a Change of Control or termination by reason of death or Disability, ownership of the Common Stock subject to any Restricted Period at the date of Termination of Employment and all rights therein shall be forfeited to the Company, unless otherwise expressly provided by the Committee. In the event of Termination of Employment by reason of Retirement of a Participant during a Restricted Period, the Committee or its designee in the sole discretion of either may provide, before the Participant’s Retirement, that the Restricted Period applicable to any outstanding Grant at the date of Retirement shall lapse immediately upon the Participant’s Retirement.

(d) In the event of Termination Upon a Change of Control or Termination of Employment by reason of death or Disability of a Participant during a Restricted Period, the Restricted Period applicable to any outstanding Grant at the date of Termination of Employment shall lapse immediately.

(e) The effect of approved leaves of absence on the running of applicable Restricted Periods shall be determined by the Committee, provided, however, that no Restricted Period shall lapse during an approved leave of absence unless expressly provided by the Committee.

(f) Notwithstanding the other provisions of this Section 3.5, options which have been granted under this Plan to any Company employees who become employed by Lincoln National Corporation or one or more of its subsidiaries or affiliates on or about January 1, 1998 as a result of the sale of the assets of the CIGNA Individual Insurance Division and which options remain unexercised and unexpired as of December 31, 1997, shall not expire before the earlier of (1) 10 years from the date of grant or (2) the later of the close of business on March 31, 1998 or ninety (90) days following the closing of such sale of assets.

3.6 Dividend Equivalent Rights. The Committee shall have the authority to grant dividend equivalent rights to Eligible Employees upon such terms and conditions as it shall establish, subject in all events to the following limitations and provisions of general application:

(a) Each right may relate to a specific option granted under this Plan and may be granted to the optionee either concurrently with the grant of such option or at such later time as determined by the Committee, or each right may be granted independent of any option.

(b) The right shall entitle a holder to receive, for a period of time to be determined by the Committee, a payment equal to the quarterly dividend declared and paid by the Company on one share of Common Stock. If the right relates to a specific option, the period shall not extend beyond the earliest of the date the option is exercised, the date any stock appreciation right related to the option is exercised, or the expiration date set forth in the option.

(c) The Committee shall determine at time of grant whether payment pursuant to a right shall be immediate or deferred and whether it shall be in the form of cash or Common Stock, or a combination of cash and Common Stock. If immediate, the Company shall make payments pursuant to each right within 90 days after the Company has paid the quarterly dividend to holders of Common Stock. If deferred, the payments shall accumulate (with interest computed in a manner to be determined by the Committee) until a date or event specified by the Committee and then shall be made within 90 days after the occurrence of the

7

specified date or event, unless the right is forfeited under the terms of the Plan.

(d) In the event of Termination of Employment (including termination during an approved leave of absence) of a Participant for any reason, any dividend equivalent right held by such Participant at Termination of Employment shall be forfeited, unless otherwise expressly provided by the Committee.

3.7 Common Stock in Lieu of Other Awards. The Committee shall have the authority to award an Eligible Employee Common Stock, including Common Stock awarded by a Grant under Section 3.5, (collectively referred to as a “Stock Payment”) in lieu of all or a portion (determined by the Committee) of an award otherwise payable pursuant to a Qualifying Incentive Plan or Qualifying Supplemental Benefit Plan. The Stock Payment shall comprise the number of shares of Common Stock that have an aggregate Fair Market Value, determined as of the Payment Date, equal to the amount of the award in lieu of which the Stock Payment is made. All Stock Payments shall be subject to the following limitations and provisions of general application:

(a) Unless the Committee, in its sole discretion, provides otherwise, a Stock Payment which has been awarded to a Participant who dies or whose employment otherwise terminates before the Payment Date, shall be paid in the form of Common Stock to the Participant (or to his spouse or estate).

(b) The right to receive all or a portion of Stock Payments in the form of Common Stock shall be deferred if the Participant has elected to defer the award otherwise payable in cash under a Deferred Compensation Plan, subject to the provisions of such Deferred Compensation Plan.

ARTICLE 4
Shares Authorized under the Plan

4.1 Maximum Number Authorized. The number of shares of Common Stock Authorized to be issued pursuant to stock options, rights, Grants or Stock Payments awarded under this Plan is 3,500,000.

4.2 Maximum Number Per Participant. No more than 10% of the maximum number of shares of Common Stock authorized pursuant to this Plan shall be acquired by any one Participant by way of option (including Common Stock subject to option), right, Grant or Stock Payment under this Plan.

4.3 Unexercised Options, Grant Forfeitures and Options Exercised with Common Stock.

(a) All Common Stock (1) under options granted under this Plan which expire or are canceled or surrendered or (2) which is forfeited pursuant to Section 3.5, shall be available for further awards under this Plan upon such expiration, cancellation, surrender or forfeiture; and

(b) Any Common Stock which is used by a Participant as full or partial payment to the Company for the purchase of Common Stock acquired upon exercise of a stock option granted under this Plan, and any shares withheld by the Company to satisfy a Participant’s tax withholding obligations, shall be available for further awards under this Plan.

8

4.4 No Fractional Shares. No fractional shares of Common Stock shall be issued pursuant to this Plan.

4.5 Source of Shares. Common Stock may be issued from authorized but unissued shares or out of shares held in CIGNA Corporation’s treasury, or both.

ARTICLE 5
Antidilution Provisions

Except as otherwise expressly provided herein, the following provisions shall apply to all Common Stock authorized for issuance, and options, granted or awarded under this Plan:

5.1 Stock Dividends, Splits, Etc. In the event of a stock dividend, stock split, or other subdivision or combination of the Common Stock, the number of shares of Common Stock authorized under this Plan will be adjusted proportionately. Similarly, in any such event there will be a proportionate adjustment in the number of shares of Common Stock subject to unexercised stock options (but without adjustment to the aggregate option price) and in the number of shares of Common Stock then subject to Restricted Periods under a Grant.

5.2 Merger, Exchange or Reorganization. In the event that the outstanding shares of Common Stock are changed or converted into, exchanged or exchangeable for, a different number or kind of shares or other securities of CIGNA Corporation or of another corporation, by reason of a reorganization, merger, consolidation, reclassification or combination, appropriate adjustment shall be made by the Committee in the number of shares and kind of Common Stock for which options, rights, Grants and Stock Payments may be or may have been awarded under this Plan, to the end that the proportionate interests of Participants shall be maintained as before the occurrence of such event, provided, however, that in the event of any contemplated transaction which may constitute a Change of Control of CIGNA Corporation, the Committee, with the approval of a majority of the members of the Board of Directors who are not then Participants, may modify any and all outstanding options, rights, Grants and Stock Payments (except those deferred pursuant to Section 3.7(b)), so as to accelerate, as a consequence of or in connection with such transaction, the vesting of a Participant’s right to exercise any such options or stock appreciation right or the unqualified ownership of Common Stock subject to a Grant or the accelerated payment of any deferred dividend equivalent rights.

ARTICLE 6
Administration of Plan

6.1 General Administration. The Plan is to be administered by the Committee, subject to such requirements for review and approval by the Board of Directors as the Board of Directors may establish.

6.2 Administrative Rules. The Committee shall have the power and authority to adopt, amend and rescind administrative guidelines, rules and regulations pertaining to this Plan and to interpret and rule on any questions respecting any provision of this Plan.

9

6.3 Committee Members Not Eligible. No member of the Committee shall be eligible to participate in this Plan.

6.4 Decisions Binding. Decisions of the Committee concerning this Plan shall be binding on CIGNA Corporation and its Subsidiaries and their respective boards of directors, and on all Eligible Employees and Participants.

ARTICLE 7
Amendments

All amendments to this Plan shall be in writing and shall be effective when approved by the Board of Directors, provided, however, that an amendment shall not be effective without the prior approval of the shareholders of CIGNA Corporation if such approval is necessary under Internal Revenue Service or Securities and Exchange Commission regulations, or the rules of the New York Stock Exchange or any applicable law. The Board of Directors may make any changes required to conform this Plan and option agreements with applicable provisions of the Internal Revenue Code or regulations thereunder pertaining to Incentive Stock Options. Unless otherwise expressly provided by an amendment or the Board of Directors, no amendment to this Plan shall apply to grants of options, rights or Restricted Stock made before the effective date of the amendment.

ARTICLE 8
Other Provisions

8.1 Effective Date. This Plan is effective on May 1, 1991 (the “Effective Date”).

8.2 Duration of the Plan. The Plan shall remain in effect until all options and rights granted under this Plan have been satisfied by the issuance of Common Stock, or terminated under the terms of this Plan, provided that options, rights, Grants and Stock Payments under this Plan must be awarded on or after the Effective Date.

8.3 Early Termination. Notwithstanding the provisions of Section 8.2, the Board of Directors may terminate this Plan at any time; but no such action by the Board of Directors shall adversely affect the rights of Participants which exist under this Plan immediately before its termination.

8.4 General Restriction. No Common Stock issued pursuant to this Plan shall be sold or distributed by a Participant until all appropriate listing, registration and qualification requirements and consents and approvals have been obtained, free of any condition unacceptable to the Board of Directors.

8.5 Awards Not Assignable.

(a) No derivative security (as defined in rules promulgated under Section 16 of the Securities Exchange

10

Act of 1934), including any right to receive Common Stock (such as options, stock appreciation rights or similar rights) or any right to payment pursuant to this Plan, shall be assignable or transferable by a Participant except by will or by the laws of descent and distribution. Any other attempted assignment or alienation shall be void and of no force or effect. Any right to receive Common Stock or any other derivative security (including options, stock appreciation rights or similar rights) shall be exercisable during a Participant’s lifetime only by the Participant or by the Participant’s guardian or legal representatives.

(b) Notwithstanding the restrictions set forth above in Section 8.5(a), the Committee shall have the authority, in its discretion, to grant (or to sanction by way of amendment of an existing grant, including, without limitation, grants made before the effective date of this Section 8.5(b)) derivative securities which may be transferred without consideration by the Participant during his lifetime to any member of his immediate family, to a trust established for the exclusive benefit of one or more members of his immediate family, to a partnership of which the only partners are members of his immediate family, or to such other person as the Committee shall permit. In the case of a grant, the written documentation containing the terms and conditions of such derivative security shall state that it is transferable, and in the case of an amendment to an existing grant, such amendment shall be in writing. A derivative security transferred as contemplated in this Section 8.5(b) may not be subsequently transferred by the transferee except by will or the laws of descent and distribution and shall continue to be governed by and subject to the terms and limitations of the Plan and the relevant grant. However, the Committee, in its sole discretion at the time the transfer is approved, may alter the terms and limitations of the relevant grant and establish such additional terms and conditions as it shall deem appropriate. As used in this subparagraph, “immediate family” shall mean, with respect to any person, a spouse, any child, stepchild or grandchild, and shall include relationships arising from legal adoption.

8.6 Withholding Taxes. Whenever Common Stock is to be issued or delivered in satisfaction of options or other awards granted hereunder, the Company shall have the right to require the Participant to remit an amount sufficient to satisfy federal, state and local withholding taxes prior to delivery of any certificate for such shares. The Committee may require, or permit, the Participant to remit such amount in whole or in part in Common Stock. If the Committee permits a Participant to elect to remit such amount in Common Stock, any such election shall be made on or prior to the date the withholding obligation arises and be subject to the disapproval of the Committee. The Committee may establish such additional conditions as it deems appropriate. If the Participant remits such amount in Common Stock, the number of shares of Common Stock delivered to or on behalf of a Participant shall be reduced by the number of shares so remitted. Common Stock so remitted shall be valued using the Fair Market Value of Common Stock as of the date the withholding obligation arises.

8.7 Safekeeping of Certificates. The certificate evidencing Common Stock awarded by a restricted stock grant or purchased upon exercise of an option shall be retained for safekeeping by the Company, or by a custodian appointed by the Company, except the Committee may in its discretion cause the certificate to be delivered to the Participant after a restricted stock grant or a purchase upon exercise of an option. The Company will deliver any such retained certificates that are not subject to a Restricted Period to the Participant within a reasonable period after a Participant requests delivery of such certificates.

11

EX-10

                                                                 Exhibit 10.9(a)

                         CIGNA SUPPLEMENTAL PENSION PLAN
                 (Amended and Restated effective August 1, 1998)


     CIGNA  Corporation,  for itself and its  subsidiaries  and affiliates which
participate  in the CIGNA  Pension  Plan,  established  the  CIGNA  Supplemental
Pension Plan,  effective  January 1, 1983, to provide  eligible  employees  with
retirement  benefits  which cannot be provided by the CIGNA Pension Plan because
of certain restrictions.

     This Plan is an "excess  benefit  plan"  under ERISA  section  3(36) and an
unfunded  plan  maintained  primarily  for the  purpose  of  providing  deferred
compensation  for a select group of management or highly  compensated  employees
under ERISA section 401(a)(1).

     CIGNA is amending  and  restating  the Plan in its  entirety to reflect the
adoption of a new benefit  accrual  formula  under the CIGNA  Pension Plan as of
January 1, 1998 and the  expansion  of benefit  distribution  options  effective
August 1, 1998.


Article I      Definitions
               -----------

     Except as otherwise provided in this document,  Plan terms with capitalized
initial  letters shall have the same  definitions  as in the CIGNA Pension Plan.
The following definitions apply to this Plan:

1.1    "Beneficiary" means the person(s) (or trust) designated by a Participant,
       or determined by the Plan Administrator, under Section 4.7.

1.2    "CIGNA"  means  CIGNA  Corporation,   a  Delaware  corporation,   or  its
       successor.

1.3    "Committee"  means the Corporate  Benefit Plan  Committee of CIGNA,  or a
       successor  committee  or person  designated  by CIGNA's  Chief  Executive
       Officer.

1.4    "Company"  means  CIGNA  Corporation  and those of its  subsidiaries  and
       affiliates which participate in the CIGNA Pension Plan.

1.5    "Deferred  Compensation  Plan" means the  Deferred  Compensation  Plan of
       CIGNA  Corporation,   any  successor  plan,  and  any  similar  plans  or
       arrangements maintained by the Company.

1.6    "Participant"  means any Eligible Employee who is eligible to participate
       in the Plan but only to the extent that the employee has (or might in the
       event of  Retirement  at his  earliest  Early  Retirement  Date under the
       Pension Plan have) an Accrued Benefit as defined in Section 3.1.


1.7    "Plan" means the CIGNA Supplemental Pension Plan, as amended and restated
       effective August 1, 1998.

1.8    "Plan A  Participant"  means,  beginning  January 1, 1998, a  Participant
       whose Pension Plan benefit does not accrue under the formula described in
       the Part B version of the Pension Plan.

1.9    "Plan B  Participant"  means,  beginning  January 1, 1998, a  Participant
       whose Pension Plan benefit does accrue under the formula described in the
       Part B version of the Pension Plan.

1.10   "Pension  Plan" means the CIGNA Pension Plan, a defined  benefit  pension
       plan, or its successor plan(s).

1.11   "Rabbi  Trust"  means a grantor  trust,  the  assets of which will not be
       subject to the claims of creditors of the Company,  except in the case of
       the bankruptcy or insolvency of the Company.

1.12   "Supplemental  Pension  Benefit"  means  the  benefit  payable  to a Plan
       Participant as described in Section 3.1.

1.13   "Supplemental  Pre-Retirement Surviving Spouse Benefit" means the benefit
       payable to Participant's surviving Spouse as described in Section 4.3.

1.14   "Survivor"  means a  Participant's  Spouse or other person  designated in
       writing  by the  Participant  under  procedures  established  by the Plan
       Administrator,  to the extent the Spouse or other person  remains  living
       after the Participant's death.

1.15   "Financial  Emergency"  means a  Participant's  severe and  unforeseeable
       financial  hardship,  resulting from a sudden and  unexpected  illness or
       accident,   casualty  loss,   sudden  financial   reversal,   or  similar
       unforeseeable  occurrence  arising  as a  result  of  events  beyond  the
       Participant's  control.  Cash needs arising from foreseeable events (such
       as the purchase of a home or educational expenses for children) shall not
       be considered to be a Financial Emergency.


Article II     Eligibility
               -----------

     All Eligible  Employees of the Company who are  participants in the Pension
Plan  shall be  eligible  to  participate  in this  Plan.  In no event  shall an
employee who is not  entitled to benefits  under the Pension Plan be entitled to
benefits under this Plan.

                                       2

Article III    Supplemental Pension Benefit
               ----------------------------

3.1    Accrual of Benefit
       ------------------

(a)    A Participant  shall accrue a Supplemental  Pension  Benefit equal to the
       excess of (1) over (2) where:

       (1)    is the  Accrued  Benefit  the  Participant  would  have  under the
              Pension Plan if the Pension Plan did not have:

              (A)    a limit on retirement benefits under Code section 415;

              (B)    a limit on compensation under Code section 401(a)(17); and

              (C)    an  exclusion  from  Eligible   Earnings  of   compensation
                     deferred under the Deferred Compensation Plan; and

       (2)    is the  Participant's  actual  Accrued  Benefit  under the Pension
              Plan.

(b)    For a Plan A Participant,  the Supplemental Pension Benefit shall include
       the actuarial  lump sum present  value  determined  using the  applicable
       assumptions  and methods  under the Pension  Plan (as modified by Section
       3.3) as of the date of payment, of the excess of (1) over (2) where:

       (1)    is the  post-retirement  surviving  Spouse  benefit which would be
              payable to the Spouse  under the Pension  Plan if the Pension Plan
              did not have the provisions  listed in Section 3.1 (a)(1)(A),  (B)
              and (C); and

       (2)    is the post-retirement  surviving Spouse benefit which is actually
              payable under the Pension Plan.

3.2    Vesting
       -------

The vesting of a Participant's  Supplemental Pension Benefit shall be subject to
the Pension Plan's vesting provisions.

3.3    Calculation of Benefits
       -----------------------

For all  calculations  of actuarial  equivalence  under the Plan, the applicable
actuarial factors and methods described in the Pension Plan shall be used except
that, for Plan A  Participants,  the Applicable  Interest Rate shall be the same
rate(s) used, for the applicable time period(s),  to calculate the present value
of pension benefits  guaranteed by the Pension Benefit  Guaranty  Corporation in
case of a plan termination.

                                       3


3.4    Coordination with Other Retirement Benefits
       -------------------------------------------

The  Supplemental  Pension  Benefit shall be added to, and treated as being part
of, the benefits  payable to a Participant (or a Spouse or a Beneficiary)  under
the Pension Plan when applying  provisions of other  Company  retirement  plans,
arrangements or agreements which provisions  reduce benefits payable under these
plans,  arrangements  or agreements by the amount of benefits  payable under the
Pension Plan.

3.5    Duration of Accruals
       --------------------

No Participant  shall accrue any  Supplemental  Pension  Benefit under this Plan
during any period in which  benefit  accruals  under the Pension  Plan have been
suspended or after benefit accruals under the Pension Plan have ceased.


Article IV          Payment of Benefits
                    -------------------

4.1    Standard Form of Benefits
       -------------------------

(a)    Except as provided in Section 4.2, the Supplemental Pension Benefit under
       Section 3.1 shall be paid to the Participant in the form of a single lump
       sum in the January following Participant's termination of employment from
       the Company or, if later,  the  January  following  the year in which the
       Participant reaches age 55.

(b)    The  amount  of the  single  lump sum  payment  shall be the  actuarially
       equivalent  present value,  determined as of the date of payment,  of (1)
       the Supplemental  Pension Benefit described in Section 3.1(a) and (2) for
       a Plan A Participant,  the amount described in Section 3.1(b),  with both
       (1) and (2) stated in the form of a single life annuity.

4.2    Optional Payment Methods; Optional Payment Date
       -----------------------------------------------

(a)    A Participant may request that the Supplemental  Pension Benefit be paid,
       beginning  on  the  dates  described  in  Section  4.1(a),  in one of the
       following Optional Payment Methods:

       (1)    Single life annuity for the Participant's life;

       (2)    Life  annuity  for  the  Participant's  life  with a 50%  or  100%
              contingent Survivor annuity;

       (3)    Annual  installments  for five,  ten or  fifteen  years  (with any
              remaining   installments  after  Participant's  death  payable  to
              Participant's Beneficiary).

                                       4


       The  contingent  Survivor  annuity  under  paragraph  4.2(a)(2)  shall be
       payable to the Participant's Survivor only if the Participant predeceases
       the Survivor and shall be paid in monthly  installments  beginning in the
       month  following  the  Participant's  death  and  ending in the month the
       Participant's Survivor dies.

(b)    Regardless  whether the  Participant  has  requested an Optional  Payment
       Method under Section  4.2(a),  a Participant may request that the date of
       payment under Section 4.1 or the date payments begin under Section 4.2(a)
       be  postponed  to January of any later  year,  but no later than the year
       after the Participant reaches age 70.

(c)    A Participant's  request for payment of the Supplemental  Pension Benefit
       in an Optional Payment Method,  or for a postponed payment date, shall be
       made in writing to the Plan  Administrator.  The request must be received
       by the Plan  Administrator  no later  than the  earlier  of (1) 13 months
       before  the  earliest  scheduled  date of  payment  or (2)  Participant's
       termination of employment date.

(d)    Notwithstanding  Section 4.2(c), the Plan  Administrator may provide,  as
       soon as is reasonably  practicable  after August 1, 1998, to Participants
       whose  Supplemental  Pension  Benefit  payments  have not yet  started an
       opportunity to request an Optional Payment Method or a postponed  payment
       date,  or both, or to revoke or modify a prior  election.  The nature and
       duration  of  that   opportunity   shall  be   determined   by  the  Plan
       Administrator in its sole and absolute discretion.

(e)    A Participant  may,  before his  termination of employment  date,  make a
       written request to the Plan Administrator for an Optional Payment Method,
       a change to another  Optional  Payment Method or a change to the standard
       single lump sum form of benefit under Section 4.1.

(f)    The Plan  Administrator  shall  consider any request  made under  Section
       4.2(a),  (b), (d) or (e). In  determining  whether the request  should be
       granted, the Plan Administrator shall consider:

       (1)    the Participant's  financial needs, including any other sources of
              retirement income;

       (2)    the needs and financial security of the Participant's dependents;

       (3)    the projected financial needs of the Company; and

       (4)    for  requests  under  Section  4.2(e),   any  changed  or  unusual
              circumstances (such as the Participant's  involuntary  termination
              of employment).

       If  the  Plan  Administrator,   in  its  sole  and  absolute  discretion,
       determines  that the  request  should be granted,  the  request  shall be
       deemed to be an election by the Participant, effective as of the date the
       Plan Administrator received the Participant's request, and payment of the

                                       5


       Participant's  Supplemental  Pension Benefit shall be in the form, and at
       the time, requested by the Participant.

4.3    Pre-Retirement Death Benefits - Plan A Participants
       ---------------------------------------------------

(a)    If a Plan A Participant who dies before the Supplemental  Pension Benefit
       payment  has been made under  Section 4.1 (or before the date as of which
       payments have commenced under Section 4.2) has a surviving  Spouse who is
       eligible for a pre-retirement  surviving Spouse benefit under the Pension
       Plan, then the Spouse shall be eligible for a Supplemental Pre-Retirement
       Surviving Spouse Benefit under this Plan (if the amount  calculated under
       Section 4.3(c) is greater than zero).

(b)    The Supplemental Pre-Retirement Surviving Spouse Benefit shall be paid to
       the eligible Spouse as soon as practicable after the Participant's death.
       The form of payment shall be:

       (1)    A single lump sum if the  Participant  had not elected an Optional
              Payment Method under Section 4.2(a);

       (2)    Annual installments for the period selected by the Participant, if
              the  Participant  had elected an  Optional  Payment  Method  under
              Section 4.2(a)(3); or

       (3)    Annual installments for 15 years (with any remaining  installments
              payable to the Spouse's  Beneficiary if the Spouse dies before all
              installments  are paid),  if the  Participant  elected an Optional
              Payment Method under Section 4.2(a)(1) or (2).

(c)    The amount of the  Supplemental  Pre-Retirement  Surviving Spouse Benefit
       shall be equal to the  actuarial  present  value,  determined  using  the
       applicable assumptions and methods under the Pension Plan (as modified by
       Section  3.3) as of the date of  payment,  of the  excess of (1) over (2)
       where:

       (1)    is the  pre-retirement  surviving  Spouse  benefit  which would be
              payable to the Spouse  under the Pension  Plan if the Pension Plan
              did not have the provisions  listed in Section 3.1 (a)(1) (A), (B)
              and (C) of this Plan; and

       (2)    is the  pre-retirement  surviving Spouse benefit which is actually
              payable under the Pension Plan.

4.4    Pre-Retirement Death Benefits - Plan B Participants
       ---------------------------------------------------

(a)    If a Plan B  Participant  dies before the  Supplemental  Pension  Benefit
       payment  has been made under  Section 4.1 (or before the date as of which
       payments  have   commenced   under  Section   4.2),   the   Participant's
       Supplemental   Pension  Benefit  shall  be  paid  to  the   Participant's

                                       6



       Beneficiary as soon as practicable  after the  Participant's  death.  The
       form of payment shall be:

       (1)    A single lump sum if the  Participant  had not elected an Optional
              Payment Method under Section 4.2(a);

       (2)    Annual installments for the period selected by the Participant, if
              the  Participant  had elected an  Optional  Payment  Method  under
              Section 4.2(a)(3); or

       (3)    Annual installments for 15 years (with any remaining  installments
              payable to the  Beneficiary's  Beneficiary if the Beneficiary dies
              before all installments  are paid), if the Participant  elected an
              Optional  Payment Method under Section  4.2(a)(1) or (2).

4.5    Lump Sum Benefits
       -----------------

(a)    At the sole discretion of the Plan Administrator, any benefits payable to
       the Participant under Section 4.1, to Participant's  Spouse under Section
       4.3 or to Participant's  Beneficiary  under Section 4.4 which at any time
       either  (1) have a lump sum  present  value of less than  $25,000  or (2)
       result in monthly  installments of less than $250 each may be commuted to
       a  single  lump  sum  payment  and paid to the  Participant,  Spouse,  or
       Beneficiary as appropriate.

(b)    A Plan A Participant  who is paid a Supplemental  Pension  Benefit in the
       form of a single lump sum under Sections 4.1, 4.5 or 4.6 and who is later
       rehired by any Company  shall not,  upon  subsequent  Retirement or other
       termination  of employment,  be entitled to any  additional  Supplemental
       Pension  Benefit under this Plan based upon any Credited  Service used in
       the  calculation of the initial  Supplemental  Pension  Benefit  payment.
       Furthermore,  any Credited Service that is or would be disregarded  under
       the preceding  sentence in computing a Plan A Participant's  Supplemental
       Pension  Benefit  shall also be  disregarded  in  computing  any benefits
       payable to  Participant's  Spouse under Sections 4.3 after  Participant's
       reemployment.

(c)    A Plan B Participant  who is paid a Supplemental  Pension  Benefit in the
       form of a single lump sum under Sections 4.1, 4.5 or 4.6 and who is later
       rehired by any Company  shall not,  upon  subsequent  Retirement or other
       termination  of employment,  be entitled to any  additional  Supplemental
       Pension  Benefit  under  this Plan  based  upon any  Benefit  Credits  or
       Interest  Credits  used in the  calculation  of the initial  Supplemental
       Pension Benefit  payment.  Furthermore,  any Credits that are or would be
       disregarded   under  the  preceding   sentence  in  computing  a  Plan  B
       Participant's  Supplemental  Pension Benefit shall also be disregarded in
       computing any benefits payable to Participant's Beneficiary under Section
       4.4 after Participant's reemployment.

                                       7

4.6    Emergency Payment
       -----------------

(a)    Section 4.6 shall apply only to a Participant who has elected to postpone
       the date of payment (or the date payments begin) under Section 4.2(b) and
       only  after  the  later  of the date the  Participant  reaches  age 55 or
       terminates employment with the Company.

(b)    Before  the  date of  payment  of a  Participant's  Supplemental  Pension
       Benefit (or the date  payments  are to begin  under an  Optional  Payment
       Method), a Participant may request an accelerated  payment of all or part
       of the Supplemental  Pension Benefit to meet a Financial  Emergency.  The
       request  must  be in  writing  to the  Plan  Administrator  and  must  be
       supported by evidence of a Financial  Emergency.  The Plan  Administrator
       shall  have  sole  and   absolute   discretion   to  grant  or  deny  the
       Participant's request. If the request is granted, the accelerated payment
       shall  not be more  than the  lesser  of  $50,000  or the  amount  deemed
       necessary  by the  Plan  Administrator  to meet  Participant's  Financial
       Emergency.

(c)    Any payments  under this Section 4.6 shall reduce any remaining  benefits
       to, or related to, the Participant under this Plan.

4.7    Beneficiaries
       -------------

The Plan  Administrator  shall provide an opportunity a Participant to designate
in writing one or more  Beneficiaries  to receive Plan  benefits  following  the
Participant's  death,  and to change any  designations.  If a  Participant  dies
without  a  surviving,  validly  designated  Beneficiary  and all or part of the
Participant's  Accrued Benefit remains payable, the benefit shall be paid to the
Participant's  surviving  Spouse  or, if there is no  surviving  Spouse,  to the
Participant's estate.

4.10   Domestic Relations Orders
       -------------------------

A person  shall not qualify for a benefit  under this Plan solely  because he is
entitled to a benefit under the Pension Plan by reason of a "qualified  domestic
relations order" (as defined in ERISA section 206). Notwithstanding Section 7.3,
the Plan  Administrator  shall have the sole and absolute  discretion  to comply
with the terms of a domestic  relations  order if the Plan  Administrator  deems
compliance to be in the interests of the Participant and the Company.

4.11   Tax Withholding
       ---------------

Plan payments,  and under certain  circumstances an accrued Supplemental Pension
Benefit not yet paid, may be subject to withholding for taxes. To the extent the
Company meets any  withholding  obligations by paying the required  withholding,
the Participant's Supplemental Pension Benefit shall be reduced by the amount of
the Company's payment.

                                       8

Article V      Funding
               -------

5.1    In General
       ----------

(a)    This Plan shall be  maintained  as an unfunded plan which is not intended
       to meet the qualification requirements of Code section 401. Plan benefits
       shall be payable  solely  from the general  assets of the  Company  which
       employs the Participant when benefits are accrued, or a Company which has
       assumed  liability for paying the  benefits.  No separate or special fund
       shall be established and no segregation of assets shall be made to assure
       the payment of Plan benefits,  though the Company may choose to fund Plan
       benefits through a Rabbi Trust. A Participant shall have no right, title,
       or interest in or to any investments which the Company may make to aid in
       meeting its obligations under this Plan.

(b)    Nothing contained in the Plan, and no action taken under it, shall create
       or  be  construed  to  create  a  trust  of  any  kind,  or  a  fiduciary
       relationship,  between  the  Company  or  the  Plan  Administrator  and a
       Participant or any other person. To the extent that any person acquires a
       right to receive Plan  benefits,  that right shall be no greater than the
       right of an unsecured creditor of the Company.


Article VI     Administration
               --------------

6.1    Plan Administrator
       ------------------

(a)    The Plan shall be administered by a Plan  Administrator  appointed by the
       Committee,  or its designee. The Plan Administrator shall have full power
       and authority to interpret the Plan; to prescribe,  amend and rescind any
       rules,  forms and procedures as it deems necessary or appropriate for the
       proper  administration  of the  Plan;  to make any  other  determinations
       including  factual  determinations  and  determinations as to eligibility
       for, and the amount of, benefits  payable under the Plan; and to take any
       other actions it deems  necessary or advisable in carrying out its duties
       under the Plan.

(b)    All   decisions,   interpretations   and   determinations   by  the  Plan
       Administrator shall be final and binding on the Company, Participants and
       any other persons having or claiming an interest under this Plan.

6.2    Amendment or Termination
       ------------------------

Subject to Section 6.3,  CIGNA,  through its Board of  Directors,  or the People
Resources  Committee of the Board of Directors (or a successor  committee),  may
amend or terminate  this Plan at any time,  in whole or in part. No amendment or
termination shall impair or adversely affect any benefits accrued under the Plan
in which the Participant was vested as of the date of that action.

                                       9

6.3    Change of Control
       -----------------

For a three  (3) year  period  beginning  on the  effective  date of a Change of
Control and as to Participants on that date:

(a)    the Plan shall not be terminated;

(b)    the  accrual  of  Supplemental  Pension  Benefits  shall not be  stopped,
       suspended or otherwise adversely affected; and

(c)    the rate at which  Supplemental  Pension  Benefits  accrue  shall  not be
       reduced.

CIGNA  reserves the right to amend or eliminate  this  paragraph 6.3 at any time
before a Change of Control.


Article VII    Miscellaneous
               -------------

7.1    Notices
       -------

A Participant shall be responsible for providing the Plan Administrator with his
current  and proper  address  for the  mailing of  notices,  reports and benefit
payments.  Any notice shall be deemed given if directed to a person's last known
address and mailed by regular United States mail,  first-class  and prepaid.  If
any check mailed to that address is returned as  undeliverable to the addressee,
mailing  of checks  will be  suspended  until the  Participant,  Beneficiary  or
Survivor provides the proper address.

7.2    Missing Persons
       ---------------

A  benefit  shall be deemed  forfeited  if the Plan  Administrator  is unable to
locate the  Participant,  Beneficiary  or Survivor to whom payment is due, after
reasonably  diligent effort for a period of at least two (2) years, but the Plan
Administrator shall have the authority (but not the obligation) to reinstate the
benefit upon the later discovery of a proper payee for the benefit. Mailing of a
notice in writing, by certified or registered mail, to the last known address of
the  Participant,  Beneficiary or Survivor (if the address of the Beneficiary or
Survivor is known to the Plan  Administrator) not less frequently than once each
year for the two-year period shall be deemed a reasonably diligent effort.

7.3    Nonalienation of Benefits
       -------------------------

None of the  payments,  benefits or rights of any  Participant,  Beneficiary  or
Survivor  shall be subject to any claim of any creditor.  To the fullest  extent
permitted  by law,  all Plan  payments,  benefits  and rights shall be free from
attachment,  garnishment,  trustee's  process,  or any other legal or  equitable

                                       10



process  available to any creditor of the Participant,  Beneficiary or Survivor.
No  Participant,  Beneficiary  or  Survivor  shall  have the right to  alienate,
anticipate,  commute, pledge, encumber or assign any of the benefits or payments
which he may expect to receive under this Plan,  except the right, to the extent
applicable,  to designate a Beneficiary  or Survivor and change a Beneficiary or
Survivor designation.

7.4    Reliance on Data
       ----------------

The Company,  the Plan  Administrator and all other persons  associated with the
Plan's  operation  shall have the right to rely on the  veracity and accuracy of
any data  provided  under  this  Plan or the  Pension  Plan by the  Participant,
Beneficiary or Survivor, including representations as to age, health and marital
status.  These  representations  are binding  upon any party  seeking to claim a
benefit through a Participant. The Company, the Plan Administrator and all other
persons  associated  with the Plan's  operation  are  absolved  completely  from
inquiring   into,   and  may  rely  upon,   the  accuracy  or  veracity  of  any
representation made at any time by a Participant, Beneficiary or Survivor.

7.5    No Contract of Employment
       -------------------------

Neither the establishment of the Plan, nor any Plan amendment,  nor the creation
of any  fund,  trust  or  account,  nor the  payment  of any  benefits  shall be
construed  as  giving  any  Participant,  or any other  person,  the right to be
employed or continue to be employed by the  Company,  and all  Participants  and
other  persons  shall  remain  subject to discharge to the same extent as if the
Plan had never been adopted.

7.6    Effect on Other Plans
       ---------------------

Except as provided in the Plan,  no Plan benefit shall be deemed salary or other
compensation  in computing  benefits  under any  employee  benefit plan or other
arrangement of the Company.

7.7    Severability of Provisions
       --------------------------

If any  provision  of the  Plan  shall be held  invalid  or  unenforceable,  the
invalidity or unenforceability  shall not affect any other Plan provisions,  and
the Plan shall be  construed  and  enforced  as if that  provision  had not been
included.

7.8    Heirs, Assigns and Personal Representatives
       -------------------------------------------

The Plan shall be binding upon the heirs, executors, administrators,  successors
and assigns of the parties, including each Participant, Beneficiary or Survivor,
present and future.

                                       11

7.9    Payments to Minors, Etc.
       ------------------------

Any benefit payable to or for the benefit of a minor,  an incompetent  person or
other person  incapable of legally  accepting  receipt shall be deemed paid when
paid to the person's guardian or to the party providing or reasonably  appearing
to provide for the care of the person,  and that payment  shall fully  discharge
the Company, the Plan Administrator and all other parties regarding that benefit
payment.

7.10   Headings and Captions
       ---------------------

The headings and captions in the Plan are provided for reference and convenience
only, shall not be considered part of the Plan, and shall not be employed in the
construction of the Plan.

7.11   Gender and Number
       -----------------

Except where  otherwise  clearly  indicated by context,  the  masculine  and the
neuter shall include the feminine and the neuter, the singular shall include the
plural, and vice-versa.

7.12   Controlling Law
       ---------------

The  Plan  shall  be  construed  and  enforced  according  to  the  laws  of the
Commonwealth of Pennsylvania,  to the extent not preempted by federal law, which
shall otherwise control.



                                       12

EX-10

Exhibit 10.10

Description of CIGNA Corporation
Financial Services Program

        The CIGNA Financial Services Program (“Program”) is designed to maximize the value of CIGNA’s compensation and benefits program by providing support to key employees in their financial and estate planning. Under the Program, key employees are provided an allowance, related to the employee’s job grade, that may be applied to the cost of financial planning and used for reimbursement of expenses for tax return preparation and legal services related to estate or financial planning. The allowance for the chief executive officer and certain employees who report to him covers the full amount of such costs and expenses.

EX-10

Exhibit 10.16

AGREEMENT AND RELEASE

        This Agreement and Release (Agreement) is dated as of October 21, 2003 (Today), and is between Donald M. Levinson, (you), and CIGNA Corporation, a Delaware corporation (the Company).

        You and the Company intend to be legally bound by the Agreement, and are entering into it in reliance on the promises made to each other in the Agreement. Under the Agreement, your employment will end, and you and the Company agree to settle all issues concerning your employment and termination of employment. The Company will pay you certain benefits described in this agreement and release certain claims against you. In turn, you are releasing certain legal claims against the Company.

        1.        Your Retirement Date. Your employment with the Company will end on December 31, 2003 (the Retirement Date).

        2.        Your Promises to the Company.

a. Terms used in paragraph 2 are defined as follows:

(1) “CIGNA” means the Company and any subsidiaries and/or affiliates of the Company.

(2) “Confidential Information” means any knowledge, information or materials relating to the Company or the Division about their products, services, know-how, customers, business plans, or financial, marketing, pricing, compensation and other proprietary matters, whether or not subject to trademark, copyright, trade secret or other protection, that you obtained during the course of your employment with the Company.

