S&P Affirms CIGNA HealthCare of TX 'Bpi'Rtg.

NEW YORK--(BUSINESS WIRE)--Standard & Poor's--

Oct. 8, 1999--Standard & Poor's today affirmed its single-'Bpi' financial strength rating of CIGNA HealthCare of Texas Inc.(CIGNA), reflecting the health maintenance organization's (HMO) very weak risk-based capitalization, weak liquidity,

CIGNA, based in Austin, TX, is a licensed HMO in Texas, providing health insurance throughout the region. It is a wholly owned subsidiary of Healthsource Inc., which is an indirect wholly owned subsidiary of CIGNA Corp.

The HMO's level of capitalization is very weak, as reflected by a Standard & Poor's capital adequacy ratio of 4%. At year-end 1998, its total net worth was $2.6 million, which is considered inadequate to support its current premium level. Liquidity is weak, based on the relatively small size of invested assets to meet its short-term obligations. Operating performance has been declining in the past three years, averaging a return on revenue of 0.9%. Additionally, it experienced underwriting losses in the past five years. Enrollment growth is strong, evidenced by a 29.7% increase from 1997 to 1998.

'Pi' ratings, denoted with a 'pi' subscript, are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. 'Pi' ratings are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings.

Ratings with a 'pi' subscript generally are not modified with 'plus' or 'minus' designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group, Standard & Poor's said.---CreditWire