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, 1998
  
                                         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, Philadelphia, Pa.             19192-1550
          ------------------------------------             ----------
       (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 May 4, 1998, 215,351,649 shares (as adjusted for the three-for-one stock
  split) 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                        10
  
  PART II. OTHER INFORMATION
  
          Item 5.  Other Information                                 21
          Item 6.  Exhibits and Reports on Form 8-K                  21
  
  SIGNATURE                                                          22
  
  EXHIBIT INDEX                                                      23
  
  
  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>
  <S>                                                                                                 <C>            <C>        
                                                                                                            Three Months Ended
                                                                                                                 March 31,
                                                                                                           1998            1997
  ==============================================================================================================================
  
  REVENUES
  Premiums and fees                                                                                   $   3,901      $     3,388
  Net investment income                                                                                     937            1,053
  Other revenues                                                                                            514              160
  Realized investment gains                                                                                  59               44
                                                                                                        --------       ---------
      Total revenues                                                                                      5,411            4,645
                                                                                                        --------       ---------
  
  BENEFITS, LOSSES AND EXPENSES
  Benefits, losses and settlement expenses                                                                3,333            3,009
  Policy acquisition expenses                                                                               228              264
  Other operating expenses                                                                                1,082              935
                                                                                                        --------       ---------
      Total benefits, losses and expenses                                                                 4,643            4,208
                                                                                                        --------       ---------
  
  INCOME BEFORE INCOME TAXES                                                                                768              437
                                                                                                        --------       ---------
  
  Income taxes (benefits):
      Current                                                                                               432              110
      Deferred                                                                                             (159)              39
                                                                                                        --------       ---------
          Total taxes                                                                                       273              149
                                                                                                        --------       ---------
  
  NET INCOME                                                                                          $     495      $       288
  ------------------------------------------------------------------------------------------------------========================
  
  BASIC EARNINGS PER SHARE                                                                            $    2.30      $      1.31
  ------------------------------------------------------------------------------------------------------========================
  
  DILUTED EARNINGS PER SHARE                                                                          $    2.27      $      1.30
  ------------------------------------------------------------------------------------------------------========================
  
  DIVIDENDS DECLARED PER SHARE                                                                        $    0.29      $      0.28
  ------------------------------------------------------------------------------------------------------========================
  </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>
  <S>                                                                              <C>                           <C>   
                                                                                       As of                       As of
                                                                                      March 31,                 December 31,
                                                                                       1998                         1997
  ===========================================================================================================================
  ASSETS
  Investments:
     Fixed maturities, at fair value (amortized cost, $31,276; $34,284)           $     33,190                $        36,358
     Equity securities, at fair value (cost, $695; $648)                                 1,030                            854
     Mortgage loans                                                                      9,401                         10,859
     Policy loans                                                                        6,584                          7,253
     Real estate                                                                           755                            769
     Other long-term investments                                                           351                            273
     Short-term investments                                                                306                            212
                                                                                    -----------                 -------------
         Total investments                                                              51,617                         56,578
  Cash and cash equivalents                                                              2,322                          2,625
  Accrued investment income                                                                847                            868
  Premiums, accounts and notes receivable                                                4,416                          4,265
  Reinsurance recoverables                                                              12,433                          6,753
  Deferred policy acquisition costs                                                        918                          1,542
  Property and equipment                                                                   847                            857
  Deferred income taxes                                                                  1,916                          1,788
  Other assets                                                                           1,130                          1,033
  Goodwill and other intangibles                                                         2,517                          2,542
  Separate account assets                                                               32,256                         29,348
  ---------------------------------------------------------------------------------------------------------------------------
  
          Total assets                                                            $    111,219                $       108,199
  ----------------------------------------------------------------------------------=========================================
  
  LIABILITIES
  Contractholder deposit funds                                                    $     30,714                $        30,682
  Unpaid claims and claim expenses                                                      17,702                         17,906
  Future policy benefits                                                                11,937                         11,976
  Unearned premiums                                                                      1,864                          1,774
                                                                                    -----------                 -------------
           Total insurance and contractholder liabilities                               62,217                         62,338
  Accounts payable, accrued expenses and other liabilities                               6,610                          6,562
  Current income taxes                                                                     277                             60
  Short-term debt                                                                          266                            690
  Long-term debt                                                                         1,463                          1,465
  Separate account liabilities                                                          32,061                         29,152
  ---------------------------------------------------------------------------------------------------------------------------
           Total liabilities                                                           102,894                        100,267
  ---------------------------------------------------------------------------------------------------------------------------
  
  CONTINGENCIES - NOTE 9
  
  SHAREHOLDERS' EQUITY
  Common stock (par value, $.25; shares issued, 265; 264)                                   66                             66
  Additional paid-in capital                                                             2,695                          2,655
  Net unrealized appreciation - fixed maturities                          $    723                      $     752
  Net unrealized appreciation - equity securities                              214                            132
  Net translation of foreign currencies                                       (125)                          (126)
                                                                          --------                      ---------
     Accumulated other comprehensive income                                                812                            758
  Retained earnings                                                                      6,129                          5,696
  Less treasury stock, at cost                                                          (1,377)                        (1,243)
  ---------------------------------------------------------------------------------------------------------------------------
           Total shareholders' equity                                                    8,325                          7,932
  ---------------------------------------------------------------------------------------------------------------------------
  
           Total liabilities and shareholders' equity                             $    111,219                $       108,199
  ----------------------------------------------------------------------------------=========================================
  
  SHAREHOLDERS' EQUITY PER SHARE                                                  $      38.58                $         36.55
  ----------------------------------------------------------------------------------=========================================
  </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>
  <S>                                                                          <C>              <C>            <C>          <C>  
                                                                                              Three Months Ended March 31,
                                                                                           1998                        1997
  ==================================================================================================================================
                                                                                   Compre-        Share-        Compre-        Share-
                                                                                   hensive      holders'        hensive      holders'
                                                                                    Income       Equity          Income       Equity
  ==================================================================================================================================
  
  Common stock                                                                               $        66                 $        66
                                                                                              ----------                  ----------
  
  Additional paid-in capital - January 1                                                           2,655                       2,594
    Issuance of common stock for employee benefits plans                                              40                          11
                                                                                              ----------                  ----------
  Additional paid-in capital - March 31                                                            2,695                       2,605
                                                                                              ----------                  ----------
  
  Accumulated other comprehensive income - January 1                                                 758                         582
    Net unrealized depreciation - fixed maturities                             $       (29)          (29)    $      (280)       (280)
    Net unrealized appreciation - equity securities                                     82            82              13          13
                                                                                ----------                    ----------
        Net unrealized appreciation (depreciation) on securities                        53                          (267)
    Net translation of foreign currencies                                                1             1              (8)         (8)
                                                                                ----------                    ----------
            Other comprehensive income (loss)                                           54                          (275)
                                                                                              ----------                  ----------
  Accumulated other comprehensive income - March 31                                                  812                         307
                                                                                              ----------                  ----------
  
  Retained earnings - January 1                                                                    5,696                       4,855
    Net income                                                                         495           495             288         288
    Common dividends declared                                                                        (62)                        (61)
                                                                                              ----------                  ----------
  Retained earnings - March 31                                                                     6,129                       5,082
                                                                                              ----------                  ----------
  
  Treasury stock - January 1                                                                      (1,243)                       (889)
    Repurchase of common stock                                                                      (111)                        (49)
    Other treasury stock transactions, net                                                           (23)                         (5)
                                                                                              ----------                  ----------
  Treasury stock - March 31                                                                       (1,377)                       (943)
  ----------------------------------------------------------------------------------------------------------------------------------
  TOTAL COMPREHENSIVE INCOME AND SHAREHOLDERS' EQUITY                          $       549   $     8,325     $        13 $     7,117
  ------------------------------------------------------------------------------====================================================
  </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>
  <S>                                                                                 <C>                         <C>        
                                                                                            Three Months Ended March 31,
                                                                                          1998                        1997
  ============================================================================================================================
  
  CASH FLOWS FROM OPERATING ACTIVITIES
      Net income                                                                      $       495                 $       288
      Adjustments to reconcile net income to net cash
          provided by (used in) operating activities:
              Insurance liabilities                                                            12                        (281)
              Reinsurance recoverables                                                        167                         507
              Deferred policy acquisition costs                                               (33)                        (44)
              Premiums, accounts and notes receivable                                        (167)                        145
              Accounts payable, accrued expenses, other liabilities and
                  current income taxes                                                        119                        (104)
              Deferred income taxes                                                          (159)                         39
              Realized investment gains                                                       (59)                        (44)
              Depreciation and goodwill amortization                                           78                          54
              Gain on sale of businesses                                                     (342)                          -
              Other, net                                                                     (192)                       (184)
                                                                                        ----------                 ----------
                  Net cash provided by (used in) operating activities                         (81)                        376
                                                                                        ----------                 ----------
  
  CASH FLOWS FROM INVESTING ACTIVITIES
      Proceeds from investments sold:
          Fixed maturities                                                                  1,594                       1,523
          Equity securities                                                                    92                          64
          Mortgage loans                                                                      345                         116
          Other (primarily short-term investments)                                            137                       1,554
      Investment maturities and repayments:
          Fixed maturities                                                                    940                         909
          Mortgage loans                                                                      232                         124
      Investments purchased:
          Fixed maturities                                                                 (2,616)                     (2,462)
          Equity securities                                                                  (152)                        (57)
          Mortgage loans                                                                     (479)                       (473)
          Other (primarily short-term investments)                                           (792)                     (1,107)
      Net proceeds from sale of businesses                                                  1,296                           -
      Other, net                                                                              (60)                        (57)
                                                                                        ----------                 ----------
                  Net cash provided by investing activities                                   537                         134
                                                                                        ----------                 ----------
  
  CASH FLOWS FROM FINANCING ACTIVITIES
      Deposits and interest credited to contractholder deposit funds                        1,604                       1,550
      Withdrawals and benefit payments from contractholder deposit funds                   (1,774)                     (1,823)
      Net change in short-term debt                                                          (360)                        104
      Repayment of long-term debt                                                             (66)                        (25)
      Repurchase of common stock                                                             (108)                        (55)
      Issuance of common stock                                                                 12                           2
      Common dividends paid                                                                   (60)                        (60)
                                                                                        ----------                 ----------
                  Net cash used in financing activities                                      (752)                       (307)
                                                                                        ----------                 ----------
  Effect of foreign currency rate changes on cash and cash equivalents                         (7)                         (8)
  ---------------------------------------------------------------------------------------------------------------------------
  Net increase (decrease) in cash and cash equivalents                                       (303)                        195
  Cash and cash equivalents, beginning of period                                            2,625                       1,760
  ---------------------------------------------------------------------------------------------------------------------------
  
  Cash and cash equivalents, end of period                                            $     2,322                 $     1,955
  --------------------------------------------------------------------------------------=====================================
  
  Supplemental Disclosure of Cash Information:
      Income taxes paid, net of refunds                                               $       204                 $        97
      Interest paid                                                                   $        27                 $        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 1998
  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 drawing  specific  conclusions  from  interim
  results.
  
  On April 22, 1998, CIGNA's  shareholders  approved a three-for-one  common stock
  split,  an increase in the number of common shares  authorized for issuance from
  200 million to 600 million and a decrease in the par value of common  stock from
  $1 per share to $0.25 per share.  The  additional  shares will be distributed on
  May 15, 1998,  to  shareholders  of record as of May 4, 1998.  The  reduction in
  common stock and  corresponding  increase in  additional  paid-in capital of $22
  million  reflects  these  actions  and all share  data  have been  retroactively
  adjusted for the stock split as though the split had  occurred at the  beginning
  of the periods presented.
  
  NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS
  
  In 1997, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
  Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an
  Enterprise  and Related  Information,"  which could  change the way segments are
  structured and require additional segment  disclosure.  CIGNA has not determined
  the  timing  of  implementation  of this  pronouncement,  which is  required  by
  December 31, 1998.
  
  In 1997, the FASB issued SFAS No. 130, "Reporting  Comprehensive  Income," which
  requires a presentation in the financial  statements of the components of, and a
  combined total for, all nonowner changes in shareholders'  equity. CIGNA adopted
  SFAS No. 130 in the first quarter of 1998.
  
  The American Institute of Certified Public Accountants  (AICPA) issued Statement
  of Position  (SOP) 97-3,  "Accounting  by Insurance  and Other  Enterprises  for
  Insurance-Related  Assessments"  in 1997.  SOP  97-3  provides  guidance  on the
  recognition   and  measurement  of  liabilities  for  guaranty  fund  and  other
  insurance-related  assessments.  Implementation is required by the first quarter
  of 1999, 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.
  
  In 1998,  the AICPA  issued  SOP  98-1,  "Accounting  for the Costs of  Computer
  Software  Developed or Obtained for Internal  Use." SOP 98-1 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 is required by the first quarter of 1999. Although CIGNA
  has not yet determined the timing of  implementation,  this pronouncement is not
  expected  to have a  material  effect on  results of  operations,  liquidity  or
  financial condition.
  