(3) “Division” means the CIGNA Human Resources & Services Division.

b. You agree that, other than in the good faith performance of your services to CIGNA before the Retirement Date, you will not disclose any Confidential Information to anyone other than CIGNA employees or use any Confidential Information for your benefit or the benefit of any other person, firm, operation or entity unrelated to CIGNA except to the extent disclosure is or may be required (1) by a statute, by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with actual or apparent jurisdiction to order you to divulge, disclose or make accessible such information; (2) in connection with any litigation, mediation or arbitration involving this Agreement, including enforcement of this Agreement; or (3) with respect to any cooperation provided by

you pursuant to paragraph 2.g. After an item of Confidential Information has become public knowledge or known generally in the industry, you shall have no further obligation under this paragraph 2.b regarding that information so long as you were in no manner responsible, directly or indirectly, for permitting the information to become public knowledge or known within the industry without CIGNA’s consent.

c. Until December 31, 2005, you will not, within any part of the United States or any other country where CIGNA currently conducts business:

(1) engage directly or indirectly, in any capacity (including, but not limited to owner, sole proprietor, partner, shareholder (unless your holding is for investment purposes only and is limited to less than 1% of the total combined voting power of all shares), employee, agent, consultant, officer or director) in any business that competes with the Company without prior written consent of the Chief Executive Officer of CIGNA Corporation, which consent shall not be unreasonably withheld, or

(2) solicit in any manner:

(a) any CIGNA employees, either to terminate employment with CIGNA or to become employed, as an employee or independent contractor, by you or by any business that you may become employed by, or affiliated in any way with, after leaving CIGNA; or

(b) Any of CIGNA’s customers (that you know or have reason to know are CIGNA customers as of the Retirement Date) to (a) terminate or reduce any business arrangements in effect with CIGNA on your Retirement Date or (b) to enter into any new business arrangements with you or any business that employs or becomes affiliated with you after you leave CIGNA, if such new business arrangements would adversely affect in any way any business arrangements with any CIGNA customer that CIGNA either has Today or has been planning during the three-month period ending Today.

The Company agrees that it shall not be a violation of paragraph 2.c(2) if: (a) you provide a personal reference for any CIGNA employee setting forth your personal views about the employee, provided you make it clear in any such reference that you are not speaking for CIGNA; or (b) an entity that employs or becomes affiliated with you hires a CIGNA employee, provided you are not involved in hiring the employee or identifying the employee as a potential recruit and you do not assist in recruiting the employee for the entity.

The Company agrees that it shall not be a violation of paragraph 2.c merely because an entity that employs or becomes affiliated with you (x) has a pre-

2

existing relationship with a CIGNA customer or (y) responds to a solicitation for a proposal from a CIGNA customer, so long as you are not significantly involved in the development or delivery of the proposal.

d. You agree that the duration, area and scope of activities restricted under paragraphs 2.b and 2.c are reasonable and necessary to protect the Company’s legitimate business interests and that, if any court or arbitrator determines that paragraphs 2.b or 2.c or any part of them is unenforceable because of the duration, area or scope of activities restricted, then the court or arbitrator shall have the power to reduce the duration, area or scope to the maximum allowed by applicable law and, in its reduced form, the provision shall then be enforced and you will abide by the provision as altered.

e. From your Retirement Date until December 31, 2004, you agree that:

1) You will be subject to the same CIGNA stock trading window periods that apply to senior CIGNA officers;

2) You will continue to clear all trades involving CIGNA Corporation stock with the Corporate Secretary; and

3) During any one window period, you will not sell more than 25% of the combined number of shares of CIGNA Corporation common stock that (1) you own on your Retirement Date and (2) are issued to you within 30 days after your Retirement Date.

From and after your Retirement Date, you agree not to sell more than 15,000 shares of CIGNA Corporation common stock during any one day.

f. (1) You shall be entitled to indemnification by the Company (and, if applicable, any other Company affiliate) to the fullest extent permitted or authorized by its (or their) by-laws against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred or sustained by you, in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative, to which you may be made a party (or are threatened to be made a party) (each a Proceeding), by reason of your having been an officer, employee or director of the Company or an officer, employee or director of any other Company affiliate (including service at the request of or on behalf of CIGNA as a director, officer, member, employee, consultant or agent of another corporation, limited liability corporation, partnership, joint venture, trust or other entity, including service with respect to employee benefit plans), whether or not the basis of such Proceeding is your alleged action in an official capacity while serving in

3

such capacities, and such indemnification shall continue as to you even though you have ceased to be an officer, member, employee, consultant or agent of CIGNA or any other entity and shall inure to the benefit of your heirs, executors and administrators.

(2) The Company or applicable affiliate shall advance to you all reasonable costs and expenses that you incur in connection with any Proceeding as provided under the by-laws of the Company or applicable affiliate after receipt by the Company of a written request for such advance that includes an undertaking by you to repay the amount of such advance if it shall ultimately be determined that you are not entitled to be indemnified against such costs and expenses. The amount of such obligation to repay shall be limited to the after-tax amount of any such advance except to the extent you are able to offset such taxes incurred on the advance by the tax benefit, if any, attributable to a deduction for repayment.

(3) Neither the failure of the Company or any Company affiliate (including their respective boards of directors, independent legal counsel or stockholders) to have made a determination prior to the commencement of any Proceeding concerning payment of amounts claimed by you under paragraph 2.f(1) above that indemnification of you is proper because you have met the applicable standard of conduct, nor a determination by the Company or any Company affiliate (including their respective boards of directors, independent legal counsel or stockholders) that you have not met such applicable standard of conduct, shall create a presumption or inference that you have not met the applicable standard of conduct.

(4) Nothing in this paragraph 2.f shall be construed as reducing or waiving any right to indemnification, or advancement of expenses, you would otherwise have under the by-laws of the Company or any affiliate or any rights you may have under any directors’ and officers’ liability policies maintained by the Company or any affiliates.

g. You agree to make yourself reasonably available to the Company in connection with any legal proceedings relating to CIGNA in which you may have knowledge of potentially relevant facts because of your employment with the Company, and the Company agrees to accommodate reasonably your other personal and business commitments. The Company shall reimburse you for all reasonable expenses that you incur (including the costs of travel and meals) in connection with your making yourself available to it or its counsel to provide information or to testify. For the first ten days (not necessarily consecutive, and including partial days) that you spend in so providing information or testifying, you shall not be compensated for such time. Thereafter, the Company shall pay you $750.00 for each day (or

4

part of a day) as compensation for your time in providing information or testifying.

h. Prior to your Retirement Date, you will return to CIGNA any CIGNA property that you now have (for example: identification card, access card, office keys, company manuals, office equipment, records and files); provided, however, you will not be required to return rolodexes, personal cell phone, personal diaries (including your portable personal computer), or correspondence and other items of a personal nature. If those personal items are responsive to instructions you have received to retain documents in connection with legal proceedings and an SEC inquiry, you must continue to retain them after your termination. If CIGNA property that you have includes information that you reasonably believe you may need for tax purposes and copies of plans, programs and agreements relating to your employment and termination of employment, you may make and retain copies before returning the information to CIGNA.

3. Your Retirement Arrangements.

a. From Today until your Retirement Date, the Company will continue to pay you a salary at your current regular salary rate and you and your eligible dependents may continue to participate in the Company’s employee benefits programs in accordance with the terms of those programs. During this period, you agree to remain available for internal consulting and advice to the CEO and other division heads.

b. You agree that you will not be covered by the CIGNA Short-Term Disability Plan or CIGNA Long-Term Disability Plan after Today.

c. You will receive no further time off benefits for 2003.

d. If you die before the Company pays you all amounts due under paragraph 3 of the Agreement, the remaining amounts (except for those described in paragraphs 3.e and f) will be paid to your surviving spouse in a lump sum within 90 calendar days after the date of your death. The amounts described in paragraphs 3.e and f will be paid to your surviving spouse at the same times the payments would have been made to you, as described in paragraphs 3.e and f. If you have no surviving spouse, the payment will be made to your estate. If you die before December 31, 2003, the date you die will automatically be your new Retirement Date (but the above lump sum payment shall be calculated as if you had remained employed until December 31, 2003).

5

e. In March 2004 (or if earlier, when bonuses for 2003 are paid to CIGNA senior executives), the Company will pay you a cash bonus for service performed in 2003 in an amount equal to your bonus target multiplied by the CIGNA corporate staff bonus rating for 2003.

f. In May 2004, May 2005 and May 2006 (or such earlier time as provided below), the Company will pay you for one hundred percent of your previously-awarded Strategic Performance Units. Notwithstanding anything to the contrary in paragraphs 10.5(d) or 10.7 of the CIGNA Long-Term Incentive Plan (Incentive Plan) as in effect Today, the payments will be in cash, in amounts that are in accordance with the formula under the Strategic Performance Unit provisions of the Incentive Plan and that are based on the same Unit values that apply to other senior executives (taking into account any changes in the method of valuing these awards) and shall include any supplemental or additional payments made to any active senior executive of the Company. If a Change of Control (as defined in the Incentive Plan) occurs prior to the payment of all of these awards, all unpaid units will be paid within 30 days following the Change of Control in accordance with the provisions of paragraph 10.6(d)(1)-(3) of the CIGNA Long-Term Incentive Plan as approved by shareholders in April, 2000. No changes to the terms of these awards will be made without your advance approval.

g. Any amounts you may have earned under the CIGNA Pension, Supplemental Pension, CIGNA Deferred Compensation, Medical, Life Insurance and 401(k) Plans will be paid to you under the provisions of those plans except as modified under contractual arrangements which have been previously disclosed in public filings. Notwithstanding any previous agreements, years of credited service beyond 30 years will be determined using the same “hours of service method” used in the CIGNA Pension Plan.

h. Any options on Company stock that you now hold will vest under the terms of your applicable grant letters and will expire on the original expiration dates specified in your applicable grant letters. During the remaining term of these options, you shall be able to participate in any future program the Company adopts for senior executive officers that replaces, or reduces the exercise prices (reprices) of, stock options that have exercise prices above the then-prevailing market price. Your participation in the program shall be on the same terms and conditions that apply to those senior executive officers and shall apply only to comparable options. “Comparable options” are options that you then still hold and that the Company granted to you (by original grant or replacement grant) in the same year(s) that the Company granted the options being replaced or repriced to the senior executives participating in the program.

6

i. The Company will provide you with:

(1) Executive Financial Services through year-end 2008;

(2) Reimbursement for reasonable tax preparation fees incurred for income tax returns for income through year-end 2008;

j. With respect to any shares of restricted CIGNA Corporation stock that you hold on your Retirement Date (RSGs), the Company will, within 30 days after your Retirement Date, make a lump sum cash payment to you equal to (a) one hundred percent of the number of RSGs that you forfeit on your Retirement Date multiplied by (b) the average closing price of a share of CIGNA Corporation stock on the 10 trading days ending on your Retirement Date.

k. You will receive no other money from the Company except as provided in this Agreement.

4. Release of Claims.

a. You and the Company each agree not to file (or ask or allow anyone else to file) any charge, complaint, claim or lawsuit of any kind in connection with any claim released by this Agreement against any Released Person. However, the preceding sentence does not apply to any claim you might file alleging that your waiver of claims under the Age Discrimination in Employment Act of 1967 (ADEA) was not knowing and voluntary.

b. You acknowledge full and complete satisfaction of, and release and discharge all Released Persons from, any Claims.

c. The Company acknowledges full and complete satisfaction of, and releases and discharges all Released Persons from, any Claims.

d. You are giving this release for yourself as well as for your executors, administrators, heirs and assigns.

e. The Company is giving this release for the Company, together with its successors, subsidiaries and affiliates (Company Affiliated Parties) and all of their directors, officers, agents and employees (but as to any such director, officer, agent or employee only in connection with, or in relationship to, his or its capacity as a director, officer, agent or employee of any Company Affiliated Party and not in connection with, or in relationship to, his or its personal capacity unrelated to any Company Affiliated Party).

7

f. “Released Persons” for your release of Claims are the Company Affiliated Parties and all of their directors, officers, agents and employees (as limited by paragraph 4.e). “Released Persons” for the release of Claims against you by the Company (and other persons described in paragraph 4.e) are you, your dependents, heirs, agents, assigns and estate.

g. With respect to Claims you are releasing, “Claims” are any and all claims, demands and causes of action of whatever kind, including any claims for attorneys fees, that you now have, or at any time had, against any Released Persons, but only to the extent they arise out of or relate in any way to your employment or termination of employment with the Company and its affiliates. With respect to Claims the Company and Company Affiliated Parties are releasing, “Claims” are any and all claims, demands and causes of action of whatever kind, including any claims for attorneys fees, that the Company or any other Company Affiliated Party now has, or at any time had, against you, but only to the extent they arise out of or relate in any way to your employment or termination of employment with the Company and its affiliates. “Claims” includes things you or the Company may not even know about or suspect as well as any claims you may have under ADEA.

h. “Claims” does not include (and you and the Company are not releasing):

(1) any claims for promises you and the Company are making to each other under this Agreement and any claims that arise after Today,

(2) any claims for benefits under any retirement savings or other employee benefit programs under which you will receive benefits after your Retirement Date (however, the Release does include any claims for benefits under any severance pay plan or arrangement, any pension plan and any other plans or programs referenced in this Agreement, to the extent such claims are inconsistent with this Agreement),

(3) any claims covered by workers compensation laws,

(4) any rights you have to indemnification under the Company’s (and, if applicable, any Company affiliate’s) by-laws, directors and officers liability insurance or this Agreement or any rights you may have to obtain contribution as permitted by law in the event of entry of judgment against you as a result of any act or failure to act for which you and any Company Affiliated Party are jointly liable, and

(5) any claims that you did not knowingly and voluntarily waive your rights under ADEA.

8

        5.       No Mitigation, No Offset. You shall have no duty to seek other employment and there shall be no offset against amounts due under this Agreement on account of any remuneration you may receive attributable to any subsequent employment or self-employment.

        6.       Anti-disparagement. You agree not to knowingly make any statement to a customer of CIGNA or any public statement, whether oral or written, that would disparage CIGNA or any of its senior officers or directors. The Company agrees that it (and its affiliates) shall not, and it shall cause each CIGNA senior officer or director not to, knowingly make any public statement, whether oral or written, that disparages you. It shall not, however, be a violation of this paragraph 6 for any person: (a) to make truthful statements (i) when required to do so by a court of law, by any governmental agency having supervisory authority over CIGNA’s business or by any administrative or legislative body (including a committee thereof) with actual or apparent jurisdiction to order such person to divulge, disclose or make accessible such information or (ii) to the extent necessary with respect to any litigation, arbitration or mediation involving this Agreement, including but not limited to, enforcement of this Agreement; or (b) from responding publicly to incorrect or disparaging public statements to the extent reasonably necessary to correct or refute such public statement.

        7.       No Admission of Wrongdoing. Just because the Company is entering into this Agreement and paying you money, the Company is not admitting that it (or any Released Person) has done anything wrong or violated any law, rule, order, policy, procedure, or contract, express or implied, or otherwise incurred any liability. Similarly, by entering into this Agreement, you are not admitting that you have done anything wrong or violated any law, rule, order, policy, procedure, or contract, express or implied, or otherwise incurred any liability.

        8.       Applicable Law. This Agreement is being made in Pennsylvania. It will be interpreted, enforced and governed under the laws of Pennsylvania (without reference to the principles of conflicts of law), but your eligibility for, or the amount of any, employee benefits shall be subject to the terms of the benefit plans and the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

        9.       Arbitration. Without in any way affecting the releases in paragraph 4, any and all disagreements, disputes or claims listed below will be resolved exclusively by arbitration in the Philadelphia, Pennsylvania area. Arbitration will be conducted in accordance with the Employment Dispute Resolution Rules of the American Arbitration

9

Association, as modified by Company. Copies of the Arbitration Policy and Rules and Procedures have been provided to you. A legal judgment based upon the Arbitrator’s award may be entered in any court having jurisdiction over the matter. Each party shall be liable for its own costs and expenses (including attorneys’ fees). You and the Company agree to arbitrate anything:

a. related in any way to this Agreement, including its validity, and how it is interpreted or implemented, and the validity of your ADEA waiver; or

b. that involves your employment with Company or the termination of that employment, including any disputes arising under local, state or federal statutes or common law (if for any reason your release and waiver under paragraph 4 is found to be unenforceable or inapplicable).

        10.       Final and Entire Agreement. This Agreement is intended to be the complete, entire and final agreement between you and the Company. It fully replaces all earlier agreements or understandings; however, it does not replace the terms of any employee benefit plan or terms included in any stock option or restricted stock grant; provided that the covenants and provisions in paragraphs 2, 6 and 9 above supercede in their entirety any similar provisions in any employee benefit plan. Neither you nor the Company has relied upon any other statement, agreement or contract, written or oral, in deciding to enter into this Agreement. Any amendment to this Agreement must be in writing and signed by both you and the Company. Any waiver by any person of any provision of this Agreement shall be effective only if in writing, specifically referring to the provision being waived and signed by the person against whom enforcement of the waiver is being sought. No waiver of any provision of this Agreement shall be effective as to any other provision of this Agreement except to the extent specifically provided in an effective written waiver. If any provision or portion this Agreement is determined to be invalid or unenforceable in a legal forum with competent jurisdiction to so determine, the remaining provisions or portions of this Agreement shall remain in full force and effect to the fullest extent permitted by law and the invalid or unenforceable provisions or portions shall be deemed to be reformed so as to give maximum legal effect to the agreements of the parties contained herein.

        11.       Your Understanding. By signing this Agreement, you admit and agree that:

a. You have read this Agreement.

b. You understand it is legally binding, and you were advised to review it with a lawyer of your choice.

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c. You have had (or had the opportunity to take) at least 21 calendar days to discuss it with a lawyer of your choice before signing it and, if you sign it before the end of that period, you do so of your own free will and with the full knowledge that you could have taken the full period.

d. You realize and understand that the release covers certain claims, demands, and causes of action against the Company and any Released Persons relating to your employment or termination of employment, including those under ADEA, whether or not you know or suspect them to exist at the present time (but the release does not apply to claims described in paragraph 4.h).

e. You understand the terms of this Agreement and that it is not part of an exit incentive or other employment termination program being offered to a group or class of employees.

f. You are signing this Agreement voluntarily and with the full understanding of its consequences, and you have not been forced or coerced in any way.

        12.       Revoking the Agreement. You have seven calendar days from the date you sign this Agreement to revoke and cancel it. To do that, a clear, written cancellation letter, signed by you, must be received by Kenneth Bottoms, CIGNA Corporation, 1650 Market Street OL54H, Philadelphia, PA, 19192 before 5:00 p.m. Eastern Time on the seventh calendar day following the date you sign this Agreement. The Agreement will have no force and effect until the end of that seventh day; provided that, during such seven-day period, the Company shall not be able to revoke this Agreement or cancel it.

        13.       If Legal Action Is Started by You. You understand and agree that Company’s main reason for entering into this Agreement is to avoid lawsuits and other litigation. Therefore, if any legal action covered by paragraph 4 or 9 (other than arbitration of a dispute described in paragraph 9.a or b or claims related to whether your release of ADEA claims was knowing and voluntary) is started by you (or by someone else on your behalf) against any Company Released Person with respect to any Claim released by you under paragraph 4, you agree to withdraw such proceeding or claim with prejudice (or, in the case of any legal action filed on your behalf, you agree to withdraw from such proceeding or claim).

If you fail to withdraw such proceeding or claim (or, in the case of any legal action filed on your behalf, you fail to withdraw from such proceeding or claim) within 30 days of receipt of written notice from the Company requesting that you withdraw such proceeding or claim, then in addition to any other equitable or legal relief that the Company may be entitled to:

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a. The Company may withhold or retain all or any portion of the amounts due hereunder until such proceeding or claim is withdrawn by you;

b. You agree to pay back to the Company within 60 days after receipt of written notice from the Company all the money you receive under paragraph 3 (except sub-paragraph 3.g); and

c. You agree to pay the Company the reasonable costs and attorneys’ fees it incurs in defending such action.

You represent that as of Today you have not assigned to any other party, and agree not to assign, any claim released by you under this Agreement. (If you claim that your release of ADEA claims was not knowing and voluntary, the Company reserves its right to recover from you its attorneys’ fees and/or costs in defending that claim, at the conclusion of that action.)

Upon a finding by a court of competent jurisdiction or arbitrator that a release or waiver of claims provided for by paragraph 4 above is illegal, void or unenforceable, the Company or you, as the case may be, may require the other party to execute promptly a release that is legal and enforceable and does not extend to Claims not released under paragraph 4. If you fail to execute such a release within a reasonable period of time, then this Agreement shall be null and void from Today on, and any money paid to you by the Company after Today under paragraph 3 (except sub-paragraphs 3.g) and not previously returned to the Company, will be treated as an overpayment. You will have to repay that overpayment to the Company with interest, compounded annually at the rate of 6%. However, the repayment provision in this paragraph does not apply to legal actions in which you claim that your release of ADEA claims was not knowing and voluntary.

This paragraph 13 does not apply to any thing of value given to you for which you actually performed services and by law you are entitled to receive.

        14.       Legal Action by the Company. The Company represents that as of Today neither it nor any of its affiliates has assigned to any other party, and agrees not to assign, any claim released by it under this Agreement. In addition, the Company promises that neither it nor any of its affiliates (including CIGNA Corporation) will file a lawsuit or an arbitration claim against you or any other Released Persons asserting any claim released by the Company or any of the Company Released Parties under this Agreement and, to the extent that the Company or any affiliate does commence such a proceeding, the Company agrees that it or its affiliate will withdraw such proceeding with prejudice. If the Company or any affiliate fails to withdraw any proceeding or claim with respect to any claim released under this Agreement within 30 days of receipt of written notice from you requesting that such withdrawal, the Company agrees to pay you the reasonable costs and attorneys’ fees you incur in defending such action.

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        15.       Representations. The Company represents and warrants that (a) the execution, delivery and performance of this Agreement has been fully and validly authorized by all necessary corporate action (including, without limitation, by any action required to be taken by the board of directors of the Company or any affiliate, any committee of such board or any committee or designee administering the applicable CIGNA plans, including the Incentive Plan); (b) the officer signing this Agreement on behalf of the Company is duly authorized to do so; (c) the execution, delivery and performance of this Agreement does not violate any applicable law, regulation, order, judgment or decree or any agreement, plan or corporate governance document to which the Company or any affiliate is a party or by which it is bound; and (d) upon execution and delivery of this Agreement by the parties, it shall be a valid and binding obligation of the Company enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

        16.       Notices. Except as provided below, any notice, request or other communication given in connection with this Agreement shall be in writing and shall be deemed to have been given (a) when personally delivered to the recipient or (b) provided that a written acknowledgement of receipt is obtained, three days after being sent by prepaid certified or registered mail, or two days after being sent by a nationally recognized overnight courier, to the address specified in this paragraph 16 (or such other address as the recipient shall have specified by ten days’ advance written notice given in accordance with this paragraph 16). Such communication shall be addressed to you as follows (unless such address is changed in accordance with this paragraph 16):

        Donald M. Levinson

and to the Company or CIGNA as follows:

        Kenneth Bottoms
        CIGNA Corporation
        1650 Market Street OL54H
        Philadelphia, PA, 19192

However, CIGNA and you may deliver any notices or other communications related to any employee benefit or compensation plans, programs or arrangements in the same manner that similar communications are delivered to or from other current or former employees, including by electronic transmission and first class mail.

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        17.       Successors and Assigns. This Agreement will be binding on and inure to the benefit of the parties and their respective successors, heirs (in your case) and assigns. No rights or obligations of the Company under this Agreement may be assigned or transferred without your prior written consent, except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or a sale, liquidation or other disposition of the assets of the Company, provided that the assignee or transferee is the successor to the Company (or in connection with a purchase of Company assets, assumes the liabilities, obligations and duties of the Company under this Agreement), either contractually or as a matter of law. Your rights or obligations under this Agreement may not be assigned or transferred by you, without the Company’s prior written consent, other than your rights to compensation and benefits, which may be transferred only by will or operation of law or pursuant to the terms of the applicable plan, program, grant or agreement of CIGNA or the Company. In the event of your death or a judicial determination of your incompetence, references in this Agreement to you shall be deemed to refer, where appropriate, to your legal representative, or, where appropriate, to your beneficiary or beneficiaries.

        18.        This Agreement is not effective or binding on either party until fully signed by both parties.

        The persons named below have signed this Agreement on the dates shown below:

December 10, 2003	/s/ John M. Murabito
Date	John M. Murabito on behalf of CIGNA Corporation
December 8, 2003	/s/ Donald M. Levinson
Date	Donald M. Levinson

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EX-10

Exhibit 10.22

Schedule regarding Deferred Stock Unit Agreements
dated August 6, 2003 with Messrs. Hanway, Bell and Wolf
and Ms. Soltz

On August 6, 2003, CIGNA Corporation entered into Deferred Stock Unit Agreements with Messrs. Hanway, Bell and Wolf and Ms. Soltz. Under these agreements, Mr. Hanway received 100,000 deferred stock units, Mr. Bell received 22,225 deferred stock units, Mr. Wolf received 10,560 deferred stock units, and Ms. Soltz received 11,560 deferred stock units. Other than the name of the executive officer and the number of units granted, the Deferred Stock Unit Agreements for Messrs. Hanway, Bell and Wolf and Ms. Soltz are identical in form, as attached in the appendix to this Exhibit 10.22.

Appendix to Exhibit 10.22

FORM OF DEFERRED STOCK UNIT AGREEMENT

This Deferred Stock Unit Agreement is dated as of August 6, 2003, and is between (NAME, ADDRESS), and CIGNA Corporation, 1650 Market Street, Philadelphia, Pennsylvania, 19192, a Delaware corporation.

You and CIGNA, intending to be legally bound and in consideration of the promises in this Agreement, mutually agree as follows:

1.  Definitions. Under this Agreement, these terms shall have the following meanings:

(a) "Agreement" - - this Deferred Stock Unit Agreement.

(b) “CIGNA” – CIGNA Corporation, or a successor.

(c) “CIGNA Company” – CIGNA Corporation and/or any CIGNA Corporation subsidiary.

(d) “Deferred Plan” – the CIGNA Deferred Compensation Plan.

(e) “Grant Date” – August 6, 2003.

(f) “Payment Date” – the January following your Termination of Employment.

(g) “Stock Plan” – the CIGNA Corporation Stock Plan, or a successor plan.

(h) “Units” – the deferred stock units described in paragraph 2.

(i) “Vesting Date” – the date your right to Units vests under paragraphs 3, 4 or 5.

(j) “Change of Control,” “Committee,” “Disability,” “Retirement,” “Termination of Employment” and “Termination upon a Change of Control” – all as defined in Section 2.1 of the Stock Plan.

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2. Deferred Stock Units.

(a) CIGNA grants you xxxx Units effective as of the Grant Date.

(b) Each Unit represents your right to receive, under the terms and conditions described in this Agreement, payment of:

(1) One share of CIGNA common stock; and

(2) Dividend equivalents (described in paragraph 7) on one share of CIGNA common stock from the Grant Date until the Payment Date.

(c) Your right to Unit payments is subject to the conditions described in this Agreement, including the forfeiture provisions described in paragraphs 3 and 9.

3. Regular Unit Vesting. The regular Vesting Date is August 6, 2009. You shall forfeit any Unit, and shall have no right to receive any payments related to that Unit, if your Termination of Employment occurs before the Vesting Date. The Units will vest on the regular Vesting Date unless:

(a) The Units vest on an accelerated Vesting Date as described in paragraph 4;

(b) The Units vest early as described in paragraph 5; or

(c) You forfeit the Units.

4. Accelerated Unit Vesting. If CIGNA achieves certain performance goals approved by the Committee on August 6, 2003, the Units will vest on the earliest of the following accelerated Vesting Dates, as applicable: August 6, 2006; August 6, 2007 or August 6, 2008. The Committee will have sole authority to determine whether CIGNA has met those performance goals.

5. Early Unit Vesting. If your Termination of Employment occurs before the Vesting Date and is due to your death or Disability or is a Termination upon a Change of Control, the forfeiture described in paragraph 3 shall not apply and the Units shall immediately become vested upon your Termination of Employment. If your Termination of Employment occurs before the Vesting Date and is due to your Retirement, the forfeiture described in paragraph 3 shall apply unless the Committee, in its sole discretion, decides that the Units shall immediately vest upon your Termination of Employment.

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6. Deferred Share Issuance. Issuance of the shares described in paragraph 2(b)(1) will generally be deferred under the terms of the Deferred Plan until the Payment Date; however, CIGNA may issue and then withhold some shares when Units vest to meet tax withholding requirements under paragraph 16. CIGNA will issue the shares under Article 9 of the Stock Plan (or a successor plan) as a grant in lieu of an award under a Qualifying Incentive Plan. This Agreement is a Qualifying Incentive Plan. Issuance of the Shares shall be subject to the deferral, vesting, forfeiture and other provisions of this Agreement and the Stock Plan.

7. Dividend Equivalents.

(a) From the Grant Date until the Vesting Date, on or about each date that CIGNA makes dividend payments with respect to shares of common stock, CIGNA shall pay you an amount equal to the per share dividend for each Unit granted to you under paragraph 2 that has not yet become vested. CIGNA reserves the right, however, to defer these payments under paragraph 7(b) so the payments may be fully tax deductible under Internal Revenue Code section 162(m).

(b) From the Vesting Date until the Payment Date, CIGNA will credit an amount equal to the dividends CIGNA pays on each share of common stock to your Deferred Plan account for each vested Unit. CIGNA will pay you these deferred dividend equivalents on the Payment Date under the terms of the Deferred Plan. During this deferral period CIGNA will also credit (or debit) your Deferred Plan account with hypothetical earnings (or losses) on the deferred dividend equivalents, as if you had voluntarily elected to defer the Unit shares under the Deferred Plan. CIGNA will base the hypothetical earnings credits (or loss debits) on the provisions of the Deferred Plan. CIGNA will pay you any accumulated hypothetical earnings on the Payment Date.

(c) Your right to further payment of any dividend equivalents under paragraph 7 shall end immediately if you forfeit the Units.

8. Payments after Your Death. If you die before CIGNA has issued all Unit shares to you and made all related dividend equivalent payments to you under this Agreement, CIGNA shall issue the Unit shares and make the dividend equivalent payments within 90 days after your death to your surviving spouse or, if you have no surviving spouse, to your estate.

9. Forfeiture.

(a) If you have a Forfeiture Event, you shall forfeit any Unit, have no right to receive any shares or dividend equivalent payments related to that Unit, and shall be obligated to return to CIGNA (as described in paragraph 9(c)) any Unit shares that are issued to you. You will have a Forfeiture Event if you do any of the following at any time up to and including the first anniversary of the Vesting Date:

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(1) Have a Termination of Employment initiated by a CIGNA Company because of your misconduct;

(2) Own or operate a business, or accept a job as an employee or independent contractor with a business, that competes with any CIGNA Company, unless your Termination of Employment is initiated by a CIGNA Company for reasons other than your misconduct;

(3) Try to persuade any employee or customer of any CIGNA Company to end an existing relationship, contractual or otherwise, with that company; or

(4) Do anything after your Termination of Employment that would, if you were still a CIGNA Company employee, be reason for your Termination of Employment for misconduct.

(b) The Committee shall determine whether you have a Forfeiture Event. Determinations of the Committee shall be final and binding on all parties.

(c) If you have a Forfeiture Event, you must return any Unit shares issued to you by any or all of the following methods that CIGNA management determines are needed for CIGNA to recover all the Unit shares issued to you.

(1) When a Forfeiture Event occurs, if you have any shares in your Stock Account or in any other account in book-entry form, you will forfeit up to the number of Unit shares issued to you.

(2) You will deliver to CIGNA any shares you hold in certificate form (up to the number of Unit shares issued to you) within 30 days after the Forfeiture Event.

(3) If you do not then own enough shares, you will purchase shares (up to the number of Unit shares issued to you) and deliver them to CIGNA within 30 days after the Forfeiture Event.

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10. Share Adjustments.

(a) In the event of a stock dividend, stock split, or other subdivision or combination of CIGNA common stock, the Committee shall make a proportionate adjustment in the number of shares under paragraph 2(b)(1) and in the number of shares that form the basis of the dividend equivalents under paragraph 2(b)(2).

(b) If the outstanding shares of CIGNA common stock are changed or converted into, exchanged or exchangeable for, a different number or kind of shares or other securities of CIGNA or of another corporation, by reason of a reorganization, merger, consolidation, reclassification or combination (an Event), the Committee shall make an appropriate adjustment in the number and/or kind of shares under paragraph 2(b)(1) and in the number and/or kind of shares that form the basis of the dividend equivalents under paragraph 2(b)(2), so that your proportionate interest under this Agreement shall be maintained as before the Event. However, in case of any contemplated Event that may constitute a Change of Control, the Committee, with the approval of a majority of the members of the Board who are not then CIGNA Company employees, may modify any and all outstanding Units and Unit payment rights, so as to accelerate, as a consequence of or in connection with the Event, the vesting of your Units and/or your rights to any Unit payment.

11. Effect of Agreement. This Agreement is not a contract of employment for any specified term, and nothing in it is intended to change, and it shall not be construed as changing, the nature of your employment from an at-will relationship. This Agreement is limited to the terms and conditions that it includes and does not otherwise address your compensation or benefits, your duties and responsibilities, or any of CIGNA’s rights as employer. This Agreement contains the entire agreement between you and CIGNA with respect to the matters addressed herein and fully replaces and supersedes all prior agreements or understandings between them related to such matters.

12. Applicable Law. The Agreement is entered into in the Commonwealth of Pennsylvania, and at all times and for all purposes shall be interpreted, enforced and governed under its laws without regard to principles of conflict of laws.

13. Arbitration of Disputes. CIGNA and you agree that any controversy or claim arising out of or relating to this Agreement shall be settled exclusively by arbitration in Philadelphia, Pennsylvania, in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association, as modified by Company. Copies of the Arbitration Policy and Rules and Procedures can be obtained from your Human Resources representative. A legal judgment based upon the Arbitrator’s award may be entered in any court having jurisdiction over the matter.

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14. Successors. CIGNA’s rights and obligations under this Agreement will inure to the benefit of, and be binding upon, CIGNA’s successors and assigns. Your rights under this Agreement, including the right to receive Common Stock or any other payment, shall not be assignable or transferable by you except by will or by the laws of descent and distribution. Any other attempted assignment or alienation shall be void and of no force or effect.

15. Funding of Payments. CIGNA's obligations under this Agreement to issue shares and make cash payments are unfunded and unsecured promises, and shall be considered as such for tax purposes and for purposes of the Employee Retirement Income and Security Act of 1974. Cash shall be paid when due out of CIGNA's general assets.

16. Withholding. You must satisfy any required tax withholding obligation when the Units vest and when the Units are paid, and CIGNA reserves the right to withhold enough shares to cover all or part of any applicable tax withholding.

17. Changes to Agreement. Any amendment to this Agreement must be in writing and signed by both you and CIGNA.

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EX-12

Exhibit 12

CIGNA CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)

	Year ended December 31,
	2003		2002			2001			2000		1999
Income (loss) from continuing operations
before income taxes (benefits)	$	903	$	(569	)	$	1,469		$	1,487	$	1,224
Adjustments:
Loss (income) from equity investees		4		4			(79	)		-		-
Minority interest		-		-			-			53		31
Income (loss) from continuing operations
before income taxes (benefits), as
adjusted	$	907	$	(565	)	$	1,390		$	1,540	$	1,255
Fixed charges included in income:
Interest expense	$	111	$	121		$	118		$	104	$	116
Interest portion of rental expense		54		52			50			43		50
		165		173			168			147		166
Interest credited to contractholders		877		1,036			1,071			1,017		975
	$	1,042	$	1,209		$	1,239		$	1,164	$	1,141
Income available for fixed charges
(including interest credited to
contractholders)	$	1,949	$	644		$	2,629		$	2,704	$	2,396
Income available for fixed charges
(excluding interest credited to
contractholders) (1)	$	1,072	$	-		$	1,558		$	1,687	$	1,421
RATIO OF EARNINGS TO FIXED CHARGES:
Including interest credited to
contractholders(1)		1.9		-			2.1			2.3		2.1
SUPPLEMENTAL RATIO:
Excluding interest credited to
contractholders(1)		6.5		-			9.3			11.5		8.6

_________________

(1) Due to the loss in 2002, the ratio coverage was less than 1:1. CIGNA must generate additional earnings of $565 million to achieve a coverage of 1:1.

EX-13

Exhibit 13

 HIGHLIGHTS

		2003			2002			2001			2000			1999
(Dollars in millions, except per share amounts)
REVENUES
Premiums and fees and other revenues		$	16,063		$	16,870		$	15,940		$	16,579		$	15,304
Net investment income			2,594			2,716			2,842			2,940			2,958
Realized investment gains (losses)			151			(238	)		(175	)		7			8
TOTAL REVENUES		$	18,808		$	19,348		$	18,607		$	19,526		$	18,270
RESULTS OF OPERATIONS
Segment earnings (loss):
	Health Care	$	447		$	455		$	671		$	706		$	582
	Disability and Life		137			124			59			50			132
	Retirement		260			231			221			257			265
	International		55			31			95			48			(342	)
	Run-off Reinsurance		(359	)		(1,070	)		57			(119	)		35
	Other Operations		73			74			76			93			104
	Corporate		(91	)		(87	)		(96	)		(58	)		(78	)
	Total segment earnings (loss)		522			(242	)		1,083			977			698
Realized investment gains (losses), net of taxes			98			(155	)		(112	)		4			4
Income (loss) from continuing operations			620			(397	)		971			981			702
Income (loss) from discontinued operations			48			(1	)		18			6			1,163
Cumulative effect of accounting change, net of taxes			—			—			—			—			(91	)
NET INCOME (LOSS)		$	668		$	(398	)	$	989		$	987		$	1,774
NET INCOME (LOSS) EXCLUDING GOODWILL AMORTIZATION		$	668		$	(398	)	$	1,037		$	1,035		$	1,822
Income (loss) per share from continuing operations:
	Basic	$	4.44		$	(2.83	)	$	6.57		$	6.14		$	3.61
	Diluted	$	4.41		$	(2.83	)	$	6.47		$	6.04		$	3.56
Net income (loss) per share:
	Basic	$	4.78		$	(2.83	)	$	6.69		$	6.18		$	9.12
	Diluted	$	4.75		$	(2.83	)	$	6.59		$	6.08		$	8.99
Common dividends declared per share		$	1.32		$	1.32		$	1.28		$	1.24		$	1.20
Total assets		$	90,953		$	88,950		$	91,589		$	95,088		$	95,333
Long-term debt		$	1,500		$	1,500		$	1,626		$	1,162		$	1,357
Shareholders’ equity		$	4,519		$	3,867		$	5,055		$	5,413		$	6,149
	Per share	$	32.14		$	27.75		$	35.71		$	35.61		$	36.24
Common shares outstanding (in thousands)			140,591			139,370			141,553			152,005			169,697
Shareholders of record			9,608			9,945			10,437			10,947			11,716
Employees			32,700			41,200			44,600			43,200			41,900

Segment earnings (loss) is defined as net income (loss) excluding: 1) after-tax realized investment results, 2) results of discontinued operations, and 3) in 1999, the cumulative effect of adopting Statement of Position 97-3, “Accounting by Insurance and Other Enterprises for Insurance-Related Assessments.”

In January 2003, CIGNA sold the operations of Lovelace Health Systems, Inc., an integrated health care system and subsidiary of CIGNA. This business has been reported as discontinued operations. Prior period financial information has been reclassified.

In 1999, CIGNA sold its domestic and international property and casualty business and reported this business as discontinued operations.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

INDEX

14	Overview
15	Consolidated Results of Operations
19	Sale of Retirement Business
19	Other Matters
22	Health Care
24	Disability and Life
25	Retirement
26	International
26	Run-off Reinsurance
28	Other Operations
28	Corporate
28	Discontinued Operations
29	Liquidity and Capital Resources
33	Investment Assets
35	Market Risk
37	Cautionary Statement

OVERVIEW

CIGNA Corporation’s subsidiaries provide employee benefits offered through the workplace. Key product lines include health care products and services (medical, pharmacy, behavioral health, clinical information management, dental and vision benefits, and case and disease management); group disability, life and accident insurance; retirement products and services; and investment management. In addition, CIGNA has an international operation that offers similar products to businesses and individuals in selected markets, and has certain inactive businesses including a run-off reinsurance operation.

CIGNA’s results are influenced by a range of economic and other factors, including:

• cost trends and inflation levels for medical and related services;

• patterns of utilization of medical and other services;

• employment levels;

• the tort liability system;

• interest rates and equity market returns;

• regulations and tax rules related to the provision and administration of employee benefit plans; and

• initiatives to increase health care regulation.

