AM Best has affirmed the Financial Strength Rating (FSR)
of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term
ICR) of “a” of the key U.S. life/health subsidiaries, health
maintenance organizations and New Zealand- and Europe-based
insurance companies of Cigna Corporation (Cigna) (headquartered in
Bloomfield, CT) [NYSE: CI]. Concurrently, AM Best has affirmed the
FSR of A (Excellent) and the Long-Term ICRs of “a” of Medco
Containment Life Insurance Company (Warrendale, PA) and Medco
Containment Insurance Company of New York (Troy, NY) (collectively
referred to as Medco Containment Group). Additionally, AM Best has
affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” of
the Cigna HealthSpring Companies (HealthSpring). AM Best also has
affirmed the Long-Term ICR of “bbb”, the Long-Term Issue Credit
Ratings (Long-Term IR) and the Short-Term Issue Credit Rating
(Short-Term IR) of AMB-2 of Cigna. The outlook of these Credit
Ratings (ratings) is stable. Furthermore, AM Best has affirmed the
Long-Term IRs of Cigna Holding Company (headquartered in
Bloomfield, CT). The outlook of these ratings is stable. (Please
see link below for a detailed listing of the companies and
ratings.)
The majority of Cigna’s core U.S. operating entities are
collectively referred to herein by AM Best as the Cigna Life &
Health Group. The ratings of Cigna Life & Health Group reflect
its balance sheet strength, which AM Best assesses as strong, as
well as its strong operating performance, favorable business
profile and appropriate enterprise risk management (ERM).
The ratings of Cigna Life & Health Group also factor in the
elevated, albeit declining, financial leverage of just below 40%
through year-end 2020, and the very high level of goodwill at
Cigna, the ultimate parent. AM Best notes that the Cigna
organization has successfully executed the integration of Express
Scripts following the merger, including the moderation of its total
leverage. While the March 2021 debt issue has caused leverage to
increase in the interim, a large portion of the funds are being
used to redeem and replace existing debt. Furthermore management
has repeatedly indicated that it remains committed to continued
de-leveraging, which is expected to leave financial leverage around
40% again by the end of 2021. Cigna has strong earnings and
dividends from the group’s insurance entities, as well as solid
non-regulated earnings from its Evernorth segment and from
additional one-time special items, such as a portion of the
proceeds from the sale of its group employee benefits business at
year-end 2020. These have helped bolster holding company metrics,
such as interest coverage and reduction of outstanding debt.
Cigna Life & Health Group’s balance sheet strength
assessment of strong is supported by its risk-adjusted
capitalization, which is at the strongest level, as measured by
Best’s Capital Adequacy Ratio (BCAR), reinforced by excellent
sources of contingent liquidity with strong and stable metrics, and
operating cash flows across its diverse set of businesses.
Additionally, Cigna provides access to cash in the event there are
any cash flow or capital needs, and Cigna’s insurance subsidiaries
have consistently provided cash flow upstream in the form of
dividends, which have been growing each of the past two-years,
given favorable operating results.
Cigna Life & Health Group reported strong earnings again in
2020, supported by lower utilization in the face of the COVID-19
pandemic, with the organization also consistently reporting strong
double-digit profitability ratios. Earnings and margins have been
driven by Cigna Life & Health Group’s core commercial and its
senior segment–Medicare-related operations. AM Best also notes that
Cigna Life & Health Group operates a lower risk model, with a
majority of its commercial business in self-funded/administrative
services only (ASO) employer groups. It should be noted that the
sale of its group insurance operations is expected to cause a
decline in total aggregate premium volume. Additionally, new sales
were somewhat depressed in 2020, due to the pandemic, but this was
offset by better persistency with less groups shopping coverage.
Cigna has generally reported premium growth in its core businesses,
and growth is projected for 2021.
AM Best views Cigna Life & Health Group’s business profile
as favorable, driven by the combination of strong market presence
in its core products in the United States. In addition, Cigna Life
& Health Group continues to grow its government segment,
primarily Medicare-related business, which includes Medicare
supplement and Medicare Advantage (MA) and MA-Part D, along with
its other ancillary/supplemental businesses. Cigna has taken a
measured approach to the Medicaid space, with a focus on the
dual-eligible population. Finally, Express Scripts and growth of
its Evernorth health services business, as well as the parent’s
international business, provide Cigna an expanded customer base and
cross-selling opportunities, with further opportunity for premium,
revenue and earnings growth for the overall organization.
The ratings of Medco Containment Group reflect its balance sheet
strength, which AM Best assesses as very strong, as well as its
adequate operating performance, limited business profile and
appropriate ERM. AM Best’s views Medco as a strategic and core part
of Cigna’s Medicare Part D offerings.
The ratings of HealthSpring reflect its balance sheet strength,
which AM Best assesses as adequate, as well as its adequate
operating performance, neutral business profile and appropriate
ERM. Additionally, the ratings reflect AM Best’s view of the
strategic position HealthSpring plays as a core part of Cigna’s MA
offerings.
The ratings of Cigna Life Insurance Company of Europe S.A.-N.V.
(CLICE) (Belgium) reflect its balance sheet strength, which AM Best
assesses as very strong, as well as its adequate operating
performance, neutral business profile and appropriate ERM. The
ratings also factor in rating enhancement from Cigna. The ratings
of CIGNA Europe Insurance Company S.A.-N.V. (CEIC) factors in its
strategic importance to CLICE and Cigna as the group’s non-life
insurance carrier in Europe. With its competitive position in
Europe’s health insurance market, CLICE is viewed as a key
component to the group’s strategy to access and develop local
opportunities in a drive to provide further geographical
diversification and to strengthen global presence.
The ratings of Cigna Life Insurance New Zealand Limited (CLINZ)
(New Zealand) reflect its balance sheet strength, which AM Best
assesses as very strong, as well as its adequate operating
performance, neutral business profile and appropriate ERM.
Furthermore, the ratings of CLINZ factor in rating enhancement from
the Cigna group. This reflects integration and ownership from Cigna
group and AM Best’s expectation that the group would provide
capital support if required. CLINZ ranks among the largest life
insurance companies in New Zealand, benefiting from a multichannel
distribution approach. While the company accounts for a small
component of the Cigna group’s consolidated revenues and earnings,
it is viewed as significant to the group’s operations in the
Asia-Pacific region.
A complete listing of Cigna Corporation and its subsidiaries’
FSRs, Long-Term ICRs and Long- and Short-Term IRs also is
available.
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 London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
Copyright © 2021 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Joseph Zazzera, MBA Director +1 908 439 2200, ext.
5797 joseph.zazzera@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Stanislav Stoev Financial Analyst +44 20 7626
6264 stanislav.stoev@ambest.com
Jim Peavy Director, Communications +1 908 439
2200, ext. 5644 james.peavy@ambest.com
Sin Yee Chuah Financial Analyst +65-6303-5022
ext.5002 sinyee.chuah@ambest.com
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