A.M. Best Upgrades Ratings of Cigna Life Insurance Company of Europe SA-N.V.

A.M. Best Europe – Rating Services Limited has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and the issuer credit rating to “a” from “a-” of Cigna Life Insurance Company of Europe SA-N.V. (CLICE) (Belgium). The outlook for both ratings remains stable.

The ratings reflect the implicit support CLICE receives from its ultimate parent company, Cigna Corporation (Cigna), along with its excellent level of risk-adjusted capitalisation, strengthening business profile and sound prospective underwriting performance. The upgrades reflect CLICE’s improving business profile.

CLICE is expected to benefit from the Cigna group’s acquisitions of Vanbreda International NV (Vanbreda) and FirstAssist Insurance Services Ltd, which have taken place over the past 18 months. Along with additional premium income of around EUR 350 million (USD 450 million) during 2012, CLICE is also expected to receive capital injections through 2013 from the Cigna group approaching EUR 90 million (USD 120 million) in order to service the new business and maintain an excellent level of risk-adjusted capitalization, EUR 50 million (USD 66 million), which has already been received.

CLICE’s business profile is growing rapidly, with overall gross premium income expected to increase from around EUR 300 million (USD 380 million) in 2010 to EUR 750 million (USD 950 million) in 2013. Although new business from recent acquisitions will drive growth, CLICE also benefits from the organic growth of its existing business units. The global health benefits (formerly expatriate) business of CLICE is its most significant and has been strengthened by the Cigna group’s recent acquisition of Vanbreda. In 2012, this business is likely to account for around 40%-50% of gross premium income and a majority of underwriting profits. CLICE is developing a strong position within the global health benefits market. CLICE’s business profile is diversified by a number of unrelated revenue streams and other complimentary products.

Although CLICE’s level of profitability for the 2011 financial year is expected to be below original expectations, with overall loss in the region of EUR 7 million (USD 9 million), the performance of its core business units remains good despite challenging market conditions. CLICE’s global health benefits business, along with its UK and Spanish healthcare businesses are expected to remain profitable, although with loss ratios marginally higher than in prior years. Offsetting this is CLICE’s significant investment in new products and new distribution channels, along with the adverse effects of some local accounting rules.

Further positive rating developments are unlikely at this time. A significant deterioration in risk-adjusted capitalisation, future earnings below expectations, deterioration in the ratings of CLICE’s ultimate parent or a reduction in parental support would be likely to add negative pressure to CLICE’s ratings.

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 utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Rating Members of Insurance Groups”; and “Understanding Universal BCAR”. Methodologies can be found at http://www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: http://www3.ambest.com/emea/ambersdisclosure.pdf.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.