CIGNA generates revenues, income and cash flows by maintaining and growing its relationships with employers and consumers, charging prices that reflect emerging experience and investing available cash at attractive rates of return for appropriate durations. CIGNA’s ability to increase operating results in terms of growth in revenue, net income and operating cash flow is directly related to its ability to execute plans that address broad economic factors as well as company-specific drivers.

Key company-specific drivers affecting CIGNA’s results include:

• the absolute level of and trends in benefit costs;

• the volume of customers served and the mix of products and services purchased by those customers;

• competitiveness of CIGNA’s product design and service quality relative to those of other employee benefit providers;

• the ability to price products and services competitively at levels that appropriately account for underlying cost inflation and utilization patterns; and

• the relationship between administrative costs and revenue.

Management regularly monitors trends in the economic factors listed above and the company-specific drivers of operating results. CIGNA develops strategic and tactical plans designed to improve performance and maximize its competitive position in the markets served. CIGNA’s ability to achieve its financial objectives is dependent upon its ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends.

CIGNA’s results, excluding realized investment gains and losses and special items ( described on page 15), declined in 2003 and 2002 and were below competitive benchmarks due to lower

14

Management’s Discussion and Analysis

results in the health care operations and losses in the run-off reinsurance operations. CIGNA is focused on improving performance in its health care operations by (1) lowering medical cost trends; (2) continuing to deliver quality service; (3) lowering administrative expenses; and (4) stabilizing and growing membership. CIGNA has also strengthened reserves and reduced certain equity market exposures in its run-off reinsurance operations by selling futures and forward contracts.

CIGNA expects to complete a sale of its retirement business around the end of the first quarter of 2004, subject to regulatory approval. The sale of this business will allow CIGNA to focus on its health care and related operations. The effect of the sale would also improve parent company liquidity and enhance CIGNA’s financial flexibility while reducing revenue, net income, cash flows and invested assets.

CONSOLIDATED RESULTS OF OPERATIONS

(In millions)
Financial Summary	2003		2002			2001
Premiums and fees	$	15,441	$	15,737		$	14,860
Net investment income		2,594		2,716			2,842
Other revenues		622		1,133			1,080
Realized investment gains (losses)		151		(238	)		(175	)
Total revenues		18,808		19,348			18,607
Benefits and expenses		17,905		19,917			17,138
Income (loss) from continuing operations before taxes (benefits)		903		(569	)		1,469
Income taxes (benefits)		283		(172	)		498
Income (loss) from continuing operations		620		(397	)		971
Income (loss) from discontinued operations		48		(1	)		18
Net income (loss)		668		(398	)		989
Adjustment to exclude goodwill amortization in 2001		—		—			48
Net income (loss) excluding goodwill amortization	$	668	$	(398	)	$	1,037
Realized investment gains (losses), net of taxes	$	98	$	(155	)	$	(112	)

The significant improvement in income (loss) from continuing operations in 2003 was primarily due to reduced losses in the Run-off Reinsurance segment reflecting lower charges related to specialty life reinsurance contracts that guarantee minimum death benefits. Absent these charges and other special items discussed further below, CIGNA’s underlying results declined primarily due to operational difficulties in the health care operations. See  page 22 for further discussion on the drivers of these results. Partially offsetting these results were strong realized investment gains from the sale of securities ( see page 16 for further discussion).

The loss from continuing operations in 2002, compared with income in 2001, was primarily due to the effects of special items and higher realized investment losses.

In order to facilitate an understanding and comparison of results of operations and permit analysis of trends in underlying revenue, expenses and net income, the following table presents special items, which management believes are not representative of the underlying results of continuing operations. See  “Quarterly Financial Data” in CIGNA’s 2003 Annual Report to Shareholders for special items reported quarterly in 2003 and 2002.

SPECIAL ITEMS

	Pre-Tax			After-Tax
	Benefit			Benefit
(In millions)	(Charge)			(Charge)
2003
Reserve charge on guaranteed minimum death benefit contracts ( see page 27)	$	(441	)	$	(286	)
Health care provider litigation ( see page 21)		(57	)		(37	)
Reduction in allowance against amounts recoverable from pension policyholders ( see page 25)		51			33
Restructuring items, net(1) ( see page 19)		26			17
Intangible asset write-off for provider contracts ( see Note 2(J) to the Financial Statements)		(16	)		(10	)
Gain on sale of Japan pension operations ( see page 20)		8			5
Total	$	(429	)	$	(278	)
2002
Reserve charge on guaranteed minimum death benefit contracts	$	(1,108	)	$	(720	)
Charge for Unicover and London reinsurance matters		(408	)		(317	)
Restructuring costs, net(2)		(147	)		(95	)
Health care provider litigation		(77	)		(50	)
Accelerated recognition of deferred gain on sale of life reinsurance business		4			3
Reduction in charges for the events of September 11, 2001		3			2
Total	$	(1,733	)	$	(1,177	)
2001
Restructuring costs	$	(96	)	$	(62	)
Accelerated recognition of portion of deferred gain on sale of life reinsurance business		107			69
Gain on sale of interest in Japanese life insurance operation		54			35
Charges for the events of September 11, 2001		(38	)		(25	)
Total	$	27		$	17

⁽¹⁾ Restructuring items in 2003 include a pre-tax benefit of $39 million ($26 million after-tax) reflecting a reduction in costs associated with the 2002 and 2001 health care restructuring programs (including gains on other postretirement benefits, see Note 15 to the Financial Statements), and a pre-tax charge of $13 million ($9 million after-tax) related to restructuring certain corporate staff functions.

⁽²⁾ Restructuring costs in 2002 reflect pre-tax charges of $151 million ($97 million after-tax) associated with the health care restructuring program adopted in the fourth quarter of 2002 (including gains on other postretirement benefits), and a pre-tax reduction of $4 million

15

($2 million after-tax) in the costs associated with the fourth quarter 2001 restructuring program.

Revenues

Revenues decreased in 2003 primarily because of:

• losses recognized from futures and forward contracts, compared to gains in the prior year, in connection with the program to reduce equity market risks ( see Run-off Reinsurance segment on page 26 for further discussion); and

• lower premiums and fees in the Health Care segment primarily due to lower membership.

These factors were partially offset by improved realized investment results (see below).

Revenues increased in 2002 primarily because of higher Health Maintenance Organization (HMO) and medical indemnity premiums and fees due to rate increases.

Realized Investment Results

Realized investment results for 2003 increased primarily because of:

• gains on sales of fixed maturities and equity securities compared with losses in the prior year;

• lower impairments on equities, fixed maturities and real estate investments; and

• higher gains on sales of real estate investments.

These increases were partially offset by impairment losses associated with the settlement annuity business in the Other Operations segment.

Realized investment losses increased in 2002 primarily because of:

• higher losses on sales of fixed maturities;

• losses on sales of equity securities compared to gains in 2001; and

• higher impairments on equity securities and real estate investments.

These losses were partially offset by gains on sales of real estate investments and lower impairments on investments in collateralized debt obligations, which are secured by pools of corporate debt obligations.

For additional information on realized investment results,  see Note 10(B) to the Financial Statements. The weakness in certain sectors of the economy may cause additional investment losses. Refer to  “Investment Assets” beginning on page 33 for further information.

Outlook for 2004

Subject to the factors noted in the  Cautionary Statement on page 37, management expects full year 2004 income from continuing operations excluding realized investment gains (losses) and special items to be lower than the comparable 2003 amount. This outlook for 2004 primarily reflects reduced earnings from the retirement business, which CIGNA expects to sell around the end of the first quarter of 2004.

Information is not available for management to reasonably estimate realized investment gains (losses) or special items for 2004. Special items for 2004 may include:

• the effect of adopting a new accounting standard ( see Note 2 to the Financial Statements);

• charges related to expense reduction initiatives ( see page 19); and

• effects of the accounting for the sale of the retirement business.

Critical Accounting Estimates

The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect reported amounts and related disclosures. Management considers an accounting estimate to be critical if:

• it requires assumptions to be made that were uncertain at the time the estimate was made; and

• changes in the estimate or different estimates that could have been selected could have a material effect on CIGNA’s consolidated results of operations or financial condition.

Management has discussed the development and selection of its critical accounting estimates with the Audit Committee of CIGNA’s Board of Directors and the Audit Committee has reviewed the disclosure presented below relating to them.

In addition to the estimates presented in the following table, there are other accounting estimates used in the preparation of CIGNA’s consolidated financial statements, including estimates of liabilities for unpaid claims and claim expenses and future policy benefits other than those identified in the following table, as well as estimates with respect to contracts that guarantee a minimum level of income benefits, post-employment and postretirement benefits, certain compensation accruals, and income taxes.

Management believes the current assumptions and other considerations used to estimate amounts reflected in CIGNA’s consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in CIGNA’s consolidated financial statements, the resulting changes could have a material adverse effect on CIGNA’s consolidated results of operations, and in certain situations, could have a material adverse effect on liquidity and CIGNA’s financial condition.

 See Note 2 to the Financial Statements for further information on key accounting policies that impact CIGNA.

16

Management’s Discussion and Analysis

The table that follows presents information about CIGNA’s most critical accounting estimates, as well as the effects of hypothetical changes in the material assumptions used to develop each estimate.

Balance Sheet Caption /		Effect if
Nature of Critical Estimate Item	Assumptions / Approach Used	Different Assumptions Used
Future policy benefits –  Guaranteed minimum death benefits Reserves for these liabilities are estimates of the present value of net amounts expected to be paid, less the present value of net future premiums expected to be received. The amounts to be paid represent the excess of the guaranteed death benefit over the values of annuitants’ accounts. The death benefits coverage in force at December 31, 2003 (representing the amount payable if all annuitants had died as of that date) was approximately $12.9 billion.	Management estimates these reserves based on assumptions and other considerations, including lapse, partial surrender, mortality, interest rates and volatility. These are based on CIGNA’s experience and future expectations. CIGNA monitors actual experience to update these reserve estimates as necessary. Lapse refers to the full surrender of an annuity prior to an annuitant’s death. Partial surrender refers to the fact that most annuitants have the ability to withdraw substantially all of their mutual fund investments while retaining any available death benefit coverage in effect at the time of the withdrawal. Volatility refers to market volatility that affects the costs of the program adopted by CIGNA to reduce equity market risks associated with these liabilities. CIGNA completed a review of reserves in 2003 and recognized an after-tax charge of $286 million ($441 million pre-tax) relating to both actual and projected future partial surrenders, as well as updates to other assumptions such as mortality. In addition, CIGNA recorded a $720 million after-tax charge ($1.1 billion pre-tax) in 2002 in connection with stock market declines and implementation of a risk reduction program for these liabilities.  See page 20 for further discussion of these charges.	If a 10% unfavorable change were to occur for the following assumptions, the approximate after-tax decrease in net income would be as follows: • Mortality – $75 million • Volatility – $55 million • Lapse – $40 million • Interest rates – $30 million • Future partial surrenders – $10 million Management believes the current assumptions and other considerations used to estimate reserves for these liabilities are appropriate. However, if actual experience differs from the assumptions and other considerations (including lapse, partial surrender, mortality, interest rates and volatility) used in estimating reserves, the resulting changes could have a material adverse effect on CIGNA’s consolidated results of operations, and in certain situations, could have a material adverse effect on CIGNA’s financial condition. The amounts would be reflected in the Run-off Reinsurance segment.
Unpaid claims and claim expenses –  Unpaid claims for guaranteed cost and minimum premium programs and retrospectively experience-rated health care products Unpaid claims and related liabilities for these health care products include both reported claims and estimates for losses incurred but not yet reported.	Unpaid claims and related liabilities for these health care products are estimated using actuarial models based on historical data for payment patterns, cost trends, product mix, seasonality, utilization of health care services and other relevant factors. Reserves for these liabilities for the year ended December 31 were as follows: • 2003 – $1.9 billion • 2002 – $1.8 billion • 2001 – $1.5 billion The above amounts reflect that portion of unpaid claims and claim expenses included in CIGNA’s consolidated balance sheets, which are attributable to these health care operations. It excludes amounts for administrative services only business. The estimation process for determining liabilities for unpaid claims for health care products inherently results in adjustments each year for claims incurred (but not paid) in preceding years. During the year ended December 31, CIGNA’s net income was increased for such adjustments for prior year claims, as follows (amounts after-tax): • 2003 – $48 million • 2002 – $44 million • 2001 – $36 million	A 1% increase in the assumed medical cost trend would reduce net income by approximately $45 million after-tax annually. This charge would impact the Health Care segment.

17

Balance Sheet Caption /		Effect if
Nature of Critical Estimate Item	Assumptions / Approach Used	Different Assumptions Used
Reinsurance recoverables – Reinsurance  recoverables in Run-off Reinsurance Collectibility of reinsurance recoverables requires an assessment of risks that such amounts will not be collected, including risks associated with reinsurer default and disputes with reinsurers regarding applicable coverage.	The amount of reinsurance recoverables in the Run-off Reinsurance segment, net of reserves, represents management’s best estimate of recoverability, including an assessment of the financial strength of reinsurers. The ultimate amounts received are dependent, in certain cases, on the resolution of disputes with reinsurers, including the outcome of arbitration and litigation proceedings. Net reinsurance recoverables in the Run-off Reinsurance segment for the year ended December 31, were as follows: • 2003 – $621 million • 2002 – $765 million • 2001 – $938 million	A 10% reduction of net reinsurance recoverables at December 31, 2003, would reduce net income by approximately $50 million after-tax. This charge would impact the Run-off Reinsurance segment.
Investments – Fixed maturities  Recognition of losses from “other than temporary” impairments of public and private placement fixed maturities Losses for “other than temporary” impairments of fixed maturities must be recognized in net income based on an estimate of fair value by management. Changes in fair value are reflected as an increase or decrease in shareholders’ equity. A decrease in fair value is recognized in net income when the decrease is determined to be “other than temporary.” Determining whether a decline in value is “other than temporary” includes an evaluation of the reasons for and the significance of the decrease in value of the security as well as the duration of the decrease.	Management estimates the amount of “other than temporary” impairment when a decline in value is expected to persist, using quoted market prices for public securities with active markets and the present value of future cash flows for private placement bonds. Expected future cash flows are based on historical experience of the issuer and management’s expectation of future performance. CIGNA recognized “other than temporary” impairments of investments in fixed maturities as follows (after-tax, excluding policyholder share*): • 2003 – $73 million • 2002 – $84 million • 2001 – $120 million  See Note 8(A) to the Financial Statements for a discussion of review of declines in fair value.	For all fixed maturities with cost in excess of their fair value, the excess of cost which has not been recognized in net income as of December 31, 2003, was approximately $37 million, after-tax. For private placement bonds considered impaired, a decrease of 10% of all expected future cash flows for the impaired bonds would reduce net income by approximately $7 million after-tax.

* Investment securities are attributable to CIGNA’s various business segments; amounts noted are presented from a consolidated perspective and are net of experience-rated pension policyholder share (i.e., these amounts exclude the impact of losses in 2003, 2002 and 2001 on investment assets related to experience-rated pension policyholder contracts because these amounts generally accrue to the policyholders). As of October 1, 2003, investment assets related to experience-rated pension policyholder contracts were reclassified from fixed maturities to “Securities supporting experience-rated pension policyholder contracts” on CIGNA’s balance sheet and CIGNA no longer recognizes other than temporary impairments because changes in the fair values of these securities are reported in net income in each period.  See Note 8(B) to the Financial Statements for additional discussion.

18

Management’s Discussion and Analysis

SALE OF RETIREMENT BUSINESS

In November 2003, CIGNA entered into an agreement to sell its retirement business, excluding the corporate life insurance business, for cash proceeds of $2.1 billion. The sale, which is subject to regulatory approvals and other conditions prior to closing, is expected to be completed around the end of the first quarter of 2004. The agreement provides that the sale price will be reduced by $250 million if the financial strength rating of Connecticut General Life Insurance Company, a CIGNA subsidiary that underwrites much of the business sold by CIGNA’s retirement benefits business, is downgraded to certain levels by S&P and Moody’s before the sale closes. CIGNA considers downgrades to those levels to be unlikely.

The determination of the gain on sale will be affected by transaction costs, changes in net assets through the closing date from the results of operations, and other adjustments. The transaction will be primarily in the form of a reinsurance arrangement, therefore a significant portion of the gain will be deferred and amortized over future periods and reported in results of continuing operations.

Segment earnings for the business to be sold, which includes the special items noted on  page 25, were approximately $225 million in 2003, $200 million in 2002, and $195 million in 2001.

OTHER MATTERS

Restructuring Programs

In order to drive productivity improvement, CIGNA is implementing a restructuring program and expects to record a charge in the first quarter of 2004. This charge is associated with planned organizational changes to streamline functional support resources and to adjust its operations to reflect a new operating strategy and current business volumes. Management does not expect the charge to exceed $75 million, after-tax. In addition, CIGNA expects to record additional charges later in 2004 related to this restructuring. The total of all charges is not expected to exceed $100 million after-tax for 2004.

Corporate effectiveness initiative. In 2003, CIGNA adopted a restructuring program to attain certain operational efficiencies in its corporate staff functions and to achieve additional cost savings. As a result, CIGNA recognized in other operating expenses an after-tax charge in Corporate of $9 million ($13 million pre-tax) for severance costs for the expected reduction of approximately 280 employees. As of December 31, 2003, $6 million ($9 million pre-tax) of the severance cost has been paid. Annualized after-tax savings are estimated to be $15 million reflecting the elimination of salary and benefits costs for terminated employees.

Fourth quarter 2002 program. In 2002, CIGNA adopted a restructuring program primarily to realign the organizational structure and operations of its health care business. As a result, CIGNA recognized during 2002 in other operating expenses, a net after-tax charge of $97 million ($151 million pre-tax) in the Health Care segment. These amounts reflect a reduction in costs of $2 million after-tax ($3 million pre-tax) for other postretirement benefits for employees terminated in 2002. The benefit cost reduction continued in 2003 as employees were terminated.

During 2003, CIGNA reduced the remaining liability for this program by $15 million after-tax ($23 million pre-tax) of which $5 million after-tax ($8 million pre-tax) occurred during the fourth quarter of 2003. These reductions were primarily due to higher than expected attrition (which did not result in severance benefits or costs) and lower costs relating to outplacement and other services.

This restructuring program was substantially completed in the fourth quarter of 2003. Cash outlays under this program did not result in, nor are the remaining cash outlays expected to have, a significant effect on liquidity. Net annual after-tax savings from this program were approximately $100 million in 2003 and are expected to be approximately $150 million in 2004, reflecting the elimination of salary and benefit costs for terminated employees and lower facility costs.

The table below shows CIGNA’s restructuring activity (pre-tax) related to severance and real estate for this program:

		Severance
		No. of						Real			Remaining
(Dollars in millions)		Employees			Cost			Estate			Liability
Fourth quarter 2002 charge			3,890		$	116		$	38		$	154
Fourth quarter 2002 activity:
	Employees		(713	)		(4	)					(4	)
	Lease costs								—			—
	Asset write-downs								(4	)		(4	)
Balance as of December 31, 2002			3,177			112			34			146
2003 activity:
	Employees		(2,414	)		(75	)					(75	)
	Lease costs								(9	)		(9	)
	Reduction of remaining balance		(708	)*		(22	)		(1	)		(23	)
Balance as of December 31, 2003			55		$	15		$	24		$	39

* Due to higher than expected attrition.

Fourth quarter 2001 program. In 2001, CIGNA adopted a restructuring program primarily to consolidate existing health service centers into regional service centers. As a result, CIGNA recognized in other operating expenses an after-tax charge of $59 million ($91 million pre-tax) in the Health Care segment and $3 million ($5 million pre-tax) in the Disability and Life segment.

This restructuring program was substantially completed in the fourth quarter of 2002. Cash outlays under this program did not result in, nor are the remaining cash outlays expected to have, a significant effect on CIGNA’s liquidity. Beginning in 2003, the program resulted in net annual after-tax savings of approximately $50 million.

19

The table below shows CIGNA’s restructuring activity (pre-tax) for this program:

		Severance
		No. of						Real			Remaining
(Dollars in millions)		Employees			Cost			Estate			Liability
Fourth quarter 2001 charge			3,100		$	48		$	48		$	96
Fourth quarter 2001 activity:
	Employees		(436	)		(5	)					(5	)
	Lease costs								(1	)		(1	)
	Asset write-downs								(11	)		(11	)
Balance as of December 31, 2001			2,664			43			36			79
2002 activity:
	Employees		(2,366	)		(36	)					(36	)
	Lease costs								(2	)		(2	)
	Adjustment of remaining balance		(143	)		7			(11	)		(4	)
Balance as of December 31, 2002			155			14			23			37
2003 activity:
	Employees		(155	)		(14	)					(14	)
	Lease costs								(7	)		(7	)
	Reduction of remaining balance		—			—			(5	)		(5	)
Balance as of December 31, 2003			—		$	—		$	11		$	11

In the fourth quarter of 2003, CIGNA reduced its remaining liability for this program resulting from favorable sublet activity.

Minimum Pension Liability

During 2003, CIGNA’s minimum pension liabilities declined resulting in a net after-tax increase to equity of $47 million (of which $60 million after-tax occurred during the fourth quarter of 2003). This decline was primarily due to the effect on plan assets of stock market appreciation, partially offset by a decrease in long-term interest rates used to determine the accumulated benefit obligation. During 2002, CIGNA’s minimum pension liabilities increased due to the effect of equity market declines on the value of pension plan assets and reduced long-term interest rates resulting in an after-tax charge to equity of $638 million.

Charges in Run-off Reinsurance

In 2003 and 2002, CIGNA recognized charges to strengthen reserves for guaranteed minimum death benefit contracts and, in 2002, to adopt a program to substantially reduce equity market risks related to these contracts. In 2002, CIGNA also recognized a charge to strengthen reserves for other run-off reinsurance exposures.  See the Run-off Reinsurance segment beginning on page 26 for further information on these charges.

Other Acquisitions and Dispositions

CIGNA may from time to time acquire or dispose of assets, subsidiaries or lines of business. Significant transactions are described below.

Sale of Japanese pension operations. In September 2003, CIGNA sold its interest in a Japanese pension operation for cash proceeds of $18 million and recognized an after-tax gain of $5 million in the International segment. The gain is reported in continuing operations since this operation was accounted for under the equity method of accounting.

Sale of Lovelace Health Systems Inc. In January 2003, CIGNA sold the operations of Lovelace, an integrated health care system, for cash proceeds of $209 million and recognized an after-tax gain of $32 million, which was reported in discontinued operations. In 2002, CIGNA began reporting this business as discontinued operations and prior period financial information was reclassified.

Sale of Brazilian health care operations. In January 2003, CIGNA sold its Brazilian health care operations. The sale generated an after-tax gain of $18 million, primarily as a result of the disposition of the net liabilities associated with these operations. The gain is reported in discontinued operations. Prior period financial information has not been reclassified due to immateriality.

Sale of interest in Japanese life insurance operation. In 2001, CIGNA sold its remaining interest in its Japanese life insurance operation for an after-tax gain of $35 million. The gain was reported in the International segment.

Events of September 11, 2001

As a result of claims arising from the events of September 11, 2001, CIGNA recorded after-tax charges of $25 million in 2001. CIGNA reported these charges in certain segments in the following amounts: Health Care, $5 million; Disability and Life, $15 million; Retirement, $3 million; and Run-off Reinsurance, $2 million. During the fourth quarter of 2002, CIGNA reduced its estimate of these liabilities, and recognized an after-tax gain of $2 million in the Run-off Reinsurance segment.

Regulatory and Industry Developments

Health care regulation. The business of administering and insuring employee benefit programs, particularly health care programs, is heavily regulated by federal and state laws and administrative agencies, such as state departments of insurance and the federal Departments of Labor and Justice, as well as the courts. Regulation and judicial decisions have resulted in changes to industry and CIGNA’s business practices and will continue to do so in the future. In addition, CIGNA’s subsidiaries are routinely involved with various claims, lawsuits and regulatory audits and investigations that could result in financial liability, changes in business practices, or both. Health care regulation in its various forms could have an adverse effect on CIGNA’s health care operations if it inhibits CIGNA’s ability to respond to market demands or results in increased medical or administrative costs without improving the quality of care or services.

The United States Supreme Court has agreed to review a case involving a CIGNA subsidiary in which the issue is preemption by the Employee Retirement Income Security Act (ERISA) of a state law tort claim in circumstances involving a determination, based on medical judgment, that benefits were

20

Management’s Discussion and Analysis

not covered. A determination that ERISA does not preempt state law would have an adverse effect on the health care industry and on CIGNA.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) and related regulations have created significant regulatory requirements related to, among other things, the privacy of individually identifiable health care information, electronic data interchange and the security of electronic health information. CIGNA has instituted systems enhancements and training, and has undertaken other administrative efforts to satisfy these requirements. CIGNA’s incremental technology and business-related after-tax expenses associated with HIPAA compliance efforts were approximately $55 million in 2003 and $20 million in 2002.

Other possible regulatory changes that could have an adverse effect on CIGNA’s health care operations include:

• additional mandated benefits or services that increase costs without improving the quality of care;

• narrowing of ERISA preemption of state laws;

• changes in ERISA regulations resulting in increased administrative burdens and costs;

• additional restrictions on the use of prescription drug formularies;

• additional privacy legislation and regulations that interfere with the proper use of medical information for research, coordination of medical care and disease management;

• additional rules establishing the time periods for payment of health care provider claims that vary from state to state; and

• legislation that would exempt independent physicians from antitrust laws.

The health care industry remains under scrutiny by various state and federal government agencies and could be subject to government efforts to bring criminal actions in circumstances that could previously have given rise only to civil or administrative proceedings.

Litigation and other legal matters. In January 2004, a Florida federal court handling multi-district health care litigation against CIGNA and several health care industry competitors approved a settlement agreement between the physician class and CIGNA, and dismissed all claims by class members against CIGNA. In February 2004, some class members filed a notice of appeal of the court’s approval of the settlement. If affirmed on appeal, the settlement would resolve for CIGNA and the plaintiffs all physician claims reflected in the litigation.

CIGNA recorded an after-tax charge of $37 million ($57 million pre-tax) in 2003 to increase the reserve for this settlement and other non-physician provider health care litigation. CIGNA had previously recognized an after-tax charge of $50 million ($77 million pre-tax) in 2002 for expected costs associated with the multi-district litigation. The reserve reflects expected insurance recoveries.

The U. S. Attorney’s Office for the Eastern District of Pennsylvania is investigating compliance with federal laws in connection with pharmaceutical companies’ marketing practices and their impact on prices paid by the government to pharmaceutical companies for products under federal health programs. As part of this investigation, CIGNA is responding to subpoenas concerning contractual relationships between pharmaceutical companies and CIGNA’s health care operations.

In 2002, several purported class action lawsuits, as well as two shareholder derivative complaints nominally brought on behalf of CIGNA, were filed in federal court in the Eastern District of Pennsylvania against CIGNA and certain of its senior officers and directors. These suits allege securities law violations and breaches of fiduciary duty. Two other purported class action lawsuits asserting violations of ERISA were filed against CIGNA and certain officers in the Eastern District of Pennsylvania by individuals who seek to represent a class of participants in the CIGNA 401(k) Plan who allegedly suffered losses on investments in CIGNA stock.

During 2002, a Connecticut federal court certified a class action lawsuit against CIGNA and the CIGNA Pension Plan. The plaintiffs are participants in the Plan who earned certain Plan benefits prior to 1998. The plaintiffs allege, among other things, that the Plan violated ERISA by impermissibly conditioning certain post-1997 benefit accruals on the amount of pre-1998 benefit accruals, that these conditions are not adequately disclosed to Plan participants, and that the Plan’s cash balance formula discriminates against older employees.

 See “Unicover and other run-off reinsurance” on page 27 for a description of legal matters arising out of the run-off reinsurance operations.

CIGNA is routinely involved in numerous claims, lawsuits, regulatory audits, investigations and other legal matters arising, for the most part, in the ordinary course of the business of administering and insuring employee benefit programs. An increasing number of claims are being made for substantial non-economic, extra-contractual or punitive damages. The outcome of litigation and other legal matters is always uncertain, and outcomes that are not justified by the evidence can occur. CIGNA believes that it has valid defenses to the legal matters pending against it and is defending itself vigorously. Nevertheless, it is possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to CIGNA’s consolidated results of operations, liquidity or financial condition.

Summary. The eventual effect on CIGNA of the changing environment in which it operates remains uncertain. For additional information on contingencies that could affect CIGNA’s results,  see Note 22 to the Financial Statements.

Accounting Pronouncements

For information on recent accounting pronouncements,  see Note 2(B) to the Financial Statements.

21

Segment Reporting

In 2003, CIGNA changed its segment presentation to report its health care operations and its separately managed group disability and life insurance operations as two discrete segments. Previously, results from these operations were combined as a single segment. In addition, CIGNA has renamed its segments as Health Care, Disability and Life, Retirement, International, Run-off Reinsurance and Other Operations.

Disability and life insurance products that were historically sold in connection with certain experience-rated medical accounts and continue to be managed by CIGNA’s health care business are reported in the Health Care segment.

Operating segments generally reflect groups of related products, but the International segment is based on geography. CIGNA measures the financial results of its segments using “segment earnings,” which is defined as income (loss) from continuing operations excluding realized investment gains (losses).  See Note 20 to the Financial Statements for additional segment information and a reconciliation of segment earnings to CIGNA’s consolidated income (loss) from continuing operations.

HEALTH CARE

(In millions)
Financial Summary	2003			2002			2001
Premiums and fees	$	12,265		$	12,624		$	11,578
Net investment income		283			298			335
Other revenues		1,145			924			685
Segment revenues		13,693			13,846			12,598
Benefits and expenses		13,012			13,146			11,546
Income before taxes		681			700			1,052
Income taxes		234			245			381
Segment earnings		447			455			671
Adjustment to exclude goodwill amortization in 2001		—			—			48
Segment earnings, excluding goodwill amortization	$	447		$	455		$	719
Realized investment gains (losses), net of taxes	$	44		$	(34	)	$	(54	)
Special items (after-tax) included in segment earnings:
Restructuring, net	$	26		$	(95	)	$	(59	)
Health care provider litigation	$	(37	)	$	(50	)	$	—
Intangible asset write-off for provider contracts	$	(10	)	$	—		$	—
Charges for the events of September 11, 2001	$	—		$	—		$	(5	)

Results

Segment earnings decreased slightly for 2003 reflecting a deterioration in underlying operations in 2003 somewhat mitigated by lower amounts from special items in 2003. Excluding special items, segment earnings declined 22% due to higher medical costs relative to premiums, lower membership and higher administrative expenses. The declines in these areas were partially offset by improved results in the specialty health care operations, due to significant growth in the pharmacy business.

CIGNA experienced higher medical costs per member in 2003 primarily due to three factors: higher utilization, unit cost increases and costs related to reprocessing certain 2002 claims. Increased utilization largely resulted from certain operational challenges associated with the transition to a new centralized medical management system in the early part of 2003. The increases in unit costs primarily related to certain facility contracts with unfavorable medical reimbursement arrangements. Lastly, as a result of migrating to new systems platforms in 2002, there was a significant increase in the volume of claims submitted for reprocessing in 2003, which resulted in a greater proportion of additional payments than had been experienced historically.

The migration to the new systems platform also created service disruptions in 2002, which caused a decline in membership in 2003. CIGNA is taking steps to address each of these issues and improve performance.  See the Operational Improvement discussion below for further discussion of the key areas of focus.

Overall, medical membership, excluding the Medicaid business which CIGNA exited in 2003, declined 11% in 2003 largely resulting from the service disruptions and operational difficulties discussed above. The level of cancellations increased significantly in 2003, and new sales declined. Additional drivers impacting the results of the HMO and Indemnity operations are discussed more fully below.

CIGNA reports the results of this segment in two parts, HMO and Indemnity operations. HMO includes medical managed care and specialty health care operations such as managed behavioral health, medical cost and utilization management, managed dental, managed pharmacy programs and pharmaceutical fulfillment services. Indemnity includes medical and dental indemnity, and that portion of CIGNA’s group disability and life insurance business that continues to be managed by the health care business.

22

Management’s Discussion and Analysis

Segment earnings, excluding goodwill amortization in 2001, for the HMO and Indemnity operations were as follows:

(In millions)	2003			2002			2001
HMO operations	$	422		$	365		$	428
Indemnity operations		25			90			291
Total	$	447		$	455		$	719
Total special items (after-tax) for HMO and Indemnity operations:
HMO operations	$	(14	)	$	(90	)	$	(39	)
Indemnity operations	$	(7	)	$	(55	)	$	(25	)

HMO results, excluding the special items noted above, decreased in 2003 primarily due to lower Commercial HMO (guaranteed cost HMO excluding Medicare and Medicaid) results reflecting reduced membership and increased medical costs per member, partially offset by higher earnings in the specialty health care operations due to significant business growth in pharmacy fulfillment services, resulting from higher prescription volumes in 2003, and effective cost management.

Membership declined 24% in the Commercial HMO business in 2003, primarily due to higher cancellations attributable, in part, to the service disruptions discussed above, as well as lower new sales. The decline in Commercial HMO results also reflects an increase in the commercial medical cost ratio for this product (86.9% for 2003 compared with 84.9% for 2002) due to the medical cost drivers discussed above. These declines were partially offset by an improvement in the administrative expense ratio (12.7% for 2003 compared with 12.9% for 2002) resulting from restructuring actions and rate increases.

HMO results, excluding goodwill amortization in 2001 and special items noted above, decreased 3% in 2002 primarily due to:

• significantly lower earnings in HMO Administrative Services Only (ASO) programs, primarily resulting from higher operating expenses for customer service initiatives; and

• to a lesser extent, lower Medicare earnings.

These declines were partially offset by:

• significantly improved results in the specialty health care operations primarily due to business growth; and

• increased earnings in the guaranteed cost HMO business reflecting rate increases.

Indemnity results, excluding the special items noted above, decreased 78% in 2003 primarily due to:

• lower membership and higher operating expenses per member in indemnity ASO programs;

• higher payments under performance guarantees resulting from the service disruptions discussed above; and

• lower results in the guaranteed cost business primarily reflecting higher unit medical costs.

Membership in Indemnity ASO programs declined 12% in 2003 due to increased cancellations and lower new sales, primarily as a result of the service disruptions and operational challenges. The level of expenses, however, did not decline proportionately with membership, thus contributing to higher losses in ASO programs in 2003.

Indemnity results, excluding goodwill amortization in 2001 and the special items above, decreased 54% in 2002 due to the following factors:

• significantly lower earnings in the experience-rated and guaranteed cost health care businesses primarily due to lower margins on new business, poor performance of certain large new accounts and margin deterioration on renewal business; and

• higher expenses for the indemnity health care business primarily due to technology and customer service initiatives.

Premiums and Fees

Premiums and fees decreased in 2003 primarily reflecting lower revenue due to declining membership, partially offset by rate increases.

Premiums and fees increased in 2002 primarily due to HMO and medical indemnity rate increases.

Medical Membership

As of December 31, medical membership from continuing operations (excluding Medicare members) was as follows for the HMO and Indemnity operations:

(In millions)	2003		2002		2001
HMO		6.0		6.7		6.8
Indemnity (estimated)		5.5		6.3		6.4

See  “HMO” and  “Indemnity” results above for further discussion of declines in medical membership in 2003.

The decline in HMO medical membership in 2002 reflects lower Commercial HMO program membership, partially offset by growth in HMO ASO programs. The decline in Indemnity medical membership in 2002 primarily reflects cancellations in traditional indemnity programs.

Business Mix

Business mix, as measured by premiums and fees, was as follows for the year ended December 31:

	2003		2002		2001
HMO medical and dental		54%		55%		54%
Medical indemnity and PPO		37%		36%		34%
Life and other insurance coverages		5%		5%		7%
Dental indemnity and PPO		4%		4%		5%

23

Operational Improvement

CIGNA continues to focus on improving operational effectiveness and the financial results of its health care operations. Key areas of focus are:

• lowering medical cost trends;

• continuing to deliver quality service;

• lowering administrative expenses; and

• stabilizing and growing membership.

Lowering medical cost trend. In early 2003, CIGNA implemented a new centralized medical management model to help facilitate consistent levels of care to its members and to reduce infrastructure expenses. As a result, inpatient utilization rates, particularly in the Commercial HMO line of business, had declined during 2003.

CIGNA also expects to reduce its medical cost trend by managing unit medical costs more effectively. In 2003, CIGNA focused on contract renegotiations with certain facilities to reduce medical reimbursement costs. Contract renegotiations are expected to continue in 2004 and 2005.

Continuing to deliver quality service. During 2002, CIGNA began transitioning to a new service and systems platform to improve the level and quality of service to its customers. Approximately 65% of health care members were serviced on this new platform by January 1, 2004. While service disruptions occurred in early 2002 as a result of initial migration difficulties with the platform, customer satisfaction levels improved during 2003 and into 2004. Migration to this new platform will continue into 2005.

Lowering administrative expenses. Early in 2004, CIGNA took steps to realign its organization and consolidate support functions in an effort to increase efficiency and responsiveness to customers. Reducing costs and operating more efficiently is a component of CIGNA’s plan to improve profitability.  See page 19 for further discussion of a charge in first quarter 2004 related to this matter.

Stabilizing and growing membership. CIGNA is working to stabilize and grow membership by:

• sustaining service and medical cost management improvements;

• communicating those improvements to customers, key producers and benefit consultants;

• enhancing product offerings;

• demonstrating the value of CIGNA’s medical management and specialty health care capabilities; and

• improving the capabilities of the health care sales force.

CIGNA believes that effective execution in these key areas will accelerate earnings growth and improve profitability.

DISABILITY AND LIFE

(In millions)
Financial Summary	2003		2002			2001
Premiums and fees	$	1,807	$	1,712		$	1,881
Net investment income		250		260			264
Other revenues		—		1			1
Segment revenues		2,057		1,973			2,146
Benefits and expenses		1,876		1,808			2,078
Income before taxes		181		165			68
Income taxes		44		41			9
Segment earnings	$	137	$	124		$	59
Realized investment gains (losses), net of taxes	$	39	$	(50	)	$	5
Special items (after-tax) included in segment earnings:
Charges for the events of September 11, 2001	$	—	$	—		$	(15	)
Restructuring charge	$	—	$	—		$	(3	)

The Disability and Life segment includes group accident and specialty association business in addition to its disability and life products.

Results

Disability and Life segment earnings in 2003 reflect improvements in the life insurance business due largely to higher margins from rate actions taken in the year as well as lower expense ratios. Disability earnings were slightly higher in 2003 due to continued strong disability management execution.

Excluding special items, segment earnings also increased in 2002 due to increased earnings in both the disability and life insurance businesses. Disability results were higher due to rate actions taken in 2002 as well as improvements in disability management execution. Increased earnings in life insurance were primarily due to a focused effort on lowering operating expenses related to the product.

Premiums and Fees

Premiums and fees increased in 2003 reflecting rate actions in the life insurance business and higher persistency and new sales in both the disability and life insurance businesses.

Premiums and fees decreased in 2002 due to persistency losses, largely resulting from rate actions taken in the year and lower sales.

24

Management’s Discussion and Analysis

RETIREMENT

(In millions)
Financial Summary	2003			2002			2001
Premiums and fees	$	340		$	336		$	322
Net investment income		1,574			1,649			1,668
Other revenues		(126	)		—			—
Segment revenues		1,788			1,985			1,990
Benefits and expenses		1,411			1,658			1,681
Income before taxes		377			327			309
Income taxes		117			96			88
Segment earnings	$	260		$	231		$	221
Realized investment gains (losses), net of taxes	$	29		$	(68	)	$	(61	)
Special items (after-tax) included in segment earnings:
Reduction in allowance against amounts recoverable from pension policyholders	$	33		$	—		$	—
Charges for the events of September 11, 2001	$	—		$	—		$	(3	)

Results

Retirement segment earnings increased in 2003 primarily due to a reduction in the allowance against amounts recoverable from experience-rated pension policyholders.

