Cigna Group
For the period ended Dec 31, 2023. Filed Feb 29, 2024.
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FY2023 · Filed Feb 29, 2024
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Leases
Note 21 – Leases
The Company's leases are primarily for office space and certain computer and other equipment and have terms of up to 35 years.
Accounting policy. The Company determines if an arrangement is a lease and its lease classification (operating or finance) at inception. Both operating and finance leases result in (1) a right-of-use ("ROU") asset that represents our right to use the underlying asset for the lease term and (2) a lease liability that represents our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are reflected in the following lines in the Company's Consolidated Balance Sheets:
| ROU Asset | Current Lease Liability | Non-Current Lease Liability | |
| Operating lease | Other assets | Accrued expenses and other liabilities (current) | Other liabilities (non-current) |
|---|---|---|---|
| Finance lease | Property and equipment | Short-term debt | Long-term debt |
These lease assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. Most of the Company's leases do not provide an implicit rate, so the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also includes any lease pre-payments made and excludes lease incentives for operating leases. The Company's expected life of a lease may consider options to extend or terminate a lease when it is reasonably certain that the Company will exercise that option.
The Company has lease agreements with lease and non-lease components that are accounted for as a single lease component. Operating lease ROU assets are amortized on a straight-line basis over the lease term, which is representative of the pattern in which benefit is expected to be derived from the right to use the underlying asset. Variable lease payments are expensed as incurred and represent amounts that are neither fixed in nature, such as maintenance and other services provided by the lessor, nor tied to an index or rate.
The components of lease expense were as follows:
| For the Years Ended December 31, | |||
|---|---|---|---|
| (In millions) | 2023 | 2022 | 2021 |
| Operating lease cost | $115 | $124 | $170 |
| Finance lease cost: | |||
| Amortization of ROU assets | 41 | 33 | 22 |
| Interest on lease liabilities | 4 | 2 | 2 |
| Total finance lease cost | 45 | 35 | 24 |
| Variable lease cost | 38 | 41 | 39 |
| Total lease cost | $198 | $200 | $233 |
Supplemental cash flow information related to leases was as follows:
| For the Years Ended December 31, | |||
|---|---|---|---|
| (In millions) | 2023 | 2022 | 2021 |
| Cash paid for amounts included in the measurement of lease liabilities: | |||
| Operating cash outflows from operating leases | $132 | $148 | $167 |
| Operating cash outflows from finance leases | $4 | $2 | $2 |
| Financing cash outflows from finance leases | $39 | $33 | $22 |
| ROU assets obtained in exchange for lease obligations: | |||
| Operating leases | $103 | $43 | $122 |
| Finance leases | $48 | $84 | $20 |
Operating and finance lease ROU assets and lease liabilities were as follows:
| (In millions) | December 31, 2023 | December 31, 2022 |
|---|---|---|
| Operating leases: | ||
| Operating lease ROU assets in Other assets | $370 | $375 |
| Accrued expenses and other liabilities | $105 | $114 |
| Other non-current liabilities | 340 | 346 |
| Total operating lease liabilities | $445 | $460 |
| Finance leases: | ||
| Property and equipment, gross | $177 | $145 |
| Accumulated depreciation | (73) | (48) |
| Property and equipment, net | $104 | $97 |
| Short-term debt | $42 | $33 |
| Long-term debt | 66 | 66 |
| Total finance lease liabilities | $108 | $99 |
As of December 31, 2023, the weighted average remaining lease term was 6 years for operating leases and 3 years for finance leases, and the weighted average discount rate was 3.45% for operating leases and 4.29% for finance leases.
Maturities of lease liabilities are as follows:
| (In millions) | Operating Leases | Finance Leases |
|---|---|---|
| 2024 | $110 | $46 |
| 2025 | 102 | 38 |
| 2026 | 83 | 19 |
| 2027 | 63 | 6 |
| 2028 | 41 | 6 |
| Thereafter | 98 | — |
| Total lease payments | 497 | 115 |
| Less: imputed interest | 52 | 7 |
| Total | $445 | $108 |
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