A.M. Best Assigns Issue Credit Ratings to UnitedHealth Group Incorporated’s Forthcoming New Senior Unsecured Notes
October 18 2017 - 5:03PM
Business Wire
A.M. Best has assigned Long-Term Issue Credit Ratings of
“bbb+” to the forthcoming $300 million floating rate senior
unsecured notes due 2020, the $900 million senior unsecured notes
due 2020, the $900 million senior unsecured notes due 2022, the
$950 million senior unsecured notes due 2027 and the $950 million
senior unsecured notes due 2047 that will be issued by
UnitedHealth Group Incorporated (UnitedHealth) (Minnetonka,
MN) [NYSE:UNH]. The outlook assigned to these Credit Ratings
(ratings) is stable. A.M. Best expects the proceeds from this
offering to be used by UnitedHealth for debt maturities in the
fourth quarter of 2017 and February 2018, to pay down outstanding
commercial paper borrowings and for general corporate purposes. The
existing ratings of UnitedHealth and its subsidiaries are
unchanged.
A.M. Best anticipates that these issuances will be within
UnitedHealth’s plan for its financial leverage to be approximately
40% by the end of 2017. Furthermore, UnitedHealth maintains good
interest coverage of 12 times driven by the strong operating
earnings from its UnitedHealthcare and Optum platforms.
Nevertheless, UnitedHealth’s ratio of goodwill plus intangibles to
shareholders’ equity remains high due to the company’s history of
acquisition activity and exceeds 130%, which puts pressure on
UnitedHealth’s balance sheet. However, the company has no history
of sizeable goodwill write-downs and recent acquisitions, including
Catamaran Corporation, have had a favorable impact on revenues and
earnings.
UnitedHealth has a good level of financial flexibility, which is
supported by its commercial paper program, parent company cash,
subsidiary dividends and credit facility. Moreover, UnitedHealth’s
non-regulated operating earnings and cash flows are materially
higher than that of its peers. The company’s net income increased
significantly over the past two years driven by enrollment growth
and margin expansion for its core UnitedHealthcare business, and
the strong and growing earnings contribution from the Optum
operations. Consolidated earnings are anticipated to remain strong
through year-end 2017.
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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version on businesswire.com: http://www.businesswire.com/news/home/20171018006603/en/
A.M. BestBridget Maehr, +1-908-439-2200, ext.
5321Senior Financial
Analystbridget.maehr@ambest.comorSally Rosen,
+1-908-439-2200, ext. 5280Senior
Directorsally.rosen@ambest.comorChristopher Sharkey,
+1-908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
+1-908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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