Cigna Corporation's (CI - Free Report) unsecured debts of $1.6 billion recently received rating action from Moody’s Investor Service, a wing of Moody Corporation. These unsecured debts which are due by 2027 and 2047, respectively, have been assigned a rating of Baa1 by the agency.
At the same time, the rating agency also affirmed the A1 ratings of Cigna’s affiliates, Connecticut General Life Insurance Company (CGLIC), Cigna Health and Life Insurance Company (CHLIC) and Life Insurance Company of North America (LINA). The outlook stays stable.
The ratings reflect Cigna’s solid business profile reinforced by its wide presence in the country, brand name and huge customer base coupled with a wide range of lucrative benefits offered by it. The health insurer’s prime customer base primarily comprises self-insured employers, which insulates it from the hazards that might arise from an unexpected increase in healthcare costs.
The ratings also reflect the company’s solid earnings and liquidity position, moderate financial leverage, and sturdy capitalization. Following the new issuance and cash tender offer of $1.0 billion and $131 million of maturities in its balance sheet, its leverage has increased.
Moody’s stated that the ratings could be upgraded if EBITDA margins stays above 10% with a risk-based capital ratio of 325%, adjusted financial leverage stays below 35%, annual membership grows a minimum 2%, and the company diversifies its revenue and earnings streams.
Similarly, the ratings would be subject to downgrade if the consolidated risk-based capital ratio plunges below 250%, adjusted financial leverage rises above 40%, or if there is membership loss of 5% or more.
Financial performances of companies are assessed regularly by rating agencies. Ratings play an important role in retaining investor confidence as well as in maintaining credit worthiness and have become an important factor in establishing a competitive position. This rating by Moody’s reflects the strong financial position of the company which might help the company in meeting its debt obligations in the long run.
Zacks Rank and Share Price Movement
Cigna Corporation carries a Zacks Rank #3 (Hold). Shares of Cigna have outperformed the industry in a year’s time. While Cigna’s shares have gained 44.6%, the industry has gained 21.7%. Solid cash flow from operations and increasing membership are expected to drive the stock higher in the future.
Stocks to Consider
A few better-ranked stocks from the same space are CNO Financial Group, Inc. (CNO - Free Report) , Mercury General Corporation (MCY - Free Report) and Kemper Corporation (KMPR - Free Report) .
CNO Financial Group, Inc. delivered a positive earnings surprise in three of the trailing four quarters, the average beat being 6.69%. It carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Mercury General Corporation sports a Zacks Rank #1. The company delivered a positive earnings surprise in three of the last four quarters, the average beat being 1.06%.
Kemper Corporation carries a Zacks Rank #2. The company delivered a positive earnings surprise in each of the trailing four quarters, with an average beat of 57.53%.
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