A.M. Best Places Credit Ratings of Cigna Corporation and Its Insurance Subsidiaries Under Review With Negative Implications
March 13 2018 - 3:25PM
Business Wire
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 ratings.)
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 Corporation.
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20180313006412/en/
A.M. BestSaurin Parikh, +1 908-439-2200, ext. 5030Financial
Analystsaurin.parikh@ambest.comorValeria Ermakova, +44 20
7397 0269Senior Financial
Analystvaleria.ermakova@ambest.comorSin Yee Chuah, +65 6303
5022Associate Financial
Analystsinyee.chuah@ambest.comorChristopher Sharkey, +1
908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy, +1
908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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