content: UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 10-Q
  
                [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
  
                    For the quarterly period ended March 31, 1999
                                                   --------------
  
                                         OR
  
                [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
  
                    for the transition period from _____ to _____
  
                            Commission file number 1-8323
                                                   ------
  
                                  CIGNA Corporation
                                  -----------------
               (Exact name of registrant as specified in its charter)
  
                       Delaware                          06-1059331
                      ---------                          ----------
            (State or other jurisdiction              (I.R.S. Employer
           of incorporation or organization)         Identification No.)
  
                        One Liberty Place, 1650 Market Street
                          Philadelphia, Pennsylvania 19192
                          --------------------------------
                 (Address of principal executive offices) (Zip Code)
  
          Registrant's telephone number, including area code (215) 761-1000
                                                             --------------
  
                                   Not Applicable
                                   --------------
                (Former name, former address and former fiscal year,
                            if changed since last report)
  
           Indicate by check mark whether the registrant (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
  1934  during  the  preceding  12 months  (or for such  shorter  period  that the
  registrant was required to file such reports),  and (2) has been subject to such
  filing requirements for the past 90 days.
  
                                                       Yes  x     No ___
  
    As of March 31, 1999,  203,460,700  shares of the  issuer's  Common Stock were
  outstanding.
  <PAGE>
                                  CIGNA CORPORATION
  
  
                                        INDEX
  
  
                                                                        Page No.
                                                                        --------
  
  PART I.  FINANCIAL INFORMATION
  
           Item 1.  Financial Statements
  
                    Consolidated Income Statements                         1
                    Consolidated Balance Sheets                            2
                    Consolidated Statements of Comprehensive
                      Income and Changes in Shareholders' Equity           3
                    Consolidated Statements of Cash Flows                  4
                    Notes to Financial Statements                          5
  
           Item 2.  Management's Discussion and Analysis
                     of Financial Condition and Results of Operations     11
  
  PART II. OTHER INFORMATION
  
           Item 6.  Exhibits and Reports on Form 8-K                      23
  
  SIGNATURE                                                               24
  
  EXHIBIT INDEX                                                           25
  
  
  As used  herein,  "CIGNA"  refers  to one or more of CIGNA  Corporation  and its
  consolidated subsidiaries.
  <PAGE>
  Part I.  FINANCIAL  INFORMATION
  Item 1.  Financial Statements
  -----------------------------
  
  CIGNA CORPORATION
  CONSOLIDATED INCOME STATEMENTS
  (In millions, except per share amounts)
  <TABLE>
  <CAPTION>
                                                                                                           Three Months Ended
                                                                                                                March 31,
                                                                                                          1999             1998
  =================================================================================================================================
  REVENUES
  <S>                                                                                                <C>              <C>         
  Premiums and fees                                                                                  $      4,263     $      3,901
  Net investment income                                                                                       858              937
  Other revenues                                                                                              237              514
  Realized investment gains                                                                                    42               59
                                                                                                       -----------      -----------
      Total revenues                                                                                        5,400            5,411
                                                                                                       -----------      -----------
  
  BENEFITS, LOSSES AND EXPENSES
  Benefits, losses and settlement expenses                                                                  3,516            3,333
  Policy acquisition expenses                                                                                 246              228
  Other operating expenses                                                                                  1,208            1,082
                                                                                                       -----------      -----------
      Total benefits, losses and expenses                                                                   4,970            4,643
                                                                                                       -----------      -----------
  
  INCOME BEFORE INCOME TAXES AND
       CUMULATIVE EFFECT OF
       ACCOUNTING CHANGE                                                                                      430              768
                                                                                                       -----------      -----------
  
  Income taxes (benefits):
      Current                                                                                                  95              432
      Deferred                                                                                                 56             (159)
                                                                                                       -----------      -----------
          Total taxes                                                                                         151              273
                                                                                                       -----------      -----------
  
  INCOME BEFORE CUMULATIVE
       EFFECT OF ACCOUNTING CHANGE                                                                            279              495
  
  Cumulative effect of accounting change for
       guaranty fund and other insurance-related
       assessments, net of taxes                                                                              (91)               0
                                                                                                       -----------      -----------
  
  NET INCOME                                                                                         $        188     $        495
  -------------------------------------------------------------------------------------------------================================
  
  BASIC EARNINGS PER SHARE
  Income before cumulative effect of accounting
       change                                                                                        $       1.36     $       2.30
  Cumulative effect of accounting change                                                                    (0.44)               0
                                                                                                       -----------      -----------
  
  NET INCOME                                                                                         $       0.92     $       2.30
  -------------------------------------------------------------------------------------------------================================
  
  DILUTED EARNINGS PER SHARE
  Income before cumulative effect of accounting
       change                                                                                        $       1.34     $       2.27
  Cumulative effect of accounting change                                                                    (0.43)               0
                                                                                                       -----------      -----------
  
  NET INCOME                                                                                         $       0.91     $       2.27
  -------------------------------------------------------------------------------------------------================================
  
  DIVIDENDS DECLARED PER SHARE                                                                       $       0.30     $       0.29
  -------------------------------------------------------------------------------------------------================================
  </TABLE>
  
  The Notes to Financial Statements are an integral part of these statements.
  
  
                                         1
  <PAGE>
  CIGNA  CORPORATION
  CONSOLIDATED  BALANCE  SHEETS
  (In millions, except per share amounts)
  <TABLE>
  <CAPTION>
                                                                                         As of                    As of
                                                                                       March 31,               December 31,
                                                                                         1999                      1998
  =========================================================================================================================
  <S>                                                                                 <C>                      <C>      
  ASSETS
  Investments:
     Fixed maturities, at fair value (amortized cost, $30,636; $30,614)               $  32,020                $  32,634
     Equity securities, at fair value (cost, $729; $746)                                  1,056                    1,043
     Mortgage loans                                                                       9,847                    9,599
     Policy loans                                                                         4,433                    6,185
     Real estate                                                                            807                      733
     Other long-term investments                                                            181                      205
     Short-term investments                                                                 233                      308
                                                                                      -----------              -----------
         Total investments                                                               48,577                   50,707
  Cash and cash equivalents                                                               2,227                    3,028
  Accrued investment income                                                                 768                      769
  Premiums, accounts and notes receivable                                                 4,664                    4,469
  Reinsurance recoverables                                                               12,803                   12,925
  Deferred policy acquisition costs                                                       1,075                    1,069
  Property and equipment                                                                    905                      938
  Deferred income taxes                                                                   2,022                    1,861
  Other assets                                                                            1,396                    1,543
  Goodwill and other intangibles                                                          2,461                    2,495
  Separate account assets                                                                35,555                   34,808
  ------------------------------------------------------------------------------------------------------------------------
          Total assets                                                                $ 112,453                $ 114,612
  ----------------------------------------------------------------------------------======================================
  
  
  LIABILITIES
  Contractholder deposit funds                                                        $  28,781                $  30,864
  Unpaid claims and claim expenses                                                       17,848                   18,017
  Future policy benefits                                                                 12,290                   12,510
  Unearned premiums                                                                       1,933                    1,990
                                                                                      -----------              -----------
           Total insurance and contractholder liabilities                                60,852                   63,381
  Accounts payable, accrued expenses and other liabilities                                6,871                    6,765
  Current income taxes                                                                       28                       56
  Short-term debt                                                                           293                      272
  Long-term debt                                                                          1,404                    1,431
  Separate account liabilities                                                           35,136                   34,430
  ------------------------------------------------------------------------------------------------------------------------
           Total liabilities                                                            104,584                  106,335
  ------------------------------------------------------------------------------------------------------------------------
  
  CONTINGENCIES - NOTE 10
  
  SHAREHOLDERS' EQUITY
  Common stock (par value, $0.25; shares issued, 266; 265)                                   67                       66
  Additional paid-in capital                                                              2,788                    2,719
  Net unrealized appreciation, fixed maturities                         $     495                $     750
  Net unrealized appreciation, equity securities                              229                      206
  Net translation of foreign currencies                                      (221)                    (114)
                                                                        ---------                ---------
     Accumulated other comprehensive income                                                 503                      842
  Retained earnings                                                                       6,873                    6,746
  Less treasury stock, at cost                                                           (2,362)                  (2,096)
  ------------------------------------------------------------------------------------------------------------------------
           Total shareholders' equity                                                     7,869                    8,277
  ------------------------------------------------------------------------------------------------------------------------
  
           Total liabilities and shareholders' equity                                 $ 112,453                $ 114,612
  ----------------------------------------------------------------------------------======================================
  
  SHAREHOLDERS' EQUITY PER SHARE                                                      $   38.68                $   40.25
  ----------------------------------------------------------------------------------======================================
  </TABLE>
  
  The Notes to Financial Statements are an integral part of these statements.
  
  
  
                                         2
  <PAGE>
  CIGNA  CORPORATION
  CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND CHANGES IN
      SHAREHOLDERS' EQUITY
  (In millions)
  <TABLE>
  <CAPTION>
  Three Months Ended March 31,                                                       1999                             1998
  -----------------------------------------------------------------------------------------------------------------------------------
                                                                           Compre-             Share-       Compre-            Share-
                                                                           hensive            holders'      hensive          holders'
                                                                           Income               Equity       Income            Equity
  ====================================================================================================================================
  <S>                                                                 <C>                <C>              <C>             <C>      
  Common stock, January 1                                                                 $        66                      $      66
    Issuance of common stock for employee benefits plans                                            1                              0
                                                                                          -----------                      -----------
  Common stock, March 31                                                                           67                             66
                                                                                          -----------                      -----------
  
  Additional paid-in capital, January 1                                                         2,719                          2,655
    Issuance of common stock for employee benefits plans                                           69                             40
                                                                                          -----------                      -----------
  Additional paid-in capital, March 31                                                          2,788                          2,695
                                                                                          -----------                      -----------
  
  Accumulated other comprehensive income, January 1                                               842                            758
    Net unrealized depreciation, fixed maturities                      $      (255)              (255)    $     (29)             (29)
    Net unrealized appreciation, equity securities                              23                 23            82               82
                                                                       -----------                        ---------
        Net unrealized appreciation (depreciation) on securities              (232)                              53
    Net translation of foreign currencies                                     (107)              (107)            1                1
                                                                       -----------                        ---------
            Other comprehensive income (loss)                                 (339)                              54
                                                                                          -----------                      -----------
  Accumulated other comprehensive income, March 31                                                503                            812
                                                                                          -----------                      -----------
  
  Retained earnings, January 1                                                                  6,746                          5,696
    Net income                                                                 188                188           495              495
    Common dividends declared                                                                     (61)                           (62)
                                                                                          -----------                      -----------
  Retained earnings, March 31                                                                   6,873                          6,129
                                                                                          -----------                      -----------
  
  Treasury stock, January 1                                                                    (2,096)                        (1,243)
    Repurchase of common stock                                                                   (229)                          (111)
    Other treasury stock transactions, net                                                        (37)                           (23)
                                                                                          -----------                      -----------
  Treasury stock, March 31                                                                     (2,362)                        (1,377)
  -----------------------------------------------------------------------------------------------------------------------------------
  TOTAL COMPREHENSIVE INCOME (LOSS) AND SHAREHOLDERS' EQUITY           $      (151)       $     7,869     $     549        $   8,325
  ---------------------------------------------------------------------===============================================================
  </TABLE>
  
  The Notes to Financial Statements are an integral part of these statements.
  
  
                                         3
  <PAGE>
  CIGNA  CORPORATION
  CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
  (In millions)
  <TABLE>
  <CAPTION>
                                                                                                   Three Months Ended March 31,
                                                                                                   1999                      1998
  ==================================================================================================================================
  CASH FLOWS FROM OPERATING ACTIVITIES
  <S>                                                                                       <C>                       <C>          
      Income before cumulative effect of accounting change                                  $         279             $         495
      Adjustments to reconcile income before cumulative effect of accounting
          change to net cash provided by (used in) operating activities:
              Insurance liabilities                                                                  (194)                       12
              Reinsurance recoverables                                                                158                       167
              Deferred policy acquisition costs                                                       (28)                      (33)
              Premiums, accounts and notes receivable                                                (208)                     (167)
              Accounts payable, accrued expenses, other liabilities and
                  current income taxes                                                                 47                       119
              Deferred income taxes                                                                    56                      (159)
              Realized investment gains                                                               (42)                      (59)
              Depreciation and goodwill amortization                                                   82                        78
              Gain on sale of businesses                                                              (26)                     (342)
              Other, net                                                                               (2)                     (192)
                                                                                              ------------              ------------
                  Net cash provided by (used in) operating activities                                 122                       (81)
                                                                                              ------------              ------------
  
  CASH FLOWS FROM INVESTING ACTIVITIES
      Proceeds from investments sold:
          Fixed maturities                                                                          1,265                     1,594
          Equity securities                                                                            96                        92
          Mortgage loans                                                                               51                       345
          Other                                                                                       335                       137
      Investment maturities and repayments:
          Fixed maturities                                                                          1,024                       940
          Mortgage loans                                                                              115                       232
      Investments purchased:
          Fixed maturities                                                                         (2,388)                   (2,616)
          Equity securities                                                                           (79)                     (152)
          Mortgage loans                                                                             (492)                     (479)
          Other                                                                                       (84)                     (792)
      Sale of individual life insurance and annuity business, net proceeds                              0                     1,296
      Other, net                                                                                      (80)                      (60)
                                                                                              ------------              ------------
                  Net cash provided by (used in) investing activities                                (237)                      537
                                                                                              ------------              ------------
  
  CASH FLOWS FROM FINANCING ACTIVITIES
      Deposits and interest credited to contractholder deposit funds                                1,838                     1,604
      Withdrawals and benefit payments from contractholder deposit funds                           (2,272)                   (1,774)
      Net change in short-term debt                                                                    (6)                     (360)
      Repayment of long-term debt                                                                       0                       (66)
      Repurchase of common stock                                                                     (204)                     (108)
      Issuance of common stock                                                                         22                        12
      Common dividends paid                                                                           (59)                      (60)
                                                                                              ------------              ------------
                  Net cash used in financing activities                                              (681)                     (752)
                                                                                              ------------              ------------
  Effect of foreign currency rate changes on cash and cash equivalents                                 (5)                       (7)
  ----------------------------------------------------------------------------------------------------------------------------------
  Net decrease in cash and cash equivalents                                                          (801)                     (303)
  Cash and cash equivalents, beginning of period                                                    3,028                     2,625
  ----------------------------------------------------------------------------------------------------------------------------------
  
  Cash and cash equivalents, end of period                                                  $       2,227             $       2,322
  ------------------------------------------------------------------------------------------========================================
  
  Supplemental Disclosure of Cash Information:
      Income taxes paid, net of refunds                                                     $         100             $         204
      Interest paid                                                                         $          24             $          27
  ----------------------------------------------------------------------------------------------------------------------------------
  </TABLE>
  
  The Notes to Financial Statements are an integral part of these statements.
  
  
  
                                         4
  <PAGE>
  CIGNA CORPORATION
  NOTES TO FINANCIAL STATEMENTS
  
  NOTE 1 - BASIS OF PRESENTATION
  
  The consolidated  financial statements include the accounts of CIGNA Corporation
  and  all  significant   subsidiaries  (CIGNA).   These  consolidated   financial
  statements have been prepared in conformity with generally  accepted  accounting
  principles.  Certain  reclassifications  have been made to conform with the 1999
  presentation.
  
  The interim  financial  statements  are  unaudited  but include all  adjustments
  (consisting  of normal  recurring  adjustments)  necessary,  in the  opinion  of
  management, for a fair statement of financial position and results of operations
  for the periods reported.
  
  The preparation of interim financial  statements  necessarily  relies heavily on
  estimates.  This and  certain  other  factors,  such as the  seasonal  nature of
  portions of the  insurance  business  as well as  competitive  and other  market
  conditions,  call for caution in  estimating  results for the full year based on
  interim results of operations.
  
  NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS
  
  CIGNA adopted  Statement of Position  (SOP) 97-3,  "Accounting  by Insurance and
  Other Enterprises for Insurance-Related  Assessments" as of January 1, 1999. SOP
  97-3, issued by the American Institute of Certified Public Accountants  (AICPA),
  provides guidance on the recognition and measurement of liabilities for guaranty
  fund and  other  insurance-related  assessments  such as  workers'  compensation
  second  injury  funds,  medical  risk pools and  charges  related  to  operating
  expenses of state regulatory  bodies.  The cumulative effect of adopting the SOP
  was a reduction  of net income of $91 million  ($140  million  pre-tax),  and is
  primarily related to the property and casualty operations.
  
  In 1999, CIGNA adopted SOP 98-1,  "Accounting for the Costs of Computer Software
  Developed or Obtained for Internal Use." SOP 98-1,  issued by the AICPA in 1998,
  specifies the types of costs that must be  capitalized  and  amortized  over the
  software's expected useful life and the types of costs which must be immediately
  recognized  as  expense.  Implementation  of this  pronouncement  did not have a
  material effect on results of operations, liquidity or financial condition.
  
  In 1998, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
  Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
  Instruments and Hedging  Activities."  SFAS No. 133 requires that derivatives be
  reported  on the  balance  sheet  at  fair  value.  Changes  in fair  value  are
  recognized  in net income or,  for  derivatives  that are  hedging  market  risk
  related to future cash flows,  in the  accumulated  other  comprehensive  income
  section of shareholders' equity. Implementation is required by the first quarter
  of 2000,  with the  cumulative  effect of adoption  reflected  in net income and
  accumulated other comprehensive income, as appropriate. CIGNA has not determined
  the effect or timing of implementation of this pronouncement.
  
  In 1998,  the  AICPA  issued  SOP  98-7,  "Deposit  Accounting:  Accounting  for
  Insurance and Reinsurance  Contracts That Do Not Transfer  Insurance  Risk." SOP
  98-7 does not apply to long-duration  life and health contracts.  Implementation
  is required by the first quarter of 2000, with the cumulative effect of adopting
  the  SOP  reflected  in net  income  in the  year  of  adoption.  CIGNA  has not
  determined the effect or timing of implementation of this pronouncement.
  
  NOTE 3 - ACQUISITIONS AND DISPOSITIONS
  
  In January  1999,  CIGNA  entered  into an  agreement  to sell its  domestic and
  international  property and casualty businesses (which comprise the Property and
  Casualty  segment) to ACE Limited for cash proceeds of $3.45 billion.  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.  Net assets of
  the
  
                                          5
  <PAGE>
  businesses to be sold were  approximately $2.2 billion as of March 31, 1999. The
  gain on sale will be  determined,  in part, by the effects on net assets through
  closing of results of operations  of, and dividends  from,  the businesses to be
  sold, as well as transaction costs and other adjustments.
  
  In April 1999,  CIGNA sold a 29% interest in its  Japanese  life  operations  to
  Yasuda Fire & Marine Insurance Company Ltd., reducing CIGNA's ownership interest
  to 61%. Proceeds of the sale were  approximately  $100 million and the after-tax
  gain,  which CIGNA will recognize in the second quarter,  is  approximately  $40
  million.
  
  As of January 1, 1998,  CIGNA sold its  individual  life  insurance  and annuity
  business for cash  proceeds of $1.4  billion.  The sale resulted in an after-tax
  gain of  approximately  $770 million of which $202 million was  recognized  upon
  closing of the sale.  Since the principal  agreement to sell this business is in
  the  form of an  indemnity  reinsurance  arrangement,  the  remaining  gain  was
  deferred and is being  recognized  at the rate that  earnings  from the business
  sold would have been  expected  to emerge,  primarily  over  fifteen  years on a
  declining  basis.  CIGNA  recognized $15 million and $17 million of the deferred
  gain in the first quarters of 1999 and 1998, respectively.
  
  CIGNA has recently invested in certain entities in connection with the expansion
  of its  international  operations.  Most  of  these  investments  relate  to the
  expansion of CIGNA's health care operations in Brazil. CIGNA has incurred losses
  in the Brazilian  operations and expects to incur additional losses.  Additional
  investments  may be required in order for the  Brazilian  operations  to achieve
  profitable  operations.  Risks are inherent in expanding  operations  in foreign
  countries.  CIGNA routinely  monitors its investments  supporting  international
  expansion for potential impairment, and management currently believes that these
  investments are recoverable.
  
  CIGNA had other  acquisitions and  dispositions  during the three months of 1999
  and 1998, the effects of which were not material to the financial statements.
  
