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 September 30, 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, 1650 Market Street
                        Philadelphia, Pennsylvania 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 September 30, 1998,  206,482,621  shares of the issuer's Common Stock were
  outstanding.
  
  <PAGE>
                                  CIGNA CORPORATION
  
  
                                        INDEX
  
  
                                                                          Page No.
  
  PART I.   FINANCIAL INFORMATION
  
            Item 1.   Financial Statements
  
                      Consolidated Income Statements                           1
                      Consolidated Balance Sheets                              2
                      Consolidated Statements of Comprehensive
                        Income and Changes in Shareholders'
                        Equity                                                 3
                      Consolidated Statements of Cash Flows                    4
                      Notes to Financial Statements                            5
  
            Item 2.   Management's Discussion and
                        Analysis of Financial Condition
                        and Results of Operations                             11
  
  PART II.  OTHER INFORMATION
  
            Item 6.   Exhibits and Reports on Form 8-K                        24
  
  SIGNATURE                                                                   25
  
  EXHIBIT INDEX                                                               26
  
  
  As used  herein,  "CIGNA"  refers  to one or more of CIGNA  Corporation  and its
  consolidated subsidiaries.
  
  
  <PAGE>
  Part I.  FINANCIAL  INFORMATION
  
  Item 1.  Financial Statements
  -----------------------------
  
  CIGNA  CORPORATION
  CONSOLIDATED INCOME STATEMENTS
  (In millions, except per share amounts)
  <TABLE>
  <CAPTION>
                                                     Three Months Ended               Nine Months Ended
                                                        September 30,                   September 30,
                                                    1998           1997             1998             1997
  ---------------------------------------------------------------------------------------------------------
  <S>                                             <C>             <C>             <C>              <C>     
  REVENUES
  Premiums and fees                               $  4,093        $  3,925        $ 12,109         $ 10,795
  Net investment income                                911           1,057           2,790            3,172
  Other revenues                                       205             175             936              498
  Realized investment gains                             17              25             123               81
                                                  --------        --------        --------         --------
      Total revenues                                 5,226           5,182          15,958           14,546
                                                  --------        --------        --------         --------
  
  BENEFITS, LOSSES AND EXPENSES
  Benefits, losses and settlement expenses           3,476           3,359          10,273            9,433
  Policy acquisition expenses                          252             263             719              797
  Other operating expenses                           1,106           1,133           3,335            3,041
                                                  --------        --------        --------         --------
      Total benefits, losses and expenses            4,834           4,755          14,327           13,271
                                                  --------        --------        --------         --------
  
  INCOME BEFORE INCOME TAXES                           392             427           1,631            1,275
                                                  --------        --------        --------         --------
  
  Income taxes (benefits):
      Current                                          124              86             732              320
      Deferred                                          17              62            (155)             109
                                                  --------        --------        --------         --------
          Total taxes                                  141             148             577              429
                                                  --------        --------        --------         --------
  
  NET INCOME                                      $    251        $    279        $  1,054         $    846
  -----------------------------------------------==========================================================
  
  BASIC EARNINGS PER SHARE                        $   1.20        $   1.26        $   4.95         $   3.83
  -----------------------------------------------==========================================================
  
  DILUTED EARNINGS PER SHARE                      $   1.19        $   1.25        $   4.90         $   3.79
  -----------------------------------------------==========================================================
  
  DIVIDENDS DECLARED PER SHARE                    $   0.29        $   0.28        $   0.86         $   0.83
  -----------------------------------------------==========================================================
  </TABLE>
  
  The Notes to Financial Statements are an integral part of these statements.
  
                                         1
  <PAGE>
  CIGNA  CORPORATION
  CONSOLIDATED  BALANCE  SHEETS
  (In millions, except per share amounts)
  
  <TABLE>
  <CAPTION>
                                                                                           As of                    As of
                                                                                      September 30,             December 31,
                                                                                           1998                      1997
  -------------------------------------------------------------------------------------------------------------------------
  <S>                                                                                   <C>                     <C>      
  ASSETS
  Investments:
     Fixed maturities, at fair value (amortized cost, $30,936; $34,284)                  $  33,339               $  36,358
     Equity securities, at fair value (cost, $662; $648)                                       862                     854
     Mortgage loans                                                                          9,556                  10,859
     Policy loans                                                                            6,547                   7,253
     Real estate                                                                               755                     769
     Other long-term investments                                                               535                     273
     Short-term investments                                                                    318                     212
                                                                                         ---------               ---------
         Total investments                                                                  51,912                  56,578
  Cash and cash equivalents                                                                  1,162                   2,625
  Accrued investment income                                                                    942                     868
  Premiums, accounts and notes receivable                                                    4,963                   4,265
  Reinsurance recoverables                                                                  12,567                   6,753
  Deferred policy acquisition costs                                                            967                   1,542
  Property and equipment                                                                       856                     857
  Deferred income taxes                                                                      1,891                   1,788
  Other assets                                                                               1,125                   1,033
  Goodwill and other intangibles                                                             2,462                   2,542
  Separate account assets                                                                   30,449                  29,348
  ------------------------------------------------------------------------------------------------------------------------
  
          Total assets                                                                   $ 109,296               $ 108,199
  --------------------------------------------------------------------------------------==================================
  
  LIABILITIES
  Contractholder deposit funds                                                           $  30,877               $  30,682
  Unpaid claims and claim expenses                                                          17,895                  17,906
  Future policy benefits                                                                    12,205                  11,976
  Unearned premiums                                                                          1,897                   1,774
                                                                                         ---------               ---------
           Total insurance and contractholder liabilities                                   62,874                  62,338
  Accounts payable, accrued expenses and other liabilities                                   6,268                   6,562
  Current income taxes                                                                         114                      60
  Short-term debt                                                                              245                     690
  Long-term debt                                                                             1,440                   1,465
  Separate account liabilities                                                              30,199                  29,152
  ------------------------------------------------------------------------------------------------------------------------
           Total liabilities                                                               101,140                 100,267
  ------------------------------------------------------------------------------------------------------------------------
  
  CONTINGENCIES - NOTE 9
  
  SHAREHOLDERS' EQUITY
  Common stock (par value, $.25; shares issued, 265; 264)                                       66                      66
  Additional paid-in capital                                                                 2,710                   2,655
  Net unrealized appreciation - fixed maturities                               $     864              $     752
  Net unrealized appreciation - equity securities                                    127                    132
  Net translation of foreign currencies                                             (149)                  (126)
                                                                               ---------              ---------
     Accumulated other comprehensive income                                                    842                     758
  Retained earnings                                                                          6,567                   5,696
  Less treasury stock, at cost                                                              (2,029)                 (1,243)
  ------------------------------------------------------------------------------------------------------------------------
           Total shareholders' equity                                                        8,156                   7,932
  ------------------------------------------------------------------------------------------------------------------------
  
           Total liabilities and shareholders' equity                                    $ 109,296               $ 108,199
  --------------------------------------------------------------------------------------==================================
  
  SHAREHOLDERS' EQUITY PER SHARE                                                         $   39.50               $   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>
  Three Months Ended September 30,                                                 1998                            1997
  -------------------------------------------------------------------------------------------------------------------------------
                                                                           Compre-         Share-          Compre-        Share-
                                                                           hensive        holders'         hensive       holders'
                                                                           Income         Equity           Income        Equity
  -------------------------------------------------------------------------------------------------------------------------------
  <S>                                                                     <C>             <C>             <C>             <C>    
  Common stock                                                                            $    66                         $    66
                                                                                          -------                         -------
  Additional paid-in capital - June 30                                                      2,704                           2,632
    Issuance of common stock for employee benefits plans                                        6                              21
                                                                                          -------                         -------
  Additional paid-in capital - September 30                                                 2,710                           2,653
                                                                                          -------                         -------
  Accumulated other comprehensive income - June 30                                            835                             496
    Net unrealized appreciation - fixed maturities                        $   119             119         $   187             187
    Net unrealized appreciation (depreciation) - equity securities            (85)            (85)             13              13
                                                                          -------                         -------
        Net unrealized appreciation on securities                              34                             200
    Net translation of foreign currencies                                     (27)            (27)              7               7
                                                                          -------                         -------
            Other comprehensive income                                          7                             207
                                                                                          -------                         -------
  Accumulated other comprehensive income - September 30                                       842                             703
                                                                                          -------                         -------
  Retained earnings - June 30                                                               6,376                           5,299
    Net income                                                                251             251             279             279
    Common dividends declared                                                                 (60)                            (61)
                                                                                          -------                         -------
  Retained earnings - September 30                                                          6,567                           5,517
                                                                                          -------                         -------
  Treasury stock - June 30                                                                 (1,641)                           (945)
    Repurchase of common stock                                                               (385)                             --
    Other treasury stock transactions, net                                                     (3)                             (3)
                                                                                          -------                         -------
  Treasury stock - September 30                                                            (2,029)                           (948)
  -------------------------------------------------------------------------------------------------------------------------------
  TOTAL COMPREHENSIVE INCOME AND SHAREHOLDERS' EQUITY                     $   258         $ 8,156         $   486         $ 7,991
  ------------------------------------------------------------------------=======================================================
  
  Nine Months Ended September 30,
  -------------------------------------------------------------------------------------------------------------------------------
  Common stock                                                                            $    66                         $    66
                                                                                          -------                         -------
  Additional paid-in capital - January 1                                                    2,655                           2,594
    Issuance of common stock for employee benefits plans                                       55                              59
                                                                                          -------                         -------
  Additional paid-in capital - September 30                                                 2,710                           2,653
                                                                                          -------                         -------
  Accumulated other comprehensive income - January 1                                          758                             582
    Net unrealized appreciation - fixed maturities                        $   112             112         $    81              81
    Net unrealized appreciation (depreciation) - equity securities             (5)             (5)             61              61
                                                                          -------                         -------
        Net unrealized appreciation on securities                             107                             142
    Net translation of foreign currencies                                     (23)            (23)            (21)            (21)
                                                                          -------                         -------
            Other comprehensive income                                         84                             121
                                                                                          -------                         -------
  Accumulated other comprehensive income - September 30                                       842                             703
                                                                                          -------                         -------
  Retained earnings - January 1                                                             5,696                           4,855
    Net income                                                              1,054           1,054             846             846
    Common dividends declared                                                                (183)                           (184)
                                                                                          -------                         -------
  Retained earnings - September 30                                                          6,567                           5,517
                                                                                          -------                         -------
  Treasury stock - January 1                                                               (1,243)                           (889)
    Repurchase of common stock                                                               (756)                            (49)
    Other treasury stock transactions, net                                                    (30)                            (10)
                                                                                          -------                         -------
  Treasury stock - September 30                                                            (2,029)                           (948)
  -------------------------------------------------------------------------------------------------------------------------------
  TOTAL COMPREHENSIVE INCOME AND SHAREHOLDERS' EQUITY                     $ 1,138         $ 8,156         $   967         $ 7,991
  ------------------------------------------------------------------------=======================================================
  </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>
                                                                             Nine Months Ended September 30,
                                                                                 1998              1997
  ---------------------------------------------------------------------------------------------------------
  <S>                                                                           <C>             <C>    
  CASH FLOWS FROM OPERATING ACTIVITIES
      Net income                                                                $ 1,054         $   846
      Adjustments to reconcile net income to net cash
          provided by (used in) operating activities:
              Insurance liabilities                                                 628            (219)
              Reinsurance recoverables                                               98             387
              Deferred policy acquisition costs                                    (111)           (102)
              Premiums, accounts and notes receivable                              (481)            (99)
              Accounts payable, accrued expenses, other liabilities and
                  current income taxes                                             (166)            (26)
              Deferred income taxes                                                (155)            109
              Realized investment gains                                            (123)            (81)
              Depreciation and goodwill amortization                                242             164
              Gain on sale of businesses                                           (393)             --
              Other, net                                                           (394)           (257)
                                                                                -------         -------
                  Net cash provided by operating activities                         199             722
                                                                                -------         -------
  
  CASH FLOWS FROM INVESTING ACTIVITIES
      Proceeds from investments sold:
          Fixed maturities                                                        5,082           4,491
          Equity securities                                                         369             204
          Mortgage loans                                                            831             465
          Other (primarily short-term investments)                                1,632           3,194
      Investment maturities and repayments:
          Fixed maturities                                                        3,000           2,588
          Mortgage loans                                                            416             446
      Investments purchased:
          Fixed maturities                                                       (7,812)         (7,328)
          Equity securities                                                        (363)           (347)
          Mortgage loans                                                         (1,292)           (908)
          Other (primarily short-term investments)                               (2,643)         (2,621)
      Net cash from acquisitions and dispositions                                   998          (1,339)
      Other, net                                                                   (232)           (122)
                                                                                -------         -------
                  Net cash used in investing activities                             (14)         (1,277)
                                                                                -------         -------
  
  CASH FLOWS FROM FINANCING ACTIVITIES
      Deposits and interest credited to contractholder deposit funds              4,655           5,384
      Withdrawals and benefit payments from contractholder deposit funds         (4,892)         (5,181)
      Net change in short-term debt                                                (372)            104
      Issuance of long-term debt                                                     --             600
      Repayment of long-term debt                                                   (99)           (276)
      Repurchase of common stock                                                   (754)            (55)
      Issuance of common stock                                                       20              18
      Common dividends paid                                                        (184)           (182)
                                                                                -------         -------
                  Net cash provided by (used in) financing activities            (1,626)            412
                                                                                -------         -------
  Effect of foreign currency rate changes on cash and cash equivalents              (22)            (19)
  -----------------------------------------------------------------------------------------------------
  Net decrease in cash and cash equivalents                                      (1,463)           (162)
  Cash and cash equivalents, beginning of period                                  2,625           1,760
  -----------------------------------------------------------------------------------------------------
  
  Cash and cash equivalents, end of period                                      $ 1,162         $ 1,598
  ------------------------------------------------------------------------------=======================
  
  Supplemental Disclosure of Cash Information:
      Income taxes paid, net of refunds                                         $   660         $   333
      Interest paid                                                             $    90         $    82
  -----------------------------------------------------------------------------------------------------
  </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 were 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 1998, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
  Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
  Instruments and Hedging  Activities."  SFAS No. 133 requires that derivatives be
  reported  on the  balance  sheet  at  fair  value.  Changes  in fair  value  are
  recognized  in net income or, for  derivatives  which are  hedging  market  risk
  related to future cash flows,  in the  accumulated  other  comprehensive  income
  section of shareholders' equity. Implementation is required by the first quarter
  of 2000,  with the  cumulative  effect of adoption  reflected  in net income and
  accumulated other comprehensive income, as appropriate. CIGNA has not determined
  the effect or timing of implementation of this pronouncement.
  
