-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Orzvj3M3OvC41OmmnUKB8M+rr+CSYtpL5xT0iWzOcJ7oQW/324b0HiHht4K0aHbc nu1y+mqHkQpn8950nSd01A== 0000950159-99-000170.txt : 19990628 0000950159-99-000170.hdr.sgml : 19990628 ACCESSION NUMBER: 0000950159-99-000170 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990625 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIGNA CORP CENTRAL INDEX KEY: 0000701221 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 061059331 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-08323 FILM NUMBER: 99652046 BUSINESS ADDRESS: STREET 1: ONE LIBERTY PLACE 48TH FLOOR STREET 2: 1601 CHESTNUT STREET CITY: PHILADELPHIA STATE: PA ZIP: 19192-1550 BUSINESS PHONE: 2157616211 MAIL ADDRESS: STREET 1: TWO LIBERTY PLACE 48TH FLOOR STREET 2: 1601 CHESTNUT STREET CITY: PHILADELPHIA STATE: PA ZIP: 19192 11-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission File Number 1-8323 --------------------------- A. Full title of the plan and the address of the plan, if different from that of the issuer named below: CIGNA 401(k) Plan (formerly Savings and Investment Plus Plan) Two Liberty Place, 17th Floor 1601 Chestnut Street P.O. Box 7716 Philadelphia, PA 19192 B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: CIGNA Corporation One Liberty Place 1650 Market Street Philadelphia, PA 19192 Required Information -------------------- Financial statements and schedules for the CIGNA 401(k) Plan, prepared in accordance with the financial reporting requirements of the Employee Retirement Income Security Act of 1974, appear on pages 11-K-3 through 11-K-20 of this Annual Report on Form 11-K. 11-K-2 CIGNA 401(k) PLAN (formerly Savings and Investment Plus Plan) Financial Statements and Supplemental Schedules December 31, 1998 and 1997 11-K-3 CIGNA 401(k) PLAN TABLE OF CONTENTS Page ---- Report of Independent Accountants 1 Financial Statements Statements of Net Assets Available for Benefits 2 Statements of Changes in Net Assets Available for Benefits 3 Notes to Financial Statements 4 Supplemental Schedules Schedule of Assets Held for Investment Purposes 14 Schedule of Reportable Transactions 15 Schedule of Loans in Default 16 11-K-4 REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Administrator of the CIGNA 401(k) Plan In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the CIGNA 401(k) Plan (the Plan) at December 31, 1998 and 1997, and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of Assets Held for Investment Purposes, Reportable Transactions and Loans in Default are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ PricewaterhouseCoopers LLP Philadelphia, Pennsylvania June 22, 1999 11-K-5
CIGNA 401(k) PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS As of December 31, 1998 1997 ---- ---- (In thousands) Assets Investments, at fair value Fixed Income Fund $ 935,011 $ 886,053 CIGNA Stock Fund 248,735 162,070 Pooled separate accounts of Connecticut General Life Insurance Company: Fidelity Advisor Growth Opportunities Fund 341,284 300,218 Stock Market Index Fund 226,927 144,841 Founders Growth Fund 73,535 44,028 Warburg Pincus Advisor Emerging Growth Fund 30,599 28,040 International Equity Fund 26,583 29,733 Barclays Equity Market Index Fund 12,710 -- State Street Global Advisors EAFE Index Fund 10,228 -- Templeton Foreign Fund 6,298 -- INVESCO Total Return Fund -- 28,036 Participant Loans 50,827 50,648 ---------- ---------- 1,962,737 1,673,667 Employer's contributions receivable 8,939 -- ---------- ---------- Net assets available for benefits $1,971,676 $1,673,667 ========== ========== The Notes to Financial Statements are an integral part of these statements. -2- 11-K-6
CIGNA 401(k) PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS For the Years Ended December 31, 1998 1997 ---- ---- (In thousands) Investment income Interest and dividends $ 66,753 $ 64,915 Net appreciation in fair value of CIGNA stock 58,810 29,912 Net investment gain from separate accounts 134,792 112,262 ----------- ----------- Total investment income 260,355 207,089 ----------- ----------- Contributions Employees' contributions 84,173 76,321 Employer's contributions 38,279 28,609 Rollover contributions 6,259 6,458 ----------- ----------- Total contributions 128,711 111,388 ----------- ----------- Benefits paid (137,294) (90,274) ----------- ----------- Net increase 251,772 228,203 Transfers from other plans 46,237 -- Net assets available for benefits Beginning of year 1,673,667 1,445,464 ----------- ----------- End of year $ 1,971,676 $ 1,673,667 =========== =========== The Notes to Financial Statements are an integral part of these statements. -3- 11-K-7
CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS Note 1 - Description of the Plan The following description of the CIGNA 401(k) Plan (formerly called the Savings and Investment Plus Plan) (the Plan) provides general information only. A more complete explanation of the features and benefits available under the Plan is contained in the Summary Plan Description and Prospectus. Generally, all domestic employees of CIGNA Corporation (CIGNA) and its participating subsidiaries who complete at least one year of eligible service (as defined by the Plan) can participate in the Plan, a defined contribution plan. Effective January 1, 1999, the one-year of eligible service requirement was eliminated for enrolling in the Plan. Newly hired employees may enroll in the Plan immediately. However, only participants who have completed one year of eligible service may receive employer-matching contributions, as described below. Employee Contributions - ---------------------- The Plan permits tax-deferred contributions to a maximum of 16% of a participant's eligible earnings. Eligible earnings were limited to $160,000 in 1998 and 1997. Tax-deferred contributions are accomplished by means of an employee's election, pursuant to Section 401(k) of the Internal Revenue Code (IRC), to have an amount withheld by the employer from the employee's compensation, and for the employer to remit to the employee's plan account an amount equal to such withholding. Tax-deferred contributions are also referred to as "employee contributions." Under the IRC, tax-deferred contributions were limited to $10,000 and $9,500 in 1998 and 1997, respectively. To comply with anti-discrimination provisions, tax-deferred contributions for highly compensated employees were effectively limited to 6.4% and 7% of eligible earnings in 1998 and 1997, respectively. Employee contributions may be invested in any combination of several funds. Employer Contributions - ---------------------- CIGNA offers two kinds of matching contributions - the regular match, which is a 50% match of any participant's contributions up to 6% of eligible earnings and, beginning with the 1998 plan year, the variable match, which is determined annually and is discretionary. The variable match may be up to two percent of a participant's eligible earnings and is invested in the CIGNA Stock Fund. For most participants, a variable matching contribution for 1998 was approved of up to 1% of participants' eligible earnings. In addition, effective April 1, 1999, half of the regular matching contributions for most participants are invested in the CIGNA Stock Fund. Employer contributions that are required to be invested in the CIGNA Stock Fund (i.e. non-participant directed contributions) and the related investment earnings cannot be transferred to any of the Plan's other investment funds until termination of employment or attainment of age 55. The portion of matching contributions which are not required to be invested in the CIGNA Stock Fund are invested automatically in the same manner as participants' own contributions. These matching contributions are collectively referred to as "employer contributions." -4- 11-K-8 CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS Rollover Contributions - ---------------------- The Plan may accept rollover contributions. Rollover contributions represent distributions received from other employer-sponsored, tax qualified pension or profit sharing plans. Distributions from other plans are subject to certain conditions to be eligible for rollover into the Plan. Vesting - ------- Employee contributions, including related investment earnings, are fully vested at all times. Employer contributions and related investment earnings vest 20% for each year of vesting service. Participants earn a year of vesting service if they have at least 1,000 hours of service during the calendar year period. Early vesting rules may apply upon joining the Plan if