                                          5
  <PAGE>
  NOTE 3 - ACQUISITIONS AND DISPOSITIONS
  
  As of January 1, 1998,  CIGNA sold its  individual  life  insurance  and annuity
  businesses for cash proceeds of $1.4 billion.  The sale resulted in an after-tax
  gain of $773  million of which $202 million was  recognized  upon closing of the
  sale.  Since the principal  agreement to sell these businesses is in the form of
  an indemnity reinsurance arrangement, the remaining $571 million of the gain was
  deferred and is being  recognized at the rate that earnings from the  businesses
  sold would have been  expected  to emerge,  primarily  over  fifteen  years on a
  declining basis. Also, as part of the transaction,  CIGNA recorded a reinsurance
  recoverable  from  the  purchaser  of $5.8  billion  for  insurance  liabilities
  retained and transferred invested assets of $5.4 billion along with other assets
  and liabilities associated with the businesses. The sales agreement provides for
  post-closing adjustments, however, any future adjustments are not expected to be
  material to results of operations, liquidity or financial condition.
  
  CIGNA acquired the outstanding common stock of Healthsource, Inc. (Healthsource)
  on June 25, 1997. The cost of the acquisition  was $1.7 billion,  reflecting the
  purchase of  Healthsource  common stock for $1.4 billion and the  retirement  of
  Healthsource  debt of $250  million.  The  acquisition  was  accounted  for as a
  purchase,  and was  financed  through  the  issuance of  long-term  debt of $600
  million and a combination of internally generated funds and short-term debt. The
  results  of  operations  of  Healthsource   are  included  in  the  accompanying
  consolidated  financial  statements from the date of  acquisition.  Healthsource
  revenues  that are not  included  in  CIGNA's  results of  operations  were $482
  million for the first three months of 1997.  The pro forma effect on CIGNA's net
  income was not material.
  
  Goodwill  and  other   intangible   assets   associated  with  the  Healthsource
  acquisition  were $1.5  billion,  including  $24 million  recorded in the fourth
  quarter of 1997 for severance of Healthsource  employees,  vacated  Healthsource
  lease space and  adjustments  to  Healthsource  net assets to conform to CIGNA's
  accounting policies. As of March 31, 1998, approximately $4 million of severance
  was paid to approximately  230 employees.  Goodwill and other intangible  assets
  are being  amortized on a straight-line basis over periods ranging from eight to
  40 years.
  
  CIGNA had other  acquisitions and  dispositions  during the three months of 1998
  and 1997, 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)                                         1998       1997
  ---------------------------------------------------------------------
  Realized investment gains (losses):
       Fixed maturities                                  $32        $26
       Equity securities                                   4          5
       Mortgage loans                                     12        (13)
       Real estate                                         1         18
       Other                                              10          8
                                                  ---------------------
                                                          59         44
  Less income taxes                                       21         16
  ---------------------------------------------------------------------
  Net realized investment
  gains                                                  $38        $28
  ------------------------------------------------=====================
  
  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)                                         1998       1997
  ---------------------------------------------------------------------
  
  Proceeds from sales                                 $1,686     $1,587
  Gross gains on sales                                    51         19
  Gross losses on sales                                  (24)       (11)
  ---------------------------------------------------------------------
  
                                          6
  <PAGE>
  
  The components of unrealized  appreciation  (depreciation) on securities for the
  three months ended March 31 were as follows:
  
  ==================================================================
  (In millions)                                      1998       1997
  ------------------------------------------------------------------
  Unrealized appreciation (depreciation) on
  securities held, net of taxes (benefits) of $93
  and $(131), respectively.                          $179     $(247)
  Less gains realized in net income, net of
  taxes of $68 and $11, respectively.                 126         20
                                               ---------------------
  Net unrealized appreciation (depreciation)          $53     $(267)
  ---------------------------------------------=====================
  
  NOTE 5 - EARNINGS PER SHARE
  
  Three Months Ended March 31,
  ==================================================================
                                                  Effect
  (Dollars in millions,                               of
  except per share amounts)           Basic     Dilution      Diluted
  -------------------------------------------------------------------
  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
  ---------------------------------==================================
  1997
  -------------------------------------------------------------------
  Net income                           $288           --         $288
  ---------------------------------==================================
  Shares (in thousands):
  Weighted average                  220,458           --      220,458
  Options and restricted
  stock grants                                     1,857        1,857
  -------------------------------------------------------------------
  Total shares                      220,458        1,857      222,315
  ---------------------------------==================================
  Earnings per share                  $1.31      $(0.01)        $1.30
  ---------------------------------==================================
  
  Common shares held as Treasury shares were 48,803,100 and 41,127,330 as of March
  31, 1998 and 1997, respectively.
  
  Share and per share amounts  reflect the three-for-one stock split discussed in
  Note 1.
  
  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.  During  the third  quarter  of 1997,  the U.S.  Tax Court  ruled
  against  CIGNA on this issue.  The decision did not have an effect on results of
  operations,  as liabilities had been previously established.  In connection with
  this matter,  CIGNA made payments of approximately  $250 million during 1997 and
  $115 million in the first quarter of 1998. CIGNA has appealed the U.S. Tax Court
  decision to the U.S. Court of Appeals.
  
  In management's opinion,  adequate tax liabilities have been established for all
  years.
  
  NOTE 7 - REINSURANCE
  
  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.
  
  Failure of reinsurers to indemnify CIGNA, as a result of reinsurer  insolvencies
  and disputes, could result in losses.  Allowances for uncollectible amounts were
  $702  million  and $720  million as of March 31,  1998 and  December  31,  1997,
  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  quarter  of 1998 and 1997,  premiums  and fees were net of ceded
  premiums of $443 million and $414 million,  respectively. In addition, benefits,
  losses and  settlement  expenses for the first quarter of 1998 and 1997 were net
  of reinsurance recoveries of $385 million and $258 million, respectively.
  
                                          7
  <PAGE>
  NOTE 8 - COST REDUCTION INITIATIVES
  
  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  Life and Health  Benefits
  segment.  The charge  consisted  primarily of costs related to  severance,  real
  estate and other costs for office  closings.  The cash outlays  associated  with
  these  initiatives will continue through 1999 with most occurring in 1998. CIGNA
  has funded and will continue to fund the cash outlays through liquid assets, and
  such  funding  has not and  will  not  have a  material  adverse  effect  on its
  liquidity. As of March 31, 1998,  approximately $1 million of severance was paid
  to approximately 225 employees.
  
  NOTE 9 - 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 industrial  revenue bonds as well as other debt instruments
  and  guarantees  of a minimum  level of benefits  for certain  separate  account
  contracts.  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 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.
  
  Proposed  legislation  for  Superfund  reform  remains  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  results of  operations,  liquidity  or  financial  condition  cannot be
  reasonably estimated at this time.
  
  In 1996,  Congress passed  legislation that phases out over a three-year  period
  the tax deductibility of policy loan interest for most leveraged corporate-owned
  life  insurance  products.  CIGNA does not  expect  this  legislation  to have a
  material  effect  on  its  consolidated  results  of  operations,  liquidity  or
  financial condition.
  
  The  National  Association  of  Insurance   Commissioners  (NAIC)  is  currently
  addressing  risk-based capital guidelines for health  maintenance  organizations
  (HMOs).  CIGNA does not expect such guidelines to have a material adverse effect
  on its future results of operations, liquidity or financial condition.
  
  In 1998, the NAIC adopted standardized  statutory accounting  principles.  Since
  these  principles  have not yet been  adopted by the  insurance  departments  of
  various jurisdictions in which CIGNA's insurance
  
                                          8
  <PAGE>
  subsidiaries are domiciled, the timing or 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.
  
                                          9
  <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, 1998,  compared with December 31, 1997,  and its results
  of operations for the three months ended March 31, 1998,  compared with the same
  period  last  year.  This  discussion   should  be  read  in  conjunction   with
  Management's  Discussion and Analysis  included in CIGNA's 1997 Annual Report to
  Shareholders  (pages 10  through  23),  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
  
  As of January 1, 1998,  CIGNA sold its  individual  life  insurance  and annuity
  businesses for cash proceeds of $1.4 billion.  The sale resulted in an after-tax
  gain of $773  million of which $202 million was  recognized  upon closing of the
  sale.  Since the principal  agreement to sell these businesses is in the form of
  an indemnity reinsurance arrangement, the remaining $571 million of the gain was
  deferred and is being  recognized at the rate that earnings from the  businesses
  sold would have been  expected  to emerge,  primarily  over  fifteen  years on a
  declining basis.  Approximately  $17 million of the deferred gain was recognized
  in the first  quarter of 1998.  The sales  agreement  provides for  post-closing
  adjustments,  however, any future adjustments are not expected to be material to
  results of operations, liquidity or financial condition.
  
  CIGNA's priorities for the use of capital, including proceeds from the sale, are
  internal  growth,  acquisitions  and share  repurchases.  Absent higher internal
  growth  or  attractive  acquisition  opportunities,  proceeds  from the sale are
  expected to be used for share repurchases, depending on market conditions.
  
  CIGNA acquired the outstanding common stock of Healthsource, Inc. (Healthsource)
  on June 25, 1997. The cost of the acquisition  was $1.7 billion,  reflecting the
  purchase of  Healthsource  common stock for $1.4 billion and the  retirement  of
  Healthsource  debt of $250  million.  The  acquisition  was  accounted  for as a
  purchase,  and was  financed  through  the  issuance of  long-term  debt of $600
  million and a combination of internally generated funds and short-term debt.
  
  Goodwill  and  other   intangible   assets   associated  with  the  Healthsource
  acquisition  were $1.5  billion,  including  $24 million  recorded in the fourth
  quarter of 1997 for severance of Healthsource  employees,  vacated  Healthsource
  lease space and  adjustments  to  Healthsource  net assets to conform to CIGNA's
  accounting  policies.  Annual  expense  savings  of $35  million  after-tax  are
  expected from the severance actions and vacated lease space, with  approximately
  two-thirds  emerging  in 1998 and the full  amount in 1999.  Goodwill  and other
  intangible  assets are being  amortized  on a straight-line basis over  periods
  ranging from eight to 40 years.
  
  In addition, in the fourth quarter of 1997, CIGNA recorded a pre-tax integration
  charge of $87 million ($58 million  after-tax) in connection  with its review of
  Healthsource  operations.  The charge  primarily  resulted  from an  analysis of
  Healthsource  HMO  medical   reserves,   receivable   balances  and  contractual
  obligations.
  
  CIGNA continues to conduct  strategic and financial reviews of its businesses in
  order to deploy its capital most effectively.  In connection with these efforts,
  CIGNA has invested in various growth  initiatives  including  approximately $210
  million for recent  international  life and health expansion.  Certain risks are
  inherent in expanding  operations in foreign  countries.  These  investments are
  routinely  monitored for potential  impairment.  However,  management  currently
  believes that such investments are recoverable.
  
  See  Note  3  to  the  Financial   Statements  for  additional   information  on
  acquisitions and dispositions.
  
  Cost Reduction Initiatives
  
  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
  
                                         10
  <PAGE>
  Life and Health  Benefits  segment.  The  charge  consisted  primarily  of costs
  related to severance,  real estate and other costs for office closings. The cash
  outlays  associated with these  initiatives will continue through 1999 with most
  occurring in 1998.  CIGNA has funded and will  continue to fund the cash outlays
  through  liquid  assets,  and such  funding has not and will not have a material
  adverse effect on its  liquidity.  These  initiatives  are expected to result in
  annual after-tax expense savings of $50 million with approximately two-thirds of
  the savings  emerging in 1998 and the full amount in 1999. As of March 31, 1998,
  there were no material  changes to the costs  associated with or the anticipated
  annual savings related to these initiatives. As of March 31, 1998, approximately
  $1 million of severance was paid to approximately 225 employees.
  
  See  Note 8 to the  Financial  Statements  for  additional  information  on cost
  reduction initiatives.
  
  Other Matters
  
  CIGNA is highly  dependent  on  automated  systems and systems  applications  in
  conducting  its ongoing  operations.  Such systems are utilized for, among other
  things,  processing claims,  billing and collecting  premiums from customers and
  managing  investment  activities.  If these  systems were unable to process data
  accurately  because of failing to be Year 2000 ready,  these activities would be
  interrupted  and could have a  material  adverse  effect on  CIGNA's  results of
  operations.
  
  By the beginning of 1999, CIGNA expects to substantially  complete modifications
  or replacement  of its systems to ensure Year 2000  readiness and,  during 1999,
  expects to complete  testing of its systems and verify that its systems properly
  interface   with  external   parties,   including   customers  and   third-party
  administrators.  CIGNA is utilizing both internal and external resources to meet
  this  timetable.  The  after-tax  costs  of these  efforts  are  expected  to be
  approximately $100 million in 1998 and $50 million in 1999. 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.  Due to the complexities of estimating
  remediation  costs,  estimates  are  subject  to  change  as Year  2000  efforts
  progress.  Year  2000  costs  for the first  quarter  of 1998  were $14  million
  after-tax.
  
  As noted above, CIGNA has relationships with various third party entities in its
  ordinary  course of business.  CIGNA is assessing and attempting to mitigate its
  risks with respect to the failure of these  entities to be Year 2000 ready.  The
  effect,  if any,  on CIGNA's  results of  operations  from the  failure of these
  entities  to be Year  2000  ready  is not  reasonably  estimable.  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.
  
