A.M. Best Assigns Issue Credit Rating to Aetna Inc.’s Forthcoming Senior Unsecured Notes
August 09 2017 - 2:49PM
Business Wire
A.M. Best has assigned a Long-Term Issue Credit Rating of
“bbb” to the forthcoming $1 billion 3.875% senior unsecured notes
due August 2047, which will be issued on Aug. 10, 2017, by Aetna
Inc. (Aetna) (headquartered in Hartford, CT) [NYSE:AET]. The
outlook assigned to this Credit Rating (rating) is stable.
A.M. Best anticipates that Aetna will use the proceeds from this
offering to pay down debt maturities in November and December of
2017 and for general corporate purposes. The existing ratings of
Aetna and its subsidiaries are unchanged.
Aetna’s financial leverage improved substantially following the
mandatory early redemption of $10.2 billion of senior notes in
February 2017. The notes were issued in 2016 to finance the
anticipated acquisition of Humana, Inc (Humana). Following
the termination of the transaction due to the blocking of the
merger by U.S. Department of Justice, Aetna redeemed a significant
portion of the debt issued in 2016, resulting in financial leverage
declining to under 40% as of June 30, 2017, compared with over 50%
at year-end 2016. As a result of the new debt issuance, A.M. Best
expects Aetna’s debt-to-capital ratio to uptick slightly until the
upcoming maturities are paid later in 2017; however, the ratio is
expected remain below 40%. Aetna’s shareholders’ equity declined at
June 30, 2017, compared with year-end 2016, as the company
accelerated share repurchase and paid a higher dividend. While
remaining positive, Aetna’s financial results were negatively
affected by the payment of the $1 billion merger termination fee to
Humana in early 2017. However, Aetna’s group commercial and
government business posted stronger-than-anticipated results
supported by premium growth and modest cost trend.
This press release relates to Credit Ratings that have been
published on A.M. 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 A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
####
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A.M. BestDoniella PlissAssociate
Director+1 908-439-2200, ext.
5104doniella.pliss@ambest.comorSally
RosenSenior Director+1 908-439-2200, ext.
5280sally.rosen@ambest.comorChristopher
SharkeyManager, Public Relations+1 908-439-2200, ext.
5159christopher.sharkey@ambest.comorJim
PeavyDirector, Public Relations+1 908-439-2200, ext.
5644james.peavy@ambest.com
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