the participant was previously employed by a CIGNA company or had an account in certain plans that have since merged into the Plan. Employer contributions and related investment earnings are fully vested upon an employee's attainment of age 65, death or total and permanent disability. Full vesting would also occur if a participating CIGNA company is sold and does not maintain a successor plan, if CIGNA discontinues matching contributions or if the Plan is terminated. Upon termination of a participant's employment that portion of employer contributions and related investment earnings which are not vested are forfeited. Forfeited amounts are used to reduce future employer contributions. Forfeitures of approximately $1,200,000 and $605,000 were used to reduce employer contributions in 1998 and 1997, respectively. Participant Loans - ----------------- The Plan permits participants to borrow a portion of their account, subject to certain limitations, at an annual rate of interest with a specified repayment period. The minimum amount that can be borrowed is $1,000; the maximum total loan amount is the lesser of $50,000 or 50% of the participant's vested account balance. A participant may have no more than two outstanding loans. Loan terms range from 12 to 60 months or up to 120 months if the loan is used to buy or build a participant's primary residence. Loan interest rates remain fixed during the term of the loan. The loan is secured by the participant's account balance. Generally, loan repayments are made by payroll deduction. Both the interest and principal portions of every repayment are allocated to the participant account according to the investment election in effect at the time of the repayment. The interest portion of every repayment is added to the participant's account balance as earnings. If a default occurs, the amount of the outstanding loan balance is treated as a distribution to the participant. The defaulting participant is subject to immediate taxation on the taxable portion of the defaulted amount, including a possible 10% penalty tax. As soon as permitted by law, the loan account balance is reduced to zero and the participant's account balance is reduced by the amount of the defaulted loan. -5- 11-K-9 CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS Payment of Benefits - ------------------- Participants may withdraw funds subject to the requirements of the Plan, and such withdrawals may be subject to immediate taxation and a possible 10% penalty tax. On termination of employment due to death, disability, retirement or other reasons, a participant may elect to receive either a lump-sum amount equal to the value of the participant's vested account balance, monthly installments for up to 30 years, an annuity, or a combination of these forms. To the extent amounts are invested in the CIGNA Stock Fund, a participant may elect to receive such amounts in CIGNA common stock. Transfers from Other Plans - -------------------------- In February 1998, assets of approximately $46 million were transferred into the Plan from the Healthsource Retirement Savings Plan and Trust in connection with the merger of the plans. Investments - ----------- During the periods presented, the Plan included the funds described below. Some of the funds are pooled with investments made by other benefit plans or investors in separate accounts. Participants may transfer assets among the funds, subject to certain restrictions. o Fixed Income Fund - Contributions to this investment option are invested in ----------------- a group fixed annuity contract issued by Connecticut General Life Insurance Company (CGLIC), a CIGNA subsidiary. CGLIC guarantees the principal and accumulated interest of all monies deposited. An annual rate of interest is declared in advance and subject to change. o CIGNA Stock Fund - Contributions to this investment option are invested in ---------------- shares of CIGNA common stock. Such shares presently are purchased on the open market but may be acquired directly from CIGNA. From time to time, a portion of CIGNA Stock Fund assets may be invested in short-term investments. o Fidelity Advisor Growth Opportunities Fund - Contributions to this ------------------------------------------ investment option are invested in Separate