  Certain European  countries plan to begin  implementing a common currency (euro)
  in January 1999. CIGNA expects that it will have procedures and systems in place
  as of January 1999 to support the  implementation of the euro and that the costs
  of these efforts will not be material.
  
  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.
  
  The eventual  effect on CIGNA of the changing  environment  in which it operates
  remains  uncertain.  For  additional  information,  see Note 9 to the  Financial
  Statements.
  
  Recent Accounting Pronouncements
  
  The American Institute of Certified Public Accountants  (AICPA) issued Statement
  of Position  (SOP) 97-3,  "Accounting  by Insurance  and Other  Enterprises  for
  Insurance-Related  Assessments"  in 1997.  SOP  97-3  provides  guidance  on the
  recognition   and  measurement  of  liabilities  for  guaranty  fund  and  other
  insurance-related  assessments.  Implementation is required by the first quarter
  of 1999, with the cumulative  effect of adopting the SOP reflected in net income
  in the
  
                                         11
  <PAGE>
  year  of  adoption.   CIGNA  has  not   determined   the  effect  or  timing  of
  implementation of this pronouncement.
  
  In 1998,  the AICPA  issued  SOP  98-1,  "Accounting  for the Costs of  Computer
  Software  Developed or Obtained for Internal  Use." SOP 98-1 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 is required by the first quarter of 1999. Although CIGNA
  has not yet determined the timing of  implementation,  this pronouncement is not
  expected  to have a  material  effect on  results of  operations,  liquidity  or
  financial condition.
  
  CONSOLIDATED RESULTS OF OPERATIONS
  =================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                       March 31,
  (In millions)                                    1998       1997
  -----------------------------------------------------------------
  Premiums and fees                                $3,901    $3,388
  Net investment income                               937     1,053
  Other revenues                                      514       160
  Realized investment gains                            59        44
                                                  -----------------
  Total revenues                                    5,411     4,645
  Benefits and expenses                             4,643     4,208
                                                  -----------------
  Income before taxes                                 768       437
  Income taxes                                        273       149
                                                  -----------------
  Net income                                         $495      $288
  ------------------------------------------------=================
  Realized investment gains,
  net of taxes                                        $38       $28
  ------------------------------------------------=================
  
  CIGNA's first quarter 1998  consolidated  net income increased 72% from the same
  period last year. The increase in net income  primarily  reflects a $202 million
  after-tax gain  recognized  upon closing of the sale of CIGNA's  individual life
  insurance and annuity businesses. Excluding this gain, operating income* for the
  first  quarter of 1998 was $255 million  compared with $260 million for the same
  period last year, a decrease of 2%. This decrease  reflects  improvement  in the
  Employee Life and Health Benefits and Employee  Retirement and Savings  Benefits
  segments  offset by lower  earnings  in the other  business  segments  and Other
  Operations.
  
  After-tax realized investment results increased 36% in the first quarter of 1998
  from the same period last year. This increase  primarily reflects gains on sales
  of fixed maturities and mortgage loans, partially offset by lower gains on sales
  of  real  estate.  For  additional  information  see  Note  4 to  the  Financial
  Statements.
  
  Full year  operating  income  for 1998 is  expected  to be  comparable  to 1997,
  excluding  the $202 million gain on sale of businesses  discussed  above and the
  1997  Healthsource  integration  and health  care cost  reduction  charge of $80
  million.  Results for 1998 could be adversely  affected by the factors  noted in
  the cautionary statements on page 20.
  
  EMPLOYEE LIFE AND HEALTH BENEFITS
  =================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                       March 31,
  (In millions)                                    1998       1997
  -----------------------------------------------------------------
  Premiums and fees                                $2,730    $2,103
  Net investment income                               143       135
  Other revenues                                      129       107
  Realized investment gains                            27         6
                                                  -----------------
  Total revenues                                    3,029     2,351
  Benefits and expenses                             2,794     2,166
                                                  -----------------
  Income before taxes                                 235       185
  Income taxes                                         86        64
                                                  -----------------
  Net income                                         $149      $121
  ------------------------------------------------=================
  Realized investment gains,
  net of taxes                                        $18        $4
  ------------------------------------------------=================
  
  Net income for the Employee Life and Health Benefits  segment  increased 23% for
  the first quarter of 1998,  compared  with the same period last year.  Operating
  income for the first quarter of 1998 increased 12% compared with the same period
  last year. Operating income for the Indemnity and HMO operations was as follows:
  
  =================================================================
                                                  Three Months Ended
                                                       March 31,
  (In millions)                                      1998      1997
  -----------------------------------------------------------------
  Indemnity operations                                $69       $58
  HMO operations                                       62        59
  -----------------------------------------------------------------
  Total                                              $131      $117
  =================================================================
  
  Indemnity  operating income increased 19% for the first quarter of 1998 compared
  with the same period  last year.  This  increase  primarily  reflects  favorable
  long-term  disability claim experience,  partially offset by unfavorable medical
  claim experience.
  --------
  *Operating  income  (loss) is defined as net income (loss)  excluding  after-tax
  realized investment results.
  
                                         12
  <PAGE>
  HMO earnings  increased 5% for the first  quarter of 1998 compared with the same
  period last year. This improvement  reflects medical membership growth primarily
  from the  Healthsource  acquisition and rate increases,  and improved results in
  dental and mental health operations. These improvements were partially offset by
  increased HMO medical costs,  and  Healthsource  goodwill and other  intangibles
  amortization of $9 million.
  
  Premiums and fees  increased  30% for the first  quarter of 1998 compared to the
  same period last year. This increase  primarily reflects  Healthsource  premiums
  and fees of  approximately  $500 million,  rate  increases and  non-Healthsource
  membership growth.  Growth in premiums is expected to continue to be constrained
  by competitive pressures in both the medical indemnity and HMO markets.
  
  Net  investment  income  increased 6% for the first  quarter of 1998 compared to
  1997 primarily due to the addition of assets related to Healthsource,  partially
  offset by lower yields.
  
  As of March 31,  1998,  total HMO  membership  was  approximately  6.3  million,
  representing  an increase of 40% since March 31, 1997 and 7% since  December 31,
  1997.  Approximately  75% of the increase from March 31, 1997 is a result of the
  Healthsource  acquisition while the remaining 25% reflects  membership growth in
  CIGNA's HMO alternative  funding  programs and  traditional HMO business.  Under
  alternative  funding  programs,  the  customer  assumes  all or a portion of the
  responsibility for funding claims. CIGNA generally earns a lower margin on these
  programs than under traditional HMO plans.
  
  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 1998 and  1997  were
  approximately  $3.2 billion and $2.4 billion,  respectively,  representing a 33%
  increase. This increase primarily reflects the Healthsource acquisition,  and to
  a lesser  extent,  higher  medical costs and  cancellations  and  conversions of
  medical indemnity business to HMOs. Premium equivalents are expected to continue
  to be constrained by competitive pressures in both the medical indemnity and HMO
  markets.
  
  Premium equivalents were 54% and 53% of total adjusted premiums and fees for the
  first  quarters of 1998 and 1997,  respectively.  Administrative  Services  Only
  (ASO) plans  accounted for 48% and 49% of total  adjusted  premiums and fees for
  the first quarters of 1998 and 1997, respectively.
  
  EMPLOYEE RETIREMENT AND SAVINGS BENEFITS
  =================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                       March 31,
  (In millions)                                    1998       1997
  -----------------------------------------------------------------
  Premiums and fees                                  $54        $46
  Net investment income                              387        402
  Realized investment gains                            4         12
                                               --------------------
  Total revenues                                     445        460
  Benefits and expenses                              359        368
                                               --------------------
  Income before taxes                                 86         92
  Income taxes                                        27         30
                                               --------------------
  Net income                                         $59        $62
  ---------------------------------------------====================
  Realized investment gains,
  net of taxes                                        $3         $8
  ---------------------------------------------====================
  
  Net income for the Employee Retirement and Savings Benefits segment decreased 5%
  for the first quarter of 1998, compared with the same period of 1997.  Operating
  income for the first quarter of 1998 was $56 million,  compared with $54 million
  for the same period last year.  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 1998  increased 17% compared with the
  same period last year,  reflecting higher fees from separate accounts and higher
  annuity sales.
  
  Net  investment  income  decreased 4% for the first  quarter of 1998,  primarily
  reflecting lower  investment  yields and customers'  continued  redirection of a
  portion of their investments from the general account to separate accounts.
  
                                         13
  <PAGE>
  Assets  under  management  is 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)                                  1998           1997
  ------------------------------------------------------------------
  Balance -- January 1                        $45,924        $40,587
  Premiums and deposits                         2,064          2,049
  Investment results                              744            554
  Increase (decrease) in fair value of assets   1,853           (286)
  Customer withdrawals                           (868)          (790)
  Other, including participant
  withdrawals and benefit payments             (1,344)        (1,031)
  ------------------------------------------------------------------
  Balance -- March 31                         $48,373        $41,083
  ==================================================================
  
  Premiums  and deposits  were about level in the three  months of 1998,  compared
  with  the  same  period  in  1997.  For  the  three  months  of 1998  and  1997,
  approximately  54% and 45%,  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 34% in the three months of 1998, compared with the same period
  in 1997.  This  increase  reflects  higher  capital  gains and growth in assets,
  partially offset by lower investment  yields.  The increase for 1998 in the fair
  value of assets is due to market  value  appreciation  of equity  securities  in
  separate  accounts and, to a lesser extent,  market value  appreciation of fixed
  maturities  in the  general  account.  The  increase  in Other  reflects  larger
  participant  withdrawals  and benefit  payments  due to a higher level of assets
  under management.
  
  Management expects asset growth to continue to be constrained due to the lack of
  growth in the defined benefit market. In addition,  assets under management will
  continue to be affected by market value  fluctuations  for fixed  maturities and
  equity securities.
  
  INDIVIDUAL FINANCIAL SERVICES
  ==================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                       March 31,
  (In millions)                                     1998      1997
  -----------------------------------------------------------------
  Premiums and fees                                  $155      $234
  Net investment income                               170       260
  Other revenues                                      342        14
  Realized investment gains                             8        13
                                              ---------------------
  Total revenues                                      675       521
  Benefits and expenses                               288       436
                                              ---------------------
  Income before taxes                                 387        85
  Income taxes                                        139        30
                                              ---------------------
  Net income                                         $248       $55
  --------------------------------------------=====================
  Realized investment gains,
  net of taxes                                         $5        $8
  --------------------------------------------=====================
  
  Net income for the Individual Financial Services segment increased substantially
  from the same period last year. This increase reflects an after-tax gain of $202
  million recognized upon the closing of the sale of the individual life insurance
  and annuity  businesses and $17 million  after-tax from recognition of a portion
  of the  deferred  gain  associated  with  the sale (as  discussed  on page  10).
  Excluding these amounts,  operating income for the first quarter of 1998 was $24
  million  compared  with $26 million  for the same  period  last year  (excluding
  earnings of $21 million related to the businesses sold). This decrease primarily
  reflects  unfavorable  claim  experience in the accident and health  reinsurance
  operations, partially offset by growth in interest-sensitive business.
  
  For the first  quarter of 1998,  premiums and fees  decreased  34% from the same
  period of 1997. Excluding 1997 premiums and fees related to the businesses sold,
  the  increase  for the first  quarter of 1998 was 17%.  This  increase  reflects
  growth in reinsurance  sales and higher renewal premiums for  interest-sensitive
  products.
  
  Net investment  income decreased 35% for the first quarter of 1998 compared with
  the same period of 1997.  Excluding  1997 net  investment  income related to the
  businesses  sold,  the  increase  for the first  quarter  of 1998 was 11%.  This
  increase reflects growth in interest-sensitive business.
  
  In 1996,  Congress passed  legislation that phases out over a three-year  period
  the tax deductibility of policy loan interest for most leveraged corporate-owned
  life insurance (COLI) products. For the first
  
                                         14
  <PAGE>
  quarter of 1998,  revenues of $145 million and  operating  income of $10 million
  were from  leveraged  COLI products that are affected by this  legislation.  The
  effect of this  legislation  on customers'  decisions to maintain these policies
  after  the  phase-out  period is  unknown.  However,  all or a portion  of these
  policies could lapse.
  
  PROPERTY AND CASUALTY
  ==================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                      March 31,
  (In millions)                                    1998       1997
  -----------------------------------------------------------------
  Premiums and fees                                 $962     $1,005
  Net investment income                              173        195
  Other revenues                                      69         72
  Realized investment gains                           19         13
                                               --------------------
  Total revenues                                   1,223      1,285
  Benefits and expenses                            1,131      1,190
                                               --------------------
  Income before taxes                                 92         95
  Income taxes                                        30         30
                                               --------------------
  Net income                                         $62        $65
  ---------------------------------------------====================
  Realized investment gains,
  net of taxes                                       $12         $8
  ---------------------------------------------====================
  
  Net income for the  Property  and  Casualty  segment  decreased 5% for the first
  quarter of 1998, compared with the same period last year.
  
