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A.M. Best has placed under review with negative implications the
Financial Strength Rating (FSR) of A (Excellent) and the Long-Term
Issuer Credit Ratings (Long-Term ICR) of “a” of the key life/health
subsidiaries, health maintenance organizations, New Zealand and European
insurance companies of Cigna Corporation (Cigna) (Bloomfield, CT)
[NYSE: CI]. Additionally, A.M. Best has placed under review with
negative implications the FSR of A- (Excellent) and Long-Term ICRs of
“a-” of Cigna Supplemental Benefit Companies, as well as the Cigna
HealthSpring companies. Concurrently, A.M. Best has placed under review
with negative implications the Long-Term ICR of “bbb” and the Long- and
Short-Term Issue Credit Ratings (Long-Term IR; Short-Term IR) of Cigna.
(Please see link below for a detailed listing of the companies and
The rating actions follow the recent announcement that Cigna has signed
a definitive agreement to acquire Express Scripts Holding Company
(Express Scripts) for $67 billion in a combination of cash and stock.
The transaction is subject to approval by federal and state regulators
and expected to close by Dec. 31, 2018.
Following the issuance of $22.5 billion of new debt to finance the
transaction combined with the existing debt at Cigna and Express
Scripts, Cigna’s financial leverage is expected to be approximately 49%,
and its goodwill plus intangibles to equity ratio will likely exceed
125%. The negative implications reflect A.M. Best’s concerns regarding
the increased debt and limited financial flexibility that the new
combined organization will have and the potential for increased
dividends from the insurance operations. A.M. Best expects interest
coverage to decline to under 10x; however, it is expected to remain at
levels considered strong. Furthermore, the transaction is the largest
Cigna has undertaken and presents significant execution risks.
Additionally, there is concern for potential losses of Express Scripts
customers following the transaction, which could negatively impact
earnings and revenues. However, A.M. Best recognizes Cigna’s expertise
in pharmacy, as it has its own Pharmacy Benefit Management operation,
including ownership of Cigna Tel Drug.
For a complete listing of the members of Cigna Corporation’s FSRs,
Long-Term ICRs and Long- and Short-Term IRs, please visit Cigna
This press release relates to Credit Ratings 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 see A.M. Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and A.M. Best press releases, please view Guide
for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating
Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180313006412/en/
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