Account 55A of CGLIC. All the assets of this pooled account are invested in Class T shares of the Fidelity Advisor Growth Opportunities Fund, a mutual fund. The fund's objective is long-term capital growth. The fund's portfolio consists primarily of common stocks or securities convertible into common stocks. o Stock Market Index Fund - Contributions to this investment option are ----------------------- invested in Separate Account B of CGLIC, a pooled common stock fund. The fund's objective is to match the performance of the Standard & Poor's 500 Composite Stock Price Index. On April 1, 1999, the name of the fund was changed to the Charter Large Company Stock Index Fund. The fund's objective did not change. -6- 11-K-10 CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS o Founders Growth Fund - Contributions to this investment option are invested ---------------------- in Separate Account 55JR of CGLIC. All the assets of this pooled account are invested in the Founders Growth Fund, a mutual fund. The fund's objective is long-term capital growth. The fund's portfolio consists primarily of common stocks of high-quality growth companies. o Warburg Pincus Advisor Emerging Growth Fund - Contributions to this --------------------------------------------- investment option are invested in Separate Account 55G of CGLIC. All the assets of this pooled account are invested in the Warburg Pincus Advisor Emerging Growth Fund, a mutual fund. The fund's objective is maximum capital appreciation. The fund's portfolio consists primarily of common stocks or warrants of small to medium-sized domestic companies with emerging or renewed growth potential. o International Equity Fund - Contributions to this investment option are --------------------------- invested in Separate Account I of CGLIC, a pooled common stock fund. The fund's objective is to invest primarily in stocks of a diversified group of non-U.S. companies that have the potential to provide superior returns. o Barclays Equity Market Index Fund - Contributions to this investment option --------------------------------- began January 1, 1998 and are invested in Separate Account BGI of CGLIC. All the assets of this pooled account are invested in the Barclays Daily Extended Equity Market Fund, a commingled trust fund. The fund's objective is to approximate the performance of the Barclays Extended Market Index. o State Street Global Advisors EAFE Index Fund - Contributions to this -------------------------------------------- investment option began January 1, 1998 and are invested in Separate Account 55A1 of CGLIC. All the assets of this pooled account are invested in the State Street Global Advisors EAFE Index Fund, a commingled trust fund. The fund's objective is to match the total return of the Morgan Stanley Capital International Europe, Australia and Far East (EAFE) Index. o Templeton Foreign Fund - Contributions to this investment option began ---------------------- January 1, 1998 and are invested in Separate Account 55HS of CGLIC. All the assets of this pooled account are invested in Class I shares of the Templeton Foreign Fund, a mutual fund. The fund's objective is to provide long-term capital growth by investing in stocks and, to a lesser extent, debt obligations of companies and governments outside of the U.S. o INVESCO Total Return Fund - This investment option was eliminated from the ------------------------- Plan on February 27, 1998. Any balances in the fund on this date were transferred into the Fixed Income Fund. Contributions to this investment option were invested in Separate Account 55K of CGLIC. All the assets of this pooled account were invested in the INVESCO Total Return Fund, a mutual fund. o INVESCO Industrial Income Fund - This investment option was eliminated from ------------------------------ the Plan on January 31, 1997. Any balances in the fund on this date were transferred into the Stock Market Index Fund. Contributions to this investment option were invested in Separate -7- 11-K-11 CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS Account 55J of CGLIC. All the assets of this pooled account were invested in the INVESCO Industrial Income Fund, a mutual fund. Subsequent Investment Changes - ----------------------------- On April 1, 1999, the Plan added six