AM Best Assigns Issue Credit Ratings to Anthem, Inc.’s Senior Unsecured Notes
May 12 2020 - 5:24PM
Business Wire
AM Best has assigned Long-Term Issue Credit Ratings
(Long-Term IR) of “bbb+” to the new senior unsecured notes of
Anthem, Inc. (Anthem) (Indianapolis, IN) [NYSE: ANTM], which total
$2.5 billion. The offering consists of $400 million of 2.375%
senior unsecured notes due 2025; $1.1 billion of 2.25% senior
unsecured notes due 2030; and $1.0 billion of 3.125% senior
unsecured notes due 2050. The outlook assigned to these Credit
Ratings (ratings) is stable. Anthem’s existing Long-Term Issuer
Credit Ratings remain unchanged.
Proceeds of these notes issuances are expected to be used for
working capital and general corporate purposes, including repayment
of short-term and long-term debt, share repurchase and to fund
acquisitions. Anthem has two debt issues totaling $1.6 billion
maturing later this year and approximately $1.3 billion outstanding
under its commercial paper program. It is important to note that
Anthem has stopped its share repurchase program temporarily.
AM Best expects that the issuance will not have a major impact
on financial leverage, as Anthem will increase the total amount of
debt outstanding modestly for 2020. Anthem’s financial leverage, as
calculated by AM Best, was 41.4%, and interest coverage is good at
over eight times and has improved through year-end 2019. Based on
discussions with management, AM Best expects Anthem’s financial
leverage to continue to moderate somewhat over time, through the
elimination of existing debt and an increase in equity through
retained earnings.
However, AM Best acknowledges that COVID-19 may cause this
process to decelerate for the remainder of the year, as the
organization seeks ways to maintain strong liquidity.
Anthem maintains very good liquidity through favorable cash
flows from its various operating subsidiaries. Additional sources
of contingent liquidity for the organization are Anthem’s cash and
investments and $3.5 billion available under its combined long- and
short-term credit facilities. Capitalization levels and operating
results at its regulated entities continue to be strong, and Anthem
maintains a leading market share across many of its Blue Cross Blue
Shield states. Anthem has reported strong operating results in 2019
and through first-quarter 2020.
This press release relates to Credit Ratings that have been
published on AM 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 AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best’s
Credit Ratings. For information on the proper media use of Best’s
Credit Ratings and AM Best press releases, please view Guide for
Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in New York, London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
Copyright © 2020 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Joseph Zazzera Director +1 908 439 2200, ext.
5797 joseph.zazzera@ambest.com Sally Rosen Senior
Director +1 908 439 2200, ext. 5280
sally.rosen@ambest.com Christopher Sharkey Manager,
Public Relations +1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com Jim Peavy Director, Public
Relations +1 908 439 2200, ext. 5644
james.peavy@ambest.com
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