  In 1997,  the FASB  issued  SFAS No.  131,  "Disclosures  about  Segments  of an
  Enterprise and Related  Information."  SFAS No. 131 will change the way segments
  are  reported  and  require   additional  segment   disclosure,   including  the
  presentation  of  CIGNA's  International  division  as a  separate  segment  and
  realignment  of the  components of the  Individual  Financial  Services  segment
  following the sale of its individual life and annuity  businesses in 1998. CIGNA
  will implement these new requirements in the fourth 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.  Although  CIGNA  has not  determined  the  timing  of
  implementation of this pronouncement,  the estimated after-tax cumulative effect
  to be recognized upon  implementation is expected to be approximately $75 - $100
  million.
  
  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
  
                                          5
  <PAGE>
  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.
  
  
  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
  the possibility of certain 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 $971
  million in the first half 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  September  30, 1998,  approximately  $7 million of
  severance was paid to approximately 530 employees. Goodwill and other intangible
  assets are being  amortized on a  straight-line  basis over periods ranging from
  eight to 40 years.
  
  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 for recent  international life
  and health  expansion,  mainly in Brazil.  In August 1998, CIGNA made additional
  investments  of  approximately  $200  million in certain  Brazilian  health care
  companies,  resulting in total investments of approximately $350 million in, and
  control of, these  companies.  The effect on CIGNA's  results of operations from
  these investments has not been material. Combined revenues of these companies in
  1997 were approximately $1 billion.  CIGNA will complete its fair value analysis
  of the net assets of these companies  during the next several months.  While the
  effects of this analysis are not reasonably estimable at this time, they are not
  expected to have a material effect on CIGNA's  results of operations,  liquidity
  or financial condition.
  
  Certain risks are inherent in expanding operations in foreign countries.  During
  the third quarter and nine months of 1998,  CIGNA recognized $23 million and $31
  million of after-tax  losses  associated  with equity  securities of a Brazilian
  financial  services company.  The investments in recent  international  life and
  health  expansion,  which now total  approximately  $400 million,  are routinely
  monitored for potential impairment,  and management currently believes that such
  investments are recoverable.
  
  CIGNA had other acquisitions and dispositions during the nine months of 1998 and
  1997, the effects of which were not material to the financial statements.
  
  
                                          6
  <PAGE>
  NOTE 4 - INVESTMENTS
  
  Realized Investment Gains and Losses
  
  Realized gains and losses on investments,  excluding policyholder share, were as
  follows:
  
  --------------------------------------------------------------------
                                Three Months           Nine Months
                                   Ended                  Ended
                                September 30,          September 30,
  (In millions)                1998       1997       1998       1997
  --------------------------------------------------------------------
  
  Fixed maturities            $  22      $   6      $  68      $  35
  Equity securities             (24)        19         (4)        33
  Mortgage loans                  8         (3)        13        (17)
  Real estate                     8          3         15         20
  Other                           3         --         31         10
                              --------------------------------------
                                 17         25        123         81
  Less income taxes               7          8         43         27
  ------------------------------------------------------------------
  Net realized investment
  gains                       $  10      $  17      $  80      $  54
  ---------------------------=======================================
  
  Fixed Maturities and Equity Securities
  
  Sales of  available-for-sale  fixed maturities and equity securities,  including
  policyholder share, were as follows:
  
  -------------------------------------------------------------------------
                                 Three Months               Nine Months
                                    Ended                      Ended
                                 September 30,             September 30,
  (In millions)               1998         1997         1998         1997
  -------------------------------------------------------------------------
  
  Proceeds from sales       $ 1,590      $ 1,417      $ 5,451      $ 4,695
  Gross gains on sales           75           55          216          141
  Gross losses on sales          (7)         (10)         (66)         (70)
  -------------------------------------------------------------------------
  
  
  The components of unrealized appreciation on securities were as follows:
  
  
  -------------------------------------------------------------------
  (In millions)                                     1998        1997
  -------------------------------------------------------------------
  Three months ended September 30,
  Unrealized appreciation on securities held,
  net of taxes of $26 and $118, respectively.      $  32      $ 216
  Less gains (losses) realized in net income,
  net of taxes of $9 in 1997.                         (2)        16
                                                   ------------------
  Net unrealized appreciation                      $  34      $ 200
  -------------------------------------------------==================
  Nine months ended September 30,
  Unrealized appreciation on securities held,
  net of taxes of $135 and $104, respectively.     $ 251      $ 186
  Less gains realized in net income, net of
  taxes of $78 and $24, respectively.                144         44
                                                   ------------------
  Net unrealized appreciation                      $ 107      $ 142
  -------------------------------------------------==================
  
  
  NOTE 5 - 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.
  
                                          7
  <PAGE>
  NOTE 6 - EARNINGS PER SHARE
  
  -------------------------------------------------------------------------
                                                     Effect
  (Dollars in millions,                                  of
  except per share amounts)              Basic     Dilution       Diluted
  -------------------------------------------------------------------------
  
  Three Months Ended September 30,
  -------------------------------------------------------------------------
  1998
  -------------------------------------------------------------------------
  Net income                              $251           --          $251
  ------------------------------------=====================================
  Shares (in thousands):
  Weighted average                     209,212           --       209,212
  Options and restricted
  stock grants                                        2,300         2,300
  -------------------------------------------------------------------------
  Total shares                         209,212        2,300       211,512
  ------------------------------------=====================================
  Earnings per share                     $1.20       $(0.01)        $1.19
  ------------------------------------=====================================
  1997
  -------------------------------------------------------------------------
  Net income                              $279           --          $279
  ------------------------------------=====================================
  Shares (in thousands):
  Weighted average                     220,897           --       220,897
  Options and restricted
  stock grants                                        2,675         2,675
  -------------------------------------------------------------------------
  Total shares                         220,897        2,675       223,572
  ------------------------------------=====================================
  Earnings per share                     $1.26       $(0.01)        $1.25
  ------------------------------------=====================================
  
  
  Nine Months Ended September 30,
  -------------------------------------------------------------------------
  1998
  -------------------------------------------------------------------------
  Net income                            $1,054           --        $1,054
  ------------------------------------=====================================
  Shares (in thousands):
  Weighted average                     212,871           --       212,871
  Options and restricted
  stock grants                                        2,376         2,376
  -------------------------------------------------------------------------
  Total shares                         212,871        2,376       215,247
  ------------------------------------=====================================
  Earnings per share                     $4.95       $(0.05)        $4.90
  ------------------------------------=====================================
  1997
  -------------------------------------------------------------------------
  Net income                              $846           --          $846
  ------------------------------------=====================================
  Shares (in thousands):
  Weighted average                     220,767           --       220,767
  Options and restricted
  stock grants                                        2,408         2,408
  -------------------------------------------------------------------------
  Total shares                         220,767        2,408       223,175
  ------------------------------------=====================================
  Earnings per share                     $3.83       $(0.04)        $3.79
  ------------------------------------=====================================
  
  Common  shares held as Treasury  shares were  58,498,295  and  41,524,404  as of
  September 30, 1998 and 1997, respectively.
  
  
  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
  $710 million and $720  million as of  September  30, 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 third  quarter  and nine months of 1998,  premiums  and fees were net of
  ceded  premiums of $650 million and $1.7  billion,  respectively.  For the third
  quarter and nine months of 1997, premiums and fees were net of ceded premiums of
  $448 million and $1.5 billion,  respectively.  In addition, benefits, losses and
  settlement  expenses  for the third  quarter and nine months of 1998 were net of
  reinsurance recoveries of $520 million and $1.4 billion, respectively. Benefits,
  losses and  settlement  expenses  for the third  quarter and nine months of 1997
  were  net  of   reinsurance   recoveries  of  $376  million  and  $1.1  billion,
  respectively.
  
                                          8
  <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 September 30, 1998,  approximately $6 million of severance was
  paid to approximately 860 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
  
                                          9
  <PAGE>
  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) has recently adopted
  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 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.
  
                                         10
  <PAGE>
  Item 2.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations
  
  INTRODUCTION
  
  The following  discussion addresses the financial condition of CIGNA Corporation
  (CIGNA) as of  September  30, 1998,  compared  with  December 31, 1997,  and its
  results of operations for the quarter and nine months ended  September 30, 1998,
  compared  with the same periods  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) and in CIGNA's  report on
  Form 10-Q for the second  quarter of 1998,  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.  CIGNA recognized  approximately $17 million and $50 million of
  the deferred  gain in the third  quarter and nine months of 1998,  respectively.
  The  sales  agreement  provides  for the  possibility  of  certain  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.
  
  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 for recent  international life
  and health  expansion,  mainly in Brazil.  In August 1998, CIGNA made additional
  investments  of  approximately  $200  million in certain  Brazilian  health care
  companies,  resulting in total investments of approximately $350 million in, and
  control of, these  companies.  The effect on CIGNA's  results of operations from
  these investments has not been material. Combined revenues of these companies in
  1997 were approximately $1 billion.  CIGNA will complete its fair value analysis
  of the net assets of these companies  during the next several months.  While the
  effects of this analysis are not reasonably estimable at this time, they are not
  expected to have a material effect on CIGNA's  results of operations,  liquidity
  or financial condition.
  
  Certain risks are inherent in expanding operations in foreign countries.  During
  the third quarter and nine months of 1998, CIGNA recognized $23
  
                                         11
  <PAGE>
  million and $31 million of after-tax losses associated with equity securities of
  a Brazilian financial services company.  The investments in recent international
  life and health  expansion,  which now total  approximately  $400  million,  are
  routinely monitored for potential impairment,  and 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  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  September  30,  1998,  there  were no
  material changes to the costs associated with or the anticipated  annual savings
  related to these initiatives. As of September 30, 1998, approximately $6 million
  of severance was paid to approximately 860 employees.
  
  Other Matters
  
  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  as well  as the  overall  effect  on  CIGNA's  international
  operations 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
  
  In 1998, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
  Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
  Instruments and Hedging  Activities."  SFAS No. 133 requires that derivatives be
  reported  on the  balance  sheet  at  fair  value.  Changes  in fair  value  are
  recognized  in net income or, for  derivatives  which are  hedging  market  risk
  related to future cash flows,  in the  accumulated  other  comprehensive  income
  section of shareholders' equity. Implementation is required by the first quarter
  of 2000,  with the  cumulative  effect of adoption  reflected  in net income and
  accumulated other comprehensive income, as appropriate. CIGNA has not determined
  the effect or timing of implementation of this pronouncement.
  
  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.  Although  CIGNA  has not  determined  the  timing  of
  implementation of this pronouncement,  the estimated after-tax cumulative effect
  to be recognized upon  implementation is expected to be approximately $75 - $100
  million.
  
  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
  
                                         12
  <PAGE>
  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  Nine Months Ended
                                  September 30,     September 30,
  (In millions)                 1998       1997     1998     1997
  -----------------------------------------------------------------
  Premiums and fees            $4,093    $3,925   $12,109  $10,795
  Net investment income           911     1,057     2,790    3,172
  Other revenues                  205       175       936      498
  Realized investment gains        17        25       123       81
                           ----------------------------------------
  Total revenues                5,226     5,182    15,958   14,546
  Benefits and expenses         4,834     4,755    14,327   13,271
                           ----------------------------------------
  Income before taxes             392       427     1,631    1,275
  Income taxes                    141       148       577      429
                           ----------------------------------------
  Net income                     $251      $279    $1,054     $846
  -------------------------========================================
  Realized investment 
  gains, net of taxes             $10       $17       $80      $54
  -------------------------========================================
  
  CIGNA's  consolidated net income decreased 10% for the third quarter of 1998 and
  increased  25% for the nine months of 1998  compared  with the same periods last
  year.  The  decrease for the quarter  reflects  lower  operating  income* in the
  Property and Casualty segment (principally due to catastrophe losses) and in the
  Individual  Financial  Services segment,  partially offset by improved operating
  income in the Employee  Life and Health  Benefits and  Employee  Retirement  and
  Savings  Benefits  segments.  For the nine  months,  the  increase in net income
  primarily  reflects the $202 million  after-tax  gain  recognized on the sale of
  CIGNA's individual life insurance and annuity businesses and improved results in
  the  Employee  Life and Health  Benefits  and  Employee  Retirement  and Savings
  Benefits segments.  This increase was partially offset by lower operating income
  in the Property and Casualty  segment,  as discussed  above, and lower operating
  income in the Individual Financial Services segment (excluding the gain).
  
  After-tax realized investment results decreased 41% in the third quarter of 1998
  and  increased  48% for the nine months of 1998  compared  with the same periods
  last year.  The  decrease  for the quarter  reflects  the  impairment  losses on
  Brazilian equity securities  discussed beginning on page 11, partially offset by
  increased gains on sales of fixed  maturities and mortgage  loans.  The increase
  for the nine months primarily  reflects higher gains on sales of mortgage loans,
  equity  securities,  real estate  partnerships  and fixed  maturities  partially
  offset  by  higher  impairment  losses on equity  securities  noted  above.  For
  additional information see Note 4 to the Financial Statements.
  
  Full year operating  income for 1998 may be slightly lower than 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)
  due  primarily  to higher  catastrophe  losses.  CIGNA  currently  expects  1999
  operating  income to be somewhat  higher than 1998  (excluding  the $202 million
  gain).  Results  for 1998 and 1999 could be  adversely  affected  by the factors
  noted in the cautionary statements on page 23.
  
  EMPLOYEE LIFE AND HEALTH BENEFITS
  
  ==================================================================
  FINANCIAL SUMMARY           Three Months Ended   Nine Months Ended
                                 September 30,       September 30,
  (In millions)                1998        1997     1998     1997
  -----------------------------------------------------------------
  Premiums and fees           $2,861     $2,572    $8,418   $6,792
  Net investment income          152        142       436      415
  Other revenues                 136        116       402      340
  Realized investment gains
  (losses)                        29         (6)       85        1
                           ----------------------------------------
  Total revenues               3,178      2,824     9,341    7,548
  Benefits and expenses        2,895      2,629     8,570    6,981
                           ----------------------------------------
  Income before taxes            283        195       771      567
  Income taxes                   105         71       284      194
                           ----------------------------------------
  Net income                    $178       $124      $487     $373
  -------------------------========================================
  Realized investment gains
  (losses), net of taxes         $19        $(4)      $55       $2
  -------------------------========================================
  
  Net income for the Employee Life and Health Benefits  segment  increased 44% and
  31% for the  third  quarter  and nine  months  of 1998,  compared  with the same
  periods  last year.  Operating  income for the third  quarter and nine months of
  1998  increased 24% and 16%,  respectively,  compared with the same periods last
  year. Operating income
  
  --------
  *    Operating income (loss) is defined as net income (loss) excluding after-tax
       realized investment results.
  
