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FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 07, 2017 02:16 PM (EST)
A.M. Best has placed under review with negative implications the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of SilverScript Insurance Company (SilverScript) (Nashville, TN).
The rating action follows the recent announcement that SilverScript’s ultimate parent, CVS Health Corporation (CVS Health), has signed a definitive agreement to acquire Aetna, Inc. for $69 billion in a combination of cash and stock. The transaction, subject to approval by federal and state regulators, is expected to close in the second half of 2018.
Following the issuance of $44.8 billion of new debt to finance the transaction, CVS Health’s financial leverage is expected to be approximately 60%, and its goodwill plus intangibles to equity ratio likely will exceed 200%. The negative implications reflect the potential adverse impact on the rating of SilverScript from CVS Health as a result of the transaction. Furthermore, A.M. Best has concern that CVS Health’s increased debt and very limited financial flexibility might place pressure on the capitalization of SilverScript, as CVS Health could increase dividends from SilverScript to service the debt. However, A.M. Best believes that SilverScript’s Medicare Part D business could benefit from the addition of Aetna Inc.’s Medicare Advantage expertise.
The ratings will remain under review pending the completion of the transaction and A.M. Best conducts discussions with CVS Health management regarding the impact to SilverScript from the transaction.
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.
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