Excluding the impact of this special item, results decreased 2% in 2003 reflecting a decline in pension earnings, partially offset by increased results in the corporate life insurance business resulting from favorable mortality. The decline in pension results was primarily due to lower margins in the pension business, partially offset by growth in ending assets under management.

Segment earnings increased in 2002 primarily due to a favorable shift to higher margin products, business growth and effective expense management, partially offset by the negative effect of stock market declines.

Other Revenues

Beginning October 1, 2003, other revenues include changes in fair value for fixed maturities and equity securities supporting experience-rated pension policyholder contracts. Under the experience-rating process, gains and losses on assets related to these contracts generally accrue to policyholders and are offset by amounts included in benefits, losses and settlement expenses.  See Note 2(D) to the Financial Statements for further discussion.

Assets Under Management

Assets under management consist of invested and separate account assets, as well as third-party investment advisory account assets of the Retirement segment. Assets under management are a key driver of earnings for this segment because a significant portion of this segment’s revenues is based on asset values.

The following table shows assets under management and related activity, including amounts attributable to separate accounts for the year ended December 31.

(In millions)	2003			2002
Balance—January 1	$	53,757		$	55,306
Premiums and deposits		7,342			8,797
Investment income		2,433			2,519
Increase (decrease) in fair value of assets		4,922			(4,207	)
Customer withdrawals		(4,007	)		(3,595	)
Other, including participant withdrawals and benefit payments		(6,900	)		(5,063	)
Balance—December 31	$	57,547		$	53,757

Changes in assets under management are discussed below.

Premiums and deposits. The decline in deposits in 2003 reflects both lower sales and lower required contributions to certain separate accounts supporting retiree benefit obligations. In 2003, approximately 71% of premiums and deposits were from existing customers, and 29% were from sales to new customers and new plan sales to existing customers.

In 2002, approximately 67% of premiums and deposits were from existing customers, and 33% were from sales to new customers and new plan sales to existing customers.

Fair value of assets. The fair value of assets under management fluctuates because of changes in the market value of fixed maturities, securities supporting experience-rated pension policyholder contracts, related derivatives and equity securities. The increase in fair value of assets in 2003 was primarily attributable to market value appreciation of equity securities in separate accounts, compared with depreciation of these securities in 2002.

Customer withdrawals. Withdrawals were higher in 2003 primarily due to persistency losses, which CIGNA believes resulted from the uncertainty of an impending sale and ratings downgrades, as well as higher business failures among customers.

Other. The increase includes lower required assets in certain separate accounts supporting retiree benefit obligations, and lower required surplus assets supporting certain statutory liabilities.

25

INTERNATIONAL

(In millions)
Financial Summary	2003		2002		2001
Premiums and fees	$	855	$	811	$	788
Net investment income		49		51		49
Other revenues		11		3		148
Segment revenues		915		865		985
Benefits and expenses		830		816		838
Income before taxes		85		49		147
Income taxes		30		18		52
Segment earnings	$	55	$	31	$	95
Realized investment gains (losses), net of taxes	$	5	$	4	$	(3	)
Special items (after-tax) included in segment earnings:
Gain on sale of Japanese pension operations	$	5	$	—	$	—
Gain on sale of interest in Japanese life insurance operation	$	—	$	—	$	35

Results

International segment earnings increased in 2003 partially due to the gain on sale of the Japanese pension operations. Excluding the gain on sale, segment earnings increased 61% in 2003, primarily due to:

• premium and fee growth in the expatriate employee benefit business; and

• the positive impact of the divestiture of under-performing businesses.

International segment earnings declined in 2002 because the 2001 results include $52 million in other revenue from CIGNA’s share in the earnings of the Japanese life insurance operation, which was fully divested in the fourth quarter of 2001. Excluding the results of the Japanese life insurance operation and the special item noted above, segment earnings increased significantly primarily due to:

• improved results for the expatriate employee benefit business;

• improved results in the life, accident and health operations (primarily in Asia); and

• lower health care losses in 2002.

Premiums and Fees

Premiums and fees increased in 2003 reflecting:

• higher premiums and fees for the expatriate employee benefit business due to rate increases and membership growth; and

• sales growth primarily in the life, accident and health operations in Asia.

These increases were partially offset by the absence of premiums and fees from the Brazilian health care and pension operations, which CIGNA sold in 2003.

Premiums and fees increased in 2002 reflecting:

• higher premiums and fees for health care and other expatriate benefit products; and

• growth in the life, accident and health operations in Asia.

RUN-OFF REINSURANCE

(In millions)
Financial Summary	2003			2002			2001
Premiums and fees	$	84		$	138		$	148
Net investment income		82			44			52
Other revenues		(551	)		91			120
Segment revenues		(385	)		273			320
Benefits and expenses		155			1,831			232
Income (loss) before taxes (benefits)		(540	)		(1,558	)		88
Income taxes (benefits)		(181	)		(488	)		31
Segment earnings (loss)	$	(359	)	$	(1,070	)	$	57
Realized investment gains (losses), net of taxes	$	13		$	(6	)	$	(9	)
Special items (after-tax) included in segment earnings:
Reserve charge on guaranteed minimum death benefit contracts	$	(286	)	$	(720	)	$	—
Charge for Unicover and London reinsurance matters	$	—		$	(317	)	$	—
Accelerated recognition of deferred gain on sale of life reinsurance business	$	—		$	3		$	69
(Charges) reduction for the events of September 11, 2001	$	—		$	2		$	(2	)

CIGNA’s reinsurance businesses are in run-off. No new reinsurance business has been underwritten since the sale of the U.S. individual life, group life and accidental death reinsurance business in 2000.

Results

The segment loss for Run-off Reinsurance was lower in 2003 than in 2002 due to higher reserve charges in 2002 related to guaranteed minimum death benefit contracts and to Unicover and London reinsurance matters. See further discussion under Other Matters below.

Excluding these special items, results were lower in 2003 primarily due to:

• increases in reserves for disputed contracts;

• higher losses in the personal accident business; and

• higher losses in the workers’ compensation business.

26

Management’s Discussion and Analysis

Excluding the special items noted above, the segment loss was higher in 2002 primarily due to:

• lower amortization of the deferred gain on the sale of the life reinsurance business;

• reserve strengthening associated with the workers’ compensation reinsurance business; and

• a decline in premiums and net investment income.

Other Revenues

As discussed further below, CIGNA maintains a program to substantially reduce the equity market exposures for guaranteed minimum death benefit contracts by selling exchange-traded futures and, beginning in 2003, foreign currency forward contracts. Other revenues include losses of $550 million in 2003 and gains of $87 million in 2002 from these contracts. Expense offsets reflecting corresponding changes in liabilities for these guaranteed minimum death benefit contracts are included in benefits, losses and settlement expenses. Other revenues in 2001 include $107 million in accelerated gain recognition from the 2000 sale.

Other Matters

Guaranteed minimum death benefit contracts. CIGNA’s reinsurance operations, which were discontinued in 2000 and are now an inactive business in run-off mode, reinsured a guaranteed minimum death benefit under certain variable annuities issued by other insurance companies. These variable annuities are essentially investments in mutual funds combined with a death benefit. Death benefits under the annuity contracts reinsured by CIGNA are determined using various methods.

The majority of CIGNA’s exposure arises under annuities that guarantee that the benefit received at death will be no less than the highest historical account value of the related mutual fund investments on an annuitant’s contract anniversary date. Under this type of death benefit, CIGNA is liable to the extent the highest historical anniversary account value exceeds the fair value of the related mutual fund investments at the time of an annuitant’s death. Other annuity designs that CIGNA reinsured guarantee that the benefit received at death will be no less than net deposits paid into the contract accumulated at a specified rate or net deposits paid into the contract. In periods of declining equity markets and in periods of flat equity markets following a decline, CIGNA’s liabilities for these guaranteed minimum death benefits increase.

CIGNA had future policy benefit reserves for these guaranteed minimum death benefit contracts of approximately $1.2 billion as of December 31, 2003, and approximately $1.4 billion as of December 31, 2002. The determination of the reserves for these contracts requires CIGNA to make critical accounting estimates, as discussed in the table on  page 17.

In 2003, following an analysis of experience and reserve assumptions for the guaranteed minimum death benefit product, CIGNA recognized an after-tax charge to increase reserves of $286 million ($441 million pre-tax). The reserve increase included a charge relating to both actual and projected future partial surrenders, as well as updates to other assumptions such as mortality.

In 2002, CIGNA recognized an after-tax charge of $720 million ($1.1 billion pre-tax) to strengthen reserves related to these guaranteed minimum death benefit contracts and to adopt a program to substantially reduce equity market risks related to these contracts.

The $720 million after-tax charge consisted of:

• $620 million after-tax, principally reflecting the reduction in assumed future equity market returns as a result of implementing the program and, to a lesser extent, changes to the policy lapse, mortality, market volatility and interest rate assumptions used in estimating the liabilities for these contracts; and

• $100 million after-tax reflecting deterioration in equity markets that occurred in the third quarter of 2002 (prior to implementation of the program).

 See Note 5 to the Financial Statements for further discussion on the program to reduce equity market risks on these contracts.

CIGNA has also written reinsurance contracts with issuers of variable annuity contracts that provide annuitants with certain guarantees related to minimum income benefits. See  page 32 for further information about these contracts.

Unicover and other run-off reinsurance. The Run-off Reinsurance operations participate in a workers’ compensation reinsurance pool, which ceased accepting new risks in early 1999. This pool was formerly managed by Unicover Managers, Inc. Although an arbitration over the most significant reinsurance (retrocessional) contracts for the pool was completed in 2002, some disputes over collection of amounts due CIGNA from the retrocessionaires continue and may require further arbitration actions to resolve. Also, disputes and arbitration regarding other reinsurance (retrocessional) contracts for the pool remain and may not be resolved for some time.

Run-off Reinsurance also includes other workers’ compensation reinsurance contracts, as well as personal accident reinsurance contracts, including contracts assumed in the London market. CIGNA obtained retrocessional reinsurance coverage for a significant portion of its liabilities under these contracts. Some of these retrocessionaires have disputed the validity of their contracts with CIGNA and arbitration over some of these disputes has commenced. CIGNA also bears the risk of loss if the retrocessionaires are unable to meet their reinsurance obligations to CIGNA.

In 2002, CIGNA recorded an after-tax charge of $317 million ($408 million pre-tax) based on the outcome of the Unicover arbitration in 2002, as well as a review of other exposures for the run-off reinsurance operations, including an assessment of retrocessional disputes and workers’ compensation and personal accident reinsurance exposures. This charge was net of ceded premiums returned to CIGNA of $31 million after-tax ($47 million pre-tax).

27

The retrocessional disputes are not expected to be resolved for some time. In addition, unfavorable claims experience related to workers’ compensation and personal accident exposures is possible and could result in future losses, including losses attributable to the inability to recover amounts from retrocessionaires (either due to disputes with the retrocessionaires or their financial condition).

Summary. CIGNA’s reserves for amounts recoverable from retrocessionaires, as well as for liabilities associated with underlying reinsurance exposures assumed by CIGNA, are considered appropriate as of December 31, 2003, based on current information. However, it is possible that future developments regarding these matters could result in a material adverse effect on CIGNA’s consolidated results of operations, and, in certain situations, could have a material adverse effect on CIGNA’s financial condition.

OTHER OPERATIONS

(In millions)
Financial Summary	2003			2002			2001
Premiums and fees	$	90		$	116		$	143
Net investment income		356			409			450
Other revenues		216			177			190
Segment revenues		662			702			783
Benefits and expenses		547			591			674
Income before taxes		115			111			109
Income taxes		42			37			33
Segment earnings	$	73		$	74		$	76
Realized investment gains (losses), net of taxes	$	(32	)	$	(1	)	$	10

Other Operations consist of:

• deferred gains recognized from the 1998 sale of the individual life insurance and annuity business;

• corporate life insurance on which policy loans are outstanding (leveraged corporate life insurance);

• settlement annuity business; and

• certain investment management services.

Results

Segment earnings for Other Operations in 2003 reflect:

• a favorable adjustment to the gain recognized from the sale of the individual life insurance and annuity business as a result of an account review; and

• improved results from investment management services.

These increases were offset by a decline in earnings in the leveraged corporate life insurance business due to an increase in the dividend liability for participating policies.

Segment earnings for Other Operations decreased in 2002 primarily due to the continued runoff of the leveraged corporate life insurance business and lower amortized gains on the sale of the individual life insurance business, partially offset by lower losses in investment management services.

Other Matters

Tax benefits for corporate life insurance. Federal legislation in 1996 eliminated on a prospective basis the tax deductibility of policy loan interest for most leveraged corporate life insurance products, and an Internal Revenue Service (IRS) initiative in 2001 encouraged policyholders to settle tax disputes regarding these products. As a result, some customers have surrendered their policies and management expects earnings associated with these products to continue to decline.

CORPORATE

(In millions)
Financial Summary	2003			2002			2001
Segment loss	$	(91	)	$	(87	)	$	(96	)
Special items (after-tax) included in segment loss:
Restructuring charge	$	(9	)	$	—		$	—

Corporate reflects amounts not allocated to segments, such as interest expense on corporate debt, net investment income on unallocated investments, intersegment eliminations and certain corporate overhead expenses.

The loss increased in 2003 primarily due to higher expenses due to the charge related to CIGNA’s corporate effectiveness initiative ( see page 19), partially offset by favorable tax adjustments.

The loss decreased 9% in 2002 primarily reflecting a decline in unallocated corporate overhead expenses.

DISCONTINUED OPERATIONS

(In millions)
Financial Summary	2003			2002			2001
Revenues	$	—		$	567		$	508
Income (loss) before income taxes (benefits)	$	(3	)	$	1		$	28
Income taxes (benefits)		(1	)		2			10
Income (loss) from operations		(2	)		(1	)		18
Gains on sales, net of taxes of $25		50			—			—
Income (loss) from discontinued operations	$	48		$	(1	)	$	18

Results from discontinued operations in 2003 were primarily driven by after-tax gains on sales of businesses, including:

• $32 million related to Lovelace ( see page 20); and

• $18 million related to the Brazilian health care operations ( see page 20).

Results from discontinued operations in 2002 and 2001 represent the results of operations from Lovelace.

28

Management’s Discussion and Analysis

LIQUIDITY AND CAPITAL RESOURCES

(In millions)
Financial Summary	2003		2002		2001
Short-term investments	$	147	$	86	$	137
Cash and cash equivalents	$	1,392	$	1,575	$	1,918
Short-term debt	$	—	$	130	$	49
Long-term debt	$	1,500	$	1,500	$	1,626
Shareholders’ equity	$	4,519	$	3,867	$	5,055

Liquidity

CIGNA normally meets its operating requirements by:

• maintaining appropriate levels of liquidity in its investment portfolio;

• using cash flows from operating activities; and

• matching investment maturities to the estimated duration of the related insurance and contractholder liabilities.

CIGNA’s operations have liquidity requirements that vary among the principal product lines.

Life insurance and pension plan reserves are primarily longer-term liabilities. Liquidity requirements are usually stable and predictable, and are supported primarily by medium-term, fixed-income investments.

Accident and health reserves, including reserves for long-term disability insurance, consist of both short-term and long-term liabilities. The settlement of reported claims is generally stable and predictable, but usually shorter-term, requiring greater liquidity.

CIGNA’s insurance and HMO subsidiaries are subject to regulatory restrictions that limit the amount of dividends or other distributions (such as loans or cash advances) these subsidiaries may provide to their shareholders without prior approval of regulatory authorities. These restrictions may limit the use of operating cash flows of the insurance and HMO subsidiaries for CIGNA’s general corporate purposes.  See Note 13 for additional information.

Cash flows from continuing operations for the year ended December 31 were as follows:

(In millions)	2003			2002			2001
Operating activities	$	2,308		$	1,378		$	1,063
Investing activities	$	(796	)	$	(1,486	)	$	(2,011	)
Financing activities	$	(1,695	)	$	(235	)	$	671

Cash and cash equivalents decreased $183 million in 2003 and $343 million in 2002.

Cash flows from operating activities consist of cash receipts and disbursements for premiums and fees, gains (losses) recognized in connection with CIGNA’s program to manage equity market risk related to guaranteed minimum death benefit contracts, investment income, taxes, and benefits, losses and expenses.

2003:

The increase in cash flows from operating activities primarily reflects the following factors:

• Net proceeds from sales and maturities of securities supporting experience-rated pension policyholder contracts of $867 million. Such proceeds were used to fund most of the withdrawals from contractholder deposit funds discussed below under financing;

• Tax refunds of $245 million in 2003, compared with tax and related payments of approximately $275 million in 2002. The tax refunds in 2003 related to loss carrybacks. Current tax liability increased in 2003 for which cash has not been disbursed; and

• Lower claim payments and amounts credited to policyholders of approximately $200 million, primarily in the reinsurance, retirement, and leveraged corporate life insurance businesses.

These factors were partially offset by the following:

• Lower cash revenues of approximately $600 million, resulting primarily from losses of $550 million associated with futures and forward contracts entered into as part of CIGNA’s program to manage equity risks in the Run-off Reinsurance segment compared with gains of $87 million in 2002; and

• Higher paid expenses of approximately $40 million reflecting higher payments in 2003 for expenses associated with restructuring charges.

Cash used in investing activities primarily consists of:

• Net purchases of investments of $920 million, reflecting the investment of cash flows from operating activities;

• Net purchases of property and equipment of $107 million, which are significantly lower than prior year due to less spending on technology and customer service initiatives in the health care business; and

• Proceeds on the sale of businesses of $231 million, which primarily consists of Lovelace and the Japanese pension operations.

Cash used in financing activities consists of:

• Net withdrawals from contractholder deposit funds of $1.4 billion, reflecting persistency losses in the retirement business resulting from ratings downgrades, the uncertainty of an impending sale and higher business failures among customers;

• Dividends on common stock of $185 million, reflecting dividends per share of $1.32; and

• Repayment of debt of $130 million, reflecting scheduled maturities of debt. CIGNA does not have any scheduled debt maturities until 2006.

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2002:

• The increase in cash flows from operating activities in 2002 primarily reflects higher cash revenues of approximately $1 billion (due to price increases and growth in the Health Care segment). This increase was partially offset by:

      – Higher cash expenses of approximately $470 million (primarily in the Health Care segment) reflecting customer service and technology initiatives, growth in the specialty lines of business as well as 2002 cash spending of approximately $40 million for the 2001 restructuring charge;

      – Higher tax payments of approximately $100 million, primarily due to taxes paid in 2002 for the 2001 gain on sale of interest in the Japanese life insurance operation;

      – Higher paid claims of approximately $90 million due to medical cost inflation, partially offset by membership declines, the absence of Medicare claim payments that had been made in 2001 due to the exit of certain Medicare markets and the timing of payment of claims; and

      – Lower collections of net investment income of approximately $30 million due to declining yields and the continued run-off of the leveraged corporate life insurance business.

• Cash used in investing activities consisted of net purchases of investments of approximately $1.1 billion and net purchases of property and equipment of $303 million.

• Cash used in financing activities consisted primarily of payments of dividends on and repurchases of common stock ($540 million), partially offset by net deposits to contractholder deposit funds ($282 million).

Capital Resources

CIGNA’s capital resources (primarily retained earnings and the proceeds from the issuance of long-term debt and equity securities) provide protection for policyholders, furnish the financial strength to underwrite insurance risks and facilitate continued business growth.

CIGNA has suspended share repurchase and retained capital since July 2002 in order to strengthen CIGNA’s principal subsidiary (Connecticut General Life Insurance Company or “CG Life”) and rebuild parent company financial flexibility as a result of the charges in the Run-off Reinsurance segment and reduced earnings in the Health Care segment.

CIGNA expects the net proceeds from the sale of the Retirement business, which should be completed around the end of the first quarter of 2004 subject to regulatory approvals and other conditions to closing, to be approximately $1.7 billion. CIGNA also expects its operating subsidiaries to provide approximately $500 million of dividends to the parent company during 2004. CIGNA expects to provide capital necessary to support growth and maintain or improve the financial strength ratings of its subsidiaries and, upon completion of the sale of the retirement business, to maintain at least $500 million of uncommitted cash at the parent company level through 2004. Following the retirement transaction, CIGNA expects to return capital to investors through share repurchase and will implement a new dividend policy. This policy, which reduces CIGNA’s quarterly dividend to shareholders to $.025 per share, is more consistent with the dividend policies of other managed care companies. In addition, CIGNA also expects to retire some outstanding debt.

Senior management, guided by regulatory requirements and rating agency capital guidelines, determine the amount of capital resources that CIGNA maintains. Management allocates resources to new long-term business commitments when returns, considering the risks, look promising and when the resources available to support existing business are adequate.

CIGNA has $500 million remaining under an effective shelf registration statement filed with the Securities and Exchange Commission, which may be issued as debt securities, equity securities or both. Management and the Board of Directors will consider market conditions and internal capital requirements when deciding whether CIGNA should issue new securities.

In May 2003, CIGNA entered into a syndicated bank letter of credit agreement for $433 million in support of a potential internal reinsurance arrangement. A letter of credit in a nominal amount is currently issued under this new agreement.

As of December 31, 2003, CIGNA had available $260 million in committed lines of credit. These lines are provided by U.S. banks and typically have terms ranging from one to three years. Approximately $160 million of CIGNA’s available lines of credit will expire within the next twelve months.

Liquidity and Capital Resources Outlook

The availability of resources at the parent/holding company level is partially dependent on dividends from CIGNA’s subsidiaries, most of which are subject to regulatory restrictions and rating agency capital guidelines. CIGNA expects, based on current projections for cash activity (including projections for dividends from subsidiaries), to have sufficient resources to:

• provide any funding to subsidiaries needed to support growth and maintain or improve their financial strength ratings;

• provide for the capital requirements of its subsidiaries;

• meet debt service requirements and pay dividends to CIGNA shareholders;

• satisfy pension plan funding requirements; and

• fund CIGNA’s program to reduce the equity market risks associated with guaranteed minimum death benefit contracts.

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Management’s Discussion and Analysis

However, if CIGNA’s projections are not realized, the demand for funds could exceed available cash if:

• management uses cash for investment opportunities;

• a substantial insurance or contractholder liability becomes due before related investment assets mature; or

• regulatory restrictions prevent the insurance and HMO subsidiaries from distributing cash.

In those cases, CIGNA has the flexibility to satisfy liquidity needs through short-term borrowings, such as lines of credit.

Ratings

CIGNA and certain of its insurance subsidiaries are rated by nationally recognized rating agencies. Ratings are always subject to change and there can be no assurance that CIGNA’s current ratings will continue for any given period of time. As of February 26, 2004, the current ratings of CIGNA and CG Life were as follows:

	CG Life Insurance		CIGNA Corporation
	Ratings		Debt Ratings
			Senior		Commercial
			Debt		Paper
A.M. Best		A-		—		—
Moody’s		A3		Baa3		P3
S&P		A		BBB		A2
Fitch		A+		BBB+		F2

Following the announcement in November 2003 that CIGNA has agreed to sell its retirement business, Moody’s and A.M. Best downgraded by one notch the financial strength rating of CG Life. Also, Moody’s downgraded by one notch the senior debt and commercial paper ratings of CIGNA. CIGNA anticipates one notch downgrades in CG Life’s rating from Standard and Poor’s and Fitch, and in CIGNA’s senior debt rating from Fitch, when the sale of the Retirement business is final. These downgrades reflect the reduced earnings available to the parent company following the sale. CIGNA is committed to maintaining appropriate levels of capital in its subsidiaries to support ratings that meet customers’ expectations, and to improving the earnings of the health care business. Lower ratings of CG Life could adversely affect new sales and retention of current business. Lower ratings at the parent company level increase the cost to borrow funds.

For additional information, refer to the Ratings section in CIGNA’s 2003 Form 10-K.

Guarantees and Contractual Obligations

CIGNA, through its subsidiaries, is contingently liable for various financial guarantees provided and contractual obligations entered into in the ordinary course of business.

Separate account assets are contractholder funds maintained in accounts with specific investment objectives. CIGNA records separate account liabilities equal to separate account assets. In certain cases, CIGNA guarantees a minimum level of benefits for retirement and insurance contracts written in separate accounts. CIGNA establishes an additional liability if management believes that CIGNA will be required to make a payment under these guarantees, which include the following:

• CIGNA guarantees that separate account assets will be sufficient to pay certain retiree or life benefits. The sponsoring employers are primarily responsible for ensuring that assets are sufficient to pay these benefits and are required to maintain assets that exceed a certain percentage of benefit obligations. This percentage varies depending on the asset class within a sponsoring employer’s 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 of separate account assets, CIGNA has the right to redirect the management of the related assets to provide for benefit payments. As of December 31, 2003, employers maintained assets that exceeded 102% to 132% of benefit obligations. Benefit obligations under these arrangements were $3.5 billion as of December 31, 2003, and $3.3 billion as of December 31, 2002. There were no additional liabilities required for these guarantees as of December 31, 2003 or 2002.

• For certain employer-sponsored savings and retirement plans, CIGNA guarantees that participants will receive the value of their accounts at the time of withdrawal. These guarantees could require payment by CIGNA in the event that a significant number of plan participants withdraw their accounts when the market value of the related separate account assets is less than the plan participant account values at the time of withdrawal. Participant account values under these arrangements are invested primarily in fixed income investments and were $2.0 billion as of December 31, 2003, and $1.7 billion as of December 31, 2002. There were no additional liabilities required for these guarantees as of December 31, 2003 or 2002.

• CIGNA guarantees a minimum level of earnings (based on investment, mortality and retirement experience) for a certain group annuity contract. If the actual investment return is less than the minimum guaranteed level, CIGNA is required to fund the difference. The guaranteed benefit obligation was $304 million as of December 31, 2003, and $313 million as of December 31, 2002. CIGNA had additional liabilities for this guarantee of $15 million as of December 31, 2003 and 2002.

CIGNA guaranteed a construction loan of $26 million as of December 31, 2003 ($106 million of construction loans as of December 31, 2002) related to a real estate joint venture investment. The loan is secured by joint venture real estate property with a fair value in excess of the loan amount and matures in 2008, including extension options. CIGNA would be required to repay the construction loan if permanent financing could not be obtained. CIGNA also guaranteed

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$14 million of interest and principal for industrial revenue bonds as of December 31, 2003 ($50 million as of December 31, 2002). The bonds, payable in 2007, are secured by property and other assets held by a real estate partnership and CIGNA has recourse to its partner for 50% of any amounts paid under the guarantee. There were no liabilities required for these guarantees as of December 31, 2003 or 2002.

CIGNA had indemnification obligations to lenders of up to $329 million as of December 31, 2003, and $280 million as of December 31, 2002, related to borrowings by certain real estate joint ventures in which CIGNA holds investments. These borrowings, which are nonrecourse to CIGNA, are secured by the joint ventures’ real estate properties, which have fair values in excess of the loan amounts, and mature at various dates from 2004 to 2015. CIGNA’s indemnification obligations would require payment to lenders for any actual damages resulting from certain acts such as unauthorized ownership transfers, misappropriation of rental payments by others or environmental damages. Based on initial and ongoing reviews of property management and operations, CIGNA does not expect that payments will be required under these indemnification obligations. Any payments that might be required could be recovered through a refinancing or sale of the assets. In some cases, CIGNA also has recourse to partners for their proportionate share of amounts paid. There were no liabilities required for these indemnification obligations as of December 31, 2003 or 2002.

As of December 31, 2003 and 2002, CIGNA guaranteed that it would compensate the lessor for a shortfall of up to $49 million in the market value of leased equipment at the end of the lease. Guarantees of $21 million expire in 2006 and $28 million expire in 2012.

CIGNA had indemnification obligations as of December 31, 2003, and 2002, in connection with acquisition and disposition transactions. These indemnification obligations would be triggered by the breach of representations or covenants provided by CIGNA, such as representations for the presentation of financial statements, the filing of tax returns or the identification of outstanding litigation. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential amount due is subject to contractual limitations based on a percentage of the transaction purchase price, while in other cases limitations are not specified or applicable. CIGNA does not believe that it is possible to determine the maximum potential amount due under these obligations, since not all amounts due under these indemnification obligations are subject to limitation. There were no liabilities required for these indemnification obligations as of December 31, 2003, or 2002.

CIGNA does not expect that these guarantees will have a material adverse effect on CIGNA’s consolidated results of operations, liquidity or financial condition.

Guaranteed minimum income benefit contracts. CIGNA has written reinsurance contracts with issuers of variable annuity contracts that provide annuitants with certain guarantees related to minimum income benefits. When annuitants elect to receive these minimum income benefits, CIGNA may be required to make payments based on changes in underlying mutual fund values and interest rates.

CIGNA has purchased reinsurance from third parties, which covers 80% of the exposures of these contracts. CIGNA estimates the fair value of the assets and liabilities associated with these contracts using assumptions as to equity market returns, volatility of the underlying equity and bond mutual fund investments, interest rates, mortality, annuity election rates, policy surrenders and credit risk.

CIGNA is required to disclose the maximum potential undiscounted future payments for guarantees related to minimum income benefits using hypothetical worse-case assumptions defined as follows:

• No annuitants surrendered their accounts; and

• All annuitants lived to elect their benefit; and

• All annuitants elected to receive their benefit on the first available date (beginning in 2004 through 2014); and

• All underlying mutual fund investment values remained at the December 31, 2003, value of $3.3 billion, with no future returns.

The maximum potential undiscounted payment that CIGNA would make under those assumptions would aggregate $1.8 billion before reinsurance recoveries. CIGNA believes the likelihood of such payment is remote. CIGNA has purchased reinsurance from third parties which covers 80% of the exposures on these contracts. CIGNA has revised credit risk assumptions for about 25% of the exposures on these contracts. CIGNA expects the amount of actual payments to be significantly less than this hypothetical undiscounted aggregate amount.

As of December 31, 2003, CIGNA had liabilities of $74 million related to these contracts and net amounts recoverable from reinsurers of $51 million. In 2003, CIGNA reduced its amount recoverable from reinsurers by $9 million pre-tax related to revised credit risk assumptions. CIGNA had an additional liability of $40 million associated with the cost of reinsurance as of December 31, 2003.

As of December 31, 2002, CIGNA had liabilities of $95 million related to these contracts and amounts recoverable from reinsurers of $76 million. CIGNA also had an additional liability of $44 million associated with the cost of reinsurance as of December 31, 2002.

Management believes the current assumptions used to estimate reserves for these liabilities are appropriate.  See Note 8(H) to the Financial Statements for further information.

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Management’s Discussion and Analysis

Contractual obligations. The maturities of CIGNA’s principal contractual cash obligations, excluding insurance liabilities, as of December 31, 2003, are as follows:

			Less
			than		1-3		4-5		After 5
(In millions)	Total		1 year		years		years		years
On-Balance Sheet:
Long-term debt	$	1,500	$	—	$	100	$	400	$	1,000
Other long-term liabilities		881		653		166		41		21
Off-Balance Sheet:
Purchase obligations		613		516		96		1		—
Operating leases		559		134		211		106		108
Total	$	3,553	$	1,303	$	573	$	548	$	1,129

• Other long-term liabilities. These items are presented in accounts payable, accrued expenses and other liabilities in CIGNA’s consolidated balance sheet. This table includes approximately $325 million of nondiscretionary pension contributions and $98 million of estimated benefit payments expected in 2004 for pension and other postretirement benefit plans. This amount of nondiscretionary pension contributions assumes that current minimum funding requirements continue unchanged. If Congressional discussions currently underway are finalized and provide rate relief similar to minimum funding requirements used in 2003, nondiscretionary pension contributions expected to be made in 2004 would approximate $175 million. CIGNA expects to make additional benefit plan payments subsequent to 2004, however these amounts have been excluded from the table as the timing of such payments is based on plan assumptions which may materially differ from actual plan activities ( see Note 15 to the Financial Statements for further information on pension and other postretirement benefit obligations). This table also includes estimated payments for deferred and supplemental compensation plans, interest rate, foreign currency and forward swap contracts and certain reinsurance liabilities.

• Purchase obligations. These items include estimated payments required under contractual arrangements for future services and investment commitments. As of December 31, 2003, CIGNA had commitments to purchase the following investments:

Fixed maturities	$	20 million
Securities supporting experience-rated pension policyholder contracts	$	35 million
Mortgage loans	$	324 million
Real estate joint ventures and security partnerships (other long-term investments)	$	135 million

CIGNA expects to disburse most of these committed amounts in 2004.

• Operating leases. For additional information,  see Note 19 to the Financial Statements.

Share Repurchase

CIGNA has a stock repurchase plan, which was authorized by its Board of Directors. Decisions to repurchase shares depend on market conditions and alternative uses of capital.

The total remaining share repurchase authorization as of February 26, 2004, was $572 million. CIGNA repurchased 3.5 million shares in 2002 for $343 million, and 12.0 million shares in 2001 for $1.1 billion. CIGNA did not repurchase shares in 2003.

INVESTMENT ASSETS

CIGNA’s investment assets do not include separate account assets. Additional information regarding CIGNA’s investment assets and related accounting policies is included in  Notes 2,  8,  9 and  10 to the Financial Statements and in CIGNA’s Form 10-K.

A significant portion of CIGNA’s investment assets is attributable to experience-rated pension policyholder contracts, associated with the retirement business. The following table shows, as of December 31, the percentage of certain categories of investment assets that are held under these policyholder contracts:

	2003		2002
Fixed maturities		—		48%
Securities supporting experience-rated pension policyholder contracts		100%		—
Mortgage loans		54%		56%
Real estate		46%		54%
Other long-term investments		24%		46%

Under the experience-rating process, net investment income and gains and losses on assets related to policyholder contracts generally accrue to these policyholders. Consequently, changes in fair value, write-downs, changes in valuation reserves and non-accruals on investments attributable to these policyholder contracts do not affect CIGNA’s net income except under unusual circumstances.

Fixed Maturities and Securities Supporting Experience-rated Pension Policyholder Contracts

Investments in fixed maturities (bonds) include publicly traded and privately placed debt securities, mortgage and other asset-backed securities and redeemable preferred stocks. Securities supporting experience-rated pension policyholder contracts predominantly consist of fixed maturities.

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The fair value of investments in fixed maturities and securities supporting experience-rated pension policyholder contracts as of December 31 were as follows:

(In millions)	2003		2002
Federal government and agency	$	990	$	1,197
State and local government		2,390		1,761
Foreign government		884		825
Corporate		19,297		17,796
Federal agency mortgage-backed		847		1,669
Other mortgage-backed		2,000		2,265
Other asset-backed		1,935		2,290
Total	$	28,343	$	27,803

Quality ratings. As of December 31, 2003, $27.1 billion, or 96%, of the fixed maturities and securities supporting experience-rated pension policyholder contracts in CIGNA’s investment portfolio were investment grade (Baa and above, or equivalent), and the remaining $1.2 billion were below investment grade. Most of the bonds that are below investment grade are rated at the higher end of the non-investment grade spectrum. Approximately 32% of CIGNA’s below investment grade portfolio is attributable to experience-rated pension policyholder contracts.

Private placement investments are generally less marketable than public bonds, but yields on these investments tend to be higher than yields on publicly offered debt with comparable credit risk. The fair value of private placement investments was $11.5 billion as of December 31, 2003, and $11.0 billion as of December 31, 2002. CIGNA maintains controls on its participation in private placement investments. In particular, CIGNA performs a credit analysis of each issuer, diversifies investments by industry and issuer and requires financial and other covenants that allow CIGNA to monitor issuers for deteriorating financial strength so CIGNA can take remedial actions, if warranted.

Because of the higher yields and the inherent risk associated with privately placed investments and below investment grade securities, gains or losses from such investments could significantly affect future results of operations. However, management does not expect such gains or losses to be material to CIGNA’s liquidity or financial condition.

Mortgage Loans

CIGNA’s mortgage loans are diversified by property type, location and borrower to reduce exposure to potential losses. CIGNA routinely monitors and evaluates the status of its mortgage loans by reviewing loan and property-related information, including cash flows, expiring leases, financial health of the borrower and major tenants, loan payment history, occupancy and room rates for hotels and, for commercial properties, significant new competition. CIGNA evaluates this information in light of current economic conditions as well as geographic and property type considerations.

Problem and Potential Problem Bonds and Mortgage Loans

“Problem” bonds and mortgage loans are either delinquent or have been restructured as to terms (interest rate or maturity date). “Potential problem” bonds and mortgage loans are fully current, but management believes they have certain characteristics that increase the likelihood that they will become “problems.” For example, CIGNA considers mortgage loans to be potential problems if the borrower has requested restructuring, or principal or interest payments are past due by more than 30 but fewer than 60 days.

CIGNA recognizes interest income on “problem” bonds and 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 $8 million in 2003, $14 million in 2002 and $12 million in 2001.

The following table shows problem and potential problem bonds and mortgage loans, net of valuation reserves and write-downs, as of December 31, including amounts attributable to policyholder contracts:

(In millions)	2003		2002
Problem bonds	$	132	$	182
Potential problem bonds	$	161	$	243
Problem mortgage loans	$	24	$	48
Potential problem mortgage loans	$	335	$	191

The increase in potential problem mortgage loans reflects an increase in loans that CIGNA is closely monitoring. The loans do not require an increase in reserves at this time.

Real Estate

Investment real estate includes both real estate held and used and real estate held for sale. Most of the real estate held for sale was office buildings and retail facilities that were acquired as a result of foreclosure of mortgage loans. As of December 31, investment real estate (including amounts attributable to policyholder contracts) and related cumulative write-downs and valuation reserves were as follows:

(In millions)	2003		2002
Real estate held for sale	$	—	$	47
Less cumulative write-downs		—		8
Less valuation reserves		—		21
		—		18
Real estate held and used		248		303
Less cumulative write-downs		102		68
		146		235
Investment real estate	$	146	$	253

At December 31, 2003, 48% of the carrying value of the properties acquired through foreclosure was attributable to policyholder contracts, compared with 45% at December 31, 2002.

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Management’s Discussion and Analysis

Summary

The effect of investment asset write-downs and changes in valuation reserves on CIGNA’s net income and on amounts attributable to policyholder contracts was as follows:

(In millions)	2003		2002		2001
CIGNA	$	103	$	150	$	139
Policyholder contracts	$	61	$	199	$	78

CIGNA’s portion of these losses is a component of realized investment results, which are discussed on  page 16.

The weakness in certain sectors of the economy may cause additional investment losses. These investment losses could materially affect future results of operations, although CIGNA does not currently expect them to have a material effect on its liquidity or financial condition, or to result in a significant decline in the aggregate carrying value of its assets.

MARKET RISK

Financial Instruments

CIGNA’s assets and liabilities include financial instruments subject to the risk of potential losses from adverse changes in market rates and prices. CIGNA’s primary market risk exposures are:

• Interest-rate risk on fixed-rate, domestic, medium-term instruments. Changes in market interest rates affect the value of instruments that promise a fixed return.

• Foreign currency exchange rate risk of the U.S. dollar to the British pound, South Korean won, Hong Kong dollar, Taiwan dollar, Chilean peso, Canadian dollar and New Zealand dollar. An unfavorable change in exchange rates reduces the carrying value of net assets denominated in foreign currencies.