                                         13
  <PAGE>
  
  for the Indemnity and HMO operations was as follows:
  
  ====================================================================
                               Three Months Ended    Nine Months Ended
                                  September 30,        September 30,
  (In millions)                  1998      1997       1998      1997
  --------------------------------------------------------------------
  Indemnity operations            $77       $76       $218      $202
  HMO operations                   82        52        214       169
  --------------------------------------------------------------------
  Total                          $159      $128       $432      $371
  ====================================================================
  
  Indemnity  operating  income  increased 1% and 8% for the third quarter and nine
  months of 1998,  respectively,  compared with the same periods last year.  These
  increases primarily reflect improved long-term disability claim experience.
  
  HMO results for the third quarter and nine months of 1998 include $4 million and
  $11 million of after-tax charges for uncollectible receivables for a health care
  specialty service business. These results also include $5 million and $6 million
  of after-tax  benefits  principally for  adjustments to reserves  established in
  connection with the 1997 Healthsource integration and health care cost reduction
  plan.  HMO results for the nine months of 1997 include net  favorable  after-tax
  adjustments of $11 million from reserve and account reviews.
  
  Excluding  the  adjustments,  HMO earnings were $81 million and $219 million for
  the third  quarter  and nine  months of 1998,  respectively,  compared  with $52
  million and $158  million for the same  periods  last year.  These  improvements
  reflect medical  membership growth,  rate increases,  improved results in dental
  and mental  health  operations  and lower  operating  expenses per member due to
  expense  savings  initiatives.  For the nine  months  of 1998,  the  improvement
  resulting from membership growth was primarily  attributable to the Healthsource
  acquisition in June 1997. These  improvements were partially offset by increased
  HMO medical costs reflecting  higher pharmacy,  physician and outpatient  costs,
  and,  for the nine  months  of  1998,  higher  goodwill  and  other  intangibles
  amortization of $18 million associated with the acquisition of Healthsource.
  
  Premiums and fees increased 11% and 24% for the third quarter and nine months of
  1998, respectively, compared to the same periods last year. The increase for the
  third quarter primarily  reflects rate increases and membership  growth. For the
  nine months, the increase primarily reflects  Healthsource premiums and fees, as
  well  as rate  increases  and  membership  growth.  Growth  in  premiums  may be
  constrained  by  competitive  pressures  in both the medical  indemnity  and HMO
  markets.
  
  Net investment  income increased 7% and 5% for the third quarter and nine months
  of 1998,  respectively,  compared to the same periods in 1997,  primarily due to
  higher assets, partially offset by lower yields.
  
  Total HMO  membership  increased  11%  since  September  30,  1997 and 10% since
  December  31,  1997,  primarily  reflecting  membership  growth in  CIGNA's  HMO
  alternative funding programs.  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 third quarter and nine months of 1998 were
  approximately  $3.3  billion  and  $9.7  billion,  respectively.  These  amounts
  represent  an  increase  of 8% and  24%,  respectively,  compared  with the same
  periods last year. This increase primarily reflects  membership growth, and to a
  lesser extent,  higher medical costs.  Premium equivalents may be constrained by
  competitive  pressures in both the medical  indemnity  and HMO markets.  Premium
  equivalents were 54% of total adjusted  premiums and fees for the nine months of
  1998 and 1997.  Administrative  Services Only (ASO) plans  accounted for 49% and
  50% of total  adjusted  premiums  and fees for the nine months of 1998 and 1997,
  respectively.
  
                                         14
  <PAGE>
  EMPLOYEE RETIREMENT AND SAVINGS BENEFITS
  
  =======================================================================
  FINANCIAL SUMMARY             Three Months Ended      Nine Months Ended
                                   September 30,          September 30,
  (In millions)                   1998       1997       1998       1997
  -----------------------------------------------------------------------
  Premiums and fees                $42        $40        $155       $138
  Net investment income            365        393       1,140      1,192
  Realized investment gains
  (losses)                           8         (3)         24         11
                                -----------------------------------------
  Total revenues                   415        430       1,319      1,341
  Benefits and expenses            320        355       1,043      1,095
                                -----------------------------------------
  Income before taxes               95         75         276        246
  Income taxes                      31         24          89         79
                                -----------------------------------------
  Net income                       $64        $51        $187       $167
  ------------------------------=========================================
  Realized investment gains
  (losses), net of taxes            $5        $(2)        $16         $7
  ------------------------------=========================================
  
  Net income for the Employee  Retirement and Savings Benefits  segment  increased
  25% and 12% for the third  quarter  and nine months of 1998,  compared  with the
  same periods of 1997.  Operating income for the third quarter and nine months of
  1998 was $59  million  and $171  million,  compared  with $53  million  and $160
  million for the same periods last year. These increases  reflect higher earnings
  from an increased asset base,  partially offset by customers' shift from general
  account fixed income investments to lower margin separate account equity funds.
  
  Premiums and fees  increased 5% and 12% for the third quarter and nine months of
  1998, respectively,  compared with the same periods last year, reflecting higher
  fees from  separate  accounts  and higher  annuity  sales for the nine months of
  1998.
  
  Net investment  income decreased 7% and 4% for the third quarter and nine months
  of 1998, respectively. These decreases primarily reflect lower investment yields
  and customers'  redirection of a portion of their  investments  from the general
  account to separate accounts for the nine months of 1998.
  
  Assets  under  management  is generally a key  determinant  of earnings for this
  segment.  For the nine months ended  September 30, assets under  management  and
  related activity,  including amounts attributable to separate accounts,  were as
  follows:
  
  ===================================================================
  (In millions)                                  1998           1997
  -------------------------------------------------------------------
  Balance -- January 1                        $46,074        $40,605
  Premiums and deposits                         5,751          5,221
  Investment results                            2,128          1,847
  Increase (decrease) in fair value of assets     (26)         2,946
  Customer withdrawals                         (2,900)        (1,679)
  Other, including participant
  withdrawals and benefit payments             (4,173)        (3,417)
  -------------------------------------------------------------------
  Balance -- September 30                     $46,854        $45,523
  --------------------------------------------=======================
  
  Premiums and deposits  increased  10% in the nine months of 1998,  compared with
  the same period in 1997,  primarily  reflecting  higher recurring  deposits from
  existing customers.  For the nine months of 1998 and 1997, approximately 54% and
  53%,  respectively,  of premiums and deposits  reflect  recurring  deposits from
  existing  customers while the remaining amounts represent sales to new customers
  and new plan sales to existing  customers.  Investment  results increased 15% in
  the nine months of 1998,  compared  with the same period in 1997.  This increase
  reflects higher realized capital gains and growth in assets, partially offset by
  lower  investment  yields.  The decrease for 1998 in the fair value of assets is
  due to market value  depreciation of equity  securities in separate  accounts in
  the third quarter of 1998. The increase in customer withdrawals is primarily due
  to the effect of one customer withdrawal in 1998. The increase in Other reflects
  larger  participant  withdrawals  and benefit  payments due to a higher level of
  assets under management.
  
  Management  expects  that  asset  growth may 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.
  
                                         15
  <PAGE>
  INDIVIDUAL FINANCIAL SERVICES
  ========================================================================
  FINANCIAL SUMMARY             Three Months Ended     Nine Months Ended
                                   September 30,          September 30,
  (In millions)                   1998       1997       1998        1997
  -----------------------------------------------------------------------
  Premiums and fees               $141       $248        $455       $731
  Net investment income            166        274         502        805
  Other revenues                    26         17         393         46
  Realized investment gains
  (losses)                           5         (4)         12          7
                                 ----------------------------------------
  Total revenues                   338        535       1,362      1,589
  Benefits and expenses            272        460         856      1,357
                                 ----------------------------------------
  Income before taxes               66         75         506        232
  Income taxes                      23         26         178         81
                                 ----------------------------------------
  Net income                       $43        $49        $328       $151
  -------------------------------========================================
  Realized investment gains
  (losses), net of taxes            $3        $(2)         $8         $5
  -------------------------------========================================
  
  Net income for the Individual  Financial  Services segment decreased 12% for the
  third quarter of 1998 and increased  substantially  for the nine months of 1998,
  compared  with the same  periods of 1997.  Results  for the nine  months of 1998
  include  an  after-tax  gain  of  $202  million  recognized  on the  sale of the
  individual life insurance and annuity businesses.  Results for the third quarter
  and nine months  include $17  million and $50 million  after-tax,  respectively,
  from  recognition of a portion of the deferred gain associated with the sale (as
  discussed on page 11).
  
  Excluding these amounts,  operating income for the third quarter and nine months
  of 1998 was $23 million and $68 million,  respectively.  These amounts, compared
  with  operating  income of $25 million  and $76 million for the same  periods in
  1997 (excluding results from the businesses sold), primarily reflect unfavorable
  claim  experience in the reinsurance  operation,  partially  offset by growth in
  interest-sensitive and specialty life reinsurance products.
  
  For the third quarter and nine months of 1998,  premiums and fees  decreased 43%
  and 38%,  respectively,  compared with the same periods of 1997.  Excluding 1997
  premiums and fees  related to the  businesses  sold,  the increase for the third
  quarter and nine months of 1998 was 1% and 10%,  respectively.  These  increases
  reflect growth in reinsurance and higher renewal premiums for interest-sensitive
  products.
  
  Net  investment  income  decreased  39% and 38% for the third  quarter  and nine
  months of 1998, respectively,  compared with the same periods of 1997. Excluding
  1997 net investment  income related to the businesses sold, the increase for the
  third  quarter  and  nine  months  of 1998  was 4% and 8%,  respectively.  These
  increases primarily reflect growth in interest-sensitive products.
  
  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 third quarter and nine months of 1998,
  revenues of $131  million and $415 million and  operating  income of $12 million
  and $33  million,  respectively,  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   Nine Months Ended
                                 September 30,       September 30,
  (In millions)                  1998     1997       1998     1997
  ------------------------------------------------------------------
  Premiums and fees             $1,049   $1,065     $3,081   $3,134
  Net investment income            170      190        523      574
  Other revenues                    74       72        210      209
  Realized investment gains
  (losses)                         (26)      35         (4)      59
                              --------------------------------------
  Total revenues                 1,267    1,362      3,810    3,976
  Benefits and expenses          1,278    1,241      3,646    3,669
                              --------------------------------------
  Income (loss) before taxes       (11)     121        164      307
  Income taxes (benefits)           (7)      39         50       94
                              --------------------------------------
  Net income (loss)                $(4)     $82       $114     $213
  ----------------------------======================================
  Realized investment gains
  (losses), net of taxes          $(17)     $23        $(4)     $38
  ----------------------------======================================
  
  Results for the Property and Casualty  segment  declined  substantially  for the
  third quarter and nine months of 1998 compared with the same periods last year.
  
                                         16
  <PAGE>
  Operating income for the ongoing and run-off operations was as follows:
  
  ===================================================================
                               Three Months Ended   Nine Months Ended
                                  September 30,        September 30,
  (In millions)                  1998      1997      1998       1997
  -------------------------------------------------------------------
  Ongoing operations:
    International                $(13)      $33       $46       $102
    Domestic                       26        26        72         72
                               --------------------------------------
      Total ongoing
        operations                 13        59       118        174
  Run-off operations               --        --        --          1
  -------------------------------------------------------------------
      Total                       $13       $59      $118       $175
  ===================================================================
  
  International  results for the third  quarter  and nine  months of 1998  include
  catastrophe  losses of $36  million  after-tax  related  to  Hurricane  Georges.
  Results for the nine months of 1997  include a $6 million  after-tax  charge for
  cost  reduction  initiatives,  principally  severance.  Excluding  these  items,
  operating  income was $23 million and $82 million for the third quarter and nine
  months of 1998  compared  with $33 million and $108 million for the same periods
  last year. These declines reflect lower property and casualty earnings primarily
  due to the competitive  environment,  and lower net investment income. Partially
  offsetting these declines were improvements in the international life and health
  operations (primarily in Japan).
  
  Results for the domestic operations in the third quarter and nine months of 1998
  are  level  compared  with  the same  periods  of 1997.  These  results  reflect
  catastrophe  losses associated with Hurricane  Georges of $6 million  after-tax,
  lower net investment income and unfavorable  workers'  compensation  experience,
  offset  by  favorable  prior  year  development,  improvement  in  results  from
  insurance-related  service businesses and, for the nine months,  improved claims
  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  decreased  2% for the third  quarter and nine months of 1998.
  These changes reflect the  discontinuance of certain personal lines of business,
  continued price competition and, for  international,  the unfavorable  effect of
  foreign  exchange,  partially  offset  by growth in  workers'  compensation  and
  international life and health (primarily in Japan).
  
  Net investment income decreased 11% and 9% for the third quarter and nine months
  of 1998,  respectively,  compared  with the same  periods of 1997.  The declines
  reflect lower average assets,  the  unfavorable  effect of foreign  exchange,  a
  shift in the investment portfolio mix from fixed maturities to equity securities
  and lower yields.
  
  The ongoing operations had pre-tax  catastrophe  losses, net of reinsurance,  of
  $67  million  and $97  million  for the third  quarter  and nine months of 1998,
  respectively,  compared  with $2 million and $16 million for the same periods of
  1997.   Catastrophe   losses  in  1998   included   $65  million   ($55  million
  international, $10 million domestic) for Hurricane Georges.
  
  Effective July 1, 1998, CIGNA revised its reinsurance programs. CIGNA's domestic
  reinsurance  programs  provide  for  approximately  60%  recovery  for  property
  catastrophe  losses  between  $45 million and $260  million.  Other  reinsurance
  programs  are  in  place  which  could  provide  for  the  recovery  of up to an
  additional  $300 million on certain  losses,  including  property  catastrophes,
  depending  on  the   aggregate   annual  level  of  losses   incurred.   CIGNA's
  international  catastrophe program provides approximately 95% recovery of losses
  between $100 million and $400 million.  CIGNA's  results of operations  could be
  volatile, depending on the frequency and severity of catastrophes.
  
  Certain  competitors  and  policyholders  of CIGNA are  challenging in court the
  restructuring of its domestic  property and casualty  business into two separate
  operations,  ongoing and  run-off.  Although  CIGNA  expects the matter to be in
  litigation for some time, it expects to ultimately prevail.
  
                                         17
  
  <PAGE>
  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.
  
