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Cigna Corporation -- Moody’s rates Cigna’s senior notes Baa2; outlook stable

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Rating Action:

Moody’s rates Cigna’s senior notes Baa2; outlook stable

1 March 2021

New York, March 1, 2021 – Moody’s Investors Service has assigned a Baa2 senior unsecured debt

rating to Cigna Corporation’s (Cigna; NYSE:CI) planned issuance of senior unsecured debt, with

terms of 3, 5, 10 and 30 years. Net proceeds from the offering will be used mainly to refinance debt

maturing between 2021 – 2023, with the balance used to partly fund the announced acquisition

of MDLIVE. Total debt will increase modestly, but this transaction strengthens financial flexibility

through 2023. The proposed issuance constitutes a takedown from Cigna’s shelf registration filed in

March 2020. The outlook on Cigna is unchanged at stable.
RATINGS RATIONALE
Since the proceeds of the new issuance will be mainly used to refinance outstanding debt, there will

not be a material impact on Cigna’s leverage. Moody’s expects the transaction to increase Cigna’s

debt-to-capital ratio with Moody's adjustments, which 40.6% as of December 31, 2020 by less than

1% with a similarly modest impact on debt-to-EBITDA, which was 2.9x at year-end. We expect

the company to continue to de-lever, with adjusted debt-to-capital decreasing to below 40% by the

end of 2021. The acquisition of MDLIVE will provide Evernorth, Cigna’s health services segment, a

leading 24/7 telehealth platform.
The Baa2 rating for Cigna Corporation reflects its strong market position, relatively low underwriting

risk, the strong capital position of its health insurance operating subsidiaries and the leading EBITDA

margin among Moody’s rated health insurers. It also reflects the company’s significantly enhanced

diversification and the large increase in unregulated revenues attained through the acquisition of

Express Scripts (ESI) in December 2018.
The stable outlook reflects the progress Cigna has made in integrating Express Scripts and the

significant deleveraging through 2020 along with the benefits of greater diversification and the

addition of significant non-regulated cash flows available to the parent company.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The following drivers could place upward pressure on Cigna's ratings (including its insurance

subsidiaries): 1) leverage as measured by debt-to-capital falls below 40% and debt/EBITDA moves

to 2.5x or below (both measures considering Moody's adjustments); 2) profitability as measured by

EBITDA margin sustained or improved in the current range over time; or 3) stable and improving

cash flow coverage.
Conversely, the following drivers could place downward pressure on the ratings: 1) Declining

EBITDA margin and/or cash flow coverage; 2) Debt-to-capital sustained above 45% and Debt/

EBITDA above 3.0x (both with Moody's adjustments); or 3) a significant decline in membership.
Moody's added that the generation of strong levels of unregulated and diversified cash flows now

available to the parent company as a result of the ESI acquisition, accompanied by deleveraging,

could lead to tighter debt notching at the parent, as compared with the current 3-notch gap between

Cigna's operating insurance subsidiaries A2 IFS ratings and the parent company's Baa2 senior debt

ratings.

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Rating actions:
..Issuer: Cigna Corporation:
…Senior Unsecured Notes due 2024, 2026, 2031, and 2051: Assigned at Baa2
The outlook on Cigna Corporation is unchanged at stable.
Cigna Corporation (Cigna) is a global health care services organization headquartered in

Connecticut. Through its subsidiaries, the company provides health care and related benefits, with

the majority offered through employers and other groups. In addition to health insurance, Cigna

offers related specialty health care products. With the acquisition of ESI, Cigna Corporation is

also a leader in the pharmacy benefits management space. As of December 31, 2020, Cigna had

approximately 16.7 million medical members in its health insurance segment and 3,000 clients and

89 million members in its pharmacy benefits segment.
The principal methodology used in these ratings was US Health Insurance Companies

Methodology published in November 2019 available at

https://www.moodys.com/

researchdocumentcontentpage.aspx?docid=PBC_1187569

. Alternatively, please see the Rating

Methodologies page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody’s key rating assumptions and sensitivity analysis, see

the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure

form. Moody’s Rating Symbols and Definitions can be found at:

https://www.moodys.com/

researchdocumentcontentpage.aspx?docid=PBC_79004

.

For ratings issued on a program, series, category/class of debt or security this announcement

provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or

note of the same series, category/class of debt, security or pursuant to a program for which the

ratings are derived exclusively from existing ratings in accordance with Moody's rating practices.

For ratings issued on a support provider, this announcement provides certain regulatory disclosures

in relation to the credit rating action on the support provider and in relation to each particular credit

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For provisional ratings, this announcement provides certain regulatory disclosures in relation to the

provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent

to the final issuance of the debt, in each case where the transaction structure and terms have not

changed prior to the assignment of the definitive rating in a manner that would have affected the

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For any affected securities or rated entities receiving direct credit support from the primary entity(ies)

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The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no

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These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited

Credit Ratings available on its website www.moodys.com.

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Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the

related rating outlook or rating review.
Moody’s general principles for assessing environmental, social and governance (ESG) risks in our

credit analysis can be found at

https://www.moodys.com/researchdocumentcontentpage.aspx?

docid=PBC_1243406

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The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s

affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt

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disclosures for each credit rating.
Dean Ungar, CFA

VP-Sr Credit Officer

Financial Institutions Group

Moody's Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653
Scott Robinson, CFA

Associate Managing Director

Financial Institutions Group

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653
Releasing Office:

Moody's Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653

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