  Operating income decreased 12% for the first quarter of 1998,  compared with the
  same period in 1997.  Operating  income for the ongoing and run-off  operations
  was as follows:
  
  ==================================================================
                                                 Three Months Ended
                                                      March 31,
  (In millions)                                    1998        1997
  -----------------------------------------------------------------
  Ongoing operations:
    International                                     $31       $33
    Domestic                                           19        23
                                             ----------------------
      Total ongoing
        operations                                     50        56
  Run-off operations                                   --         1
  -----------------------------------------------------------------
      Total                                           $50       $57
  =================================================================
  
  The decline in the  international  operations for 1998 primarily  reflects lower
  property and  casualty  earnings due to the  competitive  environment  and lower
  investment  income.  Partially  offsetting the decline were  improvements in the
  international life and health operations.
  
  The decline in the domestic  operations  for 1998  primarily  reflects lower net
  investment income and, to a lesser extent, adverse property claim experience.
  
  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  4% in the  first  quarter  of 1998.  This  decline
  reflects lower domestic premiums,  including $17 million from the discontinuance
  of writing personal homeowners  insurance and lower  international  property and
  casualty  premiums.  These declines reflect continued price competition and, for
  international,  the unfavorable effect of foreign exchange. Partially offsetting
  these  declines  was  growth in the  international  life,  health  and  accident
  businesses.
  
  Net investment  income decreased 11% for the first quarter of 1998 compared with
  the same  period of 1997.  The decline  reflects  lower  assets and yields,  the
  unfavorable  effect of foreign exchange and a shift in the investment  portfolio
  mix from fixed maturities to equity securities.
  
  The domestic ongoing  operations had pre-tax  catastrophe  losses of $9 million,
  net of reinsurance, for the first quarter of 1998, compared with $12 million for
  the first quarter of 1997. The international  operations had pre-tax catastrophe
  losses of $11 million, net of reinsurance,  for the first quarter of 1998. There
  were no catastrophe  losses associated with the international  operations in the
  first quarter of 1997. The effects of reinsurance on catastrophe  losses for the
  periods presented were not material.
  
  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 1997 Form 10-K.
  
                                         15
  <PAGE>
  CIGNA's  property and casualty  loss reserves of $14.9 billion and $15.1 billion
  as of March 31, 1998 and  December 31,  1997,  respectively,  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.
  
  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  reinsurance  recoverables  were  approximately  $6.0  billion  and $6.2
  billion as of March 31,  1998 and  December  31,  1997,  net of  allowances  for
  unrecoverable reinsurance of $702 million and $720 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)                                     1998       1997
  -----------------------------------------------------------------
  By business operation:
    Ongoing operations                                 $2       $21
    Run-off operations                                 46        53
  -----------------------------------------------------------------
  Total                                               $48       $74
  =================================================================
  By type of loss:
    Asbestos-related                                  $18       $21
    Environmental pollution                             7         6
    Unrecoverable
       reinsurance                                      9         6
    Workers' compensation                              10        12
    Other                                               4        29
  -----------------------------------------------------------------
  Total                                               $48       $74
  =================================================================
  
  OTHER OPERATIONS
  
  Other Operations  primarily includes  unallocated  investment  income,  expenses
  (including  debt  service) and taxes.  Also  included are the results of CIGNA's
  settlement  annuity business and non-insurance  operations  engaged primarily in
  investment and real estate activities and certain new business initiatives.
  
  Other  Operations  had a net loss of $23 million  for the first  quarter of 1998
  compared  with a net loss of $15  million for the first  quarter of 1997.  There
  were no realized  investment  gains or losses for the first  quarter of 1998 and
  1997. The increase in losses primarily  reflects financing costs associated with
  the  Healthsource  acquisition  and increased  expenses  related to new business
  initiatives.
  
                                         16
  <PAGE>
  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 1998, cash and cash equivalents  decreased $303 million
  from $2.6 billion as of December  31, 1997.  This  decrease  primarily  reflects
  repayment of debt ($426 million),  net withdrawals from  contractholder  deposit
  funds ($170  million),  payments of dividends on and repurchases of CIGNA common
  stock  ($168  million)  and cash used in  operating  activities  ($81  million),
  reflecting  the timing of  operating  cash  receipts  and  disbursements.  These
  decreases were partially  offset by cash provided by investing  activities ($537
  million),  which  includes  net  proceeds  on the  sale of the  individual  life
  insurance  and  annuity  businesses  of $1.3  billion,  partially  offset by net
  investment purchases.
  
  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  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 $1.5  billion of  long-term  debt  outstanding  at March 31,  1998 and
  December 31,  1997.  As of March 31, 1998,  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, 1998,  CIGNA's short-term debt amounted to $266 million, a decrease
  of $424 million from December 31, 1997.
  
  In April 1998,  CIGNA's Board of Directors  increased  CIGNA's  authorization to
  repurchase its common stock by $750 million.  Stock  repurchases  will depend on
  prevailing market conditions and alternative uses of capital. During 1998, CIGNA
  has repurchased  approximately 797,000 shares (2,391,000 shares post-split*) for
  $154 million,  including 209,000 shares (627,000 shares post-split*) repurchased
  for $43 million from April 1 through April 30, 1998. The remaining authorization
  as of April 30, 1998 was $957 million.
  
  INVESTMENT ASSETS
  ==================================================================
                                       March 31,        December 31,
  (In millions)                             1998                1997
  ------------------------------------------------------------------
  Fixed maturities                       $33,190             $36,358
  Equity securities                        1,030                 854
  Mortgage loans                           9,401              10,859
  Real estate                                755                 769
  Other, primarily policy loans            7,241               7,738
  ------------------------------------------------------------------
  Total investment assets                $51,617             $56,578
  ==================================================================
  
  Additional information regarding CIGNA's investment assets is included in Note 4
  to the first quarter 1998 Financial  Statements and Notes 2, 4 and 5 to the 1997
  Financial Statements as well as the 1997 Form 10-K.
  
  Investment assets as of March 31, 1998 decreased 9% from December 31, 1997. This
  decrease primarily relates to investments which were included in the sale of the
  individual life insurance and annuity businesses.
  
  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,
                                               1998             1997
  ------------------------------------------------------------------
  Fixed maturities                              30%              29%
  Mortgage loans                                58%              53%
  Real estate                                   62%              64%
  ==================================================================
  
  --------------
  *  See  Note  1 to  the  Financial  Statements  for  information  regarding  the
  three-for-one stock split.
  
                                         17
  <PAGE>
  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, 1998, the fair value of fixed maturities, including policyholder
  share,  was greater than  amortized  cost by $1.9  billion,  compared  with $2.1
  billion as of  December  31,  1997.  The  decrease  in  unrealized  appreciation
  primarily  relates to bonds which were  included  in the sale of the  individual
  life insurance and annuity businesses.
  
       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 $49 million of potential problem bonds, including amounts attributable
  to policyholder contracts, as of March 31, 1998, compared with $63 million as of
  December  31,  1997.  These  amounts  are  net  of  $10  million  of  cumulative
  write-downs for both periods.
  
  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, 1998 and December  31,  1997,  CIGNA had problem  bonds,  including  amounts
  attributable to policyholder contracts, of $150 million and $137 million, net of
  related  cumulative  write-downs  of $18 million and $30 million,  respectively.
  Problem bonds included $3 million  related to Asian  investments as of March 31,
  1998.
  
  CIGNA recognizes interest income on problem bonds only when payment is received.
  See the Summary on page 19 for the effect of  non-accruals  and  write-downs for
  bonds on policyholder contracts and on CIGNA's net income.
  
  Mortgage Loans
  ==================================================================
                                        March 31,       December 31,
                                             1998               1997
  ------------------------------------------------------------------
  Mortgage loans (in millions)             $9,401            $10,859
  Property type:
     Retail facilities                        39%                40%
     Office buildings                          36                 34
     Apartment buildings                       13                 13
     Industrial                                 6                  5
     Hotels                                     4                  5
     Other                                      2                  3
  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 $194 million as of March 31, 1998, and $191 million
  as of December 31, 1997,  net of related  valuation  reserves of $36 million and
  $41 million, respectively.
  
  CIGNA's  problem  mortgage loans include  delinquent and  restructured  mortgage
  loans.  Delinquent  mortgage  loans  include  those on which  payment is overdue
  generally  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 $142 million and $152  million,  net of valuation  reserves of $9
  million as of March 31, 1998 and December 31, 1997.
  
                                         18
  <PAGE>
  CIGNA recognizes  interest income on problem mortgage loans only when payment is
  received.  See the Summary  below for the effect of  non-accruals  and valuation
  reserves for mortgage loans on policyholder contracts and on CIGNA's net income.
  
  Real Estate
  
  As of March 31, 1998 and  December  31, 1997,  investment  real  estate,  net of
  reserves  and  write-downs,   included:   1)  $411  million  and  $414  million,
  respectively,  of real estate  held for the  production  of income,  and 2) $344
  million and $355 million,  respectively, of real estate held for sale, primarily
  properties acquired as a result of foreclosure of mortgage loans.
  
  See the Summary below for the effect of write-downs  and valuation  reserves for
  real estate on policyholder contracts and on CIGNA's net income.
  
  Summary
  
  The adverse (favorable) effects of write-downs and changes in valuation reserves
  as well as of non-accruals  on policyholder  contracts and on CIGNA's net income
  were as follows:
  
  <TABLE>
  <CAPTION>
  <S>                                                                             <C>        <C>                <C>         <C>
  ============================================================================================================================
                                                                                         Three Months Ended March 31,
                                                                             -------------------------------------------------
                                                                                       1998                         1997
                                                                             -------------------------------------------------
                                                                               Policy-                       Policy-
                                                                                holder                        holder
  (In millions)                                                              Contracts       CIGNA         Contracts     CIGNA
  ----------------------------------------------------------------------------------------------------------------------------
  Write-downs and
  valuation
  reserves:
     Bonds                                                                        $1         $--                $6          $1
     Mortgage loans                                                               (3)         (1)                2           1
     Real estate                                                                  (2)         --                 1           1
  ----------------------------------------------------------------------------------------------------------------------------
  Total                                                                          $(4)        $(1)               $9          $3
  ============================================================================================================================
  Non-accruals:
     Bonds                                                                        $1          $2                $2          $5
     Mortgage loans                                                               --          --                (1)         --
  ----------------------------------------------------------------------------------------------------------------------------
  Total                                                                           $1          $2                $1          $5
  ============================================================================================================================
  </TABLE>
  
  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 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.
  
  
                                         19
  <PAGE>
  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;  and 6) the effect on CIGNA's  international  operations and  investments
  from further significant deterioration in Asian economies.
  
                                         20
  <PAGE>
  Part II. OTHER INFORMATION
  
  Item 5.  Other Information
  
                           SELECTED FINANCIAL INFORMATION
  
  The following table sets forth certain selected historical financial information
  of the  Company  for,  and as of the end of, each of the  periods  presented  as
  adjusted for a  three-for-one  stock split  effective May 4, 1998.  The selected
  historical financial information supplements,  and should be read in conjunction
  with,  the  Company's  Annual  Report on Form  10-K for the  fiscal  year  ended
  December 31, 1997. The selected historical financial  information provided below
  is not  necessarily  indicative  of future  results of  operations  or financial
  performance for the Company.
  
  <TABLE>
  <CAPTION>
                                                                        Year Ended December 31,
                                                   1997           1996            1995            1994            1993
  =====================================================================================================================
  <S>                                             <C>             <C>             <C>             <C>             <C>  
  Net income per share - basic                    $4.93           $4.68           $0.97           $2.58           $1.09
  
  Net income per share - diluted                  $4.88           $4.64           $0.96           $2.50           $1.09
  
  Common dividends declared per share             $1.11           $1.07           $1.01           $1.01           $1.01
  
  Shareholders' equity per share                 $36.55          $32.38          $31.25          $26.82          $30.43
  
  Common shares outstanding (thousands)         216,996         222,594         228,996         216,675         216,045
  ---------------------------------------------------------------------------------------------------------------------
  </TABLE>
  
  Item 6.  Exhibits and Reports on Form 8-K.
  
            (a)  See Exhibit Index.
  
            (b)  During the quarterly  period ended March 31, 1998,  and as of the
                 filing date, CIGNA filed the following Reports on Form 8-K:
  
                 o    dated February 10, 1998,  Item 5 - containing a news release
                      regarding its fourth quarter and full year 1997 results.
  
                 o    dated April 30,  1998,  Item 5 -  containing  a news release
                      regarding its first quarter 1998 results.
  
                                         21
  <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/ Gary A. Swords
                                                  ------------------
                                                  Gary A. Swords
                                                  Vice President and
                                                  Chief Accounting Officer
  
  Date: May 8, 1998
  
                                         22
  <PAGE>
                                    Exhibit Index
  
                                                                Method of
  Number   Description                                            Filing
  
    3.1    (a)      Restated Certificate of Incorporation
                    of the registrant effective as of
                    August 4, 1997                              Filed herewith
  
            (b)     Certificate of Amendment of
                    Restated Certificate of Incorporation
                    of the registrant effective as
                    of May 4, 1998                              Filed herewith
  
  10.1              Special Incentive Agreement
                    with Mr. Taylor dated March 17, 1998        Filed herewith
  
  10.2              Special Incentive Agreement
                    with Mr. Stewart dated March 17, 1998       Filed herewith
  
  10.3              Special Incentive Agreement
                    with Mr. Levinson dated March 17, 1998      Filed herewith
  
  10.4              Special Incentive Agreement
                    with Mr. Isom dated March 17, 1998          Filed herewith
  
  10.5              Special Incentive Agreement
                    with Mr. Hanway dated March 17, 1998        Filed herewith
  
  12                Computation of Ratio of
                    Earnings to Fixed Charges                   Filed herewith
  
  27                Financial Data Schedule                     Included only in
                                                                the EDGAR version
                                                                of the Form 10-Q.
  
