In an announcement that is becoming less common by the day, a European insurance company has received a credit rating upgrade.
A.M. Best upgraded their financial strength and issuer credit ratings on Cigna Life Insurance both from ‘A-‘ to ‘A’ yesterday.
Cigna Life Insurance is a Belgium based company who has been operating in the UK for almost 30 years.
Best said that, while the support Cigna receives from their parent company (Cigna Corporation) is important, the upgrade reflects the improving business profile of the company.
An “excellent level of risk-adjusted capitalisation, strengthening business profile and sound prospective underwriting performances” were other factors which contributed to the upgrade.
“Cigna’s business profile is growing rapidly, with overall gross premium income expected to increase from around €300 million (£249m) in 2010 to €750 million (£623m) in 2013.
“Although new business from recent acquisitions will drive growth, Cigna also benefits from the organic growth of its existing business units.”
The upgrade is one of the first of the year for the insurance industry, with both Fitch and Standard and Poor’s downgrading sovereigns and company’s throughout January.
“Although Cigna’s level of profitability for the 2011 financial year is expected to be below original expectations, with overall loss in the region of €7 million (£5.8m), the performance of its core business units remains good despite challenging market conditions,” the company said.
“Cigna’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 Cigna’s significant investment in new products and new distribution channels, along with the adverse effects of some local accounting rules.”
The rating company went on to say that further upgrades would be unlikely. To view the full rating statement, click here.
