A.M. Best Comments on CIGNA Corporation's Proposed Acquisition of HealthSpring Inc.

OLDWICK, N.J.--(BUSINESS WIRE)--

A.M. Best Co. has commented that the financial strength ratings, issuer credit ratings and debt ratings of CIGNA Corporation (CIGNA) (Philadelphia, PA) CI and its insurance and health maintenance organization (HMO) subsidiaries are unchanged following the announcement that CIGNA has entered into an agreement to acquire HealthSpring Inc. (Nashville, TN) for approximately $3.8 billion in an all cash transaction.

The transaction is expected to close during the first half of 2012, subject to the required regulatory approvals. The transaction is expected to be funded through a combination of cash, long and short-term debt and equity. As of June 30, 2011, CIGNA's debt-to-capital ratio was approximately 30% and its financial leverage will significantly increase following the planned debt issuance to finance the acquisition. However, A.M. Best expects CIGNA's financial leverage to gradually moderate over time. Furthermore, CIGNA's proforma increased its debt-to-capital ratio as well as its interest coverage both of which are expected to remain adequate for the organization's current ratings. A.M. Best also is concerned with an expected substantial increase in goodwill and intangible assets on CIGNA's balance sheet.

This acquisition will allow CIGNA to expand its presence in the Medicare market, which is expected to significantly grow due to the aging population. In addition, HealthSpring Inc.'s successful physician partnership models may benefit CIGNA's other lines of business.

The principal methodology used in determining these ratings is Best's Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “A.M. Best's Rating and the Treatment of Debt.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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