                                         23
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 105773}]
metadata_filer: {"company-data": {"conformed-name": "CIGNA CORP", "cik": "0000701221", "assigned-sic": "6331", "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": "98614546"}, "business-address": {"street1": "ONE LIBERTY PLACE 1650 MARKET ST", "street2": "PO BOX 7716", "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, 1998
  
                                         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, Philadelphia, Pa.             19192-1550
          ------------------------------------             ----------
       (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 May 4, 1998, 215,351,649 shares (as adjusted for the three-for-one stock
  split) 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                        10
  
  PART II. OTHER INFORMATION
  
          Item 5.  Other Information                                 21
          Item 6.  Exhibits and Reports on Form 8-K                  21
  
  SIGNATURE                                                          22
  
  EXHIBIT INDEX                                                      23
  
  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,
                                                                                                           1998            1997
  ==============================================================================================================================
  
  REVENUES
  Premiums and fees                                                                                   $   3,901      $     3,388
  Net investment income                                                                                     937            1,053
  Other revenues                                                                                            514              160
  Realized investment gains                                                                                  59               44
                                                                                                        --------       ---------
      Total revenues                                                                                      5,411            4,645
                                                                                                        --------       ---------
  
  BENEFITS, LOSSES AND EXPENSES
  Benefits, losses and settlement expenses                                                                3,333            3,009
  Policy acquisition expenses                                                                               228              264
  Other operating expenses                                                                                1,082              935
                                                                                                        --------       ---------
      Total benefits, losses and expenses                                                                 4,643            4,208
                                                                                                        --------       ---------
  
  INCOME BEFORE INCOME TAXES                                                                                768              437
                                                                                                        --------       ---------
  
  Income taxes (benefits):
      Current                                                                                               432              110
      Deferred                                                                                             (159)              39
                                                                                                        --------       ---------
          Total taxes                                                                                       273              149
                                                                                                        --------       ---------
  
  NET INCOME                                                                                          $     495      $       288
  ------------------------------------------------------------------------------------------------------========================
  
  BASIC EARNINGS PER SHARE                                                                            $    2.30      $      1.31
  ------------------------------------------------------------------------------------------------------========================
  
  DILUTED EARNINGS PER SHARE                                                                          $    2.27      $      1.30
  ------------------------------------------------------------------------------------------------------========================
  
  DIVIDENDS DECLARED PER SHARE                                                                        $    0.29      $      0.28
  ------------------------------------------------------------------------------------------------------========================
  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,
                                                                                       1998                         1997
  ===========================================================================================================================
  ASSETS
  Investments:
     Fixed maturities, at fair value (amortized cost, $31,276; $34,284)           $     33,190                $        36,358
     Equity securities, at fair value (cost, $695; $648)                                 1,030                            854
     Mortgage loans                                                                      9,401                         10,859
     Policy loans                                                                        6,584                          7,253
     Real estate                                                                           755                            769
     Other long-term investments                                                           351                            273
     Short-term investments                                                                306                            212
                                                                                    -----------                 -------------
         Total investments                                                              51,617                         56,578
  Cash and cash equivalents                                                              2,322                          2,625
  Accrued investment income                                                                847                            868
  Premiums, accounts and notes receivable                                                4,416                          4,265
  Reinsurance recoverables                                                              12,433                          6,753
  Deferred policy acquisition costs                                                        918                          1,542
  Property and equipment                                                                   847                            857
  Deferred income taxes                                                                  1,916                          1,788
  Other assets                                                                           1,130                          1,033
  Goodwill and other intangibles                                                         2,517                          2,542
  Separate account assets                                                               32,256                         29,348
  ---------------------------------------------------------------------------------------------------------------------------
  
          Total assets                                                            $    111,219                $       108,199
  ----------------------------------------------------------------------------------=========================================
  
  LIABILITIES
  Contractholder deposit funds                                                    $     30,714                $        30,682
  Unpaid claims and claim expenses                                                      17,702                         17,906
  Future policy benefits                                                                11,937                         11,976
  Unearned premiums                                                                      1,864                          1,774
                                                                                    -----------                 -------------
           Total insurance and contractholder liabilities                               62,217                         62,338
  Accounts payable, accrued expenses and other liabilities                               6,610                          6,562
  Current income taxes                                                                     277                             60
  Short-term debt                                                                          266                            690
  Long-term debt                                                                         1,463                          1,465
  Separate account liabilities                                                          32,061                         29,152
  ---------------------------------------------------------------------------------------------------------------------------
           Total liabilities                                                           102,894                        100,267
  ---------------------------------------------------------------------------------------------------------------------------
  
  CONTINGENCIES - NOTE 9
  
  SHAREHOLDERS' EQUITY
  Common stock (par value, $.25; shares issued, 265; 264)                                   66                             66
  Additional paid-in capital                                                             2,695                          2,655
  Net unrealized appreciation - fixed maturities                          $    723                      $     752
  Net unrealized appreciation - equity securities                              214                            132
  Net translation of foreign currencies                                       (125)                          (126)
                                                                          --------                      ---------
     Accumulated other comprehensive income                                                812                            758
  Retained earnings                                                                      6,129                          5,696
  Less treasury stock, at cost                                                          (1,377)                        (1,243)
  ---------------------------------------------------------------------------------------------------------------------------
           Total shareholders' equity                                                    8,325                          7,932
  ---------------------------------------------------------------------------------------------------------------------------
  
           Total liabilities and shareholders' equity                             $    111,219                $       108,199
  ----------------------------------------------------------------------------------=========================================
  
  SHAREHOLDERS' EQUITY PER SHARE                                                  $      38.58                $         36.55
  ----------------------------------------------------------------------------------=========================================
  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,
                                                                                           1998                        1997
  ==================================================================================================================================
                                                                                   Compre-        Share-        Compre-        Share-
                                                                                   hensive      holders'        hensive      holders'
                                                                                    Income       Equity          Income       Equity
  ==================================================================================================================================
  
  Common stock                                                                               $        66                 $        66
                                                                                              ----------                  ----------
  
  Additional paid-in capital - January 1                                                           2,655                       2,594
    Issuance of common stock for employee benefits plans                                              40                          11
                                                                                              ----------                  ----------
  Additional paid-in capital - March 31                                                            2,695                       2,605
                                                                                              ----------                  ----------
  
  Accumulated other comprehensive income - January 1                                                 758                         582
    Net unrealized depreciation - fixed maturities                             $       (29)          (29)    $      (280)       (280)
    Net unrealized appreciation - equity securities                                     82            82              13          13
                                                                                ----------                    ----------
        Net unrealized appreciation (depreciation) on securities                        53                          (267)
    Net translation of foreign currencies                                                1             1              (8)         (8)
                                                                                ----------                    ----------
            Other comprehensive income (loss)                                           54                          (275)
                                                                                              ----------                  ----------
  Accumulated other comprehensive income - March 31                                                  812                         307
                                                                                              ----------                  ----------
  
  Retained earnings - January 1                                                                    5,696                       4,855
    Net income                                                                         495           495             288         288
    Common dividends declared                                                                        (62)                        (61)
                                                                                              ----------                  ----------
  Retained earnings - March 31                                                                     6,129                       5,082
                                                                                              ----------                  ----------
  
  Treasury stock - January 1                                                                      (1,243)                       (889)
    Repurchase of common stock                                                                      (111)                        (49)
    Other treasury stock transactions, net                                                           (23)                         (5)
                                                                                              ----------                  ----------
  Treasury stock - March 31                                                                       (1,377)                       (943)
  ----------------------------------------------------------------------------------------------------------------------------------
  TOTAL COMPREHENSIVE INCOME AND SHAREHOLDERS' EQUITY                          $       549   $     8,325     $        13 $     7,117
  ------------------------------------------------------------------------------====================================================
  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,
                                                                                          1998                        1997
  ============================================================================================================================
  
  CASH FLOWS FROM OPERATING ACTIVITIES
      Net income                                                                      $       495                 $       288
      Adjustments to reconcile net income to net cash
          provided by (used in) operating activities:
              Insurance liabilities                                                            12                        (281)
              Reinsurance recoverables                                                        167                         507
              Deferred policy acquisition costs                                               (33)                        (44)
              Premiums, accounts and notes receivable                                        (167)                        145
              Accounts payable, accrued expenses, other liabilities and
                  current income taxes                                                        119                        (104)
              Deferred income taxes                                                          (159)                         39
              Realized investment gains                                                       (59)                        (44)
              Depreciation and goodwill amortization                                           78                          54
              Gain on sale of businesses                                                     (342)                          -
              Other, net                                                                     (192)                       (184)
                                                                                        ----------                 ----------
                  Net cash provided by (used in) operating activities                         (81)                        376
                                                                                        ----------                 ----------
  
  CASH FLOWS FROM INVESTING ACTIVITIES
      Proceeds from investments sold:
          Fixed maturities                                                                  1,594                       1,523
          Equity securities                                                                    92                          64
          Mortgage loans                                                                      345                         116
          Other (primarily short-term investments)                                            137                       1,554
      Investment maturities and repayments:
          Fixed maturities                                                                    940                         909
          Mortgage loans                                                                      232                         124
      Investments purchased:
          Fixed maturities                                                                 (2,616)                     (2,462)
          Equity securities                                                                  (152)                        (57)
          Mortgage loans                                                                     (479)                       (473)
          Other (primarily short-term investments)                                           (792)                     (1,107)
      Net proceeds from sale of businesses                                                  1,296                           -
      Other, net                                                                              (60)                        (57)
                                                                                        ----------                 ----------
                  Net cash provided by investing activities                                   537                         134
                                                                                        ----------                 ----------
  
  CASH FLOWS FROM FINANCING ACTIVITIES
      Deposits and interest credited to contractholder deposit funds                        1,604                       1,550
      Withdrawals and benefit payments from contractholder deposit funds                   (1,774)                     (1,823)
      Net change in short-term debt                                                          (360)                        104
      Repayment of long-term debt                                                             (66)                        (25)
      Repurchase of common stock                                                             (108)                        (55)
      Issuance of common stock                                                                 12                           2
      Common dividends paid                                                                   (60)                        (60)
                                                                                        ----------                 ----------
                  Net cash used in financing activities                                      (752)                       (307)
                                                                                        ----------                 ----------
  Effect of foreign currency rate changes on cash and cash equivalents                         (7)                         (8)
  ---------------------------------------------------------------------------------------------------------------------------
  Net increase (decrease) in cash and cash equivalents                                       (303)                        195
  Cash and cash equivalents, beginning of period                                            2,625                       1,760
  ---------------------------------------------------------------------------------------------------------------------------
  
  Cash and cash equivalents, end of period                                            $     2,322                 $     1,955
  --------------------------------------------------------------------------------------=====================================
  
  Supplemental Disclosure of Cash Information:
      Income taxes paid, net of refunds                                               $       204                 $        97
      Interest paid                                                                   $        27                 $        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 1998
  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 drawing  specific  conclusions  from  interim
  results.
  
  On April 22, 1998, CIGNA's  shareholders  approved a three-for-one  common stock
  split,  an increase in the number of common shares  authorized for issuance from
  200 million to 600 million and a decrease in the par value of common  stock from
  $1 per share to $0.25 per share.  The  additional  shares will be distributed on
  May 15, 1998,  to  shareholders  of record as of May 4, 1998.  The  reduction in
  common stock and  corresponding  increase in  additional  paid-in capital of $22
  million  reflects  these  actions  and all share  data  have been  retroactively
  adjusted for the stock split as though the split had  occurred at the  beginning
  of the periods presented.
  
  NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS
  
  In 1997, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
  Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an
  Enterprise  and Related  Information,"  which could  change the way segments are
  structured and require additional segment  disclosure.  CIGNA has not determined
  the  timing  of  implementation  of this  pronouncement,  which is  required  by
  December 31, 1998.
  
  In 1997, the FASB issued SFAS No. 130, "Reporting  Comprehensive  Income," which
  requires a presentation in the financial  statements of the components of, and a
  combined total for, all nonowner changes in shareholders'  equity. CIGNA adopted
  SFAS No. 130 in the first quarter of 1998.
  
  The American Institute of Certified Public Accountants  (AICPA) issued Statement
  of Position  (SOP) 97-3,  "Accounting  by Insurance  and Other  Enterprises  for
  Insurance-Related  Assessments"  in 1997.  SOP  97-3  provides  guidance  on the
  recognition   and  measurement  of  liabilities  for  guaranty  fund  and  other
  insurance-related  assessments.  Implementation is required by the first quarter
  of 1999, 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.
  
  In 1998,  the AICPA  issued  SOP  98-1,  "Accounting  for the Costs of  Computer
  Software  Developed or Obtained for Internal  Use." SOP 98-1 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 is required by the first quarter of 1999. Although CIGNA
  has not yet determined the timing of  implementation,  this pronouncement is not
  expected  to have a  material  effect on  results of  operations,  liquidity  or
  financial condition.
  