• Equity price risk for stocks and for specialty life reinsurance contracts that guarantee minimum death or income benefits resulting from unfavorable changes in variable annuity account values based on underlying mutual fund investments. At December 31, 2003, CIGNA’s investment in domestic equity securities (which primarily consists of various mutual fund investments including large cap, global and balanced funds) was $68 million. At December 31, 2002, CIGNA’s investment in domestic equity securities (which were primarily managed to mirror to S&P 500) was $261 million. CIGNA held $10 million in international equities at December 31, 2003, and $34 million at December 31, 2002. Substantially all of CIGNA’s international equities were issued by entities based in developed countries.

CIGNA’s Management of Market Risks

CIGNA predominantly relies on three techniques to manage its exposure to market risk:

• Investment/liability matching. CIGNA generally selects investment assets with characteristics (such as duration, yield, currency and liquidity) that correspond to the underlying characteristics of its related insurance and contractholder liabilities so that CIGNA can match the investments to its obligations. Shorter-term investments support generally shorter-term life and health liabilities. Medium-term, fixed-rate investments support interest- sensitive, experience-rated and health liabilities. Longer-term investments generally support longer-term, fully guaranteed products like annuities and longer-term life and health (principally long-term disability) liabilities.

• Use of local currencies for foreign operations. CIGNA generally conducts its international business through foreign operating entities that maintain assets and liabilities in local currencies. This substantially limits exchange rate risk to net assets denominated in foreign currencies.

• Use of derivatives. CIGNA generally uses derivative financial instruments to minimize certain market risks.

 See Notes 2(C) and  8(H) to the Financial Statements for additional information about financial instruments, including derivative financial instruments.

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Effect of Market Fluctuations on CIGNA

The examples shown in the table that follows illustrate the effect of hypothetical changes in market rates or prices on the fair value of certain financial instruments. Actual results could differ materially because the examples were developed using estimates and assumptions. Certain financial instruments, such as separate account assets and liabilities, are excluded from these hypothetical calculations because gains and losses in separate accounts generally accrue to policyholders. Insurance contract liabilities (48% of CIGNA’s non-separate account liabilities at December 31, 2003 and 2002) and reinsurance recoverables on unpaid losses (11% of CIGNA’s non-separate account assets at December 31, 2003 and 2002) are also excluded. In addition, the effect of a hypothetical change in equity indices and foreign exchange rates on fair values of futures and forward contracts used in a program for guaranteed minimum death benefit contracts is excluded from this table and discussed separately below.

Subject to these exclusions, the effects of hypothetical changes in market rates or prices on the fair values of certain of CIGNA’s financial instruments would have been as follows as of December 31:

Market scenario for certain
noninsurance financial instruments	Loss in fair value
(In millions)	2003		2002
100 basis point increase in interest rates	$	1,280	$	1,110
10% strengthening in U.S. dollar to foreign currencies	$	100	$	90
10% decrease in market prices for equity exposures	$	30	$	50

The effect of a hypothetical increase in interest rates on the fair values of certain of CIGNA’s financial instruments increased in 2003 due to increased fixed maturities supporting non-experienced-rated pension policyholder contracts.  See Note 2(D) to the Financial Statements for further discussion. The effect of a hypothetical increase in interest rates was determined by estimating the present value of future cash flows using various models, primarily duration modeling. The effect of a hypothetical strengthening of the U.S. dollar relative to the foreign currencies held by CIGNA was estimated to be 10% of the U.S. dollar equivalent fair value. The effect of a hypothetical decrease in the market prices of equity securities was estimated to be 10% of their fair value.

CIGNA began using futures contracts in 2002 as part of a program to substantially reduce the effect of equity market changes on certain specialty life reinsurance contracts that guarantee minimum death benefits based on unfavorable changes in variable annuity account values. During 2003, CIGNA began using foreign-denominated, exchange-traded futures contracts and foreign currency forward contracts to reduce international equity market risks associated with these guaranteed minimum death benefit contracts. The hypothetical effect of a 10% increase in the S&P 500, Russell 2000, NASDAQ, TOPIX (Japanese) and PAN-EURO equity indices and a 10% weakening in the U.S. dollar to the Japanese yen and EURO would have been a decrease of approximately $160 million in the fair value of the futures and forward contracts outstanding under this program as of December 31, 2003. A corresponding decrease in liabilities for guaranteed minimum death benefit contracts would result from the hypothetical 10% increase in these equity indices and 10% weakening in the U.S. dollar.  See Note 5 to the Financial Statements for further discussion of this program and related guaranteed minimum death benefit contracts.

Stock Market Performance

The performance of equity markets can have a significant effect on CIGNA’s businesses, including on:

• risks and exposures associated with guaranteed minimum death benefit ( see page 27) or income benefit contracts ( see page 32);

• earnings for the retirement business because changes in assets under management affect asset-based fees ( see page 25); and

• minimum pension liabilities since equity securities comprise a significant portion of the assets of CIGNA’s employee pension plans.

36

Management’s Discussion and Analysis

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

CIGNA and its representatives may from time to time make written and oral forward-looking statements, including statements contained in press releases, in CIGNA’s filings with the Securities and Exchange Commission, in its reports to shareholders and in meetings with analysts and investors. Forward-looking statements may contain information about financial prospects, economic conditions, trends and other uncertainties. For example, this Management’s Discussion and Analysis includes forward-looking information regarding, among other things, the completion of CIGNA’s sale of its retirement business, CIGNA’s restructuring programs and activities, litigation and other legal matters, operational improvement in the health care operations, and the outlook for CIGNA’s full year 2004 results. You should not place undue reliance on these forward-looking statements. CIGNA cautions that actual results could differ materially from those that management expects, depending on the outcome of certain factors. Some factors that could cause actual results to differ materially from the forward-looking statements include:

1.	increases in medical costs that are higher than anticipated in establishing premium rates in CIGNA’s health care operations, including increased use and costs of medical services;
2.	increased medical, administrative, technology or other costs resulting from legislative and regulatory challenges to, and new regulatory requirements imposed on, CIGNA’s health care business (see Health care regulation on  page 20 for more information);
3.	challenges and risks associated with implementing the planned improvement initiatives in the health care operations, the organizational realignment and the reduction of overall CIGNA and health care cost structure, including that operational efficiencies and medical cost benefits do not emerge as expected;
4.	risks associated with completing the sale of CIGNA’s retirement benefits business, final terms and timing of the sale and the amount of the gain;
5.	risks associated with pending and potential state and federal health care class action lawsuits, purported securities class action lawsuits, disputes regarding reinsurance arrangements, other litigation challenging CIGNA’s businesses and the outcome of pending government proceedings;
6.	heightened competition, particularly price competition, which could reduce product margins and constrain growth in CIGNA’s businesses;
7.	significantly greater than expected reductions in medical membership;
8.	significant changes in interest rates;
9.	downgrades in the financial strength ratings of CIGNA’s insurance subsidiaries, which could, among other things, adversely affect new sales and retention of current business and the sale price of the retirement business;

10.	limitations on the ability of CIGNA’s insurance subsidiaries to dividend capital to the parent company as a result of downgrades in the subsidiaries’ financial strength ratings, changes in statutory reserve or capital requirements or other financial constraints;
11.	inability of the program adopted by CIGNA to substantially reduce equity market risks for reinsurance contracts that guarantee minimum death benefits under certain variable annuities (including possible market difficulties in entering into appropriate futures and forwards contracts and in matching such contracts to the underlying equity risk);
12.	adjustments to the reserve assumptions and other considerations (including lapse, partial surrender, mortality, interest rates and volatility) used in estimating CIGNA’s liabilities for reinsurance contracts that guarantee minimum death benefits under certain variable annuities;
13.	adjustments to the assumptions used in estimating CIGNA’s assets and liabilities for reinsurance contracts that guarantee minimum income benefits under certain variable annuities;
14.	significant stock market declines, which could, among other things, reduce results in CIGNA’s retirement business and result in increased pension expenses in CIGNA’s pension plan in future periods and the recognition of additional pension obligations;
15.	unfavorable claims experience related to workers’ compensation and personal accident exposures of the run-off reinsurance business, including losses attributable to the inability to recover claims from retrocessionaires;
16.	significant deterioration in economic conditions, which could have an adverse effect on CIGNA’s operations and investments; and
17.	changes in federal income tax laws.

This list of important factors is not intended to be exhaustive. There may be other risk factors that would preclude CIGNA from realizing the forward-looking statements. While CIGNA may periodically update this discussion of risk factors, CIGNA does not undertake to update any forward-looking statement that may be made by or on behalf of CIGNA prior to its next required filing with the Securities and Exchange Commission.

37

Consolidated Statements of Income

(In millions, except per share amounts)
For the years ended December 31,			2003		2002			2001
Revenues
Premiums and fees			$	15,441	$	15,737		$	14,860
Net investment income				2,594		2,716			2,842
Other revenues				622		1,133			1,080
Realized investment gains (losses)				151		(238	)		(175	)
		Total revenues		18,808		19,348			18,607
Benefits, Losses and Expenses
Benefits, losses and settlement expenses				12,220		14,314			11,976
Policy acquisition expenses				241		246			237
Other operating expenses				5,444		5,357			4,925
		Total benefits, losses and expenses		17,905		19,917			17,138
Income (Loss) from Continuing Operations before Income Taxes (Benefits)				903		(569	)		1,469
Income taxes (benefits):
	Current			96		(131	)		293
	Deferred			187		(41	)		205
		Total taxes (benefits)		283		(172	)		498
Income (Loss) from Continuing Operations				620		(397	)		971
Income (Loss) from Discontinued Operations				48		(1	)		18
Net Income (Loss)			$	668	$	(398	)	$	989
Net Income (Loss) Excluding Goodwill Amortization in 2001 ( Note 2)			$	668	$	(398	)	$	1,037
Basic Earnings (Loss) Per Share:
Income (loss) from continuing operations			$	4.44	$	(2.83	)	$	6.57
Income from discontinued operations				0.34		—			0.12
Net income (loss)			$	4.78	$	(2.83	)	$	6.69
Net income (loss) excluding goodwill amortization in 2001 ( Note 2)			$	4.78	$	(2.83	)	$	7.01
Diluted Earnings (Loss) Per Share:
Income (loss) from continuing operations			$	4.41	$	(2.83	)	$	6.47
Income from discontinued operations				0.34		—			0.12
Net income (loss)			$	4.75	$	(2.83	)	$	6.59
Net income (loss) excluding goodwill amortization in 2001 ( Note 2)			$	4.75	$	(2.83	)	$	6.91

38

Consolidated Balance Sheets

(In millions, except per share amounts)
As of December 31,						2003						2002
Assets
Investments:
	Fixed maturities, at fair value (amortized cost, $15,772; $25,948)					$	17,121					$	27,803
	Securities supporting experience-rated pension policyholder contracts, at fair value (amortized cost, $10,558 for 2003)						11,222						—
	Equity securities, at fair value (cost, $47; $239)						78						295
	Mortgage loans						8,655						8,729
	Policy loans						1,572						2,405
	Real estate						146						253
	Other long-term investments						717						791
	Short-term investments						147						86
		Total investments					39,658						40,362
Cash and cash equivalents							1,392						1,575
Accrued investment income							468						504
Premiums, accounts and notes receivable							3,026						3,206
Reinsurance recoverables							6,395						6,775
Deferred policy acquisition costs							580						494
Property and equipment							973						1,078
Deferred income taxes							1,001						1,257
Goodwill							1,620						1,620
Other assets, including other intangibles							447						624
Separate account assets							35,393						31,255
Assets of discontinued operations							—						200
		Total assets				$	90,953					$	88,950
Liabilities
Contractholder deposit funds						$	26,979					$	29,374
Unpaid claims and claim expenses							4,708						4,535
Future policy benefits							11,545						11,848
Unearned premiums							326						243
	Total insurance and contractholder liabilities						43,558						46,000
Accounts payable, accrued expenses and other liabilities							5,983						6,123
Short-term debt							—						130
Long-term debt							1,500						1,500
Separate account liabilities							35,393						31,255
Liabilities of discontinued operations							—						75
		Total liabilities					86,434						85,083
Contingencies —  Note 22
Shareholders’ Equity
Common stock (shares issued, 275; 273)							69						68
Additional paid-in capital							3,279						3,212
Net unrealized appreciation, fixed maturities			$	610					$	512
Net unrealized appreciation, equity securities				29						26
Net unrealized appreciation (depreciation), derivatives				(12	)					6
Net translation of foreign currencies				(14	)					(32	)
Minimum pension liability adjustment				(667	)					(714	)
	Accumulated other comprehensive loss						(54	)					(202	)
Retained earnings							9,782						9,299
Less treasury stock, at cost							(8,557	)					(8,510	)
		Total shareholders’ equity					4,519						3,867
		Total liabilities and shareholders’ equity				$	90,953					$	88,950
Shareholders’ Equity Per Share						$	32.14					$	27.75

39

Consolidated Statements of Comprehensive Income and Changes in Shareholders’ Equity

(In millions, except per share amounts)
For the years ended December 31,
		2003						2002						2001
		Compre-			Share-			Compre-			Share-			Compre-			Share-
		hensive			holders’			hensive			holders’			hensive			holders’
		Income			Equity			Income			Equity			Income			Equity
Common Stock, beginning of year					$	68					$	68					$	67
Issuance of common stock for employee benefit plans						1						—						1
Common Stock, end of year						69						68						68
Additional Paid-In Capital, beginning of year						3,212						3,093						2,966
Issuance of common stock for employee benefit plans						67						119						127
Additional Paid-In Capital, end of year						3,279						3,212						3,093
Accumulated Other Comprehensive Income (Loss), beginning of year						(202	)					147						221
Net unrealized appreciation, fixed maturities		$	98			98		$	323			323		$	26			26
Net unrealized appreciation (depreciation), equity securities			3			3			(24	)		(24	)		(80	)		(80	)
Net unrealized appreciation (depreciation) on securities			101						299						(54	)
Net unrealized appreciation (depreciation), derivatives			(18	)		(18	)		(4	)		(4	)		10			10
Net translation of foreign currencies			18			18			(6	)		(6	)		(30	)		(30	)
Minimum pension liability adjustment			47			47			(638	)		(638	)		—			—
	Other comprehensive income (loss)		148						(349	)					(74	)
Accumulated Other Comprehensive Income (Loss), end of year						(54	)					(202	)					147
Retained Earnings, beginning of year						9,299						9,882						9,081
Net income (loss)			668			668			(398	)		(398	)		989			989
Common dividends declared (per share: $1.32; $1.32; $1.28)						(185	)					(185	)					(188	)
Retained Earnings, end of year						9,782						9,299						9,882
Treasury Stock, beginning of year						(8,510	)					(8,135	)					(6,922	)
Repurchase of common stock						—						(343	)					(1,139	)
Other treasury stock transactions, net						(47	)					(32	)					(74	)
Treasury Stock, end of year						(8,557	)					(8,510	)					(8,135	)
Total Comprehensive Income (Loss) and Shareholders’ Equity		$	816		$	4,519		$	(747	)	$	3,867		$	915		$	5,055

40

Consolidated Statements of Cash Flows

(In millions)
For the years ended December 31,		2003			2002			2001
Cash Flows from Operating Activities
Income (loss) from continuing operations		$	620		$	(397	)	$	971
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities:
	Insurance liabilities		(71	)		1,797			(264	)
	Reinsurance recoverables		186			161			(33	)
	Deferred policy acquisition costs		(80	)		(39	)		(51	)
	Premiums, accounts and notes receivable		62			(261	)		(22	)
	Accounts payable, accrued expenses and other liabilities		33			288			93
	Current income taxes		341			(417	)		198
	Deferred income taxes		187			(41	)		205
	Realized investment (gains) losses		(151	)		238			175
	Depreciation and amortization		246			221			235
	Gains on sales of businesses (excluding discontinued operations)		(92	)		(75	)		(255	)
	Proceeds from sales and maturities of securities supporting experience-rated pension policyholder contracts, net of purchases		867			—			—
	Other, net		160			(97	)		(189	)
	Net cash provided by operating activities of continuing operations		2,308			1,378			1,063
Cash Flows from Investing Activities
Proceeds from investments sold:
	Fixed maturities		7,984			4,348			2,496
	Equity securities		292			123			200
	Mortgage loans		886			1,324			629
	Other (primarily short-term investments)		7,921			5,459			2,425
Investment maturities and repayments:
	Fixed maturities		2,210			2,059			2,288
	Mortgage loans		1,310			928			592
Investments purchased:
	Fixed maturities		(11,271	)		(9,788	)		(6,169	)
	Equity securities		(55	)		(127	)		(196	)
	Mortgage loans		(2,067	)		(1,056	)		(1,489	)
	Other (primarily short-term investments)		(8,130	)		(4,418	)		(2,431	)
Proceeds on sales of businesses, net			231			—			350
Deconsolidation of Japanese life insurance operation			—			—			(327	)
Property and equipment, net			(107	)		(303	)		(366	)
Other, net			—			(35	)		(13	)
	Net cash used in investing activities of continuing operations		(796	)		(1,486	)		(2,011	)
Cash Flows from Financing Activities
Deposits and interest credited to contractholder deposit funds			7,963			8,535			8,565
Withdrawals and benefit payments from contractholder deposit funds			(9,349	)		(8,253	)		(6,965	)
Net change in short-term debt			(3	)		(9	)		13
Issuance of long-term debt			—			—			493
Repayment of long-term debt			(127	)		(36	)		(144	)
Repurchase of common stock			—			(355	)		(1,139	)
Issuance of common stock			6			68			38
Common dividends paid			(185	)		(185	)		(190	)
	Net cash provided by (used in) financing activities of continuing operations		(1,695	)		(235	)		671
Effect of foreign currency rate changes on cash and cash equivalents			—			—			(1	)
Net cash from discontinued operations			—			—			17
Net decrease in cash and cash equivalents			(183	)		(343	)		(261	)
Cash and cash equivalents, beginning of year			1,575			1,918			2,179
Cash and cash equivalents, end of year		$	1,392		$	1,575		$	1,918
Supplemental Disclosure of Cash Information:
	Income taxes paid (received), net	$	(245	)	$	218		$	121
	Interest paid	$	114		$	120		$	109

41

Notes to the Financial Statements

Note 1 – Description of Business

CIGNA Corporation’s subsidiaries provide employee benefits offered through the workplace. Key product lines include health care products and services (medical, pharmacy, behavioral health, clinical information management, dental and vision benefits, and case and disease management); group disability, life and accident insurance; retirement products and services; and investment management. In addition, CIGNA has an international operation that offers similar products to businesses and individuals in selected markets, and has certain inactive businesses including a run-off reinsurance operation. See  Note 4(A) for information regarding the pending sale of the retirement business.

Note 2 – Summary of Significant Accounting Policies

A. Basis of Presentation

The consolidated financial statements include the accounts of CIGNA Corporation, its significant subsidiaries, and certain variable interest entities of which CIGNA is the primary beneficiary, which are referred to collectively as “CIGNA.” Intercompany transactions and accounts have been eliminated in consolidation.

These consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States. Amounts recorded in the financial statements reflect management’s estimates and assumptions about medical costs, investment valuation, interest rates and other factors. Significant estimates are discussed throughout these Notes; however, actual results could differ from those estimates.

Results of operations of Lovelace Health Systems, Inc. (Lovelace), an integrated health care system and subsidiary of CIGNA, are reported as discontinued operations because CIGNA sold that business in January 2003 ( see Note 4(C)). Unless otherwise indicated, amounts in these Notes exclude the effects of discontinued operations.

Certain reclassifications have also been made to prior years’ amounts to conform to the 2003 presentation.

B. Recent Accounting Pronouncements

Consolidation. In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, “Consolidation of Variable Interest Entities,” that provides criteria for consolidating certain entities based on majority ownership of expected losses or residual returns. In December 2003, the FASB postponed the required implementation date for certain entities to March 31, 2004. On that date, CIGNA expects to record additional assets and liabilities, primarily associated with real estate joint ventures, of up to $125 million each, including $110 million of nonrecourse liabilities. In the unlikely event that all of the underlying assets of these entities had no value and all other participants in these entities failed to meet their obligations, CIGNA estimates that its maximum exposure to loss at December 31, 2003 would approximate $80 million, representing CIGNA’s net investment in and additional commitments to these entities, including recourse liabilities. CIGNA expects to recover the recorded amounts of its investments in variable interest entities.

CIGNA currently consolidates certain variable interest entities for which CIGNA serves as asset manager. These entities issue investment products secured by commercial loan pools and have investments and nonrecourse liabilities of approximately $215 million each at December 31, 2003. CIGNA also consolidates real estate joint ventures with assets of $20 million and nonrecourse liabilities of $5 million.

Derivative Instruments. In April 2003, the FASB issued an amendment to Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS No. 133). Implementation of the SFAS No. 133 amendment in the third quarter of 2003 had no effect on CIGNA’s financial statements. In addition, the FASB finalized an implementation issue relating to SFAS No. 133, effective October 1, 2003.

The implementation issue and a recently issued Statement of Position (described below) address accounting for liabilities that provide contractholders with returns based on pools of investments, and each permits a one-time accounting reclassification of investment securities from available-for-sale to trading. In the fourth quarter of 2003, CIGNA reclassified securities supporting experience-rated pension policyholder contracts associated with its retirement business to trading, and now reports these securities in a separate balance sheet caption. Under the experience-rating process, unrealized gains and losses recognized for these securities accrue to policyholders. Accordingly, the accounting reclassification did not affect CIGNA’s net income.

The implementation issue requires companies to recognize the fair value of an embedded derivative in contractholder liabilities. This embedded derivative reflects contractual features including the changes in credit risk of a pool of investments. The effect of implementing this requirement was not material to CIGNA’s financial statements.

The sale of CIGNA’s retirement business is generally expected to result in the transfer of the pool of investments and securities supporting experience-rated pension policyholder contracts discussed above to the buyer. See  Note 4(A) for information about this sale.

Additional information regarding SFAS No. 133 and the nature and accounting treatment of CIGNA’s derivative financial instruments is included in  Note 8(H).

Long-Duration Contracts. In July 2003, the American Institute of Certified Public Accountants issued a Statement of Position (SOP), “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts,” for implementation in the first quarter of 2004.

42

Notes to the Financial Statements

The SOP addresses accounting for certain contractual features of investment-related and universal life contracts and for separate accounts. The cumulative effect of implementing the SOP in the first quarter of 2004 is expected to reduce net income by approximately $125 million, of which $120 million results from recording liabilities for certain experience-rated pension policyholder contracts based on the appreciated value of associated pools of investments, primarily mortgage loans. Based on historical changes in interest rates and credit spreads, future volatility in benefits, losses and settlement expenses may be material to CIGNA’s net income, and possibly to CIGNA’s shareholders’ equity. This volatility would result from adjusting liabilities for unrealized changes in the fair values of mortgage loans, while mortgage loans are carried at amortized cost. The sale of CIGNA’s retirement business discussed in  Note 4(A) is expected to result in the transfer of mortgages supporting experience-rated pension policyholder contracts to the buyer. The remaining cumulative effect results from implementing the SOP’s requirements applicable to universal life contracts and separate accounts.

CIGNA’s accounting for reinsurance of guaranteed minimum death benefits and guaranteed minimum income benefits is not affected by the provisions of the SOP.

Goodwill and other intangible assets. As of January 1, 2002, CIGNA adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 eliminates the practice of amortizing goodwill through periodic charges to earnings and establishes a new methodology for reporting and measuring goodwill and other intangible assets.

In accordance with the standard, CIGNA ceased goodwill amortization on January 1, 2002. Although goodwill is no longer amortized, SFAS No. 142 requires goodwill to be evaluated for impairment at least annually, and written down through earnings when impaired. At implementation, CIGNA’s evaluation of its goodwill, based on discounted cash flow analyses, resulted in no impairment loss. CIGNA’s annual evaluations of its goodwill during 2003 and 2002 also resulted in no impairment loss. See  Note 2(J) for results of CIGNA’s annual evaluation of its other intangible assets.

For comparative purposes, the following table adjusts net income (loss) and basic and diluted earnings (loss) per share for the year ended December 31, 2001, as if goodwill amortization had ceased at the beginning of 2001. Goodwill amortization is attributable to the Health Care segment.

(In millions, except per share amounts)	2003		2002			2001
Reported net income (loss)	$	668	$	(398	)	$	989
Adjustment for goodwill amortization, after-tax		—		—			48
Adjusted net income (loss)	$	668	$	(398	)	$	1,037
Reported basic earnings (loss) per share	$	4.78	$	(2.83	)	$	6.69
Adjustment for goodwill amortization, after-tax		—		—			0.32
Adjusted basic earnings (loss) per share	$	4.78	$	(2.83	)	$	7.01
Reported diluted earnings (loss) per share	$	4.75	$	(2.83	)	$	6.59
Adjustment for goodwill amortization, after-tax		—		—			0.32
Adjusted diluted earnings (loss) per share	$	4.75	$	(2.83	)	$	6.91

Impairment of long-lived assets. As of January 1, 2002, CIGNA adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” and reclassified real estate of $119 million to “held and used” from “held for sale.” Adoption of SFAS No. 144 did not have a material effect on CIGNA’s consolidated financial statements. See  Note 2(D) for further information regarding the accounting treatment of CIGNA’s real estate investments.

C. Financial Instruments

In the normal course of business, CIGNA enters into transactions involving various types of financial instruments. These financial instruments include:

• various investments (such as fixed maturities, securities supporting experience-rated pension policyholder contracts and equity securities);

• short- and long-term debt; and

• off-balance-sheet instruments (such as investment and certain loan commitments and financial guarantees).

These instruments may change in value due to interest rate and market fluctuations, and most also have credit risk. CIGNA evaluates and monitors each financial instrument individually and, when management considers it appropriate, uses a derivative instrument or obtains collateral or another form of security to minimize risk of loss.

43

Most financial instruments that are subject to fair value disclosure requirements are carried in the financial statements at amounts that approximate fair value. The following table shows the fair values and carrying values of CIGNA’s financial instruments not carried at fair value, at the end of 2003 and 2002:

(In millions)	2003				2002
	Fair		Carrying		Fair		Carrying
	Value		Value		Value		Value
Mortgage loans	$	9,293	$	8,655	$	9,622	$	8,729
Contractholder deposit funds, excluding universal life products	$	19,235	$	18,823	$	20,906	$	20,268
Long-term debt	$	1,667	$	1,500	$	1,488	$	1,500

Fair values of off-balance-sheet financial instruments were not material.

Fair values of financial instruments are based on quoted market prices when available. When market prices are not available, management estimates fair value based on discounted cash flow analyses, which use current interest rates for similar financial instruments with comparable terms and credit quality. Management estimates the fair value of liabilities for contractholder deposit funds using the amount payable on demand and, for those deposit funds not payable on demand, using discounted cash flow analyses. In many cases, the estimated fair value of a financial instrument may differ significantly from the amount that could be realized if the instrument were sold immediately.

D. Investments

A significant portion of CIGNA’s investment assets is attributable to experience-rated pension policyholder contracts associated with the retirement business. Under the experience-rating process for pension contracts, net investment income and other revenues on these assets generally accrue to policyholders and are primarily offset by amounts included in benefits, losses and settlement expenses. Realized and unrealized investment gains and losses on these assets are reported net of amounts that accrue to pension policyholders. See  Note 2(B) for a discussion of CIGNA’s 2003 reclassification of securities supporting experience-rated pension policyholder contracts.

Realized and unrealized investment gains and losses are also reported net of amounts to adjust future policy benefits for certain annuities that would be required had related investments been sold at their current fair values.

Fixed maturities, equity securities and securities supporting experience-rated pension policyholder contracts. Fixed maturities include bonds, mortgage- and other asset-backed securities and redeemable preferred stocks. Equity securities include common and non-redeemable preferred stocks. These investments are classified as available for sale and are carried at fair value with changes in fair value recorded in shareholders’ equity. Fixed maturities and equity securities are considered impaired, and their cost basis is written down to fair value through earnings, when management expects a decline in value to persist (i.e. the decline is “other than temporary”).

Securities supporting experience-rated pension policyholder contracts include fixed maturities and equity securities. Beginning October 1, 2003, these securities are classified as trading and are carried at fair value, with changes in fair value reported in other revenues. Under the experience-rating process, results generally accrue to policyholders and are offset by amounts reported in benefits, losses and settlement expenses.

Mortgage loans. Mortgage loans are carried at unpaid principal balances. Impaired loans are carried at the lower of unpaid principal or fair value of the underlying collateral. CIGNA estimates the fair value of the underlying collateral primarily using internal appraisals. Mortgage loans are considered impaired when it is probable that CIGNA will not collect amounts due according to the terms of the loan agreement.

Real estate. Investment real estate can be “held and used” or “held for sale.” As of January 1, 2002, CIGNA adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” and accounts for real estate as follows:

• Real estate “held and used” is expected to be held longer than one year and includes real estate acquired through the foreclosure of mortgage loans. CIGNA carries real estate held and used at depreciated cost less any write-downs to fair value due to impairment and assesses impairment when cash flows indicate that the carrying value may not be recoverable. Depreciation is generally calculated using the straight-line method based on the estimated useful life of the particular real estate asset.

• Real estate is “held for sale” when a buyer’s investigation is completed, a deposit has been received and the sale is expected to be completed within the next year. Real estate held for sale is carried at the lower of carrying value or current fair value, less estimated costs to sell, and is not depreciated. Valuation reserves reflect any changes in fair value.

• CIGNA uses several methods to determine the fair value of real estate, but relies primarily on discounted cash flow analyses and, in some cases, third party appraisals.

Real estate acquired through the foreclosure of mortgage loans prior to implementation of SFAS No. 144 was generally classified as “held for sale.” At the time of foreclosure, properties are reclassified from mortgage loans to real estate. CIGNA rehabilitates, re-leases and sells foreclosed properties. This process usually takes from 2 to 4 years unless management considers a near-term sale preferable.

Short-term investments. CIGNA classifies short-term investments as available for sale and carries them at fair value, which approximates cost.

Policy loans. Policy loans are carried at unpaid principal balances.

44

Notes to the Financial Statements

Other long-term investments. Other long-term investments include assets in the separate accounts in excess of separate account liabilities (see  Note 2(K)). These assets are carried at fair value. Investments in unconsolidated entities in which CIGNA has significant influence are carried at cost plus CIGNA’s ownership percentage of reported income or loss. These entities include certain partnerships and limited liability companies holding real estate and securities.

Net investment income. When interest and principal payments on investments are current, CIGNA recognizes interest income when it is earned. CIGNA stops recognizing interest income when interest payments are delinquent or when certain terms (interest rate or maturity date) of the investment have been restructured. Net investment income on these investments is only recognized when interest payments are actually received.

Investment gains and losses. Realized investment gains and losses are net of policyholder share and result from sales, investment asset write-downs and changes in valuation reserves based on specifically identified assets. Unrealized gains and losses on fixed maturities and equity securities carried at fair value are included in accumulated other comprehensive income (loss), net of policyholder share and deferred income taxes.

Beginning October 1, 2003, changes in the fair values of securities supporting experience-rated pension policyholder contracts are reported in other revenues.

Derivative financial instruments.  Note 8(H) discusses CIGNA’s accounting policies for derivative financial instruments.

E. Cash and Cash Equivalents

Cash equivalents consist of short-term investments that will mature in three months or less from the time of purchase.

F. Reinsurance Recoverables

Reinsurance recoverables are estimates of amounts that CIGNA will receive from reinsurers and are recorded net of amounts management believes will not be received.

G. Deferred Policy Acquisition Costs

Acquisition costs consist of incentive payments, commissions, premium taxes and other costs that CIGNA incurs to acquire new business. Depending on the product line they relate to, CIGNA records acquisition costs in different ways. Acquisition costs for:

• Contractholder deposit funds and universal life products are deferred and amortized in proportion to the present value of total estimated gross profits over the expected lives of the contracts.

• Annuity and other individual life insurance (primarily international) and group health indemnity products are deferred and amortized, generally in proportion to the ratio of periodic revenue to the estimated total revenues over the contract periods.

• Other products are expensed as incurred.

Management estimates the present value of future revenues less expected payments on products that carry deferred policy acquisition costs. If that estimate is less than the deferred costs, CIGNA reduces deferred policy acquisition costs and records an expense.

H. Property and Equipment

Property and equipment is carried at cost less accumulated depreciation. When applicable, cost includes interest, real estate taxes and other costs incurred during construction. Also included in this category is internal-use software that is acquired, developed or modified, solely to meet CIGNA’s internal needs, with no plan to market externally. Costs directly related to obtaining, developing or upgrading internal-use software are capitalized. Unamortized internal-use software costs were $477 million at December 31, 2003, and $500 million at December 31, 2002.

Most of the unamortized internal-use software costs relate to CIGNA’s health care business, which is currently engaged in a multi-year project to convert to newly designed systems and processes to support business growth and service to customers. CIGNA has incurred total costs for this project of approximately $1.1 billion from 1999 through 2003, of which $460 million has been capitalized and $640 million has been expensed as incurred. Accumulated amortization of capitalized amounts for this project was $41 million at December 31, 2003, and $15 million at December 31, 2002.

Capitalized costs for this multi-year project are amortized over a 7.5 year period. The amounts of amortization will increase as additional members are migrated to the new systems.

For other capitalized costs, CIGNA calculates depreciation and amortization principally using the straight-line method based on the estimated useful life of each asset.

Accumulated depreciation and amortization on property and equipment was $1.2 billion at December 31, 2003 and $1.1 billion at December 31, 2002.

I. Goodwill

Goodwill represents the excess of the cost of businesses acquired over the fair value of their net assets. CIGNA adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” and ceased goodwill amortization as of January 1, 2002. CIGNA evaluates goodwill for impairment annually based on discounted cash flow analyses and writes it down through earnings when impaired.

45

J.  Other Assets, including Other Intangibles

Other assets consist primarily of various insurance-related assets. CIGNA’s other intangible assets are primarily purchased customer lists and provider contracts. CIGNA amortizes other intangibles on a straight-line basis over ten year periods. Management revises amortization periods if it believes there has been a change in the length of time that an intangible asset will continue to have value. In 2003, CIGNA recorded a $16 million pre-tax charge ($10 million after-tax) in other operating expenses for the impairment of provider contracts that had been terminated or substantially amended by the Health Maintenance Organization (HMO) operations.

The gross carrying value of CIGNA’s other intangible assets was $198 million at December 31, 2003 and $247 million at December 31, 2002. The accumulated amortization was $107 million at December 31, 2003 and $113 million at December 31, 2002.

K. Separate Accounts

Separate account assets and liabilities are contractholder funds maintained in accounts with specific investment objectives, including at December 31, 2002 assets and liabilities of separate trust arrangements for the benefit of purchasers of certain investment products. The assets of these accounts are legally segregated and are not subject to claims that arise out of any of CIGNA’s other businesses. These accounts are carried at fair value. The investment income, gains and losses of these accounts generally accrue to the contractholders and are not included in CIGNA’s revenues and expenses. Fees earned for asset management services are reported in premiums and fees.

The management fee that CIGNA charges to separate accounts includes a guarantee fee. These fees are recognized in income as earned.

L. Contractholder Deposit Funds

Liabilities for contractholder deposit funds include deposits received from customers for investment-related and universal life products and investment earnings on their fund balances. These liabilities are adjusted to reflect administrative charges, policyholder share of changes in fair value of related investment assets and, for universal life fund balances, mortality charges.

M. Unpaid Claims and Claim Expenses

Liabilities for unpaid claims and claim expenses are estimates of payments to be made under insurance coverages, primarily health and life, for reported claims and for losses incurred but not yet reported. Management develops these estimates using actuarial methods based upon historical data for payment patterns, cost trends, product mix, seasonality, utilization of health care services and other relevant factors. When estimates change, CIGNA records the adjustment in benefits, losses and settlement expenses in the period in which the change in estimate is identified.

N. Future Policy Benefits

Future policy benefits are liabilities for the present value of estimated future obligations under traditional life and health policies and annuity products currently in force. These obligations are estimated using actuarial methods and primarily consist of reserves for life and disability insurance benefits, annuity contracts and guaranteed minimum death benefit contracts.

Obligations for life and disability insurance policies represent benefits to be paid to policyholders, net of future premiums to be received. Obligations for annuities represent fixed monthly benefits to be paid to a group of individuals over their remaining lives. These obligations are estimated based on assumptions as to premiums, interest rates, mortality, morbidity and surrenders, allowing for adverse deviation. Mortality, morbidity and surrender assumptions are based on either CIGNA’s own experience or actuarial tables. Interest rate assumptions are based on management’s judgment considering CIGNA’s experience and future expectations, and range from 2% to 10%. Obligations for certain annuities include adjustments for amounts that would be required had related investments been sold at their current fair values.

Certain specialty life reinsurance contracts guarantee a minimum death benefit under variable annuities issued by other insurance companies. These obligations represent the guaranteed death benefit in excess of the annuitant’s account values (based on underlying equity and bond mutual fund investments). These obligations are estimated based on assumptions and other considerations for lapse, partial surrenders, mortality, interest rates and market volatility as well as investment returns and premiums, consistent with the requirements of generally accepted accounting principles when a premium deficiency exists. Lapse, partial surrenders, mortality, interest rates and volatility are based on management’s judgment considering CIGNA’s experience and future expectations. The results of futures and forward contracts are reflected in the liability calculation as a component of investment returns.  See also Note 5 for additional information.

O. Unearned Premiums

Premiums for group life, accident and health insurance are recognized as revenue on a pro rata basis over the contract period. The unrecognized portion of these premiums is recorded as unearned premiums.

P. Other Liabilities

Other liabilities consist principally of postretirement and postemployment benefits and various insurance-related liabilities, including amounts related to reinsurance contracts and insurance-related assessments that management can reasonably estimate. Other liabilities also include the loss position of certain derivatives ( see Note 8(H)).

46

Notes to the Financial Statements

Q. Translation of Foreign Currencies

CIGNA generally conducts its international business through foreign operating entities that maintain assets and liabilities in local currencies, which are generally their functional currencies. CIGNA uses exchange rates as of the balance sheet date to translate assets and liabilities into U.S. dollars. Translation gains or losses on functional currencies, net of applicable taxes, are recorded in accumulated other comprehensive income (loss). CIGNA uses average exchange rates during the year to translate revenues and expenses into U.S. dollars.

R. Premiums and Fees, Revenues and Related Expenses

Premiums for group life, accident and health insurance and managed care coverages are recognized as revenue on a pro rata basis over the contract period. Benefits, losses and settlement expenses are recognized when incurred.

Premiums for individual life insurance and individual and group annuity products, excluding universal life and investment-related products, are recognized as revenue when due. Benefits, losses and settlement expenses are matched with premiums.

Revenue for investment-related products is recognized as follows:

• Net investment income on assets supporting investment-related products is recognized as earned.

• Fair value changes of securities supporting experience-rated pension policyholder contracts are recognized in other revenues each period.

• Contract fees, which are based upon related administrative expenses, are assessed against the customer’s fund balance ratably over the contract year and recognized as earned in premiums and fees.

Benefits, losses and settlement expenses for investment-related products consist primarily of income credited to policyholders in accordance with contract provisions and policyholder share of other revenues.

Revenue for universal life products is recognized as follows:

• Net investment income on assets supporting universal life products is recognized as earned.

• Fees for mortality are recognized ratably over the policy year.

• Administration fees are recognized as services are provided.

• Surrender charges are recognized as earned.

Benefits, losses and settlement expenses for universal life products consist of benefit claims in excess of policyholder account balances. Expenses are recognized when claims are filed, and income is credited in accordance with contract provisions.

Contract fees and expenses for administrative services only programs and pharmacy programs and services are recognized as services are provided.

S. Participating Business

CIGNA’s participating life insurance policies entitle policyholders to earn dividends that represent a portion of the earnings of CIGNA’s life insurance subsidiaries. Participating insurance accounted for approximately 2% of CIGNA’s total life insurance in force at the end of 2003, approximately 4% at the end of 2002 and approximately 6% at the end of 2001.

