Cigna GroupCI
Cigna Group Fair Value Disclosure
Note 12 – Fair Value Measurements
Accounting Policy. The Company carries certain financial instruments at fair value in the financial statements including debt securities, certain equity securities, short-term investments and derivatives. Other financial instruments are measured at fair value only under certain conditions, such as when impaired or when there are observable price changes for equity securities with no readily determinable fair value.
Fair value is defined as the price at which an asset could be exchanged in an orderly transaction between market participants at the balance sheet date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a market participant, not the amount that would be paid to settle the liability with the creditor.
The Company's financial assets and liabilities carried at fair value have been classified based upon a hierarchy defined by GAAP. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset's or a liability's classification is based on the lowest level of input that is significant to its measurement. For example, a financial asset or liability carried at fair value would be classified in Level 3 if unobservable inputs were significant to the instrument's fair value, even though the measurement may be derived using inputs that are both observable (Levels 1 and 2) and unobservable (Level 3).
The Company estimates fair values using prices from third parties or internal pricing methods. Fair value estimates received from third-party pricing services are based on reported trade activity and quoted market prices when available and other market information that a market participant would use to estimate fair value. The internal pricing methods are performed by the Company's investment professionals and generally involve using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality as well as other qualitative factors. In instances where there is little or no market activity for the same or similar instruments, fair value is estimated using methods, models and assumptions that the Company believes a hypothetical market participant would use to determine a current transaction price. These valuation techniques involve some level of estimation and judgment that becomes significant with increasingly complex instruments or pricing models.
The Company is responsible for determining fair value and for assigning the appropriate level within the fair value hierarchy based on the significance of unobservable inputs. The Company reviews methodologies, processes and controls of third-party pricing services and compares prices on a test basis to those obtained from other external pricing sources or internal estimates. The Company performs ongoing analyses of both prices received from third-party pricing services and those developed internally to determine that they represent appropriate estimates of fair value. The controls executed by the Company include evaluating changes in prices and monitoring for potentially stale valuations. The Company also performs sample testing of sales values to confirm the accuracy of prior fair value estimates. The minimal exceptions identified during these processes indicate that adjustments to prices are infrequent and do not significantly impact valuations. An annual due diligence review of the most significant pricing service is conducted to review their processes, methodologies and controls. This review includes a walk-through of inputs for a sample of securities held across various asset types to validate the documented pricing process.
Financial Assets and Financial Liabilities Carried at Fair ValueThe following table provides information about the Company's investment and derivative financial assets and liabilities carried at fair value on a recurring basis. Further information regarding insurance assets and liabilities carried at fair value is provided in Note 9E to the Consolidated Financial Statements. Separate account assets are also recorded at fair value on the Company's Consolidated Balance Sheets and are reported separately in the Separate Accounts section below as gains and losses related to these assets generally accrue directly to contractholders.
| (In millions) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2025 | December 31, 2024 | December 31, 2025 | December 31, 2024 | December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||
| Financial assets at fair value | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt securities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Federal government and agency | $ | 105 | $ | 165 | $ | 122 | $ | 116 | $ | — | $ | — | $ | 227 | $ | 281 | ||||||||||||||||||||||||||||||||||
| State and local government | — | — | 25 | 37 | — | — | 25 | 37 | ||||||||||||||||||||||||||||||||||||||||||
| Foreign government | — | — | 446 | 344 | 10 | — | 456 | 344 | ||||||||||||||||||||||||||||||||||||||||||
Corporate | — | — | 7,133 | 8,049 | 277 | 374 | 7,410 | 8,423 | ||||||||||||||||||||||||||||||||||||||||||
| Mortgage and other asset-backed | — | — | 206 | 295 | 38 | 43 | 244 | 338 | ||||||||||||||||||||||||||||||||||||||||||
| Total debt securities | 105 | 165 | 7,932 | 8,841 | 325 | 417 | 8,362 | 9,423 | ||||||||||||||||||||||||||||||||||||||||||
Equity securities (1) | 54 | 1 | 36 | 36 | 2 | — | 92 | 37 | ||||||||||||||||||||||||||||||||||||||||||
| Short-term investments | — | — | 257 | 170 | — | — | 257 | 170 | ||||||||||||||||||||||||||||||||||||||||||
| Derivative assets | — | — | 68 | 168 | 923 | — | 991 | 168 | ||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities at fair value | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative liabilities | $ | — | $ | — | $ | 22 | $ | 1 | $ | 354 | $ | — | $ | 376 | $ | 1 | ||||||||||||||||||||||||||||||||||
(1)Excludes certain equity securities that have no readily determinable fair value.
