AM Best

A.M. Best Removes From Under Review and Affirms Credit Ratings of Cigna Corporation and Its Subsidiaries


Saurin Parikh
Financial Analyst
+1 908 439 2200, ext. 5030

Valeria Ermakova
Senior Financial Analyst
+44 20 7397 0269

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


OLDWICK - MAY 04, 2017 04:48 PM (EDT)
A.M. Best has removed from under review with developing implications and affirmed the Financial Strength Rating (FSR) of A (Excellent) and Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of the key life/health subsidiaries, health maintenance organizations and European insurance companies of Cigna Corporation (Cigna) (Bloomfield, CT) [NYSE: CI]. Concurrently, A.M. Best also has removed from under review with developing implications and affirmed the Long-Term ICR of “bbb” and the Long- and Short-Term Issue Credit Ratings (Long-Term IR/Short-Term IR) of Cigna. Additionally, A.M. Best has removed from under review with developing implications and affirmed the FSR of A- (Excellent) and Long-Term ICRs of “a-” of Cigna Supplemental Benefit Companies, as well as the Cigna HealthSpring companies. The outlook assigned to these Credit Ratings (ratings) is stable.

This rating action reflects the announcement on April 28, 2017 by the U.S. Court of Appeals for the District of Columbia Circuit which affirmed a lower court decision to block the proposed merger of Anthem, Inc. and Cigna. While Anthem, Inc. and Cigna are scheduled for a Delaware Court of Chancery hearing on May 8, 2017 regarding termination of the merger agreement, A.M. Best believes at this time that the merger has a low probability of being completed.

The rating affirmations reflect Cigna’s business profile, which is diversified by both geography and product. Additionally, the organization continues to grow and expand its international operations in both Asian and European-domiciled subsidiaries, driven by its multi-year strategy with investments in business through channel and product diversification. Cigna has strong financial performance with its health, life and disability insurance operations reporting consistent revenue growth and strong earnings and return on revenues typically exceeding 7%, and underwriting income of more than $1B. Strong earnings have sustained sound risk-adjusted capitalization at its key operating entities. Furthermore, Cigna has good financial flexibility and liquidity with access to lines of credit and its commercial paper program, as well as a trend of strong interest coverage at more than 10 times.

Partially offsetting these strengths are the deteriorated earnings from its Group Disability and Life segment, which declined substantially in 2016. The drop was driven by increases in life claims and in disability durations, which was driven by modifications to its disability claims process. However, A.M. Best acknowledges that Cigna has implemented initiatives to improve the profitability of the disability block in 2017 and beyond. Cigna’s Medicare Advantage operations continue to be challenged from sanctions imposed by the Centers for Medicare and Medicaid Services (CMS) in January 2016, which restrict the organization from marketing to potential customers. The CMS sanctions have negatively impacted enrollment at the Cigna HealthSpring companies in 2016 and into 2017 as they were not allowed to market during the 2017 annual open enrollment.

The insurance entities, particularly Connecticut General Life Insurance Company and Cigna Health and Life Insurance Company (CHLIC), pay a steady stream of dividends to Cigna Corporation, which totals more than $1 billion per year. However, A.M. Best notes that the current level of capitalization at the majority of life and health subsidiaries, including CHLIC as the largest insurance entity, is considered sufficient for the ratings.

For a complete listing of Cigna Corporation and its subsidiaries’ 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.

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