Press Release - MARCH 13, 2018

A.M. Best Places Credit Ratings of Medco Containment Group Members Under Review With Developing Implications


CONTACTS:
 Craig Draghi
Financial Analyst
+1 908 439 2200, ext. 5164
craig.draghi@ambest.com

Doniella Pliss
Associate Director
+1 908 439 2200, ext. 5104
doniella.pliss@ambest.com
Christopher Sharkey
Manager, Public Relations
(908) 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
(908) 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - MARCH 13, 2018
A.M. Best has placed under review with developing implications the Financial Strength Rating of A- (Excellent) and Long-Term Issuer Credit Rating of “a-” of Medco Containment Life Insurance Company (Mechanicsburg, PA) and Medco Containment Insurance Company of New York (Troy, NY) (collectively referred to as Medco Containment Group). Both companies are subsidiaries of Express Scripts Holding Company (Express Scripts) [NASDAQ: ESRX].

The rating actions follow the recent announcement that Cigna Corporation (Cigna) has signed a definitive agreement to acquire 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%, with a sizeable increase in its goodwill plus intangibles to equity ratio. The developing implications reflect A.M. Best’s concerns that the strategic importance of Medco Containment Group to the overall organization might change following the completion of the transaction.

In addition, the increased debt and limited financial flexibility at the new combined organization might create the potential for increased dividends from the insurance operations. Furthermore, the transaction is the largest Cigna has undertaken and presents significant execution risks.

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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