A.M. Best Places Credit Ratings of Medco Containment Life Insurance Company & Medco Containment Insurance Company of New York...
March 13 2018 - 4:15PM
Business Wire
A.M. Best has placed under review with developing
implications the Financial Strength Rating of A- (Excellent) and
Long-Term Issuer Credit Rating of “a-” of Medco Containment Life
Insurance Company (Mechanicsburg, PA) and Medco Containment
Insurance Company of New York (Troy, NY) (collectively referred
to as Medco Containment Group). Both companies are
subsidiaries of Express Scripts Holding Company (Express
Scripts) [NASDAQ: ESRX].
The rating actions follow the recent announcement that Cigna
Corporation (Cigna) has signed a definitive agreement to
acquire 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%, with a sizeable increase in its goodwill plus
intangibles to equity ratio. The developing implications reflect
A.M. Best’s concerns that the strategic importance of Medco
Containment Group to the overall organization might change
following the completion of the transaction.
In addition, the increased debt and limited financial
flexibility at the new combined organization might create the
potential for increased dividends from the insurance operations.
Furthermore, the transaction is the largest Cigna has undertaken
and presents significant execution risks.
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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A.M. BestCraig Draghi, +1-908-439-2200, ext.
5164Financial
Analystcraig.draghi@ambest.comorDoniella Pliss,
+1-908-439-2200, ext. 5104Associate
Directordoniella.pliss@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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