  NOTE 4 - INVESTMENTS
  
  Realized Investment Gains and Losses
  
  Realized gains and losses on investments,  excluding policyholder share, were as
  follows:
  
  ----------------------------------------------------------------------
                                                         Three Months
                                                            Ended
                                                           March 31,
  (In millions)                                         1999       1998
  ----------------------------------------------------------------------
  Fixed maturities                                       $36        $32
  Equity securities                                        5          4
  Mortgage loans                                          --         12
  Real estate                                             (1)         1
  Other                                                    2         10
                                                  ---------------------
                                                          42         59
  Less income taxes                                       14         21
  ----------------------------------------------------------------------
  Net realized investment
  gains                                                  $28        $38
  ------------------------------------------------======================
  
  Fixed Maturities and Equity Securities
  
  Sales of  available-for-sale  fixed maturities and equity securities,  including
  policyholder share, were as follows:
  
  
  ----------------------------------------------------------------------
                                                         Three Months
                                                            Ended
                                                           March 31,
  (In millions)                                         1999       1998
  ----------------------------------------------------------------------
  Proceeds from sales                                 $1,361    $1,686
  Gross gains on sales                                    85        51
  Gross losses on sales                                  (42)      (24)
  ----------------------------------------------------------------------
  
  The  components  of net  unrealized  appreciation  (depreciation)  on securities
  (excluding  policyholder  share)  for the three  months  ended  March 31 were as
  follows:
  
  -------------------------------------------------------------------
  (In millions)                                      1999       1998
  -------------------------------------------------------------------
  Unrealized appreciation (depreciation) on                          
  securities held, net of taxes (benefits) of                        
  $(111) and $93, respectively.                     $(205)      $179
  Less gains realized in net income, net of                          
  taxes of $14 and $68, respectively.                  27        126
                                                 --------------------
  Net unrealized appreciation (depreciation)        $(232)       $53
  -----------------------------------------------====================
  
                                          6
  <PAGE>
  NOTE 5 - EARNINGS PER SHARE
  
  Three Months Ended March 31,
  -------------------------------------------------------------------
                                                  Effect              
  (Dollars in millions,                               of 
  except per share amounts)           Basic     Dilution      Diluted
  -------------------------------------------------------------------
  1999
  -------------------------------------------------------------------
  Net income                           $188           --         $188
  --------------------------------===================================
  Shares (in thousands):
  Weighted average                  204,881           --      204,881
  Options and restricted
  stock grants                                     2,827        2,827
  -------------------------------------------------------------------
  Total shares                      204,881        2,827      207,708
  --------------------------------===================================
  Earnings per share                  $0.92      $(0.01)        $0.91
  --------------------------------===================================
  1998
  -------------------------------------------------------------------
  Net income                           $495           --         $495
  --------------------------------===================================
  Shares (in thousands):
  Weighted average                  215,637           --      215,637
  Options and restricted
  stock grants                                     2,118        2,118
  -------------------------------------------------------------------
  Total shares                      215,637        2,118      217,755
  --------------------------------===================================
  Earnings per share                  $2.30      $(0.03)        $2.27
  --------------------------------===================================
  
  Common shares held as Treasury shares were 62,715,992 and 48,803,100 as of March
  31, 1999 and 1998, respectively.
  
  NOTE 6 - INCOME TAXES
  
  CIGNA's federal income tax returns are routinely audited by the Internal Revenue
  Service  (IRS),  and  provisions  are  made  in  the  financial   statements  in
  anticipation  of the results of these  audits.  The IRS completed its audits for
  the years 1982 through 1993, and challenged  CIGNA on one issue related to years
  prior to 1989. In April 1999, the U.S. Court of Appeals affirmed the Tax Court's
  ruling on this issue in favor of the IRS. The  decision  will not have an effect
  on results of  operations  or  liquidity,  as  liabilities  had been  previously
  established and paid.
  
  In management's opinion,  adequate tax liabilities have been established for all
  years.
  
  NOTE 7 - REINSURANCE RECOVERABLES
  
  In the normal  course of business,  CIGNA's  insurance  subsidiaries  enter into
  agreements,  primarily relating to short-duration  contracts, to assume and cede
  reinsurance  with other insurance  companies.  Reinsurance is ceded primarily to
  limit losses from large  exposures and to permit recovery of a portion of direct
  losses,  although ceded reinsurance does not relieve the originating  insurer of
  liability.  CIGNA  evaluates  the  financial  condition  of its  reinsurers  and
  monitors  concentrations of credit risk arising from similar geographic regions,
  activities or economic characteristics of its reinsurers. In connection with the
  sale of CIGNA's  individual life insurance and annuity business (as discussed in
  Note 3), the reinsurance  recoverable from Lincoln National Corporation at March
  31, 1999 was $6.0 billion.
  
  Failure of reinsurers to indemnify CIGNA, as a result of reinsurer  insolvencies
  and disputes, could result in losses.  Allowances for uncollectible amounts were
  $706  million  and $705  million as of March 31,  1999 and  December  31,  1998,
  respectively.
  
  Future charges for  unrecoverable  reinsurance may materially  affect results of
  operations in future periods,  however,  such amounts are not expected to have a
  material adverse effect on CIGNA's liquidity or financial condition.
  
  For the first  quarters  of 1999 and 1998,  premiums  and fees were net of ceded
  premiums of $448 million and $443 million,  respectively. In addition, benefits,
  losses and settlement  expenses for the first quarters of 1999 and 1998 were net
  of reinsurance  recoveries of $255 million and $385 million,  respectively.  For
  these quarters, ceded premiums associated with the individual life insurance and
  annuity  business  sold were $63 million  and $113  million,  respectively,  and
  reinsurance recoveries were $22 million and $56 million.
  
                                          7
  <PAGE>
  NOTE 8 - SEGMENT INFORMATION
  
  Operating  segments  are  based on  CIGNA's  internal  reporting  structure  and
  generally reflect  differences in products;  the International  Life, Health and
  Employee  Benefits  segment is based on geography.  CIGNA uses operating  income
  (net income excluding  after-tax  realized  investment results and, in 1999, the
  cumulative  effect of an accounting  change) to measure the financial results of
  its segments. Summarized segment financial information was as follows:
  
  ----------------------------------------------------------------------
                                                         Three Months
                                                            Ended
                                                           March 31,
  (In millions)                                         1999       1998
  ----------------------------------------------------------------------
  Premiums and fees and other revenues:
  
  Employee Health Care, Life and                                        
     Disability Benefits                              $3,136     $2,866
  Employee Retirement Benefits and                                      
     Investment Services                                  62         71
  International Life, Health and                                        
     Employee Benefits                                   383        278
  Property and Casualty                                  755        754
  Other Operations                                       219        495
  Corporate                                              (55)       (49)
  ----------------------------------------------------------------------
  Total                                               $4,500     $4,415
  ---------------------------------------------------===================
  
  Income before cumulative effect of accounting change:
  
  Operating income                                                      
     (loss):                                                            
  Employee Health Care, Life and                                        
     Disability Benefits                                $157       $131
  Employee Retirement Benefits and                                      
     Investment Services                                  63         61
  International Life, Health and                                        
     Employee Benefits                                     3          9
  Property and Casualty                                   18         41
  Other Operations                                        30        233
  Corporate                                              (20)       (18)
                                                     -------------------
  Total operating income                                 251        457
  Realized investment gains, net of taxes                 28         38
  ----------------------------------------------------------------------
  Income before cumulative effect of
  accounting change                                     $279       $495
  ---------------------------------------------------===================
  
  NOTE 9 - COST REDUCTION INITIATIVES
  
  Property and Casualty Restructuring
  
  In the  fourth  quarter  of  1998,  CIGNA  adopted  a  cost  reduction  plan  to
  restructure  certain of its  domestic  and  international  property and casualty
  operations,  which  resulted  in a pre-tax  charge of $28 million  ($18  million
  after-tax).  The charge  consisted  primarily of costs  related to severance and
  vacated lease space. The cash outlays  associated with these initiatives will be
  substantially  completed by the end of 2000 with most  occurring in 1999.  As of
  March 31, 1999,  approximately $6 million of severance was paid to approximately
  300 employees.
  
  Employee Health Care, Life and Disability Benefits Restructuring
  
  In the  fourth  quarter  of  1997,  CIGNA  adopted  a  cost  reduction  plan  to
  restructure  its health care  operations,  which resulted in a pre-tax charge of
  $32 million  ($22 million  after-tax)  in the  Employee  Health  Care,  Life and
  Disability Benefits segment.  The charge consisted primarily of costs related to
  severance  and vacated  lease  space.  The cash  outlays  associated  with these
  initiatives  will continue through 1999 with most having occurred in 1998. As of
  March 31, 1999, approximately $11 million of severance was paid to approximately
  1,300 employees.
  
                                          8
  <PAGE>
  NOTE 10 - CONTINGENCIES AND OTHER MATTERS
  
  Financial Guarantees
  
  CIGNA,  through its subsidiaries,  is contingently  liable for various financial
  guarantees provided in the ordinary course of business. These include guarantees
  for the repayment of municipal  obligations and industrial  revenue bonds. CIGNA
  also  guarantees  a minimum  level of  benefits  for  certain  separate  account
  contracts.  In  addition,  CIGNA has entered  into  specialty  life  reinsurance
  contracts that guarantee payments for specified  unfavorable changes in variable
  annuity  account values based on underlying  mutual fund  investments if account
  holders expire or elect to receive periodic income payments.
  
  Although the  ultimate  outcome of any loss  contingencies  arising from CIGNA's
  financial  guarantees  may  adversely  affect  results of  operations  in future
  periods,  they are not  expected  to have a material  adverse  effect on CIGNA's
  liquidity or financial condition.
  
  Regulatory and Industry Developments
  
  CIGNA's  businesses  are  subject  to  a  changing  social,   economic,   legal,
  legislative  and  regulatory  environment  that could affect  them.  Some of the
  changes include initiatives to: 
  
  o    increase health care regulation;
  o    revise the system of funding cleanup of environmental damages;
  o    reinterpret  insurance  contracts  long after the policies  were written to
       provide coverage unanticipated by CIGNA;
  o    restrict  insurance pricing and the application of underwriting  standards;
       and
  o    revise federal tax laws.
  
  Some of the more significant issues are discussed below.
  
  Efforts at the federal and state level to increase regulation of the health care
  industry could have an adverse effect on CIGNA's health care  operations if they
  reduce marketplace  competition and innovation or result in increased medical or
  administrative  costs.  Matters under  consideration  that could have an adverse
  effect  include  mandated  benefits  or services  that  increase  costs  without
  improving the quality of care, loss of the Employee  Retirement  Income Security
  Act of 1974  (ERISA)  preemption  of state law through  legislative  actions and
  court  decisions,  changes  in the  ERISA  regulations  governing  claim  appeal
  procedures imposing increased  administrative burdens and costs and restrictions
  on the use of prescription drug formularies.  Due to the uncertainty  associated
  with the timing and content of any proposals  ultimately adopted,  the effect on
  CIGNA's  results of  operations,  liquidity  or  financial  condition  cannot be
  reasonably estimated at this time.
  
  Proposals  for  Superfund  reform remain under  consideration  by Congress.  Any
  changes in Superfund relating to 1) assigning responsibility, 2) funding cleanup
  costs or 3)  establishing  cleanup  standards  could affect the  liabilities  of
  policyholders and insurers. Due to uncertainties  associated with the timing and
  content of any future Superfund legislation,  the effect on CIGNA's consolidated
  results of  operations,  liquidity or financial  condition  cannot be reasonably
  estimated at this time.
  
  In early 1999, the Administration proposed a federal budget that would eliminate
  the  deferral  of  taxation  of  certain  statutory  income  of  life  insurance
  companies.  CIGNA has not provided taxes on $450 million of such income.  If the
  budget provision is enacted,  CIGNA will record additional income tax expense of
  $158 million to reflect this liability.  The proposed  federal budget also would
  limit  the  deduction  of  interest  expense  on  the  general  indebtedness  of
  corporations owning non-leveraged corporate life insurance policies covering the
  lives of officers,  employees or directors who are not 20 percent  owners of the
  corporation.  If this latter  provision is enacted as  proposed,  CIGNA does not
  anticipate  that it will have a material effect on its  consolidated  results of
  operations, liquidity, or financial condition, although it could have a material
  adverse effect on the results of operations of the Employee  Retirement Benefits
  and Investment Services segment.
  
  In 1996,  Congress passed  legislation that phased out over a three-year  period
  the tax deductibility of policy loan interest for most leveraged  corporate life
  insurance products. CIGNA does not expect
  
                                          9
  <PAGE>
  this legislation to have a material  adverse effect on its consolidated  results
  of operations, liquidity or financial condition.
  
  In 1998,  the National  Association  of Insurance  Commissioners  (NAIC) adopted
  risk-based capital guidelines for health maintenance organizations (HMOs). CIGNA
  expects its HMO subsidiaries to be adequately capitalized under these guidelines
  as they become effective in various jurisdictions in 1999.
  
  In 1998, the NAIC adopted standardized  statutory accounting  principles.  Since
  these  principles have not been adopted by most of the insurance  departments of
  various jurisdictions in which CIGNA's insurance subsidiaries are domiciled, the
  timing and effects of implementation have not yet been determined.
  
  The eventual  effect on CIGNA of the changing  environment  in which it operates
  remains uncertain.
  
  Property and Casualty Unpaid Claims and Claim Expense Reserves and 
  Reinsurance Recoverables
  
  CIGNA's  property and casualty loss reserves are an estimate of future  payments
  for reported and unreported  claims for losses and related expenses with respect
  to insured events that have occurred.  The basic assumption  underlying the many
  traditional  actuarial and other methods used in the  estimation of property and
  casualty  loss  reserves is that past  experience  is an  appropriate  basis for
  predicting future events.  However,  current trends and other factors that would
  modify past experience are also  considered.  The process of  establishing  loss
  reserves is subject to uncertainties that are normal,  recurring and inherent in
  the property and casualty business.
  
  Reserving  for  property  and  casualty  claims  continues  to be a complex  and
  uncertain  process,  requiring  the use of  informed  estimates  and  judgments.
  CIGNA's  estimates and judgments  may be revised as  additional  experience  and
  other data become available and are reviewed,  as new or improved  methodologies
  are  developed or as current law  changes.  Any such  revisions  could result in
  future changes in estimates of losses or reinsurance recoverables,  and would be
  reflected in CIGNA's results of operations for the period in which the estimates
  are  changed.  While the effect of any such  changes in  estimates  of losses or
  reinsurance  recoverables  could be  material to future  results of  operations,
  CIGNA does not expect such changes to have a material effect on its liquidity or
  financial condition.
  
  In management's judgment, information currently available has been appropriately
  considered in estimating CIGNA's loss reserves and reinsurance recoverables.
  
  Litigation
  
  CIGNA is continuously  involved in numerous lawsuits arising, for the most part,
  in the ordinary  course of  business,  either as a liability  insurer  defending
  third-party  claims  brought  against its  insureds  or as an insurer  defending
  coverage claims brought against it by its  policyholders or other insurers.  One
  such area of litigation involves policy coverage and judicial  interpretation of
  legal liability for asbestos-related and environmental pollution (A&E) claims.
  
  While the outcome of all litigation involving CIGNA, including insurance-related
  litigation,  cannot be  determined,  litigation  (including  that related to A&E
  claims) is not expected to result in losses that differ from  recorded  reserves
  by  amounts  that would be  material  to results  of  operations,  liquidity  or
  financial  condition.   Also,   reinsurance  recoveries  related  to  claims  in
  litigation, net of the allowance for uncollectible reinsurance, are not expected
  to result in recoveries  that differ from recorded  recoverables by amounts that
  would be material to results of operations, liquidity or financial condition.
  
  Property and Casualty Restructuring
  
  Effective  December  31, 1995,  CIGNA  restructured  its  domestic  property and
  casualty businesses into two separate operations,  ongoing and run-off.  Certain
  competitors and  policyholders  of CIGNA are challenging  the  restructuring  in
  court.  Although  CIGNA expects the matter to be in litigation for some time, it
  expects to ultimately prevail.
  
                                         10
  <PAGE>
  Item 2.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations
  
  INTRODUCTION
  
  The following  discussion addresses the financial condition of CIGNA Corporation
  (CIGNA) as of March 31, 1999,  compared with December 31, 1998,  and its results
  of operations for the three months ended March 31, 1999,  compared with the same
  period  last  year.  This  discussion   should  be  read  in  conjunction   with
  Management's  Discussion and Analysis  included in CIGNA's 1998 Annual Report to
  Shareholders  (pages 10  through  24),  to which  the  reader  is  directed  for
  additional  information.  Due to the  seasonality of certain  aspects of CIGNA's
  business,  caution should be used in estimating  results for the full year based
  on interim results of operations.
  
  Acquisitions and Dispositions
  
  In January  1999,  CIGNA  entered  into an  agreement  to sell its  domestic and
  international  property and casualty businesses (which comprise the Property and
  Casualty  segment) to ACE Limited for cash proceeds of $3.45 billion.  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.  Net assets of
  the businesses to be sold were  approximately $2.2 billion as of March 31, 1999.
  The gain on sale will be  determined,  in part,  by the  effects  on net  assets
  through  closing of results of operations of, and dividends from, the businesses
  to be  sold,  as  well as  transaction  costs  and  other  adjustments.  CIGNA's
  priorities  for the use of  capital,  including  proceeds  from the sale are, in
  order, internal growth, acquisitions, and share repurchases.
  
  In April 1999,  CIGNA sold a 29% interest in its  Japanese  life  operations  to
  Yasuda Fire & Marine Insurance Company Ltd., reducing CIGNA's ownership interest
  to 61%. Proceeds of the sale were  approximately  $100 million and the after-tax
  gain,  which CIGNA will recognize in the second quarter,  is  approximately  $40
  million.
  
  As of January 1, 1998,  CIGNA sold its  individual  life  insurance  and annuity
  business for cash  proceeds of $1.4  billion.  The sale resulted in an after-tax
  gain of  approximately  $770 million of which $202 million was  recognized  upon
  closing of the sale.  Since the principal  agreement to sell this business is in
  the  form of an  indemnity  reinsurance  arrangement,  the  remaining  gain  was
  deferred and is being  recognized  at the rate that  earnings  from the business
  sold would have been  expected  to emerge,  primarily  over  fifteen  years on a
  declining  basis.  CIGNA  recognized $15 million and $17 million of the deferred
  gain in the first quarters of 1999 and 1998, respectively.
  
  CIGNA has recently invested in certain entities in connection with the expansion
  of its international  operations and expects to pursue additional  international
  growth  opportunities.  CIGNA anticipates start-up costs and initial losses as a
  result of this expansion.
  
  Most of the recent international  investments relate to the expansion of CIGNA's
  health care  operations  in Brazil.  CIGNA has incurred  losses in the Brazilian
  operations and expects to incur additional losses. Additional investments may be
  required in order for the Brazilian operations to achieve profitable operations.
  
  Risks are inherent in expanding operations in foreign countries. CIGNA routinely
  monitors  its  investments  supporting  international  expansion  for  potential
  impairment,  and  management  currently  believes  that  these  investments  are
  recoverable.
  
  CIGNA continues to conduct  strategic and financial reviews of its businesses in
  order to  deploy  its  capital  most  effectively.  See Note 3 to the  Financial
  Statements for additional information on acquisitions and dispositions.
  
  Cost Reduction Initiatives
  
  In the  fourth  quarter  of  1998,  CIGNA  adopted  a  cost  reduction  plan  to
  restructure certain operations which resulted in a pre-tax charge of $29 million
  ($19 million  after-tax),  including  $18 million  after- tax for  restructuring
  certain of its domestic and  international  operations  included in the Property
  and Casualty segment and $1 million after-tax for certain operations included in
  the International Life, Health and Employee Benefits segment. The
  
                                         11
  <PAGE>
  charge  consisted  primarily  of costs  related to severance  and vacated  lease
  space. The cash outlays  associated with these initiatives will be substantially
  completed by the end of 2000 with most occurring in 1999. These  initiatives are
  expected to result in annual  after-tax  savings of $20 million in the  Property
  and Casualty  segment.  As noted  above,  CIGNA has entered into an agreement to
  sell the businesses that comprise this segment.
  
