S&P assigns Cigna notes BBB

Standard & Poor's said it assigned its BBB senior unsecured debt rating to Cigna Corp.'s issuance of approximately $2 billion of senior notes consisting of three tranches maturing in 2016, 2022 and 2042.

The company will use the proceeds of the debt issuance to finance its acquisition of HealthSpring Inc. for about a $3.8 billion purchase price, according to an S&P news release. S&P said it believes that this transaction makes strategic sense as it allows Cigna meaningfully to enter the Medicare Advantage and Medicare Prescription Drug Program market by acquiring HealthSpring's membership base, providing additional diversification for Cigna.

The ratings on Cigna are based on the company's strong consolidated competitive position, very strong operating performance, good financial flexibility, and limited exposure to health-care reform, the agency said.

Partially offsetting these strengths are Cigna's significant commercial mortgage loan holdings and its high exposure to equity-market conditions through its run-off reinsurance business and unfunded postretirement obligations, the agency said.

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