S&P says may cut Cigna ratings

NEW YORK, Nov 4 (Reuters) - Standard & Poor's on Tuesday revised its outlook on U.S. health insurer Cigna Corp (CI.N) and its Connecticut General Life Insurance unit to negative from stable, citing deteriorating earnings and fallout from equity market turmoil.

The agency rates Cigna "BBB-plus," or three notches above speculative, or 'junk' grade. The negative outlook means it could downgrade the rating in the next two years.

The move "reflects Cigna's weaker earnings and increased liabilities resulting from its relatively high exposure to equity markets in its run-off reinsurance business and from its pension plan," S&P said in a note.

Cigna shares hit a 13-year low last week after it posted a 53 percent decline in third-quarter earnings and forecast disappointing result for the full year, hurt by the economic slowdown and competitive pressure. For details, see [ID:nN31346623]

Moody's Investors Service placed Cigna's ratings on review for a possible downgrade on Monday.

Cigna debt protection costs fell slightly on Tuesday. Five-year credit default swaps were quoted at about 201 basis points, or $201,000 annually to insure $10 million of debt, according to Markit Intraday.

That's down from about 209 basis points late Monday and well off highs close to 250 basis points last week. (Reporting by Ciara Linnane; Editing by Theodore d'Afflisio)