  In the  fourth  quarter  of  1997,  CIGNA  adopted  a  cost  reduction  plan  to
  restructure  its health care  operations,  which resulted in a pre-tax charge of
  $32 million  ($22 million  after-tax)  in the  Employee  Health  Care,  Life and
  Disability Benefits segment.  The charge consisted primarily of costs related to
  severance  and vacated  lease  space.  The cash  outlays  associated  with these
  initiatives  will continue through 1999 with most having occurred in 1998. These
  initiatives  are expected to result in annual  after-tax  expense savings of $50
  million with approximately two-thirds having emerged in 1998 and the full amount
  in 1999.
  
  See  Note 9 to the  Financial  Statements  for  additional  information  on cost
  reduction initiatives.
  
  Other Matters
  
  CIGNA's  businesses  are  subject  to  a  changing  social,   economic,   legal,
  legislative  and  regulatory  environment  that could affect  them.  Some of the
  changes include initiatives to:
  
  o    increase health care regulation;
  
  o    revise the system of funding cleanup of environmental damages;
  
  o    reinterpret  insurance  contracts  long after the policies  were written to
       provide coverage unanticipated by CIGNA;
  
  o    restrict  insurance pricing and the application of underwriting  standards;
       and
  
  o    revise federal tax laws.
  
  In early 1999, the Administration proposed a federal budget that would eliminate
  the  deferral  of  taxation  of  certain  statutory  income  of  life  insurance
  companies.  As discussed in Note 10 to the Financial  Statements,  CIGNA has not
  provided  taxes on $450  million  of such  income.  If the budget  provision  is
  enacted,  CIGNA will record  additional  income tax  expense of $158  million to
  reflect  this  liability.  The  proposed  federal  budget  also would  limit the
  deduction of interest expense on the general indebtedness of corporations owning
  non-leveraged  corporate life insurance policies covering the lives of officers,
  employees or directors who are not 20 percent owners of the corporation. If this
  latter provision is enacted as proposed,  CIGNA does not anticipate that it will
  have a material effect on its consolidated results of operations,  liquidity, or
  financial  condition,  although it could have a material  adverse  effect on the
  results  of  operations  of the  Employee  Retirement  Benefits  and  Investment
  Services segment.
  
  The eventual  effect on CIGNA of the changing  environment  in which it operates
  remains  uncertain.  For  additional  information,  see Note 10 to the Financial
  Statements.
  
  Recent Accounting Pronouncements
  
  CIGNA adopted  Statement of Position  (SOP) 97-3,  "Accounting  by Insurance and
  Other Enterprises for Insurance-Related  Assessments" as of January 1, 1999. SOP
  97-3 , issued by the American Institute of Certified Public Accountants (AICPA),
  provides guidance on the recognition and measurement of liabilities for guaranty
  fund and  other  insurance-related  assessments  such as  workers'  compensation
  second  injury  funds,  medical  risk pools and  charges  related  to  operating
  expenses of state regulatory  bodies.  The cumulative effect of adopting the SOP
  was a reduction  of net income of $91 million  ($140  million  pre-tax),  and is
  primarily related to the property and casualty operations.
  
  In 1999, CIGNA adopted SOP 98-1,  "Accounting for the Costs of Computer Software
  Developed or Obtained for Internal Use." SOP 98-1,  issued by the AICPA in 1998,
  specifies the types of costs that must be  capitalized  and  amortized  over the
  software's expected useful life and the types of costs which must be immediately
  recognized  as  expense.  Implementation  of this  pronouncement  did not have a
  material effect on results of operations, liquidity or financial condition.
  
  In 1998, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
  Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
  Instruments and Hedging Activities."
  
                                         12
  <PAGE>
  SFAS No. 133 requires that  derivatives be reported on the balance sheet at fair
  value.  Changes in fair value are  recognized in net income or, for  derivatives
  that are hedging  market risk related to future cash flows,  in the  accumulated
  other comprehensive  income section of shareholders'  equity.  Implementation is
  required by the first quarter of 2000,  with the  cumulative  effect of adoption
  reflected  in  net  income  and  accumulated  other  comprehensive   income,  as
  appropriate.  CIGNA has not determined the effect or timing of implementation of
  this pronouncement.
  
  In 1998,  the  AICPA  issued  SOP  98-7,  "Deposit  Accounting:  Accounting  for
  Insurance and Reinsurance  Contracts That Do Not Transfer  Insurance  Risk." SOP
  98-7 does not apply to long- duration life and health contracts.  Implementation
  is required by the first quarter of 2000, with the cumulative effect of adopting
  the  SOP  reflected  in net  income  in the  year  of  adoption.  CIGNA  has not
  determined the effect or timing of implementation of this pronouncement.
  
  CONSOLIDATED RESULTS OF OPERATIONS
  ==================================================================
  FINANCIAL SUMMARY                               Three Months Ended
                                                       March 31,
  (In millions)                                      1999      1998
  ------------------------------------------------------------------
  Premiums and fees                                $4,263    $3,901
  Net investment income                               858       937
  Other revenues                                      237       514
  Realized investment gains                            42        59
                                              ---------------------
  Total revenues                                    5,400     5,411
  Benefits and expenses                             4,970     4,643
                                              ---------------------
  Income before taxes                                 430       768
  Income taxes                                        151       273
                                              ---------------------
  Income before cumulative                                          
     effect of accounting change                      279       495
  Less realized investment gains,                                   
     net of taxes                                      28        38
  -----------------------------------------------------------------
  Operating income*                                  $251      $457
  --------------------------------------------=====================
  
  CIGNA's first quarter 1998 consolidated operating income included a $202 million
  after-tax gain  recognized  upon closing of the sale of CIGNA's  individual life
  insurance and annuity business.  Excluding this gain,  operating income was $251
  million in 1999  compared  with $255  million for the same  period last year,  a
  decrease of 2%. This decrease  primarily  reflects lower operating income in the
  Property and  Casualty  and  International  Life,  Health and Employee  Benefits
  segments,  partially offset by improved results in CIGNA's Employee Health Care,
  Life and Disability Benefits segment.
  
  After-tax realized investment results decreased 26% in the first quarter of 1999
  from the same period last year. This decrease  primarily reflects lower gains on
  sales  of  mortgage   loans  and  real  estate   partnerships.   For  additional
  information, see Note 4 to the Financial Statements.
  
  Excluding  the $202 million  after-tax  gain  recognized  on the sale of CIGNA's
  individual life insurance and annuity  business and the anticipated  gain on the
  sale of CIGNA's property and casualty operations, full year operating income for
  1999 is  expected  to improve  over 1998;  however,  such  improvement  could be
  adversely affected by the factors noted in the cautionary statement on page 22.
  
  EMPLOYEE HEALTH CARE, LIFE AND DISABILITY BENEFITS
  ==================================================================
  FINANCIAL SUMMARY                               Three Months Ended
                                                       March 31,
  (In millions)                                      1999      1998
  ------------------------------------------------------------------
  Premiums and fees                                $2,976    $2,737
  Net investment income                               138       143
  Other revenues                                      160       129
                                              ---------------------
  Segment revenues                                  3,274     3,009
  Benefits and expenses                             3,030     2,801
                                              ---------------------
  Income before taxes                                 244       208
  Income taxes                                         87        77
                                              ---------------------
  Operating income                                   $157      $131
  --------------------------------------------=====================
  Realized investment gains,
  net of taxes                                         $6       $18
  --------------------------------------------======================
  
  Operating  income for the Employee  Health Care,  Life and  Disability  Benefits
  segment  increased  20% for the first  quarter of 1999,  compared  with the same
  period last year.  Operating  income for the Indemnity and HMO operations was as
  follows:
  --------
  *Operating  income  (loss) is defined as net income (loss)  excluding  after-tax
  realized  investment  results.  Operating  income  in  1999  also  excludes  the
  cumulative effect of adopting a new accounting pronouncement.
  
                                         13
  <PAGE>
  ==================================================================
                                                  Three Months Ended
                                                       March 31,
  (In millions)                                      1999      1998
  ------------------------------------------------------------------
  Indemnity operations                                $63       $69
  HMO operations                                       94        62
  ------------------------------------------------------------------
  Total                                              $157      $131
  ==================================================================
  
  Indemnity  operating  income decreased 9% for the first quarter of 1999 compared
  with the same period last year. This decrease  primarily reflects lower earnings
  from the  experience-rated  medical business resulting from higher medical costs
  and unfavorable claim experience in the group accident business. These decreases
  were partially  offset by improved claim experience from guaranteed cost medical
  and group life businesses.
  
  HMO earnings  increased 52% for the first quarter of 1999 compared with the same
  period last year. This  improvement  reflects rate increases for guaranteed cost
  HMO business,  improved results in health care services  operations,  membership
  growth  in HMO  experience-rated  and  alternative  funding  business  and lower
  operating expenses per member.
  
  Premiums  and fees  increased 9% for the first  quarter of 1999  compared to the
  same  period  last  year.  This  increase  primarily  reflects  HMO and  medical
  indemnity membership growth and rate increases.
  
  Net  investment  income  decreased 3% for the first  quarter of 1999 compared to
  1998 due to a decrease in investment yields.
  
  As of March 31,  1999,  total HMO  membership  was  approximately  6.7  million,
  representing  an increase of 6% since March 31, 1998 and 3% since  December  31,
  1998. These increases  primarily reflect  membership growth in  experience-rated
  and alternative funding programs,  partially offset by lower guaranteed cost HMO
  membership.  Under alternative  funding programs,  the customer assumes all or a
  portion of the  responsibility  for funding claims,  and CIGNA generally earns a
  lower margin than under traditional programs.
  
  Management  believes  that  adding  premium  equivalents  to  premiums  and fees
  (adjusted  premiums  and fees)  produces a more  meaningful  measure of business
  volume.  Premium  equivalents  for the first quarters of 1999 and 1998 were $3.5
  billion and $3.2 billion,  respectively.  This increase  primarily  reflects HMO
  membership growth.  Premium  equivalents were 54% of total adjusted premiums and
  fees  for  the  first  quarters  of 1999  and  1998.  ASO  plans  accounted  for
  approximately  50% of total adjusted premiums and fees for the first quarters of
  1999 and 1998.
  
  EMPLOYEE RETIREMENT BENEFITS AND
  INVESTMENT SERVICES
  ==================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                       March 31,
  (In millions)                                     1999       1998
  ------------------------------------------------------------------
  Premiums and fees                                  $62        $71
  Net investment income                              387        410
                                              ---------------------
  Segment revenues                                   449        481
  Benefits and expenses                              356        392
                                              ---------------------
  Income before taxes                                 93         89
  Income taxes                                        30         28
                                              ---------------------
  Operating income                                   $63        $61
  --------------------------------------------======================
  Realized investment gains,
  net of taxes                                        $1         $6
  --------------------------------------------======================
  
  Operating income for the Employee  Retirement  Benefits and Investment  Services
  segment  increased  3% for the first  quarter  of 1999,  compared  with the same
  period of 1998.  This increase  reflects higher earnings from an increased asset
  base,  partially  offset by a shift to lower margin products  (separate  account
  equity funds).
  
  Premiums and fees for the first quarter of 1999  decreased 13% compared with the
  same  period  last  year,  reflecting  a  decline  in  annuity  sales  and lower
  non-leveraged  corporate life insurance  premiums and fees,  partially offset by
  higher fees from separate accounts.
  
  Net  investment  income  decreased 6% for the first  quarter of 1999,  primarily
  reflecting lower  investment  yields and customers'  continued  redirection of a
  portion of their investments from the general account to separate accounts.
  
                                         14
  <PAGE>
  Assets under  management  are generally a key  determinant  of earnings for this
  segment.  For the quarter  ended March 31, assets under  management  and related
  activity, including amounts attributable to separate accounts, were as follows:
  
  ==================================================================
  (In millions)                                  1999           1998
  ------------------------------------------------------------------
  Balance -- January 1                        $52,929        $48,231
  Premiums and deposits                         2,088          2,191
  Investment results                              924            805
  Increase (decrease) in fair value of assets     (16)         1,875
  Customer withdrawals                         (1,556)          (875)
  Other, including participant                                       
  withdrawals and benefit payments             (1,264)        (1,255)
  ------------------------------------------------------------------
  Balance -- March 31                         $53,105        $50,972
  ==================================================================
  
  Premiums and deposits  decreased 5% in the three months of 1999,  compared  with
  the same period in 1998.  For the three  months of 1999 and 1998,  approximately
  64% and 53%,  respectively,  of premiums and deposits reflect recurring deposits
  from existing  customers  while the  remaining  amounts  represent  sales to new
  customers and new plan sales to existing customers. Investment results increased
  15% in the three  months of 1999,  compared  with the same period in 1998.  This
  increase reflects higher capital gains and growth in assets, partially offset by
  lower  investment  yields.  The decrease for 1999 in the fair value of assets is
  primarily due to market value  depreciation  of fixed  maturities in the general
  account.  The increase in customer withdrawals is primarily due to the effect of
  withdrawals under defined contribution business in the first quarter of 1999.
  
  Assets  under   management   will  continue  to  be  affected  by  market  value
  fluctuations for fixed maturities and equity securities.
  
  See Other Matters on page 12 for additional information regarding corporate life
  insurance.
  
  INTERNATIONAL LIFE, HEALTH AND EMPLOYEE BENEFITS
  
  ==================================================================
  FINANCIAL SUMMARY                               Three Months Ended
                                                       March 31,
  (In millions)                                      1999      1998
  -----------------------------------------------------------------
  Premiums and fees                                  $378      $277
  Net investment income                                30        27
  Other revenues                                        5         1
                                             ----------------------
  Segment revenues                                    413       305
  Benefits and expenses                               405       291
                                             ----------------------
  Income before taxes                                   8        14
  Income taxes                                          5         5
                                             ----------------------
  Operating income                                     $3        $9
  -------------------------------------------======================
  Realized investment gains,
  net of taxes                                        $--       $--
  -------------------------------------------======================
  
  Operating  income  for the  International  Life,  Health and  Employee  Benefits
  segment declined from the prior year. This decline is primarily  attributable to
  losses of $7 million after-tax from Brazilian health care operations.
  
  CIGNA's health care operations in Brazil include a managed health care business,
  which is being  consolidated,  and investments in another health care operation,
  which are being accounted for under the equity method.
  
  Premiums and fees increased 36% for the first quarter of 1999, compared with the
  same period last year.  Excluding  premiums and fees from the Brazilian  managed
  health care  operation  (which was  acquired in the second half of 1998) and the
  effects of foreign  currency  changes,  premiums and fees  increased  23%.  This
  increase  reflects  growth in Japanese life  operations and, to a lesser extent,
  expansion of health care operations in other Latin American countries and higher
  premiums and fees from health care business  related to expatriate  employees of
  multinational companies.
  
  Net investment  income for the first quarter of 1999 increased 11% from the same
  period  last  year.  Excluding  the  effects of foreign  currency  changes,  the
  increase was 4%. This  increase  reflects  growth in invested  assets  partially
  offset by lower yields.
  
                                         15
  <PAGE>
  Operating  income  associated  with the 29%  interest in CIGNA's  Japanese  life
  operations that was sold in April 1999 was approximately $2 million in the first
  quarter of 1999 and $1 million in the first  quarter of 1998.  Operating  income
  associated with this sold interest for full year 1998 was $10 million.
  
  PROPERTY AND CASUALTY
  =================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                      March 31,
  (In millions)                                     1999       1998
  -----------------------------------------------------------------
  Premiums and fees                                 $676       $685
  Net investment income                              135        146
  Other revenues                                      79         69
                                              ---------------------
  Segment revenues                                   890        900
  Benefits and expenses                              867        841
                                              ---------------------
  Income before taxes                                 23         59
  Income taxes                                         5         18
                                              ---------------------
  Operating income                                   $18        $41
  --------------------------------------------=====================
  Realized investment gains,
  net of taxes                                       $20        $12
  --------------------------------------------=====================
  
  In January 1999, CIGNA entered into an agreement to sell the businesses included
  in this  segment.  See  page 11 for  additional  information.  Operating  income
  decreased  56% for the first  quarter of 1999,  compared with the same period in
  1998. Operating income for the ongoing and run-off operations was as follows:
  
  =================================================================
                                                 Three Months Ended
                                                       March 31,
  (In millions)                                      1999      1998
  -----------------------------------------------------------------
  Ongoing operations:
    International                                      $3       $22
    Domestic                                           15        19
                                             ----------------------
      Total ongoing                                                 
        operations                                     18        41
  Run-off operations                                   --        --
  -----------------------------------------------------------------
      Total                                           $18       $41
  =================================================================
  
  The decline in the international  operations for 1999 reflects unfavorable prior
  year loss  development,  primarily  related  to  catastrophe  losses,  and lower
  property and casualty earnings due to the competitive environment.
  
  The decline in the domestic  operations for 1999 primarily reflects  unfavorable
  prior year development related to property losses,  continued competitive market
  conditions and lower results from  insurance-related  service businesses.  These
  decreases were partially  offset by more  favorable  underwriting  experience in
  selected lines of business.
  
  Results for the run-off  operations  primarily reflect prior year development on
  claim and claim adjustment expense reserves and investment activity.
  
  Premiums and fees declined slightly in the first quarter of 1999. These declines
  reflect continued price competition  partially offset by the favorable effect of
  foreign exchange for international operations.
  
  Net investment  income  decreased 8% for the first quarter of 1999 compared with
  the same period of 1998.  The decline  reflects  lower assets and a shift in the
  investment portfolio mix from fixed maturities to equity securities.
  
  Pre-tax  catastrophe  losses, net of reinsurance,  were $23 million in the first
  quarter of 1999 compared  with $9 million in the first quarter of 1998.  CIGNA's
  future results of operations  could be volatile,  depending on the frequency and
  severity of future catastrophes.
  
  Certain  competitors  and  policyholders  of CIGNA are  challenging in court the
  restructuring of its domestic  property and casualty  business into two separate
  operations,  ongoing and  run-off.  Although  CIGNA  expects the matter to be in
  litigation for some time, it expects to ultimately prevail.
  
  LOSS RESERVES AND REINSURANCE RECOVERABLES
  
  CIGNA's reserving methodology and significant issues affecting the estimation of
  loss reserves and reinsurance recoverables are described in its 1998 Form 10-K.
  
  CIGNA's  property and casualty  loss reserves of $14.3 billion and $14.6 billion
  as of March 31, 1999 and  December  31,  1998,  respectively,  are  estimates of
  future  payments  for  reported  and  unreported  claims for losses and  related
  expenses with respect to insured events that have occurred. The basic assumption
  underlying  the  many  traditional  actuarial  and  other  methods  used  in the
  estimation
  
                                         16
  <PAGE>
  of property and casualty loss reserves is that past experience is an appropriate
  basis for predicting  future events.  However,  current trends and other factors
  that  would  modify  past  experience  are  also  considered.   The  process  of
  establishing  loss  reserves  is  subject  to  uncertainties  that  are  normal,
  recurring and inherent in the property and casualty business.
  
  CIGNA  continually  attempts to improve its loss estimation  process by refining
  its  analysis  of  loss   development   patterns,   claims  payments  and  other
  information,  but there remain many reasons for adverse development of estimated
  ultimate   liabilities.   For   example,   unanticipated   changes  in  workers'
  compensation and product liability laws have at times significantly affected the
  ability of  insurers  to  estimate  liabilities  for unpaid  losses and  related
  expenses.
  
  Reserving  for  property  and  casualty  claims  continues  to be a complex  and
  uncertain  process,  requiring  the use of  informed  estimates  and  judgments.
  CIGNA's  estimates and judgments  may be revised as  additional  experience  and
  other data become available and are reviewed,  as new or improved  methodologies
  are  developed or as current law  changes.  Any such  revisions  could result in
  future changes in estimates of losses or reinsurance recoverables,  and would be
  reflected in CIGNA's results of operations for the period in which the estimates
  are  changed.  While the effect of any such  changes in  estimates  of losses or
  reinsurance  recoverables  could be  material to future  results of  operations,
  CIGNA does not expect such changes to have a material effect on its liquidity or
  financial condition.
  
  CIGNA  manages  its  loss  exposure  through  the  use  of  reinsurance.   While
  reinsurance  arrangements  are designed to limit losses from large exposures and
  to permit recovery of a portion of direct losses,  reinsurance  does not relieve
  CIGNA of liability to its insureds. Accordingly, CIGNA's loss reserves represent
  total  gross  losses,  and  reinsurance   recoverables   represent   anticipated
  recoveries of a portion of those losses.
  
