Cigna Corporation (CI)has been assigned the provisional shelf rating of (P)Baa1 by Moody’s Investors Service, a wing of Moody’s Corporation MCO. Concurrently, the rating agency assigned (P) Baa2 to provisional subordinated shelf and provisional junior subordinated shelf, and (P) Baa1 to provisional senior unsecured shelf.
The rating agency issued (P)Baa3 rating to the provisional preferred stock. The outlook stays stable.
The ratings reflect the company’s solid business profile supported by its presence, brand reputation, large customer base and wide range of group benefits that it provides. The health insurer’s prime customer base mainly comprises self-insured employers which insulates it from the hazards that might arise from an unexpected rise in healthcare costs.
For the first half of 2017, the health insurer recorded total medical membership of 15.7 million.
The ratings also reflect the company’s solid earnings and liquidity position, moderate adjusted debt to capital ratio and sturdy capitalization.
The credit rating agency stated that the ratings could be upgraded if the EBITDA margins of the company remain above 10% with a risk-based capital ratio of 325%, the adjusted financial leverage stays below 35%, the 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%, CAL and adjusted financial leverage rises above 40% or if there is membership loss of 5% or more.
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 shares have gained 40.48%, the industry has registered an increase of 15.64%. Solid cash flow from operations and increasing membership are expected to drive the stock higher in the future.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Markel Corporation MKL and Kemper Corporation KMPR. Each of these stocks sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Markel Corporation markets and underwrites specialty insurance products in the United States and internationally. The company delivered positive surprises two out of the last four quarters, with an average beat of 21.06%.
Kemper Corporation provides property & casualty, and life & health insurance services in the United States. The company delivered positive surprises in the last four quarters, with an average beat of 57.53%.
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Moody's Corporation (MCO): Free Stock Analysis Report
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