T. Income Taxes

CIGNA and its domestic subsidiaries file a consolidated United States federal income tax return. CIGNA’s foreign subsidiaries file tax returns in accordance with applicable foreign law. U.S. taxation of foreign affiliates may differ in timing and amount from taxation under foreign laws. Reportable amounts, including credits for foreign tax paid by those affiliates, are reflected in the U.S. tax return of the affiliates’ domestic parent.

CIGNA generally recognizes deferred income taxes when assets and liabilities have different values for financial statement and tax reporting purposes.  Note 14 contains detailed information about CIGNA’s income taxes.

U. Stock Compensation

CIGNA uses the intrinsic value method of accounting for stock-based compensation. Under this method, no compensation expense is recorded for stock options because their exercise price is equal to the market price of CIGNA common stock on the date of grant. Compensation expense is recorded for restricted stock grants over their vesting periods based on fair value, which is equal to the market price of CIGNA common stock on the date of grant. The following illustrates the effect on reported net income (loss) and earnings (loss) per share if CIGNA had recorded compensation expense based on the fair value method of accounting for all stock awards (using the Black-Scholes option-pricing model for stock options).

(In millions, except per share amounts)		2003			2002			2001
Net income (loss), as reported		$	668		$	(398	)	$	989
Compensation expense for restricted stock grants at fair value, net of taxes, included in net income (loss) as reported			11			14			12
Total compensation expense for stock options and restricted stock grants under fair value method for all awards, net of taxes			(47	)		(63	)		(62	)
Pro forma net income (loss)		$	632		$	(447	)	$	939
Net income (loss) per share:
	Basic—as reported	$	4.78		$	(2.83	)	$	6.69
	Basic—pro forma	$	4.52		$	(3.18	)	$	6.35
	Diluted—as reported	$	4.75		$	(2.83	)	$	6.59
	Diluted—pro forma	$	4.50		$	(3.18	)	$	6.27

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Note 3 – Segment Reporting

In 2003, CIGNA changed its segment presentation to report its health care operations and its separately managed group disability and life insurance operations as two discrete segments. Previously, results from these operations were combined as a single segment. In addition, CIGNA has renamed its segments as Health Care, Disability and Life, Retirement, International, Run-off Reinsurance and Other Operations.

Disability and life insurance products that were historically sold in connection with certain experience-rated medical accounts and continue to be managed by CIGNA’s health care business are reported in the Health Care segment.

As a result of losses on guaranteed minimum death benefit contracts recognized in 2002 ( see Note 5), CIGNA placed the run-off reinsurance operations (previously reported in Other Operations) into a separate reporting segment.

Prior period amounts have been reclassified to conform to this presentation.

Note 4 – Acquisitions and Dispositions

CIGNA may from time to time acquire or dispose of assets, subsidiaries or lines of business. Significant transactions are described below.

A. Sale of Retirement Business

In November 2003, CIGNA entered into an agreement to sell its retirement business, excluding the corporate life insurance business, for cash proceeds of $2.1 billion. The sale, which is subject to regulatory approvals and other conditions prior to closing, is expected to be completed around the end of the first quarter of 2004. The agreement provides that the sale price will be reduced by $250 million if the financial strength rating of Connecticut General Life Insurance Company, a CIGNA subsidiary that underwrites much of the business sold by CIGNA’s retirement benefits business, is downgraded to certain levels by S&P and Moody’s before the sale closes. CIGNA considers downgrades to those levels to be unlikely.

The determination of the gain will be affected by transaction costs, changes in net assets through the closing date from the results of operations, and other adjustments. The transaction will be primarily in the form of a reinsurance arrangement, therefore a significant portion of the gain will be deferred and amortized over future periods and reported in results of continuing operations.

Segment earnings for the business to be sold were approximately $225 million in 2003, $200 million in 2002 and $195 million in 2001.

B.  Sale of Japanese Pension Operations

In September 2003, CIGNA sold its interest in a Japanese pension operation for cash proceeds of $18 million and recognized an after-tax gain of $5 million in the International segment. The gain is reported in continuing operations since this operation was accounted for under the equity method of accounting.

C.  Sale of Lovelace Health Systems, Inc.

In January 2003, CIGNA sold the operations of Lovelace, an integrated health care system, for cash proceeds of $209 million and recognized an after-tax gain of $32 million, which was reported in discontinued operations. In 2002, CIGNA began reporting this business as discontinued operations and prior period financial information was reclassified.

D.  Sale of Brazilian Health Care Operations

In January 2003, CIGNA sold its Brazilian health care operations. The sale generated an after-tax gain of $18 million, primarily as a result of the disposition of the net liabilities associated with these operations. The gain is reported in discontinued operations. Prior period financial information has not been reclassified due to immateriality.

Lovelace and Brazilian Health Care Discontinued Operations. Summarized financial data for discontinued operations (which includes Lovelace and the gain on the sale of the Brazilian health care operations) are outlined below:

(In millions)	2003			2002			2001
Income Statement Data
Revenues	$	—		$	567		$	508
Income (loss) before taxes	$	(3	)	$	1		$	28
Income taxes (benefits)		(1	)		2			10
Income (loss ) from operations		(2	)		(1	)		18
Gains on sales, net of taxes of $25		50			—			—
Income (loss) from discontinued operations	$	48		$	(1	)	$	18

(In millions)	2002
Balance Sheet Data
Cash	$	23
Accounts receivable		34
Property and equipment		94
Goodwill and other assets		49
Total assets	$	200
Insurance liabilities	$	47
Accounts payable and other liabilities		28
Total liabilities	$	75

E.  Sale of Interest in Japanese Life Insurance Operation

In 2001, CIGNA sold its remaining interest in its Japanese life insurance operation for an after-tax gain of $35 million.

48

Notes to the Financial Statements

F.  Sale of Portions of U.S. Life Reinsurance Business

In 2000, CIGNA sold its U.S. individual life, group life and accidental death reinsurance business for an after-tax gain of approximately $85 million, which was deferred because the sale was structured as an indemnity reinsurance arrangement.

During 2002 and 2001, the acquirer entered into agreements with the reinsured parties, relieving CIGNA of any remaining obligations to those parties. As a result, CIGNA accelerated the recognition of deferred gain of $3 million after-tax in 2002 and $69 million after-tax in 2001. In addition to the accelerated gain recognition, CIGNA recognized normal amortization of $9 million after-tax in 2001. The remaining deferred gain as of December 31, 2001 was not material.

CIGNA has placed its remaining reinsurance businesses (including its accident, domestic health, international life and health, and specialty life reinsurance businesses) into run-off and has stopped underwriting new reinsurance business.  See also Notes 5 and  18 for further discussions related to the Run-off Reinsurance segment.

G. Sale of Individual Life Insurance and Annuity Business

In 1998, CIGNA sold its individual life insurance and annuity business for cash proceeds of $1.4 billion. The sale generated an after-tax gain of approximately $800 million, the majority of which was deferred and is recognized at the rate that earnings from the sold business would have been expected to emerge (primarily over 15 years on a declining basis). This gain reflects an increase of $23 million after-tax resulting from an account review in 2003. CIGNA recognized $54 million after-tax of the deferred gain in 2003, which included an additional $13 million after-tax as a result of this review. CIGNA recognized $48 million after-tax of the deferred gain in 2002 and $52 million after-tax in 2001. The remaining deferred gain as of December 31, 2003, was $252 million after-tax.

Note 5 – Charges for the Run-off Reinsurance Segment

A. Losses on Guaranteed Minimum Death Benefit Contracts

In 2003, CIGNA recognized an after-tax charge of $286 million ($441 million pre-tax) related to a review of reserves for guaranteed minimum death benefit contracts. In 2002, CIGNA recognized an after-tax charge of $720 million ($1.1 billion pre-tax) to strengthen reserves for, and to adopt a program to substantially reduce equity market risks related to, these contracts.

CIGNA’s reinsurance operations, which were discontinued in 2000 and are now an inactive business in run-off mode, reinsured a guaranteed minimum death benefit under certain variable annuities issued by other insurance companies. These variable annuities are essentially investments in mutual funds combined with a death benefit. Death benefits under the annuity contracts reinsured by CIGNA are determined using various methods.

The majority of CIGNA’s exposure arises under annuities that guarantee that the benefit received at death will be no less than the highest historical account value of the related mutual fund investments on an annuitant’s contract anniversary date. Under this type of death benefit, CIGNA is liable to the extent the highest historical anniversary account value exceeds the fair value of the related mutual fund investments at the time of an annuitant’s death. Other annuity designs that CIGNA reinsured guarantee that the benefit received at death will be no less than net deposits paid into the contract accumulated at a specified rate or net deposits paid into the contract. In periods of declining equity markets and in periods of flat equity markets following a decline, CIGNA’s liabilities for these guaranteed minimum death benefits increase.

CIGNA had future policy benefit reserves for these guaranteed minimum death benefit contracts of approximately $1.2 billion as of December 31, 2003, and approximately $1.4 billion as of December 31, 2002.

Management estimates reserves for variable annuity death benefit exposures based on assumptions and other considerations, including lapse, partial surrender, mortality, interest rates and volatility. These estimates are based on CIGNA’s experience and future expectations. CIGNA monitors actual experience to update these reserve estimates as necessary.

Lapse refers to the full surrender of an annuity prior to an annuitant’s death. Partial surrender refers to the fact that most annuitants have the ability to withdraw substantially all of their mutual fund investments while retaining the death benefit coverage in effect at the time of the withdrawal. Volatility refers to market volatility that affects the costs of the program adopted by CIGNA to reduce equity market risks associated with these liabilities.

The determination of reserves for variable annuity death benefits requires CIGNA to make critical accounting estimates. Management believes the current assumptions and other considerations used to estimate reserves for these liabilities are appropriate. However, if actual experience differs from the assumptions and other considerations (including lapse, partial surrender, mortality, interest rates and volatility) used in estimating these reserves, the resulting change could have a material adverse effect on CIGNA’s consolidated results of operations, and in certain situations, could have a material adverse effect on CIGNA’s financial condition.

The $286 million after-tax reserve increase in 2003 included a charge relating to both actual and projected future partial surrenders, as well as updates to other assumptions such as mortality.

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As a result of equity market declines and volatility in 2002, CIGNA evaluated alternatives for addressing the exposures associated with these reinsurance contracts, considering the possibility of continued depressed equity market conditions, the potential effects of further market declines and the impact on future earnings and capital. As a result of this evaluation, CIGNA implemented a program to substantially reduce the equity market exposures of this business by selling exchange-traded futures contracts and, potentially, other instruments, which are expected to rise in value as the equity market declines and decline in value as the equity market rises.

The purpose of this program is to substantially reduce the adverse effects of potential future stock market declines on CIGNA’s liabilities for certain reinsurance contracts, as increases in liabilities under the reinsurance contracts from a declining market will be substantially offset by gains on the futures contracts. A consequence of this program is that it also substantially reduces the positive effects of potential future equity market increases, as reductions in liabilities under these contracts from improved equity market conditions will be substantially offset by losses on the futures contracts.

The $720 million after-tax charge in 2002 consisted of:

• $620 million after-tax, principally reflecting the reduction in assumed future equity market returns as a result of implementing the program and, to a lesser extent, changes to the policy lapse, mortality, market volatility and interest rate assumptions used in estimating the liabilities for these contracts. CIGNA determines liabilities under the reinsurance contracts using an assumption for expected future performance of equity markets. A consequence of implementing the program is, effectively, a reduction in the assumption for expected future performance of equity markets, as the futures contracts essentially eliminate the opportunity to achieve previously expected market returns; and

• $100 million after-tax reflecting deterioration in equity markets that occurred in the third quarter of 2002 (prior to implementation of the program).

During 2003, CIGNA added foreign-denominated, exchange-traded futures contracts and foreign currency forward contracts to this program to reduce international equity market risks associated with this business. To support its program to reduce equity risks associated with this business, CIGNA expects to adjust the futures and forward contract positions and enter into other positions over time, to reflect changing equity market levels and changes in the investment mix of the underlying variable annuity investments.

CIGNA recorded pre-tax losses of $550 million for 2003 and pre-tax gains of $87 million for 2002 from futures and forward contracts. Expense offsets reflecting corresponding changes in liabilities for these contracts are included in benefits, losses and settlement expenses.

As of December 31, 2003, the aggregate fair value of the underlying mutual fund investments was approximately $52.5 billion. The death benefit coverage in force as of that date (representing the amount that CIGNA would have to pay if all 1.4 million annuitants had died on that date) was approximately $12.9 billion. The death benefit coverage in force represents the excess of the guaranteed benefit amount over the fair value of the underlying mutual fund investments. The notional or face amount of the futures and forward contract positions held by CIGNA at December 31, 2003, was $1.8 billion.

CIGNA has also written reinsurance contracts with issuers of variable annuity contracts that provide annuitants with certain guarantees related to minimum income benefits.  See Note 22(B) for further information.

B. Other Reinsurance Charges

CIGNA also recognized an after-tax charge of $317 million ($408 million pre-tax) in 2002 for Unicover and other run-off reinsurance exposures, including London reinsurance business. For further information on these charges, see  Note 18.

Note 6 – Restructuring Programs

A. Corporate Effectiveness Initiative

In 2003, CIGNA adopted a restructuring program to attain certain operational efficiencies in its corporate staff functions and to achieve additional cost savings. As a result, CIGNA recognized in other operating expenses an after-tax charge in Corporate of $9 million ($13 million pre-tax) for severance costs for the expected reduction of approximately 280 employees. As of December 31, 2003, $6 million ($9 million pre-tax) of the severance cost has been paid.

B. Fourth Quarter 2002 Program

In 2002, CIGNA adopted a restructuring program primarily to realign the organizational structure and operations of its health care business. As a result, CIGNA recognized during 2002, in other operating expenses, a net after-tax charge of $97 million ($151 million pre-tax) in the Health Care segment. These amounts reflect a reduction in costs of $2 million after-tax ($3 million pre-tax) for other postretirement benefits for employees terminated in 2002. This benefit cost reduction continued in 2003 as employees were terminated.

During 2003, CIGNA reduced the remaining liability for this program by $15 million after-tax ($23 million pre-tax) of which $5 million after-tax ($8 million pre-tax) occurred during the fourth quarter of 2003. These reductions were primarily due to higher than expected attrition (which did not result in severance benefits or costs) and lower costs relating to outplacement and other services.

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Notes to the Financial Statements

This restructuring program was substantially completed in the fourth quarter of 2003. The table below shows CIGNA’s restructuring activity (pre-tax) related to severance and real estate for this program:

		Severance
		No. of						Real			Remaining
(Dollars in millions)		Employees			Cost			Estate			Liability
Fourth quarter 2002 charge			3,890		$	116		$	38		$	154
Fourth quarter 2002 activity:
	Employees		(713	)		(4	)					(4	)
	Lease costs								—			—
	Asset write-downs								(4	)		(4	)
Balance as of December 31, 2002			3,177			112			34			146
2003 activity:
	Employees		(2,414	)		(75	)					(75	)
	Lease costs								(9	)		(9	)
	Reduction of remaining balance		(708	)*		(22	)		(1	)		(23	)
Balance as of December 31, 2003			55		$	15		$	24		$	39

*  Due to higher than expected attrition.

C. Fourth Quarter 2001 Program

In 2001, CIGNA adopted a restructuring program primarily to consolidate existing health service centers into regional service centers. As a result, CIGNA recognized in other operating expenses an after-tax charge of $59 million ($91 million pre-tax) in the Health Care segment and $3 million ($5 million pre-tax) in the Disability and Life segment.

This restructuring program was substantially completed in the fourth quarter of 2002. The table below shows CIGNA’s restructuring activity (pre-tax) for this program:

		Severance
		No. of						Real			Remaining
(Dollars in millions)		Employees			Cost			Estate			Liability
Fourth quarter 2001 charge			3,100		$	48		$	48		$	96
Fourth quarter 2001 activity:
	Employees		(436	)		(5	)					(5	)
	Lease costs								(1	)		(1	)
	Asset write-downs								(11	)		(11	)
Balance as of December 31, 2001			2,664			43			36			79
2002 activity:
	Employees		(2,366	)		(36	)					(36	)
	Lease costs								(2	)		(2	)
	Adjustment of remaining balance		(143	)		7			(11	)		(4	)
Balance as of December 31, 2002			155			14			23			37
2003 activity:
	Employees		(155	)		(14	)					(14	)
	Lease costs								(7	)		(7	)
	Reduction of remaining balance		—			—			(5	)		(5	)
Balance as of December 31, 2003			—		$	—		$	11		$	11

In the fourth quarter of 2003, CIGNA reduced its remaining liability for this program by $5 million pre-tax ($3 million after-tax) resulting from favorable sublet activity. During 2002, CIGNA made certain adjustments associated with this restructuring program, resulting in a net adjustment of $4 million pre-tax ($2 million after-tax).

Note 7 – Events of September 11, 2001

As a result of claims arising from the events of September 11, 2001, CIGNA recorded after-tax charges of $25 million in 2001. CIGNA reported these charges in certain segments in the following amounts: Health Care, $5 million; Disability and Life, $15 million; Retirement, $3 million; and Run-off Reinsurance, $2 million. During the fourth quarter of 2002, CIGNA revised its estimate of these liabilities associated with the events of September 11, 2001, and recognized an after-tax gain of $2 million in the Run-off Reinsurance segment.

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Note 8 – Investments

CIGNA’s investments, as recorded on the balance sheet, include policyholder share.  See Note 2(D) for discussion of the investment gains and losses associated with policyholder share.

A. Fixed Maturities and Equity Securities

The amortized cost and fair value by contractual maturity periods for fixed maturities, including policyholder share, were as follows at December 31, 2003:

	Amortized		Fair
(In millions)	Cost		Value
Due in one year or less	$	850	$	875
Due after one year through five years		3,852		4,118
Due after five years through ten years		4,898		5,257
Due after ten years		4,099		4,712
Mortgage- and other asset-backed securities		2,073		2,159
Total	$	15,772	$	17,121

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 CIGNA may extend maturity dates.

Gross unrealized appreciation (depreciation) on fixed maturities by type of issuer is shown below. Amounts for 2003 reflect the reclassification to trading of securities supporting experience-rated pension policyholder contracts. The changes in fair value of securities supporting pension policyholder contracts are reported through other revenues.

	Amortized		Unrealized		Unrealized			Fair
	Cost		Appreciation		Depreciation			Value
(In millions)	December 31, 2003
Federal government and agency	$	645	$	171	$	—		$	816
State and local government		2,061		169		(3	)		2,227
Foreign government		700		56		(4	)		752
Corporate		10,336		918		(43	)		11,211
Federal agency mortgage-backed		249		2		(1	)		250
Other mortgage-backed		645		37		(10	)		672
Other asset-backed		1,136		65		(8	)		1,193
Total	$	15,772	$	1,418	$	(69	)	$	17,121

			December 31, 2002
Federal government and agency	$	956	$	241	$	—		$	1,197
State and local government		1,612		151		(2	)		1,761
Foreign government		751		79		(5	)		825
Corporate		16,628		1,376		(208	)		17,796
Federal agency mortgage-backed		1,638		31		—			1,669
Other mortgage-backed		2,158		112		(5	)		2,265
Other asset-backed		2,205		132		(47	)		2,290
Total	$	25,948	$	2,122	$	(267	)	$	27,803

As of December 31, 2003, CIGNA had commitments to purchase $20 million of fixed maturities. Most of these commitments are to purchase unsecured investment grade bonds bearing interest at a fixed market rate. These bond commitments are diversified by issuer and maturity date. CIGNA expects to disburse all of the committed amounts in 2004.

Review of Declines in Fair Value. Management reviews fixed maturities and equity securities for impairment based on criteria that include:

• length of time of decline;

• financial health and specific near term prospects of the issuer; and

• changes in the regulatory, economic or general market environment of the issuer’s industry or geographic region.

As of December 31, 2003, fixed maturities with a decline in fair value from cost (primarily investment grade corporate bonds) were as follows, including the length of time of such decline:

		Fair		Amortized		Unrealized
(In millions)		Value		Cost		Depreciation
One year or less:
	Investment grade	$	2,046	$	2,096	$	(50	)
	Below investment grade	$	97	$	106	$	(9	)
More than one year:
	Investment grade	$	79	$	82	$	(3	)
	Below investment grade	$	83	$	90	$	(7	)

There were no equity securities with a material decline in fair value from cost at December 31, 2003.  See Note 10(B) for discussion of impairments included in realized gains and losses.

B.  Securities Supporting Experience-Rated Pension Policyholder Contracts

At December 31, 2003, securities supporting experience-rated pension policyholder contracts included fixed maturities of $11.2 billion and equity securities of $5 million. The change in the net holding gain or loss on these securities held at December 31, 2003 was a pre-tax net loss of $174 million, and was reported in other revenues. The change in fair values of securities supporting experience-rated pension policyholder contracts sold during 2003, was a pre-tax net gain of $48 million.  See Note 2(B) for discussion of reclassification.

As of December 31, 2003, CIGNA had commitments to purchase $35 million of securities supporting experience-rated pension policyholder contracts. Most of these commitments are to purchase unsecured investment grade bonds bearing interest at a fixed market rate. These bond commitments are diversified by issuer and maturity date. CIGNA expects to disburse all of the committed amounts in 2004.

52

Notes to the Financial Statements

C.  Mortgage Loans, Real Estate and Other Long-term Investments

CIGNA’s mortgage loans and real estate investments are diversified by property type, location and, for mortgage loans, borrower. Mortgage loans, which are secured by the related property, are generally made at less than 70% of the property’s value.

At December 31, the carrying values of mortgage loans and real estate investments, including policyholder share, were as follows:

(In millions)		2003		2002
Mortgage loans		$	8,655	$	8,729
Real estate:
	Held for sale		—		18
	Held and used		146		235
Total real estate			146		253
Total		$	8,801	$	8,982

At December 31, mortgage loans and real estate investments were distributed among the following property types and geographic regions:

(In millions)	2003		2002
Property type
Retail facilities	$	2,207	$	2,357
Office buildings		3,298		3,845
Apartment buildings		1,099		1,177
Industrial		911		789
Hotels		1,036		597
Other		250		217
Total	$	8,801	$	8,982
Geographic region
Central	$	2,114	$	2,315
Pacific		2,085		1,997
South Atlantic		1,949		1,897
Middle Atlantic		1,272		1,383
Mountain		874		887
New England and Other		507		503
Total	$	8,801	$	8,982

Mortgage loans. At December 31, 2003, scheduled mortgage loan maturities were as follows (in billions, unless otherwise indicated): $0.8 million in 2004, $1.0 in 2005, $1.2 in 2006, $1.3 in 2007 and $4.4 thereafter.

Actual maturities could differ from contractual maturities for several reasons: borrowers may have the right to prepay obligations, with or without prepayment penalties; the maturity date may be extended; and loans may be refinanced.

As of December 31, 2003, CIGNA had commitments to extend credit under commercial mortgage loan agreements of $324 million, most of which were at a fixed market rate of interest. These loan commitments are diversified by property type and geographic region. CIGNA expects to disburse 94% of the committed amounts in 2004.

At December 31, impaired mortgage loans and valuation reserves, including policyholder share, were as follows:

(In millions)	2003		2002
Impaired loans with no valuation reserves	$	272	$	204
Impaired loans with valuation reserves		106		46
Total impaired loans		378		250
Less valuation reserves		19		11
Net impaired loans	$	359	$	239

During the year ended December 31, changes in reserves for impaired mortgage loans, including policyholder share, were as follows:

(In millions)	2003		2002
Reserve balance—January 1	$	11	$	15
Charge-offs upon sales		—		(27	)
Net change in reserves		8		23
Reserve balance—December 31	$	19	$	11

Impaired mortgage loans, before valuation reserves, averaged approximately $313 million in 2003 and $257 million in 2002. Interest income recorded (cash received) on impaired loans was approximately $28 million in 2003 and $19 million in 2002.

During 2003, CIGNA refinanced approximately $95 million of its mortgage loans at then-current market rates for borrowers unable to obtain alternative financing. CIGNA refinanced $82 million during 2002.

Real estate and other long-term investments. During 2003 and 2002, non-cash investing activities did not include any real estate acquired through foreclosure of mortgage loans, compared to $110 million for 2001. The total of valuation reserves and cumulative write-downs related to real estate, including policyholder share, was $102 million at the end of 2003 compared to $97 million at the end of 2002. Net investment income from real estate held for sale (including policyholder share) was $2 million for 2003, $9 million for 2002 and $26 million for 2001. After-tax write-downs upon foreclosure and changes in valuation reserves (excluding policyholder share) were $1 million for 2003, $9 million for 2002 and $6 million for 2001.

As of December 31, 2003, CIGNA had commitments to contribute additional equity of $63 million to existing real estate joint ventures that are diversified by property type and geographic region, and $72 million to existing security partnerships that hold securities which are diversified by issuer and maturity date. CIGNA expects to disburse 79% of the committed amounts in 2004.

D. Short-Term Investments and Cash Equivalents

Short-term investments and cash equivalents included corporate securities of $386 million, federal government securities of $324 million and money market funds of $202 million at December 31, 2003. CIGNA’s short-term investments and cash equivalents at December 31, 2002, included corporate securities of $439 million, federal

53

government securities of $328 million and money market funds of $216 million.

E.  Net Unrealized Appreciation (Depreciation) on Investments

At December 31, unrealized appreciation (depreciation) on fixed maturities and equity securities was as follows:

(In millions)		2003			2002
Unrealized appreciation:
	Fixed maturities	$	1,418		$	2,122
	Equity securities		32			87
			1,450			2,209
Unrealized depreciation:
	Fixed maturities		(69	)		(267	)
	Equity securities		(1	)		(31	)
			(70	)		(298	)
			1,380			1,911
Less policyholder-share			396			1,083
Shareholder net unrealized appreciation			984			828
Less deferred income taxes			345			290
Net unrealized appreciation		$	639		$	538

F.  Non-Income Producing Investments

As of December 31, the carrying values of investments that were non-income producing during the preceding twelve months are shown below. These amounts include policyholder share except for fixed maturities reclassified to securities supporting experience-rated pension policyholder contracts in 2003.

(In millions)	2003		2002
Fixed maturities	$	23	$	47
Mortgage loans		1		—
Real estate		—		39
Other long-term investments		179		105
Total	$	203	$	191

G. Concentration of Risk

As of December 31, 2003 and 2002, CIGNA did not have a concentration of investments in a single issuer or borrower exceeding 10% of shareholders’ equity.

H. Derivative Financial Instruments

CIGNA’s investment strategy is to manage the characteristics of investment assets (such as duration, yield, currency and liquidity) to meet the varying demands of the related insurance and contractholder liabilities (such as paying claims, investment returns and withdrawals). As part of this investment strategy, CIGNA typically uses derivatives to minimize interest rate, foreign currency and equity price risks. CIGNA routinely monitors exposure to credit risk associated with derivatives and diversifies the portfolio among approved dealers of high credit quality to minimize credit risk.

CIGNA uses hedge accounting when derivatives are designated, qualify and are highly effective as hedges. Under hedge accounting, the changes in fair value of the derivative and the hedged risk are generally recognized together and offset each other when reported in net income.

CIGNA accounts for derivative instruments as follows:

• Derivatives are reported on the balance sheet at fair value with changes in fair values reported in net income or accumulated other comprehensive income.

• Changes in the fair value of derivatives that hedge market risk related to future cash flows – and that qualify for hedge accounting – are reported in a separate caption in accumulated other comprehensive income. These hedges are referred to as cash flow hedges.

• A change in the fair value of a derivative instrument may not always equal the change in the fair value of the hedged item; this difference is referred to as hedge ineffectiveness. Where hedge accounting is used, CIGNA reflects hedge ineffectiveness in net income (generally as part of realized investment gains and losses).

• Features of certain investments and obligations, called embedded derivatives, are accounted for as derivatives. As permitted under SFAS No. 133, derivative accounting has not been applied to these features of such investments or obligations existing before January 1, 1999.

In 2003, CIGNA recorded a pre-tax loss of $4 million in other operating expenses reflecting the net changes in fair value (due to revised credit risk assumptions partially offset by stock market increases) for reinsurance contracts that guarantee minimum income benefits. In 2002, CIGNA recorded a pre-tax loss of $16 million reflecting the net changes in fair value for these contracts due to stock market decreases and changes in assumptions.

CIGNA recorded pre-tax realized investment gains (losses) from swaps on commercial loan pools of $26 million in 2003, $(1) million in 2002 and $(13) million in 2001. In 2001, CIGNA also recorded $10 million pre-tax in other operating expenses reflecting the decline in fair value of forward starting swaps used to hedge a mortgage loan participation held for sale. The increase in fair value of the participation through the date of sale was $5 million pre-tax, reported in other revenues.

See  Note 5 to the Financial Statements for a discussion of derivatives associated with guaranteed minimum death benefit contracts and  Note 22 to the Financial Statements for a discussion of derivatives associated with guaranteed minimum income benefit contracts. The other effects of derivatives were not material to CIGNA’s consolidated results of operations, liquidity or financial condition for 2003, 2002 or 2001.

54

Notes to the Financial Statements

The table below presents information about the nature and accounting treatment of CIGNA’s primary derivative financial instruments. Derivatives in CIGNA’s separate accounts are not included because associated gains and losses generally accrue directly to policyholders.

Instrument	Risk	Purpose	Cash Flows	Accounting Policy
Futures and foreign currency forwards	Primarily equity and foreign currency risks	To reduce domestic and international equity market exposures for certain specialty life reinsurance contracts that guarantee death benefits resulting from changes in variable annuity account values based on underlying mutual funds.	For futures, CIGNA receives (pays) cash daily in the amount of the change in fair value of the futures contracts. For foreign currency forwards, CIGNA periodically exchanges the difference between domestic and international currencies, to begin at a designated future date.	Fair value changes are reported in other revenues. Fair values of foreign currency forwards are recorded in other assets or other liabilities.
Futures	Interest rate risk	To hedge fair value changes of fixed maturity and mortgage loan investments to be purchased.	CIGNA receives (pays) cash daily in the amount of the change in fair value of the futures contracts.	Using cash flow hedge accounting, fair value changes are reported in other comprehensive income and amortized into net investment income over the life of the investments purchased.
Swaps	Interest rate and foreign currency risk	To hedge the interest or foreign currency cash flows of fixed maturities, securities supporting experience-rated pension policyholder contracts and mortgage loans to match associated liabilities. Currency swaps are primarily euros and extend for periods of up to 18 years.	CIGNA periodically exchanges cash flows between variable and fixed interest rates or between two currencies for both principal and interest.	Using cash flow hedge accounting, fair values of swaps hedging fixed maturities and mortgage loans are reported in other long-term investments or other liabilities and other comprehensive income. Net interest cash flows are reported in net investment income. For swaps hedging securities supporting experience-rated pension policyholder contracts, fair value changes are reported in other long- term investments or other liabilities and in contractholder deposit fund liabilities, with no effect on net income.
Forward swaps	Interest rate risk	To hedge fair value changes of securities and mortgage loans supporting experience-rated pension policyholder contracts.	CIGNA periodically exchanges the difference between variable and fixed rate asset cash flows, to begin at a designated future date.	Fair values are reported in other long-term investments or other liabilities and in contractholder deposit fund liabilities, with no effect on net income.
		To hedge fair value changes of mortgage loan participations to be sold.	CIGNA receives (pays) cash in the amount of fair value changes when the mortgage loan participation is sold.	Fair values of the forward swaps are reported in other assets or liabilities, with changes reported in other revenues or other operating expenses.
Swaps on commercial loan pools	Interest rate and credit risk	To obtain returns based on the performance of underlying commercial loan pools.	CIGNA receives cash based on the performance of underlying commercial loan pools.	Fair values of the swaps are reported in other long-term investments or other liabilities, with changes reported in realized investment gains and losses. Prior to December 31, 2003, total return swaps were reported as embedded derivatives in fixed maturities.
Written and purchased options	Primarily equity risk	CIGNA has written certain specialty life reinsurance contracts to guarantee minimum income benefits resulting from unfavorable changes in variable annuity account values based on underlying mutual funds. CIGNA purchased reinsurance contracts to hedge the market risks assumed. These contracts are accounted for as written and purchased options.	CIGNA periodically receives (pays) fees and will pay (receive) cash resulting from the unfavorable changes in account values when account holders elect to receive minimum income payments.	Fair values are reported in other liabilities and other assets. Changes in fair value are reported in other operating expenses.

55

Note 9 – Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) (which exclude policyholder share) were as follows:

				Tax
	Pre-			(Expense)			After-
(In millions)	Tax			Benefit			Tax
2003
Net unrealized appreciation, securities:
Unrealized appreciation on securities held	$	206		$	(72	)	$	134
Gains realized on securities		(51	)		18			(33	)
Net unrealized appreciation, securities	$	155		$	(54	)	$	101
Net unrealized depreciation, derivatives	$	(27	)	$	9		$	(18	)
Net translation of foreign currencies:
Net translation on foreign currencies held	$	17		$	(7	)	$	10
Foreign currency translation losses realized on sale of business		12			(4	)		8
Net translation of foreign currencies	$	29		$	(11	)	$	18
Minimum pension liability adjustment	$	71		$	(24	)	$	47
2002
Net unrealized appreciation, securities:
Unrealized appreciation on securities held	$	202		$	(69	)	$	133
Losses realized on securities		256			(90	)		166
Net unrealized appreciation, securities	$	458		$	(159	)	$	299
Net unrealized depreciation, derivatives	$	(6	)	$	2		$	(4	)
Net translation of foreign currencies	$	(8	)	$	2		$	(6	)
Minimum pension liability adjustment	$	(981	)	$	343		$	(638	)
2001
Net unrealized depreciation, securities:
Unrealized depreciation on securities held	$	(145	)	$	46		$	(99	)
Losses realized on securities		167			(58	)		109
Gains realized on sale of business		(92	)		32			(60	)
Reclassification to establish separate caption for derivatives		(6	)		2			(4	)
Net unrealized depreciation, securities	$	(76	)	$	22		$	(54	)
Net unrealized appreciation derivatives:
Reclassification to establish separate caption for derivatives	$	6		$	(2	)	$	4
Unrealized appreciation on derivatives held		9			(3	)		6
Net unrealized appreciation, derivatives	$	15		$	(5	)	$	10
Net translation of foreign currencies:
Net translation on foreign currencies held	$	(40	)	$	9		$	(31	)
Foreign currency translation losses realized on sale of business		2			(1	)		1
Net translation of foreign currencies	$	(38	)	$	8		$	(30	)

Note 10 – Investment Income and Gains and Losses

A. Net Investment Income

The components of net investment income, including policyholder share, for the year ended December 31 were as follows:

(In millions)	2003		2002		2001
Fixed maturities	$	1,616	$	1,774	$	1,722
Securities supporting experience-rated pension policyholder contracts		171		—		—
Equity securities		11		10		10
Mortgage loans		641		707		772
Policy loans		136		177		208
Real estate		72		63		94
Other long-term investments		26		34		56
Short-term investments and cash		29		38		73
		2,702		2,803		2,935
Less investment expenses		108		87		93
Net investment income	$	2,594	$	2,716	$	2,842

Net investment income attributable to experience-rated pension policyholder contracts (which is included in CIGNA’s revenues and is primarily offset by amounts included in benefits, losses and settlement expenses) was approximately $1.0 billion for 2003, $1.3 billion for 2002 and $1.5 billion for 2001. Net investment income for separate accounts (which is not reflected in CIGNA’s revenues) was $620 million for 2003, $790 million for 2002 and $1.0 billion for 2001.

Fixed maturities, securities supporting experience-rated pension policyholder contracts and mortgage loans on which CIGNA recognizes interest income only when cash is received (referred to as non-accrual investments), including policyholder share, were as follows at December 31:

(In millions)	2003		2002
Restructured	$	98	$	164
Delinquent		74		126
Total non-accrual investments	$	172	$	290

Net investment income was $13 million lower in 2003, $25 million lower in 2002 and $20 million lower in 2001 than it would have been if interest on non-accrual investments had been recognized in accordance with the original terms of these investments.

56

Notes to the Financial Statements

B. Realized Investment Gains and Losses

Realized gains and losses on investments, excluding policyholder share for the year ended December 31 were as follows:

(In millions)	2003			2002			2001
Fixed maturities	$	(27	)	$	(193	)	$	(204	)
Equity securities		78			(63	)		37
Mortgage loans		(1	)		(10	)		(2	)
Real estate		74			24			(12	)
Other		27			4			6
		151			(238	)		(175	)
Less income taxes (benefits)		53			(83	)		(63	)
Net realized investment gains (losses)	$	98		$	(155	)	$	(112	)

Realized investment gains and losses included impairments in the value of investments, net of recoveries, of $158 million in 2003, $230 million in 2002 and $214 million in 2001.

Realized investment gains and losses that are not reflected in CIGNA’s revenues for the year ended December 31 were as follows:

(In millions)		2003			2002			2001
Separate accounts		$	(220	)	$	(1,925	)	$	(819	)
Policyholder contracts:
	Policyholder results	$	189		$	(520	)	$	(157	)
	Effect of 2003 trading reclassification	$	814		$	—		$	—

Sales of available-for-sale fixed maturities and equity securities, including policyholder share, for the year ended December 31 were as follows:

(In millions)	2003			2002			2001
Proceeds from sales	$	8,276		$	4,471		$	2,696
Gross gains on sales	$	393		$	136		$	189
Gross losses on sales	$	(78	)	$	(326	)	$	(178	)

Note 11 – Debt

Short-term and long-term debt consisted of the following at December 31:

(In millions)		2003		2002
Short-term
Current maturities of long-term debt		$	—	$	127
Short-term notes			—		3
Total short-term debt		$	—	$	130
Long-term
Uncollateralized debt:
	6 3/8% Notes due 2006	$	100	$	100
	7.4% Notes due 2007		300		300
	8 1/4% Notes due 2007		100		100
	7% Notes due 2011		250		250
	6.375% Notes due 2011		250		250
	7.65% Notes due 2023		100		100
	8.3% Notes due 2023		17		17
	7 7/8% Debentures due 2027		300		300
	8.3% Step Down Notes due 2033		83		83
Total long-term debt		$	1,500	$	1,500

CIGNA may issue commercial paper primarily to manage imbalances between operating cash flows and existing commitments, to meet working capital needs, and to take advantage of current investment opportunities. Commercial paper borrowing arrangements are supported by various lines of credit. There was no commercial paper outstanding as of December 31, 2003 and 2002.

In May 2003, CIGNA entered into a syndicated bank letter of credit agreement for $433 million in support of an internal reinsurance arrangement. A letter of credit in a nominal amount is currently issued under this new agreement.

As of December 31, 2003, CIGNA had available $260 million in committed lines of credit provided by U.S. banks. These lines of credit typically have terms ranging from one to three years and are paid for with a combination of fees and bank balances. Interest that CIGNA incurs for using these lines of credit is generally LIBOR plus a predetermined spread. Approximately $160 million of CIGNA’s available lines of credit will expire within the next twelve months.

As of December 31, 2003, CIGNA had $500 million remaining under an effective shelf registration statement filed with the Securities and Exchange Commission, which may be issued as debt securities, equity securities or both.

Maturities of long-term debt are as follows (in millions): none in 2004 and 2005, $100 in 2006, $400 in 2007, and the remainder in years after 2007.

Interest expense was $111 million in 2003, $121 million in 2002 and $118 million in 2001.

