AM Best Affirms Credit Ratings of Cigna Corporation and Its Subsidiaries; Removes from Under Review with
Developing Implications and Affirms Credit Ratings of Medco Containment Group Members
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 life/health subsidiaries, health maintenance organizations and New Zealand- and Europe-based
insurance companies of Cigna Corporation (Cigna) (headquartered in Bloomfield, CT) (NYSE:CI), following the completion of Cigna’s
acquisition of Express Scripts Holding Company (Express Scripts). The outlook of these Credit Ratings (rating) is stable.
Concurrently, AM Best has removed from under review with developing implications and affirmed the FSR of A- (Excellent) and the
Long-Term ICR of “a-” of Medco Containment Life Insurance Company (Mechanicsburg, PA) and Medco Containment Insurance Company of
New York (Troy, NY) (collectively referred to Medco Containment Group). The outlook assigned to these ratings is stable. Both
companies are subsidiaries of Express Scripts and their ultimate parent, Cigna. Additionally, AM Best has affirmed the FSR of A-
(Excellent) and the Long-Term ICRs of “a-” of the Cigna HealthSpring companies. AM Best also has affirmed the Long-Term ICRs of
“bbb” of Cigna and Cigna Holding Company (Delaware). In addition, AM Best has affirmed the Long- and Short-Term Issue Credit
Ratings (Long- and Short-Term IR) of Cigna Holding Company. The outlook of these ratings is stable. Furthermore, AM Best has
assigned a Short-Term IR of AMB-2 to Cigna. (Please see link below for a detailed listing of the companies and ratings.)
Lastly, AM Best has withdrawn the indicative Long-Term IRs of Cigna Holding Company.
The majority of Cigna’s operating entities are collectively referred to as Cigna Life & Health Group. The ratings of Cigna
Life & Health Group reflect is balance sheet strength, which AM Best categorizes 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 reflect high financial leverage of approximately 49%, and high level of
goodwill at Cigna, the ultimate parent. In addition, there is a significant execution risk related to the Cigna-Express Scripts
merger given the vertical nature of the transaction. However, Cigna stated its intention to accelerate de-leveraging from its
strong earnings from its insurance entities and its solid non-regulated earnings from Express Scripts.
Cigna Life & Health Group’s balance sheet strength assessment of strong is supported by risk-adjusted capitalization at the
strongest level, as measured by Best’s Capital Adequacy Ratio, along with good liquidity and cash flows from operations. The
insurance entities have a line of credit from an intermediate holding company in the event that any of them face cash flow
uncertainties. However, the insurance subsidiaries continue to provide sizeable dividends in excess of $1 billion a year to the
parent.
Cigna Life & Health Group continues to report strong earnings, with a five-year return on revenue of 7% and a five-year
return on equity of 28%, while maintaining premium growth. The earnings stem from Cigna Life & Health Group’s core medical
operations and its group life and disability business. Furthermore, earnings improved in all lines of business during 2018. Cigna
Life & Health Group continues to have a majority of its medical business in self-funded employer groups, also known as
administrative services only (ASO).
Cigna Life & Health Group continues to have a strong market presence in the United States, with its wide array of products,
while maintaining a solid market share in medical insurance, primarily ASO along with life and disability insurance. Also, Cigna
Life & Health Group continues to grow its Medicare business, which includes Medicare Supplement and Medicare Advantage, along
with its supplemental business. The acquisition of Express Scripts may provide Cigna with more cross-selling opportunities due to
the expansion of its customer base.
The ratings of Medco Containment Group reflect its balance sheet strength, which AM Best categorizes as strongest, as well as
its adequate operating performance, limited business profile and appropriate ERM.
Medco Containment Group has maintained the strongest level of risk-adjusted capital despite a slight decline from the prior year
due to dividend payments. The group also has maintained solid overall liquidity and strong underwriting leverage. These positive
balance sheet attributes are offset by cash-flow uncertainty due to potential payment delays from the Centers for Medicare &
Medicaid Service (CMS) reconciliation process; however, this is mitigated by the capital support that Cigna can provide. Medco
Containment Group’s earnings remained positive, although they declined in 2017 and in 2018, primarily driven by an increase in
management fees paid to the parent. Medco Containment Group continues to focus on a single line of business, Medicare Part D, a
highly regulated business that is a very competitive market.
The ratings of Cigna Life Insurance Company of Europe S.A.-N.V. (CLICE) (Belgium) reflect its balance sheet strength, which AM
Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.
Furthermore, the ratings of CLICE factor in rating enhancement from the Cigna organization. CLICE, together with its sister
company, CIGNA Europe Insurance Company S.A.-N.V. (CEIC) (Belgium), form the European arm of the Cigna group, and both companies
have received capital injections and operational support from their U.S. parent in recent years. The ratings of CEIC reflect its
strong level of integration and strategic importance to Cigna’s European operations as the carrier with a non-life license in
Europe.
The ratings of CIGNA Life Insurance New Zealand Limited (CLINZ) (New Zealand) reflect its balance sheet strength, which AM Best
categorizes 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 AM Best’s expectation that the
group would provide capital support to the subsidiary in the event that it is unable to maintain appropriate capital adequacy.
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
Understanding 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 rating agency and information provider with a unique focus on the insurance industry. Visit
www.ambest.com for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
Saurin Parikh
Financial Analyst
+1 908 439 2200, ext. 5030
saurin.parikh@ambest.com
Valeria Ermakova
Senior Financial Analyst
+44 20 7397 0269
valeria.ermakova@ambest.com
Sin Yee Chuah
Associate Financial Analyst
+65 6303 5022
sinyee.chuah@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com
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