Level 1 Financial Assets
Inputs for instruments classified in Level 1 include unadjusted quoted prices for identical assets in active markets accessible at the measurement date. Active markets provide pricing data for trades occurring at least weekly and include exchanges and dealer markets. Assets in Level 1 include actively traded U.S. government bonds and exchange-listed equity securities.
Level 2 Financial Assets and Financial Liabilities
Inputs for instruments classified in Level 2 include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are market-observable or can be corroborated by market data for the term of the instrument. Such other inputs include market interest rates and volatilities, spreads, and yield curves. An instrument is classified in Level 2 if the Company determines that unobservable inputs are insignificant.
Debt and Equity Securities. Third-party pricing services and internal methods often use recent trades of securities with similar features and characteristics because many debt securities do not trade daily. Pricing models are used to determine these prices when recent trades are not available. These models calculate fair values by discounting future cash flows at estimated market interest rates. Such market rates are derived by calculating the appropriate spreads over comparable U.S. Treasury securities based on the credit quality, industry and structure of the asset. Typical inputs and assumptions to pricing models include, but are not limited to, a combination of benchmark yields, reported trades, issuer spreads, liquidity, benchmark securities, bids, offers, reference data, and industry and economic events. For mortgage-backed securities, inputs and assumptions may also include characteristics of the issuer, collateral attributes, prepayment speeds and credit rating. Nearly all of these instruments are valued using recent trades or pricing models.
Short-term Investments are carried at fair value that approximates cost. The Company compares market prices for these securities to recorded amounts on a regular basis to validate that current carrying amounts approximate exit prices. The short-term nature of the investments and corroboration of the reported amounts over the holding period support their classification in Level 2.
Derivative Assets and Liabilities classified in Level 2 represent over-the-counter instruments, such as foreign currency forward and swap contracts. Fair values for these instruments are determined using market-observable inputs, including forward currency and
interest rate curves and widely published market-observable indices. Credit risk related to the counterparty and the Company is considered when estimating the fair values of these derivatives. The nature and use of these derivative financial instruments are described in Note 11.
Level 3 Financial Assets and Financial Liabilities
Certain inputs for instruments classified in Level 3 are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement. Unobservable inputs reflect the Company's best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date. Additionally, as discussed in Note 9E, the Company classifies variable annuity assets and liabilities in Level 3 of the fair value hierarchy.
The Company classifies certain newly issued, privately placed, complex or illiquid securities in Level 3. Approximately 4% of debt securities are priced using significant unobservable inputs and classified in this category.
Fair values of mortgage and other asset-backed securities, as well as corporate and government debt securities, are primarily determined using pricing models that incorporate the specific characteristics of each asset and related assumptions, including the investment type and structure, credit quality, industry and maturity date in comparison to current market indices, spreads, and liquidity of assets with similar characteristics. Inputs and assumptions for pricing may also include characteristics of the issuer, collateral attributes, and prepayment speeds for mortgage and other asset-backed securities. Recent trades in the subject security or similar securities are assessed when available, and the Company may also review published research in its evaluation, as well as the issuer's financial statements.
Information about Debt Securities. The significant unobservable input used to value our corporate and government debt securities, and mortgage and other asset-backed securities, is an adjustment for liquidity. This adjustment is needed to reflect current market conditions and issuer circumstances when there is limited trading activity for the security.