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Note 12 – Common and Preferred Stock

As of December 31, CIGNA had issued the following shares:

(Shares in thousands)		2003		2002			2001
Common: Par value $0.25 600,000 shares authorized
	Outstanding—January 1		139,370		141,553			152,005
	Issued for stock option and other benefit plans		1,221		1,309			1,576
	Repurchase of common stock		—		(3,492	)		(12,028	)
	Outstanding—December 31		140,591		139,370			141,553
	Treasury shares		133,952		133,317			129,461
Issued—December 31			274,543		272,687			271,014

In 1997, CIGNA’s Board of Directors adopted a shareholder rights plan, which will expire on August 4, 2007. The rights attach to all outstanding shares of common stock, and will become exercisable if a third party acquires (or announces that it will acquire) 10% or more of CIGNA’s outstanding common stock unless CIGNA’s Board of Directors approves the acquisition. When exercisable, each right entitles its holder to purchase CIGNA securities at a substantial discount or, at the discretion of the Board of Directors, to exchange the rights for CIGNA common stock on a one-for-one basis. In some cases, a right also entitles its holder to purchase securities of an acquirer at a substantial discount. CIGNA’s Board of Directors may authorize the redemption of the rights for $.0033 each before a third party acquires 10% or more of CIGNA’s common stock, and thereafter under certain circumstances.

CIGNA has authorized a total of 25 million shares of $1 par value preferred stock. No shares of preferred stock were outstanding at December 31, 2003, 2002 or 2001.

Note 13 – Shareholders’ Equity and Dividend Restrictions

State insurance departments that regulate certain of CIGNA’s subsidiaries prescribe accounting practices (which differ in some respects from generally accepted accounting principles) to determine statutory net income and surplus. CIGNA’s life insurance and HMO company subsidiaries are regulated by such statutory requirements. The statutory net income for the year ended, and surplus as of, December 31 of CIGNA’s life insurance and HMO subsidiaries were as follows:

(In millions)	2003		2002			2001
Net income (loss)	$	1,043	$	(526	)	$	452
Surplus	$	3,945	$	3,178		$	3,144

CIGNA’s life insurance and HMO subsidiaries are also subject to regulatory restrictions that limit the amount of annual dividends or other distributions (such as loans or cash advances) insurance companies may extend to their shareholders without prior approval of regulatory authorities. The maximum dividend distribution that CIGNA’s life insurance and HMO subsidiaries may make during 2004 without prior approval is approximately $1.0 billion. The amount of net assets of CIGNA that could not be distributed without prior approval as of December 31, 2003, was approximately $3.4 billion.

Note 14 – Income Taxes

Management believes that consolidated taxable income expected to be generated in the future will be sufficient to realize CIGNA’s net deferred tax assets of $1.0 billion as of December 31, 2003, and $1.3 billion as of December 31, 2002. This determination is based on CIGNA’s earnings history and future expectations.

CIGNA’s deferred tax asset is net of a federal and state valuation allowance of $223 million as of December 31, 2003, and $204 million as of December 31, 2002. The $19 million increase during 2003 related primarily to operating loss carryforwards primarily from the run-off reinsurance operations and state tax benefits. These increases were partially offset by a release associated with the Brazilian health care sale (reported through discontinued operations). The valuation allowance reflects management’s assessment as to whether certain deferred tax assets will be realizable. These assessments could be revised in the near term if underlying circumstances change.

Federal operating loss carryforwards in the amount of $246 million were available at December 31, 2003 compared to $209 million as of December 31, 2002. Subject to statutory limitations, the operating losses are available to offset taxable income through the year 2023. Capital loss carryforwards in the amount of $151 million were fully utilized during 2003.

Through 1983, a portion of CIGNA’s life insurance subsidiaries’ statutory income was not subject to current income taxation, but was accumulated in a designated policyholders’ surplus account. Additions to the account were no longer permitted beginning in 1984. CIGNA’s existing account balance of $450 million would result in a $158 million tax liability only if it were distributed or treated as distributed to shareholders as defined by the Internal Revenue Code. CIGNA has not provided taxes on this amount because management believes it is remote that conditions requiring taxation will be met.

CIGNA’s federal income tax returns are routinely audited by the Internal Revenue Service (IRS). In management’s opinion, adequate tax liabilities have been established for all years. These liabilities could be revised in the near term if estimates of CIGNA’s ultimate liability change.

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Notes to the Financial Statements

Deferred income tax assets and liabilities as of December 31 are shown below. Amounts for 2002 have been reclassified to conform to 2003 presentation.

(In millions)	2003			2002
Deferred tax assets
Employee and retiree benefit plans	$	888		$	908
Investments, net		126			100
Other insurance and contractholder liabilities		372			509
Deferred gain on sales of businesses		136			155
Policy acquisition expenses		138			120
Loss carryforwards		87			126
Bad debt expense		37			28
Other		41			38
Deferred tax assets before valuation allowance		1,825			1,984
Valuation allowance for deferred tax assets		(223	)		(204	)
Deferred tax assets, net of valuation allowance		1,602			1,780
Deferred tax liabilities
Depreciation and amortization		256			233
Unrealized appreciation on investments		345			290
Total deferred tax liabilities		601			523
Net deferred income tax assets	$	1,001		$	1,257

As of December 31, 2003, current income taxes payable was $135 million and was included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheet. Current income taxes receivable was $219 million as of December 31, 2002 and was included in premiums, accounts and notes receivable in the consolidated balance sheet.

The components of income taxes for the year ended December 31 were as follows:

(In millions)	2003			2002			2001
Current taxes (benefits)
U.S. income	$	82		$	(167	)	$	274
Foreign income		7			11			6
State income		7			25			13
		96			(131	)		293
Deferred taxes (benefits)
U.S. income		183			(38	)		206
Foreign income		(7	)		5			1
State income		11			(8	)		(2	)
		187			(41	)		205
Total income taxes (benefits)	$	283		$	(172	)	$	498

Total income taxes (benefits) for the year ended December 31 were different from the amount computed using the nominal federal income tax rate of 35% for the following reasons:

(In millions)	2003			2002			2001
Tax expense (benefit) at nominal rate	$	316		$	(199	)	$	514
Tax-exempt interest income		(30	)		(25	)		(25	)
Dividends received deduction		(21	)		(17	)		(16	)
Amortization of goodwill		—			—			15
State income tax (net of federal income tax benefit)		12			12			7
Change in federal valuation allowance		9			58			—
Other		(3	)		(1	)		3
Total income taxes (benefits)	$	283		$	(172	)	$	498

Note 15 – Pension and Other Postretirement Benefit Plans

A. Pension and Other Postretirement Benefit Plans

CIGNA and certain of its subsidiaries provide pension, health care and life insurance benefits to eligible retired employees, spouses and other eligible dependents through various plans.

CIGNA measures the assets and obligations of its domestic pension and other postretirement benefit plans as of December 31. The following table summarizes the obligations and assets related to CIGNA’s pension and other postretirement benefit plans as of, and for the year ended, December 31:

							Other
							Postretirement
	Pension Benefits						Benefits
(In millions)	2003			2002			2003			2002
Change in benefit obligation
Benefit obligation, January 1	$	3,427		$	2,932		$	558		$	506
Service cost		80			101			3			4
Interest cost		221			235			36			36
Loss from past experience		190			437			40			53
Benefits paid from plan assets		(205	)		(184	)		(2	)		(2	)
Benefits paid—other		(30	)		(94	)		(39	)		(39	)
Amendments		—			—			(16	)		—
Benefit obligation, December 31		3,683			3,427			580			558
Change in plan assets
Fair value of plan assets, January 1		2,032			2,500			37			37
Actual return on plan assets		454			(284	)		2			2
Benefits paid		(205	)		(184	)		(2	)		(2	)
Contributions		75			—			—			—
Fair value of plan assets, December 31		2,356			2,032			37			37
Net benefit obligation		1,327			1,395			543			521
Unrecognized net gains (losses) from past experience		(1,173	)		(1,260	)		6			47
Unrecognized prior service cost		8			8			140			152
Net amount recognized in the balance sheet	$	162		$	143		$	689		$	720
Accrued benefit liability	$	1,188		$	1,241		$	689		$	720
Accumulated other comprehensive income (loss) (after-tax $667, $714)		(1,026	)		(1,098	)		—			—
Net amount recognized in the balance sheet	$	162		$	143		$	689		$	720

59

Pension benefits. During 2003, CIGNA’s minimum pension liabilities declined resulting in an after-tax increase to equity of $47 million. This decline was primarily due to the effect on plan assets of stock market appreciation, partially offset by a decrease in long-term interest rates used to determine the accumulated benefit obligation. During 2002, CIGNA’s minimum pension liabilities increased due to the effect of equity market declines on the value of pension plan assets and reduced long-term interest rates, resulting in an after-tax charge to equity of $638 million.

At the end of 2003 and 2002, all of CIGNA’s pension plans had accumulated benefits exceeding plan assets as a result of the effect of equity market declines on the value of pension plan assets in 2002 and reduced long-term interest rates. The accumulated benefit obligation for these plans as of December 31, 2003 was $3.5 billion, the fair value of plan assets was $2.4 billion and the projected benefit obligation was $3.7 billion.

The accumulated benefit obligation for these plans as of December 31, 2002 was $3.3 billion, the fair value of plan assets was $2.0 billion and the projected benefit obligation was $3.4 billion.

CIGNA funds qualified pension plans at least at the minimum amount required by the Employee Retirement Income Security Act of 1974 (ERISA). CIGNA expects to make domestic pension plan contributions of approximately $325 million in 2004 to meet minimum funding requirements, assuming no changes to those requirements. If Congressional discussions currently underway are finalized and provide rate relief similar to minimum funding requirements used in 2003, nondiscretionary contributions expected to be made in 2004 would approximate $175 million.

Components of net pension cost, for the year ended December 31 were as follows:

(In millions)		2003			2002			2001
Service cost		$	80		$	101		$	91
Interest cost			221			235			196
Expected return on plan assets			(200	)		(258	)		(232	)
Amortization of:
	Net loss from past experience		23			14			14
	Prior service cost		—			(1	)		1
	SFAS 87 transition asset		—			—			(1	)
Net pension cost		$	124		$	91		$	69

Other postretirement benefits. CIGNA has determined the accumulated other postretirement benefit obligation with no consideration of the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 because the regulations and accounting guidance that will determine its application to CIGNA’s medical benefit plan have not yet been finalized. When finalized, the accounting guidance may require reported information to be changed.

Unfunded retiree health benefit plans had accumulated benefit obligations of $432 million at December 31, 2003, and $416 million at December 31, 2002. At the end of 2003, retiree life insurance plans with accumulated benefit obligations of $148 million were partially funded with plan assets of $37 million, compared with accumulated benefit obligations of $142 million, partially funded with plan assets of $37 million, at the end of 2002. CIGNA expects to make other postretirement benefit contributions of approximately $40 million in 2004.

Components of net other postretirement benefit cost, for the year ended December 31 were as follows:

(In millions)		2003			2002			2001
Service cost		$	3		$	4		$	3
Interest cost			36			36			36
Expected return on plan assets			(2	)		(2	)		(2	)
Amortization of:
	Net gain from past experience		(1	)		(3	)		(4	)
	Prior service cost		(17	)		(16	)		(16	)
Net other postretirement benefit cost		$	19		$	19		$	17

In 2003, a gain of $8 million after-tax ($12 million pre-tax) was reported as part of the fourth quarter 2002 restructuring program to realign the health care business. In 2002, a gain of $2 million after-tax ($3 million pre-tax) was reported as part of the fourth quarter 2002 restructuring program to realign the health care business. See also  Note 6(B).

The estimated rate of future increases in the per capita cost of health care benefits was 11%, decreasing to 5% over six years. This estimate reflects CIGNA’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 change 2003 reported amounts as follows:

(In millions)	Increase		Decrease
Effect on total service and interest cost	$	1	$	(1	)
Effect on postretirement benefit obligation	$	23	$	(21	)

Plan Assets. The following summarizes the fair value of assets related to pension plans as of December 31, 2003:

	Percent		Target
	of Total		Allocation
Plan Asset Category	Fair Value		Percentage
Equity securities		72%		68%
Fixed Income		18%		20%
Real estate		8%		7%
Other		2%		5%

The target investment allocation percentages are developed by management as guidelines, although the fair values of each asset category are expected to vary as a result of changes in market conditions. The pension plan asset portfolio has been most heavily weighted towards equity securities, consisting of domestic and international investments, in an effort to synchronize the expected higher rate of return on equities over the long-term with the overall long-term nature of the pension benefit obligations. The diversification of the pension plan assets into other investments is intended to mitigate the volatility in returns, while also providing adequate liquidity to fund benefit distributions.

60

Notes to the Financial Statements

Substantially all pension plan assets are invested in the separate accounts of Connecticut General Life Insurance Company (CGLIC) and Life Insurance Company of North America, which are CIGNA subsidiaries, or immediate participation guaranteed investment contracts issued by CGLIC. Plan assets also include 292,500 shares of CIGNA common stock with a fair value of $17 million at December 31, 2003, and $12 million at December 31, 2002.

The other postretirement plan assets are invested in fixed income investments in the general account of CGLIC.

Assumptions for pension and other postretirement benefit plans. Management determined the projected pension benefit obligation and the accumulated other postretirement benefit obligation based on the following weighted average assumptions at December 31:

		2003		2002		2001
Discount rate:
	Benefit obligation		6.25%		6.75%		7.25%
	Benefit cost		6.75%		7.25%		7.5%
Expected return on plan assets:
	Projected pension benefit obligation		7.5%		7.5%		9%
	Pension benefit cost		7.5%		9%		9%
	Accumulated other postretirement benefit obligation		7%		7%		7%
	Other postretirement benefits cost		7%		7%		7%
Expected rate of compensation increase:
	Projected pension benefit obligation		3.5%		3.6%		5.3%
	Pension benefit cost		3.6%		5.3%		5.2%
	Accumulated other postretirement benefit obligation		3%		3%		4.5%
	Other postretirement benefit cost		3%		4.5%		4.5%

Expected rates of return on plan assets were developed considering actual historical returns, current and expected market conditions, plan asset mix and management’s investment strategy.

B. 401(k) Plans

CIGNA sponsors a 401(k) plan in which CIGNA matches a portion of employees’ pre-tax contributions. Another 401(k) plan, with an employer match was frozen in 1999. Participants in the active plan may invest in a fund that invests in CIGNA common stock, several diversified stock funds, a bond fund and a fixed-income fund.

CIGNA may elect to increase its matching contributions if CIGNA’s annual performance meets certain targets. A substantial amount of CIGNA’s matching contributions are invested in CIGNA common stock. CIGNA’s expense for these plans was $36 million for 2003, $47 million for 2002 and $50 million for 2001.

Note 16 – Employee Incentive Plans

The People Resources Committee of the Board of Directors awards stock options and restricted stock to certain employees. To a very limited extent, the Committee has issued common stock instead of cash compensation and dividend equivalent rights as part of restricted stock units. Stock appreciation rights issued with stock options are authorized but have not been issued for several years.

CIGNA had the following number of shares of common stock available for award at December 31: 11.3 million in 2003, 13.4 million in 2002 and 16.3 million in 2001.

Stock options. CIGNA awards options to purchase CIGNA common stock at the market price of the stock on the grant date. Options vest over periods ranging from one to five years and expire no later than 10 years after the grant date.

Until June 30, 2004, when senior executives use shares of CIGNA common stock in lieu of cash to exercise outstanding options, CIGNA issues replacement options equal to the number of shares used. Like ordinary options, replacement options are exercisable at the market price of CIGNA common stock on their grant date. Replacement options vest six months after the grant date and expire on the expiration date of the original option.

The table below shows the status of, and changes in, common stock options during the last three years:

(Options in thousands)		2003					2002					2001
					Weighted					Weighted					Weighted
					Average					Average					Average
		Options			Exercise Price		Options			Exercise Price		Options			Exercise Price
Outstanding—January 1			14,354		$	88.71		13,089		$	84.98		11,856		$	75.34
	Granted		3,439		$	42.03		4,121		$	94.30		3,474		$	107.81
	Exercised		(136	)	$	47.53		(1,702	)	$	70.19		(1,681	)	$	64.65
	Expired or canceled		(1,875	)	$	83.52		(1,154	)	$	93.67		(560	)	$	83.45
Outstanding—December 31			15,782		$	79.51		14,354		$	88.71		13,089		$	84.98
Options exercisable at year-end			10,401		$	86.68		7,954		$	85.31		6,041		$	79.26

61

The following table summarizes information for outstanding common stock options at December 31, 2003:

	Range of Exercise Prices
	$ 20.81		$ 50.00		$ 90.00
	to		to		to
(Options in thousands)	$ 49.99		$ 89.99		$ 130.63
Options outstanding		3,398		5,115		7,269
Weighted average remaining contractual life (years)		8.4		4.7		6.0
Weighted average exercise price	$	42.03	$	73.07	$	101.56
Options exercisable		307		5,072		5,022
Weighted average exercise price	$	42.92	$	73.15	$	103.01

The weighted average fair value of options granted under employee incentive plans was $12.62 for 2003, $22.13 for 2002 and $22.34 for 2001, using the Black-Scholes option-pricing model and the following assumptions:

	2003		2002		2001
Dividend yield		1.9%		1.5%		1.2%
Expected volatility		44.3%		29.4%		24.2%
Risk-free interest rate		1.9%		3.6%		5.0%
Expected option life		3.5 years		3.5 years		3.0 years

Restricted stock. CIGNA makes restricted stock grants with vesting periods ranging from three to six years. Recipients are entitled to receive dividends and to vote during the vesting period, but forfeit their awards if their employment terminates before the vesting date. Grants of restricted shares of CIGNA common stock were as follows:

(Shares in thousands)	2003		2002		2001
Shares granted		1,141		358		358
Weighted average fair value per share	$	44.05	$	99.26	$	108.44

At the end of 2003, approximately 2,050 employees held 1.5 million restricted shares.

Note 17 – Earnings (Loss) Per Share

Basic and diluted earnings (loss) per share (EPS) for income (loss) from continuing operations are computed as follows for the year ended December 31:

				Effect of
(In millions, except per share amounts)	Basic			Dilution			Diluted
2003
Income from continuing operations	$	620		$	—		$	620
Shares (in thousands):
Weighted average		139,747			—			139,747
Options and restricted stock grants					859			859
Total shares		139,747			859			140,606
EPS	$	4.44		$	(0.03	)	$	4.41
2002
Loss from continuing operations	$	(397	)	$	—		$	(397	)
Shares (in thousands):
Weighted average		140,517			—			140,517
Options and restricted stock grants*					—			—
Total shares		140,517			—			140,517
Loss per share	$	(2.83	)	$	—		$	(2.83	)
2001
Income from continuing operations	$	971		$	—		$	971
Shares (in thousands):
Weighted average		147,892			—			147,892
Options and restricted stock grants					2,144			2,144
Total shares		147,892			2,144			150,036
EPS	$	6.57		$	(0.10	)	$	6.47
EPS from continuing operations adjusted to exclude goodwill amortization in 2001 (Note 2(B))	$	6.89		$	(0.10	)	$	6.79

* Because of the loss from continuing operations for the year ended December 31, 2002, the number of shares used to compute loss per share does not reflect the dilution of approximately 1.4 million shares caused by stock options and restricted stock grants.

62

Notes to the Financial Statements

Note 18 – Reinsurance

In the normal course of business, CIGNA’s insurance subsidiaries enter into agreements with other insurance companies to assume and cede reinsurance. Reinsurance is ceded primarily to limit losses from large exposures and to permit recovery of a portion of direct losses. Reinsurance does not relieve the originating insurer of liability. CIGNA evaluates the financial condition of its reinsurers and monitors their concentrations of credit risk.

Individual life and annuity reinsurance. CIGNA had a reinsurance recoverable of $5.4 billion at December 31, 2003, and $5.6 billion at December 31, 2002, from Lincoln National Corporation that arose from the 1998 sale of CIGNA’s individual life insurance and annuity business to Lincoln through an indemnity reinsurance arrangement.  See Note 4(G) for information about this sale.

Unicover and other run-off reinsurance. The Run-off Reinsurance operations participate in a workers’ compensation reinsurance pool, which ceased accepting new risks in early 1999. This pool was formerly managed by Unicover Managers, Inc. Although an arbitration over the most significant reinsurance (retrocessional) contracts for the pool was completed in 2002, some disputes over collection of amounts due CIGNA from the retrocessionaires continue and may require further arbitration actions to resolve. Also, disputes and arbitrations regarding other reinsurance (retrocessional) contracts for the pool remain and may not be resolved for some time.

Run-off Reinsurance also includes other workers’ compensation reinsurance contracts, as well as personal accident reinsurance contracts, including contracts assumed in the London market. CIGNA obtained retrocessional reinsurance coverage for a significant portion of its liabilities under these contracts. Some of these retrocessionaires have disputed the validity of their contracts with CIGNA and arbitration over some of these disputes has commenced.

In 2002, CIGNA recorded an after-tax charge of $317 million ($408 million pre-tax) based on the outcome of the Unicover arbitration, as well as a review of other exposures for the run-off reinsurance operations, including an assessment of retrocessional disputes and workers’ compensation and personal accident exposures.

The retrocessional disputes are not expected to be resolved for some time. In addition, unfavorable claims experience related to workers’ compensation and personal accident exposures is possible and could result in future losses, including losses attributable to the inability to recover amounts from retrocessionaires (either due to disputes with the retrocessionaires or their financial condition).

CIGNA’s reserves for amounts recoverable from retrocessionaires, as well as for reserves for liabilities associated with underlying reinsurance exposures assumed by CIGNA, are considered appropriate as of December 31, 2003, based on current information. However, it is possible that future developments regarding these matters could result in a material adverse effect on CIGNA’s consolidated results of operations, and, in certain situations, could have a material adverse effect on CIGNA’s financial condition.

Other reinsurance. CIGNA could have losses if reinsurers fail to indemnify CIGNA on other reinsurance arrangements, whether because of reinsurer insolvencies or contract disputes. However, management does not expect charges for other unrecoverable reinsurance to have a material adverse effect on CIGNA’s consolidated results of operations, liquidity or financial condition.

Effects of reinsurance. In CIGNA’s consolidated income statements, premiums and fees were net of ceded premiums, and benefits, losses and settlement expenses were net of reinsurance recoveries, in the following amounts:

(In millions)			2003			2002			2001
Premiums and fees
Short-duration contracts:
	Direct		$	13,949		$	13,995		$	13,013
	Assumed			127			135			221
	Ceded			(130	)		(111	)		(215	)
				13,946			14,019			13,019
Long-duration contracts:
	Direct			1,475			1,694			1,815
	Assumed			409			461			523
	Ceded:
		Individual life insurance and annuity business sold		(329	)		(364	)		(386	)
		Other		(60	)		(73	)		(111	)
				1,495			1,718			1,841
Total			$	15,441		$	15,737		$	14,860
Reinsurance recoveries
Individual life insurance and annuity business sold			$	298		$	326		$	269
Other				168			4			460
Total			$	466		$	330		$	729

The effects of reinsurance on written premiums and fees for short-duration contracts were not materially different from the recognized premium and fee amounts shown in the above table.

63

Note 19 – Leases and Rentals

Rental expenses for operating leases, principally for office space, amounted to $173 million in 2003, $159 million in 2002 and $152 million in 2001.

As of December 31, 2003, future net minimum rental payments under non-cancelable operating leases were approximately $559 million, payable as follows (in millions): $134 in 2004, $125 in 2005, $86 in 2006, $64 in 2007, $42 in 2008 and $108 thereafter.

Note 20 – Segment Information

Operating segments generally reflect groups of related products, but the International segment is based on geography. CIGNA measures the financial results of its segments using “segment earnings,” which is defined as income (loss) from continuing operations excluding after-tax realized investment gains and losses and excluding the results of discontinued operations. CIGNA’s operations are not materially dependent on one or a few customers, brokers or agents.

As discussed in  Note 3, CIGNA changed its segment reporting and reclassified prior period amounts to conform to the current presentation. CIGNA presents segment information as follows:

Health Care includes a range of indemnity group health and managed care products and services through guaranteed cost, experience-rated, administrative services only and minimum premium funding arrangements. This business also continues to manage certain disability and life insurance products which were historically sold in connection with certain experience-rated medical accounts.

Disability and Life includes group accident and specialty association business in addition to its disability and life products.

Retirement includes investment products and professional services primarily to sponsors of qualified pension, profit sharing and retirement savings plans. This segment also provides certain corporate and variable life insurance products.

International includes life, accident, health and employee benefits (group life, health and pension) coverages and services, primarily outside the United States.

Run-off Reinsurance consists of the run-off reinsurance business, which includes accident, domestic health, international life and health, and specialty life reinsurance businesses. CIGNA has stopped underwriting new reinsurance business.

CIGNA also reports results in two other categories.

Other Operations consist of:

• deferred gains recognized from the 1998 sale of the individual life insurance and annuity business;

• corporate life insurance on which policy loans are outstanding (leveraged corporate life insurance);

• settlement annuity business; and

• certain investment management services.

Corporate reflects amounts not allocated to segments, such as interest expense on corporate debt, net investment income on unallocated corporate investments, intersegment eliminations and certain corporate overhead expenses.

CIGNA determines segment earnings (loss) consistent with the accounting policies for the consolidated financial statements, except that amounts included in Corporate are not allocated to segments. CIGNA allocates other corporate general, administrative and systems expenses on systematic bases. Income taxes are generally computed as if each segment were filing separate income tax returns.

64

Notes to the Financial Statements

Summarized segment financial information for the year ended and as of December 31 was as follows:

(In millions)		2003			2002			2001
Health Care
Premiums and fees and other revenues		$	13,410		$	13,548		$	12,263
Net investment income			283			298			335
Segment revenues		$	13,693		$	13,846		$	12,598
Income taxes		$	234		$	245		$	381
Segment earnings		$	447		$	455		$	671
Assets under management:
	Invested assets	$	5,201		$	4,274		$	4,336
	Separate account assets		882			1,238			1,828
Total		$	6,083		$	5,512		$	6,164
Disability and Life
Premiums and fees and other revenues		$	1,807		$	1,713		$	1,882
Net investment income			250			260			264
Segment revenues		$	2,057		$	1,973		$	2,146
Income taxes		$	44		$	41		$	9
Segment earnings		$	137		$	124		$	59
Assets under management:
	Invested assets	$	4,303		$	4,078		$	4,030
	Separate account assets		14			12			12
Total		$	4,317		$	4,090		$	4,042
Retirement
Premiums and fees and other revenues		$	214		$	336		$	322
Net investment income			1,574			1,649			1,668
Segment revenues		$	1,788		$	1,985		$	1,990
Income taxes		$	117		$	96		$	88
Segment earnings		$	260		$	231		$	221
Assets under management:
	Invested assets	$	23,386		$	24,698		$	22,678
	Separate account assets		33,481			28,513			32,399
Total		$	56,867		$	53,211		$	55,077
International
Premiums and fees and other revenues		$	866		$	814		$	936
Net investment income			49			51			49
Segment revenues		$	915		$	865		$	985
Income taxes		$	30		$	18		$	52
Equity in net income (loss) of investees		$	(4	)	$	(4	)	$	79
Segment earnings		$	55		$	31		$	95
Assets under management:
	Invested assets	$	955		$	848		$	682
	Separate account assets		179			172			147
Total		$	1,134		$	1,020		$	829
Run-off Reinsurance
Premiums and fees and other revenues		$	(467	)	$	229		$	268
Net investment income			82			44			52
Segment revenues		$	(385	)	$	273		$	320
Income taxes (benefits)		$	(181	)	$	(488	)	$	31
Segment earnings (loss)		$	(359	)	$	(1,070	)	$	57
Invested assets		$	1,847		$	1,356		$	835
Other Operations
Premiums and fees and other revenues		$	306		$	293		$	333
Net investment income			356			409			450
Segment revenues		$	662		$	702		$	783
Income taxes		$	42		$	37		$	33
Segment earnings		$	73		$	74		$	76
Assets under management:
	Invested assets	$	3,961		$	5,106		$	5,603
	Separate account assets		837			1,320			1,877
Total		$	4,798		$	6,426		$	7,480
Corporate
Other revenues and eliminations		$	(73	)	$	(63	)	$	(64	)
Net investment income			—			5			24
Segment revenues		$	(73	)	$	(58	)	$	(40	)
Income tax benefits		$	(56	)	$	(38	)	$	(33	)
Segment loss		$	(91	)	$	(87	)	$	(96	)
Invested assets		$	5		$	2		$	97
Realized Investment Gains (Losses)
Realized investment gains (losses)		$	151		$	(238	)	$	(175	)
Income taxes (benefits)			53			(83	)		(63	)
Realized investment gains (losses), net of taxes		$	98		$	(155	)	$	(112	)
Total
Premiums and fees and other revenues		$	16,063		$	16,870		$	15,940
Net investment income			2,594			2,716			2,842
Realized investment gains (losses)			151			(238	)		(175	)
Total revenues		$	18,808		$	19,348		$	18,607
Income taxes (benefits)		$	283		$	(172	)	$	498
Segment earnings (loss)		$	522		$	(242	)	$	1,083
Realized investment gains (losses), net of taxes			98			(155	)		(112	)
Income (loss) from continuing operations		$	620		$	(397	)	$	971
Assets under management
Invested assets		$	39,658		$	40,362		$	38,261
Separate account assets			35,393			31,255			36,263
Total		$	75,051		$	71,617		$	74,524

Premiums and fees and other revenues by product type were as follows for the year ended December 31:

(In millions)	2003		2002		2001
Health Maintenance Organizations	$	6,620	$	6,992	$	6,342
Medical and Dental Indemnity		5,472		5,400		4,914
Group Life		1,565		1,595		1,717
Other		2,406		2,883		2,967
Total	$	16,063	$	16,870	$	15,940

65

Note 21 – Foreign Operations

CIGNA provides international life, accident, health and employee benefits insurance coverages on a direct and reinsured basis, primarily through the International segment and principally in the Pacific region and Europe.

Premiums and fees and other revenues by geographic region for the year ended December 31 were as follows:

(In millions)	2003		2002		2001
Domestic	$	15,384	$	16,266	$	15,141
Foreign		679		604		799
Total	$	16,063	$	16,870	$	15,940

CIGNA’s aggregate foreign exchange transaction losses and foreign long-lived assets for the year ended and as of December 31, 2003, 2002 and 2001 were not material.

Note 22 – Contingencies

A. Financial Guarantees

CIGNA, through its subsidiaries, is contingently liable for various financial guarantees provided in the ordinary course of business.

Separate account assets are contractholder funds maintained in accounts with specific investment objectives. CIGNA records separate account liabilities equal to separate account assets. In certain cases, CIGNA guarantees a minimum level of benefits for retirement and insurance contracts written in separate accounts. CIGNA establishes an additional liability if management believes that CIGNA will be required to make a payment under these guarantees, which include the following:

• CIGNA guarantees that separate account assets will be sufficient to pay certain retiree or life benefits. The sponsoring employers are primarily responsible for ensuring that assets are sufficient to pay these benefits and are required to maintain assets that exceed a certain percentage of benefit obligations. This percentage varies depending on the asset class within a sponsoring employer’s 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 of separate account assets, CIGNA has the right to redirect the management of the related assets to provide for benefit payments. As of December 31, 2003, employers maintained assets that exceeded 102% to 132% of benefit obligations. Benefit obligations under these arrangements were $3.5 billion as of December 31, 2003, and $3.3 billion as of December 31, 2002. There were no additional liabilities required for these guarantees as of December 31, 2003 or 2002.

• For certain employer-sponsored savings and retirement plans, CIGNA guarantees that participants will receive the value of their accounts at the time of withdrawal. These guarantees could require payment by CIGNA in the event that a significant number of plan participants withdraw their accounts when the market value of the related separate account assets is less than the plan participant account values at the time of withdrawal. Participant account values under these arrangements are invested primarily in fixed income investments and were $2.0 billion as of December 31, 2003, and $1.7 billion as of December 31, 2002. There were no additional liabilities required for these guarantees as of December 31, 2003 or 2002.

• CIGNA guarantees a minimum level of earnings (based on investment, mortality and retirement experience) for a certain group annuity contract. If the actual investment return is less than the minimum guaranteed level, CIGNA is required to fund the difference. The guaranteed benefit obligation was $304 million as of December 31, 2003, and $313 million as of December 31, 2002. CIGNA had additional liabilities for this guarantee of $15 million as of December 31, 2003 and 2002.

CIGNA guaranteed a construction loan of $26 million as of December 31, 2003 ($106 million of construction loans as of December 31, 2002) related to a real estate joint venture investment. The loan is secured by joint venture real estate property with fair value in excess of the loan amount and matures in 2008, including extension options. CIGNA would be required to repay the construction loan if permanent financing could not be obtained. CIGNA also guaranteed $14 million of interest and principal for industrial revenue bonds as of December 31, 2003 ($50 million as of December 31, 2002). The bonds, payable in 2007, are secured by property and other assets held by a real estate partnership and CIGNA has recourse to its partner for 50% of any amounts paid under the guarantee. There were no liabilities required for these guarantees as of December 31, 2003 or 2002.

66

Notes to the Financial Statements

CIGNA had indemnification obligations to lenders of up to $329 million as of December 31, 2003, and $280 million as of December 31, 2002, related to borrowings by certain real estate joint ventures in which CIGNA holds investments. These borrowings, which are nonrecourse to CIGNA, are secured by the joint ventures’ real estate properties, which have fair values in excess of the loan amounts, and mature at various dates from 2004 to 2015. CIGNA’s indemnification obligations would require payment to lenders for any actual damages resulting from certain acts such as unauthorized ownership transfers, misappropriation of rental payments by others or environmental damages. Based on initial and ongoing reviews of property management and operations, CIGNA does not expect that payments will be required under these indemnification obligations. Any payments that might be required could be recovered through a refinancing or sale of the assets. In some cases, CIGNA also has recourse to partners for their proportionate share of amounts paid. There were no liabilities required for these indemnification obligations as of December 31, 2003 or 2002.

As of December 31, 2003 and 2002, CIGNA guaranteed that it would compensate the lessor for a shortfall of up to $49 million in the market value of leased equipment at the end of the lease. Guarantees of $21 million expire in 2006 and $28 million expire in 2012.

CIGNA had indemnification obligations as of December 31, 2003 and 2002, in connection with acquisition and disposition transactions. These indemnification obligations would be triggered by the breach of representations or covenants provided by CIGNA, such as representations for the presentation of financial statements, the filing of tax returns or the identification of outstanding litigation. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential amount due is subject to contractual limitations based on a percentage of the transaction purchase price, while in other cases limitations are not specified or applicable. CIGNA does not believe that it is possible to determine the maximum potential amount due under these guarantees, since not all amounts due under these indemnification obligations are subject to limitation. There were no liabilities required for these indemnification obligations as of December 31, 2003 or 2002.

CIGNA does not expect that these guarantees will have a material adverse effect on CIGNA’s consolidated results of operations, liquidity or financial condition.

B. Guaranteed Minimum Income Benefit Contracts

CIGNA has written reinsurance contracts with issuers of variable annuity contracts that provide annuitants with certain guarantees related to minimum income benefits. When annuitants elect to receive these minimum income benefits, CIGNA may be required to make payments based on changes in underlying mutual fund values and interest rates.

CIGNA has purchased reinsurance from third parties, which covers 80% of the exposures of these contracts. CIGNA estimates the fair value of the assets and liabilities associated with these contracts using assumptions as to equity market returns, volatility of the underlying equity and bond mutual fund investments, interest rates, mortality, annuity election rates, policy surrenders and credit risk.

CIGNA is required to disclose the maximum potential undiscounted future payments for guarantees related to minimum income benefits using hypothetical worse-case assumptions, defined as follows:

• No annuitants surrendered their accounts; and

• All annuitants lived to elect their benefit; and

• All annuitants elected to receive their benefit on the first available date (beginning in 2004 through 2014); and

• All underlying mutual fund investment values remained at the December 31, 2003 value of $3.3 billion, with no future returns.

The maximum potential undiscounted payments that CIGNA would make under those assumptions would aggregate $1.8 billion before reinsurance recoveries. CIGNA believes the likelihood of such payment is remote. CIGNA has purchased reinsurance from third parties which covers 80% of the exposures on these contracts. CIGNA has revised credit risk assumptions for about 25% of the exposures on these contracts. CIGNA expects the amount of actual payments to be significantly less than this hypothetical undiscounted aggregate amount.

As of December 31, 2003, CIGNA had liabilities of $74 million related to these contracts and net amounts recoverable from reinsurers of $51 million. In 2003, CIGNA reduced its amount recoverable from reinsurers by $9 million pre-tax related to revised credit risk assumptions. CIGNA had an additional liability of $40 million associated with the cost of reinsurance as of December 31, 2003.

67

As of December 31, 2002, CIGNA had liabilities of $95 million related to these contracts and amounts recoverable from reinsurers of $76 million. CIGNA also had an additional liability of $44 million associated with the cost of reinsurance as of December 31, 2002.

Management believes the current assumptions used to estimate reserves for these liabilities are appropriate. See  Note 8(H) to the Financial Statements for further information.

C. Regulatory and Industry Developments

Health care regulation. The business of administering and insuring employee benefit programs, particularly health care programs, is heavily regulated by federal and state laws and administrative agencies, such as state departments of insurance and the federal Departments of Labor and Justice, as well as the courts. Regulation and judicial decisions have resulted in changes to industry and CIGNA’s business practices and will continue to do so in the future. In addition, CIGNA’s subsidiaries are routinely involved with various claims, lawsuits and regulatory audits and investigations that could result in financial liability, changes in business practices, or both. Health care regulation in its various forms could have an adverse effect on CIGNA’s health care operations if it inhibits CIGNA’s ability to respond to market demands or results in increased medical or administrative costs without improving the quality of care or services.

The United States Supreme Court has agreed to review a case involving a CIGNA subsidiary in which the issue is preemption by ERISA of a state law tort claim in circumstances involving a determination, based on medical judgment, that benefits were not covered. A determination that ERISA does not preempt state law would have an adverse effect on the health care industry and on CIGNA.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) and related regulations have created significant regulatory requirements related to, among other things, the privacy of individually identifiable health care information, electronic data interchange and the security of electronic health information. CIGNA has instituted systems enhancements and training, and has undertaken other administrative efforts to satisfy these requirements. CIGNA’s incremental technology and business-related after-tax expenses associated with HIPAA compliance efforts were approximately $55 million in 2003 and $20 million in 2002.

Other possible regulatory changes that could have an adverse effect on CIGNA’s health care operations include:

• additional mandated benefits or services that increase costs without improving the quality of care;

• narrowing of ERISA preemption of state laws;

• changes in ERISA regulations resulting in increased administrative burdens and costs;

• additional restrictions on the use of prescription drug formularies;

• additional privacy legislation and regulations that interfere with the proper use of medical information for research, coordination of medical care and disease management;

• additional rules establishing the time periods for payment of health care provider claims that vary from state to state; and

• legislation that would exempt independent physicians from antitrust laws.

The health care industry remains under scrutiny by various state and federal government agencies and could be subject to government efforts to bring criminal actions in circumstances that could previously have given rise only to civil or administrative proceedings.

Tax benefits for corporate life insurance. Federal legislation in 1996 eliminated on a prospective basis the tax deductibility of policy loan interest for most leveraged corporate life insurance products, and IRS initiative in 2001 encouraged policyholders to settle tax disputes regarding these products. As a result, some customers have surrendered their policies and management expects earnings associated with these products to continue to decline.

Insurance-related assessments. Many states maintain funds to pay for the operating expenses of insurance regulatory agencies and pay the obligations of insolvent insurance companies. Regulators finance these funds by imposing assessments against insurance companies operating in the state. In some states, insurance companies can recover a portion of these assessments through reduced premium taxes.

CIGNA’s insurance and HMO subsidiaries have recorded assets and liabilities for insolvency fund and other insurance-related assessments that are not material.

68

Notes to the Financial Statements

D. Litigation and Other Legal Matters

In January 2004, a Florida federal court handling multi-district health care litigation against CIGNA and several health care industry competitors approved a settlement agreement between the physician class and CIGNA, and dismissed all claims by class members against CIGNA. In February 2004, some class members filed a notice of appeal of the court’s approval of the settlement. If affirmed on appeal, the settlement would resolve for CIGNA and the plaintiffs all physician claims reflected in the litigation.