                                          5
  NOTE 3 - ACQUISITIONS AND DISPOSITIONS
  
  As of January 1, 1998,  CIGNA sold its  individual  life  insurance  and annuity
  businesses for cash proceeds of $1.4 billion.  The sale resulted in an after-tax
  gain of $773  million of which $202 million was  recognized  upon closing of the
  sale.  Since the principal  agreement to sell these businesses is in the form of
  an indemnity reinsurance arrangement, the remaining $571 million of the gain was
  deferred and is being  recognized at the rate that earnings from the  businesses
  sold would have been  expected  to emerge,  primarily  over  fifteen  years on a
  declining basis. Also, as part of the transaction,  CIGNA recorded a reinsurance
  recoverable  from  the  purchaser  of $5.8  billion  for  insurance  liabilities
  retained and transferred invested assets of $5.4 billion along with other assets
  and liabilities associated with the businesses. The sales agreement provides for
  post-closing adjustments, however, any future adjustments are not expected to be
  material to results of operations, liquidity or financial condition.
  
  CIGNA acquired the outstanding common stock of Healthsource, Inc. (Healthsource)
  on June 25, 1997. The cost of the acquisition  was $1.7 billion,  reflecting the
  purchase of  Healthsource  common stock for $1.4 billion and the  retirement  of
  Healthsource  debt of $250  million.  The  acquisition  was  accounted  for as a
  purchase,  and was  financed  through  the  issuance of  long-term  debt of $600
  million and a combination of internally generated funds and short-term debt. The
  results  of  operations  of  Healthsource   are  included  in  the  accompanying
  consolidated  financial  statements from the date of  acquisition.  Healthsource
  revenues  that are not  included  in  CIGNA's  results of  operations  were $482
  million for the first three months of 1997.  The pro forma effect on CIGNA's net
  income was not material.
  
  Goodwill  and  other   intangible   assets   associated  with  the  Healthsource
  acquisition  were $1.5  billion,  including  $24 million  recorded in the fourth
  quarter of 1997 for severance of Healthsource  employees,  vacated  Healthsource
  lease space and  adjustments  to  Healthsource  net assets to conform to CIGNA's
  accounting policies. As of March 31, 1998, approximately $4 million of severance
  was paid to approximately  230 employees.  Goodwill and other intangible  assets
  are being  amortized on a straight-line basis over periods ranging from eight to
  40 years.
  
  CIGNA had other  acquisitions and  dispositions  during the three months of 1998
  and 1997, 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)                                         1998       1997
  ---------------------------------------------------------------------
  Realized investment gains (losses):
       Fixed maturities                                  $32        $26
       Equity securities                                   4          5
       Mortgage loans                                     12        (13)
       Real estate                                         1         18
       Other                                              10          8
                                                  ---------------------
                                                          59         44
  Less income taxes                                       21         16
  ---------------------------------------------------------------------
  Net realized investment
  gains                                                  $38        $28
  ------------------------------------------------=====================
  
  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)                                         1998       1997
  ---------------------------------------------------------------------
  
  Proceeds from sales                                 $1,686     $1,587
  Gross gains on sales                                    51         19
  Gross losses on sales                                  (24)       (11)
  ---------------------------------------------------------------------
  
                                          6
  The components of unrealized  appreciation  (depreciation) on securities for the
  three months ended March 31 were as follows:
  
  ==================================================================
  (In millions)                                      1998       1997
  ------------------------------------------------------------------
  Unrealized appreciation (depreciation) on
  securities held, net of taxes (benefits) of $93
  and $(131), respectively.                          $179     $(247)
  Less gains realized in net income, net of
  taxes of $68 and $11, respectively.                 126         20
                                               ---------------------
  Net unrealized appreciation (depreciation)          $53     $(267)
  ---------------------------------------------=====================
  
  NOTE 5 - EARNINGS PER SHARE
  
  Three Months Ended March 31,
  ==================================================================
                                                  Effect
  (Dollars in millions,                               of
  except per share amounts)           Basic     Dilution      Diluted
  -------------------------------------------------------------------
  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
  ---------------------------------==================================
  1997
  -------------------------------------------------------------------
  Net income                           $288           --         $288
  ---------------------------------==================================
  Shares (in thousands):
  Weighted average                  220,458           --      220,458
  Options and restricted
  stock grants                                     1,857        1,857
  -------------------------------------------------------------------
  Total shares                      220,458        1,857      222,315
  ---------------------------------==================================
  Earnings per share                  $1.31      $(0.01)        $1.30
  ---------------------------------==================================
  
  Common shares held as Treasury shares were 48,803,100 and 41,127,330 as of March
  31, 1998 and 1997, respectively.
  
  Share and per share amounts  reflect the three-for-one stock split discussed in
  Note 1.
  
  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.  During  the third  quarter  of 1997,  the U.S.  Tax Court  ruled
  against  CIGNA on this issue.  The decision did not have an effect on results of
  operations,  as liabilities had been previously established.  In connection with
  this matter,  CIGNA made payments of approximately  $250 million during 1997 and
  $115 million in the first quarter of 1998. CIGNA has appealed the U.S. Tax Court
  decision to the U.S. Court of Appeals.
  
  In management's opinion,  adequate tax liabilities have been established for all
  years.
  
  NOTE 7 - REINSURANCE
  
  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.
  
  Failure of reinsurers to indemnify CIGNA, as a result of reinsurer  insolvencies
  and disputes, could result in losses.  Allowances for uncollectible amounts were
  $702  million  and $720  million as of March 31,  1998 and  December  31,  1997,
  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  quarter  of 1998 and 1997,  premiums  and fees were net of ceded
  premiums of $443 million and $414 million,  respectively. In addition, benefits,
  losses and  settlement  expenses for the first quarter of 1998 and 1997 were net
  of reinsurance recoveries of $385 million and $258 million, respectively.
  
                                          7
  NOTE 8 - COST REDUCTION INITIATIVES
  
  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  Life and Health  Benefits
  segment.  The charge  consisted  primarily of costs related to  severance,  real
  estate and other costs for office  closings.  The cash outlays  associated  with
  these  initiatives will continue through 1999 with most occurring in 1998. CIGNA
  has funded and will continue to fund the cash outlays through liquid assets, and
  such  funding  has not and  will  not  have a  material  adverse  effect  on its
  liquidity. As of March 31, 1998,  approximately $1 million of severance was paid
  to approximately 225 employees.
  
  NOTE 9 - 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 industrial  revenue bonds as well as other debt instruments
  and  guarantees  of a minimum  level of benefits  for certain  separate  account
  contracts.  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 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.
  
  Proposed  legislation  for  Superfund  reform  remains  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  results of  operations,  liquidity  or  financial  condition  cannot be
  reasonably estimated at this time.
  
  In 1996,  Congress passed  legislation that phases out over a three-year  period
  the tax deductibility of policy loan interest for most leveraged corporate-owned
  life  insurance  products.  CIGNA does not  expect  this  legislation  to have a
  material  effect  on  its  consolidated  results  of  operations,  liquidity  or
  financial condition.
  
  The  National  Association  of  Insurance   Commissioners  (NAIC)  is  currently
  addressing  risk-based capital guidelines for health  maintenance  organizations
  (HMOs).  CIGNA does not expect such guidelines to have a material adverse effect
  on its future results of operations, liquidity or financial condition.
  
  In 1998, the NAIC adopted standardized  statutory accounting  principles.  Since
  these  principles  have not yet been  adopted by the  insurance  departments  of
  various jurisdictions in which CIGNA's insurance
  
                                          8
  subsidiaries are domiciled, the timing or 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.
  
                                          9
  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, 1998,  compared with December 31, 1997,  and its results
  of operations for the three months ended March 31, 1998,  compared with the same
  period  last  year.  This  discussion   should  be  read  in  conjunction   with
  Management's  Discussion and Analysis  included in CIGNA's 1997 Annual Report to
  Shareholders  (pages 10  through  23),  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
  
  As of January 1, 1998,  CIGNA sold its  individual  life  insurance  and annuity
  businesses for cash proceeds of $1.4 billion.  The sale resulted in an after-tax
  gain of $773  million of which $202 million was  recognized  upon closing of the
  sale.  Since the principal  agreement to sell these businesses is in the form of
  an indemnity reinsurance arrangement, the remaining $571 million of the gain was
  deferred and is being  recognized at the rate that earnings from the  businesses
  sold would have been  expected  to emerge,  primarily  over  fifteen  years on a
  declining basis.  Approximately  $17 million of the deferred gain was recognized
  in the first  quarter of 1998.  The sales  agreement  provides for  post-closing
  adjustments,  however, any future adjustments are not expected to be material to
  results of operations, liquidity or financial condition.
  
  CIGNA's priorities for the use of capital, including proceeds from the sale, are
  internal  growth,  acquisitions  and share  repurchases.  Absent higher internal
  growth  or  attractive  acquisition  opportunities,  proceeds  from the sale are
  expected to be used for share repurchases, depending on market conditions.
  
  CIGNA acquired the outstanding common stock of Healthsource, Inc. (Healthsource)
  on June 25, 1997. The cost of the acquisition  was $1.7 billion,  reflecting the
  purchase of  Healthsource  common stock for $1.4 billion and the  retirement  of
  Healthsource  debt of $250  million.  The  acquisition  was  accounted  for as a
  purchase,  and was  financed  through  the  issuance of  long-term  debt of $600
  million and a combination of internally generated funds and short-term debt.
  
  Goodwill  and  other   intangible   assets   associated  with  the  Healthsource
  acquisition  were $1.5  billion,  including  $24 million  recorded in the fourth
  quarter of 1997 for severance of Healthsource  employees,  vacated  Healthsource
  lease space and  adjustments  to  Healthsource  net assets to conform to CIGNA's
  accounting  policies.  Annual  expense  savings  of $35  million  after-tax  are
  expected from the severance actions and vacated lease space, with  approximately
  two-thirds  emerging  in 1998 and the full  amount in 1999.  Goodwill  and other
  intangible  assets are being  amortized  on a straight-line basis over  periods
  ranging from eight to 40 years.
  
  In addition, in the fourth quarter of 1997, CIGNA recorded a pre-tax integration
  charge of $87 million ($58 million  after-tax) in connection  with its review of
  Healthsource  operations.  The charge  primarily  resulted  from an  analysis of
  Healthsource  HMO  medical   reserves,   receivable   balances  and  contractual
  obligations.
  
  CIGNA continues to conduct  strategic and financial reviews of its businesses in
  order to deploy its capital most effectively.  In connection with these efforts,
  CIGNA has invested in various growth  initiatives  including  approximately $210
  million for recent  international  life and health expansion.  Certain risks are
  inherent in expanding  operations in foreign  countries.  These  investments are
  routinely  monitored for potential  impairment.  However,  management  currently
  believes that such investments are recoverable.
  
  See  Note  3  to  the  Financial   Statements  for  additional   information  on
  acquisitions and dispositions.
  
  Cost Reduction Initiatives
  
  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
  
                                         10
  Life and Health  Benefits  segment.  The  charge  consisted  primarily  of costs
  related to severance,  real estate and other costs for office closings. The cash
  outlays  associated with these  initiatives will continue through 1999 with most
  occurring in 1998.  CIGNA has funded and will  continue to fund the cash outlays
  through  liquid  assets,  and such  funding has not and will not have a material
  adverse effect on its  liquidity.  These  initiatives  are expected to result in
  annual after-tax expense savings of $50 million with approximately two-thirds of
  the savings  emerging in 1998 and the full amount in 1999. As of March 31, 1998,
  there were no material  changes to the costs  associated with or the anticipated
  annual savings related to these initiatives. As of March 31, 1998, approximately
  $1 million of severance was paid to approximately 225 employees.
  
  See  Note 8 to the  Financial  Statements  for  additional  information  on cost
  reduction initiatives.
  
  Other Matters
  
  CIGNA is highly  dependent  on  automated  systems and systems  applications  in
  conducting  its ongoing  operations.  Such systems are utilized for, among other
  things,  processing claims,  billing and collecting  premiums from customers and
  managing  investment  activities.  If these  systems were unable to process data
  accurately  because of failing to be Year 2000 ready,  these activities would be
  interrupted  and could have a  material  adverse  effect on  CIGNA's  results of
  operations.
  
  By the beginning of 1999, CIGNA expects to substantially  complete modifications
  or replacement  of its systems to ensure Year 2000  readiness and,  during 1999,
  expects to complete  testing of its systems and verify that its systems properly
  interface   with  external   parties,   including   customers  and   third-party
  administrators.  CIGNA is utilizing both internal and external resources to meet
  this  timetable.  The  after-tax  costs  of these  efforts  are  expected  to be
  approximately $100 million in 1998 and $50 million in 1999. 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.  Due to the complexities of estimating
  remediation  costs,  estimates  are  subject  to  change  as Year  2000  efforts
  progress.  Year  2000  costs  for the first  quarter  of 1998  were $14  million
  after-tax.
  
  As noted above, CIGNA has relationships with various third party entities in its
  ordinary  course of business.  CIGNA is assessing and attempting to mitigate its
  risks with respect to the failure of these  entities to be Year 2000 ready.  The
  effect,  if any,  on CIGNA's  results of  operations  from the  failure of these
  entities  to be Year  2000  ready  is not  reasonably  estimable.  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.
  
