Cigna rating placed under review due to debt burden

AM Best has placed the credit ratings of US health insurer Cigna Corporation and its insurance subsidiaries under review with negative implications following the firm’s plan to  acquire Express Scripts Holding Company for $67 billion.

As a result of 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 percent, and its goodwill plus intangibles to equity ratio will likely exceed 125 percent. The ratings agency voiced concern about the increased debt and limited financial flexibility that the new combined organisation will have and the potential for increased dividends from the insurance operations.

In addition, the transaction is the largest Cigna has undertaken and presents significant execution risks. Furthermore there is concern for potential losses of Express Scripts customers following the transaction, which could negatively impact earnings and revenues, AM Best noted.

Join us at Intelligent Automation in Insurance - London 2018. Spring Special:  Book before March 31st and save £200. 

More of today's news

Starr reveals leadership shake-up in casualty unit

Fitch downgrades Prudential on UK demerger

Marsh joins B3i blockchain rival Ethereum

Prosperity Life private equity owners sell the business

Don't miss our insurtech email newsletter - sign up today