A.M. Best Assigns Debt Rating to Cigna Corporation’s Senior Unsecured Notes
March 12 2015 - 10:22AM
Business Wire
A.M. Best has assigned a debt rating of “bbb” to the $900
million 3.25% 10-year senior unsecured notes recently issued by
Cigna Corporation (Cigna) (Bloomfield, CT) (NYSE:CI). The
assigned outlook is positive. Cigna’s existing issuer credit and
debt ratings are unchanged.
A.M. Best expects the proceeds from the sale of the notes to be
utilized to fully redeem Cigna’s $600 million 2.75% senior notes
due 2016 and $251 million 8.50% senior notes due 2019. As Cigna
intends to call the notes, the redemption price will include a
make-whole premium of approximately $85 million.
A.M. Best notes that Cigna’s financial leverage will be
minimally impacted and is expected to remain in the 30% range in
the near to medium term. Additionally, the enterprise’s financial
flexibility remains sound and interest coverage is expected to
remain above 10 times.
Cigna’s ratings reflect its diversified business profile,
favorable strategic position within the health insurance market,
strong financial performance and good level of risk-adjusted
capital. The organization continues to strengthen its position as
one of the leading providers of health, group life and disability
benefits. Cigna’s relatively low exposure to commercial full-risk
and individual business provides a competitive advantage, as the
impact of changes and potential membership losses related to the
Patient Protection and Affordable Care Act (ACA) implementation are
significantly smaller in comparison with its peers. In addition,
Cigna’s proven ability to offer Administrative Services Only
solutions for the middle market has become an engine for growth, as
smaller employers are looking to transition to self-funded
plans.
Partially offsetting these strengths is earnings pressure in
Cigna’s Global Health Care segment due to ACA fees, increased
competition and lower Medicare Advantage reimbursement levels. In
addition, Cigna experienced unfavorable financial results in its
new individual exchange business in 2014. However, the exchange
membership remains small and is not likely to grow substantially in
2015 following pricing actions and product modifications.
The methodology used in determining these ratings is Best’s
Credit Rating Methodology, which provides a comprehensive
explanation of A.M. Best’s rating process and contains the
different rating criteria employed in the rating process. Best’s
Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Analyzing Insurance Holding Company
Liquidity
- Insurance Holding Company and Debt
Ratings
This press release relates to rating(s) that have been
published on A.M. Best's website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please visit A.M.
Best’s Ratings & Criteria Center.
A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2015 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
A.M. Best CompanyDoniella Pliss, (908) 439-2200, ext.
5104Senior Financial
Analystdoniella.pliss@ambest.comorAndrew Edelsberg, CPA,
FLMI, (908) 439-2200, ext. 5182Vice
Presidentandrew.edelsberg@ambest.comorChristopher Sharkey,
(908) 439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy, (908)
439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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