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