AM Best Affirms Credit Ratings of The Cigna Group and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a+” (Excellent) of the key U.S. life/health subsidiaries and Europe-based insurance companies of The Cigna Group (Cigna) (headquartered in Bloomfield, CT) [NYSE: CI]. In addition, AM Best has affirmed the Long-Term ICR of “bbb+” (Good) and the Long-Term Issue Credit Ratings (Long-Term IRs) of Cigna. AM Best also has affirmed the Short-Term Issue Credit Rating (Short-Term IR) of Cigna. The outlook of these Credit Ratings (ratings) is stable. (Please see below for a detailed listing of the companies and ratings.) The majority of Cigna’s core U.S. health insurance entities are collectively referred to as Cigna Life & Health Group.

The ratings of Cigna Life & Health Group reflect its balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

Cigna Life & Health Group’s balance sheet strength assessment of strong is supported by its risk-adjusted capitalization, which is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Cigna Life & Health Group’s risk-adjusted capitalization has remained at the strongest level over the past few years, driven by capital expansion supported by favorable earnings, despite sizeable annual dividends. The group also has been strengthened by sources of contingent liquidity, which contributes to the fungibility of capital, with strong and stable metrics, as well as diverse operating cash flows across its businesses. Additional sources of liquidity for the insurance entities include parent company cash and a commercial paper program supported by an unsecured revolving credit facility and access to the debt market, as well as non-regulated cash flows from Cigna's Evernorth business segment. Cigna’s insurance subsidiaries consistently have provided cash flow from operations upstream in the form of sizeable dividends, which have been growing given its ongoing favorable results.

Furthermore, the ratings of Cigna Life & Health Group also consider the high level of goodwill/intangibles at Cigna, the ultimate parent, largely relating to acquisitions. While financial leverage has fluctuated, management remains committed to managing it at approximately 40%. Cigna’s debt service is supported by its strong earnings and dividends from the group’s insurance entities, as well as solid non-regulated earnings from its Evernorth segment. Cigna’s earnings before interest and taxes interest coverage remains good at close to five times for 2023.

Cigna Life & Health Group has a track record of strong operating performance, demonstrated by a five-year weighted average return-on-equity ratio exceeding 28%. Earnings from the insurance operations have been driven largely by the group’s core commercial segment. AM Best also notes that Cigna Life & Health Group continues to operate under a lower risk model as a majority of its commercial business is operated under self-funded/administrative services only employer group contracts, versus fully insured. Underwriting and net income each has remained strong over the past five years. AM Best expects prospective earnings to remain positive, underpinned by profitable underwriting results. Cigna’s insurance operations are less exposed to government programs compared with its peers, resulting in higher margins, and the organization has demonstrated profitable growth in the commercial segment over the past several years. Cigna has reported premium growth in its core businesses and looking forward, growth is projected for 2024. On Jan. 31, 2024, it was announced that Cigna entered into an agreement to sell its Medicare business to Health Care Service Corporation. The transaction is expected to close in the first quarter of 2025.

Cigna Life & Health Group’s business profile is viewed as favorable, driven by a strong position in the competitive health care market. Cigna has been increasing its penetration into the U.S. commercial health market through organic growth. Cigna maintains a diverse product portfolio of health care products. The organization also offers specialty health care products and services that include medical management, disease management and other health advocacy services to employers and other plan sponsors. The growth of Evernorth health services business, as well as the parent’s retained international core medical business, provide Cigna an expanded customer base, earnings diversification and medical cost management capabilities.

The organization has a comprehensive ERM program with mature governance. The program is integrated into day-to-day operations and strategic business planning. Each business unit has its own heat map, which rolls up to an enterprise-level heat map.

The organization also employs a formal risk appetite statement that includes key principles and key tolerances and limits. Cigna utilizes economic capital modeling and stress testing.

The ratings of CIGNA Life Insurance Company of Europe S.A.- N.V. reflects its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. Additionally, the company benefits from rating enhancement from Cigna.

The ratings of CIGNA Global Insurance Company Limited (Guernsey) reflect its balance sheet strength, which AM Best assesses as very strong as well as its adequate operating performance, limited business profile and appropriate ERM. The company also benefits from rating enhancement from Cigna.

The FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) have been affirmed with stable outlooks for the following key U.S. life/health subsidiaries of The Cigna Group:

• Connecticut General Life Insurance Company
• Cigna Health and Life Insurance Company
• Cigna Worldwide Insurance Company
• Cigna HealthCare of Indiana, Inc.
• Cigna HealthCare of North Carolina, Inc.
• Cigna HealthCare of South Carolina, Inc.
• Cigna HealthCare of Arizona, Inc.
• Cigna HealthCare of Georgia, Inc.
• Cigna HealthCare of Texas, Inc.
• Cigna HealthCare of Florida, Inc.
• Cigna HealthCare of New Jersey, Inc.
• Cigna HealthCare of Connecticut, Inc.
• Cigna HealthCare of Illinois, Inc.
• Cigna HealthCare of St. Louis, Inc.
• Cigna HealthCare of Tennessee, Inc.
• Cigna HealthCare of California, Inc.
• Cigna Dental Health Plan of Arizona, Inc.
• Cigna Dental Health of California, Inc.
• Cigna Dental Health of Florida, Inc.
• Cigna Dental Health of Maryland, Inc.
• Cigna Dental Health of Ohio, Inc.
• Cigna Dental Health of Pennsylvania, Inc.
• Cigna Dental Health of Texas, Inc.
• Cigna Dental Health of New Jersey, Inc.
• Cigna Dental Health of Missouri, Inc.
• Cigna Dental Health of Virginia, Inc.

The FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) have been affirmed with stable outlooks for the following Europe-based subsidiaries of The Cigna Group:

• CIGNA Life Insurance Company of Europe S.A. – N.V.
• CIGNA Europe Insurance Company S.A. – N.V.
• CIGNA Global Insurance Company Limited

The following Long-Term IRs have been affirmed with stable outlooks for The Cigna Group:

The Cigna Group—

-- “bbb+” (Good) on $700 million of 5.685% senior unsecured notes, due 2026

-- “bbb+” (Good) on $800 million of 1.25% senior unsecured notes, due 2026

-- “bbb+” (Good) on $1 billion of 5% senior unsecured notes, due 2029

-- “bbb+” (Good) on $1.5 billion of 2.4% senior unsecured notes, due 2030

-- “bbb+” (Good) on $1.5 billion of 2.375% senior unsecured notes, due 2031

-- “bbb+” (Good) on $750 million of 5.125% senior unsecured notes, due 2031

-- “bbb+” (Good) on $800 million of 5.4% senior unsecured notes, due 2033

-- “bbb+” (Good) on $1.25 billion of 5.25% senior unsecured notes, due 2034

-- “bbb+” (Good) on $750 million of 3.2% senior unsecured notes, due 2040

-- “bbb+” (Good) on $1.25 billion of 3.4% senior unsecured notes, due 2050

-- “bbb+” (Good) on $1.5 billion of 3.4% senior unsecured notes, due 2051

-- “bbb+” (Good) on $1.5 billion of 5.6% senior unsecured notes, due 2054

The following Short-Term IR has been affirmed:

The Cigna Group—

-- AMB-2 (Satisfactory) on commercial paper program

The following indicative Long-Term IRs have been affirmed with stable outlooks for The Cigna Group:

The Cigna Group—

-- “bbb+” (Good) on senior unsecured debt

-- “bbb-” (Good) on preferred stock

The following Long-Term IRs have been affirmed with stable outlooks for Cigna Holding Company:

Cigna Holding Company—

-- “bbb+” (Good) on $900 million of 3.25% senior unsecured notes, due 2025

-- “bbb+” (Good) on $300 million of 7.875% of senior unsecured debentures, due 2027

-- “bbb+” (Good) on $600 million of 3.05% senior unsecured notes, due 2027

-- “bbb+” (Good) on $83 million of 8.3% senior unsecured step-down notes, due 2033

-- “bbb+” (Good) on $500 million of 6.15% senior unsecured notes, due 2036

-- “bbb+” (Good) on $300 million of 5.875% senior unsecured notes, due 2041

-- “bbb+” (Good) on $750 million of 5.375% senior unsecured notes, due 2042

-- “bbb+” (Good) on $1 billion of 3.875% senior unsecured notes, due 2047

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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