Fitch Ratings Downgrades CIGNA’s Ratings; Removes Rtg Watch Negative

Fitch Ratings-Chicago-April 1, 2004: As signaled last year, Fitch Ratings today downgraded and removed from Rating Watch Negative its ratings on CIGNA Corporation (CIGNA) and its lead operating subsidiary, Connecticut General Life Insurance Company (CG Life). At the same time, Fitch has affirmed CIGNA's 'F2' commercial paper rating. The rating action affects approximately $1.5 billion of debt outstanding as of December 31, 2003. The Rating Outlook is Stable. A complete list of ratings is at the end of this release.  
 
The rating action follows today's announcement that CIGNA has completed the sale of its pension unit to Prudential Financial Inc. (Prudential) in an all cash transaction valued at $2.1 billion.  
 
Fitch placed CIGNA's ratings on Rating Watch Negative in August based on Fitch's view that the proposed disposition of the pension business would have a negative impact on CIGNA's overall operating profile and cash-flow generating ability. Following the announcement of the proposed sale of the pension unit in November 2003, Fitch affirmed the Rating Watch Negative status and indicated that the ratings on CIGNA and CGL would be downgraded one notch following the close of the proposed transaction. CIGNA's ratings have historically benefited from the increased diversification and strong earnings provided by the pension business. This concern is somewhat offset by the expected improvement in CIGNA's financial flexibility near term due to the receipt of sales proceeds, as well as by the reduction in its dividend to a nominal amount.  
 
Fitch expects that a significant portion of the approximately $1.7 billion of net proceeds from the sale of the pension unit will be used to fund CIGNA's core health care and group insurance businesses, increase parent liquidity and reduce debt. The balance will be used primarily to fund share repurchases over time.  
 
Fitch's ratings on CIGNA and CG Life continue to reflect the company's well-established competitive position in the health benefits and group insurance business, its strong International and COLI businesses, sound balance sheet fundamentals and good, albeit reduced, earnings profile.  
 
Fitch's key rating concerns include CIGNA's ability to implement necessary corrective actions to address operational issues affecting the health benefits business and reduce operating expenses in line with the reduction in medical membership, which has declined by over 4 million to 10.3 million at January 1, 2004. Prior to CIGNA's announcement that the company was looking at strategic alternatives for its pension unit, the ratings on CIGNA and CG Life had a Negative Rating Outlook due to Fitch's concerns regarding the continued underperformance of CIGNA's health care operations and ongoing concerns regarding the company's exposure to variable annuity death benefit risk.  
 
These concerns have been mitigated by recent progress in its health care operations and an effective hedging program for the principal GMDB risk, resulting in Fitch's Stable Rating Outlook.  
 
Entity/Issue/Action/Rating/Outlook  
 
CIGNA Corporation  
 
--Long-term rating Downgrade to 'BBB' from 'BBB+'/Stable;  
 
--Senior debt rating Downgrade to 'BBB' from 'BBB+'/Stable;  
 
--Subordinated debt rating Downgrade to 'BBB-' from 'BBB'/Stable;  
 
--Commercial paper rating Affirm 'F2'.  
 
Connecticut General Life Insurance Company  
 
--Insurer financial strength Downgrade to 'A' from 'A+'/Stable.  
 
Contact: Douglas L. Meyer, CFA +1-312-368-2061, or Bradley S. Ellis, CFA +1-312-368-2089, Chicago.