  CIGNA's property and casualty  reinsurance  recoverables were approximately $6.1
  billion and $6.3  billion as of March 31, 1999 and  December  31,  1998,  net of
  allowances  for  unrecoverable  reinsurance  of $706  million and $705  million,
  respectively.
  
  In management's judgment, information currently available has been appropriately
  considered in estimating CIGNA's loss reserves and reinsurance recoverables.
  
  The  following  table  shows the adverse  pre-tax  effects on the  Property  and
  Casualty  segment's  results of operations from prior year  development,  net of
  reinsurance, for the three months ended March 31:
  =================================================================
                                                 Three Months Ended
                                                       March 31,
  (In millions)                                      1999      1998
  -----------------------------------------------------------------
  By business operation:
    Ongoing operations                                $28        $2
    Run-off operations                                 39        46
  -----------------------------------------------------------------
  Total                                               $67       $48
  =================================================================
  By type of loss:
    Asbestos-related                                  $16       $18
    Environmental pollution                            25         7
    Unrecoverable                                         
       reinsurance                                      3         9
    Workers' compensation                               9        10
    Other                                              14         4
  -----------------------------------------------------------------
  Total                                               $67       $48
  =================================================================
  
  OTHER OPERATIONS
  =================================================================
  FINANCIAL SUMMARY                            Three Months Ended
                                                    March 31,
  (In millions)                                     1999       1998
  -----------------------------------------------------------------
  Premiums and fees                                 $171       $131
  Net investment income                              161        198
  Other revenues                                      48        364
                                              ---------------------
  Segment revenues                                   380        693
  Benefits and expenses                              334        331
                                              ---------------------
  Income before taxes                                 46        362
  Income taxes                                        16        129
                                              ---------------------
  Operating income                                   $30       $233
  --------------------------------------------=====================
  Realized investment gains,
  net of taxes                                       $--         $2
  --------------------------------------------=====================
  Other Operations consist of:
  o    gain  recognition  related to the sale of the individual life insurance and
       annuity business;
  o    corporate life insurance on which policy loans are  outstanding  (leveraged
       corporate life insurance);
  o    life, accident and health reinsurance operations;
  
                                         17
  <PAGE>
  o    settlement annuity business; and
  o    certain new business initiatives.
  
  Operating  income for the first  quarter of 1998  includes an after-tax  gain of
  $202 million recognized on the sale of the individual life insurance and annuity
  business. On a pre-tax basis, the gain was $316 million and is reported in Other
  Revenues. Excluding this amount, operating income for the first quarter 1999 was
  $30 million,  compared with operating income of $31 million in the first quarter
  1998,  reflecting  comparable  results for the  businesses  which comprise Other
  Operations.
  
  For the first  quarter of 1999,  premiums and fees  increased  31% from the same
  period  of 1998.  This  increase  primarily  reflects  growth  in  accident  and
  international reinsurance sales.
  
  Net investment  income decreased 19% for the first quarter of 1999 compared with
  the same period of 1998.  This  decrease  primarily  reflects  lower assets from
  leveraged corporate life insurance, and, to a lesser extent, lower yields.
  
  In 1996,  Congress passed  legislation that phased out over a three-year  period
  the tax deductibility of policy loan interest for most leveraged  corporate life
  insurance products. Revenues of $108 million and operating income of $10 million
  for the first  quarter  of 1999 were from  leveraged  corporate  life  insurance
  products  that are  affected  by this  legislation.  CIGNA does not expect  this
  legislation  to have a material  adverse effect on its  consolidated  results of
  operations, liquidity or financial condition.
  
  The specialty life reinsurance  products of this segment include  contracts that
  guarantee payments for specified unfavorable changes in variable annuity account
  values based on underlying  mutual fund investments if account holders expire or
  elect to  receive  periodic  income  payments.  Although  these  guarantees  may
  adversely affect CIGNA's  consolidated  results of operations in future periods,
  they are not expected to have a material adverse effect on CIGNA's  liquidity or
  financial condition.
  
  The  personal   accident   reinsurance   business  of  this   segment   includes
  participation in a workers'  compensation  program managed by Unicover Managers,
  Inc. where disputes have arisen regarding retrocessional coverage. Resolution of
  these disputes is likely to take several  years.  CIGNA does not expect to incur
  losses  material  to  its  consolidated  results  of  operations,  liquidity  or
  financial condition related to this program.
  
  CORPORATE
  =================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                       March 31,
  (In millions)                                     1999       1998
  ------------------------------------------------------------------
  Operating loss                                    $(20)      $(18)
  --------------------------------------------=====================
  Realized investment gains,
  net of taxes                                        $1        $--
  --------------------------------------------=====================
  
  Corporate is used to report amounts not allocated to segments,  such as interest
  expense,  certain  goodwill  amortization  and  intersegment  eliminations.  The
  increase in the operating loss in the first quarter of 1999  primarily  reflects
  lower net investment income due to a reduction in investment assets.
  
  LIQUIDITY AND CAPITAL RESOURCES
  
  Liquidity  for CIGNA  and its  insurance  subsidiaries  has  remained  strong as
  evidenced by  significant  amounts of short-term  investments  and cash and cash
  equivalents   in  the  aggregate.   Generally,   CIGNA  has  met  its  operating
  requirements  by maintaining  appropriate  levels of liquidity in its investment
  portfolio and through utilization of overall positive cash flows.
  
  For the first quarter of 1999, cash and cash equivalents decreased approximately
  $800 million from $3.0 billion as of December 31, 1998. This decrease  primarily
  reflects net  withdrawals  from  contractholder  deposit  funds ($434  million),
  payments of dividends on and  repurchases of CIGNA common stock ($263  million),
  and cash used for investing  activities  ($237  million).  These  decreases were
  partially  offset by cash  provided  by  operating  activities  ($122  million),
  reflecting earnings and the timing of operating cash receipts and disbursements.
  
  CIGNA's  capital  resources  represent  funds  available for long-term  business
  commitments.  They primarily  consist of retained earnings and proceeds from the
  issuance of long-term debt and equity
  
                                         18
  <PAGE>
  securities.  CIGNA's financial strength provides the capacity and flexibility to
  enable it to raise funds in the  capital  markets  through the  issuance of such
  securities.  CIGNA continues to be well capitalized,  with sufficient  borrowing
  capacity to meet the anticipated needs of its businesses.
  
  CIGNA had $1.4  billion of  long-term  debt  outstanding  at March 31,  1999 and
  December 31,  1998.  As of March 31, 1999,  CIGNA had  approximately  $1 billion
  remaining  under  effective  shelf   registration   statements  filed  with  the
  Securities and Exchange Commission that may be issued as debt securities, equity
  securities  or both,  depending  upon  market  conditions  and  CIGNA's  capital
  requirements.
  
  At March 31, 1999, CIGNA's short-term debt amounted to $293 million, an increase
  of $21 million from December 31, 1998.
  
  CIGNA has  repurchased  approximately  3,844,000  shares of its common stock for
  $314 million during 1999,  including 990,000 shares  repurchased for $85 million
  from April 1 through  April 30, 1999.  The  remaining  authorization  of CIGNA's
  Board of Directors as of April 30, 1999 was $476 million.
  
  INVESTMENT ASSETS
  ==================================================================
                                       March 31,        December 31,
  (In millions)                             1999                1998
  ------------------------------------------------------------------
  Fixed maturities                       $32,020             $32,634
  Equity securities                        1,056               1,043
  Mortgage loans                           9,847               9,599
  Real estate                                807                 733
  Other, primarily policy loans            4,847               6,698
  ------------------------------------------------------------------
  Total investment assets                $48,577             $50,707
  ==================================================================
  
  Additional information regarding CIGNA's investment assets is included in Note 4
  to the first quarter 1999 Financial  Statements and Notes 2, 4 and 5 to the 1998
  Financial Statements as well as the 1998 Form 10-K.
  
  Investment assets as of March 31, 1999 decreased 4% from December 31, 1998. This
  decrease  primarily  reflects a decline of approximately  $1.7 billion in policy
  loans due to surrenders of leveraged corporate life insurance policies.
  
  Significant   amounts  of  CIGNA's   investment   assets  are   attributable  to
  experience-rated   contracts  with   policyholders   (policyholder   contracts).
  Approximate  percentages of investments  attributable to policyholder  contracts
  were as follows:
  
  ==================================================================
                                          March 31,     December 31,
                                               1999             1998
  ------------------------------------------------------------------
  Fixed maturities                              30%              27%
  Mortgage loans                                58%              57%
  Real estate                                   63%              63%
  ==================================================================
  
  Fixed Maturities
  
  Investments in fixed  maturities  (bonds)  include  publicly  traded and private
  placement debt securities;  asset-backed  securities,  including  collateralized
  mortgage obligations (CMOs); and redeemable preferred stocks.
  
  As of March 31, 1999, the fair value of fixed maturities, including policyholder
  share,  was greater than  amortized  cost by $1.4  billion,  compared  with $2.0
  billion as of December 31, 1998.  The decrease is primarily  attributable  to an
  increase in interest rates during the first quarter of 1999.
  
       Potential Problem and Problem Bonds
  
  Potential  problem  bonds are fully  current  but judged by  management  to have
  certain  characteristics that increase the likelihood of problem classification.
  CIGNA had $95 million of potential problem bonds, including amounts attributable
  to policyholder contracts, as of March 31, 1999, compared with $69 million as of
  December 31, 1998. These amounts are net of cumulative write-downs of $7 million
  and $14 million, respectively.
  
  CIGNA considers bonds that are delinquent or restructured as to terms, typically
  interest rate and, in certain cases,  maturity date,  problem bonds. As of March
  31, 1999 and December  31,  1998,  CIGNA had problem  bonds,  including  amounts
  attributable to policyholder contracts, of $118 million and $119 million, net of
  related  cumulative  write-downs  of $29 million and $19 million,  respectively.
  Problem bonds included $3 million related to emerging markets  investments as of
  March 31, 1999 and  December  31,  1998.  CIGNA  recognizes  interest  income on
  problem bonds only when payment is received.
  
                                         19
  <PAGE>
  Mortgage Loans
  ==================================================================
                                        March 31,       December 31,
                                             1999               1998
  ------------------------------------------------------------------
  Mortgage loans (in millions)             $9,847             $9,599
  Property type:
     Office buildings                         38%                37%
     Retail facilities                         34                 34
     Apartment buildings                       14                 15
     Industrial                                 7                  7
     Hotels                                     5                  5
     Other                                      2                  2
  Total                                      100%               100%
  ==================================================================
  
  CIGNA's  investment  strategy  requires  diversification  of the  mortgage  loan
  portfolio. This strategy includes guidelines relative to property type, location
  and borrower to reduce its exposure to potential losses.
  
      Potential Problem and Problem Mortgage Loans
  
  Potential problem mortgage loans include:
  o    fully  current  loans  that  are  judged  by  management  to  have  certain
       characteristics that increase the likelihood of problem classification;
  o    fully current loans for which the borrower has requested restructuring; and
  o    loans  that  are 30 to 59 days  delinquent  with  respect  to  interest  or
       principal payments.
  
  CIGNA had potential problem mortgage loans,  including  amounts  attributable to
  policyholder  contracts, of $67 million as of March 31, 1999, and $55 million as
  of December 31, 1998. There were no valuation  reserves related to these amounts
  in either period.
  
  CIGNA's  problem  mortgage loans include  delinquent and  restructured  mortgage
  loans.  Delinquent  mortgage  loans include those on which payment is overdue 60
  days or more.  Restructured mortgage loans are those whose basic financial terms
  have been modified, typically to reduce the interest rate or extend the maturity
  date.
  
  CIGNA had problem mortgage loans, including amounts attributable to policyholder
  contracts,  of $98 million, net of valuation reserves of $6 million, as of March
  31, 1999 and December  31, 1998.  CIGNA  recognizes  interest  income on problem
  mortgage loans only when payment is received.
  
  Real Estate
  
  As of March 31, 1999 and  December  31, 1998,  investment  real  estate,  net of
  reserves  and  write-downs,   included:   1)  $464  million  and  $390  million,
  respectively,  of real estate  held for the  production  of income,  and 2) $343
  million  as of both dates of real  estate  held for sale,  primarily  properties
  acquired as a result of foreclosure of mortgage loans.
  
  Summary
  
  The effects of  write-downs,  changes in  valuation  reserves  and  non-accruals
  related to investment  assets for the three months ended March 31, 1999 and 1998
  were not  material to CIGNA's  policyholder  contracts,  results of  operations,
  liquidity or financial position.
  
  Additional  losses from problem  investments  are expected to occur for specific
  investments   in  the  normal  course  of  business.   Assuming  no  significant
  deterioration   in   economic   conditions,    including   further   significant
  deterioration  in Latin  American  and Asian  economies,  CIGNA  does not expect
  additional  non-accruals,  write-downs and reserves to materially  affect future
  results of  operations,  liquidity  or  financial  condition,  or to result in a
  significant decline in the aggregate carrying value of its assets.
  
                                         20
  <PAGE>
  YEAR 2000
  
  CIGNA is highly  dependent  on  automated  systems and systems  applications  in
  conducting its  operations.  These systems include  information  technology (IT)
  systems  that are used for,  among other  things,  processing  claims,  billing,
  collecting  premiums  from  customers,   managing   investment   activities  and
  maintaining  management  information  systems.  If these  systems were unable to
  function because of failing to be Year 2000 ready,  CIGNA's business  operations
  would be  interrupted,  which  could have a material  adverse  effect on CIGNA's
  results of operations.
  
  CIGNA's Year 2000 efforts include: 1) identifying systems requiring remediation;
  2) assessing what is required to remediate those systems; 3) remediating systems
  to be ready for the Year 2000 (by either  modifying or replacing  them);  and 4)
  testing systems for Year 2000 readiness,  including that they properly interface
  with  systems  of  external   parties,   such  as  customers   and   third-party
  administrators.  CIGNA has completed the  identification  and assessment  phases
  with respect to its IT systems that are critical to  maintaining  operations  or
  where  the  failure  of those  systems  would  result  in  significant  costs or
  disruption of operations  ("mission  critical  systems").  As of March 31, 1999,
  remediation  and testing  procedures  had been  completed for 96% of its mission
  critical  systems.  CIGNA expects to substantially  complete the remediation and
  testing of its mission critical systems by the middle of 1999. In certain cases,
  CIGNA will perform additional testing to ensure that these systems appropriately
  interact with other systems.
  
  CIGNA's  systems  also  include  non-IT  systems,  such as  telephone,  facility
  management  and other  systems  using  embedded  chips.  The  majority of non-IT
  systems are expected to be ready by mid- 1999.
  
  CIGNA is using  both  internal  and  external  resources  to meet the  timetable
  established for completion of its Year 2000 efforts. The after-tax costs of Year
  2000  efforts  were  approximately  $100  million in 1998 and are expected to be
  approximately  $50  million  in 1999.  Year 2000  after-tax  costs for the first
  quarter of 1999 were approximately $10 million.  Approximately 60% of total Year
  2000  costs are  attributable  to  existing  systems  resources  which have been
  redirected to the Year 2000 efforts. The remaining amounts represent incremental
  costs for Year 2000 efforts.  Although certain systems  development efforts have
  been  deferred in order to address Year 2000 issues,  CIGNA does not expect that
  this  deferral  will  have  a  significant  adverse  effect  on its  results  of
  operations or financial condition.
  
  CIGNA has relationships with various third-party entities in the ordinary course
  of business. For example,  CIGNA receives data from clients;  depends on others,
  such as third-party  administrators  and banks,  for services;  and bears credit
  risk on others,  such as  entities  in which it  invests.  CIGNA has  identified
  third-party  entities  critical  to  its  operations,  and it is  assessing  and
  attempting to mitigate its risks with respect to the potential  failure of these
  entities  to be Year  2000  ready  by,  among  other  things,  reviewing,  where
  possible,  their  formal  Year 2000  plans  and  obtaining  Year 2000  readiness
  affirmations from certain third-party  entities.  The effect, if any, on CIGNA's
  results of operations from the failure of these entities  (including entities on
  which  CIGNA  bears  credit  risk)  to be  Year  2000  ready  is not  reasonably
  estimable.
  
  While CIGNA expects that its Year 2000 efforts will be successful, it has begun,
  but not yet completed, a comprehensive analysis of the operational problems that
  would be reasonably likely to result from the failure by CIGNA and certain third
  parties to complete  efforts  necessary  to achieve  Year 2000  compliance  on a
  timely basis.  CIGNA has made  substantial  progress in completing this analysis
  and expects to complete it by the end of the second  quarter of 1999.  CIGNA has
  historically  had security and backup  policies and procedures for  safeguarding
  critical  corporate data. It is supplementing  these policies by developing Year
  2000 contingency  plans to provide for the continuity of operations in the event
  of Year 2000 systems failures or the failure of third-party  entities to be Year
  2000 ready.  These plans are  expected to be  completed  and tested prior to the
  fourth quarter of 1999.
  
  The costs of CIGNA's Year 2000 efforts and the dates on which CIGNA  believes it
  will complete such efforts are based on management's best
  
                                         21
  <PAGE>
  estimates,  which were  derived  using  numerous  assumptions  regarding  future
  events,  including the continued availability of certain resources,  third-party
  remediation  plans,  and other  factors.  There can be no  assurance  that these
  estimates will prove to be accurate,  and actual results could differ materially
  from  those  currently  anticipated.  Specific  factors  that  could  cause such
  material differences include, but are not limited to, the availability and costs
  of  personnel  trained in Year 2000  issues,  the ability to  identify,  assess,
  remediate and test all relevant computer codes and embedded technology, the risk
  that  reasonable  testing will not uncover all Year 2000  problems,  and similar
  uncertainties.  Property and casualty  indemnity losses for Year 2000 claims and
  litigation  costs to defend or deny such claims are not reasonably  estimable at
  this time.
  
  
  
  
  
  
  
  
  
  
  CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
  PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
  
  Except for historical  information provided in this Management's  Discussion and
  Analysis of  Financial  Condition  and Results of  Operations,  statements  made
  throughout  this  document are  forward-looking  and contain  information  about
  financial results,  economic conditions,  trends and known uncertainties.  CIGNA
  cautions  the reader that actual  results  could  differ  materially  from those
  expected by CIGNA,  depending on the outcome of certain  factors  (some of which
  are  described  with  the  forward-looking  statements)  including:  1)  adverse
  catastrophe  experience in CIGNA's property and casualty businesses;  2) adverse
  property and casualty  loss  development  for events that CIGNA insured in prior
  years;  3) an  increase  in medical  costs in CIGNA's  health  care  operations,
  including increases in utilization and costs of medical services;  4) heightened
  competition,  particularly  price  competition,  reducing  product  margins  and
  constraining  growth in CIGNA's  businesses;  5) significant changes in interest
  rates; 6) significant stock market declines resulting in payments  contingent on
  certain variable annuity account values; 7) the effect on CIGNA's  international
  operations  and  investments  from further  significant  deterioration  in Latin
  American  and Asian  economies;  and 8) proposals  to change  federal  corporate
  income taxes.
  
                                         22
  <PAGE>
  Part II. OTHER INFORMATION
  
  
  Item 6.           Exhibits and Reports on Form 8-K.
  
  
                    (a)      See Exhibit Index.
  
                    (b)      During the quarterly period ended March 31, 1999, and
                             as of the  filing  date,  CIGNA  filed the  following
                             Reports on Form 8-K:
  
                             *  dated February 9, 1999, Item 5 - containing a news
                                release regarding its fourth quarter 1998 results.
  
                             *  dated January 12, 1999, Item 5 - containing a news
                                release  regarding  an  agreement  to sell CIGNA's
                                international  and  domestic  property  & casualty
                                operations.
  
  
  
  
  
  
                                         23
  <PAGE>
                                      SIGNATURE
  
  
           Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
  the registrant has duly caused this report to be signed by the undersigned  duly
  authorized officer, on its behalf and in the capacity indicated.
  