  CIGNA's  property and casualty  loss reserves of $15.0 billion and $15.1 billion
  as of September 30, 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 September 30, 1998 and December 31, 1997,  net of  allowances  for
  unrecoverable reinsurance of $710 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  (favorable)  pre-tax  effects  on the
  Property  and  Casualty   segment's   results  of  operations  from  prior  year
  development, net of reinsurance:
  
  ====================================================================
                              Three Months Ended     Nine Months Ended
                                 September 30,         September 30,
  (In millions)                 1998      1997         1998     1997
  --------------------------------------------------------------------
  By business operation:
    Ongoing operations          $(15)       $8         $(10)     $22
    Run-off operations            44        50          137      150
  --------------------------------------------------------------------
  Total                          $29       $58         $127     $172
  ====================================================================
  By type of loss:
    Asbestos-related             $17       $20          $54      $68
    Environmental
       pollution                   8         8           23       22
    Unrecoverable
       reinsurance                 3         6           17       15
    Workers' compensation         24        18           48       36
    Other                        (23)        6          (15)      31
  --------------------------------------------------------------------
  Total                          $29       $58         $127     $172
  ====================================================================
  
  Other prior year development in the quarter and nine months reflected  favorable
  claims experience on certain commercial package,  property and aviation lines of
  business,  somewhat offset by unfavorable development on the assumed reinsurance
  line of business.
  
                                         18
  <PAGE>
  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  operating  losses of $30 million and $67 million for the
  third quarter and nine months of 1998, respectively, compared with losses of $29
  million and $60 million for the same periods in 1997.  The increase in operating
  losses for the nine months of 1998 primarily reflects financing costs associated
  with the Healthsource acquisition and increased expenses related to new business
  initiatives.
  
  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 nine months of 1998,  cash and cash  equivalents  decreased $1.5 billion
  from $2.6 billion as of December  31, 1997.  This  decrease  primarily  reflects
  repurchases of, and payments of dividends on, CIGNA common stock ($938 million),
  repayment of debt ($471 million),  net withdrawals from  contractholder  deposit
  funds ($237 million), and cash used in investing activities ($14 million), which
  includes  investments in international  growth initiatives of approximately $300
  million and net investment  purchases,  offset by net proceeds of  approximately
  $1.3  billion  on  the  sale  of  the  individual  life  insurance  and  annuity
  businesses.  These decreases were partially offset by cash provided by operating
  activities ($199 million),  reflecting the timing of operating cash receipts and
  disbursements.
  
  CIGNA's  capital  resources  represent  funds  available for long-term  business
  commitments.  They primarily  consist of retained earnings and proceeds from the
  issuance of long-term debt and equity  securities.  CIGNA's  financial  strength
  provides the capacity and flexibility to enable it to raise funds in the capital
  markets  through the  issuance of such  securities.  CIGNA  continues to be well
  capitalized, with sufficient borrowing capacity to meet the anticipated needs of
  its businesses.
  
  CIGNA had $1.4  billion  and $1.5  billion  of  long-term  debt  outstanding  at
  September 30, 1998 and December 31, 1997. As of September 30, 1998, CIGNA had $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 September 30, 1998,  CIGNA's  short-term  debt  amounted to $245  million,  a
  decrease of $445 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  depend  on
  prevailing  market  conditions and alternative  uses of capital.  From January 1
  through November 2, 1998, CIGNA repurchased  12,400,600 shares for $822 million,
  including  998,700  shares  repurchased  for $66 million  from October 1 through
  November 2, 1998.  The remaining  authorization  as of November 2, 1998 was $289
  million.
  
  
  INVESTMENT ASSETS
  
  ===================================================================
                                   September 30,        December 31,
  (In millions)                             1998                1997
  -------------------------------------------------------------------
  Fixed maturities                       $33,339             $36,358
  Equity securities                          862                 854
  Mortgage loans                           9,556              10,859
  Real estate                                755                 769
  Other, primarily policy loans            7,400               7,738
  -------------------------------------------------------------------
  Total investment assets                $51,912             $56,578
  ===================================================================
  
  Additional information regarding CIGNA's investment assets is included in Note 4
  to the third 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 September 30, 1998 decreased 8% from December 31, 1997.
  This decrease primarily relates to investments which were
  
                                         19
  <PAGE>
  
  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:
  
  ===================================================================
                                      September 30,      December 31,
                                               1998              1997
  -------------------------------------------------------------------
  Fixed maturities                              30%               29%
  Mortgage loans                                57%               53%
  Real estate                                   63%               64%
  ===================================================================
  
  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  September  30,  1998,  the  fair  value of  fixed  maturities,  including
  policyholder  share,  was greater than amortized cost by $2.4 billion,  compared
  with  $2.1  billion  as  of  December  31,  1997.  The  increase  in  unrealized
  appreciation  primarily reflects the decline in interest rates, partially offset
  by the amount of unrealized  appreciation on the bonds that 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 $78 million of potential problem bonds, including amounts attributable
  to policyholder  contracts,  as of September 30, 1998, compared with $63 million
  as of December 31, 1997.  These amounts are net of $7 million and $10 million of
  cumulative write-downs, respectively.
  
  CIGNA considers bonds that are delinquent or restructured as to terms, typically
  interest  rate and,  in certain  cases,  maturity  date,  problem  bonds.  As of
  September  30, 1998 and December 31, 1997,  CIGNA had problem  bonds,  including
  amounts  attributable  to  policyholder  contracts,  of $127  million  and  $137
  million,  net of related cumulative  write-downs of $26 million and $30 million,
  respectively.
  
  CIGNA recognizes interest income on problem bonds only when payment is received.
  See the Summary on page 21 for the effect of  non-accruals  and  write-downs for
  bonds on policyholder contracts and on CIGNA's net income.
  
  Mortgage Loans
  
  ====================================================================
                                     September 30,       December 31,
                                              1998               1997
  --------------------------------------------------------------------
  Mortgage loans (in millions)              $9,556            $10,859
  Property type:
     Retail facilities                          37%                40%
     Office buildings                           36                 34
     Apartment buildings                        15                 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 $99  million as of  September  30,  1998,  and $191
  million as of December 31, 1997, net of related valuation reserves of $1 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.
  
                                         20
  <PAGE>
  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 $143 million and $152  million,  net of valuation  reserves of $9
  million as of September 30, 1998 and December 31, 1997.
  
  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 September 30, 1998 and December 31, 1997,  investment real estate,  net of
  reserves  and  write-downs,   included:   1)  $394  million  and  $414  million,
  respectively,  of real estate  held for the  production  of income,  and 2) $361
  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>
  ===================================================================================================================================
                                       Three Months Ended September 30,                        Nine Months Ended September 30,
                            ---------------------------------------------------   ---------------------------------------------------
                                       1998                         1997                      1998                        1997
                            -------------------------  ------------------------   ------------------------  -------------------------
                              Policy-                      Policy-                   Policy-                     Policy-
                               holder                       holder                    holder                      holder
  (In millions)             Contracts       CIGNA        Contracts      CIGNA      Contracts       CIGNA       Contracts       CIGNA
  -----------------------------------------------------------------------------------------------------------------------------------
  <S>                          <C>            <C>           <C>           <C>         <C>            <C>           <C>           <C>
  Write-downs and
  valuation reserves:
     Bonds                      $3            $4            $6           $12           $4            $5           $13           $20
     Mortgage loans             (4)           --             5             3           (7)           (1)           11             8
     Real estate                 2            --            (2)           --            1            --            (1)            2
  -----------------------------------------------------------------------------------------------------------------------------------
  Total                         $1            $4            $9           $15          $(2)           $4           $23           $30
  ===================================================================================================================================
  Non-accruals:
     Bonds                     $--            $2            $2            $3           $2            $5            $5            $8
     Mortgage loans             (1)           (1)           (1)           --           (2)           (1)           (2)           --
  -----------------------------------------------------------------------------------------------------------------------------------
  Total                        $(1)           $1            $1            $3          $--            $4            $3            $8
  ===================================================================================================================================
  </TABLE>
  
  CIGNA also recognized  losses in connection with Brazilian equity  securities as
  discussed  beginning on page 11. 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 and Latin American 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.
  
                                         21
  <PAGE>
  YEAR 2000
  
  CIGNA is highly  dependent  on  automated  systems and systems  applications  in
  conducting its  operations.  These systems include  information  technology (IT)
  systems  that are used for,  among other  things,  processing  claims,  billing,
  collecting premiums from customers and managing investment activities.  If these
  systems  were  unable to  function  because of  failing  to be Year 2000  ready,
  CIGNA's business  operations  would be interrupted,  which could have a material
  adverse effect on CIGNA's results of operations.
  
  CIGNA's Year 2000 efforts include: 1) identifying systems requiring remediation;
  2) assessing what is required to remediate those systems; 3) remediating systems
  to be ready for the Year 2000 (by either  modifying or replacing  them);  and 4)
  testing systems for Year 2000 readiness,  including that they properly interface
  with   systems  of  external   parties  such  as   customers   and   third-party
  administrators.  CIGNA has completed the  identification  and assessment  phases
  with respect to its IT systems that are critical to  maintaining  operations  or
  the  failure  of which  would  result  in  significant  costs or  disruption  of
  operations ("mission critical systems").  As of September 30, 1998,  remediation
  and  testing  procedures  had been  completed  for 75% of its  mission  critical
  systems.  CIGNA expects to substantially complete the remediation and testing of
  its mission  critical  systems by the end of 1998. In certain cases,  CIGNA will
  perform additional testing to ensure that these systems  appropriately  interact
  with other systems.
  
  CIGNA's  systems also include  non-IT  systems,  such as telephone  and facility
  management systems.  The majority of non-IT systems are believed to be Year 2000
  ready and the remaining non-IT systems are expected to be ready by mid-1999.
  
  CIGNA is using  both  internal  and  external  resources  to meet the  timetable
  established for completion of its Year 2000 efforts. The after-tax costs of Year
  2000  efforts are  expected  to be  approximately  $100  million in 1998 and $50
  million in 1999. Year 2000 after-tax costs for the third quarter and nine months
  of 1998 were $23 million and $65 million.  Approximately  60% of total Year 2000
  costs are attributable to existing systems  resources which have been redirected
  to the Year 2000 efforts. The remaining amounts represent  incremental costs for
  Year 2000  efforts.  Although  certain  systems  development  efforts  have been
  deferred in order to address Year 2000  issues,  CIGNA does not expect that this
  deferral will have a significant  adverse effect on its results of operations or
  financial condition.
  
  CIGNA has relationships with various third-party entities in the ordinary course
  of business. For example,  CIGNA receives data from clients;  depends on others,
  such as third-party  administrators  and banks,  for services;  and bears credit
  risk on others,  such as  entities  in which it  invests.  CIGNA has  identified
  third-party  entities  critical  to  its  operations,  and it is  assessing  and
  attempting  to mitigate its risks with respect to the failure of these  entities
  to be Year 2000 ready by, among other things,  reviewing,  where possible, their
  formal  Year 2000 plans and  obtaining  Year 2000  readiness  affirmations  from
  certain  third-party  entities.  The  effect,  if any,  on  CIGNA's  results  of
  operations from the failure of these entities (including entities on which CIGNA
  bears credit risk) to be Year 2000 ready is not reasonably estimable.
  
  While CIGNA expects that its Year 2000 efforts will be successful, it has begun,
  but not yet completed, a comprehensive analysis of the operational problems that
  would be reasonably likely to result from the failure by CIGNA and certain third
  parties to complete  efforts  necessary  to achieve  Year 2000  compliance  on a
  timely basis.  CIGNA expects to complete this analysis in early 1999.  CIGNA has
  historically  had security and backup  policies and procedures for  safeguarding
  critical  corporate data. It is supplementing  these policies by developing Year
  2000 contingency  plans to provide for the resumption of operations in the event
  of Year 2000 systems failures or the failure of third-party  entities to be Year
  2000 ready. These plans are expected to be completed and tested by mid-1999.
  
  The costs of CIGNA's Year 2000 efforts and the dates on which CIGNA  believes it
  will complete such efforts are based on management's best estimates,  which were
  derived  using  numerous  assumptions  regarding  future  events,  including the
  continued availability of certain resources,  third-party remediation plans, and
  other factors.  There can be no assurance that these  estimates will prove to be
  accurate, and actual results could differ materially
  
                                         22
  <PAGE>
  from  those  currently  anticipated.  Specific  factors  that  could  cause such
  material differences include, but are not limited to, the availability and costs
  of  personnel  trained in Year 2000  issues,  the ability to  identify,  assess,
  remediate and test all relevant computer codes and embedded technology, the risk
  that  reasonable  testing will not uncover all Year 2000  problems,  and similar
  uncertainties.  Property and casualty  indemnity losses for Year 2000 claims and
  litigation  costs to defend or deny such claims are not reasonably  estimable at
  this time.
  
  
  
  
  
  
  
  
  
  
  
  CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
  PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
  
  Except for historical  information provided in this Management's  Discussion and
  Analysis of  Financial  Condition  and Results of  Operations,  statements  made
  throughout  this  document are  forward-looking  and contain  information  about
  financial results,  economic conditions,  trends and known uncertainties.  CIGNA
  cautions  the reader that actual  results  could  differ  materially  from those
  expected by CIGNA,  depending on the outcome of certain  factors  (some of which
  are  described  with  the  forward-looking  statements)  including:  1)  adverse
  catastrophe  experience in CIGNA's property and casualty businesses;  2) adverse
  property and casualty  loss  development  for events that CIGNA insured in prior
  years;  3) an  increase  in medical  costs in CIGNA's  health  care  operations,
  including increases in utilization and costs of medical services;  4) heightened
  competition,  particularly  price  competition,  reducing  product  margins  and
  constraining  growth in CIGNA's  businesses;  5) significant changes in interest
  rates;  and 6) the effect on CIGNA's  international  operations and  investments
  from further significant deterioration in Asian and Latin American economies.
  
                                         23
  <PAGE>
  
  Part II.  OTHER INFORMATION
  
  
  Item 6.        Exhibits and Reports on Form 8-K.
                 ---------------------------------
  
                 (a)  See Exhibit Index.
  
                 (b)  During the quarterly period ended September 30, 1998, and as
                      of the filing  date,  CIGNA filed the  following  Reports on
                      Form 8-K:
  
                      o    dated July 30, 1998, Item 5 - containing a news release
                           regarding its second quarter 1998 results.
  
                      o    dated  November  2, 1998,  Item 5 -  containing  a news
                           release regarding its third quarter 1998 results.
  
  
  
  
  
  
  
                                         24
  
  <PAGE>
  
  
                                      SIGNATURE
  
  
       Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
  registrant  has duly  caused this  report to be signed by the  undersigned  duly
  authorized officer, on its behalf and in the capacity indicated.
  
