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Investing.com -- AM Best, the global credit rating agency, has confirmed the credit ratings of The Cigna (NYSE:CI) Group and its subsidiaries. The firm has maintained the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a+” (Excellent) for Cigna's key U.S. life/health subsidiaries and Europe-based insurance companies. The Long-Term ICR of “bbb+” (Good) and the Long-Term Issue Credit Ratings (Long-Term IRs) of Cigna have also been affirmed.
The majority of Cigna’s core U.S. health insurance entities, collectively known as Cigna Life & Health Group, have seen their ratings affirmed due to their strong balance sheet, strong operating performance, favorable business profile, and appropriate enterprise risk management (ERM).
Cigna Life & Health Group's ratings are based on its consistent highest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), without any weakening of balance sheet metrics. The group's risk-adjusted capitalization has remained at the highest level, driven by capital growth supported by favorable earnings, despite substantial annual dividends from the insurance operations to the parent organization.
The group's balance sheet strength assessment continues to be impacted by high financial leverage of over 43% and a very high level of goodwill at Cigna, the ultimate parent, largely due to the Express Scripts merger several years ago. However, management is expected to decrease leverage and remains committed to managing the financial leverage at the targeted level of approximately 40%.
Cigna has excellent liquidity through parent company cash, insurance subsidiary dividend capacity, non-regulated cash flow, commercial paper program, and a revolving credit agreement. A steady stream of revenue development and earnings growth has resulted in a solid operating performance trend over the last several years, primarily driven by the group’s operations at Cigna Healthcare and Evernorth Health Services.
Cigna's operating performance is assessed as strong with a consistent trend of premium growth and overall profitability. Over the past year, all business lines reported an increase in premiums despite membership loss in the individual family plan segment. The group’s investment income remains positive and has shown growth but contributes modestly to overall net earnings.
Cigna Life & Health Group portfolio includes owned and affiliated companies that provide the organization with added diversified capabilities. Through its noninsurance service entities, Cigna provides pharmacy benefit management services, as well as a comprehensive suite of solutions for complex and chronic conditions to drive down the cost of care.
The ratings of CIGNA Life Insurance (NSE:LIFI) Company of Europe S.A.-N.V. and CIGNA Global Insurance Company Limited reflect their balance sheet strength, which AM Best assesses as very strong, as well as their adequate operating performance, neutral business profile, and appropriate ERM.
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