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Insurance ratings actions: A.M. Best downgrades members of NYCM Insurance Group

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Insurance ratings actions: A.M. Best downgrades members of NYCM Insurance Group

S&P Global Market Intelligence compiles ratings actions in the insurance space daily through 5:30 p.m. ET. Actions after 5:30 p.m. ET will be included in the following day's roundup.

Life and health

A.M. Best has affirmed the financial strength ratings of A- (Excellent) and the long-term issuer credit ratings of "a-" of Trustmark Insurance Co., Trustmark Life Insurance Co. of New York and Trustmark Life Insurance Co.

Concurrently, A.M. Best has affirmed the long-term issuer credit rating of "bbb-" of the holding company, Trustmark Group Inc.

The outlook is stable.

The ratings of Trustmark Insurance and Trustmark Life Insurance Co. of New York reflect their very strong balance sheet strength, their adequate operating performance, neutral business profile and appropriate enterprise risk management. Meanwhile, the ratings of Trustmark Life Insurance reflect this entity's strongest balance sheet strength, its adequate operating performance, limited business profile and appropriate enterprise risk management, A.M. Best said.

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A.M. Best has placed under review with developing implications the financial strength ratings of A- (Excellent) and long-term issuer credit ratings of "a-" of Medco Containment Life Insurance Co. and Medco Containment Insurance Co. of New York.

The rating actions follow the announced acquisition of the companies' parent Express Scripts Holding Co. by Cigna Corp.

A.M. Best said the developing implications reflect its concerns that the strategic importance of Medco Containment Group to the overall organization might change following the completion of the transaction.

The increased debt and limited financial flexibility at the new combined organization might create the potential for increased dividends from the insurance operations. Additionally, the transaction is the largest Cigna has undertaken and presents significant execution risks, A.M. Best said.

Managed care

Cigna's proposed acquisition of Express Scripts also resulted in A.M. Best placing under review with negative implications the financial strength ratings of A (Excellent) and the long-term issuer credit ratings of "a" of the key life and health subsidiaries, health maintenance organizations, New Zealand and European insurance companies of Cigna.

Additionally, the rating agency has placed under review with negative implications the financial strength ratings of A- (Excellent) and the long-term issuer credit ratings of "a-" of Cigna Supplemental Benefit Companies, as well as the Cigna HealthSpring companies.

Concurrently, A.M. Best has placed under review with negative implications the long-term issuer credit rating of "bbb" and the long- and short-term issue credit ratings of Cigna.

A.M. Best said that following the issuance of $22.5 billion of new debt to finance the transaction combined with the existing debt at Cigna and Express Scripts, Cigna's financial leverage is anticipated to be about 49%, and its goodwill plus intangibles to equity ratio will likely exceed 125%.

The negative implications reflect the rating agency's concerns regarding the increased debt and limited financial flexibility that the new combined organization will have and the potential for increased dividends from the insurance operations. A.M. Best expects interest coverage to decline to under 10x; however, it is expected to remain at levels considered strong.

Additionally, there is concern for potential losses of Express Scripts customers following the transaction, which could negatively impact earnings and revenues, A.M. Best added.

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Fitch Ratings has affirmed UnitedHealth Group Inc.'s long-term issuer default rating at A and senior unsecured notes at A-.

The rating agency has also affirmed the AA- (Very Strong) insurer financial strength ratings of UnitedHealth's insurance company subsidiaries UnitedHealthcare Insurance Co., UnitedHealthcare Insurance Co. of Illinois, UnitedHealthcare Insurance Co. of New York, Sierra Health & Life Insurance Co. Inc., Health Plan of Nevada Inc., UnitedHealthcare of Florida Inc., PacifiCare of Arizona Inc., Oxford Health Insurance Inc., Oxford Health Plans of New York Inc., UnitedHealthcare of Wisconsin Inc., UnitedHealthcare Benefits of Texas Inc., UHC of California, PacifiCare Life & Health Insurance Co. and UnitedHealthcare Plan of the River Valley Inc.

The rating outlook is stable.

Fitch said the affirmation of UnitedHealth's ratings reflects the company's strong capitalization and leverage profile and very strong financial performance in addition to the fact that the company's top-tier business profile supports its ratings.

UnitedHealth's financial leverage metrics have improved and are considered strong but remain inconsistent, the agency added.

Property and casualty

A.M. Best has removed from under review with negative implications and downgraded the financial strength ratings to A (Excellent) from A+ (Superior) and the long-term issuer credit ratings to "a+" from "aa-" for the members of NYCM Insurance Group, which are New York Central Mutual Fire Insurance Co. and A. Central Insurance Co.

The outlook assigned to these ratings is stable.

The current rating actions follow the completion of A.M. Best's analysis of NYCM Insurance Group under the updated Best's credit rating methodology.

The ratings reflect NYCM Insurance Group's strongest balance sheet strength, its adequate operating performance, neutral business profile and appropriate enterprise risk management.