new investment funds. o Charter High Yield Bond Fund - Contributions to this investment option are ---------------------------- invested in Separate Account 70 of CGLIC, a pooled fixed income fund. The fund's objective is to maximize total return from a bond portfolio. The fund's portfolio consists primarily of publicly-traded U.S. corporate bonds that are below investment grade. o Charter Large Company Growth Fund - Contributions to this investment option --------------------------------- invested in Separate Account CG of CGLIC, a pooled common stock fund. The fund's objective is capital appreciation by investing in companies with large market capitalization and strong growth prospects. o Charter Midsize Company Growth Fund - Contributions to this investment ----------------------------------- option are invested in Separate Account MCG of CGLIC, a pooled common stock fund. The fund's objective is capital appreciation by investing in medium size U.S. companies. o Charter Small Company Growth Fund - Contributions to this investment option --------------------------------- are invested in Separate Account FTF of CGLIC, a pooled common stock fund. The fund's objective is long-term capital appreciation by investing in growing companies involved in new product development and technological breakthroughs. o Charter Small Company Value Fund - Contributions to this investment option -------------------------------- are invested in Separate Account BSC of CGLIC, a pooled common stock fund. The fund's objective is long-term capital appreciation by investing in small U.S. companies thought to be undervalued. o Charter Foreign Stock II Fund - Contributions to this investment option are ----------------------------- invested in Separate Account BIA of CGLIC, a pooled common stock fund. The fund's objective is long-term capital appreciation by investing in well-established companies located outside the U.S. In June 1999, the Plan will eliminate five investment funds: the Fidelity Advisor Growth Opportunities Fund, the Founders Growth Fund, the International Equity Fund, the Templeton Foreign Fund and the Warburg Pincus Advisor Emerging Growth Fund. Any balances in these funds on the date they are eliminated from the Plan will be transferred into the Fixed Income Fund. Plan Termination - ---------------- CIGNA intends to continue the Plan indefinitely, but reserves the right to discontinue contributions or terminate the Plan in whole or in part at any time. If contributions are -8- 11-K-12 CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS discontinued or the Plan is terminated, affected participants will become fully vested. Upon Plan termination, net assets of the Plan will be distributed in the manner CIGNA elects and in accordance with the Employee Retirement Income Security Act of 1974 (ERISA) and its related regulations. Plan Trustee - ------------ Mellon Bank (East) N.A., Philadelphia, Pennsylvania is the Trustee for the Plan. Note 2 - Significant Accounting Policies Basis of Presentation - --------------------- The financial statements have been prepared on the accrual basis of accounting in conformity with generally accepted accounting principles. Valuation of Investments - ------------------------ Plan investments are reported at fair value. The fair value of the Fixed Income Fund is equivalent to its contract value. Contract value represents the aggregate amount on deposit, including accumulated interest. The fair value of CIGNA common stock is based upon quoted market price. Fair value of CGLIC's separate accounts is measured by the net unit value, which is based on the fair value of the underlying assets of the account. Net investment gain from separate accounts results from the increase in net unit value. Payment of Benefits - ------------------- Benefits are recorded when paid. Plan Expenses - ------------- The investment results of all funds except the CIGNA Stock Fund are net of management fees, investment expenses, risk charges and administrative costs charged by CGLIC. Brokers' commissions resulting from buying or selling stock in the CIGNA Stock Fund are paid from the participants' accounts and have been reflected as a reduction of the CIGNA Stock Fund's investment income in these financial statements. Other costs associated with the operation of the Plan, including trustee and legal fees, are paid by CIGNA. -9- 11-K-13
CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS Note 3 - Changes in Net Assets Available for Benefits by Investment Fund An analysis of the changes in net assets available for benefits by investment fund for the year ended December 31, 1998 is presented below. Participant - Directed ------------------------------------------------------------------------------------------- Fidelity Warburg Advisor Pincus Growth Advisor Fixed CIGNA Opportunities Stock Market Founders Emerging International Year Ended December 31, 1998 Income Fund Stock Fund Fund Index Fund Growth Fund Growth Fund Equity Fund - ---------------------------- ----------- ---------- ---- ---------- ----------- ----------- ----------- (In thousands) Investment income Interest and dividends $ 59,627 $ 3,480 $ -- $ -- $ -- $ -- $ -- Net appreciation in fair value of CIGNA stock -- 58,810 -- -- -- -- -- Net investment gain (loss) from separate accounts -- -- 68,083 47,570 12,710 1,178 3,487 --------- --------- --------- --------- --------- --------- --------- Total investment income 59,627 62,290 68,083 47,570 12,710 1,178 3,487 --------- --------- --------- --------- --------- --------- --------- Contributions Employees' contributions 29,740 12,300 16,900 11,093 6,247 3,262 2,094 Employer's contributions 9,907 4,479 6,139 3,871 2,145 1,151 784 Rollover contributions 1,237 1,186 954 953 715 452 169 --------- --------- --------- --------- --------- --------- --------- Total contributions 40,884 17,965 23,993 15,917 9,107 4,865 3,047 --------- --------- --------- --------- --------- --------- --------- Loan principal repayments 10,402 3,340 4,322 2,354 1,228 632 546 Loan interest received - allocated 1,614 527 703 361 197 93 83 Loans issued (13,981) (3,036) (3,694) (2,417) (915) (387) (307) Benefits paid (65,276) (15,165) (29,315) (11,705) (3,500) (2,843) (4,048) Interfund transfers 470 20,742 (23,028) 9,246 10,672 (979) (5,958) --------- --------- --------- --------- --------- --------- --------- Net increase (decrease) 33,740 86,663 41,064 61,326 29,499 2,559 (3,150) Transfers from other plans 15,218 2 2 20,760 8 -- -- Net assets available for benefits Beginning of year 886,053 162,070 300,218 144,841 44,028 28,040 29,733 --------- --------- --------- --------- --------- --------- --------- End of year $ 935,011 $ 248,735 $ 341,284 $ 226,927 $ 73,535 $ 30,599 $ 26,583 ========= ========= ========= ========= ========= ========= =========
Non-Participant Participant - Directed Directed ------------------------------------------------------------- -------------- State Street Global Barclays Advisors INVESCO Equity Market EAFE Templeton Total Participant Contributions Year Ended December 31, 1998 Index Fund Index Fund Foreign Fund Return Fund Loans Receivable Total - ---------------------------- ---------- ---------- ------------ ----------- ----- ---------- ----- (In thousands) Investment income Interest and dividends $ -- $ -- $ -- $ -- $ 3,646 $ -- $ 66,753 Net appreciation in fair value of CIGNA stock -- -- -- -- -- -- 58,810 Net investment gain (loss) from separate accounts 832 917 (597) 612 -- -- 134,792 --------- --------- --------- --------- --------- --------- ---------- Total investment income 832 917 (597) 612 3,646 -- 260,355 --------- --------- --------- --------- --------- --------- ---------- Contributions Employees' contributions 1,065 532 760 180 -- -- 84,173 Employer's contributions 362 172 263 67 -- 8,939 38,279 Rollover contributions 298 105 168 22 -- -- 6,259 --------- --------- --------- --------- --------- --------- ---------- Total contributions 1,725 809 1,191 269 -- 8,939 128,711 --------- --------- --------- --------- --------- --------- ---------- Loan principal repayments 201 114 129 39 (23,307) -- -- Loan interest received - allocated 27 19 16 6 (3,646) -- -- Loans issued (166) (121) (54) (24) 25,102 -- -- Benefits paid (807) (887) (506) (429) (2,813) -- (137,294) Interfund transfers 6,475 4,755 6,114 (28,509) -- -- -- --------- --------- --------- --------- --------- --------- ---------- Net increase (decrease) 8,287 5,606 6,293 (28,036) (1,018) 8,939 251,772 Transfers from other plans 4,423 4,622 5 -- 1,197 -- 46,237 Net assets available for benefits Beginning of year -- -- -- 28,036 50,648 -- 1,673,667 --------- --------- --------- --------- --------- --------- ---------- End of year $ 12,710 $ 10,228 $ 6,298 $ -- $ 50,827 $ 8,939 $1,971,676 ========= ========= ========= ========= ========= ========= ========== -10- 11-K-14
CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS An analysis of the changes in net assets available for benefits by investment fund for the year ended December 31, 1997 is presented below. Participant - Directed ------------------------------------------------------------------------------ Fidelity Warburg Advisor Pincus Growth Founders Advisor Fixed CIGNA Opportunities Stock Market Growth Emerging Year Ended December 31, 1997 Income Fund Stock Fund Fund Index Fund Fund Growth Fund - ---------------------------- ----------- ---------- ---- ---------- ---- ----------- (In thousands) Investment income Interest and dividends $ 58,541 $ 2,926 $ -- $ -- $ -- $ -- Net appreciation in fair value of CIGNA stock -- 29,912 -- -- -- -- Net investment gain (loss) from separate accounts -- -- 65,617 32,244 5,585 3,277 --------- --------- --------- --------- --------- --------- Total investment income 58,541 32,838 65,617 32,244 5,585 3,277 --------- --------- --------- --------- --------- --------- Contributions Employees' contributions 30,285 9,214 17,699 8,345 3,306 2,250 Employer's contributions 11,418 3,489 6,660 3,083 1,176 821 Rollover contributions 1,715 754 1,077 894 839 584 --------- --------- --------- --------- --------- --------- Total contributions 43,418 13,457 25,436 12,322 5,321 3,655 --------- --------- --------- --------- --------- --------- Loan principal repayments 11,372 2,569 4,316 1,797 770 546 Loan interest received - allocated 1,755 398 667 270 105 74 Loans issued (18,026) (2,829) (4,637) (1,902) (613) (372) Benefits paid (59,311) (6,776) (12,732) (5,344) (809) (1,003) Interfund transfers (42,977) 9,198 (5,751) 21,353 20,307 12,628 --------- --------- --------- --------- --------- --------- Net increase (decrease) (5,228) 48,855 72,916 60,740 30,666 18,805 Net assets available for benefits Beginning of year 891,281 113,215 227,302 84,101 13,362 9,235 --------- --------- --------- --------- --------- --------- End of year $ 886,053 $ 162,070 $ 300,218 $ 144,841 $ 44,028 $ 28,040 ========= ========= ========= ========= ========= =========
Participant - Directed --------------------------------------------------- INVESCO INVESCO International Total Industrial Participant Year Ended December 31, 1997 Equity Fund Return Fund Income Fund Loans Total - ---------------------------- ----------- ----------- ----------- ----- ----- (In thousands) Investment income Interest and dividends $ -- $ -- $ -- $ 3,448 $ 64,915 Net appreciation in fair value of CIGNA stock -- -- -- -- 29,912 Net investment gain (loss) from separate accounts (872) 6,138 273 -- 112,262 --------- --------- --------- --------- ---------- Total investment income (872) 6,138 273 3,448 207,089 --------- --------- --------- --------- ---------- Contributions Employees' contributions 2,977 2,180 65 -- 76,321 Employer's contributions 1,134 802 26 -- 28,609 Rollover contributions 190 401 4 -- 6,458 --------- --------- --------- --------- ---------- Total contributions 4,301 3,383 95 -- 111,388 --------- --------- --------- --------- ---------- Loan principal repayments 604 452 10 (22,436) -- Loan interest received - allocated 104 73 2 (3,448) -- Loans issued (600) (485) (12) 29,476 -- Benefits paid (1,225) (1,429) (32) (1,613) (90,274) Interfund transfers (2,693) (3,063) (9,002) -- -- --------- --------- --------- --------- ---------- Net increase (decrease) (381) 5,069 (8,666) 5,427 228,203 Net assets available for benefits Beginning of year 30,114 22,967 8,666 45,221 1,445,464 --------- --------- --------- --------- ---------- End of year $ 29,733 $ 28,036 $ -- $ 50,648 $1,673,667 ========= ========= ========= ========= ========== -11- 11-K-15
