AM Best Comments on Credit Ratings of Chubb Limited and Its Subsidiaries Following Announced Cigna Acquisitions in Asia-Pacific Markets

AM Best has commented that the Credit Ratings (ratings) of Chubb Limited (Chubb) [NYSE: CB] and its insurance subsidiaries remain unchanged following the company’s announcement of a definitive agreement to acquire the life and non-life insurance companies that house the personal accident, supplemental health and life insurance business of Cigna Corporation (NYSE: CI) in seven Asia-Pacific markets for $5.75 billion dollars in cash. (For a listing of Chubb’s ratings, please see the related press release.)

According to Chubb, the operations to be acquired include Cigna’s accident and health (A&H) and life insurance business in Korea, Taiwan, New Zealand, Thailand, Hong Kong and Indonesia and its interest in a joint venture in Turkey, all of which generated approximately $3 billion in net premiums written in 2020. The transaction, which is expected to close in 2022, is subject to standard regulatory approvals.

In AM Best’s view, the present transaction should significantly strengthen Chubb’s already established presence in the Asia-Pacific supplemental A&H and life insurance markets (especially in the Korean A&H sector), a long-term growth area for the company, while complementing its existing product and distribution capabilities. Upon completion of the transaction, Chubb’s Asia-Pacific operations and its Global A&H segment will each increase to approximately 20% of the company’s global operations (excluding China), enhancing the group’s spread of risk and global portfolio balance. These transactions will further strengthen the group’s global business profile.

AM Best notes that Chubb’s financial leverage to total and to tangible capital may increase modestly as a result of the transaction; however, these measures should remain in the low 20% and 30% ranges, respectively, thereby staying comfortably within tolerances at the current rating levels. This also takes into consideration the group’s expanded share repurchase activity, which is expected to continue through midyear 2022. Interest and fixed charge coverage measures are expected to likewise remain especially strong (e.g., comfortably above 8x) given especially strong earnings in 2021 and positive anticipated contributions in 2022 from the acquired operations. Balance sheet strength of the group’s principal rating units, reflecting its capital adequacy, as measured by Best’s Capital Adequacy Ratio (BCAR), quality of capital and other considerations, is expected to remain at the strongest level prospectively.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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