A.M. Best Affirms Credit Ratings of Anthem, Inc. and Its Subsidiaries
September 07 2018 - 11:29AM
Business Wire
A.M. Best has affirmed the Financial Strength Rating
(FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings
(Long-Term ICR) of “a+” of the core Blue Cross Blue Shield-branded
insurance subsidiaries of Anthem, Inc. (Anthem) (Indianapolis, IN)
[NYSE:ANTM]. The outlook of these Credit Ratings (ratings) is
stable.
Concurrently, A.M. Best has affirmed the Long-Term ICR of
“bbb+”, the Long- and Short-Term Issue Credit Ratings (Long-Term
IR; Short-Term IR) of Anthem and the Long-Term IR on the existing
surplus notes of Anthem Insurance Companies, Inc. (Indianapolis,
IN). The outlook of these ratings is stable.
Furthermore, A.M. Best has affirmed the FSR of A- (Excellent)
and the Long-Term ICRs of “a-” of the UNICARE, AMERIGROUP and the
CareMore companies. The outlook of these ratings is stable. (See
link below for a detailed listing of the companies and
ratings.)
The Blue Cross Blue Shield-branded entities, also referred to as
Anthem Health Group (Anthem Health), are part of the core
subsidiaries of Anthem.
The ratings reflect Anthem Health’s balance sheet strength,
which A.M. Best categorizes as very strong, as well as its strong
operating performance, favorable business profile and appropriate
enterprise risk management (ERM).
Anthem Health’s risk-adjusted capitalization is viewed as
strongest, as measured by Best’s Capital Adequacy Ratio (BCAR).
Anthem Health is the main source of earnings for its parent
organization, with dividends exceeding $2 billion in four of the
past five years, and just under $2 billion in 2017. Anthem Health
has consistently reported strong underwriting and net income over
the past five years, and produced very favorable results across its
diverse set of business lines and in its various core markets. The
group has good geographic diversity, as Anthem operates Blue Cross
Blue Shield plans in 14 states with strong brand name recognition
and leading market share in the majority of these states.
Additionally, the Anthem companies have a strong presence in the
national account/BlueCard market segment. Nevertheless, there is
geographic limitation to its business based on the Blue Cross/Blue
Shield licenses.
Anthem Health’s ERM is managed at the ultimate parent, Anthem,
level, but it has local functionality as well. Anthem has a
well-established ERM program that is coordinated at the corporate
level. Anthem’s ERM is considered appropriate for its risk profile,
and the company has a mature developed ERM program. Risk
identification and reporting are completed on a regular basis, and
ERM is incorporated into the corporate strategic planning. There is
established oversight and monitoring of the ERM program.
Anthem has strong diversified earnings and revenues through its
Blue Cross Blue Shield-branded entities in 14 states, as well as
its non-Blue branded with CareMore, AMERIGROUP and UNICARE
entities. Financial leverage at Anthem rose to just above 40% due
to a combination of its November 2017 and early 2018 issuances;
however, financial leverage is expected to moderate throughout
2018. This is expected to occur through a combination of the
elimination of existing debt and increases in equity driven by
retained earnings. Earnings before interest and taxes interest
coverage was adequate at 6.2 times for 2017 but is lower than its
peers. Additionally, the holding company maintains good liquidity
with access to a $3.5 billion revolving-credit facility, a $2.5
billion commercial paper program, and certain of its insurance
subsidiaries are members of the Federal Home Loan Bank of
Indianapolis with the ability to borrow funds if needed. While
Anthem’s goodwill plus intangibles to equity is considered high at
over 100%, it is similar to some of its peers. Furthermore, A.M.
Best acknowledges that a portion of the intangibles is the Blue
Cross/Blue Shield trademarks, which are required to operate as a
Blue Cross Blue Shield-branded entity.
For a complete listing of Anthem, Inc. and its subsidiaries’
FSRs, Long-Term ICRs and Long- and Short-Term IRs, please visit
Anthem, Inc.
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 a global rating agency and information provider
with a unique focus on the insurance industry. Visit
www.ambest.com for more information.
Copyright © 2018 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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version on businesswire.com: https://www.businesswire.com/news/home/20180907005336/en/
A.M. BestJoseph Zazzera, MBADirector+1
908 439 2200, ext.
5797joseph.zazzera@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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