Cigna Corp
.'s (
CI
) preferred stock and junior subordinated debt, under the new shelf
registration, has been conferred an investment grade rating by A.M.
Best. The company's senior unsecured debt and subordinated debt has
been bestowed with "bbb" and "bb-" ratings, respectively, whereas
its preferred stock was assigned with "bb+" rating.
All the ratings carry a stable outlook, which implies that Cigna is
experiencing stable financial and market trends. Moreover, it
indicates that the company's ratings are less likely to change over
an intermediate period.
While providing the new rating, the rating agency has withdrawn the
earlier rating on previous shelf registration, since the
registration had expired.
A.M. Best acknowledged Cigna's solid operating performance in its
health care segment.
The rating agency is also positive on Cigna's differentiated
product segments -commercial fully insured (11% of earnings),
experience rated members (8%) and administrative services only
(ASO) (81%).
Cigna's significant international business also motivated A.M. Best
to provide favorable rating to the company. The rating agency views
Cigna's expansion in the key Asian (China, Korea, India) and
European regions as a future growth driver. International business
has historically delivered double-digit revenue and earnings growth
besides very attractive margins and capital efficiency.
Moreover, a strong balance sheet along with strong capital position
has enabled the company to make strategic growth initiatives, both
internally as well as externally.
Nevertheless, Cigna's debt ratio has increased recently since it
needed enough funds to finance the HeallthSpring acquisition. A.M.
Best is confident that the company will be able to reduce its debt
burden gradually over the time to more moderate levels.
Recently, A.M. Best assigned debt ratings of "bbb+" with a stable
outlook to senior unsecured notes issued by
Aetna Inc.
(
AET
). Aetna closely competes with Cigna.
Cigna currently retains a Zacks #2 Rank, which translates into a
short-term Buy rating. We, however, maintain our long-term
"Neutral" recommendation on its shares.
AETNA INC-NEW (AET): Free Stock Analysis Report
CIGNA CORP (CI): Free Stock Analysis Report
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