CIGNA recorded an after-tax charge of $37 million ($57 million pre-tax) in 2003 to increase the reserve for this settlement and other non-physician provider health care litigation. CIGNA had previously recognized an after-tax charge of $50 million ($77 million pre-tax) in 2002 for expected costs associated with the multi-district litigation. The reserve reflects expected insurance recoveries.

In 2002, CIGNA recognized a charge based on a review of exposures for the run-off reinsurance operations, including an assessment of retrocessional disputes and exposures. The underlying retrocessional disputes are not expected to be resolved for some time. CIGNA’s reserve balance is based on a current assessment of these matters, the outcomes of which could result in adjustments to CIGNA’s reserve. See  Note 18 for further discussion.

The U.S. Attorney’s Office for the Eastern District of Pennsylvania is investigating compliance with federal laws in connection with pharmaceutical companies’ marketing practices and their impact on prices paid by the government to pharmaceutical companies for products under federal health programs. As part of this investigation, CIGNA is responding to subpoenas concerning contractual relationships between pharmaceutical companies and CIGNA’s health care operations.

In 2002, several purported class action lawsuits, as well as two shareholder derivative complaints nominally brought on behalf of CIGNA, were filed in federal court in the Eastern District of Pennsylvania against CIGNA and certain of its senior officers and directors. These suits allege securities law violations and breaches of fiduciary duty. Two other purported class action lawsuits asserting violations of ERISA were filed against CIGNA and certain officers in the Eastern District of Pennsylvania by individuals who seek to represent a class of participants in the CIGNA 401(k) Plan who allegedly suffered losses on investments in CIGNA stock.

During 2002, a Connecticut federal court certified a class action lawsuit against CIGNA and the CIGNA Pension Plan. The plaintiffs are participants in the Plan who earned certain Plan benefits prior to 1998. The plaintiffs allege, among other things, that the Plan violated ERISA by impermissibly conditioning certain post-1997 benefit accruals on the amount of pre-1998 benefit accruals, that these conditions are not adequately disclosed to Plan participants, and that the Plan’s cash balance formula discriminates against older employees.

CIGNA is routinely involved in numerous claims, lawsuits, regulatory audits, investigations and other legal matters arising, for the most part, in the ordinary course of the business of administering and insuring employee benefit programs. An increasing number of claims are being made for substantial non-economic, extra-contractual or punitive damages. The outcome of litigation and other legal matters is always uncertain, and outcomes that are not justified by the evidence can occur. CIGNA believes that it has valid defenses to the legal matters pending against it and is defending itself vigorously. Nevertheless, it is possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to CIGNA’s consolidated results of operations, liquidity or financial condition.

69

Report of Management

CIGNA’s management is responsible for the consolidated financial statements and all other information presented in this Annual Report. The financial statements have been prepared in conformity with generally accepted accounting principles, determined by management to be appropriate, and include amounts based on management’s informed estimates and judgments. Financial information presented elsewhere in this Annual Report is consistent with the financial statements. The appropriateness of data underlying such financial information is monitored through internal accounting controls, internal auditors, independent auditors, and the Board of Directors acting through an Audit Committee.

Based on the knowledge of CIGNA’s management, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of CIGNA as of, and for the periods ending December 31, 2003 and 2002.

CIGNA maintains a system of internal accounting controls designed to reasonably assure the integrity and reliability of financial reporting and to provide reasonable assurance to management and the Board of Directors that assets are safeguarded and that transactions are executed in accordance with management’s authorization and recorded properly. CIGNA implements and enforces internal accounting controls by selecting and training qualified personnel, by appropriately segregating responsibilities, and by communicating written policies and procedures broadly throughout the company.

In its corporate policy addressing business ethics, CIGNA states its intention to achieve the highest level of legal and ethical standards in the conduct of its business activities. Management provides employees with a copy of this policy. Signed statements are obtained annually from officers, certain other employees and directors attesting to their review of, and compliance with, CIGNA’s business ethics policy.

The Audit Committee of the Board of Directors reviews and reports to the full Board on the appropriateness of CIGNA’s accounting policies, the adequacy of CIGNA’s financial controls and the reliability of financial information reported to the public. The Committee is composed solely of independent directors. Ongoing Committee activities include reviewing reports of management, internal auditors and the independent auditors regarding accounting policies and practices, audit results and internal accounting controls, assessing CIGNA’s relationship with its independent auditors, including their independence, and discussing with management CIGNA’s policies regarding risk management and risk assessment. The Committee also maintains a procedure for receiving and investigating concerns, including anonymous reports from employees, regarding CIGNA’s accounting and financial practices. The Committee has direct access to the internal auditors, engages the independent auditors and meets with both without management in attendance.

The consolidated financial statements have been audited by CIGNA’s independent auditors, PricewaterhouseCoopers LLP, in accordance with generally accepted auditing standards, and have been reviewed by the Audit Committee of the Board of Directors. PricewaterhouseCoopers LLP’s audit included an evaluation of CIGNA’s internal accounting control structure to the extent necessary to determine the audit procedures required to express an opinion on the consolidated financial statements.

Management reviews recommendations of the internal auditors and independent auditors concerning the system of internal accounting controls, and responds to such recommendations with corrective actions, as appropriate. Management believes that, as of December 31, 2003, the system of internal accounting controls is adequate to provide the reasonable assurances discussed herein and that there are no material deficiencies in the design or operation of the system of internal accounting controls.

Report of Independent Auditors

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CIGNA CORPORATION

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, comprehensive income and changes in shareholders’ equity and cash flows present fairly, in all material respects, the financial position of CIGNA Corporation and its subsidiaries (the Company) at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’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 of America, 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 our opinion.

As discussed in  Note 2 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets” effective January 1, 2002.

/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

February 5, 2004

70

Quarterly Financial Data(unaudited)

   The following unaudited quarterly financial data are presented on a consolidated basis for each of the years ended December 31, 2003 and 2002.

   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.

(In millions, except per share amounts)		Three Months Ended
		March 31			June 30			Sept. 30			Dec. 31
Consolidated Results
2003
Total revenues		$	4,900		$	4,634		$	4,773		$	4,501
Income (loss) from continuing operations before income taxes (benefits)			282			(77	)		281			417
Net income (loss)			236	(1)		(53)	(2)		195	(3)		290	(4)
Net income (loss) per share:
	Basic		1.69			(.38	)		1.40			2.07
	Diluted		1.68			(.38	)		1.39			2.06
2002
Total revenues		$	4,780		$	4,737		$	5,083		$	4,748
Income (loss) from continuing operations before income taxes (benefits)			331			326			(1,279	)		53
Net income (loss)			218			214	(5)		(877	) (6)		47	(7)
Net income (loss) per share:
	Basic		1.54			1.52			(6.27	)		.34
	Diluted		1.52			1.50			(6.27	)		.33
Stock and Dividend Data
2003
Price range of common stock—high		$	46.69		$	57.41		$	50.00		$	58.58
—low		$	39.10		$	45.51		$	40.00		$	44.10
Dividends declared per common share		$	.33		$	.33		$	.33		$	.33
2002
Price range of common stock—high		$	101.52		$	111.00		$	98.40		$	74.19
—low		$	87.76		$	94.85		$	69.20		$	34.15
Dividends declared per common share		$	.33		$	.33		$	.33		$	.33

(1)	The first quarter of 2003 includes a $4 million after-tax gain for other postretirement benefits for employees terminated in the first quarter of 2003 under the 2002 restructuring program.
(2)	The second quarter of 2003 includes a $286 million after-tax charge related to a review of assumptions underlying guaranteed minimum death benefit contracts, a $9 million after-tax charge related to restructuring certain corporate staff functions, a $10 million after-tax benefit reflecting a reduction in costs associated with the 2002 restructuring program and a $2 million after-tax gain for other postretirement benefits for employees terminated in the second quarter of 2003 under the 2002 restructuring program.
(3)	The third quarter of 2003 includes a $37 million after-tax charge to increase the reserve for health care provider class action litigation, a $10 million after-tax charge to write off intangible assets related to certain provider contracts, a $5 million after-tax gain on the sale of CIGNA’s interest in a Japanese pension operation and a $1 million after-tax gain for other postretirement benefits for employees terminated in the third quarter of 2003 under the 2002 restructuring program.
(4)	The fourth quarter of 2003 includes a $33 million after-tax benefit related to a reduction in the allowance against amounts recoverable from experience-rated pension policyholders and a $9 million after-tax benefit reflecting a reduction in costs associated with the 2002 and 2001 health care costs reduction programs (including gains on other postretirement benefits).
(5)	The second quarter of 2002 includes a $2 million after-tax accelerated gain recognized on the sale of CIGNA’s life reinsurance business.
(6)	The third quarter of 2002 includes a $720 million after-tax charge to strengthen reserves for guaranteed minimum death benefit contracts as well as the impact of a program adopted by CIGNA to reduce equity market risks related to these contracts, a $317 million after-tax charge for Unicover and London reinsurance matters and a $9 million after-tax charge for a Medicare cost reporting matter associated with Lovelace Health Systems Inc., partially offset by a $1 million after-tax accelerated gain recognized on the sale of CIGNA’s life reinsurance business.
(7)	The fourth quarter of 2002 includes a net $95 million after-tax restructuring charge, a $50 million after-tax charge related to health care provider litigation and an after-tax credit of $2 million reflecting the adjustment of liabilities associated with events of September 11, 2001.

71

EX-21

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

        Listed below are subsidiaries of CIGNA Corporation as of December 31, 2003 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. CIGNA Bank & Trust Company, FSB

B. CIGNA Dental Health, Inc. (Florida)

(1) CIGNA Dental Health of California, Inc. (California)

(2) CIGNA Dental Health of Colorado, Inc. (Colorado)

(3) CIGNA Dental Health of Delaware, Inc. (Delaware)

(4) CIGNA Dental Health of Florida, Inc. (Florida)

(5) CIGNA Dental Health of Kansas, Inc. (Kansas)

(6) CIGNA Dental Health of Kentucky, Inc. (Kentucky)

(7) CIGNA Dental Health of Maryland, Inc. (Delaware)

(8) CIGNA Dental Health of Missouri, inc. (Missouri)

(9) CIGNA Dental Health of New Jersey, Inc. (New Jersey)

(10) CIGNA Dental Health of New Mexico, Inc. (New Mexico)

(11) CIGNA Dental Health of North Carolina, Inc. (North Carolina)

(12) CIGNA Dental Health of Ohio, Inc. (Ohio)

(13) CIGNA Dental Health of Pennsylvania, Inc. (Pennsylvania)

(14) CIGNA Dental Health of Texas, Inc. (Texas)

(15) CIGNA Dental Health of Virginia, Inc. (Virginia)

(16) CIGNA Dental Health Plan of Arizona, Inc. (Arizona)

C. CIGNA Financial Services, Inc. (Delaware)

D. CIGNA Health Corporation (Delaware)

(1) Healthsource, Inc. (New Hampshire)

(a) Healthsource Health Plans, Inc. (North Carolina)

(i) CIGNA HealthCare of North Carolina, Inc. (North Carolina)

(b) Healthsource Indiana, Inc. (New Hampshire)

(i) CIGNA HealthCare of Indiana, Inc. (Indiana)

(c) CIGNA Insurance Group, Inc. (New Hampshire)

(d) CIGNA HealthCare of Maine, Inc. (Maine)

(e) Healthsource Management, Inc. (New Hampshire)

(i) CIGNA HealthCare of New York, Inc. (New York)

(ii) CIGNA HealthCare of Tennessee, Inc. (Tennessee)

(f) CIGNA HealthCare of Massachusetts, Inc. (Massachusetts)

(g) CIGNA HealthCare of New Hampshire, Inc. (New Hampshire)

(h) Healthsource South, Inc.

(i) CIGNA HealthCare of Texas, Inc. (Texas)

(ii) CIGNA HealthCare of Georgia, Inc. (Georgia)

(i) Physicians' Health Systems, Inc. (South Carolina)

(i) CIGNA Insurance Services Company (South Carolina) (72% with balance owned by affiliate)

(ii) CIGNA HealthCare of South Carolina, Inc. (South Carolina)

(j) CIGNA HealthCare Mid-Atlantic, Inc. (Maryland)

(k) CIGNA HealthCare of Arizona, Inc. (Arizona)

(i) CIGNA Community Choice, Inc. (Arizona)

(l) CIGNA HealthCare of California, Inc. (California)

(m) CIGNA HealthCare of Colorado, Inc. (Colorado)

(n) CIGNA HealthCare of Connecticut, Inc. (Connecticut)

(o) CIGNA HealthCare of Delaware, Inc. (Delaware)

(p) CIGNA HealthCare of Florida, Inc. (Florida)

(q) CIGNA HealthCare of Illinois, Inc. (Delaware) (99.60% with balance owned by non-affiliate)

(r) CIGNA HealthCare of New Jersey, Inc. (New Jersey)

(s) CIGNA HealthCare of Ohio, Inc. (Ohio)

(t) CIGNA HealthCare of Pennsylvania, Inc. (Pennsylvania)

(u) CIGNA HealthCare of St. Louis, Inc. (Missouri)

(v) CIGNA HealthCare of Utah, Inc. (Utah)

(w) CIGNA HealthCare of Virginia, Inc. (Virginia)

(x) Temple Insurance Company Limited (Bermuda)

E. CIGNA Behavioral Health, Inc. (Minnesota)

F. CIGNA Life Insurance Company of Canada (Canada)

G. CIGNA Life Insurance Company of New York (New York)

H. Connecticut General Life Insurance Company (Connecticut)

(1) CIGNA Life Insurance Company (Connecticut)

I. Global Portfolio Strategies, Inc. (Connecticut)

J. International Rehabilitation Associates, Inc. d/b/a Intracorp (Delaware)

K. Life Insurance Company of North America (Pennsylvania)

(1) CIGNA & CMC Life Insurance Company Limited (China) (50% with balance owned by a non-affiliate)

(2) Linatex, Inc. (Delaware)

II. CIGNA Global Holdings, Inc. (Delaware)

A. CIGNA Brazil Holdings, Inc. (Delaware)

B. CIGNA Brasil Participacoes Ltda. (Brazil)

(a) CIGNA Compania de Seguros S.A. (Brazil)

C. CIGNA Servicos Ltda. (Brazil) (56% with balance owned by affiliate)

D. CIGNA International Marketing (Thailand) Limited (Thailand) (99.98% with balance owned by affiliates)

E. CIGNA Global Reinsurance Company, Ltd. (Bermuda)

(1) CIGNA Holdings Overseas, Inc. (Delaware)

(a) CIGNA Argentina Compania de Seguros S.A. (Argentina) (99.17% with balance owned by affiliate)

(b) CIGNA European Services (UK) Limited (United Kingdom)

(c) CIGNA International Marketing Australia Limited (Australia)

(d) CIGNA Life Insurance Company of Europe S.A.- N.V. (Belgium) (99.99% with balance owned by affiliate)

(i) CIGNA Europe Insurance Company S.A.-N.V. (Belgium) (99.99% with balance owned by affiliate)

(e) CIGNA Life Insurance Company of New Zealand Limited (New Zealand)

(f) Empresa Guatemalteca CIGNA de Seguros, Sociedad Anonima (Guatemala) (97.38% with balance owned by non-affiliates)

(g) CIGNA Seguradora S.A. (Brazil) (85.59% with balance owned by affiliate)

(h) Inversiones CIGNA Limitada (Chile) (99% with balance owned by affiliate)

(i) CIGNA Asistencia Administrativa Limitada (Chile) (99.9% with balance owned by affiliate)

(ii) CIGNA Compania de Seguros de Vida (Chile) S.A. (Chile) (98.6% with balance owned by non-affiliates)

(2) CIGNA Worldwide Insurance Company (Delaware)

(a) PT. Asuransi CIGNA (Indonesia) (80% with balance owned by non-affiliate)

F. CIGNA International Corporation (Delaware)

G. CIGNA International Services, Inc. (Delaware)

H. CIGNA Stu S.A. (Poland) (7.03% with balanced owned by non-affiliates)

I. Maxicare Healthcare Corp. (Philippines) (30% with balance owned by non-affiliates)

III. CIGNA Investment Group, Inc. (Delaware)

A. CIGNA International Finance Inc. (Delaware)

(1) CIGNA International Investment Advisors, Ltd. (Delaware)

(a) CIGNA Fund Managers Limited (Bermuda)

(b) CIGNA International Investment Advisors Limitada (Chile) (99.5% with balance owned by affiliate)

(c) CIGNA International Investment Advisors K.K. (Japan)

B. CIGNA Investments, Inc. (Delaware)

C. TimesSquare Capital Management, Inc. (Delaware)

(1) CIGNA Financial Futures, Inc. (Delaware)

IV. CIGNA Intellectual Property, Inc. (Delaware)

EX-23

Exhibit 23

CONSENT OF INDEPENDENT ACCOUNTANTS

        We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-41011) and Form S-8 (No. 33-44371, No. 33-51791, No. 33-60053, No. 333-22391, No. 333-31903, No. 333-64207 and No. 333-90785) of CIGNA Corporation of our report dated February 5, 2004 relating to the financial statements, which appears in the 2003 Annual Report to Shareholders of CIGNA Corporation, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated February 5, 2004 relating to the Financial Statement Schedules, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 27, 2004

EX-24

Exhibit 24.1

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a director of CIGNA Corporation, a Delaware corporation (“CIGNA”), hereby makes, designates, constitutes and appoints CAROL J. WARD and TIMOTHY J. GIFFORD, and each of them (with full power to act without the other), as the undersigned’s true and lawful attorneys-in-fact and agents, with full power and authority to act in any and all capacities for and in the name, place and stead of the undersigned (A) in connection with the filing with the Securities and Exchange Commission pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, of:

(i) CIGNA’s Annual Report on Form 10-K and all amendments thereto (collectively, “CIGNA’s Form 10-K”);

(ii) any and all registration statements pertaining to employee benefit or director compensation plans of CIGNA or its subsidiaries, and all amendments thereto, including, without limitation, amendments to CIGNA’s registration statements on Form S-8 (Registration Numbers 33-44371, 33-51791, 33-60053, 333-22391, 333-31903, 333-64207 and 333-90785);

(iii) all amendments to CIGNA’s registration statements on Form S-3 (Registration Number 333-41011) relating to $500 million of debt securities, Preferred Stock and Common Stock; and

(B)  in connection with the preparation, delivery and filing of any and all registrations, amendments, qualifications or notifications under the applicable securities laws of any and all states and other jurisdictions with respect to securities of CIGNA, of whatever class or series, offered, sold, issued, distributed, placed or resold by CIGNA, any of its subsidiaries, or any other person or entity.

        Such attorneys-in-fact and agents, or any of them, are also hereby granted full power and authority, on behalf of and in the name, place and stead of the undersigned, to execute and deliver all such registration statements, registrations, amendments, qualifications and notifications, and CIGNA’s Form 10-K, to execute and deliver any and all such other documents, and to take further action as they, or any of them, deem appropriate. The powers and authorities granted herein to such attorneys-in-fact and agents, and each of them, also include the full right, power and authority to effect necessary or appropriate substitutions or revocations. The undersigned hereby ratifies, confirms, and adopts, as his own act and deed, all action lawfully taken by such attorneys-in-fact and agents, or any of them, or by their respective substitutes, pursuant to the powers and authorities herein granted. This Power of Attorney expires by its terms and shall be of no further force and effect on May 15, 2005.

        IN WITNESS WHEREOF, the undersigned has executed this document as of the 25th day of February, 2004

/s/ Robert H. Campbell

Robert H. Campbell

Exhibit 24.1

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a director of CIGNA Corporation, a Delaware corporation (“CIGNA”), hereby makes, designates, constitutes and appoints CAROL J. WARD and TIMOTHY J. GIFFORD, and each of them (with full power to act without the other), as the undersigned’s true and lawful attorneys-in-fact and agents, with full power and authority to act in any and all capacities for and in the name, place and stead of the undersigned (A) in connection with the filing with the Securities and Exchange Commission pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, of:

(i) CIGNA’s Annual Report on Form 10-K and all amendments thereto (collectively, “CIGNA’s Form 10-K”);

(ii) any and all registration statements pertaining to employee benefit or director compensation plans of CIGNA or its subsidiaries, and all amendments thereto, including, without limitation, amendments to CIGNA’s registration statements on Form S-8 (Registration Numbers 33-44371, 33-51791, 33-60053, 333-22391, 333-31903, 333-64207 and 333-90785);

(iii) all amendments to CIGNA’s registration statements on Form S-3 (Registration Number 333-41011) relating to $500 million of debt securities, Preferred Stock and Common Stock; and

(B) in connection with the preparation, delivery and filing of any and all registrations, amendments, qualifications or notifications under the applicable securities laws of any and all states and other jurisdictions with respect to securities of CIGNA, of whatever class or series, offered, sold, issued, distributed, placed or resold by CIGNA, any of its subsidiaries, or any other person or entity.

        Such attorneys-in-fact and agents, or any of them, are also hereby granted full power and authority, on behalf of and in the name, place and stead of the undersigned, to execute and deliver all such registration statements, registrations, amendments, qualifications and notifications, and CIGNA’s Form 10-K, to execute and deliver any and all such other documents, and to take further action as they, or any of them, deem appropriate. The powers and authorities granted herein to such attorneys-in-fact and agents, and each of them, also include the full right, power and authority to effect necessary or appropriate substitutions or revocations. The undersigned hereby ratifies, confirms, and adopts, as his own act and deed, all action lawfully taken by such attorneys-in-fact and agents, or any of them, or by their respective substitutes, pursuant to the powers and authorities herein granted. This Power of Attorney expires by its terms and shall be of no further force and effect on May 15, 2005.

        IN WITNESS WHEREOF, the undersigned has executed this document as of the 25th day of February, 2004.

/s/ H. Edward Hanway

H. Edward Hanway

Exhibit 24.1

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a director of CIGNA Corporation, a Delaware corporation (“CIGNA”), hereby makes, designates, constitutes and appoints CAROL J. WARD and TIMOTHY J. GIFFORD, and each of them (with full power to act without the other), as the undersigned’s true and lawful attorneys-in-fact and agents, with full power and authority to act in any and all capacities for and in the name, place and stead of the undersigned (A) in connection with the filing with the Securities and Exchange Commission pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, of:

(i) CIGNA’s Annual Report on Form 10-K and all amendments thereto (collectively, “CIGNA’s Form 10-K”);

(ii) any and all registration statements pertaining to employee benefit or director compensation plans of CIGNA or its subsidiaries, and all amendments thereto, including, without limitation, amendments to CIGNA’s registration statements on Form S-8 (Registration Numbers 33-44371, 33-51791, 33-60053, 333-22391, 333-31903, 333-64207 and 333-90785);

(iii) all amendments to CIGNA’s registration statements on Form S-3 (Registration Number 333-41011) relating to $500 million of debt securities, Preferred Stock and Common Stock; and

(B) in connection with the preparation, delivery and filing of any and all registrations, amendments, qualifications or notifications under the applicable securities laws of any and all states and other jurisdictions with respect to securities of CIGNA, of whatever class or series, offered, sold, issued, distributed, placed or resold by CIGNA, any of its subsidiaries, or any other person or entity.

        Such attorneys-in-fact and agents, or any of them, are also hereby granted full power and authority, on behalf of and in the name, place and stead of the undersigned, to execute and deliver all such registration statements, registrations, amendments, qualifications and notifications, and CIGNA’s Form 10-K, to execute and deliver any and all such other documents, and to take further action as they, or any of them, deem appropriate. The powers and authorities granted herein to such attorneys-in-fact and agents, and each of them, also include the full right, power and authority to effect necessary or appropriate substitutions or revocations. The undersigned hereby ratifies, confirms, and adopts, as his own act and deed, all action lawfully taken by such attorneys-in-fact and agents, or any of them, or by their respective substitutes, pursuant to the powers and authorities herein granted. This Power of Attorney expires by its terms and shall be of no further force and effect on May 15, 2005.

        IN WITNESS WHEREOF, the undersigned has executed this document as of the 25th day of February, 2004.

/s/ Peter N. Larson

Peter N. Larson

Exhibit 24.1

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a director of CIGNA Corporation, a Delaware corporation (“CIGNA”), hereby makes, designates, constitutes and appoints CAROL J. WARD and TIMOTHY J. GIFFORD, and each of them (with full power to act without the other), as the undersigned’s true and lawful attorneys-in-fact and agents, with full power and authority to act in any and all capacities for and in the name, place and stead of the undersigned (A) in connection with the filing with the Securities and Exchange Commission pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, of:

(i) CIGNA’s Annual Report on Form 10-K and all amendments thereto (collectively, “CIGNA’s Form 10-K”);

(ii) any and all registration statements pertaining to employee benefit or director compensation plans of CIGNA or its subsidiaries, and all amendments thereto, including, without limitation, amendments to CIGNA’s registration statements on Form S-8 (Registration Numbers 33-44371, 33-51791, 33-60053, 333-22391, 333-31903, 333-64207 and 333-90785);

(iii) all amendments to CIGNA’s registration statements on Form S-3 (Registration Number 333-41011) relating to $500 million of debt securities, Preferred Stock and Common Stock; and

(B)  in connection with the preparation, delivery and filing of any and all registrations, amendments, qualifications or notifications under the applicable securities laws of any and all states and other jurisdictions with respect to securities of CIGNA, of whatever class or series, offered, sold, issued, distributed, placed or resold by CIGNA, any of its subsidiaries, or any other person or entity.

        Such attorneys-in-fact and agents, or any of them, are also hereby granted full power and authority, on behalf of and in the name, place and stead of the undersigned, to execute and deliver all such registration statements, registrations, amendments, qualifications and notifications, and CIGNA’s Form 10-K, to execute and deliver any and all such other documents, and to take further action as they, or any of them, deem appropriate. The powers and authorities granted herein to such attorneys-in-fact and agents, and each of them, also include the full right, power and authority to effect necessary or appropriate substitutions or revocations. The undersigned hereby ratifies, confirms, and adopts, as his own act and deed, all action lawfully taken by such attorneys-in-fact and agents, or any of them, or by their respective substitutes, pursuant to the powers and authorities herein granted. This Power of Attorney expires by its terms and shall be of no further force and effect on May 15, 2005.

        IN WITNESS WHEREOF, the undersigned has executed this document as of the 25th day of February, 2004.

/s/ Joseph Neubauer

Joseph Neubauer

Exhibit 24.1

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a director of CIGNA Corporation, a Delaware corporation (“CIGNA”), hereby makes, designates, constitutes and appoints CAROL J. WARD and TIMOTHY J. GIFFORD, and each of them (with full power to act without the other), as the undersigned’s true and lawful attorneys-in-fact and agents, with full power and authority to act in any and all capacities for and in the name, place and stead of the undersigned (A) in connection with the filing with the Securities and Exchange Commission pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, of:

(i) CIGNA’s Annual Report on Form 10-K and all amendments thereto (collectively, “CIGNA’s Form 10-K”);

(ii) any and all registration statements pertaining to employee benefit or director compensation plans of CIGNA or its subsidiaries, and all amendments thereto, including, without limitation, amendments to CIGNA’s registration statements on Form S-8 (Registration Numbers 33-44371, 33-51791, 33-60053, 333-22391, 333-31903, 333-64207 and 333-90785);

(iii) all amendments to CIGNA’s registration statements on Form S-3 (Registration Number 333-41011) relating to $500 million of debt securities, Preferred Stock and Common Stock; and

(B)  in connection with the preparation, delivery and filing of any and all registrations, amendments, qualifications or notifications under the applicable securities laws of any and all states and other jurisdictions with respect to securities of CIGNA, of whatever class or series, offered, sold, issued, distributed, placed or resold by CIGNA, any of its subsidiaries, or any other person or entity.

        Such attorneys-in-fact and agents, or any of them, are also hereby granted full power and authority, on behalf of and in the name, place and stead of the undersigned, to execute and deliver all such registration statements, registrations, amendments, qualifications and notifications, and CIGNA’s Form 10-K, to execute and deliver any and all such other documents, and to take further action as they, or any of them, deem appropriate. The powers and authorities granted herein to such attorneys-in-fact and agents, and each of them, also include the full right, power and authority to effect necessary or appropriate substitutions or revocations. The undersigned hereby ratifies, confirms, and adopts, as his own act and deed, all action lawfully taken by such attorneys-in-fact and agents, or any of them, or by their respective substitutes, pursuant to the powers and authorities herein granted. This Power of Attorney expires by its terms and shall be of no further force and effect on May 15, 2005.

        IN WITNESS WHEREOF, the undersigned has executed this document as of the 25th day of February, 2004.

/s/ Charles R. Shoemate

Charles R. Shoemate

Exhibit 24.1

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a director of CIGNA Corporation, a Delaware corporation (“CIGNA”), hereby makes, designates, constitutes and appoints CAROL J. WARD and TIMOTHY J. GIFFORD, and each of them (with full power to act without the other), as the undersigned’s true and lawful attorneys-in-fact and agents, with full power and authority to act in any and all capacities for and in the name, place and stead of the undersigned (A) in connection with the filing with the Securities and Exchange Commission pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, of:

(i) CIGNA’s Annual Report on Form 10-K and all amendments thereto (collectively, “CIGNA’s Form 10-K”);

(ii) any and all registration statements pertaining to employee benefit or director compensation plans of CIGNA or its subsidiaries, and all amendments thereto, including, without limitation, amendments to CIGNA’s registration statements on Form S-8 (Registration Numbers 33-44371, 33-51791, 33-60053, 333-22391, 333-31903, 333-64207 and 333-90785);

(iii) all amendments to CIGNA’s registration statements on Form S-3 (Registration Number 333-41011) relating to $500 million of debt securities, Preferred Stock and Common Stock; and

(B)  in connection with the preparation, delivery and filing of any and all registrations, amendments, qualifications or notifications under the applicable securities laws of any and all states and other jurisdictions with respect to securities of CIGNA, of whatever class or series, offered, sold, issued, distributed, placed or resold by CIGNA, any of its subsidiaries, or any other person or entity.

        Such attorneys-in-fact and agents, or any of them, are also hereby granted full power and authority, on behalf of and in the name, place and stead of the undersigned, to execute and deliver all such registration statements, registrations, amendments, qualifications and notifications, and CIGNA’s Form 10-K, to execute and deliver any and all such other documents, and to take further action as they, or any of them, deem appropriate. The powers and authorities granted herein to such attorneys-in-fact and agents, and each of them, also include the full right, power and authority to effect necessary or appropriate substitutions or revocations. The undersigned hereby ratifies, confirms, and adopts, as his own act and deed, all action lawfully taken by such attorneys-in-fact and agents, or any of them, or by their respective substitutes, pursuant to the powers and authorities herein granted. This Power of Attorney expires by its terms and shall be of no further force and effect on May 15, 2005.

        IN WITNESS WHEREOF, the undersigned has executed this document as of the 25th day of February, 2004.

/s/ Louis W. Sullivan, M.D.

Louis W. Sullivan, M.D.

Exhibit 24.1

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a director of CIGNA Corporation, a Delaware corporation (“CIGNA”), hereby makes, designates, constitutes and appoints CAROL J. WARD and TIMOTHY J. GIFFORD, and each of them (with full power to act without the other), as the undersigned’s true and lawful attorneys-in-fact and agents, with full power and authority to act in any and all capacities for and in the name, place and stead of the undersigned (A) in connection with the filing with the Securities and Exchange Commission pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, of:

(i) CIGNA’s Annual Report on Form 10-K and all amendments thereto (collectively, “CIGNA’s Form 10-K”);

(ii) any and all registration statements pertaining to employee benefit or director compensation plans of CIGNA or its subsidiaries, and all amendments thereto, including, without limitation, amendments to CIGNA’s registration statements on Form S-8 (Registration Numbers 33-44371, 33-51791, 33-60053, 333-22391, 333-31903, 333-64207 and 333-90785);

(iii) all amendments to CIGNA’s registration statements on Form S-3 (Registration Number 333-41011) relating to $500 million of debt securities, Preferred Stock and Common Stock; and

(B)  in connection with the preparation, delivery and filing of any and all registrations, amendments, qualifications or notifications under the applicable securities laws of any and all states and other jurisdictions with respect to securities of CIGNA, of whatever class or series, offered, sold, issued, distributed, placed or resold by CIGNA, any of its subsidiaries, or any other person or entity.

        Such attorneys-in-fact and agents, or any of them, are also hereby granted full power and authority, on behalf of and in the name, place and stead of the undersigned, to execute and deliver all such registration statements, registrations, amendments, qualifications and notifications, and CIGNA’s Form 10-K, to execute and deliver any and all such other documents, and to take further action as they, or any of them, deem appropriate. The powers and authorities granted herein to such attorneys-in-fact and agents, and each of them, also include the full right, power and authority to effect necessary or appropriate substitutions or revocations. The undersigned hereby ratifies, confirms, and adopts, as his own act and deed, all action lawfully taken by such attorneys-in-fact and agents, or any of them, or by their respective substitutes, pursuant to the powers and authorities herein granted. This Power of Attorney expires by its terms and shall be of no further force and effect on May 15, 2005.

        IN WITNESS WHEREOF, the undersigned has executed this document as of the 25th day of February, 2004.

/s/ Harold A. Wagner

Harold A. Wagner

Exhibit 24.1

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a director of CIGNA Corporation, a Delaware corporation (“CIGNA”), hereby makes, designates, constitutes and appoints CAROL J. WARD and TIMOTHY J. GIFFORD, and each of them (with full power to act without the other), as the undersigned’s true and lawful attorneys-in-fact and agents, with full power and authority to act in any and all capacities for and in the name, place and stead of the undersigned (A) in connection with the filing with the Securities and Exchange Commission pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, of:

(i) CIGNA’s Annual Report on Form 10-K and all amendments thereto (collectively, “CIGNA’s Form 10-K”);

(ii) any and all registration statements pertaining to employee benefit or director compensation plans of CIGNA or its subsidiaries, and all amendments thereto, including, without limitation, amendments to CIGNA’s registration statements on Form S-8 (Registration Numbers 33-44371, 33-51791, 33-60053, 333-22391, 333-31903, 333-64207 and 333-90785);

(iii) all amendments to CIGNA’s registration statements on Form S-3 (Registration Number 333-41011) relating to $500 million of debt securities, Preferred Stock and Common Stock; and

(B)  in connection with the preparation, delivery and filing of any and all registrations, amendments, qualifications or notifications under the applicable securities laws of any and all states and other jurisdictions with respect to securities of CIGNA, of whatever class or series, offered, sold, issued, distributed, placed or resold by CIGNA, any of its subsidiaries, or any other person or entity.

        Such attorneys-in-fact and agents, or any of them, are also hereby granted full power and authority, on behalf of and in the name, place and stead of the undersigned, to execute and deliver all such registration statements, registrations, amendments, qualifications and notifications, and CIGNA’s Form 10-K, to execute and deliver any and all such other documents, and to take further action as they, or any of them, deem appropriate. The powers and authorities granted herein to such attorneys-in-fact and agents, and each of them, also include the full right, power and authority to effect necessary or appropriate substitutions or revocations. The undersigned hereby ratifies, confirms, and adopts, as his own act and deed, all action lawfully taken by such attorneys-in-fact and agents, or any of them, or by their respective substitutes, pursuant to the powers and authorities herein granted. This Power of Attorney expires by its terms and shall be of no further force and effect on May 15, 2005.

        IN WITNESS WHEREOF, the undersigned has executed this document as of the 25th day of February, 2004.

/s/ Carol Cox Wait

Carol Cox Wait

Exhibit 24.1

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a director of CIGNA Corporation, a Delaware corporation (“CIGNA”), hereby makes, designates, constitutes and appoints CAROL J. WARD and TIMOTHY J. GIFFORD, and each of them (with full power to act without the other), as the undersigned’s true and lawful attorneys-in-fact and agents, with full power and authority to act in any and all capacities for and in the name, place and stead of the undersigned (A) in connection with the filing with the Securities and Exchange Commission pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, of:

(i) CIGNA’s Annual Report on Form 10-K and all amendments thereto (collectively, “CIGNA’s Form 10-K”);

(ii) any and all registration statements pertaining to employee benefit or director compensation plans of CIGNA or its subsidiaries, and all amendments thereto, including, without limitation, amendments to CIGNA’s registration statements on Form S-8 (Registration Numbers 33-44371, 33-51791, 33-60053, 333-22391, 333-31903, 333-64207 and 333-90785);

(iii) all amendments to CIGNA’s registration statements on Form S-3 (Registration Number 333-41011) relating to $500 million of debt securities, Preferred Stock and Common Stock; and

(B)  in connection with the preparation, delivery and filing of any and all registrations, amendments, qualifications or notifications under the applicable securities laws of any and all states and other jurisdictions with respect to securities of CIGNA, of whatever class or series, offered, sold, issued, distributed, placed or resold by CIGNA, any of its subsidiaries, or any other person or entity.

        Such attorneys-in-fact and agents, or any of them, are also hereby granted full power and authority, on behalf of and in the name, place and stead of the undersigned, to execute and deliver all such registration statements, registrations, amendments, qualifications and notifications, and CIGNA’s Form 10-K, to execute and deliver any and all such other documents, and to take further action as they, or any of them, deem appropriate. The powers and authorities granted herein to such attorneys-in-fact and agents, and each of them, also include the full right, power and authority to effect necessary or appropriate substitutions or revocations. The undersigned hereby ratifies, confirms, and adopts, as his own act and deed, all action lawfully taken by such attorneys-in-fact and agents, or any of them, or by their respective substitutes, pursuant to the powers and authorities herein granted. This Power of Attorney expires by its terms and shall be of no further force and effect on May 15, 2005.

        IN WITNESS WHEREOF, the undersigned has executed this document as of the 25th day of February, 2004.

/s/ Marilyn Ware

Marilyn Ware

EX-24

Exhibit 24.2

Certified to be a true and correct copy of the resolutions adopted by the Board of Directors of CIGNA Corporation at a meeting held on February 25, 2004, a quorum being present, and such resolutions are still in full force and effect as of this date of certification, not having been amended, modified or rescinded since the date of their adoption.

        RESOLVED, That the Officers of the Corporation, and each of them, are hereby authorized to sign the Form 10-K in the name and on behalf of and as attorneys for the Corporation and each of its Directors and Officers.

        RESOLVED, That each Officer and Director of the Corporation who may be required to execute (whether on behalf of the Corporation or as an Officer or Director thereof) the Form 10-K, is hereby authorized to execute and deliver a power of attorney appointing such person or persons named therein as true and lawful attorneys and agents to execute in the name, place and stead (in any such capacity) of any such Officer or Director said Form 10-K and to file any such power of attorney together with the Form 10-K with the Securities and Exchange Commission.

Date: February 27, 2004	/s/ Carol J. Ward
	Carol J. Ward

EX-31

Exhibit 31.1

CERTIFICATION

I, H. EDWARD HANWAY, certify that:

1. I have reviewed this Annual Report on Form 10-K of CIGNA Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986];

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2004

/s/ H. Edward Hanway

Title: Chief Executive Officer

EX-31

Exhibit 31.2

CERTIFICATION

I, MICHAEL W. BELL, certify that:

1. I have reviewed this Annual Report on Form 10-K of CIGNA Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986];

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2004

/s/ Michael W. Bell

Title: Chief Financial Officer

EX-32

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, 2003 (the “Report”):

(1) complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CIGNA Corporation.

/s/ H. Edward Hanway

H. Edward Hanway
Chief Executive Officer
February 27, 2004

EX-32

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, 2003 (the “Report”):

(1) complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CIGNA Corporation.

/s/ Michael W. Bell

Michael W. Bell
Chief Financial Officer
February 27, 2004