  
  
                                            CIGNA CORPORATION
  
  
  
                                            By: /s/ James A. Sears   
                                               ---------------------
                                                James A. Sears
                                                Vice President and
                                                Chief Accounting Officer
  
  
  Date:    May 7, 1999
  
  
  
  
  
  
  
                                         24
  <PAGE>
                                    Exhibit Index
  
  
                                                       Method of
  Number   Description                                   Filing      
  ------   -----------                                 ---------
  
  12       Computation of Ratio of                     Filed herewith
           Earnings to Fixed Charges
  
  27       Financial Data Schedule                     Included only in
                                                       the EDGAR version of
                                                       the Form 10-Q
  
  
  
                                         25
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 115778}]
metadata_filer: {"company-data": {"conformed-name": "CIGNA CORP", "cik": "0000701221", "assigned-sic": "6321", "irs-number": "061059331", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-08323", "film-number": "99613957"}, "business-address": {"street1": "TWO LIBERTY PLACE 48TH FLOOR", "street2": "1601 CHESTNUT STREET", "city": "PHILADELPHIA", "state": "PA", "zip": "19192-1550", "phone": "2157616211"}, "mail-address": {"street1": "TWO LIBERTY PLACE 48TH FLOOR", "street2": "1601 CHESTNUT STREET", "city": "PHILADELPHIA", "state": "PA", "zip": "19192"}}
text: UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 10-Q
  
                [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
  
                    For the quarterly period ended March 31, 1999
                                                   --------------
  
                                         OR
  
                [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
  
                    for the transition period from _____ to _____
  
                            Commission file number 1-8323
                                                   ------
  
                                  CIGNA Corporation
                                  -----------------
               (Exact name of registrant as specified in its charter)
  
                       Delaware                          06-1059331
                      ---------                          ----------
            (State or other jurisdiction              (I.R.S. Employer
           of incorporation or organization)         Identification No.)
  
                        One Liberty Place, 1650 Market Street
                          Philadelphia, Pennsylvania 19192
                          --------------------------------
                 (Address of principal executive offices) (Zip Code)
  
          Registrant's telephone number, including area code (215) 761-1000
                                                             --------------
  
                                   Not Applicable
                                   --------------
                (Former name, former address and former fiscal year,
                            if changed since last report)
  
           Indicate by check mark whether the registrant (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
  1934  during  the  preceding  12 months  (or for such  shorter  period  that the
  registrant was required to file such reports),  and (2) has been subject to such
  filing requirements for the past 90 days.
  
                                                       Yes  x     No ___
  
    As of March 31, 1999,  203,460,700  shares of the  issuer's  Common Stock were
  outstanding.
  CIGNA CORPORATION
  
                                        INDEX
  
                                                                        Page No.
                                                                        --------
  
  PART I.  FINANCIAL INFORMATION
  
           Item 1.  Financial Statements
  
                    Consolidated Income Statements                         1
                    Consolidated Balance Sheets                            2
                    Consolidated Statements of Comprehensive
                      Income and Changes in Shareholders' Equity           3
                    Consolidated Statements of Cash Flows                  4
                    Notes to Financial Statements                          5
  
           Item 2.  Management's Discussion and Analysis
                     of Financial Condition and Results of Operations     11
  
  PART II. OTHER INFORMATION
  
           Item 6.  Exhibits and Reports on Form 8-K                      23
  
  SIGNATURE                                                               24
  
  EXHIBIT INDEX                                                           25
  
  As used  herein,  "CIGNA"  refers  to one or more of CIGNA  Corporation  and its
  consolidated subsidiaries.
  Part I.  FINANCIAL  INFORMATION
  Item 1.  Financial Statements
  -----------------------------
  
  CIGNA CORPORATION
  CONSOLIDATED INCOME STATEMENTS
  (In millions, except per share amounts)
  Three Months Ended
                                                                                                                March 31,
                                                                                                          1999             1998
  =================================================================================================================================
  REVENUES
  Premiums and fees                                                                                  $      4,263     $      3,901
  Net investment income                                                                                       858              937
  Other revenues                                                                                              237              514
  Realized investment gains                                                                                    42               59
                                                                                                       -----------      -----------
      Total revenues                                                                                        5,400            5,411
                                                                                                       -----------      -----------
  
  BENEFITS, LOSSES AND EXPENSES
  Benefits, losses and settlement expenses                                                                  3,516            3,333
  Policy acquisition expenses                                                                                 246              228
  Other operating expenses                                                                                  1,208            1,082
                                                                                                       -----------      -----------
      Total benefits, losses and expenses                                                                   4,970            4,643
                                                                                                       -----------      -----------
  
  INCOME BEFORE INCOME TAXES AND
       CUMULATIVE EFFECT OF
       ACCOUNTING CHANGE                                                                                      430              768
                                                                                                       -----------      -----------
  
  Income taxes (benefits):
      Current                                                                                                  95              432
      Deferred                                                                                                 56             (159)
                                                                                                       -----------      -----------
          Total taxes                                                                                         151              273
                                                                                                       -----------      -----------
  
  INCOME BEFORE CUMULATIVE
       EFFECT OF ACCOUNTING CHANGE                                                                            279              495
  
  Cumulative effect of accounting change for
       guaranty fund and other insurance-related
       assessments, net of taxes                                                                              (91)               0
                                                                                                       -----------      -----------
  
  NET INCOME                                                                                         $        188     $        495
  -------------------------------------------------------------------------------------------------================================
  
  BASIC EARNINGS PER SHARE
  Income before cumulative effect of accounting
       change                                                                                        $       1.36     $       2.30
  Cumulative effect of accounting change                                                                    (0.44)               0
                                                                                                       -----------      -----------
  
  NET INCOME                                                                                         $       0.92     $       2.30
  -------------------------------------------------------------------------------------------------================================
  
  DILUTED EARNINGS PER SHARE
  Income before cumulative effect of accounting
       change                                                                                        $       1.34     $       2.27
  Cumulative effect of accounting change                                                                    (0.43)               0
                                                                                                       -----------      -----------
  
  NET INCOME                                                                                         $       0.91     $       2.27
  -------------------------------------------------------------------------------------------------================================
  
  DIVIDENDS DECLARED PER SHARE                                                                       $       0.30     $       0.29
  -------------------------------------------------------------------------------------------------================================
  The Notes to Financial Statements are an integral part of these statements.
  
                                         1
  CIGNA  CORPORATION
  CONSOLIDATED  BALANCE  SHEETS
  (In millions, except per share amounts)
  As of                    As of
                                                                                       March 31,               December 31,
                                                                                         1999                      1998
  =========================================================================================================================
  ASSETS
  Investments:
     Fixed maturities, at fair value (amortized cost, $30,636; $30,614)               $  32,020                $  32,634
     Equity securities, at fair value (cost, $729; $746)                                  1,056                    1,043
     Mortgage loans                                                                       9,847                    9,599
     Policy loans                                                                         4,433                    6,185
     Real estate                                                                            807                      733
     Other long-term investments                                                            181                      205
     Short-term investments                                                                 233                      308
                                                                                      -----------              -----------
         Total investments                                                               48,577                   50,707
  Cash and cash equivalents                                                               2,227                    3,028
  Accrued investment income                                                                 768                      769
  Premiums, accounts and notes receivable                                                 4,664                    4,469
  Reinsurance recoverables                                                               12,803                   12,925
  Deferred policy acquisition costs                                                       1,075                    1,069
  Property and equipment                                                                    905                      938
  Deferred income taxes                                                                   2,022                    1,861
  Other assets                                                                            1,396                    1,543
  Goodwill and other intangibles                                                          2,461                    2,495
  Separate account assets                                                                35,555                   34,808
  ------------------------------------------------------------------------------------------------------------------------
          Total assets                                                                $ 112,453                $ 114,612
  ----------------------------------------------------------------------------------======================================
  
  LIABILITIES
  Contractholder deposit funds                                                        $  28,781                $  30,864
  Unpaid claims and claim expenses                                                       17,848                   18,017
  Future policy benefits                                                                 12,290                   12,510
  Unearned premiums                                                                       1,933                    1,990
                                                                                      -----------              -----------
           Total insurance and contractholder liabilities                                60,852                   63,381
  Accounts payable, accrued expenses and other liabilities                                6,871                    6,765
  Current income taxes                                                                       28                       56
  Short-term debt                                                                           293                      272
  Long-term debt                                                                          1,404                    1,431
  Separate account liabilities                                                           35,136                   34,430
  ------------------------------------------------------------------------------------------------------------------------
           Total liabilities                                                            104,584                  106,335
  ------------------------------------------------------------------------------------------------------------------------
  
  CONTINGENCIES - NOTE 10
  
  SHAREHOLDERS' EQUITY
  Common stock (par value, $0.25; shares issued, 266; 265)                                   67                       66
  Additional paid-in capital                                                              2,788                    2,719
  Net unrealized appreciation, fixed maturities                         $     495                $     750
  Net unrealized appreciation, equity securities                              229                      206
  Net translation of foreign currencies                                      (221)                    (114)
                                                                        ---------                ---------
     Accumulated other comprehensive income                                                 503                      842
  Retained earnings                                                                       6,873                    6,746
  Less treasury stock, at cost                                                           (2,362)                  (2,096)
  ------------------------------------------------------------------------------------------------------------------------
           Total shareholders' equity                                                     7,869                    8,277
  ------------------------------------------------------------------------------------------------------------------------
  
           Total liabilities and shareholders' equity                                 $ 112,453                $ 114,612
  ----------------------------------------------------------------------------------======================================
  
  SHAREHOLDERS' EQUITY PER SHARE                                                      $   38.68                $   40.25
  ----------------------------------------------------------------------------------======================================
  The Notes to Financial Statements are an integral part of these statements.
  
                                         2
  CIGNA  CORPORATION
  CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND CHANGES IN
      SHAREHOLDERS' EQUITY
  (In millions)
  Three Months Ended March 31,                                                       1999                             1998
  -----------------------------------------------------------------------------------------------------------------------------------
                                                                           Compre-             Share-       Compre-            Share-
                                                                           hensive            holders'      hensive          holders'
                                                                           Income               Equity       Income            Equity
  ====================================================================================================================================
  Common stock, January 1                                                                 $        66                      $      66
    Issuance of common stock for employee benefits plans                                            1                              0
                                                                                          -----------                      -----------
  Common stock, March 31                                                                           67                             66
                                                                                          -----------                      -----------
  
  Additional paid-in capital, January 1                                                         2,719                          2,655
    Issuance of common stock for employee benefits plans                                           69                             40
                                                                                          -----------                      -----------
  Additional paid-in capital, March 31                                                          2,788                          2,695
                                                                                          -----------                      -----------
  
  Accumulated other comprehensive income, January 1                                               842                            758
    Net unrealized depreciation, fixed maturities                      $      (255)              (255)    $     (29)             (29)
    Net unrealized appreciation, equity securities                              23                 23            82               82
                                                                       -----------                        ---------
        Net unrealized appreciation (depreciation) on securities              (232)                              53
    Net translation of foreign currencies                                     (107)              (107)            1                1
                                                                       -----------                        ---------
            Other comprehensive income (loss)                                 (339)                              54
                                                                                          -----------                      -----------
  Accumulated other comprehensive income, March 31                                                503                            812
                                                                                          -----------                      -----------
  
  Retained earnings, January 1                                                                  6,746                          5,696
    Net income                                                                 188                188           495              495
    Common dividends declared                                                                     (61)                           (62)
                                                                                          -----------                      -----------
  Retained earnings, March 31                                                                   6,873                          6,129
                                                                                          -----------                      -----------
  
  Treasury stock, January 1                                                                    (2,096)                        (1,243)
    Repurchase of common stock                                                                   (229)                          (111)
    Other treasury stock transactions, net                                                        (37)                           (23)
                                                                                          -----------                      -----------
  Treasury stock, March 31                                                                     (2,362)                        (1,377)
  -----------------------------------------------------------------------------------------------------------------------------------
  TOTAL COMPREHENSIVE INCOME (LOSS) AND SHAREHOLDERS' EQUITY           $      (151)       $     7,869     $     549        $   8,325
  ---------------------------------------------------------------------===============================================================
  The Notes to Financial Statements are an integral part of these statements.
  
                                         3
  CIGNA  CORPORATION
  CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
  (In millions)
  Three Months Ended March 31,
                                                                                                   1999                      1998
  ==================================================================================================================================
  CASH FLOWS FROM OPERATING ACTIVITIES
  Income before cumulative effect of accounting change                                  $         279             $         495
      Adjustments to reconcile income before cumulative effect of accounting
          change to net cash provided by (used in) operating activities:
              Insurance liabilities                                                                  (194)                       12
              Reinsurance recoverables                                                                158                       167
              Deferred policy acquisition costs                                                       (28)                      (33)
              Premiums, accounts and notes receivable                                                (208)                     (167)
              Accounts payable, accrued expenses, other liabilities and
                  current income taxes                                                                 47                       119
              Deferred income taxes                                                                    56                      (159)
              Realized investment gains                                                               (42)                      (59)
              Depreciation and goodwill amortization                                                   82                        78
              Gain on sale of businesses                                                              (26)                     (342)
              Other, net                                                                               (2)                     (192)
                                                                                              ------------              ------------
                  Net cash provided by (used in) operating activities                                 122                       (81)
                                                                                              ------------              ------------
  
  CASH FLOWS FROM INVESTING ACTIVITIES
      Proceeds from investments sold:
          Fixed maturities                                                                          1,265                     1,594
          Equity securities                                                                            96                        92
          Mortgage loans                                                                               51                       345
          Other                                                                                       335                       137
      Investment maturities and repayments:
          Fixed maturities                                                                          1,024                       940
          Mortgage loans                                                                              115                       232
      Investments purchased:
          Fixed maturities                                                                         (2,388)                   (2,616)
          Equity securities                                                                           (79)                     (152)
          Mortgage loans                                                                             (492)                     (479)
          Other                                                                                       (84)                     (792)
      Sale of individual life insurance and annuity business, net proceeds                              0                     1,296
      Other, net                                                                                      (80)                      (60)
                                                                                              ------------              ------------
                  Net cash provided by (used in) investing activities                                (237)                      537
                                                                                              ------------              ------------
  
  CASH FLOWS FROM FINANCING ACTIVITIES
      Deposits and interest credited to contractholder deposit funds                                1,838                     1,604
      Withdrawals and benefit payments from contractholder deposit funds                           (2,272)                   (1,774)
      Net change in short-term debt                                                                    (6)                     (360)
      Repayment of long-term debt                                                                       0                       (66)
      Repurchase of common stock                                                                     (204)                     (108)
      Issuance of common stock                                                                         22                        12
      Common dividends paid                                                                           (59)                      (60)
                                                                                              ------------              ------------
                  Net cash used in financing activities                                              (681)                     (752)
                                                                                              ------------              ------------
  Effect of foreign currency rate changes on cash and cash equivalents                                 (5)                       (7)
  ----------------------------------------------------------------------------------------------------------------------------------
  Net decrease in cash and cash equivalents                                                          (801)                     (303)
  Cash and cash equivalents, beginning of period                                                    3,028                     2,625
  ----------------------------------------------------------------------------------------------------------------------------------
  
  Cash and cash equivalents, end of period                                                  $       2,227             $       2,322
  ------------------------------------------------------------------------------------------========================================
  
  Supplemental Disclosure of Cash Information:
      Income taxes paid, net of refunds                                                     $         100             $         204
      Interest paid                                                                         $          24             $          27
  ----------------------------------------------------------------------------------------------------------------------------------
  The Notes to Financial Statements are an integral part of these statements.
  
                                         4
  CIGNA CORPORATION
  NOTES TO FINANCIAL STATEMENTS
  
  NOTE 1 - BASIS OF PRESENTATION
  
  The consolidated  financial statements include the accounts of CIGNA Corporation
  and  all  significant   subsidiaries  (CIGNA).   These  consolidated   financial
  statements have been prepared in conformity with generally  accepted  accounting
  principles.  Certain  reclassifications  have been made to conform with the 1999
  presentation.
  
  The interim  financial  statements  are  unaudited  but include all  adjustments
  (consisting  of normal  recurring  adjustments)  necessary,  in the  opinion  of
  management, for a fair statement of financial position and results of operations
  for the periods reported.
  
  The preparation of interim financial  statements  necessarily  relies heavily on
  estimates.  This and  certain  other  factors,  such as the  seasonal  nature of
  portions of the  insurance  business  as well as  competitive  and other  market
  conditions,  call for caution in  estimating  results for the full year based on
  interim results of operations.
  
  NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS
  
  CIGNA adopted  Statement of Position  (SOP) 97-3,  "Accounting  by Insurance and
  Other Enterprises for Insurance-Related  Assessments" as of January 1, 1999. SOP
  97-3, issued by the American Institute of Certified Public Accountants  (AICPA),
  provides guidance on the recognition and measurement of liabilities for guaranty
  fund and  other  insurance-related  assessments  such as  workers'  compensation
  second  injury  funds,  medical  risk pools and  charges  related  to  operating
  expenses of state regulatory  bodies.  The cumulative effect of adopting the SOP
  was a reduction  of net income of $91 million  ($140  million  pre-tax),  and is
  primarily related to the property and casualty operations.
  
  In 1999, CIGNA adopted SOP 98-1,  "Accounting for the Costs of Computer Software
  Developed or Obtained for Internal Use." SOP 98-1,  issued by the AICPA in 1998,
  specifies the types of costs that must be  capitalized  and  amortized  over the
  software's expected useful life and the types of costs which must be immediately
  recognized  as  expense.  Implementation  of this  pronouncement  did not have a
  material effect on results of operations, liquidity or financial condition.
  
  In 1998, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
  Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
  Instruments and Hedging  Activities."  SFAS No. 133 requires that derivatives be
  reported  on the  balance  sheet  at  fair  value.  Changes  in fair  value  are
  recognized  in net income or,  for  derivatives  that are  hedging  market  risk
  related to future cash flows,  in the  accumulated  other  comprehensive  income
  section of shareholders' equity. Implementation is required by the first quarter
  of 2000,  with the  cumulative  effect of adoption  reflected  in net income and
  accumulated other comprehensive income, as appropriate. CIGNA has not determined
  the effect or timing of implementation of this pronouncement.
  
  In 1998,  the  AICPA  issued  SOP  98-7,  "Deposit  Accounting:  Accounting  for
  Insurance and Reinsurance  Contracts That Do Not Transfer  Insurance  Risk." SOP
  98-7 does not apply to long-duration  life and health contracts.  Implementation
  is required by the first quarter of 2000, with the cumulative effect of adopting
  the  SOP  reflected  in net  income  in the  year  of  adoption.  CIGNA  has not
  determined the effect or timing of implementation of this pronouncement.
  
  NOTE 3 - ACQUISITIONS AND DISPOSITIONS
  
  In January  1999,  CIGNA  entered  into an  agreement  to sell its  domestic and
  international  property and casualty businesses (which comprise the Property and
  Casualty  segment) to ACE Limited for cash proceeds of $3.45 billion.  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.  Net assets of
  the
  
                                          5
  businesses to be sold were  approximately $2.2 billion as of March 31, 1999. The
  gain on sale will be  determined,  in part, by the effects on net assets through
  closing of results of operations  of, and dividends  from,  the businesses to be
  sold, as well as transaction costs and other adjustments.
  
  In April 1999,  CIGNA sold a 29% interest in its  Japanese  life  operations  to
  Yasuda Fire & Marine Insurance Company Ltd., reducing CIGNA's ownership interest
  to 61%. Proceeds of the sale were  approximately  $100 million and the after-tax
  gain,  which CIGNA will recognize in the second quarter,  is  approximately  $40
  million.
  
  As of January 1, 1998,  CIGNA sold its  individual  life  insurance  and annuity
  business for cash  proceeds of $1.4  billion.  The sale resulted in an after-tax
  gain of  approximately  $770 million of which $202 million was  recognized  upon
  closing of the sale.  Since the principal  agreement to sell this business is in
  the  form of an  indemnity  reinsurance  arrangement,  the  remaining  gain  was
  deferred and is being  recognized  at the rate that  earnings  from the business
  sold would have been  expected  to emerge,  primarily  over  fifteen  years on a
  declining  basis.  CIGNA  recognized $15 million and $17 million of the deferred
  gain in the first quarters of 1999 and 1998, respectively.
  
  CIGNA has recently invested in certain entities in connection with the expansion
  of its  international  operations.  Most  of  these  investments  relate  to the
  expansion of CIGNA's health care operations in Brazil. CIGNA has incurred losses
  in the Brazilian  operations and expects to incur additional losses.  Additional
  investments  may be required in order for the  Brazilian  operations  to achieve
  profitable  operations.  Risks are inherent in expanding  operations  in foreign
  countries.  CIGNA routinely  monitors its investments  supporting  international
  expansion for potential impairment, and management currently believes that these
  investments are recoverable.
  