  
  
                                                 CIGNA CORPORATION
  
  
  
                                                 By: /s/ James G. Stewart
                                                     -----------------------------
                                                     James G. Stewart
                                                     Executive Vice President and
                                                     Chief Financial Officer
                                                     (Principal Financial Officer)
  
  Date: November 6,  1998
  
  
  
  
                                         25
  <PAGE>
  
                                    Exhibit Index
                                    -------------
  
  
                                                              Method of
  Number            Description                                 Filing
  ------            -----------                               ---------
  
  10                CIGNA Supplemental Pension,            Filed herewith
                    as amended and restated
                    August 1, 1998
  
  12                Computation of Ratio of                Filed herewith
                    Earnings to Fixed Charges
  
  27                Financial Data Schedule                Included only in
                                                           the EDGAR version of
                                                           the Form 10-Q
  
  
  
  
  
  
                                         26
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 120483}]
metadata_filer: {"company-data": {"conformed-name": "CIGNA CORP", "cik": "0000701221", "assigned-sic": "6321", "irs-number": "061059331", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-08323", "film-number": "98739653"}, "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 September 30, 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, 1650 Market Street
                        Philadelphia, Pennsylvania 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 September 30, 1998,  206,482,621  shares of the issuer's Common Stock were
  outstanding.
  CIGNA CORPORATION
  
                                        INDEX
  
                                                                          Page No.
  
  PART I.   FINANCIAL INFORMATION
  
            Item 1.   Financial Statements
  
                      Consolidated Income Statements                           1
                      Consolidated Balance Sheets                              2
                      Consolidated Statements of Comprehensive
                        Income and Changes in Shareholders'
                        Equity                                                 3
                      Consolidated Statements of Cash Flows                    4
                      Notes to Financial Statements                            5
  
            Item 2.   Management's Discussion and
                        Analysis of Financial Condition
                        and Results of Operations                             11
  
  PART II.  OTHER INFORMATION
  
            Item 6.   Exhibits and Reports on Form 8-K                        24
  
  SIGNATURE                                                                   25
  
  EXHIBIT INDEX                                                               26
  
  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               Nine Months Ended
                                                        September 30,                   September 30,
                                                    1998           1997             1998             1997
  ---------------------------------------------------------------------------------------------------------
  REVENUES
  Premiums and fees                               $  4,093        $  3,925        $ 12,109         $ 10,795
  Net investment income                                911           1,057           2,790            3,172
  Other revenues                                       205             175             936              498
  Realized investment gains                             17              25             123               81
                                                  --------        --------        --------         --------
      Total revenues                                 5,226           5,182          15,958           14,546
                                                  --------        --------        --------         --------
  
  BENEFITS, LOSSES AND EXPENSES
  Benefits, losses and settlement expenses           3,476           3,359          10,273            9,433
  Policy acquisition expenses                          252             263             719              797
  Other operating expenses                           1,106           1,133           3,335            3,041
                                                  --------        --------        --------         --------
      Total benefits, losses and expenses            4,834           4,755          14,327           13,271
                                                  --------        --------        --------         --------
  
  INCOME BEFORE INCOME TAXES                           392             427           1,631            1,275
                                                  --------        --------        --------         --------
  
  Income taxes (benefits):
      Current                                          124              86             732              320
      Deferred                                          17              62            (155)             109
                                                  --------        --------        --------         --------
          Total taxes                                  141             148             577              429
                                                  --------        --------        --------         --------
  
  NET INCOME                                      $    251        $    279        $  1,054         $    846
  -----------------------------------------------==========================================================
  
  BASIC EARNINGS PER SHARE                        $   1.20        $   1.26        $   4.95         $   3.83
  -----------------------------------------------==========================================================
  
  DILUTED EARNINGS PER SHARE                      $   1.19        $   1.25        $   4.90         $   3.79
  -----------------------------------------------==========================================================
  
  DIVIDENDS DECLARED PER SHARE                    $   0.29        $   0.28        $   0.86         $   0.83
  -----------------------------------------------==========================================================
  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
                                                                                      September 30,             December 31,
                                                                                           1998                      1997
  -------------------------------------------------------------------------------------------------------------------------
  ASSETS
  Investments:
     Fixed maturities, at fair value (amortized cost, $30,936; $34,284)                  $  33,339               $  36,358
     Equity securities, at fair value (cost, $662; $648)                                       862                     854
     Mortgage loans                                                                          9,556                  10,859
     Policy loans                                                                            6,547                   7,253
     Real estate                                                                               755                     769
     Other long-term investments                                                               535                     273
     Short-term investments                                                                    318                     212
                                                                                         ---------               ---------
         Total investments                                                                  51,912                  56,578
  Cash and cash equivalents                                                                  1,162                   2,625
  Accrued investment income                                                                    942                     868
  Premiums, accounts and notes receivable                                                    4,963                   4,265
  Reinsurance recoverables                                                                  12,567                   6,753
  Deferred policy acquisition costs                                                            967                   1,542
  Property and equipment                                                                       856                     857
  Deferred income taxes                                                                      1,891                   1,788
  Other assets                                                                               1,125                   1,033
  Goodwill and other intangibles                                                             2,462                   2,542
  Separate account assets                                                                   30,449                  29,348
  ------------------------------------------------------------------------------------------------------------------------
  
          Total assets                                                                   $ 109,296               $ 108,199
  --------------------------------------------------------------------------------------==================================
  
  LIABILITIES
  Contractholder deposit funds                                                           $  30,877               $  30,682
  Unpaid claims and claim expenses                                                          17,895                  17,906
  Future policy benefits                                                                    12,205                  11,976
  Unearned premiums                                                                          1,897                   1,774
                                                                                         ---------               ---------
           Total insurance and contractholder liabilities                                   62,874                  62,338
  Accounts payable, accrued expenses and other liabilities                                   6,268                   6,562
  Current income taxes                                                                         114                      60
  Short-term debt                                                                              245                     690
  Long-term debt                                                                             1,440                   1,465
  Separate account liabilities                                                              30,199                  29,152
  ------------------------------------------------------------------------------------------------------------------------
           Total liabilities                                                               101,140                 100,267
  ------------------------------------------------------------------------------------------------------------------------
  
  CONTINGENCIES - NOTE 9
  
  SHAREHOLDERS' EQUITY
  Common stock (par value, $.25; shares issued, 265; 264)                                       66                      66
  Additional paid-in capital                                                                 2,710                   2,655
  Net unrealized appreciation - fixed maturities                               $     864              $     752
  Net unrealized appreciation - equity securities                                    127                    132
  Net translation of foreign currencies                                             (149)                  (126)
                                                                               ---------              ---------
     Accumulated other comprehensive income                                                    842                     758
  Retained earnings                                                                          6,567                   5,696
  Less treasury stock, at cost                                                              (2,029)                 (1,243)
  ------------------------------------------------------------------------------------------------------------------------
           Total shareholders' equity                                                        8,156                   7,932
  ------------------------------------------------------------------------------------------------------------------------
  
           Total liabilities and shareholders' equity                                    $ 109,296               $ 108,199
  --------------------------------------------------------------------------------------==================================
  
  SHAREHOLDERS' EQUITY PER SHARE                                                         $   39.50               $   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 September 30,                                                 1998                            1997
  -------------------------------------------------------------------------------------------------------------------------------
                                                                           Compre-         Share-          Compre-        Share-
                                                                           hensive        holders'         hensive       holders'
                                                                           Income         Equity           Income        Equity
  -------------------------------------------------------------------------------------------------------------------------------
  Common stock                                                                            $    66                         $    66
                                                                                          -------                         -------
  Additional paid-in capital - June 30                                                      2,704                           2,632
    Issuance of common stock for employee benefits plans                                        6                              21
                                                                                          -------                         -------
  Additional paid-in capital - September 30                                                 2,710                           2,653
                                                                                          -------                         -------
  Accumulated other comprehensive income - June 30                                            835                             496
    Net unrealized appreciation - fixed maturities                        $   119             119         $   187             187
    Net unrealized appreciation (depreciation) - equity securities            (85)            (85)             13              13
                                                                          -------                         -------
        Net unrealized appreciation on securities                              34                             200
    Net translation of foreign currencies                                     (27)            (27)              7               7
                                                                          -------                         -------
            Other comprehensive income                                          7                             207
                                                                                          -------                         -------
  Accumulated other comprehensive income - September 30                                       842                             703
                                                                                          -------                         -------
  Retained earnings - June 30                                                               6,376                           5,299
    Net income                                                                251             251             279             279
    Common dividends declared                                                                 (60)                            (61)
                                                                                          -------                         -------
  Retained earnings - September 30                                                          6,567                           5,517
                                                                                          -------                         -------
  Treasury stock - June 30                                                                 (1,641)                           (945)
    Repurchase of common stock                                                               (385)                             --
    Other treasury stock transactions, net                                                     (3)                             (3)
                                                                                          -------                         -------
  Treasury stock - September 30                                                            (2,029)                           (948)
  -------------------------------------------------------------------------------------------------------------------------------
  TOTAL COMPREHENSIVE INCOME AND SHAREHOLDERS' EQUITY                     $   258         $ 8,156         $   486         $ 7,991
  ------------------------------------------------------------------------=======================================================
  
  Nine Months Ended September 30,
  -------------------------------------------------------------------------------------------------------------------------------
  Common stock                                                                            $    66                         $    66
                                                                                          -------                         -------
  Additional paid-in capital - January 1                                                    2,655                           2,594
    Issuance of common stock for employee benefits plans                                       55                              59
                                                                                          -------                         -------
  Additional paid-in capital - September 30                                                 2,710                           2,653
                                                                                          -------                         -------
  Accumulated other comprehensive income - January 1                                          758                             582
    Net unrealized appreciation - fixed maturities                        $   112             112         $    81              81
    Net unrealized appreciation (depreciation) - equity securities             (5)             (5)             61              61
                                                                          -------                         -------
        Net unrealized appreciation on securities                             107                             142
    Net translation of foreign currencies                                     (23)            (23)            (21)            (21)
                                                                          -------                         -------
            Other comprehensive income                                         84                             121
                                                                                          -------                         -------
  Accumulated other comprehensive income - September 30                                       842                             703
                                                                                          -------                         -------
  Retained earnings - January 1                                                             5,696                           4,855
    Net income                                                              1,054           1,054             846             846
    Common dividends declared                                                                (183)                           (184)
                                                                                          -------                         -------
  Retained earnings - September 30                                                          6,567                           5,517
                                                                                          -------                         -------
  Treasury stock - January 1                                                               (1,243)                           (889)
    Repurchase of common stock                                                               (756)                            (49)
    Other treasury stock transactions, net                                                    (30)                            (10)
                                                                                          -------                         -------
  Treasury stock - September 30                                                            (2,029)                           (948)
  -------------------------------------------------------------------------------------------------------------------------------
  TOTAL COMPREHENSIVE INCOME AND SHAREHOLDERS' EQUITY                     $ 1,138         $ 8,156         $   967         $ 7,991
  ------------------------------------------------------------------------=======================================================
  The Notes to Financial Statements are an integral part of these statements.
  
                                         3
  CIGNA  CORPORATION
  CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
  (In millions)
  Nine Months Ended September 30,
                                                                                 1998              1997
  ---------------------------------------------------------------------------------------------------------
  CASH FLOWS FROM OPERATING ACTIVITIES
      Net income                                                                $ 1,054         $   846
      Adjustments to reconcile net income to net cash
          provided by (used in) operating activities:
              Insurance liabilities                                                 628            (219)
              Reinsurance recoverables                                               98             387
              Deferred policy acquisition costs                                    (111)           (102)
              Premiums, accounts and notes receivable                              (481)            (99)
              Accounts payable, accrued expenses, other liabilities and
                  current income taxes                                             (166)            (26)
              Deferred income taxes                                                (155)            109
              Realized investment gains                                            (123)            (81)
              Depreciation and goodwill amortization                                242             164
              Gain on sale of businesses                                           (393)             --
              Other, net                                                           (394)           (257)
                                                                                -------         -------
                  Net cash provided by operating activities                         199             722
                                                                                -------         -------
  
  CASH FLOWS FROM INVESTING ACTIVITIES
      Proceeds from investments sold:
          Fixed maturities                                                        5,082           4,491
          Equity securities                                                         369             204
          Mortgage loans                                                            831             465
          Other (primarily short-term investments)                                1,632           3,194
      Investment maturities and repayments:
          Fixed maturities                                                        3,000           2,588
          Mortgage loans                                                            416             446
      Investments purchased:
          Fixed maturities                                                       (7,812)         (7,328)
          Equity securities                                                        (363)           (347)
          Mortgage loans                                                         (1,292)           (908)
          Other (primarily short-term investments)                               (2,643)         (2,621)
      Net cash from acquisitions and dispositions                                   998          (1,339)
      Other, net                                                                   (232)           (122)
                                                                                -------         -------
                  Net cash used in investing activities                             (14)         (1,277)
                                                                                -------         -------
  
  CASH FLOWS FROM FINANCING ACTIVITIES
      Deposits and interest credited to contractholder deposit funds              4,655           5,384
      Withdrawals and benefit payments from contractholder deposit funds         (4,892)         (5,181)
      Net change in short-term debt                                                (372)            104
      Issuance of long-term debt                                                     --             600
      Repayment of long-term debt                                                   (99)           (276)
      Repurchase of common stock                                                   (754)            (55)
      Issuance of common stock                                                       20              18
      Common dividends paid                                                        (184)           (182)
                                                                                -------         -------
                  Net cash provided by (used in) financing activities            (1,626)            412
                                                                                -------         -------
  Effect of foreign currency rate changes on cash and cash equivalents              (22)            (19)
  -----------------------------------------------------------------------------------------------------
  Net decrease in cash and cash equivalents                                      (1,463)           (162)
  Cash and cash equivalents, beginning of period                                  2,625           1,760
  -----------------------------------------------------------------------------------------------------
  
  Cash and cash equivalents, end of period                                      $ 1,162         $ 1,598
  ------------------------------------------------------------------------------=======================
  
  Supplemental Disclosure of Cash Information:
      Income taxes paid, net of refunds                                         $   660         $   333
      Interest paid                                                             $    90         $    82
  -----------------------------------------------------------------------------------------------------
  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 were 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 1998, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
  Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
  Instruments and Hedging  Activities."  SFAS No. 133 requires that derivatives be
  reported  on the  balance  sheet  at  fair  value.  Changes  in fair  value  are
  recognized  in net income or, for  derivatives  which are  hedging  market  risk
  related to future cash flows,  in the  accumulated  other  comprehensive  income
  section of shareholders' equity. Implementation is required by the first quarter
  of 2000,  with the  cumulative  effect of adoption  reflected  in net income and
  accumulated other comprehensive income, as appropriate. CIGNA has not determined
  the effect or timing of implementation of this pronouncement.
  
