MOODY'S CONFIRMS CREDIT RATINGS OF CIGNA CORPORATION AND SUBSIDIARIES (SENIOR DEBT AT A3) FOLLOWING ANNOUNCEMENT OF POSSIBLE SALE OF DOMESTIC AND INTERNATIONAL PROPERTY AND CASUALTY BUSINESS TO ACE LIMITED
Moody's Investors Service confirmed the credit ratings of CIGNA Corporation (senior debt rating at A3) and its subsidiaries following the announcement that CIGNA is currently discussing a sale of all of its domestic and international property and casualty operations to ACE Limited.
Moody's stated that it believes the proposed sale makes sound strategic sense for CIGNA because its primary focus is on life and health insurance and employee benefit operations. The rating agency said the transaction would help to mitigate its concerns about the ultimate adequacy of CIGNA Corporation's asbestos and environmental (A&E) reserves and ceded reinsurance for the three companies in CIGNA's inactive P&C group.
Moody's believes that the after-tax proceeds from the sale of the domestic and international property and casualty business will enhance CIGNA's financial flexibility. However, the ultimate use and benefits of the capital redeployment remain uncertain, said Moody's. The rating agency believes that the principal uses for the anticipated capital are: internal growth, acquisitions or the repurchase of the company's common stock.
Moody's continues to maintain a negative outlook for the ratings of CIGNA, Connecticut General and LINA primarily because of the possibility for additional growth through acquisition over the medium term, and the rising level of competition in the health benefits marketplace.
The following ratings were confirmed with a negative outlook:
CIGNA Corporation -- senior debt rating at A3; provisional senior debt shelf rating at (P)A3; provisional subordinated debt shelf rating at (P)Baa1; provisional cumulative preferred stock shelf rating at (P)"baa1"; provisional non-cumulative preferred stock shelf rating at (P)"baa2"; and rating of the company for commercial paper at Prime-2.
Connecticut General Life Insurance Company -- insurance financial strength rating at Aa3.
Life Insurance Company of North America (LINA) -- insurance financial strength rating at A1.
The Baa1 insurance financial strength ratings of the following members of the active property and casualty insurance group were confirmed with a stable outlook:
Insurance Company of North America;
Indemnity Insurance Company of North America;
CIGNA Property and Casualty Insurance Company;
Pacific Employers Insurance Company;
CIGNA Insurance Company;
Bankers Standard Insurance Company;
Bankers Standard Fire & Marine Insurance Company;
CIGNA Indemnity Insurance Company;
CIGNA Employers Insurance Company;
CIGNA Fire Underwriters Insurance Company;
Atlantic Employers Insurance Company;
CIGNA Insurance Company of Illinois;
CIGNA Insurance Company of Ohio;
CIGNA Insurance Company of Texas;
CIGNA Insurance Company of the Midwest;
Allied Insurance Company;
CIGNA Lloyd's Insurance Company;
Illinois Union Insurance Company; and
INA Surplus Insurance Company.
Insurance financial strength ratings were confirmed at Ba1, with a stable outlook, for the following members of the Brandywine group:
Century Indemnity Company;
CIGNA Reinsurance Company; and
Century Reinsurance Company.
CIGNA Corporation, based in Philadelphia, is a leading provider of health care, insurance, and financial services in the United States, and it is also one of the largest U.S.-based international insurance organizations. CIGNA reported consolidated assets of approximately $109 billion and shareholders' equity of approximately $8.2 billion as of September 30, 1998.
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