  CIGNA had other  acquisitions and  dispositions  during the three months of 1999
  and 1998, the effects of which were not material to the financial statements.
  
  NOTE 4 - INVESTMENTS
  
  Realized Investment Gains and Losses
  
  Realized gains and losses on investments,  excluding policyholder share, were as
  follows:
  
  ----------------------------------------------------------------------
                                                         Three Months
                                                            Ended
                                                           March 31,
  (In millions)                                         1999       1998
  ----------------------------------------------------------------------
  Fixed maturities                                       $36        $32
  Equity securities                                        5          4
  Mortgage loans                                          --         12
  Real estate                                             (1)         1
  Other                                                    2         10
                                                  ---------------------
                                                          42         59
  Less income taxes                                       14         21
  ----------------------------------------------------------------------
  Net realized investment
  gains                                                  $28        $38
  ------------------------------------------------======================
  
  Fixed Maturities and Equity Securities
  
  Sales of  available-for-sale  fixed maturities and equity securities,  including
  policyholder share, were as follows:
  
  ----------------------------------------------------------------------
                                                         Three Months
                                                            Ended
                                                           March 31,
  (In millions)                                         1999       1998
  ----------------------------------------------------------------------
  Proceeds from sales                                 $1,361    $1,686
  Gross gains on sales                                    85        51
  Gross losses on sales                                  (42)      (24)
  ----------------------------------------------------------------------
  
  The  components  of net  unrealized  appreciation  (depreciation)  on securities
  (excluding  policyholder  share)  for the three  months  ended  March 31 were as
  follows:
  
  -------------------------------------------------------------------
  (In millions)                                      1999       1998
  -------------------------------------------------------------------
  Unrealized appreciation (depreciation) on                          
  securities held, net of taxes (benefits) of                        
  $(111) and $93, respectively.                     $(205)      $179
  Less gains realized in net income, net of                          
  taxes of $14 and $68, respectively.                  27        126
                                                 --------------------
  Net unrealized appreciation (depreciation)        $(232)       $53
  -----------------------------------------------====================
  
                                          6
  NOTE 5 - EARNINGS PER SHARE
  
  Three Months Ended March 31,
  -------------------------------------------------------------------
                                                  Effect              
  (Dollars in millions,                               of 
  except per share amounts)           Basic     Dilution      Diluted
  -------------------------------------------------------------------
  1999
  -------------------------------------------------------------------
  Net income                           $188           --         $188
  --------------------------------===================================
  Shares (in thousands):
  Weighted average                  204,881           --      204,881
  Options and restricted
  stock grants                                     2,827        2,827
  -------------------------------------------------------------------
  Total shares                      204,881        2,827      207,708
  --------------------------------===================================
  Earnings per share                  $0.92      $(0.01)        $0.91
  --------------------------------===================================
  1998
  -------------------------------------------------------------------
  Net income                           $495           --         $495
  --------------------------------===================================
  Shares (in thousands):
  Weighted average                  215,637           --      215,637
  Options and restricted
  stock grants                                     2,118        2,118
  -------------------------------------------------------------------
  Total shares                      215,637        2,118      217,755
  --------------------------------===================================
  Earnings per share                  $2.30      $(0.03)        $2.27
  --------------------------------===================================
  
  Common shares held as Treasury shares were 62,715,992 and 48,803,100 as of March
  31, 1999 and 1998, respectively.
  
  NOTE 6 - INCOME TAXES
  
  CIGNA's federal income tax returns are routinely audited by the Internal Revenue
  Service  (IRS),  and  provisions  are  made  in  the  financial   statements  in
  anticipation  of the results of these  audits.  The IRS completed its audits for
  the years 1982 through 1993, and challenged  CIGNA on one issue related to years
  prior to 1989. In April 1999, the U.S. Court of Appeals affirmed the Tax Court's
  ruling on this issue in favor of the IRS. The  decision  will not have an effect
  on results of  operations  or  liquidity,  as  liabilities  had been  previously
  established and paid.
  
  In management's opinion,  adequate tax liabilities have been established for all
  years.
  
  NOTE 7 - REINSURANCE RECOVERABLES
  
  In the normal  course of business,  CIGNA's  insurance  subsidiaries  enter into
  agreements,  primarily relating to short-duration  contracts, to assume and cede
  reinsurance  with other insurance  companies.  Reinsurance is ceded primarily to
  limit losses from large  exposures and to permit recovery of a portion of direct
  losses,  although ceded reinsurance does not relieve the originating  insurer of
  liability.  CIGNA  evaluates  the  financial  condition  of its  reinsurers  and
  monitors  concentrations of credit risk arising from similar geographic regions,
  activities or economic characteristics of its reinsurers. In connection with the
  sale of CIGNA's  individual life insurance and annuity business (as discussed in
  Note 3), the reinsurance  recoverable from Lincoln National Corporation at March
  31, 1999 was $6.0 billion.
  
  Failure of reinsurers to indemnify CIGNA, as a result of reinsurer  insolvencies
  and disputes, could result in losses.  Allowances for uncollectible amounts were
  $706  million  and $705  million as of March 31,  1999 and  December  31,  1998,
  respectively.
  
  Future charges for  unrecoverable  reinsurance may materially  affect results of
  operations in future periods,  however,  such amounts are not expected to have a
  material adverse effect on CIGNA's liquidity or financial condition.
  
  For the first  quarters  of 1999 and 1998,  premiums  and fees were net of ceded
  premiums of $448 million and $443 million,  respectively. In addition, benefits,
  losses and settlement  expenses for the first quarters of 1999 and 1998 were net
  of reinsurance  recoveries of $255 million and $385 million,  respectively.  For
  these quarters, ceded premiums associated with the individual life insurance and
  annuity  business  sold were $63 million  and $113  million,  respectively,  and
  reinsurance recoveries were $22 million and $56 million.
  
                                          7
  NOTE 8 - SEGMENT INFORMATION
  
  Operating  segments  are  based on  CIGNA's  internal  reporting  structure  and
  generally reflect  differences in products;  the International  Life, Health and
  Employee  Benefits  segment is based on geography.  CIGNA uses operating  income
  (net income excluding  after-tax  realized  investment results and, in 1999, the
  cumulative  effect of an accounting  change) to measure the financial results of
  its segments. Summarized segment financial information was as follows:
  
  ----------------------------------------------------------------------
                                                         Three Months
                                                            Ended
                                                           March 31,
  (In millions)                                         1999       1998
  ----------------------------------------------------------------------
  Premiums and fees and other revenues:
  
  Employee Health Care, Life and                                        
     Disability Benefits                              $3,136     $2,866
  Employee Retirement Benefits and                                      
     Investment Services                                  62         71
  International Life, Health and                                        
     Employee Benefits                                   383        278
  Property and Casualty                                  755        754
  Other Operations                                       219        495
  Corporate                                              (55)       (49)
  ----------------------------------------------------------------------
  Total                                               $4,500     $4,415
  ---------------------------------------------------===================
  
  Income before cumulative effect of accounting change:
  
  Operating income                                                      
     (loss):                                                            
  Employee Health Care, Life and                                        
     Disability Benefits                                $157       $131
  Employee Retirement Benefits and                                      
     Investment Services                                  63         61
  International Life, Health and                                        
     Employee Benefits                                     3          9
  Property and Casualty                                   18         41
  Other Operations                                        30        233
  Corporate                                              (20)       (18)
                                                     -------------------
  Total operating income                                 251        457
  Realized investment gains, net of taxes                 28         38
  ----------------------------------------------------------------------
  Income before cumulative effect of
  accounting change                                     $279       $495
  ---------------------------------------------------===================
  
  NOTE 9 - COST REDUCTION INITIATIVES
  
  Property and Casualty Restructuring
  
  In the  fourth  quarter  of  1998,  CIGNA  adopted  a  cost  reduction  plan  to
  restructure  certain of its  domestic  and  international  property and casualty
  operations,  which  resulted  in a pre-tax  charge of $28 million  ($18  million
  after-tax).  The charge  consisted  primarily of costs  related to severance and
  vacated lease space. The cash outlays  associated with these initiatives will be
  substantially  completed by the end of 2000 with most  occurring in 1999.  As of
  March 31, 1999,  approximately $6 million of severance was paid to approximately
  300 employees.
  
  Employee Health Care, Life and Disability Benefits Restructuring
  
  In the  fourth  quarter  of  1997,  CIGNA  adopted  a  cost  reduction  plan  to
  restructure  its health care  operations,  which resulted in a pre-tax charge of
  $32 million  ($22 million  after-tax)  in the  Employee  Health  Care,  Life and
  Disability Benefits segment.  The charge consisted primarily of costs related to
  severance  and vacated  lease  space.  The cash  outlays  associated  with these
  initiatives  will continue through 1999 with most having occurred in 1998. As of
  March 31, 1999, approximately $11 million of severance was paid to approximately
  1,300 employees.
  
                                          8
  NOTE 10 - CONTINGENCIES AND OTHER MATTERS
  
  Financial Guarantees
  
  CIGNA,  through its subsidiaries,  is contingently  liable for various financial
  guarantees provided in the ordinary course of business. These include guarantees
  for the repayment of municipal  obligations and industrial  revenue bonds. CIGNA
  also  guarantees  a minimum  level of  benefits  for  certain  separate  account
  contracts.  In  addition,  CIGNA has entered  into  specialty  life  reinsurance
  contracts that guarantee payments for specified  unfavorable changes in variable
  annuity  account values based on underlying  mutual fund  investments if account
  holders expire or elect to receive periodic income payments.
  
  Although the  ultimate  outcome of any loss  contingencies  arising from CIGNA's
  financial  guarantees  may  adversely  affect  results of  operations  in future
  periods,  they are not  expected  to have a material  adverse  effect on CIGNA's
  liquidity or financial condition.
  
  Regulatory and Industry Developments
  
  CIGNA's  businesses  are  subject  to  a  changing  social,   economic,   legal,
  legislative  and  regulatory  environment  that could affect  them.  Some of the
  changes include initiatives to: 
  
  o    increase health care regulation;
  o    revise the system of funding cleanup of environmental damages;
  o    reinterpret  insurance  contracts  long after the policies  were written to
       provide coverage unanticipated by CIGNA;
  o    restrict  insurance pricing and the application of underwriting  standards;
       and
  o    revise federal tax laws.
  
  Some of the more significant issues are discussed below.
  
  Efforts at the federal and state level to increase regulation of the health care
  industry could have an adverse effect on CIGNA's health care  operations if they
  reduce marketplace  competition and innovation or result in increased medical or
  administrative  costs.  Matters under  consideration  that could have an adverse
  effect  include  mandated  benefits  or services  that  increase  costs  without
  improving the quality of care, loss of the Employee  Retirement  Income Security
  Act of 1974  (ERISA)  preemption  of state law through  legislative  actions and
  court  decisions,  changes  in the  ERISA  regulations  governing  claim  appeal
  procedures imposing increased  administrative burdens and costs and restrictions
  on the use of prescription drug formularies.  Due to the uncertainty  associated
  with the timing and content of any proposals  ultimately adopted,  the effect on
  CIGNA's  results of  operations,  liquidity  or  financial  condition  cannot be
  reasonably estimated at this time.
  
  Proposals  for  Superfund  reform remain under  consideration  by Congress.  Any
  changes in Superfund relating to 1) assigning responsibility, 2) funding cleanup
  costs or 3)  establishing  cleanup  standards  could affect the  liabilities  of
  policyholders and insurers. Due to uncertainties  associated with the timing and
  content of any future Superfund legislation,  the effect on CIGNA's consolidated
  results of  operations,  liquidity or financial  condition  cannot be reasonably
  estimated at this time.
  
  In early 1999, the Administration proposed a federal budget that would eliminate
  the  deferral  of  taxation  of  certain  statutory  income  of  life  insurance
  companies.  CIGNA has not provided taxes on $450 million of such income.  If the
  budget provision is enacted,  CIGNA will record additional income tax expense of
  $158 million to reflect this liability.  The proposed  federal budget also would
  limit  the  deduction  of  interest  expense  on  the  general  indebtedness  of
  corporations owning non-leveraged corporate life insurance policies covering the
  lives of officers,  employees or directors who are not 20 percent  owners of the
  corporation.  If this latter  provision is enacted as  proposed,  CIGNA does not
  anticipate  that it will have a material effect on its  consolidated  results of
  operations, liquidity, or financial condition, although it could have a material
  adverse effect on the results of operations of the Employee  Retirement Benefits
  and Investment Services segment.
  
  In 1996,  Congress passed  legislation that phased out over a three-year  period
  the tax deductibility of policy loan interest for most leveraged  corporate life
  insurance products. CIGNA does not expect
  
                                          9
  this legislation to have a material  adverse effect on its consolidated  results
  of operations, liquidity or financial condition.
  
  In 1998,  the National  Association  of Insurance  Commissioners  (NAIC) adopted
  risk-based capital guidelines for health maintenance organizations (HMOs). CIGNA
  expects its HMO subsidiaries to be adequately capitalized under these guidelines
  as they become effective in various jurisdictions in 1999.
  
  In 1998, the NAIC adopted standardized  statutory accounting  principles.  Since
  these  principles have not been adopted by most of the insurance  departments of
  various jurisdictions in which CIGNA's insurance subsidiaries are domiciled, the
  timing and effects of implementation have not yet been determined.
  
  The eventual  effect on CIGNA of the changing  environment  in which it operates
  remains uncertain.
  
  Property and Casualty Unpaid Claims and Claim Expense Reserves and 
  Reinsurance Recoverables
  
  CIGNA's  property and casualty loss reserves are an estimate of future  payments
  for reported and unreported  claims for losses and related expenses with respect
  to insured events that have occurred.  The basic assumption  underlying the many
  traditional  actuarial and other methods used in the  estimation of property and
  casualty  loss  reserves is that past  experience  is an  appropriate  basis for
  predicting future events.  However,  current trends and other factors that would
  modify past experience are also  considered.  The process of  establishing  loss
  reserves is subject to uncertainties that are normal,  recurring and inherent in
  the property and casualty business.
  
  Reserving  for  property  and  casualty  claims  continues  to be a complex  and
  uncertain  process,  requiring  the use of  informed  estimates  and  judgments.
  CIGNA's  estimates and judgments  may be revised as  additional  experience  and
  other data become available and are reviewed,  as new or improved  methodologies
  are  developed or as current law  changes.  Any such  revisions  could result in
  future changes in estimates of losses or reinsurance recoverables,  and would be
  reflected in CIGNA's results of operations for the period in which the estimates
  are  changed.  While the effect of any such  changes in  estimates  of losses or
  reinsurance  recoverables  could be  material to future  results of  operations,
  CIGNA does not expect such changes to have a material effect on its liquidity or
  financial condition.
  
  In management's judgment, information currently available has been appropriately
  considered in estimating CIGNA's loss reserves and reinsurance recoverables.
  
  Litigation
  
  CIGNA is continuously  involved in numerous lawsuits arising, for the most part,
  in the ordinary  course of  business,  either as a liability  insurer  defending
  third-party  claims  brought  against its  insureds  or as an insurer  defending
  coverage claims brought against it by its  policyholders or other insurers.  One
  such area of litigation involves policy coverage and judicial  interpretation of
  legal liability for asbestos-related and environmental pollution (A&E) claims.
  
  While the outcome of all litigation involving CIGNA, including insurance-related
  litigation,  cannot be  determined,  litigation  (including  that related to A&E
  claims) is not expected to result in losses that differ from  recorded  reserves
  by  amounts  that would be  material  to results  of  operations,  liquidity  or
  financial  condition.   Also,   reinsurance  recoveries  related  to  claims  in
  litigation, net of the allowance for uncollectible reinsurance, are not expected
  to result in recoveries  that differ from recorded  recoverables by amounts that
  would be material to results of operations, liquidity or financial condition.
  
  Property and Casualty Restructuring
  
  Effective  December  31, 1995,  CIGNA  restructured  its  domestic  property and
  casualty businesses into two separate operations,  ongoing and run-off.  Certain
  competitors and  policyholders  of CIGNA are challenging  the  restructuring  in
  court.  Although  CIGNA expects the matter to be in litigation for some time, it
  expects to ultimately prevail.
  
                                         10
  Item 2.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations
  
  INTRODUCTION
  
  The following  discussion addresses the financial condition of CIGNA Corporation
  (CIGNA) as of March 31, 1999,  compared with December 31, 1998,  and its results
  of operations for the three months ended March 31, 1999,  compared with the same
  period  last  year.  This  discussion   should  be  read  in  conjunction   with
  Management's  Discussion and Analysis  included in CIGNA's 1998 Annual Report to
  Shareholders  (pages 10  through  24),  to which  the  reader  is  directed  for
  additional  information.  Due to the  seasonality of certain  aspects of CIGNA's
  business,  caution should be used in estimating  results for the full year based
  on interim results of operations.
  
  Acquisitions and Dispositions
  
  In January  1999,  CIGNA  entered  into an  agreement  to sell its  domestic and
  international  property and casualty businesses (which comprise the Property and
  Casualty  segment) to ACE Limited for cash proceeds of $3.45 billion.  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.  Net assets of
  the businesses to be sold were  approximately $2.2 billion as of March 31, 1999.
  The gain on sale will be  determined,  in part,  by the  effects  on net  assets
  through  closing of results of operations of, and dividends from, the businesses
  to be  sold,  as  well as  transaction  costs  and  other  adjustments.  CIGNA's
  priorities  for the use of  capital,  including  proceeds  from the sale are, in
  order, internal growth, acquisitions, and share repurchases.
  
  In April 1999,  CIGNA sold a 29% interest in its  Japanese  life  operations  to
  Yasuda Fire & Marine Insurance Company Ltd., reducing CIGNA's ownership interest
  to 61%. Proceeds of the sale were  approximately  $100 million and the after-tax
  gain,  which CIGNA will recognize in the second quarter,  is  approximately  $40
  million.
  
  As of January 1, 1998,  CIGNA sold its  individual  life  insurance  and annuity
  business for cash  proceeds of $1.4  billion.  The sale resulted in an after-tax
  gain of  approximately  $770 million of which $202 million was  recognized  upon
  closing of the sale.  Since the principal  agreement to sell this business is in
  the  form of an  indemnity  reinsurance  arrangement,  the  remaining  gain  was
  deferred and is being  recognized  at the rate that  earnings  from the business
  sold would have been  expected  to emerge,  primarily  over  fifteen  years on a
  declining  basis.  CIGNA  recognized $15 million and $17 million of the deferred
  gain in the first quarters of 1999 and 1998, respectively.
  
  CIGNA has recently invested in certain entities in connection with the expansion
  of its international  operations and expects to pursue additional  international
  growth  opportunities.  CIGNA anticipates start-up costs and initial losses as a
  result of this expansion.
  
  Most of the recent international  investments relate to the expansion of CIGNA's
  health care  operations  in Brazil.  CIGNA has incurred  losses in the Brazilian
  operations and expects to incur additional losses. Additional investments may be
  required in order for the Brazilian operations to achieve profitable operations.
  
  Risks are inherent in expanding operations in foreign countries. CIGNA routinely
  monitors  its  investments  supporting  international  expansion  for  potential
  impairment,  and  management  currently  believes  that  these  investments  are
  recoverable.
  
  CIGNA continues to conduct  strategic and financial reviews of its businesses in
  order to  deploy  its  capital  most  effectively.  See Note 3 to the  Financial
  Statements for additional information on acquisitions and dispositions.
  
  Cost Reduction Initiatives
  
  In the  fourth  quarter  of  1998,  CIGNA  adopted  a  cost  reduction  plan  to
  restructure certain operations which resulted in a pre-tax charge of $29 million
  ($19 million  after-tax),  including  $18 million  after- tax for  restructuring
  certain of its domestic and  international  operations  included in the Property
  and Casualty segment and $1 million after-tax for certain operations included in
  the International Life, Health and Employee Benefits segment. The
  
                                         11
  charge  consisted  primarily  of costs  related to severance  and vacated  lease
  space. The cash outlays  associated with these initiatives will be substantially
  completed by the end of 2000 with most occurring in 1999. These  initiatives are
  expected to result in annual  after-tax  savings of $20 million in the  Property
  and Casualty  segment.  As noted  above,  CIGNA has entered into an agreement to
  sell the businesses that comprise this segment.
  