  In 1997,  the FASB  issued  SFAS No.  131,  "Disclosures  about  Segments  of an
  Enterprise and Related  Information."  SFAS No. 131 will change the way segments
  are  reported  and  require   additional  segment   disclosure,   including  the
  presentation  of  CIGNA's  International  division  as a  separate  segment  and
  realignment  of the  components of the  Individual  Financial  Services  segment
  following the sale of its individual life and annuity  businesses in 1998. CIGNA
  will implement these new requirements in the fourth 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.  Although  CIGNA  has not  determined  the  timing  of
  implementation of this pronouncement,  the estimated after-tax cumulative effect
  to be recognized upon  implementation is expected to be approximately $75 - $100
  million.
  
  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
  
                                          5
  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.
  
  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
  the possibility of certain 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 $971
  million in the first half 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  September  30, 1998,  approximately  $7 million of
  severance was paid to approximately 530 employees. Goodwill and other intangible
  assets are being  amortized on a  straight-line  basis over periods ranging from
  eight to 40 years.
  
  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 for recent  international life
  and health  expansion,  mainly in Brazil.  In August 1998, CIGNA made additional
  investments  of  approximately  $200  million in certain  Brazilian  health care
  companies,  resulting in total investments of approximately $350 million in, and
  control of, these  companies.  The effect on CIGNA's  results of operations from
  these investments has not been material. Combined revenues of these companies in
  1997 were approximately $1 billion.  CIGNA will complete its fair value analysis
  of the net assets of these companies  during the next several months.  While the
  effects of this analysis are not reasonably estimable at this time, they are not
  expected to have a material effect on CIGNA's  results of operations,  liquidity
  or financial condition.
  
  Certain risks are inherent in expanding operations in foreign countries.  During
  the third quarter and nine months of 1998,  CIGNA recognized $23 million and $31
  million of after-tax  losses  associated  with equity  securities of a Brazilian
  financial  services company.  The investments in recent  international  life and
  health  expansion,  which now total  approximately  $400 million,  are routinely
  monitored for potential impairment,  and management currently believes that such
  investments are recoverable.
  
  CIGNA had other acquisitions and dispositions during the nine months of 1998 and
  1997, the effects of which were not material to the financial statements.
  
                                          6
  NOTE 4 - INVESTMENTS
  
  Realized Investment Gains and Losses
  
  Realized gains and losses on investments,  excluding policyholder share, were as
  follows:
  
  --------------------------------------------------------------------
                                Three Months           Nine Months
                                   Ended                  Ended
                                September 30,          September 30,
  (In millions)                1998       1997       1998       1997
  --------------------------------------------------------------------
  
  Fixed maturities            $  22      $   6      $  68      $  35
  Equity securities             (24)        19         (4)        33
  Mortgage loans                  8         (3)        13        (17)
  Real estate                     8          3         15         20
  Other                           3         --         31         10
                              --------------------------------------
                                 17         25        123         81
  Less income taxes               7          8         43         27
  ------------------------------------------------------------------
  Net realized investment
  gains                       $  10      $  17      $  80      $  54
  ---------------------------=======================================
  
  Fixed Maturities and Equity Securities
  
  Sales of  available-for-sale  fixed maturities and equity securities,  including
  policyholder share, were as follows:
  
  -------------------------------------------------------------------------
                                 Three Months               Nine Months
                                    Ended                      Ended
                                 September 30,             September 30,
  (In millions)               1998         1997         1998         1997
  -------------------------------------------------------------------------
  
  Proceeds from sales       $ 1,590      $ 1,417      $ 5,451      $ 4,695
  Gross gains on sales           75           55          216          141
  Gross losses on sales          (7)         (10)         (66)         (70)
  -------------------------------------------------------------------------
  
  The components of unrealized appreciation on securities were as follows:
  
  -------------------------------------------------------------------
  (In millions)                                     1998        1997
  -------------------------------------------------------------------
  Three months ended September 30,
  Unrealized appreciation on securities held,
  net of taxes of $26 and $118, respectively.      $  32      $ 216
  Less gains (losses) realized in net income,
  net of taxes of $9 in 1997.                         (2)        16
                                                   ------------------
  Net unrealized appreciation                      $  34      $ 200
  -------------------------------------------------==================
  Nine months ended September 30,
  Unrealized appreciation on securities held,
  net of taxes of $135 and $104, respectively.     $ 251      $ 186
  Less gains realized in net income, net of
  taxes of $78 and $24, respectively.                144         44
                                                   ------------------
  Net unrealized appreciation                      $ 107      $ 142
  -------------------------------------------------==================
  
  NOTE 5 - 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.
  
                                          7
  NOTE 6 - EARNINGS PER SHARE
  
  -------------------------------------------------------------------------
                                                     Effect
  (Dollars in millions,                                  of
  except per share amounts)              Basic     Dilution       Diluted
  -------------------------------------------------------------------------
  
  Three Months Ended September 30,
  -------------------------------------------------------------------------
  1998
  -------------------------------------------------------------------------
  Net income                              $251           --          $251
  ------------------------------------=====================================
  Shares (in thousands):
  Weighted average                     209,212           --       209,212
  Options and restricted
  stock grants                                        2,300         2,300
  -------------------------------------------------------------------------
  Total shares                         209,212        2,300       211,512
  ------------------------------------=====================================
  Earnings per share                     $1.20       $(0.01)        $1.19
  ------------------------------------=====================================
  1997
  -------------------------------------------------------------------------
  Net income                              $279           --          $279
  ------------------------------------=====================================
  Shares (in thousands):
  Weighted average                     220,897           --       220,897
  Options and restricted
  stock grants                                        2,675         2,675
  -------------------------------------------------------------------------
  Total shares                         220,897        2,675       223,572
  ------------------------------------=====================================
  Earnings per share                     $1.26       $(0.01)        $1.25
  ------------------------------------=====================================
  
  Nine Months Ended September 30,
  -------------------------------------------------------------------------
  1998
  -------------------------------------------------------------------------
  Net income                            $1,054           --        $1,054
  ------------------------------------=====================================
  Shares (in thousands):
  Weighted average                     212,871           --       212,871
  Options and restricted
  stock grants                                        2,376         2,376
  -------------------------------------------------------------------------
  Total shares                         212,871        2,376       215,247
  ------------------------------------=====================================
  Earnings per share                     $4.95       $(0.05)        $4.90
  ------------------------------------=====================================
  1997
  -------------------------------------------------------------------------
  Net income                              $846           --          $846
  ------------------------------------=====================================
  Shares (in thousands):
  Weighted average                     220,767           --       220,767
  Options and restricted
  stock grants                                        2,408         2,408
  -------------------------------------------------------------------------
  Total shares                         220,767        2,408       223,175
  ------------------------------------=====================================
  Earnings per share                     $3.83       $(0.04)        $3.79
  ------------------------------------=====================================
  
  Common  shares held as Treasury  shares were  58,498,295  and  41,524,404  as of
  September 30, 1998 and 1997, respectively.
  
  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
  $710 million and $720  million as of  September  30, 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 third  quarter  and nine months of 1998,  premiums  and fees were net of
  ceded  premiums of $650 million and $1.7  billion,  respectively.  For the third
  quarter and nine months of 1997, premiums and fees were net of ceded premiums of
  $448 million and $1.5 billion,  respectively.  In addition, benefits, losses and
  settlement  expenses  for the third  quarter and nine months of 1998 were net of
  reinsurance recoveries of $520 million and $1.4 billion, respectively. Benefits,
  losses and  settlement  expenses  for the third  quarter and nine months of 1997
  were  net  of   reinsurance   recoveries  of  $376  million  and  $1.1  billion,
  respectively.
  
                                          8
  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 September 30, 1998,  approximately $6 million of severance was
  paid to approximately 860 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
  
                                          9
  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) has recently adopted
  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 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.
  
                                         10
  Item 2.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations
  
  INTRODUCTION
  
  The following  discussion addresses the financial condition of CIGNA Corporation
  (CIGNA) as of  September  30, 1998,  compared  with  December 31, 1997,  and its
  results of operations for the quarter and nine months ended  September 30, 1998,
  compared  with the same periods  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) and in CIGNA's  report on
  Form 10-Q for the second  quarter of 1998,  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.  CIGNA recognized  approximately $17 million and $50 million of
  the deferred  gain in the third  quarter and nine months of 1998,  respectively.
  The  sales  agreement  provides  for the  possibility  of  certain  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.
  
  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 for recent  international life
  and health  expansion,  mainly in Brazil.  In August 1998, CIGNA made additional
  investments  of  approximately  $200  million in certain  Brazilian  health care
  companies,  resulting in total investments of approximately $350 million in, and
  control of, these  companies.  The effect on CIGNA's  results of operations from
  these investments has not been material. Combined revenues of these companies in
  1997 were approximately $1 billion.  CIGNA will complete its fair value analysis
  of the net assets of these companies  during the next several months.  While the
  effects of this analysis are not reasonably estimable at this time, they are not
  expected to have a material effect on CIGNA's  results of operations,  liquidity
  or financial condition.
  
  Certain risks are inherent in expanding operations in foreign countries.  During
  the third quarter and nine months of 1998, CIGNA recognized $23
  
                                         11
  million and $31 million of after-tax losses associated with equity securities of
  a Brazilian financial services company.  The investments in recent international
  life and health  expansion,  which now total  approximately  $400  million,  are
  routinely monitored for potential impairment,  and 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  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  September  30,  1998,  there  were no
  material changes to the costs associated with or the anticipated  annual savings
  related to these initiatives. As of September 30, 1998, approximately $6 million
  of severance was paid to approximately 860 employees.
  
  Other Matters
  
  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  as well  as the  overall  effect  on  CIGNA's  international
  operations 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
  
  In 1998, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
  Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
  Instruments and Hedging  Activities."  SFAS No. 133 requires that derivatives be
  reported  on the  balance  sheet  at  fair  value.  Changes  in fair  value  are
  recognized  in net income or, for  derivatives  which are  hedging  market  risk
  related to future cash flows,  in the  accumulated  other  comprehensive  income
  section of shareholders' equity. Implementation is required by the first quarter
  of 2000,  with the  cumulative  effect of adoption  reflected  in net income and
  accumulated other comprehensive income, as appropriate. CIGNA has not determined
  the effect or timing of implementation of this pronouncement.
  
  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.  Although  CIGNA  has not  determined  the  timing  of
  implementation of this pronouncement,  the estimated after-tax cumulative effect
  to be recognized upon  implementation is expected to be approximately $75 - $100
  million.
  
  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
  
                                         12
  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  Nine Months Ended
                                  September 30,     September 30,
  (In millions)                 1998       1997     1998     1997
  -----------------------------------------------------------------
  Premiums and fees            $4,093    $3,925   $12,109  $10,795
  Net investment income           911     1,057     2,790    3,172
  Other revenues                  205       175       936      498
  Realized investment gains        17        25       123       81
                           ----------------------------------------
  Total revenues                5,226     5,182    15,958   14,546
  Benefits and expenses         4,834     4,755    14,327   13,271
                           ----------------------------------------
  Income before taxes             392       427     1,631    1,275
  Income taxes                    141       148       577      429
                           ----------------------------------------
  Net income                     $251      $279    $1,054     $846
  -------------------------========================================
  Realized investment 
  gains, net of taxes             $10       $17       $80      $54
  -------------------------========================================
  
  CIGNA's  consolidated net income decreased 10% for the third quarter of 1998 and
  increased  25% for the nine months of 1998  compared  with the same periods last
  year.  The  decrease for the quarter  reflects  lower  operating  income* in the
  Property and Casualty segment (principally due to catastrophe losses) and in the
  Individual  Financial  Services segment,  partially offset by improved operating
  income in the Employee  Life and Health  Benefits and  Employee  Retirement  and
  Savings  Benefits  segments.  For the nine  months,  the  increase in net income
  primarily  reflects the $202 million  after-tax  gain  recognized on the sale of
  CIGNA's individual life insurance and annuity businesses and improved results in
  the  Employee  Life and Health  Benefits  and  Employee  Retirement  and Savings
  Benefits segments.  This increase was partially offset by lower operating income
  in the Property and Casualty  segment,  as discussed  above, and lower operating
  income in the Individual Financial Services segment (excluding the gain).
  
  After-tax realized investment results decreased 41% in the third quarter of 1998
  and  increased  48% for the nine months of 1998  compared  with the same periods
  last year.  The  decrease  for the quarter  reflects  the  impairment  losses on
  Brazilian equity securities  discussed beginning on page 11, partially offset by
  increased gains on sales of fixed  maturities and mortgage  loans.  The increase
  for the nine months primarily  reflects higher gains on sales of mortgage loans,
  equity  securities,  real estate  partnerships  and fixed  maturities  partially
  offset  by  higher  impairment  losses on equity  securities  noted  above.  For
  additional information see Note 4 to the Financial Statements.
  
  Full year operating  income for 1998 may be slightly lower than 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)
  due  primarily  to higher  catastrophe  losses.  CIGNA  currently  expects  1999
  operating  income to be somewhat  higher than 1998  (excluding  the $202 million
  gain).  Results  for 1998 and 1999 could be  adversely  affected  by the factors
  noted in the cautionary statements on page 23.
  
  EMPLOYEE LIFE AND HEALTH BENEFITS
  
  ==================================================================
  FINANCIAL SUMMARY           Three Months Ended   Nine Months Ended
                                 September 30,       September 30,
  (In millions)                1998        1997     1998     1997
  -----------------------------------------------------------------
  Premiums and fees           $2,861     $2,572    $8,418   $6,792
  Net investment income          152        142       436      415
  Other revenues                 136        116       402      340
  Realized investment gains
  (losses)                        29         (6)       85        1
                           ----------------------------------------
  Total revenues               3,178      2,824     9,341    7,548
  Benefits and expenses        2,895      2,629     8,570    6,981
                           ----------------------------------------
  Income before taxes            283        195       771      567
  Income taxes                   105         71       284      194
                           ----------------------------------------
  Net income                    $178       $124      $487     $373
  -------------------------========================================
  Realized investment gains
  (losses), net of taxes         $19        $(4)      $55       $2
  -------------------------========================================
  
  Net income for the Employee Life and Health Benefits  segment  increased 44% and
  31% for the  third  quarter  and nine  months  of 1998,  compared  with the same
  periods  last year.  Operating  income for the third  quarter and nine months of
  1998  increased 24% and 16%,  respectively,  compared with the same periods last
  year. Operating income
  
  --------
  *    Operating income (loss) is defined as net income (loss) excluding after-tax
       realized investment results.
  