  Certain European  countries plan to begin  implementing a common currency (euro)
  in January 1999. CIGNA expects that it will have procedures and systems in place
  as of January 1999 to support the  implementation of the euro and that the costs
  of these efforts will not be material.
  
  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.
  
  The eventual  effect on CIGNA of the changing  environment  in which it operates
  remains  uncertain.  For  additional  information,  see Note 9 to the  Financial
  Statements.
  
  Recent Accounting Pronouncements
  
  The American Institute of Certified Public Accountants  (AICPA) issued Statement
  of Position  (SOP) 97-3,  "Accounting  by Insurance  and Other  Enterprises  for
  Insurance-Related  Assessments"  in 1997.  SOP  97-3  provides  guidance  on the
  recognition   and  measurement  of  liabilities  for  guaranty  fund  and  other
  insurance-related  assessments.  Implementation is required by the first quarter
  of 1999, with the cumulative  effect of adopting the SOP reflected in net income
  in the
  
                                         11
  year  of  adoption.   CIGNA  has  not   determined   the  effect  or  timing  of
  implementation of this pronouncement.
  
  In 1998,  the AICPA  issued  SOP  98-1,  "Accounting  for the Costs of  Computer
  Software  Developed or Obtained for Internal  Use." SOP 98-1 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 is required by the first quarter of 1999. Although CIGNA
  has not yet determined the timing of  implementation,  this pronouncement is not
  expected  to have a  material  effect on  results of  operations,  liquidity  or
  financial condition.
  
  CONSOLIDATED RESULTS OF OPERATIONS
  =================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                       March 31,
  (In millions)                                    1998       1997
  -----------------------------------------------------------------
  Premiums and fees                                $3,901    $3,388
  Net investment income                               937     1,053
  Other revenues                                      514       160
  Realized investment gains                            59        44
                                                  -----------------
  Total revenues                                    5,411     4,645
  Benefits and expenses                             4,643     4,208
                                                  -----------------
  Income before taxes                                 768       437
  Income taxes                                        273       149
                                                  -----------------
  Net income                                         $495      $288
  ------------------------------------------------=================
  Realized investment gains,
  net of taxes                                        $38       $28
  ------------------------------------------------=================
  
  CIGNA's first quarter 1998  consolidated  net income increased 72% from the same
  period last year. The increase in net income  primarily  reflects a $202 million
  after-tax gain  recognized  upon closing of the sale of CIGNA's  individual life
  insurance and annuity businesses. Excluding this gain, operating income* for the
  first  quarter of 1998 was $255 million  compared with $260 million for the same
  period last year, a decrease of 2%. This decrease  reflects  improvement  in the
  Employee Life and Health Benefits and Employee  Retirement and Savings  Benefits
  segments  offset by lower  earnings  in the other  business  segments  and Other
  Operations.
  
  After-tax realized investment results increased 36% in the first quarter of 1998
  from the same period last year. This increase  primarily reflects gains on sales
  of fixed maturities and mortgage loans, partially offset by lower gains on sales
  of  real  estate.  For  additional  information  see  Note  4 to  the  Financial
  Statements.
  
  Full year  operating  income  for 1998 is  expected  to be  comparable  to 1997,
  excluding  the $202 million gain on sale of businesses  discussed  above and the
  1997  Healthsource  integration  and health  care cost  reduction  charge of $80
  million.  Results for 1998 could be adversely  affected by the factors  noted in
  the cautionary statements on page 20.
  
  EMPLOYEE LIFE AND HEALTH BENEFITS
  =================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                       March 31,
  (In millions)                                    1998       1997
  -----------------------------------------------------------------
  Premiums and fees                                $2,730    $2,103
  Net investment income                               143       135
  Other revenues                                      129       107
  Realized investment gains                            27         6
                                                  -----------------
  Total revenues                                    3,029     2,351
  Benefits and expenses                             2,794     2,166
                                                  -----------------
  Income before taxes                                 235       185
  Income taxes                                         86        64
                                                  -----------------
  Net income                                         $149      $121
  ------------------------------------------------=================
  Realized investment gains,
  net of taxes                                        $18        $4
  ------------------------------------------------=================
  
  Net income for the Employee Life and Health Benefits  segment  increased 23% for
  the first quarter of 1998,  compared  with the same period last year.  Operating
  income for the first quarter of 1998 increased 12% compared with the same period
  last year. Operating income for the Indemnity and HMO operations was as follows:
  
  =================================================================
                                                  Three Months Ended
                                                       March 31,
  (In millions)                                      1998      1997
  -----------------------------------------------------------------
  Indemnity operations                                $69       $58
  HMO operations                                       62        59
  -----------------------------------------------------------------
  Total                                              $131      $117
  =================================================================
  
  Indemnity  operating income increased 19% for the first quarter of 1998 compared
  with the same period  last year.  This  increase  primarily  reflects  favorable
  long-term  disability claim experience,  partially offset by unfavorable medical
  claim experience.
  --------
  *Operating  income  (loss) is defined as net income (loss)  excluding  after-tax
  realized investment results.
  
                                         12
  HMO earnings  increased 5% for the first  quarter of 1998 compared with the same
  period last year. This improvement  reflects medical membership growth primarily
  from the  Healthsource  acquisition and rate increases,  and improved results in
  dental and mental health operations. These improvements were partially offset by
  increased HMO medical costs,  and  Healthsource  goodwill and other  intangibles
  amortization of $9 million.
  
  Premiums and fees  increased  30% for the first  quarter of 1998 compared to the
  same period last year. This increase  primarily reflects  Healthsource  premiums
  and fees of  approximately  $500 million,  rate  increases and  non-Healthsource
  membership growth.  Growth in premiums is expected to continue to be constrained
  by competitive pressures in both the medical indemnity and HMO markets.
  
  Net  investment  income  increased 6% for the first  quarter of 1998 compared to
  1997 primarily due to the addition of assets related to Healthsource,  partially
  offset by lower yields.
  
  As of March 31,  1998,  total HMO  membership  was  approximately  6.3  million,
  representing  an increase of 40% since March 31, 1997 and 7% since  December 31,
  1997.  Approximately  75% of the increase from March 31, 1997 is a result of the
  Healthsource  acquisition while the remaining 25% reflects  membership growth in
  CIGNA's HMO alternative  funding  programs and  traditional HMO business.  Under
  alternative  funding  programs,  the  customer  assumes  all or a portion of the
  responsibility for funding claims. CIGNA generally earns a lower margin on these
  programs than under traditional HMO plans.
  
  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 1998 and  1997  were
  approximately  $3.2 billion and $2.4 billion,  respectively,  representing a 33%
  increase. This increase primarily reflects the Healthsource acquisition,  and to
  a lesser  extent,  higher  medical costs and  cancellations  and  conversions of
  medical indemnity business to HMOs. Premium equivalents are expected to continue
  to be constrained by competitive pressures in both the medical indemnity and HMO
  markets.
  
  Premium equivalents were 54% and 53% of total adjusted premiums and fees for the
  first  quarters of 1998 and 1997,  respectively.  Administrative  Services  Only
  (ASO) plans  accounted for 48% and 49% of total  adjusted  premiums and fees for
  the first quarters of 1998 and 1997, respectively.
  
  EMPLOYEE RETIREMENT AND SAVINGS BENEFITS
  =================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                       March 31,
  (In millions)                                    1998       1997
  -----------------------------------------------------------------
  Premiums and fees                                  $54        $46
  Net investment income                              387        402
  Realized investment gains                            4         12
                                               --------------------
  Total revenues                                     445        460
  Benefits and expenses                              359        368
                                               --------------------
  Income before taxes                                 86         92
  Income taxes                                        27         30
                                               --------------------
  Net income                                         $59        $62
  ---------------------------------------------====================
  Realized investment gains,
  net of taxes                                        $3         $8
  ---------------------------------------------====================
  
  Net income for the Employee Retirement and Savings Benefits segment decreased 5%
  for the first quarter of 1998, compared with the same period of 1997.  Operating
  income for the first quarter of 1998 was $56 million,  compared with $54 million
  for the same period last year.  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 1998  increased 17% compared with the
  same period last year,  reflecting higher fees from separate accounts and higher
  annuity sales.
  
  Net  investment  income  decreased 4% for the first  quarter of 1998,  primarily
  reflecting lower  investment  yields and customers'  continued  redirection of a
  portion of their investments from the general account to separate accounts.
  
                                         13
  Assets  under  management  is 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)                                  1998           1997
  ------------------------------------------------------------------
  Balance -- January 1                        $45,924        $40,587
  Premiums and deposits                         2,064          2,049
  Investment results                              744            554
  Increase (decrease) in fair value of assets   1,853           (286)
  Customer withdrawals                           (868)          (790)
  Other, including participant
  withdrawals and benefit payments             (1,344)        (1,031)
  ------------------------------------------------------------------
  Balance -- March 31                         $48,373        $41,083
  ==================================================================
  
  Premiums  and deposits  were about level in the three  months of 1998,  compared
  with  the  same  period  in  1997.  For  the  three  months  of 1998  and  1997,
  approximately  54% and 45%,  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 34% in the three months of 1998, compared with the same period
  in 1997.  This  increase  reflects  higher  capital  gains and growth in assets,
  partially offset by lower investment  yields.  The increase for 1998 in the fair
  value of assets is due to market  value  appreciation  of equity  securities  in
  separate  accounts and, to a lesser extent,  market value  appreciation of fixed
  maturities  in the  general  account.  The  increase  in Other  reflects  larger
  participant  withdrawals  and benefit  payments  due to a higher level of assets
  under management.
  
  Management expects asset growth to continue to be constrained due to the lack of
  growth in the defined benefit market. In addition,  assets under management will
  continue to be affected by market value  fluctuations  for fixed  maturities and
  equity securities.
  
  INDIVIDUAL FINANCIAL SERVICES
  ==================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                       March 31,
  (In millions)                                     1998      1997
  -----------------------------------------------------------------
  Premiums and fees                                  $155      $234
  Net investment income                               170       260
  Other revenues                                      342        14
  Realized investment gains                             8        13
                                              ---------------------
  Total revenues                                      675       521
  Benefits and expenses                               288       436
                                              ---------------------
  Income before taxes                                 387        85
  Income taxes                                        139        30
                                              ---------------------
  Net income                                         $248       $55
  --------------------------------------------=====================
  Realized investment gains,
  net of taxes                                         $5        $8
  --------------------------------------------=====================
  
  Net income for the Individual Financial Services segment increased substantially
  from the same period last year. This increase reflects an after-tax gain of $202
  million recognized upon the closing of the sale of the individual life insurance
  and annuity  businesses and $17 million  after-tax from recognition of a portion
  of the  deferred  gain  associated  with  the sale (as  discussed  on page  10).
  Excluding these amounts,  operating income for the first quarter of 1998 was $24
  million  compared  with $26 million  for the same  period  last year  (excluding
  earnings of $21 million related to the businesses sold). This decrease primarily
  reflects  unfavorable  claim  experience in the accident and health  reinsurance
  operations, partially offset by growth in interest-sensitive business.
  
  For the first  quarter of 1998,  premiums and fees  decreased  34% from the same
  period of 1997. Excluding 1997 premiums and fees related to the businesses sold,
  the  increase  for the first  quarter of 1998 was 17%.  This  increase  reflects
  growth in reinsurance  sales and higher renewal premiums for  interest-sensitive
  products.
  
  Net investment  income decreased 35% for the first quarter of 1998 compared with
  the same period of 1997.  Excluding  1997 net  investment  income related to the
  businesses  sold,  the  increase  for the first  quarter  of 1998 was 11%.  This
  increase reflects growth in interest-sensitive business.
  
  In 1996,  Congress passed  legislation that phases out over a three-year  period
  the tax deductibility of policy loan interest for most leveraged corporate-owned
  life insurance (COLI) products. For the first
  
                                         14
  quarter of 1998,  revenues of $145 million and  operating  income of $10 million
  were from  leveraged  COLI products that are affected by this  legislation.  The
  effect of this  legislation  on customers'  decisions to maintain these policies
  after  the  phase-out  period is  unknown.  However,  all or a portion  of these
  policies could lapse.
  
  PROPERTY AND CASUALTY
  ==================================================================
  FINANCIAL SUMMARY                              Three Months Ended
                                                      March 31,
  (In millions)                                    1998       1997
  -----------------------------------------------------------------
  Premiums and fees                                 $962     $1,005
  Net investment income                              173        195
  Other revenues                                      69         72
  Realized investment gains                           19         13
                                               --------------------
  Total revenues                                   1,223      1,285
  Benefits and expenses                            1,131      1,190
                                               --------------------
  Income before taxes                                 92         95
  Income taxes                                        30         30
                                               --------------------
  Net income                                         $62        $65
  ---------------------------------------------====================
  Realized investment gains,
  net of taxes                                       $12         $8
  ---------------------------------------------====================
  
  Net income for the  Property  and  Casualty  segment  decreased 5% for the first
  quarter of 1998, compared with the same period last year.
  