The following table summarizes the fair value and significant unobservable inputs that were developed directly by the Company and used in pricing these debt securities. The range and weighted average basis point amounts for liquidity reflect the Company's best estimates of the unobservable adjustments a market participant would make to calculate these fair values. An increase in liquidity spread adjustments would result in a lower fair value measurement, while a decrease would result in a higher fair value measurement.
| Fair Value as of | Unobservable Adjustment Range (Weighted Average by Quantity) as of | ||||||||||||||||||||||||||||||||||
| (Fair value in millions) | December 31, 2025 | December 31, 2024 | Unobservable Input December 31, 2025 | December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||
| Debt securities | |||||||||||||||||||||||||||||||||||
| Corporate | $ | 286 | $ | 373 | Liquidity | 60 - 920 (175) | bps | 60 - 1520 (370) | bps | ||||||||||||||||||||||||||
| Mortgage and other asset-backed securities | 38 | 43 | Liquidity | 105 - 350 (160) | bps | 100 - 550 (280) | bps | ||||||||||||||||||||||||||||
| Other debt securities | 1 | 1 | |||||||||||||||||||||||||||||||||
| Total Level 3 debt securities | $ | 325 | $ | 417 | |||||||||||||||||||||||||||||||
Information about Derivative Instruments. Derivative instruments associated with certain equity securities are valued each reporting period using a Monte Carlo simulation of enterprise value and are recorded in Other assets and Other non-current liabilities in the Consolidated Balance Sheets. The estimation of enterprise value is derived from a discounted cash flow model utilizing management's forecasts and industry benchmarks. The significant unobservable Level 3 measurement inputs used as of December 31, 2025 are: volatility of adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") (55%), volatility of equity (85%), correlation (35%), purchaser credit spread (0.7%) and weighted average cost of capital (13.5%). Changes in these assumptions could increase or decrease the fair value measurements. See Note 11A to the Consolidated Financial Statements for further information.
Changes in Level 3 Financial Assets and Financial Liabilities Carried at Fair Value
The following table summarizes the changes in financial assets and financial liabilities classified in Level 3. Gains and losses reported in the table may include net changes in fair value that are attributable to both observable and unobservable inputs.
| Years Ended December 31, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Beginning balance | $ | 417 | $ | 447 | |||||||
Losses included in Shareholders' net income | (90) | (69) | |||||||||
Gains (losses) included in Other comprehensive loss | 33 | (9) | |||||||||
| Purchases, sales and settlements | |||||||||||
| Purchases | 655 | 17 | |||||||||
| Sales | (8) | (2) | |||||||||
| Settlements | (105) | (21) | |||||||||
| Total purchases, sales and settlements | 542 | (6) | |||||||||
| Transfers into / (out of) Level 3 | |||||||||||
| Transfers into Level 3 | 59 | 72 | |||||||||
| Transfers out of Level 3 | (65) | (18) | |||||||||
| Total transfers into / (out of) Level 3 | (6) | 54 | |||||||||
| Ending balance | $ | 896 | $ | 417 | |||||||
Total losses included in Shareholders' net income attributable to instruments held at the reporting date | $ | (94) | $ | (69) | |||||||
Change in unrealized gain or (loss) included in Other comprehensive loss for assets held at the end of the reporting period | $ | 19 | $ | (9) | |||||||
Total gains and losses included in Shareholders' net income in the table above are reflected in the Consolidated Statements of Income as and as . Gains and losses included in Other comprehensive loss, net of tax, in the table above are reflected in in the Consolidated Statements of Comprehensive Income.
Transfers into or out of the Level 3 category occur when unobservable inputs, such as the Company's best estimate of what a market participant would use to determine a current transaction price, become more or less significant to the fair value measurement. Market activity typically decreases during periods of economic uncertainty, and this decrease in activity reduces the availability of market observable data. As a result, the level of unobservable judgment that must be applied to the pricing of certain instruments increases and is typically observed through the widening of liquidity spreads. Transfers between Level 2 and Level 3 during 2025 and 2024 primarily reflected changes in liquidity estimates for certain private placement issuers across several sectors. See discussion under Level 3 Financial Assets and Financial Liabilities above for more information.