CIGNA 401(k) PLAN NOTES TO FINANCIAL STATEMENTS Note 4 - Tax Status A favorable determination letter was received from the Internal Revenue Service (IRS) for the Plan and all Plan amendments through December 31, 1994, indicating that the Plan was in compliance with the applicable requirements of the IRC. The Plan has been amended since receiving the determination letter. However, management believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. Note 5 - Related Party Transactions There are transactions between the Plan and CIGNA and its affiliates which, in the opinion of Plan management, are exempt from detailed reporting under Title I of ERISA. Investments in CGLIC's separate accounts represent investments for which CGLIC has fiduciary responsibility. Investment in the Fixed Income Fund represents participation in the general account assets of CGLIC. CGLIC is the Plan's recordkeeper. Note 6 - Other Matters In January 1999, CIGNA entered into an agreement to sell its domestic and international property and casualty businesses to ACE Limited (ACE). The sale, which is subject to U.S. and international regulatory approval and other conditions to closing, is expected to be completed by mid-1999. Participants who become employees of ACE will cease active participation in the Plan and become 100% vested on the closing date. While employed by ACE these participants will have a limited opportunity to close their CIGNA 401(k) accounts, including the option to roll over their accounts to the ACE USA Employee Retirement Savings Plan or to an Individual Retirement Account. Alternatively, participants may choose to keep their accounts in the CIGNA 401(k) Plan. Management cannot reasonably estimate at this time the effect that this pending sale will have on the Plan. -12- 11-K-16 SUPPLEMENTAL SCHEDULES 11-K-17
CIGNA 401(k) PLAN SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES As of December 31, 1998 (Dollars in thousands) Identity Current of Party Description Cost Value ------------------ ------------------------------------------------------- -------------- ------------- * CGLIC Fixed Income Fund $ 935,011 $ 935,011 * CIGNA CIGNA Stock Fund CIGNA common stock - 3,204,934 shares 141,754 247,781 Short-term investments 40 40 * CGLIC Fidelity Advisor Growth Opportunities Fund 197,713 341,284 * CGLIC Stock Market Index Fund 151,882 226,927 * CGLIC Founders Growth Fund 58,667 73,535 * CGLIC Warburg Pincus Advisor Emerging Growth Fund 27,193 30,599 * CGLIC International Equity Fund 23,582 26,583 * CGLIC Barclays Equity Market Index Fund 11,854 12,710 * CGLIC State Street Global Advisors EAFE Index Fund 9,399 10,228 * CGLIC Templeton Foreign Fund 6,772 6,298 Participant Loans 5.14% to 12.95%; maturity 1999-2008 -- 50,827 ------------- Total assets held for investment purposes 1,961,823 Investment income receivable (CIGNA Stock Fund) 914 ------------- $ 1,962,737 ============= * - indicates party-in-interest to the Plan -14- 11-K-18
CIGNA 401(k) PLAN SCHEDULE OF REPORTABLE TRANSACTIONS For the Year Ended December 31, 1998 (In thousands) Sales ------------------------------------------------- Party Involved Description of Asset Purchases Proceeds Cost Net Gain -------------- -------------------- --------- -------- ---- -------- CGLIC Fixed Income Fund $ 188,692 $ 199,361 $ 199,361 $ -- CIGNA CIGNA Stock Fund 69,333 41,622 25,226 16,396 CGLIC Fidelity Advisor Growth Opportunities Fund 61,264 88,281 54,991 33,290 CGLIC Stock Market Index Fund 92,437 57,921 42,338 15,583 -15- 11-K-19
CIGNA 401(k) PLAN SCHEDULE OF LOANS IN DEFAULT As of December 31, 1998 (In thousands) Original Amounts Received Unpaid Amounts of During 1998 Balances at Amounts Obligor Loans Principal Interest End of Year Overdue ------------- ---------- ------------------------------ ----------- --------- Various $ 880 $ 17 $ 3 $ 583 $ 583 -16- 11-K-20
Exhibits Exhibits are listed in the Index to Exhibits appearing on page E-1. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. CIGNA 401(k) PLAN Date: June 25, 1999 By: /s/Stewart M. Beltz -------------------------------- Stewart M. Beltz Plan Administrator 11-K-21 Index to Exhibits Number Description Method of Filing - ------ ----------- ---------------- 23 Consent of Independent Filed herewith Accountants -E-1- EX-23 2 Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 33-51791 and No. 333-64207) of CIGNA Corporation of our report dated June 22, 1999, relating to the financial statements of the CIGNA 401(k) Plan, which appears in this Form 11-K. /s/ PricewaterhouseCoopers LLP Philadelphia, Pennsylvania June 22, 1999 -E-2- -----END PRIVACY-ENHANCED MESSAGE-----