Key questions from the second quarter earnings call conducted by CIGNA Corporation on August 1, 2008.

Matthew Borsch (Goldman Sachs): Could you talk about the rate increases into this year and into the second quarter?

Mike Bell: Regarding the guaranteed cost book I would not characterize our renewal rate increase thus far in 2008 as inadequate. In fact, to put some numbers around it our pricing yields on a year to date basis for 2008 in the guaranteed cost book are 7.4% that compares to medical cost trend for the guaranteed cost book in the first half of the year of 7.1%. Admittedly we did not expand margins as much as we had targeted mainly reflecting the higher level of catastrophes in terms of claims as well as the higher medical costs from the flu. The main point here is that we will get additional leverage in the second half of the year through even stronger pricing and underwriting actions we are expecting full year pricing yields to be 8% to 8.5% which includes pricing increases net pricing yields for the second half of 9% to 10% which is higher than first half and even higher than medical costs. I would not characterize it as inadequate rate increases but I would characterize it as we expect better pricing and underwriting actions in the second half of the year which will improve the MLR.

Matthew Borsch (Goldman Sachs): What do you expect from the guaranteed cost business in terms of enrollment in light of those rate increases that you are putting through?

Mike Bell: We are down 11% on a year to date basis and we now expect full year membership to be down approximately 15% as compared to we were approximately at minus 10% at first quarter, an additional five points of membership loss.

Matthew Borsch (Goldman Sachs): What are you seeing in terms of the stop loss pricing?

Mike Bell: Our stop loss results continue to be strong. Our loss ratios have been stable over the last 18 months and significantly improved from the 2005, 2006 timeframe.

Matthew Borsch (Goldman Sachs): One of your competitors talked to a pricing cycle in that segment coming from of the non-managed care re-insurance companies. How do you think that may impact your ability to do some of the re-pricing that you are looking to do on the Great-West business?

Mike Bell: In terms of competitive pricing conditions it is fair to say it is a competitive market. There are a number of specialty players, people that we think of as the second tier in the industry working hard to compete on the basis of price to maintain their membership. It is a competitive market. As it relates to the Great-West earnings expansion the vast bulk of the earnings expansion in Great-West stems from delivering lower medical costs for this book as opposed to trying to somehow price higher than the medical cost trend, it is more lowering the medical costs to take advantage of our more favorable total medical cost position and what Great-West has had historically.

David Cordani: Relative to the CIGNA team we have had a good track record there we have a dedicated business unit and it has been a well run book of business for our shop loss for some time. The specific piece of Great-West is in the select segment, for employers 250 and below it is not like our go to market strategy now is offering it as stop loss is optional. It is an integrated sale so you are not coming up against the same specialty carve out vendors and we are increasing value by adding the additional medical costs on improvement and specialty solutions. We still feel good about that strategy in market conditions.

Joshua Raskin (Lehman Brothers): On Great-West membership, you reported 1.76 million and you were suggesting 1.4 million last quarter. The medical payables were up $50 million. How much of that was Great-West?

Mike Bell: In terms of the Great-West membership you are exactly right. There are some classification issues in terms of what we count as members versus what Great-West has historically counted as members. Based on our membership definition which has been consistent for several years now we are including a number of PPA members that are either in PPAs at Great-West, now CIGNA owns as well as PPA members that are accessing that medical network. Based on that definition we were able to count 250,000 or so members that are in those arrangements that is why we are reporting 1.76 million members. In terms of the payables, at June 30, Great-West reserves on a net basis were $67 million of the overall balance of $827 million.

Joshua Raskin (Lehman Brothers): Are there any Systems conversions planned for Great-West?

David Cordani: When we talked about the Great-West acquisition we suggested that one of the real attractive parts for us was to secure their infrastructure and build on that. The way I would ask you to think about the systems conversions for the market facing systems and tools, claim payment and market support those systems for the select segment and the core Great-West members will stay in place. Great-West was in the process and will continue that process of enhancing those systems and moving to an upgraded platform from a market standpoint. We will build on those systems and will note convert that business in mass to CIGNA systems. Behind the scenes as you might expect there is some infrastructural support for data centers, etc. which we had planned for but the most important message is the service proposition to the individual member, the employer, and the physicians will stay off their very strong systems today.

Joshua Raskin (Lehman Brothers): Are you expecting more attrition in 2009 on the Great-West book as well?

Mike Bell: At this point we have not communicated specific membership projections for 2009. It is fair to say that imbedded in our current earnings range for 2009 is some additional downward pressure on membership but we do expect by year end 2009 to be able to stabilize that book particularly given the access to the improved medical cost position.

John Rex (JP Morgan): Could you size the impact of the higher level of catastrophic claims you saw in the quarter and also the negative development that was rolling through from first quarter on medical costs?

Mike Bell: In terms of quantifying this for the first six months of the year we saw catastrophic claims including catastrophic claims related to what we believe is the flu in first quarter of approximately 50 basis points. Most of that is centered in first quarter and you are right in terms of your assertion the first quarter did emerge worse than we had expected that has picked up in the second quarter reported results. It would be 50 basis points all together. In terms of specifics underneath that we did see an increase in the acuity of claims and just overall higher inpatient costs. Interestingly that has been centered in the guaranteed cost book, we did not see a material change in either the ASO or the experience rated book in the first half of the year as it relates to catastrophic claims. Therefore we do not believe this is a widespread phenomenon, our guaranteed cost experience tends to be concentrated in some under 50 accounts as well as a couple of selected geographies. I would not characterize it as an overall issue here. The final point I would make is that remember the medical cost trend for guaranteed costs for the first six months of the year has been 7.1% versus the comparable period in 2007. For full year what is modeled is medical cost trend for the full year guaranteed cost book of 7% to 7.5%. We are not talking about an overall seat change in terms of trend.

John Rex (JP Morgan): Your guidance on the transaction costs was $45 to $50 million before. How much was born in the second quarter because the assumption was that the vast majority of that would be born in it?

Mike Bell: That is correct. The update, we refer to it internally as integration expense. They tend to be integration and transition costs because they are incremental expenses that we do not think will be part of our expense base for the long term. Our current estimate for that for 2008 is $50 million after tax. At the upper end of the previous range the main delta there is higher IT costs. We have got a higher data center migration costs including higher labor costs. We are also likely to incur some upgraded software costs not to do with the major change in customer facing systems or anything but behind the scenes costs. That is the reason we are now at the upper end of that range for 2008.