OREANDA-NEWS. Fitch Ratings said today that its ratings on Anthem Inc. (ANTM), Aetna Inc. (AET), Cigna Corp. (CI) and Humana Inc. (HUM) remain on Rating Watch following ANTM's and AET's separate announcements that they intend to challenge today's decisions by the Department of Justice's (DOJ) to block their respective acquisitions of CI and HUM.

Fitch anticipates the companies' ratings remaining on rating watch pending the ultimate outcome of the lawsuits. If ANTM and AET ultimately prove unsuccessful in challenging the DOJ's lawsuits, Fitch expects to complete a review of the insurers' then current capital and operational strategies. Assuming these capital and operational strategies are broadly consistent with those the insurers maintained prior to entering into their respective merger agreements, Fitch, consistent with previous comments, would likely affirm the insurers' ratings at their current ratings levels.

Should the challenge prove successful, Fitch, consistent with previous comments, expects to affirm ANTM's ratings at their current levels with a Negative Outlook once the company accesses the capital markets to fund its acquisition. Fitch would also expect to downgrade the ratings on CI's senior notes one notch upon the acquisition's close. Similarly Fitch would expect to downgrade AET's ratings and to upgrade HUM's ratings upon the close of their transaction. These anticipated rating actions would be subject to a review of potential asset divestiture required by the DOJ and the extent to which they would alter the profiles of the combined organizations. This is an area of heightened concern given the DOJ's assertion that divestitures proposed by the companies to date have fallen short of those required to prevent the DOJ from filing suits to block the transactions.

Fitch's ratings on ANTM and AET, the acquiring companies in their respective transactions, are on Rating Watch Negative reflecting the higher leverage and lower interest coverage that would result from the transactions' completion and integration risks. In Fitch's view, these risks are outweighed from a ratings perspective by the size and scale benefits that would result from the completion of the transactions.

Fitch's ratings on CI and HUM, the companies to be acquired in their respective transactions, are also on Rating Watch. Ratings on CI's senior unsecured securities are on Rating Watch Negative, reflecting concerns about a combined ANTM-CI organization's leverage, interest coverage and integration risks. HUM's ratings are on Rating Watch Positive reflecting anticipated ratings benefits from a combined AET-HUM organization's more diverse product portfolio as well as the fact that HUM's current ratings are two notches lower than AET's current ratings.