The financial strength ratings ("FSR") and issuer credit ratings
("ICR") of the subsidiaries of
American Financial Group Inc.
) - Loyal American Life Insurance Company, American Retirement Life
Insurance Company, Central Reserve Life Insurance Company,
Provident American Life and Health Insurance Company - have been
removed from under review by the leading rating agency A.M.
This action follows the acquisition of these subsidiaries by
) on August 31, 2012. The action has been taken with positive
A.M. Best has raised the FSR to A- (Excellent) from B++ (Good) and
ICRs to "a-" from "bbb" of Central Reserve Life and Provident
American Life, respectively. The rating agency also affirmed
the FSR of A- (Excellent) and ICR of "a-" of Loyal American and the
FSR of B++ and ICR of "bbb" of American Retirement Life. All the
ratings are of investment grade status and carry a stable outlook.
A.M. Best acknowledges the acquisition of these subsidiaries by
Cigna. It believes that Central Reserve Life, Provident American
Life and Loyal American will benefit from getting placed under
Cigna. The company is quickly expanding into Government programs,
which will boost sales of Medicare Supplement products of these
units, thus causing top-line growth.
These units will also benefit from strong financial position
since Cigna maintains enough capital at the subsidiaries' level.
The company also has capital support from its parent firm.
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The ratings of American Retirement Life recognize its limited
business profile as well as its restricted absolute capital and
These units can get a positive rating revision if they keep on
growing revenues, integrate successfully with Cigna and add more to
its overall earnings. While on the other hand, negative rating
action may follow in case the operating performances of these units
decline and these fail to get adequate support from the goodwill of
CIGNA competes with
UnitedHealth Group Inc.
). Cigna currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We, also maintain our long-term Neutral
recommendation on its shares.