A.M. Best Assigns Ratings to Aetna Inc’s New Shelf Registration

A.M. Best Co. has assigned indicative ratings of “bbb+” on senior unsecured debt, “bbb” on subordinated debt and “bbb-” on preferred stock to Aetna Inc’s (Aetna) (Hartford, CT) [NYSE: AET] recently filed universal shelf registration statement. The outlook assigned to these ratings is stable. A.M. Best also has withdrawn the debt ratings on the previous shelf registration, since the shelf has expired. All existing ratings for Aetna and its subsidiaries are unchanged.

The proceeds from any potential offerings may be added to Aetna’s general funds and used for general corporate purposes, unless specified in subsequent debt issuances.

Aetna’s ratings are reflective of its strong operational earnings in its core healthcare segment and good financial flexibility. Aetna’s financial leverage (debt to capital) is in the range near 30%, and A.M. Best expects the company to operate at or near this percentage over the near term. Aetna’s earnings before interest and taxes (EBIT) interest coverage is expected to remain at or above 10 times earnings. Both the financial leverage and EBIT interest coverage are well within A.M. Best’s guidelines for the ratings. These favorable rating factors may be offset by declining membership and margin compression.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include “A.M. Best’s Rating & the Treatment of Debt.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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