  In the  fourth  quarter  of  1997,  CIGNA  adopted  a  cost  reduction  plan  to
  restructure  its health care  operations,  which resulted in a pre-tax charge of
  $32 million  ($22 million  after-tax)  in the  Employee  Health  Care,  Life and
  Disability Benefits segment.  The charge consisted primarily of costs related to
  severance  and vacated  lease  space.  The cash  outlays  associated  with these
  initiatives  will continue through 1999 with most having occurred in 1998. These
  initiatives  are expected to result in annual  after-tax  expense savings of $50
  million with approximately two-thirds having emerged in 1998 and the full amount
  in 1999.
  
  See  Note 9 to the  Financial  Statements  for  additional  information  on cost
  reduction initiatives.
  
  Other Matters
  
  CIGNA's  businesses  are  subject  to  a  changing  social,   economic,   legal,
  legislative  and  regulatory  environment  that could affect  them.  Some of the
  changes include initiatives to:
  
  o    increase health care regulation;
  
  o    revise the system of funding cleanup of environmental damages;
  
  o    reinterpret  insurance  contracts  long after the policies  were written to
       provide coverage unanticipated by CIGNA;
  
  o    restrict  insurance pricing and the application of underwriting  standards;
       and
  
  o    revise federal tax laws.
  
  In early 1999, the Administration proposed a federal budget that would eliminate
  the  deferral  of  taxation  of  certain  statutory  income  of  life  insurance
  companies.  As discussed in Note 10 to the Financial  Statements,  CIGNA has not
  provided  taxes on $450  million  of such  income.  If the budget  provision  is
  enacted,  CIGNA will record  additional  income tax  expense of $158  million to
  reflect  this  liability.  The  proposed  federal  budget  also would  limit the
  deduction of interest expense on the general indebtedness of corporations owning
  non-leveraged  corporate life insurance policies covering the lives of officers,
  employees or directors who are not 20 percent owners of the corporation. If this
  latter provision is enacted as proposed,  CIGNA does not anticipate that it will
  have a material effect on its consolidated results of operations,  liquidity, or
  financial  condition,  although it could have a material  adverse  effect on the
  results  of  operations  of the  Employee  Retirement  Benefits  and  Investment
  Services segment.
  
  The eventual  effect on CIGNA of the changing  environment  in which it operates
  remains  uncertain.  For  additional  information,  see Note 10 to the Financial
  Statements.
  
  Recent Accounting Pronouncements
  
  CIGNA adopted  Statement of Position  (SOP) 97-3,  "Accounting  by Insurance and
  Other Enterprises for Insurance-Related  Assessments" as of January 1, 1999. SOP
  97-3 , issued by the American Institute of Certified Public Accountants (AICPA),
  provides guidance on the recognition and measurement of liabilities for guaranty
  fund and  other  insurance-related  assessments  such as  workers'  compensation
  second  injury  funds,  medical  risk pools and  charges  related  to  operating
  expenses of state regulatory  bodies.  The cumulative effect of adopting the SOP
  was a reduction  of net income of $91 million  ($140  million  pre-tax),  and is
  primarily related to the property and casualty operations.
  
  In 1999, CIGNA adopted SOP 98-1,  "Accounting for the Costs of Computer Software
  Developed or Obtained for Internal Use." SOP 98-1,  issued by the AICPA in 1998,
  specifies the types of costs that must be  capitalized  and  amortized  over the
  software's expected useful life and the types of costs which must be immediately
  recognized  as  expense.  Implementation  of this  pronouncement  did not have a
  material effect on results of operations, liquidity or financial condition.
  
  In 1998, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
  Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
  Instruments and Hedging Activities."
  
                                         12
  SFAS No. 133 requires that  derivatives be reported on the balance sheet at fair
  value.  Changes in fair value are  recognized in net income or, for  derivatives
  that are hedging  market risk related to future cash flows,  in the  accumulated
  other comprehensive  income section of shareholders'  equity.  Implementation is
  required by the first quarter of 2000,  with the  cumulative  effect of adoption
  reflected  in  net  income  and  accumulated  other  comprehensive   income,  as
  appropriate.  CIGNA has not determined the effect or timing of implementation of
  this pronouncement.
  
  In 1998,  the  AICPA  issued  SOP  98-7,  "Deposit  Accounting:  Accounting  for
  Insurance and Reinsurance  Contracts That Do Not Transfer  Insurance  Risk." SOP
  98-7 does not apply to long- duration life and health contracts.  Implementation
  is required by the first quarter of 2000, with the cumulative effect of adopting
  the  SOP  reflected  in net  income  in the  year  of  adoption.  CIGNA  has not
  determined the effect or timing of implementation of this pronouncement.
  
  CONSOLIDATED RESULTS OF OPERATIONS
  ==================================================================
  FINANCIAL SUMMARY                               Three Months Ended
                                                       March 31,
  (In millions)                                      1999      1998
  ------------------------------------------------------------------
  Premiums and fees                                $4,263    $3,901
  Net investment income                               858       937
  Other revenues                                      237       514
  Realized investment gains                            42        59
                                              ---------------------
  Total revenues                                    5,400     5,411
  Benefits and expenses                             4,970     4,643
                                              ---------------------
  Income before taxes                                 430       768
  Income taxes                                        151       273
                                              ---------------------
  Income before cumulative                                          
     effect of accounting change                      279       495
  Less realized investment gains,                                   
     net of taxes                                      28        38
  -----------------------------------------------------------------
  Operating income*                                  $251      $457
  --------------------------------------------=====================
  
  CIGNA's first quarter 1998 consolidated operating income included a $202 million
  after-tax gain  recognized  upon closing of the sale of CIGNA's  individual life
  insurance and annuity business.  Excluding this gain,  operating income was $251
  million in 1999  compared  with $255  million for the same  period last year,  a
  decrease of 2%. This decrease  primarily  reflects lower operating income in the
  Property and  Casualty  and  International  Life,  Health and Employee  Benefits
  segments,  partially offset by improved results in CIGNA's Employee Health Care,
  Life and Disability Benefits segment.
  
  After-tax realized investment results decreased 26% in the first quarter of 1999
  from the same period last year. This decrease  primarily reflects lower gains on
  sales  of  mortgage   loans  and  real  estate   partnerships.   For  additional
  information, see Note 4 to the Financial Statements.
  
  Excluding  the $202 million  after-tax  gain  recognized  on the sale of CIGNA's
  individual life insurance and annuity  business and the anticipated  gain on the
  sale of CIGNA's property and casualty operations, full year operating income for
  1999 is  expected  to improve  over 1998;  however,  such  improvement  could be
  adversely affected by the factors noted in the cautionary statement on page 22.
  
  EMPLOYEE HEALTH CARE, LIFE AND DISABILITY BENEFITS
  ==================================================================
  FINANCIAL SUMMARY                               Three Months Ended
                                                       March 31,
  (In millions)                                      1999      1998
  ------------------------------------------------------------------
  Premiums and fees                                $2,976    $2,737
  Net investment income                               138       143
  Other revenues                                      160       129
                                              ---------------------
  Segment revenues                                  3,274     3,009
  Benefits and expenses                             3,030     2,801
                                              ---------------------
  Income before taxes                                 244       208
  Income taxes                                         87        77
                                              ---------------------
  Operating income                                   $157      $131
  --------------------------------------------=====================
  Realized investment gains,
  net of taxes                                         $6       $18
  --------------------------------------------======================
  
  Operating  income for the Employee  Health Care,  Life and  Disability  Benefits
  segment  increased  20% for the first  quarter of 1999,  compared  with the same
  period last year.  Operating  income for the Indemnity and HMO operations was as
  follows:
  --------
  *Operating  income  (loss) is defined as net income (loss)  excluding  after-tax
  realized  investment  results.  Operating  income  in  1999  also  excludes  the
  cumulative effect of adopting a new accounting pronouncement.
  
                                         13
  ==================================================================
                                                  Three Months Ended
                                                       March 31,
  (In millions)                                      1999      1998
  ------------------------------------------------------------------
  Indemnity operations                                $63       $69
  HMO operations                                       94        62
  ------------------------------------------------------------------
  Total                                              $157      $131
  ==================================================================
  
  Indemnity  operating  income decreased 9% for the first quarter of 1999 compared
  with the same period last year. This decrease  primarily reflects lower earnings
  from the  experience-rated  medical business resulting from higher medical costs
  and unfavorable claim experience in the group accident business. These decreases
  were partially  offset by improved claim experience from guaranteed cost medical
  and group life businesses.
  
  HMO earnings  increased 52% for the first quarter of 1999 compared with the same
  period last year. This  improvement  reflects rate increases for guaranteed cost
  HMO business,  improved results in health care services  operations,  membership
  growth  in HMO  experience-rated  and  alternative  funding  business  and lower
  operating expenses per member.
  
  Premiums  and fees  increased 9% for the first  quarter of 1999  compared to the
  same  period  last  year.  This  increase  primarily  reflects  HMO and  medical
  indemnity membership growth and rate increases.
  
  Net  investment  income  decreased 3% for the first  quarter of 1999 compared to
  1998 due to a decrease in investment yields.
  
  As of March 31,  1999,  total HMO  membership  was  approximately  6.7  million,
  representing  an increase of 6% since March 31, 1998 and 3% since  December  31,
  1998. These increases  primarily reflect  membership growth in  experience-rated
  and alternative funding programs,  partially offset by lower guaranteed cost HMO
  membership.  Under alternative  funding programs,  the customer assumes all or a
  portion of the  responsibility  for funding claims,  and CIGNA generally earns a
  lower margin than under traditional programs.
  
  Management  believes  that  adding  premium  equivalents  to  premiums  and fees
  (adjusted  premiums  and fees)  produces a more  meaningful  measure of business
  volume.  Premium  equivalents  for the first quarters of 1999 and 1998 were $3.5
  billion and $3.2 billion,  respectively.  This increase  primarily  reflects HMO
  membership growth.  Premium  equivalents were 54% of total adjusted premiums and
  fees  for  the  first  quarters  of 1999  and  1998.  ASO  plans  accounted  for
  approximately  50% of total adjusted premiums and fees for the first quarters of
  1999 and 1998.
  
  EMPLOYEE RETIREMENT BENEFITS AND
  INVESTMENT SERVICES
  ==================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                       March 31,
  (In millions)                                     1999       1998
  ------------------------------------------------------------------
  Premiums and fees                                  $62        $71
  Net investment income                              387        410
                                              ---------------------
  Segment revenues                                   449        481
  Benefits and expenses                              356        392
                                              ---------------------
  Income before taxes                                 93         89
  Income taxes                                        30         28
                                              ---------------------
  Operating income                                   $63        $61
  --------------------------------------------======================
  Realized investment gains,
  net of taxes                                        $1         $6
  --------------------------------------------======================
  
  Operating income for the Employee  Retirement  Benefits and Investment  Services
  segment  increased  3% for the first  quarter  of 1999,  compared  with the same
  period of 1998.  This increase  reflects higher earnings from an increased asset
  base,  partially  offset by a shift to lower margin products  (separate  account
  equity funds).
  
  Premiums and fees for the first quarter of 1999  decreased 13% compared with the
  same  period  last  year,  reflecting  a  decline  in  annuity  sales  and lower
  non-leveraged  corporate life insurance  premiums and fees,  partially offset by
  higher fees from separate accounts.
  
  Net  investment  income  decreased 6% for the first  quarter of 1999,  primarily
  reflecting lower  investment  yields and customers'  continued  redirection of a
  portion of their investments from the general account to separate accounts.
  
                                         14
  Assets under  management  are generally a key  determinant  of earnings for this
  segment.  For the quarter  ended March 31, assets under  management  and related
  activity, including amounts attributable to separate accounts, were as follows:
  
  ==================================================================
  (In millions)                                  1999           1998
  ------------------------------------------------------------------
  Balance -- January 1                        $52,929        $48,231
  Premiums and deposits                         2,088          2,191
  Investment results                              924            805
  Increase (decrease) in fair value of assets     (16)         1,875
  Customer withdrawals                         (1,556)          (875)
  Other, including participant                                       
  withdrawals and benefit payments             (1,264)        (1,255)
  ------------------------------------------------------------------
  Balance -- March 31                         $53,105        $50,972
  ==================================================================
  
  Premiums and deposits  decreased 5% in the three months of 1999,  compared  with
  the same period in 1998.  For the three  months of 1999 and 1998,  approximately
  64% and 53%,  respectively,  of premiums and deposits reflect recurring deposits
  from existing  customers  while the  remaining  amounts  represent  sales to new
  customers and new plan sales to existing customers. Investment results increased
  15% in the three  months of 1999,  compared  with the same period in 1998.  This
  increase reflects higher capital gains and growth in assets, partially offset by
  lower  investment  yields.  The decrease for 1999 in the fair value of assets is
  primarily due to market value  depreciation  of fixed  maturities in the general
  account.  The increase in customer withdrawals is primarily due to the effect of
  withdrawals under defined contribution business in the first quarter of 1999.
  
  Assets  under   management   will  continue  to  be  affected  by  market  value
  fluctuations for fixed maturities and equity securities.
  
  See Other Matters on page 12 for additional information regarding corporate life
  insurance.
  
  INTERNATIONAL LIFE, HEALTH AND EMPLOYEE BENEFITS
  
  ==================================================================
  FINANCIAL SUMMARY                               Three Months Ended
                                                       March 31,
  (In millions)                                      1999      1998
  -----------------------------------------------------------------
  Premiums and fees                                  $378      $277
  Net investment income                                30        27
  Other revenues                                        5         1
                                             ----------------------
  Segment revenues                                    413       305
  Benefits and expenses                               405       291
                                             ----------------------
  Income before taxes                                   8        14
  Income taxes                                          5         5
                                             ----------------------
  Operating income                                     $3        $9
  -------------------------------------------======================
  Realized investment gains,
  net of taxes                                        $--       $--
  -------------------------------------------======================
  
  Operating  income  for the  International  Life,  Health and  Employee  Benefits
  segment declined from the prior year. This decline is primarily  attributable to
  losses of $7 million after-tax from Brazilian health care operations.
  
  CIGNA's health care operations in Brazil include a managed health care business,
  which is being  consolidated,  and investments in another health care operation,
  which are being accounted for under the equity method.
  
  Premiums and fees increased 36% for the first quarter of 1999, compared with the
  same period last year.  Excluding  premiums and fees from the Brazilian  managed
  health care  operation  (which was  acquired in the second half of 1998) and the
  effects of foreign  currency  changes,  premiums and fees  increased  23%.  This
  increase  reflects  growth in Japanese life  operations and, to a lesser extent,
  expansion of health care operations in other Latin American countries and higher
  premiums and fees from health care business  related to expatriate  employees of
  multinational companies.
  
  Net investment  income for the first quarter of 1999 increased 11% from the same
  period  last  year.  Excluding  the  effects of foreign  currency  changes,  the
  increase was 4%. This  increase  reflects  growth in invested  assets  partially
  offset by lower yields.
  
                                         15
  Operating  income  associated  with the 29%  interest in CIGNA's  Japanese  life
  operations that was sold in April 1999 was approximately $2 million in the first
  quarter of 1999 and $1 million in the first  quarter of 1998.  Operating  income
  associated with this sold interest for full year 1998 was $10 million.
  
  PROPERTY AND CASUALTY
  =================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                      March 31,
  (In millions)                                     1999       1998
  -----------------------------------------------------------------
  Premiums and fees                                 $676       $685
  Net investment income                              135        146
  Other revenues                                      79         69
                                              ---------------------
  Segment revenues                                   890        900
  Benefits and expenses                              867        841
                                              ---------------------
  Income before taxes                                 23         59
  Income taxes                                         5         18
                                              ---------------------
  Operating income                                   $18        $41
  --------------------------------------------=====================
  Realized investment gains,
  net of taxes                                       $20        $12
  --------------------------------------------=====================
  
  In January 1999, CIGNA entered into an agreement to sell the businesses included
  in this  segment.  See  page 11 for  additional  information.  Operating  income
  decreased  56% for the first  quarter of 1999,  compared with the same period in
  1998. Operating income for the ongoing and run-off operations was as follows:
  
  =================================================================
                                                 Three Months Ended
                                                       March 31,
  (In millions)                                      1999      1998
  -----------------------------------------------------------------
  Ongoing operations:
    International                                      $3       $22
    Domestic                                           15        19
                                             ----------------------
      Total ongoing                                                 
        operations                                     18        41
  Run-off operations                                   --        --
  -----------------------------------------------------------------
      Total                                           $18       $41
  =================================================================
  
  The decline in the international  operations for 1999 reflects unfavorable prior
  year loss  development,  primarily  related  to  catastrophe  losses,  and lower
  property and casualty earnings due to the competitive environment.
  
  The decline in the domestic  operations for 1999 primarily reflects  unfavorable
  prior year development related to property losses,  continued competitive market
  conditions and lower results from  insurance-related  service businesses.  These
  decreases were partially  offset by more  favorable  underwriting  experience in
  selected lines of business.
  
  Results for the run-off  operations  primarily reflect prior year development on
  claim and claim adjustment expense reserves and investment activity.
  
  Premiums and fees declined slightly in the first quarter of 1999. These declines
  reflect continued price competition  partially offset by the favorable effect of
  foreign exchange for international operations.
  
  Net investment  income  decreased 8% for the first quarter of 1999 compared with
  the same period of 1998.  The decline  reflects  lower assets and a shift in the
  investment portfolio mix from fixed maturities to equity securities.
  
  Pre-tax  catastrophe  losses, net of reinsurance,  were $23 million in the first
  quarter of 1999 compared  with $9 million in the first quarter of 1998.  CIGNA's
  future results of operations  could be volatile,  depending on the frequency and
  severity of future catastrophes.
  
  Certain  competitors  and  policyholders  of CIGNA are  challenging in court the
  restructuring of its domestic  property and casualty  business into two separate
  operations,  ongoing and  run-off.  Although  CIGNA  expects the matter to be in
  litigation for some time, it expects to ultimately prevail.
  
  LOSS RESERVES AND REINSURANCE RECOVERABLES
  
  CIGNA's reserving methodology and significant issues affecting the estimation of
  loss reserves and reinsurance recoverables are described in its 1998 Form 10-K.
  
  CIGNA's  property and casualty  loss reserves of $14.3 billion and $14.6 billion
  as of March 31, 1999 and  December  31,  1998,  respectively,  are  estimates of
  future  payments  for  reported  and  unreported  claims for losses and  related
  expenses with respect to insured events that have occurred. The basic assumption
  underlying  the  many  traditional  actuarial  and  other  methods  used  in the
  estimation
  
                                         16
  of property and casualty loss reserves is that past experience is an appropriate
  basis for predicting  future events.  However,  current trends and other factors
  that  would  modify  past  experience  are  also  considered.   The  process  of
  establishing  loss  reserves  is  subject  to  uncertainties  that  are  normal,
  recurring and inherent in the property and casualty business.
  
  CIGNA  continually  attempts to improve its loss estimation  process by refining
  its  analysis  of  loss   development   patterns,   claims  payments  and  other
  information,  but there remain many reasons for adverse development of estimated
  ultimate   liabilities.   For   example,   unanticipated   changes  in  workers'
  compensation and product liability laws have at times significantly affected the
  ability of  insurers  to  estimate  liabilities  for unpaid  losses and  related
  expenses.
  
  Reserving  for  property  and  casualty  claims  continues  to be a complex  and
  uncertain  process,  requiring  the use of  informed  estimates  and  judgments.
  CIGNA's  estimates and judgments  may be revised as  additional  experience  and
  other data become available and are reviewed,  as new or improved  methodologies
  are  developed or as current law  changes.  Any such  revisions  could result in
  future changes in estimates of losses or reinsurance recoverables,  and would be
  reflected in CIGNA's results of operations for the period in which the estimates
  are  changed.  While the effect of any such  changes in  estimates  of losses or
  reinsurance  recoverables  could be  material to future  results of  operations,
  CIGNA does not expect such changes to have a material effect on its liquidity or
  financial condition.
  
  CIGNA  manages  its  loss  exposure  through  the  use  of  reinsurance.   While
  reinsurance  arrangements  are designed to limit losses from large exposures and
  to permit recovery of a portion of direct losses,  reinsurance  does not relieve
  CIGNA of liability to its insureds. Accordingly, CIGNA's loss reserves represent
  total  gross  losses,  and  reinsurance   recoverables   represent   anticipated
  recoveries of a portion of those losses.
  
