OREANDA-NEWS. Fitch Ratings has assigned a 'BBB+' rating to Cigna Corp's (Cigna) planned issue of up to \$900 million senior unsecured notes due 2025. The rating is equivalent to Fitch's ratings on Cigna's currently outstanding senior notes.

Cigna is expected to use issuance proceeds to redeem all outstanding \$600 million 2.75% notes due in 2016 and \$251 million 8.5% notes due in 2019 with any remaining proceeds being used for general corporate purposes. The company has estimated that \$936 million is required to redeem both of these issues in their entirety.

KEY RATING DRIVERS
The rating reflects expectations that the net effect of the planned issuance and redemptions will not materially change Cigna's financial leverage and interest coverage ratios from levels reported at year-end 2014.

Cigna's ratings reflect the company's large market position, solid profitability and well capitalized operating subsidiaries. Balanced against these strengths is the company's high financial leverage ratio.

Cigna's debt-to-EBITDA was 1.2x at Dec. 31, 2014, exceeding Fitch's median guideline for the current rating category. Cigna's financial leverage ratio was 35% at Dec. 31, 2014 and remains elevated relative to Fitch's guideline of 28% for the current rating category. Fitch expects the debt-to-total capital ratio to gradually be reduced through capital retention toward the 30% range.

Consistently solid profitability and interest coverage are key rating components partially offsetting the rating implications of high financial leverage. During 2014 EBITDA/revenue was 11.9% and return on capital was 13.4%. Both ratios are better than Fitch's guidelines for the 'A' rating category.

Operating EBITDA covered interest expense by 15 times during 2014, which is above the company's recent low double digits average. Interest coverage exceeded Fitch's median guideline for Cigna's current rating category.

RATING SENSITIVITIES:

The key rating triggers that could lead to a downgrade include:

--Elevated financial leverage measured by debt-to-total capital exceeding 35% or debt-EBITDA above 1.8x;
--Deterioration in capitalization, measured by an NAIC RBC ratio below 270% of the CAL;
--Disruption in Cigna's earnings profile as evidenced by EBITDA/revenue below 8.0x and net return on average capital ratios below 10%.

The key rating triggers that could result in an upgrade include:

--Lower financial leverage ratios, specifically debt-EBITDA better than 1.2x and debt-to-total capital near 25%;
--Stronger risk-based capitalization measured by a NAIC RBC ratio near 350% of the company action level;
--Enhanced market position and size/scale comparable to peers rated in the 'AA' category.

Fitch has assigned the following rating:

--\$900 million senior unsecured notes maturing in 2025 'BBB+'

Fitch took no action on the following ratings:

Cigna Corp.
--Issuer Default Rating 'A-';
--Senior unsecured notes 'BBB+';
--Short-term IDR 'F2'.

Cigna Corp. Subsidiaries:
Connecticut General Life Insurance Company
Life Insurance Company of North America
Cigna Life Insurance Company of New York
Cigna Worldwide Insurance Company
--Insurer Financial Strength (IFS) ratings 'A+'.