Cigna Corp. shares moved lower during a week when the company found itself engaged in a fiery back-and-forth with Carl Icahn, who called on shareholders to vote against the planned acquisition of Express Scripts Holding Co.
Insurance companies modestly outperformed the broader market, as the S&P 500 ticked down 0.25% to 2,833.28 for the week ending Aug. 10, while the SNL U.S. Insurance Index rose 0.12% to 1,045.04.
Icahn, who recently disclosed a nearly 5% stake in Cigna, said the transaction dramatically overvalues Express Scripts. He also described Amazon.com Inc. as an "existential threat" to the deal and to the pharmacy benefits management industry as a whole. In one letter outlining his reasons to reject the deal, he said Amazon does not need rebates, which he asserted will ultimately be eliminated, nor does it need to produce profit margins on Express Scripts' level. If completed, the deal could be viewed as one of the "worst blunders" in corporate history, Icahn said.
For its part, Cigna accused the activist investor of making a "speculative financial bet" against the transaction and displaying an "uninformed view of the current healthcare marketplace and Cigna's strategy." The health insurer said Icahn is motivated by a "desire to profit" from his short position in Express Scripts.
While Icahn led his charge against the deal, Cigna shareholder Glenview Capital Management sided with the health insurer, as did proxy advisory firm Institutional Shareholder Services.
Shareholders will vote on the acquisition Aug. 24. Cigna's stock dropped 3.17% to $183.26 on the week.
Maiden Holdings Ltd. sold off following a slew of announcements, including the retirements of CEO Art Raschbaum and CFO Karen Schmitt, and word that it would pay out a lower dividend. Maiden and AmTrust Financial Services Inc. also pushed back their decision on a quota share reinsurance agreement.
Mark Dwelle of RBC Capital Markets said the company's results "have not been great" for some time and that it had decided it was time to "make a move" on the personnel front.
Maiden Holdings shares fell 44.91% to $4.60.
Berkshire Hathaway Inc.'s stock rose 2.41% for the week after the company reported its second-quarter results over the weekend.
Operating earnings came in at $6.89 billion, up from $4.12 billion in the prior-year period. Berkshire logged net earnings attributable to shareholders of $12.01 billion, or $7,301 per class A equivalent share, versus $4.26 billion, or $2,592 per class A equivalent share, in the second quarter of 2017.
In the financial guaranty space, Ambac Financial Group Inc. and Assured Guaranty Ltd. went up 5.19% and 4.20%, respectively, after an agreement was reached related to the division of Puerto Rico sales and use tax revenues among holders of certain senior and subordinate bonds.
Senior creditors will recover over 90% of their claims, while subordinate bondholders will get back about 60% in the form of new senior closed lien COFINA bonds. The recovery rates include fees for parties to the agreement.
MBIA Inc., which also endorsed the agreement, rose 4.98% to $10.75 for the week.