  CIGNA's property and casualty  reinsurance  recoverables were approximately $6.1
  billion and $6.3  billion as of March 31, 1999 and  December  31,  1998,  net of
  allowances  for  unrecoverable  reinsurance  of $706  million and $705  million,
  respectively.
  
  In management's judgment, information currently available has been appropriately
  considered in estimating CIGNA's loss reserves and reinsurance recoverables.
  
  The  following  table  shows the adverse  pre-tax  effects on the  Property  and
  Casualty  segment's  results of operations from prior year  development,  net of
  reinsurance, for the three months ended March 31:
  =================================================================
                                                 Three Months Ended
                                                       March 31,
  (In millions)                                      1999      1998
  -----------------------------------------------------------------
  By business operation:
    Ongoing operations                                $28        $2
    Run-off operations                                 39        46
  -----------------------------------------------------------------
  Total                                               $67       $48
  =================================================================
  By type of loss:
    Asbestos-related                                  $16       $18
    Environmental pollution                            25         7
    Unrecoverable                                         
       reinsurance                                      3         9
    Workers' compensation                               9        10
    Other                                              14         4
  -----------------------------------------------------------------
  Total                                               $67       $48
  =================================================================
  
  OTHER OPERATIONS
  =================================================================
  FINANCIAL SUMMARY                            Three Months Ended
                                                    March 31,
  (In millions)                                     1999       1998
  -----------------------------------------------------------------
  Premiums and fees                                 $171       $131
  Net investment income                              161        198
  Other revenues                                      48        364
                                              ---------------------
  Segment revenues                                   380        693
  Benefits and expenses                              334        331
                                              ---------------------
  Income before taxes                                 46        362
  Income taxes                                        16        129
                                              ---------------------
  Operating income                                   $30       $233
  --------------------------------------------=====================
  Realized investment gains,
  net of taxes                                       $--         $2
  --------------------------------------------=====================
  Other Operations consist of:
  o    gain  recognition  related to the sale of the individual life insurance and
       annuity business;
  o    corporate life insurance on which policy loans are  outstanding  (leveraged
       corporate life insurance);
  o    life, accident and health reinsurance operations;
  
                                         17
  o    settlement annuity business; and
  o    certain new business initiatives.
  
  Operating  income for the first  quarter of 1998  includes an after-tax  gain of
  $202 million recognized on the sale of the individual life insurance and annuity
  business. On a pre-tax basis, the gain was $316 million and is reported in Other
  Revenues. Excluding this amount, operating income for the first quarter 1999 was
  $30 million,  compared with operating income of $31 million in the first quarter
  1998,  reflecting  comparable  results for the  businesses  which comprise Other
  Operations.
  
  For the first  quarter of 1999,  premiums and fees  increased  31% from the same
  period  of 1998.  This  increase  primarily  reflects  growth  in  accident  and
  international reinsurance sales.
  
  Net investment  income decreased 19% for the first quarter of 1999 compared with
  the same period of 1998.  This  decrease  primarily  reflects  lower assets from
  leveraged corporate life insurance, and, to a lesser extent, lower yields.
  
  In 1996,  Congress passed  legislation that phased out over a three-year  period
  the tax deductibility of policy loan interest for most leveraged  corporate life
  insurance products. Revenues of $108 million and operating income of $10 million
  for the first  quarter  of 1999 were from  leveraged  corporate  life  insurance
  products  that are  affected  by this  legislation.  CIGNA does not expect  this
  legislation  to have a material  adverse effect on its  consolidated  results of
  operations, liquidity or financial condition.
  
  The specialty life reinsurance  products of this segment include  contracts that
  guarantee payments for specified unfavorable changes in variable annuity account
  values based on underlying  mutual fund investments if account holders expire or
  elect to  receive  periodic  income  payments.  Although  these  guarantees  may
  adversely affect CIGNA's  consolidated  results of operations in future periods,
  they are not expected to have a material adverse effect on CIGNA's  liquidity or
  financial condition.
  
  The  personal   accident   reinsurance   business  of  this   segment   includes
  participation in a workers'  compensation  program managed by Unicover Managers,
  Inc. where disputes have arisen regarding retrocessional coverage. Resolution of
  these disputes is likely to take several  years.  CIGNA does not expect to incur
  losses  material  to  its  consolidated  results  of  operations,  liquidity  or
  financial condition related to this program.
  
  CORPORATE
  =================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                       March 31,
  (In millions)                                     1999       1998
  ------------------------------------------------------------------
  Operating loss                                    $(20)      $(18)
  --------------------------------------------=====================
  Realized investment gains,
  net of taxes                                        $1        $--
  --------------------------------------------=====================
  
  Corporate is used to report amounts not allocated to segments,  such as interest
  expense,  certain  goodwill  amortization  and  intersegment  eliminations.  The
  increase in the operating loss in the first quarter of 1999  primarily  reflects
  lower net investment income due to a reduction in investment assets.
  
  LIQUIDITY AND CAPITAL RESOURCES
  
  Liquidity  for CIGNA  and its  insurance  subsidiaries  has  remained  strong as
  evidenced by  significant  amounts of short-term  investments  and cash and cash
  equivalents   in  the  aggregate.   Generally,   CIGNA  has  met  its  operating
  requirements  by maintaining  appropriate  levels of liquidity in its investment
  portfolio and through utilization of overall positive cash flows.
  
  For the first quarter of 1999, cash and cash equivalents decreased approximately
  $800 million from $3.0 billion as of December 31, 1998. This decrease  primarily
  reflects net  withdrawals  from  contractholder  deposit  funds ($434  million),
  payments of dividends on and  repurchases of CIGNA common stock ($263  million),
  and cash used for investing  activities  ($237  million).  These  decreases were
  partially  offset by cash  provided  by  operating  activities  ($122  million),
  reflecting earnings and the timing of operating cash receipts and disbursements.
  
  CIGNA's  capital  resources  represent  funds  available for long-term  business
  commitments.  They primarily  consist of retained earnings and proceeds from the
  issuance of long-term debt and equity
  
                                         18
  securities.  CIGNA's financial strength provides the capacity and flexibility to
  enable it to raise funds in the  capital  markets  through the  issuance of such
  securities.  CIGNA continues to be well capitalized,  with sufficient  borrowing
  capacity to meet the anticipated needs of its businesses.
  
  CIGNA had $1.4  billion of  long-term  debt  outstanding  at March 31,  1999 and
  December 31,  1998.  As of March 31, 1999,  CIGNA had  approximately  $1 billion
  remaining  under  effective  shelf   registration   statements  filed  with  the
  Securities and Exchange Commission that may be issued as debt securities, equity
  securities  or both,  depending  upon  market  conditions  and  CIGNA's  capital
  requirements.
  
  At March 31, 1999, CIGNA's short-term debt amounted to $293 million, an increase
  of $21 million from December 31, 1998.
  
  CIGNA has  repurchased  approximately  3,844,000  shares of its common stock for
  $314 million during 1999,  including 990,000 shares  repurchased for $85 million
  from April 1 through  April 30, 1999.  The  remaining  authorization  of CIGNA's
  Board of Directors as of April 30, 1999 was $476 million.
  
  INVESTMENT ASSETS
  ==================================================================
                                       March 31,        December 31,
  (In millions)                             1999                1998
  ------------------------------------------------------------------
  Fixed maturities                       $32,020             $32,634
  Equity securities                        1,056               1,043
  Mortgage loans                           9,847               9,599
  Real estate                                807                 733
  Other, primarily policy loans            4,847               6,698
  ------------------------------------------------------------------
  Total investment assets                $48,577             $50,707
  ==================================================================
  
  Additional information regarding CIGNA's investment assets is included in Note 4
  to the first quarter 1999 Financial  Statements and Notes 2, 4 and 5 to the 1998
  Financial Statements as well as the 1998 Form 10-K.
  
  Investment assets as of March 31, 1999 decreased 4% from December 31, 1998. This
  decrease  primarily  reflects a decline of approximately  $1.7 billion in policy
  loans due to surrenders of leveraged corporate life insurance policies.
  
  Significant   amounts  of  CIGNA's   investment   assets  are   attributable  to
  experience-rated   contracts  with   policyholders   (policyholder   contracts).
  Approximate  percentages of investments  attributable to policyholder  contracts
  were as follows:
  
  ==================================================================
                                          March 31,     December 31,
                                               1999             1998
  ------------------------------------------------------------------
  Fixed maturities                              30%              27%
  Mortgage loans                                58%              57%
  Real estate                                   63%              63%
  ==================================================================
  
  Fixed Maturities
  
  Investments in fixed  maturities  (bonds)  include  publicly  traded and private
  placement debt securities;  asset-backed  securities,  including  collateralized
  mortgage obligations (CMOs); and redeemable preferred stocks.
  
  As of March 31, 1999, the fair value of fixed maturities, including policyholder
  share,  was greater than  amortized  cost by $1.4  billion,  compared  with $2.0
  billion as of December 31, 1998.  The decrease is primarily  attributable  to an
  increase in interest rates during the first quarter of 1999.
  
       Potential Problem and Problem Bonds
  
  Potential  problem  bonds are fully  current  but judged by  management  to have
  certain  characteristics that increase the likelihood of problem classification.
  CIGNA had $95 million of potential problem bonds, including amounts attributable
  to policyholder contracts, as of March 31, 1999, compared with $69 million as of
  December 31, 1998. These amounts are net of cumulative write-downs of $7 million
  and $14 million, respectively.
  
  CIGNA considers bonds that are delinquent or restructured as to terms, typically
  interest rate and, in certain cases,  maturity date,  problem bonds. As of March
  31, 1999 and December  31,  1998,  CIGNA had problem  bonds,  including  amounts
  attributable to policyholder contracts, of $118 million and $119 million, net of
  related  cumulative  write-downs  of $29 million and $19 million,  respectively.
  Problem bonds included $3 million related to emerging markets  investments as of
  March 31, 1999 and  December  31,  1998.  CIGNA  recognizes  interest  income on
  problem bonds only when payment is received.
  
                                         19
  Mortgage Loans
  ==================================================================
                                        March 31,       December 31,
                                             1999               1998
  ------------------------------------------------------------------
  Mortgage loans (in millions)             $9,847             $9,599
  Property type:
     Office buildings                         38%                37%
     Retail facilities                         34                 34
     Apartment buildings                       14                 15
     Industrial                                 7                  7
     Hotels                                     5                  5
     Other                                      2                  2
  Total                                      100%               100%
  ==================================================================
  
  CIGNA's  investment  strategy  requires  diversification  of the  mortgage  loan
  portfolio. This strategy includes guidelines relative to property type, location
  and borrower to reduce its exposure to potential losses.
  
      Potential Problem and Problem Mortgage Loans
  
  Potential problem mortgage loans include:
  o    fully  current  loans  that  are  judged  by  management  to  have  certain
       characteristics that increase the likelihood of problem classification;
  o    fully current loans for which the borrower has requested restructuring; and
  o    loans  that  are 30 to 59 days  delinquent  with  respect  to  interest  or
       principal payments.
  
  CIGNA had potential problem mortgage loans,  including  amounts  attributable to
  policyholder  contracts, of $67 million as of March 31, 1999, and $55 million as
  of December 31, 1998. There were no valuation  reserves related to these amounts
  in either period.
  
  CIGNA's  problem  mortgage loans include  delinquent and  restructured  mortgage
  loans.  Delinquent  mortgage  loans include those on which payment is overdue 60
  days or more.  Restructured mortgage loans are those whose basic financial terms
  have been modified, typically to reduce the interest rate or extend the maturity
  date.
  
  CIGNA had problem mortgage loans, including amounts attributable to policyholder
  contracts,  of $98 million, net of valuation reserves of $6 million, as of March
  31, 1999 and December  31, 1998.  CIGNA  recognizes  interest  income on problem
  mortgage loans only when payment is received.
  
  Real Estate
  
  As of March 31, 1999 and  December  31, 1998,  investment  real  estate,  net of
  reserves  and  write-downs,   included:   1)  $464  million  and  $390  million,
  respectively,  of real estate  held for the  production  of income,  and 2) $343
  million  as of both dates of real  estate  held for sale,  primarily  properties
  acquired as a result of foreclosure of mortgage loans.
  
  Summary
  
  The effects of  write-downs,  changes in  valuation  reserves  and  non-accruals
  related to investment  assets for the three months ended March 31, 1999 and 1998
  were not  material to CIGNA's  policyholder  contracts,  results of  operations,
  liquidity or financial position.
  
  Additional  losses from problem  investments  are expected to occur for specific
  investments   in  the  normal  course  of  business.   Assuming  no  significant
  deterioration   in   economic   conditions,    including   further   significant
  deterioration  in Latin  American  and Asian  economies,  CIGNA  does not expect
  additional  non-accruals,  write-downs and reserves to materially  affect future
  results of  operations,  liquidity  or  financial  condition,  or to result in a
  significant decline in the aggregate carrying value of its assets.
  
                                         20
  YEAR 2000
  
  CIGNA is highly  dependent  on  automated  systems and systems  applications  in
  conducting its  operations.  These systems include  information  technology (IT)
  systems  that are used for,  among other  things,  processing  claims,  billing,
  collecting  premiums  from  customers,   managing   investment   activities  and
  maintaining  management  information  systems.  If these  systems were unable to
  function because of failing to be Year 2000 ready,  CIGNA's business  operations
  would be  interrupted,  which  could have a material  adverse  effect on CIGNA's
  results of operations.
  
  CIGNA's Year 2000 efforts include: 1) identifying systems requiring remediation;
  2) assessing what is required to remediate those systems; 3) remediating systems
  to be ready for the Year 2000 (by either  modifying or replacing  them);  and 4)
  testing systems for Year 2000 readiness,  including that they properly interface
  with  systems  of  external   parties,   such  as  customers   and   third-party
  administrators.  CIGNA has completed the  identification  and assessment  phases
  with respect to its IT systems that are critical to  maintaining  operations  or
  where  the  failure  of those  systems  would  result  in  significant  costs or
  disruption of operations  ("mission  critical  systems").  As of March 31, 1999,
  remediation  and testing  procedures  had been  completed for 96% of its mission
  critical  systems.  CIGNA expects to substantially  complete the remediation and
  testing of its mission critical systems by the middle of 1999. In certain cases,
  CIGNA will perform additional testing to ensure that these systems appropriately
  interact with other systems.
  
  CIGNA's  systems  also  include  non-IT  systems,  such as  telephone,  facility
  management  and other  systems  using  embedded  chips.  The  majority of non-IT
  systems are expected to be ready by mid- 1999.
  
  CIGNA is using  both  internal  and  external  resources  to meet the  timetable
  established for completion of its Year 2000 efforts. The after-tax costs of Year
  2000  efforts  were  approximately  $100  million in 1998 and are expected to be
  approximately  $50  million  in 1999.  Year 2000  after-tax  costs for the first
  quarter of 1999 were approximately $10 million.  Approximately 60% of total Year
  2000  costs are  attributable  to  existing  systems  resources  which have been
  redirected to the Year 2000 efforts. The remaining amounts represent incremental
  costs for Year 2000 efforts.  Although certain systems  development efforts have
  been  deferred in order to address Year 2000 issues,  CIGNA does not expect that
  this  deferral  will  have  a  significant  adverse  effect  on its  results  of
  operations or financial condition.
  
  CIGNA has relationships with various third-party entities in the ordinary course
  of business. For example,  CIGNA receives data from clients;  depends on others,
  such as third-party  administrators  and banks,  for services;  and bears credit
  risk on others,  such as  entities  in which it  invests.  CIGNA has  identified
  third-party  entities  critical  to  its  operations,  and it is  assessing  and
  attempting to mitigate its risks with respect to the potential  failure of these
  entities  to be Year  2000  ready  by,  among  other  things,  reviewing,  where
  possible,  their  formal  Year 2000  plans  and  obtaining  Year 2000  readiness
  affirmations from certain third-party  entities.  The effect, if any, on CIGNA's
  results of operations from the failure of these entities  (including entities on
  which  CIGNA  bears  credit  risk)  to be  Year  2000  ready  is not  reasonably
  estimable.
  
  While CIGNA expects that its Year 2000 efforts will be successful, it has begun,
  but not yet completed, a comprehensive analysis of the operational problems that
  would be reasonably likely to result from the failure by CIGNA and certain third
  parties to complete  efforts  necessary  to achieve  Year 2000  compliance  on a
  timely basis.  CIGNA has made  substantial  progress in completing this analysis
  and expects to complete it by the end of the second  quarter of 1999.  CIGNA has
  historically  had security and backup  policies and procedures for  safeguarding
  critical  corporate data. It is supplementing  these policies by developing Year
  2000 contingency  plans to provide for the continuity of operations in the event
  of Year 2000 systems failures or the failure of third-party  entities to be Year
  2000 ready.  These plans are  expected to be  completed  and tested prior to the
  fourth quarter of 1999.
  
  The costs of CIGNA's Year 2000 efforts and the dates on which CIGNA  believes it
  will complete such efforts are based on management's best
  
                                         21
  estimates,  which were  derived  using  numerous  assumptions  regarding  future
  events,  including the continued availability of certain resources,  third-party
  remediation  plans,  and other  factors.  There can be no  assurance  that these
  estimates will prove to be accurate,  and actual results could differ materially
  from  those  currently  anticipated.  Specific  factors  that  could  cause such
  material differences include, but are not limited to, the availability and costs
  of  personnel  trained in Year 2000  issues,  the ability to  identify,  assess,
  remediate and test all relevant computer codes and embedded technology, the risk
  that  reasonable  testing will not uncover all Year 2000  problems,  and similar
  uncertainties.  Property and casualty  indemnity losses for Year 2000 claims and
  litigation  costs to defend or deny such claims are not reasonably  estimable at
  this time.
  
  CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
  PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
  
  Except for historical  information provided in this Management's  Discussion and
  Analysis of  Financial  Condition  and Results of  Operations,  statements  made
  throughout  this  document are  forward-looking  and contain  information  about
  financial results,  economic conditions,  trends and known uncertainties.  CIGNA
  cautions  the reader that actual  results  could  differ  materially  from those
  expected by CIGNA,  depending on the outcome of certain  factors  (some of which
  are  described  with  the  forward-looking  statements)  including:  1)  adverse
  catastrophe  experience in CIGNA's property and casualty businesses;  2) adverse
  property and casualty  loss  development  for events that CIGNA insured in prior
  years;  3) an  increase  in medical  costs in CIGNA's  health  care  operations,
  including increases in utilization and costs of medical services;  4) heightened
  competition,  particularly  price  competition,  reducing  product  margins  and
  constraining  growth in CIGNA's  businesses;  5) significant changes in interest
  rates; 6) significant stock market declines resulting in payments  contingent on
  certain variable annuity account values; 7) the effect on CIGNA's  international
  operations  and  investments  from further  significant  deterioration  in Latin
  American  and Asian  economies;  and 8) proposals  to change  federal  corporate
  income taxes.
  
                                         22
  Part II. OTHER INFORMATION
  
  Item 6.           Exhibits and Reports on Form 8-K.
  
                    (a)      See Exhibit Index.
  
                    (b)      During the quarterly period ended March 31, 1999, and
                             as of the  filing  date,  CIGNA  filed the  following
                             Reports on Form 8-K:
  
                             *  dated February 9, 1999, Item 5 - containing a news
                                release regarding its fourth quarter 1998 results.
  
                             *  dated January 12, 1999, Item 5 - containing a news
                                release  regarding  an  agreement  to sell CIGNA's
                                international  and  domestic  property  & casualty
                                operations.
  
                                         23
  SIGNATURE
  
           Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
  the registrant has duly caused this report to be signed by the undersigned  duly
  authorized officer, on its behalf and in the capacity indicated.
  
                                            CIGNA CORPORATION
  
                                            By: /s/ James A. Sears   
                                               ---------------------
                                                James A. Sears
                                                Vice President and
                                                Chief Accounting Officer
  
  Date:    May 7, 1999
  
                                         24
  Exhibit Index
  
                                                       Method of
  Number   Description                                   Filing      
  ------   -----------                                 ---------
  
  12       Computation of Ratio of                     Filed herewith
           Earnings to Fixed Charges
  
  27       Financial Data Schedule                     Included only in
                                                       the EDGAR version of
                                                       the Form 10-Q
  
                                         25