                                         13
  for the Indemnity and HMO operations was as follows:
  
  ====================================================================
                               Three Months Ended    Nine Months Ended
                                  September 30,        September 30,
  (In millions)                  1998      1997       1998      1997
  --------------------------------------------------------------------
  Indemnity operations            $77       $76       $218      $202
  HMO operations                   82        52        214       169
  --------------------------------------------------------------------
  Total                          $159      $128       $432      $371
  ====================================================================
  
  Indemnity  operating  income  increased 1% and 8% for the third quarter and nine
  months of 1998,  respectively,  compared with the same periods last year.  These
  increases primarily reflect improved long-term disability claim experience.
  
  HMO results for the third quarter and nine months of 1998 include $4 million and
  $11 million of after-tax charges for uncollectible receivables for a health care
  specialty service business. These results also include $5 million and $6 million
  of after-tax  benefits  principally for  adjustments to reserves  established in
  connection with the 1997 Healthsource integration and health care cost reduction
  plan.  HMO results for the nine months of 1997 include net  favorable  after-tax
  adjustments of $11 million from reserve and account reviews.
  
  Excluding  the  adjustments,  HMO earnings were $81 million and $219 million for
  the third  quarter  and nine  months of 1998,  respectively,  compared  with $52
  million and $158  million for the same  periods  last year.  These  improvements
  reflect medical  membership growth,  rate increases,  improved results in dental
  and mental  health  operations  and lower  operating  expenses per member due to
  expense  savings  initiatives.  For the nine  months  of 1998,  the  improvement
  resulting from membership growth was primarily  attributable to the Healthsource
  acquisition in June 1997. These  improvements were partially offset by increased
  HMO medical costs reflecting  higher pharmacy,  physician and outpatient  costs,
  and,  for the nine  months  of  1998,  higher  goodwill  and  other  intangibles
  amortization of $18 million associated with the acquisition of Healthsource.
  
  Premiums and fees increased 11% and 24% for the third quarter and nine months of
  1998, respectively, compared to the same periods last year. The increase for the
  third quarter primarily  reflects rate increases and membership  growth. For the
  nine months, the increase primarily reflects  Healthsource premiums and fees, as
  well  as rate  increases  and  membership  growth.  Growth  in  premiums  may be
  constrained  by  competitive  pressures  in both the medical  indemnity  and HMO
  markets.
  
  Net investment  income increased 7% and 5% for the third quarter and nine months
  of 1998,  respectively,  compared to the same periods in 1997,  primarily due to
  higher assets, partially offset by lower yields.
  
  Total HMO  membership  increased  11%  since  September  30,  1997 and 10% since
  December  31,  1997,  primarily  reflecting  membership  growth in  CIGNA's  HMO
  alternative funding programs.  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 third quarter and nine months of 1998 were
  approximately  $3.3  billion  and  $9.7  billion,  respectively.  These  amounts
  represent  an  increase  of 8% and  24%,  respectively,  compared  with the same
  periods last year. This increase primarily reflects  membership growth, and to a
  lesser extent,  higher medical costs.  Premium equivalents may be constrained by
  competitive  pressures in both the medical  indemnity  and HMO markets.  Premium
  equivalents were 54% of total adjusted  premiums and fees for the nine months of
  1998 and 1997.  Administrative  Services Only (ASO) plans  accounted for 49% and
  50% of total  adjusted  premiums  and fees for the nine months of 1998 and 1997,
  respectively.
  
                                         14
  EMPLOYEE RETIREMENT AND SAVINGS BENEFITS
  
  =======================================================================
  FINANCIAL SUMMARY             Three Months Ended      Nine Months Ended
                                   September 30,          September 30,
  (In millions)                   1998       1997       1998       1997
  -----------------------------------------------------------------------
  Premiums and fees                $42        $40        $155       $138
  Net investment income            365        393       1,140      1,192
  Realized investment gains
  (losses)                           8         (3)         24         11
                                -----------------------------------------
  Total revenues                   415        430       1,319      1,341
  Benefits and expenses            320        355       1,043      1,095
                                -----------------------------------------
  Income before taxes               95         75         276        246
  Income taxes                      31         24          89         79
                                -----------------------------------------
  Net income                       $64        $51        $187       $167
  ------------------------------=========================================
  Realized investment gains
  (losses), net of taxes            $5        $(2)        $16         $7
  ------------------------------=========================================
  
  Net income for the Employee  Retirement and Savings Benefits  segment  increased
  25% and 12% for the third  quarter  and nine months of 1998,  compared  with the
  same periods of 1997.  Operating income for the third quarter and nine months of
  1998 was $59  million  and $171  million,  compared  with $53  million  and $160
  million for the same periods last year. These increases  reflect higher earnings
  from an increased asset base,  partially offset by customers' shift from general
  account fixed income investments to lower margin separate account equity funds.
  
  Premiums and fees  increased 5% and 12% for the third quarter and nine months of
  1998, respectively,  compared with the same periods last year, reflecting higher
  fees from  separate  accounts  and higher  annuity  sales for the nine months of
  1998.
  
  Net investment  income decreased 7% and 4% for the third quarter and nine months
  of 1998, respectively. These decreases primarily reflect lower investment yields
  and customers'  redirection of a portion of their  investments  from the general
  account to separate accounts for the nine months of 1998.
  
  Assets  under  management  is generally a key  determinant  of earnings for this
  segment.  For the nine months ended  September 30, assets under  management  and
  related activity,  including amounts attributable to separate accounts,  were as
  follows:
  
  ===================================================================
  (In millions)                                  1998           1997
  -------------------------------------------------------------------
  Balance -- January 1                        $46,074        $40,605
  Premiums and deposits                         5,751          5,221
  Investment results                            2,128          1,847
  Increase (decrease) in fair value of assets     (26)         2,946
  Customer withdrawals                         (2,900)        (1,679)
  Other, including participant
  withdrawals and benefit payments             (4,173)        (3,417)
  -------------------------------------------------------------------
  Balance -- September 30                     $46,854        $45,523
  --------------------------------------------=======================
  
  Premiums and deposits  increased  10% in the nine months of 1998,  compared with
  the same period in 1997,  primarily  reflecting  higher recurring  deposits from
  existing customers.  For the nine months of 1998 and 1997, approximately 54% and
  53%,  respectively,  of premiums and deposits  reflect  recurring  deposits from
  existing  customers while the remaining amounts represent sales to new customers
  and new plan sales to existing  customers.  Investment  results increased 15% in
  the nine months of 1998,  compared  with the same period in 1997.  This increase
  reflects higher realized capital gains and growth in assets, partially offset by
  lower  investment  yields.  The decrease for 1998 in the fair value of assets is
  due to market value  depreciation of equity  securities in separate  accounts in
  the third quarter of 1998. The increase in customer withdrawals is primarily due
  to the effect of one customer withdrawal in 1998. The increase in Other reflects
  larger  participant  withdrawals  and benefit  payments due to a higher level of
  assets under management.
  
  Management  expects  that  asset  growth may 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.
  
                                         15
  INDIVIDUAL FINANCIAL SERVICES
  ========================================================================
  FINANCIAL SUMMARY             Three Months Ended     Nine Months Ended
                                   September 30,          September 30,
  (In millions)                   1998       1997       1998        1997
  -----------------------------------------------------------------------
  Premiums and fees               $141       $248        $455       $731
  Net investment income            166        274         502        805
  Other revenues                    26         17         393         46
  Realized investment gains
  (losses)                           5         (4)         12          7
                                 ----------------------------------------
  Total revenues                   338        535       1,362      1,589
  Benefits and expenses            272        460         856      1,357
                                 ----------------------------------------
  Income before taxes               66         75         506        232
  Income taxes                      23         26         178         81
                                 ----------------------------------------
  Net income                       $43        $49        $328       $151
  -------------------------------========================================
  Realized investment gains
  (losses), net of taxes            $3        $(2)         $8         $5
  -------------------------------========================================
  
  Net income for the Individual  Financial  Services segment decreased 12% for the
  third quarter of 1998 and increased  substantially  for the nine months of 1998,
  compared  with the same  periods of 1997.  Results  for the nine  months of 1998
  include  an  after-tax  gain  of  $202  million  recognized  on the  sale of the
  individual life insurance and annuity businesses.  Results for the third quarter
  and nine months  include $17  million and $50 million  after-tax,  respectively,
  from  recognition of a portion of the deferred gain associated with the sale (as
  discussed on page 11).
  
  Excluding these amounts,  operating income for the third quarter and nine months
  of 1998 was $23 million and $68 million,  respectively.  These amounts, compared
  with  operating  income of $25 million  and $76 million for the same  periods in
  1997 (excluding results from the businesses sold), primarily reflect unfavorable
  claim  experience in the reinsurance  operation,  partially  offset by growth in
  interest-sensitive and specialty life reinsurance products.
  
  For the third quarter and nine months of 1998,  premiums and fees  decreased 43%
  and 38%,  respectively,  compared with the same periods of 1997.  Excluding 1997
  premiums and fees  related to the  businesses  sold,  the increase for the third
  quarter and nine months of 1998 was 1% and 10%,  respectively.  These  increases
  reflect growth in reinsurance and higher renewal premiums for interest-sensitive
  products.
  
  Net  investment  income  decreased  39% and 38% for the third  quarter  and nine
  months of 1998, respectively,  compared with the same periods of 1997. Excluding
  1997 net investment  income related to the businesses sold, the increase for the
  third  quarter  and  nine  months  of 1998  was 4% and 8%,  respectively.  These
  increases primarily reflect growth in interest-sensitive products.
  
  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 third quarter and nine months of 1998,
  revenues of $131  million and $415 million and  operating  income of $12 million
  and $33  million,  respectively,  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   Nine Months Ended
                                 September 30,       September 30,
  (In millions)                  1998     1997       1998     1997
  ------------------------------------------------------------------
  Premiums and fees             $1,049   $1,065     $3,081   $3,134
  Net investment income            170      190        523      574
  Other revenues                    74       72        210      209
  Realized investment gains
  (losses)                         (26)      35         (4)      59
                              --------------------------------------
  Total revenues                 1,267    1,362      3,810    3,976
  Benefits and expenses          1,278    1,241      3,646    3,669
                              --------------------------------------
  Income (loss) before taxes       (11)     121        164      307
  Income taxes (benefits)           (7)      39         50       94
                              --------------------------------------
  Net income (loss)                $(4)     $82       $114     $213
  ----------------------------======================================
  Realized investment gains
  (losses), net of taxes          $(17)     $23        $(4)     $38
  ----------------------------======================================
  
  Results for the Property and Casualty  segment  declined  substantially  for the
  third quarter and nine months of 1998 compared with the same periods last year.
  
                                         16
  Operating income for the ongoing and run-off operations was as follows:
  
  ===================================================================
                               Three Months Ended   Nine Months Ended
                                  September 30,        September 30,
  (In millions)                  1998      1997      1998       1997
  -------------------------------------------------------------------
  Ongoing operations:
    International                $(13)      $33       $46       $102
    Domestic                       26        26        72         72
                               --------------------------------------
      Total ongoing
        operations                 13        59       118        174
  Run-off operations               --        --        --          1
  -------------------------------------------------------------------
      Total                       $13       $59      $118       $175
  ===================================================================
  
  International  results for the third  quarter  and nine  months of 1998  include
  catastrophe  losses of $36  million  after-tax  related  to  Hurricane  Georges.
  Results for the nine months of 1997  include a $6 million  after-tax  charge for
  cost  reduction  initiatives,  principally  severance.  Excluding  these  items,
  operating  income was $23 million and $82 million for the third quarter and nine
  months of 1998  compared  with $33 million and $108 million for the same periods
  last year. These declines reflect lower property and casualty earnings primarily
  due to the competitive  environment,  and lower net investment income. Partially
  offsetting these declines were improvements in the international life and health
  operations (primarily in Japan).
  
  Results for the domestic operations in the third quarter and nine months of 1998
  are  level  compared  with  the same  periods  of 1997.  These  results  reflect
  catastrophe  losses associated with Hurricane  Georges of $6 million  after-tax,
  lower net investment income and unfavorable  workers'  compensation  experience,
  offset  by  favorable  prior  year  development,  improvement  in  results  from
  insurance-related  service businesses and, for the nine months,  improved claims
  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  decreased  2% for the third  quarter and nine months of 1998.
  These changes reflect the  discontinuance of certain personal lines of business,
  continued price competition and, for  international,  the unfavorable  effect of
  foreign  exchange,  partially  offset  by growth in  workers'  compensation  and
  international life and health (primarily in Japan).
  
  Net investment income decreased 11% and 9% for the third quarter and nine months
  of 1998,  respectively,  compared  with the same  periods of 1997.  The declines
  reflect lower average assets,  the  unfavorable  effect of foreign  exchange,  a
  shift in the investment portfolio mix from fixed maturities to equity securities
  and lower yields.
  
  The ongoing operations had pre-tax  catastrophe  losses, net of reinsurance,  of
  $67  million  and $97  million  for the third  quarter  and nine months of 1998,
  respectively,  compared  with $2 million and $16 million for the same periods of
  1997.   Catastrophe   losses  in  1998   included   $65  million   ($55  million
  international, $10 million domestic) for Hurricane Georges.
  
  Effective July 1, 1998, CIGNA revised its reinsurance programs. CIGNA's domestic
  reinsurance  programs  provide  for  approximately  60%  recovery  for  property
  catastrophe  losses  between  $45 million and $260  million.  Other  reinsurance
  programs  are  in  place  which  could  provide  for  the  recovery  of up to an
  additional  $300 million on certain  losses,  including  property  catastrophes,
  depending  on  the   aggregate   annual  level  of  losses   incurred.   CIGNA's
  international  catastrophe program provides approximately 95% recovery of losses
  between $100 million and $400 million.  CIGNA's  results of operations  could be
  volatile, depending on the frequency and severity of catastrophes.
  
  Certain  competitors  and  policyholders  of CIGNA are  challenging in court the
  restructuring of its domestic  property and casualty  business into two separate
  operations,  ongoing and  run-off.  Although  CIGNA  expects the matter to be in
  litigation for some time, it expects to ultimately prevail.
  
                                         17
  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.
  
