CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - SEPTEMBER 13, 2012 12:00 AM (EDT)
A.M. Best Co. has removed from under review with positive implications the financial strength (FSR) and issuer credit ratings (ICR) of Loyal American Life Insurance Company (Loyal American Life), American Retirement Life Insurance Company (American Retirement Life), Central Reserve Life Insurance Company (Central Reserve Life) and Provident American Life and Health Insurance Company (Provident American Life) (all headquartered in Austin, TX), following the completion of the acquisition of these supplemental benefits companies by Cigna Corporation (Cigna) (Philadelphia, PA) [NYSE: CI] from American Financial Group, Inc. on August 31, 2012.
Concurrently, A.M. Best has upgraded the FSR to A- (Excellent) from B++ (Good) and ICRs to “a-” from “bbb” of Central Reserve Life and Provident American Life. Additionally, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of “a-” of Loyal American and the FSR of B++ (Good) and ICR of “bbb” of American Retirement Life. The outlook assigned to all ratings is stable.
The ratings of Central Reserve Life, Provident American Life and Loyal American reflect the importance of the newly acquired entities’ Medicare supplement products to Cigna’s strategy of expanding its presence in government programs. The new subsidiaries will benefit from Cigna’s strong market presence and good financial flexibility. A.M. Best expects Cigna to maintain a sufficient level of capitalization at the new subsidiaries and provide financial support if needed.
The ratings of American Retirement Life recognize its limited business profile and modest absolute capital and premium.
Factors that could result in positive rating actions include profitable revenue growth, full integration of the newly acquired entities into Cigna’s strategic plan including utilization of the Cigna brand name as well as becoming a significant contributor to Cigna’s earnings.
Factors that could result in negative rating actions include a lack of future parental support; less of a focus on the Medicare Supplement business on a corporate basis or a significant deterioration in the operating performance of the newly acquired entities.
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.
Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.