Separate Accounts
Accounting Policy. Separate account assets and liabilities are contractholder funds maintained in accounts with specific investment objectives. Our subsidiaries or external advisors manage invested assets of separate accounts on behalf of contractholders, including The Cigna Group Pension Plan, variable universal life products sold through our corporate-owned life insurance products and the run-off businesses. The assets of these accounts are legally segregated and are not subject to claims that arise out of any of the Company's other businesses. These separate account assets are carried at fair value with equal amounts recorded for related separate account liabilities. The investment income and fair value gains and losses of separate account assets generally accrue directly to the contractholders and, together with their deposits and withdrawals, are excluded from the Company's Consolidated Statements of Income and Cash Flows. Fees and charges earned for mortality risks, asset management or administrative services are reported in either Premiums or Fees and other revenues. Investments that are measured using the practical expedient of net asset value are excluded from the fair value hierarchy. The separate account activity for the years ended December 31, 2025 and 2024 was primarily driven by changes in the market values of the underlying separate account investments.
Fair values of Separate account assets were as follows:
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||||||||||||
| (In millions) | December 31, 2025 | December 31, 2024 | December 31, 2025 | December 31, 2024 | December 31, 2025 | December 31, 2024 | December 31, 2025 | December 31, 2024 | ||||||||||||||||||
Guaranteed separate accounts (see Note 22) | $ | 247 | $ | 231 | $ | 330 | $ | 345 | $ | — | $ | — | $ | 577 | $ | 576 | ||||||||||
Non-guaranteed separate accounts (1) | 271 | 267 | 5,769 | 5,575 | 209 | 228 | 6,249 | 6,070 | ||||||||||||||||||
| Subtotal | $ | 518 | $ | 498 | $ | 6,099 | $ | 5,920 | $ | 209 | $ | 228 | 6,826 | 6,646 | ||||||||||||
Non-guaranteed separate accounts priced at net asset value as a practical expedient (1) | 661 | 632 | ||||||||||||||||||||||||
| Total | $ | 7,487 | $ | 7,278 | ||||||||||||||||||||||
(1)Non-guaranteed separate accounts include $3.8 billion as of both December 31, 2025 and December 31, 2024 in assets supporting the Company's pension plans, including $0.2 billion classified in Level 3 as of both December 31, 2025 and December 31, 2024. Non-guaranteed separate accounts are primarily comprised of securities partnerships, real estate and real estate funds.
Separate account assets classified in Level 1 primarily include exchange-listed equity securities. Level 2 assets primarily include corporate and structured bonds valued using recent trades of similar securities or pricing models that discount future cash flows at estimated market interest rates, as described above, and actively traded institutional and retail mutual fund investments.
Separate account assets classified in Level 3 primarily support the Company's pension plans and include certain newly issued, privately placed, complex or illiquid securities that are priced using methods discussed above, as well as commercial mortgage loans. Activity, including transfers into and out of Level 3, was not material for the years ended December 31, 2025 or 2024.
Assets and Liabilities Measured at Fair Value under Certain ConditionsSome financial assets and liabilities are not carried at fair value, such as commercial mortgage loans that are carried at unpaid principal, investment real estate that is carried at depreciated cost and equity securities with no readily determinable fair value when there are no observable market transactions. However, these financial assets and liabilities may be measured using fair value under certain conditions, such as when investments become impaired and are written down to their fair value, or when there are observable price changes from orderly market transactions of equity securities that otherwise had no readily determinable fair value.
For the year ended December 31, 2025, impairments recognized requiring the assets and liabilities described above to be measured at fair value were not material. For the year ended December 31, 2024, we determined our investment in VillageMD was fully impaired and recorded a $2.7 billion loss in Net investment gains/losses in the Company's Consolidated Statements of Income. Observable price changes for equity securities with no readily determinable fair value were not material for the years ended December 31, 2025 or December 31, 2024.
Fair Value Disclosures for Financial Instruments Not Carried at Fair ValueThe following table includes the Company's financial instruments not recorded at fair value but for which fair value disclosure is required. In addition to universal life products and finance leases, financial instruments that are carried in the Company's Consolidated Balance Sheets at amounts that approximate fair value are excluded from the following table.
| Classification in Fair Value Hierarchy | December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||
| (In millions) | Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||||||||||||||||||
| Commercial mortgage loans | Level 3 | $ | 1,195 | $ | 1,233 | $ | 1,256 | $ | 1,351 | |||||||||||||||||||||||
| Long-term debt, including current maturities, excluding finance leases | Level 2 | $ | 29,907 | $ | 31,352 | $ | 28,392 | $ | 31,008 | |||||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.