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
<PAGE>
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
<PAGE>
CIGNA 401(k) PLAN
(formerly Savings and
Investment Plus Plan)
Financial Statements and
Supplemental Schedules
December 31, 1998 and 1997
11-K-3
<PAGE>
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
<PAGE>
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
<PAGE>
<TABLE>
<CAPTION>
CIGNA 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
As of
December 31,
1998 1997
---- ----
(In thousands)
<S> <C> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CIGNA 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Years Ended
December 31,
1998 1997
---- ----
(In thousands)
<S> <C> <C>
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
</TABLE>
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
<TABLE>
<CAPTION>
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)
<S> <C> <C> <C> <C> <C> <C> <C>
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
========= ========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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)
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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)
<S> <C> <C> <C> <C> <C> <C>
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
========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Participant - Directed
---------------------------------------------------
INVESCO INVESCO
International Total Industrial Participant
Year Ended December 31, 1997 Equity Fund Return Fund Income Fund Loans Total
- ---------------------------- ----------- ----------- ----------- ----- -----
(In thousands)
<S> <C> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
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
<PAGE>
SUPPLEMENTAL SCHEDULES
11-K-17
<PAGE>
<TABLE>
<CAPTION>
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
------------------ ------------------------------------------------------- -------------- -------------
<S> <C> <C> <C>
* 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
=============
<FN>
* - indicates party-in-interest to the Plan
</FN>
-14- 11-K-18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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
-------------- -------------------- --------- -------- ---- --------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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
------------- ---------- ------------------------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Various $ 880 $ 17 $ 3 $ 583 $ 583
-16- 11-K-20
</TABLE>
<PAGE>
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
<PAGE>
Index to Exhibits
Number Description Method of Filing
- ------ ----------- ----------------
23 Consent of Independent Filed herewith
Accountants
-E-1-
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-
