AM Best Comments on Credit Ratings of CVS Health Corporation's Aetna Subsidiaries Following Announced Acquisition of Signify Health, Inc.

AM Best has commented that the Credit Ratings (ratings) of the operating entities of Aetna Inc. (Aetna), including its rated joint ventures, remain unchanged following the announcement by their parent, CVS Health Corporation (CVS Health) CVS, on Sept. 5, 2022, that it has entered into a definitive agreement to acquire Signify Health, Inc. (Signify Health), in a transaction totaling approximately $8 billion.

CVS Health will acquire Signify Health's stock for $30.50 per share. The equity value of $7.6 billion, accounting for Signify Health's net debt, equity appreciation rights and estimated fees and expenses, makes up the total transaction value of approximately $8 billion. CVS Health expects to fund the transaction with existing cash from its balance sheet and available resources, and is committed to maintain financial metrics within ranges to maintain its investment grade ratings.

The transaction was approved by the board of directors at each of the respective companies. It is subject to additional approvals by the Signify Health's stockholders and receipt of regulatory approval, as well as satisfaction of other customary closing conditions. CVS Health and Signify Health anticipate that the transaction will close in the first half of 2023.

From a strategic standpoint, Signify Health is expected to operate as a standalone distinct operation; therefore, limited integration-related disruption is expected. Strategically, this provides another avenue for CVS Health to enter the health care space and broaden its offerings and complementary capabilities in areas such as value-based care, its primary clinician network and expansion of in-home health offerings.

AM Best expects the capital at the Aetna insurance entities to be maintained to its aggregate risk-based capital target of approximately 275% of NAIC company action level. CVS Health's financial leverage was approximately 43% at year-end, and AM Best expects the organization to continue to de-lever. AM Best will have discussions with management on sources of funding for the acquisition and capitalization at the insurance entities, as well planned synergies and benefits that Signify Health can provide to CVS Health's insurance operations.

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.

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