A.M. Best Affirms Debt Ratings for CIGNA; Affirms Financial Strength Ratings of Subsidiaries.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--June 17, 2002 A.M. Best Co. has affirmed the "a+" senior debt rating and the shelf securities registered by CIGNA CIGNA CG (Connecticut General Life Insurance Company) INA (Insurance Company of North America) Corp. (NYSE NYSE See: New York Stock Exchange :CI), Philadelphia, and affirmed the "a" subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". and "a-" preferred securities ratings. In addition, the financial strength ratings of all of the group's life and health insurance and HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, subsidiaries were affirmed with a stable outlook. The currently unused shelf registration provides for the issuance up to $500 million in any combination of senior, subordinated or subordinated-convertible debt securities and preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . The debt ratings reflect CIGNA's excellent financial flexibility, supported by its moderate financial leverage--currently 25% of total capital--and strong fixed charge coverage. CIGNA's current interest coverage is high, and A.M. Best expects the debt service capability to be sustainable. The ratings also reflect the company's leading market share and franchise value in substantially all of its employee benefits segments, diverse product and services offerings, tightly-controlled risk profile and stable earnings. A minor concern offsetting these strengths is the taking of nonrecurring charges. The financial strength ratings of CIGNA's life and health insurance and HMO subsidiaries reflect the corporation's status as one of the largest publicly-traded insurance organizations in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . In addition, the ratings recognize CIGNA's dominant market presence in the large and mid-sized employer employee benefit market, diversified product portfolio, long history of strong earnings and stable, low risk liability structure. Partially offsetting these strengths are the challenges the company faces in the increasingly competitive and rapidly changing health care and pensions markets and the health care industry's undetermined regulatory and litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. risks. CIGNA HealthCare's health benefit programs are marketed in all 50 states, and the organization provides commercial medical coverage to approximately 14.3 million members through a diverse range of products, especially suited for large, multi-site and mid-sized employers. In A.M. Best's opinion, CIGNA HealthCare's national presence provides a strong competitive advantage and partially mitigates the negative impact of any state-specific regulatory reform Regulatory Reform concerns improvements to the quality of government regulation. At the international level, the "OECD Regulatory Reform Programme is aimed at helping governments improve regulatory quality -- that is, reforming regulations that raise unnecessary obstacles to or litigation. However, CIGNA faces fierce competition from other large national insurers for the national account segment. Additionally, markets with low HMO penetration HMO penetration Managed care The proportion of Pts in a geographic region enrolled in an HMO. See HMO. remain subject to further competitive pressures. The result has been lower HMO profits and growth, offset by growth in indemnity and specialty product earnings. CIGNA continues to pursue many of these markets by effecting commercial HMO price increases and is striving to capitalize on its size and product diversification to gain market share. CIGNA HealthCare, as a leader in the health care insurance industry, remains subject to continually developing regulatory and litigation risks. A.M. Best continues to assess the impact of these risks on the financial strength of the health care insurance industry and on industry leaders such as CIGNA HealthCare. CIGNA Corp. is one of the largest publicly owned employee-benefits organizations serving the United States and selected international markets. As of March 31, 2002, CIGNA Corp. had consolidated assets of $92.3 billion and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $5.0 billion. For a complete listing of CIGNA's debt and financial strength ratings, please visit http://www.ambest.com/press/cigna.pdf. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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