  CIGNA's  property and casualty  loss reserves of $15.0 billion and $15.1 billion
  as of September 30, 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 September 30, 1998 and December 31, 1997,  net of  allowances  for
  unrecoverable reinsurance of $710 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  (favorable)  pre-tax  effects  on the
  Property  and  Casualty   segment's   results  of  operations  from  prior  year
  development, net of reinsurance:
  
  ====================================================================
                              Three Months Ended     Nine Months Ended
                                 September 30,         September 30,
  (In millions)                 1998      1997         1998     1997
  --------------------------------------------------------------------
  By business operation:
    Ongoing operations          $(15)       $8         $(10)     $22
    Run-off operations            44        50          137      150
  --------------------------------------------------------------------
  Total                          $29       $58         $127     $172
  ====================================================================
  By type of loss:
    Asbestos-related             $17       $20          $54      $68
    Environmental
       pollution                   8         8           23       22
    Unrecoverable
       reinsurance                 3         6           17       15
    Workers' compensation         24        18           48       36
    Other                        (23)        6          (15)      31
  --------------------------------------------------------------------
  Total                          $29       $58         $127     $172
  ====================================================================
  
  Other prior year development in the quarter and nine months reflected  favorable
  claims experience on certain commercial package,  property and aviation lines of
  business,  somewhat offset by unfavorable development on the assumed reinsurance
  line of business.
  
                                         18
  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  operating  losses of $30 million and $67 million for the
  third quarter and nine months of 1998, respectively, compared with losses of $29
  million and $60 million for the same periods in 1997.  The increase in operating
  losses for the nine months of 1998 primarily reflects financing costs associated
  with the Healthsource acquisition and increased expenses related to new business
  initiatives.
  
  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 nine months of 1998,  cash and cash  equivalents  decreased $1.5 billion
  from $2.6 billion as of December  31, 1997.  This  decrease  primarily  reflects
  repurchases of, and payments of dividends on, CIGNA common stock ($938 million),
  repayment of debt ($471 million),  net withdrawals from  contractholder  deposit
  funds ($237 million), and cash used in investing activities ($14 million), which
  includes  investments in international  growth initiatives of approximately $300
  million and net investment  purchases,  offset by net proceeds of  approximately
  $1.3  billion  on  the  sale  of  the  individual  life  insurance  and  annuity
  businesses.  These decreases were partially offset by cash provided by operating
  activities ($199 million),  reflecting the timing of operating cash receipts and
  disbursements.
  
  CIGNA's  capital  resources  represent  funds  available for long-term  business
  commitments.  They primarily  consist of retained earnings and proceeds from the
  issuance of long-term debt and equity  securities.  CIGNA's  financial  strength
  provides the capacity and flexibility to enable it to raise funds in the capital
  markets  through the  issuance of such  securities.  CIGNA  continues to be well
  capitalized, with sufficient borrowing capacity to meet the anticipated needs of
  its businesses.
  
  CIGNA had $1.4  billion  and $1.5  billion  of  long-term  debt  outstanding  at
  September 30, 1998 and December 31, 1997. As of September 30, 1998, CIGNA had $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 September 30, 1998,  CIGNA's  short-term  debt  amounted to $245  million,  a
  decrease of $445 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  depend  on
  prevailing  market  conditions and alternative  uses of capital.  From January 1
  through November 2, 1998, CIGNA repurchased  12,400,600 shares for $822 million,
  including  998,700  shares  repurchased  for $66 million  from October 1 through
  November 2, 1998.  The remaining  authorization  as of November 2, 1998 was $289
  million.
  
  INVESTMENT ASSETS
  
  ===================================================================
                                   September 30,        December 31,
  (In millions)                             1998                1997
  -------------------------------------------------------------------
  Fixed maturities                       $33,339             $36,358
  Equity securities                          862                 854
  Mortgage loans                           9,556              10,859
  Real estate                                755                 769
  Other, primarily policy loans            7,400               7,738
  -------------------------------------------------------------------
  Total investment assets                $51,912             $56,578
  ===================================================================
  
  Additional information regarding CIGNA's investment assets is included in Note 4
  to the third 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 September 30, 1998 decreased 8% from December 31, 1997.
  This decrease primarily relates to investments which were
  
                                         19
  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:
  
  ===================================================================
                                      September 30,      December 31,
                                               1998              1997
  -------------------------------------------------------------------
  Fixed maturities                              30%               29%
  Mortgage loans                                57%               53%
  Real estate                                   63%               64%
  ===================================================================
  
  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  September  30,  1998,  the  fair  value of  fixed  maturities,  including
  policyholder  share,  was greater than amortized cost by $2.4 billion,  compared
  with  $2.1  billion  as  of  December  31,  1997.  The  increase  in  unrealized
  appreciation  primarily reflects the decline in interest rates, partially offset
  by the amount of unrealized  appreciation on the bonds that 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 $78 million of potential problem bonds, including amounts attributable
  to policyholder  contracts,  as of September 30, 1998, compared with $63 million
  as of December 31, 1997.  These amounts are net of $7 million and $10 million of
  cumulative write-downs, respectively.
  
  CIGNA considers bonds that are delinquent or restructured as to terms, typically
  interest  rate and,  in certain  cases,  maturity  date,  problem  bonds.  As of
  September  30, 1998 and December 31, 1997,  CIGNA had problem  bonds,  including
  amounts  attributable  to  policyholder  contracts,  of $127  million  and  $137
  million,  net of related cumulative  write-downs of $26 million and $30 million,
  respectively.
  
  CIGNA recognizes interest income on problem bonds only when payment is received.
  See the Summary on page 21 for the effect of  non-accruals  and  write-downs for
  bonds on policyholder contracts and on CIGNA's net income.
  
  Mortgage Loans
  
  ====================================================================
                                     September 30,       December 31,
                                              1998               1997
  --------------------------------------------------------------------
  Mortgage loans (in millions)              $9,556            $10,859
  Property type:
     Retail facilities                          37%                40%
     Office buildings                           36                 34
     Apartment buildings                        15                 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 $99  million as of  September  30,  1998,  and $191
  million as of December 31, 1997, net of related valuation reserves of $1 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.
  
                                         20
  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 $143 million and $152  million,  net of valuation  reserves of $9
  million as of September 30, 1998 and December 31, 1997.
  
  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 September 30, 1998 and December 31, 1997,  investment real estate,  net of
  reserves  and  write-downs,   included:   1)  $394  million  and  $414  million,
  respectively,  of real estate  held for the  production  of income,  and 2) $361
  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 September 30,                        Nine Months Ended September 30,
                            ---------------------------------------------------   ---------------------------------------------------
                                       1998                         1997                      1998                        1997
                            -------------------------  ------------------------   ------------------------  -------------------------
                              Policy-                      Policy-                   Policy-                     Policy-
                               holder                       holder                    holder                      holder
  (In millions)             Contracts       CIGNA        Contracts      CIGNA      Contracts       CIGNA       Contracts       CIGNA
  -----------------------------------------------------------------------------------------------------------------------------------
  Write-downs and
  valuation reserves:
     Bonds                      $3            $4            $6           $12           $4            $5           $13           $20
     Mortgage loans             (4)           --             5             3           (7)           (1)           11             8
     Real estate                 2            --            (2)           --            1            --            (1)            2
  -----------------------------------------------------------------------------------------------------------------------------------
  Total                         $1            $4            $9           $15          $(2)           $4           $23           $30
  ===================================================================================================================================
  Non-accruals:
     Bonds                     $--            $2            $2            $3           $2            $5            $5            $8
     Mortgage loans             (1)           (1)           (1)           --           (2)           (1)           (2)           --
  -----------------------------------------------------------------------------------------------------------------------------------
  Total                        $(1)           $1            $1            $3          $--            $4            $3            $8
  ===================================================================================================================================
  CIGNA also recognized  losses in connection with Brazilian equity  securities as
  discussed  beginning on page 11. 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 and Latin American 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.
  
                                         21
  YEAR 2000
  
  CIGNA is highly  dependent  on  automated  systems and systems  applications  in
  conducting its  operations.  These systems include  information  technology (IT)
  systems  that are used for,  among other  things,  processing  claims,  billing,
  collecting premiums from customers and managing investment activities.  If these
  systems  were  unable to  function  because of  failing  to be Year 2000  ready,
  CIGNA's business  operations  would be interrupted,  which could have a material
  adverse effect on CIGNA's results of operations.
  
  CIGNA's Year 2000 efforts include: 1) identifying systems requiring remediation;
  2) assessing what is required to remediate those systems; 3) remediating systems
  to be ready for the Year 2000 (by either  modifying or replacing  them);  and 4)
  testing systems for Year 2000 readiness,  including that they properly interface
  with   systems  of  external   parties  such  as   customers   and   third-party
  administrators.  CIGNA has completed the  identification  and assessment  phases
  with respect to its IT systems that are critical to  maintaining  operations  or
  the  failure  of which  would  result  in  significant  costs or  disruption  of
  operations ("mission critical systems").  As of September 30, 1998,  remediation
  and  testing  procedures  had been  completed  for 75% of its  mission  critical
  systems.  CIGNA expects to substantially complete the remediation and testing of
  its mission  critical  systems by the end of 1998. In certain cases,  CIGNA will
  perform additional testing to ensure that these systems  appropriately  interact
  with other systems.
  
  CIGNA's  systems also include  non-IT  systems,  such as telephone  and facility
  management systems.  The majority of non-IT systems are believed to be Year 2000
  ready and the remaining non-IT systems are expected to be ready by mid-1999.
  
  CIGNA is using  both  internal  and  external  resources  to meet the  timetable
  established for completion of its Year 2000 efforts. The after-tax costs of Year
  2000  efforts are  expected  to be  approximately  $100  million in 1998 and $50
  million in 1999. Year 2000 after-tax costs for the third quarter and nine months
  of 1998 were $23 million and $65 million.  Approximately  60% of total Year 2000
  costs are attributable to existing systems  resources which have been redirected
  to the Year 2000 efforts. The remaining amounts represent  incremental costs for
  Year 2000  efforts.  Although  certain  systems  development  efforts  have been
  deferred in order to address Year 2000  issues,  CIGNA does not expect that this
  deferral will have a significant  adverse effect on its results of operations or
  financial condition.
  
  CIGNA has relationships with various third-party entities in the ordinary course
  of business. For example,  CIGNA receives data from clients;  depends on others,
  such as third-party  administrators  and banks,  for services;  and bears credit
  risk on others,  such as  entities  in which it  invests.  CIGNA has  identified
  third-party  entities  critical  to  its  operations,  and it is  assessing  and
  attempting  to mitigate its risks with respect to the failure of these  entities
  to be Year 2000 ready by, among other things,  reviewing,  where possible, their
  formal  Year 2000 plans and  obtaining  Year 2000  readiness  affirmations  from
  certain  third-party  entities.  The  effect,  if any,  on  CIGNA's  results  of
  operations from the failure of these entities (including entities on which CIGNA
  bears credit risk) to be Year 2000 ready is not reasonably estimable.
  
  While CIGNA expects that its Year 2000 efforts will be successful, it has begun,
  but not yet completed, a comprehensive analysis of the operational problems that
  would be reasonably likely to result from the failure by CIGNA and certain third
  parties to complete  efforts  necessary  to achieve  Year 2000  compliance  on a
  timely basis.  CIGNA expects to complete this analysis in early 1999.  CIGNA has
  historically  had security and backup  policies and procedures for  safeguarding
  critical  corporate data. It is supplementing  these policies by developing Year
  2000 contingency  plans to provide for the resumption of operations in the event
  of Year 2000 systems failures or the failure of third-party  entities to be Year
  2000 ready. These plans are expected to be completed and tested by mid-1999.
  
  The costs of CIGNA's Year 2000 efforts and the dates on which CIGNA  believes it
  will complete such efforts are based on management's best estimates,  which were
  derived  using  numerous  assumptions  regarding  future  events,  including the
  continued availability of certain resources,  third-party remediation plans, and
  other factors.  There can be no assurance that these  estimates will prove to be
  accurate, and actual results could differ materially
  
                                         22
  from  those  currently  anticipated.  Specific  factors  that  could  cause such
  material differences include, but are not limited to, the availability and costs
  of  personnel  trained in Year 2000  issues,  the ability to  identify,  assess,
  remediate and test all relevant computer codes and embedded technology, the risk
  that  reasonable  testing will not uncover all Year 2000  problems,  and similar
  uncertainties.  Property and casualty  indemnity losses for Year 2000 claims and
  litigation  costs to defend or deny such claims are not reasonably  estimable at
  this time.
  
  CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
  PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
  
  Except for historical  information provided in this Management's  Discussion and
  Analysis of  Financial  Condition  and Results of  Operations,  statements  made
  throughout  this  document are  forward-looking  and contain  information  about
  financial results,  economic conditions,  trends and known uncertainties.  CIGNA
  cautions  the reader that actual  results  could  differ  materially  from those
  expected by CIGNA,  depending on the outcome of certain  factors  (some of which
  are  described  with  the  forward-looking  statements)  including:  1)  adverse
  catastrophe  experience in CIGNA's property and casualty businesses;  2) adverse
  property and casualty  loss  development  for events that CIGNA insured in prior
  years;  3) an  increase  in medical  costs in CIGNA's  health  care  operations,
  including increases in utilization and costs of medical services;  4) heightened
  competition,  particularly  price  competition,  reducing  product  margins  and
  constraining  growth in CIGNA's  businesses;  5) significant changes in interest
  rates;  and 6) the effect on CIGNA's  international  operations and  investments
  from further significant deterioration in Asian and Latin American economies.
  
                                         23
  Part II.  OTHER INFORMATION
  
  Item 6.        Exhibits and Reports on Form 8-K.
                 ---------------------------------
  
                 (a)  See Exhibit Index.
  
                 (b)  During the quarterly period ended September 30, 1998, and as
                      of the filing  date,  CIGNA filed the  following  Reports on
                      Form 8-K:
  
                      o    dated July 30, 1998, Item 5 - containing a news release
                           regarding its second quarter 1998 results.
  
                      o    dated  November  2, 1998,  Item 5 -  containing  a news
                           release regarding its third quarter 1998 results.
  
                                         24
  SIGNATURE
  
       Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
  registrant  has duly  caused this  report to be signed by the  undersigned  duly
  authorized officer, on its behalf and in the capacity indicated.
  
                                                 CIGNA CORPORATION
  
                                                 By: /s/ James G. Stewart
                                                     -----------------------------
                                                     James G. Stewart
                                                     Executive Vice President and
                                                     Chief Financial Officer
                                                     (Principal Financial Officer)
  
  Date: November 6,  1998
  
                                         25
  Exhibit Index
                                    -------------
  
                                                              Method of
  Number            Description                                 Filing
  ------            -----------                               ---------
  
  10                CIGNA Supplemental Pension,            Filed herewith
                    as amended and restated
                    August 1, 1998
  
  12                Computation of Ratio of                Filed herewith
                    Earnings to Fixed Charges
  
  27                Financial Data Schedule                Included only in
                                                           the EDGAR version of
                                                           the Form 10-Q
  
                                         26