Press Release - MARCH 13, 2018

A.M. Best Places Credit Ratings of Cigna Corporation and Its Insurance Subsidiaries Under Review With Negative Implications


CONTACTS:
 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

FOR IMMEDIATE RELEASE

OLDWICK - MARCH 13, 2018
A.M. Best has placed under review with negative implications 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, New Zealand and European insurance companies of Cigna Corporation (Cigna) (Bloomfield, CT) [NYSE: CI]. Additionally, A.M. Best has placed under review with negative implications the FSR of A- (Excellent) and Long-Term ICRs of “a-” of Cigna Supplemental Benefit Companies, as well as the Cigna HealthSpring companies. Concurrently, A.M. Best has placed under review with negative implications the Long-Term ICR of “bbb” and the Long- and Short-Term Issue Credit Ratings (Long-Term IR; Short-Term IR) of Cigna. (Please see link below for a detailed listing of the companies and ratings.)

The rating actions follow the recent announcement that Cigna has signed a definitive agreement to acquire Express Scripts Holding Company (Express Scripts) for $67 billion in a combination of cash and stock. The transaction is subject to approval by federal and state regulators and expected to close by Dec. 31, 2018.

Following 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%, and its goodwill plus intangibles to equity ratio will likely exceed 125%. The negative implications reflect A.M. Best’s concerns regarding the increased debt and limited financial flexibility that the new combined organization will have and the potential for increased dividends from the insurance operations. A.M. Best expects interest coverage to decline to under 10x; however, it is expected to remain at levels considered strong. Furthermore, the transaction is the largest Cigna has undertaken and presents significant execution risks. Additionally, there is concern for potential losses of Express Scripts customers following the transaction, which could negatively impact earnings and revenues. However, A.M. Best recognizes Cigna’s expertise in pharmacy, as it has its own Pharmacy Benefit Management operation, including ownership of Cigna Tel Drug.

For a complete listing of the members of Cigna Corporation’s FSRs, Long-Term ICRs and Long- and Short-Term IRs, please visit Cigna Corporation.

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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