OCTOBER 30, 2020 01:20 PM (EDT)
AM Best Assigns Credit Ratings to CIGNA Global Insurance Company Limited
FOR IMMEDIATE RELEASE
LONDON - OCTOBER 30, 2020 01:20 PM (EDT)
The ratings reflect CGIC’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. Furthermore, the ratings of CGIC factor in a rating lift from its ultimate parent, U.S.-based Cigna Corporation.
CGIC’s balance sheet strength is supported by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition, this assessment considers the company’s conservative investment strategy, with the majority of the portfolio held as cash and deposits, and its prudent reserving approach. This is partially offset by the company’s high dependence on reinsurance, which is provided by an unrated group reinsurer. AM Best notes that the associated counterparty credit risk is managed by holding funds withheld to the amount of total reinsurance share of technical provisions.
CGIC has a track record of positive operating performance, demonstrated by a five-year (2015-2019) weighted average return-on-equity ratio of 17.1%. It has reported a weighted average combined ratio of 84.7% over the same period; however, the underwriting results have been subject to some volatility as the company has been scaling up its operations. AM Best expects prospective earnings to remain positive, underpinned by profitable technical performance and modest investment returns, reflecting the low-yielding assets in which the company primarily invests.
AM Best considers CGIC’s business profile to be limited owing to its relatively small size and high product concentration. Whilst AM Best expects the company to continue growing its premium base, the successful expansion is subject to competitive pressures from larger market players.
CGIC is considered to be an important part of Cigna Corporation’s strategy and has benefited from capital contributions and operational support from its parent in the past. AM Best expects that the group will continue to provide support to the subsidiary as and when needed.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.