Sign in Subscribe
Insurance industry

A.M. Best Assigns Financial Strength Rating of "B++" to CIGNA Life Insurance Company of Europe SA - NV

Strategic Insights

— 1 min read

A.M. Best Co. has assigned a financial strength rating of "B++" (Very Good) to CIGNA Life Insurance Company of Europe SA - NV (CLICE), citing the company's very good prospective capitalisation, niche business profile, and strong financial flexibility. However, the rating is offset by the company's deteriorated financial performance. CLICE is the main European insurance entity of CIGNA Corp., focusing on employee benefit products, and has signed a new exclusive white-labeling agreement that is expected to accelerate premium growth.

Key Takeaways:

  • CLICE has been assigned a financial strength rating of "B++" (Very Good) by A.M. Best Co., reflecting the company's very good prospective capitalisation, niche business profile, and strong financial flexibility.
  • The company's niche business profile consists of employee benefit products, such as Life Accident and Sickness, Healthcare, and Dental covers, targeting corporate employers, expatriates, and affinity groups.
  • CLICE's competitive position could be challenged if the segments it operates in become more price sensitive or are targeted by more established competitors.
  • The company has entered into a new exclusive white-labeling agreement, projected to accelerate premium growth from 6% in 2003 to approximately 20% for the next two years.
  • CLICE's technical results are expected to improve in 2004, driven by growth in expatriate and Spanish healthcare business, and a decision to switch distribution channels and reduce acquisition costs for Spanish dental business.
  • The company's results remain exposed to foreign exchange fluctuations.
  • CLICE benefits from excellent liquidity, but would rely heavily on its ultimate parent, CIGNA Corp., for additional capital should the need arise.
  • CIGNA Corp.'s issuer credit rating is rated "bbb-" by A.M. Best.

Statistics:

  • CLICE's financial strength rating is "B++" (Very Good) with a stable outlook.
  • The company's prospective capitalisation is very good, factoring in pressures arising from anticipated premium growth and increased reinsurance cessions to a non-rated affiliate.
  • CLICE's technical results are expected to improve in 2004, driven by a 20% growth in premium.
  • The company's acquisition costs for Spanish dental business are expected to decline through a switch in distribution channels.
  • Foreign exchange fluctuations remain a risk for CLICE's results.

Sources:

  • A.M. Best Co. (Via COMTEX) - Apr 07, 2004.
  • CIGNA Life Insurance Company of Europe SA - NV (CLICE) - Brussels, Belgium.

Read more