  Operating income decreased 12% for the first quarter of 1998,  compared with the
  same period in 1997.  Operating  income for the ongoing and run-off  operations
  was as follows:
  
  ==================================================================
                                                 Three Months Ended
                                                      March 31,
  (In millions)                                    1998        1997
  -----------------------------------------------------------------
  Ongoing operations:
    International                                     $31       $33
    Domestic                                           19        23
                                             ----------------------
      Total ongoing
        operations                                     50        56
  Run-off operations                                   --         1
  -----------------------------------------------------------------
      Total                                           $50       $57
  =================================================================
  
  The decline in the  international  operations for 1998 primarily  reflects lower
  property and  casualty  earnings due to the  competitive  environment  and lower
  investment  income.  Partially  offsetting the decline were  improvements in the
  international life and health operations.
  
  The decline in the domestic  operations  for 1998  primarily  reflects lower net
  investment income and, to a lesser extent, adverse property claim experience.
  
  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  4% in the  first  quarter  of 1998.  This  decline
  reflects lower domestic premiums,  including $17 million from the discontinuance
  of writing personal homeowners  insurance and lower  international  property and
  casualty  premiums.  These declines reflect continued price competition and, for
  international,  the unfavorable effect of foreign exchange. Partially offsetting
  these  declines  was  growth in the  international  life,  health  and  accident
  businesses.
  
  Net investment  income decreased 11% for the first quarter of 1998 compared with
  the same  period of 1997.  The decline  reflects  lower  assets and yields,  the
  unfavorable  effect of foreign exchange and a shift in the investment  portfolio
  mix from fixed maturities to equity securities.
  
  The domestic ongoing  operations had pre-tax  catastrophe  losses of $9 million,
  net of reinsurance, for the first quarter of 1998, compared with $12 million for
  the first quarter of 1997. The international  operations had pre-tax catastrophe
  losses of $11 million, net of reinsurance,  for the first quarter of 1998. There
  were no catastrophe  losses associated with the international  operations in the
  first quarter of 1997. The effects of reinsurance on catastrophe  losses for the
  periods presented were not material.
  
  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 1997 Form 10-K.
  
                                         15
  CIGNA's  property and casualty  loss reserves of $14.9 billion and $15.1 billion
  as of March 31, 1998 and  December 31,  1997,  respectively,  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.
  
  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  reinsurance  recoverables  were  approximately  $6.0  billion  and $6.2
  billion as of March 31,  1998 and  December  31,  1997,  net of  allowances  for
  unrecoverable reinsurance of $702 million and $720 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)                                     1998       1997
  -----------------------------------------------------------------
  By business operation:
    Ongoing operations                                 $2       $21
    Run-off operations                                 46        53
  -----------------------------------------------------------------
  Total                                               $48       $74
  =================================================================
  By type of loss:
    Asbestos-related                                  $18       $21
    Environmental pollution                             7         6
    Unrecoverable
       reinsurance                                      9         6
    Workers' compensation                              10        12
    Other                                               4        29
  -----------------------------------------------------------------
  Total                                               $48       $74
  =================================================================
  
  OTHER OPERATIONS
  
  Other Operations  primarily includes  unallocated  investment  income,  expenses
  (including  debt  service) and taxes.  Also  included are the results of CIGNA's
  settlement  annuity business and non-insurance  operations  engaged primarily in
  investment and real estate activities and certain new business initiatives.
  
  Other  Operations  had a net loss of $23 million  for the first  quarter of 1998
  compared  with a net loss of $15  million for the first  quarter of 1997.  There
  were no realized  investment  gains or losses for the first  quarter of 1998 and
  1997. The increase in losses primarily  reflects financing costs associated with
  the  Healthsource  acquisition  and increased  expenses  related to new business
  initiatives.
  
                                         16
  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 1998, cash and cash equivalents  decreased $303 million
  from $2.6 billion as of December  31, 1997.  This  decrease  primarily  reflects
  repayment of debt ($426 million),  net withdrawals from  contractholder  deposit
  funds ($170  million),  payments of dividends on and repurchases of CIGNA common
  stock  ($168  million)  and cash used in  operating  activities  ($81  million),
  reflecting  the timing of  operating  cash  receipts  and  disbursements.  These
  decreases were partially  offset by cash provided by investing  activities ($537
  million),  which  includes  net  proceeds  on the  sale of the  individual  life
  insurance  and  annuity  businesses  of $1.3  billion,  partially  offset by net
  investment purchases.
  
  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  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 $1.5  billion of  long-term  debt  outstanding  at March 31,  1998 and
  December 31,  1997.  As of March 31, 1998,  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, 1998,  CIGNA's short-term debt amounted to $266 million, a decrease
  of $424 million from December 31, 1997.
  
  In April 1998,  CIGNA's Board of Directors  increased  CIGNA's  authorization to
  repurchase its common stock by $750 million.  Stock  repurchases  will depend on
  prevailing market conditions and alternative uses of capital. During 1998, CIGNA
  has repurchased  approximately 797,000 shares (2,391,000 shares post-split*) for
  $154 million,  including 209,000 shares (627,000 shares post-split*) repurchased
  for $43 million from April 1 through April 30, 1998. The remaining authorization
  as of April 30, 1998 was $957 million.
  
  INVESTMENT ASSETS
  ==================================================================
                                       March 31,        December 31,
  (In millions)                             1998                1997
  ------------------------------------------------------------------
  Fixed maturities                       $33,190             $36,358
  Equity securities                        1,030                 854
  Mortgage loans                           9,401              10,859
  Real estate                                755                 769
  Other, primarily policy loans            7,241               7,738
  ------------------------------------------------------------------
  Total investment assets                $51,617             $56,578
  ==================================================================
  
  Additional information regarding CIGNA's investment assets is included in Note 4
  to the first quarter 1998 Financial  Statements and Notes 2, 4 and 5 to the 1997
  Financial Statements as well as the 1997 Form 10-K.
  
  Investment assets as of March 31, 1998 decreased 9% from December 31, 1997. This
  decrease primarily relates to investments which were included in the sale of the
  individual life insurance and annuity businesses.
  
  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,
                                               1998             1997
  ------------------------------------------------------------------
  Fixed maturities                              30%              29%
  Mortgage loans                                58%              53%
  Real estate                                   62%              64%
  ==================================================================
  
  --------------
  *  See  Note  1 to  the  Financial  Statements  for  information  regarding  the
  three-for-one stock split.
  
                                         17
  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, 1998, the fair value of fixed maturities, including policyholder
  share,  was greater than  amortized  cost by $1.9  billion,  compared  with $2.1
  billion as of  December  31,  1997.  The  decrease  in  unrealized  appreciation
  primarily  relates to bonds which were  included  in the sale of the  individual
  life insurance and annuity businesses.
  
       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 $49 million of potential problem bonds, including amounts attributable
  to policyholder contracts, as of March 31, 1998, compared with $63 million as of
  December  31,  1997.  These  amounts  are  net  of  $10  million  of  cumulative
  write-downs for both periods.
  
  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, 1998 and December  31,  1997,  CIGNA had problem  bonds,  including  amounts
  attributable to policyholder contracts, of $150 million and $137 million, net of
  related  cumulative  write-downs  of $18 million and $30 million,  respectively.
  Problem bonds included $3 million  related to Asian  investments as of March 31,
  1998.
  
  CIGNA recognizes interest income on problem bonds only when payment is received.
  See the Summary on page 19 for the effect of  non-accruals  and  write-downs for
  bonds on policyholder contracts and on CIGNA's net income.
  
  Mortgage Loans
  ==================================================================
                                        March 31,       December 31,
                                             1998               1997
  ------------------------------------------------------------------
  Mortgage loans (in millions)             $9,401            $10,859
  Property type:
     Retail facilities                        39%                40%
     Office buildings                          36                 34
     Apartment buildings                       13                 13
     Industrial                                 6                  5
     Hotels                                     4                  5
     Other                                      2                  3
  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 $194 million as of March 31, 1998, and $191 million
  as of December 31, 1997,  net of related  valuation  reserves of $36 million and
  $41 million, respectively.
  
  CIGNA's  problem  mortgage loans include  delinquent and  restructured  mortgage
  loans.  Delinquent  mortgage  loans  include  those on which  payment is overdue
  generally  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 $142 million and $152  million,  net of valuation  reserves of $9
  million as of March 31, 1998 and December 31, 1997.
  
                                         18
  CIGNA recognizes  interest income on problem mortgage loans only when payment is
  received.  See the Summary  below for the effect of  non-accruals  and valuation
  reserves for mortgage loans on policyholder contracts and on CIGNA's net income.
  
  Real Estate
  
  As of March 31, 1998 and  December  31, 1997,  investment  real  estate,  net of
  reserves  and  write-downs,   included:   1)  $411  million  and  $414  million,
  respectively,  of real estate  held for the  production  of income,  and 2) $344
  million and $355 million,  respectively, of real estate held for sale, primarily
  properties acquired as a result of foreclosure of mortgage loans.
  
  See the Summary below for the effect of write-downs  and valuation  reserves for
  real estate on policyholder contracts and on CIGNA's net income.
  
  Summary
  
  The adverse (favorable) effects of write-downs and changes in valuation reserves
  as well as of non-accruals  on policyholder  contracts and on CIGNA's net income
  were as follows:
  ============================================================================================================================
                                                                                         Three Months Ended March 31,
                                                                             -------------------------------------------------
                                                                                       1998                         1997
                                                                             -------------------------------------------------
                                                                               Policy-                       Policy-
                                                                                holder                        holder
  (In millions)                                                              Contracts       CIGNA         Contracts     CIGNA
  ----------------------------------------------------------------------------------------------------------------------------
  Write-downs and
  valuation
  reserves:
     Bonds                                                                        $1         $--                $6          $1
     Mortgage loans                                                               (3)         (1)                2           1
     Real estate                                                                  (2)         --                 1           1
  ----------------------------------------------------------------------------------------------------------------------------
  Total                                                                          $(4)        $(1)               $9          $3
  ============================================================================================================================
  Non-accruals:
     Bonds                                                                        $1          $2                $2          $5
     Mortgage loans                                                               --          --                (1)         --
  ----------------------------------------------------------------------------------------------------------------------------
  Total                                                                           $1          $2                $1          $5
  ============================================================================================================================
  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 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.
  
                                         19
  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;  and 6) the effect on CIGNA's  international  operations and  investments
  from further significant deterioration in Asian economies.
  
                                         20
  Part II. OTHER INFORMATION
  
  Item 5.  Other Information
  
                           SELECTED FINANCIAL INFORMATION
  
  The following table sets forth certain selected historical financial information
  of the  Company  for,  and as of the end of, each of the  periods  presented  as
  adjusted for a  three-for-one  stock split  effective May 4, 1998.  The selected
  historical financial information supplements,  and should be read in conjunction
  with,  the  Company's  Annual  Report on Form  10-K for the  fiscal  year  ended
  December 31, 1997. The selected historical financial  information provided below
  is not  necessarily  indicative  of future  results of  operations  or financial
  performance for the Company.
  Year Ended December 31,
                                                   1997           1996            1995            1994            1993
  =====================================================================================================================
  Net income per share - basic                    $4.93           $4.68           $0.97           $2.58           $1.09
  
  Net income per share - diluted                  $4.88           $4.64           $0.96           $2.50           $1.09
  
  Common dividends declared per share             $1.11           $1.07           $1.01           $1.01           $1.01
  
  Shareholders' equity per share                 $36.55          $32.38          $31.25          $26.82          $30.43
  
  Common shares outstanding (thousands)         216,996         222,594         228,996         216,675         216,045
  ---------------------------------------------------------------------------------------------------------------------
  Item 6.  Exhibits and Reports on Form 8-K.
  
            (a)  See Exhibit Index.
  
            (b)  During the quarterly  period ended March 31, 1998,  and as of the
                 filing date, CIGNA filed the following Reports on Form 8-K:
  
                 o    dated February 10, 1998,  Item 5 - containing a news release
                      regarding its fourth quarter and full year 1997 results.
  
                 o    dated April 30,  1998,  Item 5 -  containing  a news release
                      regarding its first quarter 1998 results.
  
                                         21
  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/ Gary A. Swords
                                                  ------------------
                                                  Gary A. Swords
                                                  Vice President and
                                                  Chief Accounting Officer
  
  Date: May 8, 1998
  
                                         22
  Exhibit Index
  
                                                                Method of
  Number   Description                                            Filing
  
    3.1    (a)      Restated Certificate of Incorporation
                    of the registrant effective as of
                    August 4, 1997                              Filed herewith
  
            (b)     Certificate of Amendment of
                    Restated Certificate of Incorporation
                    of the registrant effective as
                    of May 4, 1998                              Filed herewith
  
  10.1              Special Incentive Agreement
                    with Mr. Taylor dated March 17, 1998        Filed herewith
  
  10.2              Special Incentive Agreement
                    with Mr. Stewart dated March 17, 1998       Filed herewith
  
  10.3              Special Incentive Agreement
                    with Mr. Levinson dated March 17, 1998      Filed herewith
  
  10.4              Special Incentive Agreement
                    with Mr. Isom dated March 17, 1998          Filed herewith
  
  10.5              Special Incentive Agreement
                    with Mr. Hanway dated March 17, 1998        Filed herewith
  
  12                Computation of Ratio of
                    Earnings to Fixed Charges                   Filed herewith
  
  27                Financial Data Schedule                     Included only in
                                                                the EDGAR version
                                                                of the Form 10-Q.
  
                                         23