AM Best Assigns Issue Credit Ratings to The Cigna Group's New Senior Unsecured Notes
AM Best has assigned Long-Term Issue Credit Ratings (Long-Term IRs) of "bbb+" (Good) to The Cigna Group's (Cigna) (headquartered in Bloomfield, CT) (NYSE:CI) recently issued $1 billion 5% senior unsecured notes, due 2029, $750 million 5.125% senior unsecured notes, due 2031, $1.25 billion 5.25% senior unsecured notes, due 2034 and the $1.5 billion 5.6% senior unsecured notes, due 2054. The outlook assigned to these Credit Ratings (ratings) is stable. Cigna's Long-Term Issuer Credit Rating of "bbb+" (Good), its other Long-Term IRs and the ratings of its insurance subsidiaries remain unchanged.
The proceeds from the debt issuances are expected to be used for general corporate purposes, including paying down upcoming debt maturities and for the tender offers announced on Feb. 5, 2024. AM Best anticipates the issuances to increase the group's adjusted financial leverage ratio to approximately 42% in the near term and then will moderate to the 40% range. As of Dec. 31, 2023, the group's financial leverage was 40.1%, as measured by AM Best. Cigna's financial debt-servicing capabilities are favorable, with sufficient liquidity to service its debt, laddered debt maturity structure and solid interest coverage. The organization maintains solid but had declined earnings before interest and taxes interest coverage in 2023, to over 4.7 times compared with 8.2 times in 2022, with consistently favorable earnings impacted by one-items in both years.
Cigna has excellent liquidity through parent company cash, insurance subsidiary dividend capacity, non-regulated cash flow, commercial paper program and a $5 billion revolving credit agreement. There was $1.5 billion of commercial paper outstanding as of third-quarter 2023. Furthermore, a steady stream of revenue development and earnings growth have resulted in a solid operating performance trend over the last several years underpinned by the group's operations at Cigna Healthcare and Evernorth Health Services. The organization expects this growth to continue over the medium term.
Goodwill and intangibles assets remain high at over 160% of shareholders equity. In addition, high goodwill/intangibles are mostly tied primarily to non-insurance operations, which continue to produce stable earnings and provide a substantial degree of diversification.
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