Best’s News & Research Service - October 11, 2021 11:58 AM (EDT)
AM Best Comments on Credit Ratings of Cigna Corporation Following Asia-Pacific Business Sale Announcement
- October 11, 2021 11:58 AM (EDT)
Oldwick //BestWire// - AM Best has commented that the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” (Good) and the Long- and Short-Term Issue Ratings of Cigna Corporation (Cigna) (Headquartered in Bloomfield, CT) [NYSE: CI] remain unchanged following Cigna’s recent announcement that it has signed a definitive agreement to sell its life, accident and supplemental benefits business in seven countries to Chubb Limited. Additionally, the Financial Strength Ratings and Long-Term ICRs of Cigna’s operating subsidiaries remain unchanged as well, with the exception of the Credit Ratings of Cigna Life Insurance New Zealand Limited, which have been placed under review with positive implications (see related press release dated Oct. 11, 2021).
On Oct. 7, 2021, Cigna announced the sale of its life, accident and supplemental benefits business, representing approximately $3 billion of premium revenue in its Asia-Pacific markets. The sale includes operations and/or legal entities in South Korea, Taiwan, Hong Kong, Thailand, Turkey, Indonesia and New Zealand in a transaction valued at $5.75 billion. Cigna will be retaining its international business, which is focused on ex-patriots and individual private health/medical business, in Europe and select Asian-Pacific markets - including several joint ventures in China, India and Australia. The international business being sold represents $3 billion in premium out of roughly $160 billion in revenue at the enterprise, and the international business in total represents approximately 10% of Cigna’s total earnings.
Cigna is expected to utilize the proceeds of the transaction for general corporate purposes, including share repurchases, with exact amounts to be determined. AM Best notes that Cigna remains committed to maintaining financial leverage around 40% through year-end 2021, but it could increase slightly prior to the close. The transaction is expected to close in the second quarter of 2022 and is subject to regulatory approvals.
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 use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.