Fitch Upgrades CIGNA Ratings; Outlook Stable.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has upgraded the ratings of CIGNA CIGNA CG (Connecticut General Life Insurance Company) INA (Insurance Company of North America) Corporation (CIGNA) and its largest life and health insurance subsidiaries, including Connecticut General Life Insurance Company (CG Life). The Rating Outlook is Stable. A complete list of ratings is shown below. Today's rating action reflects strong financial performance in the company's primary operating segments over the past several years. In addition, Fitch anticipates the company is better positioned to sustain recent performance given operational improvements in its healthcare operations. Included in Fitch's rationale is Fitch's expectation for continued improvements in operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before across the three main business units as well as strong cash flow (which includes having good access to cash from regulatory subsidiaries). Fitch expects CIGNA to show membership growth of approximately 5% during 2007 while continuing to make progress in reducing its expense levels. Given these anticipated improvements in operating performance, coupled with the company's strong balance sheet position, Fitch has determined that the upgrade is warranted. Fitch's ratings on CIGNA have historically factored in the company's well-established competitive position in the U.S. health benefits and group insurance business, as well as its growing and profitable international business. The company maintains a low exposure to underwriting risk given its high concentration in fee-based or experienced rated accounts. These considerations continue to positively contribute to Fitch's opinion of CIGNA. Other rating considerations include ongoing exposures in the run-off reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. business, which are related to the company's large exposure to variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. death benefit risk and adverse reserve development in the workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. carve-out and personal accident business. However, Fitch believes these risks have declined significantly and are not expected to create any adverse impact on CIGNA's future operating results. Balance sheet quality is expected to remain solid and Fitch anticipates financial leverage to remain relatively stable at current levels, including outstanding debt relative to EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become . While stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. activity is likely to continue for the foreseeable future (along with modest acquisitions), financial leverage is not expected to increase due to repurchase activities. Interest coverage is expected to remain strong and cash-based coverage - sourced by subsidiary dividends - is expected to remain in the 8 times (x)-10x range. In addition, consolidated statutory capitalization is expected to remain in the 300% range. Fitch upgrades the following with a Stable Outlook: CIGNA Corporation --Issuer default rating to 'A-' from 'BBB+'; --7.4% notes due 2007 to 'BBB+' from 'BBB'; --7% notes due 2011 to 'BBB+' from 'BBB'; --6.375% notes due 2011 to 'BBB+' from 'BBB'; --7.65% notes due 2023 to 'BBB+' from 'BBB'; --8.3% notes due 2023 to 'BBB+' from 'BBB'; --7.875% debentures due 2027 to 'BBB+' from 'BBB'; --8.3% step down notes due 2033 to 'BBB+' from 'BBB'; --6.15% notes due 2036 to 'BBB+' from 'BBB'. Connecticut Life Insurance Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of --Insurer financial strength to 'A+' from 'A'. Life Insurance Company of North America --Insurer financial strength to 'A+' from 'A'. CIGNA Life Insurance Company of New York --Insurer financial strength to 'A+' from 'A'. CIGNA Wordwide Insurance Company --Insurer financial strength to 'A+' from 'A'. Fitch has affirmed the following: CIGNA Corporation --Commercial paper rating 'F2'. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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