A.M. Best Assigns Issue Credit Rating to UnitedHealth Group Incorporated’s Forthcoming Senior Unsecured Notes
December 15 2016 - 4:51PM
Business Wire
A.M. Best has assigned a Long-Term Issue Credit Rating of
“bbb+” to the forthcoming $1.5 billion senior unsecured notes of
UnitedHealth Group Incorporated (UnitedHealth) (Minnetonka,
MN) [NYSE:UNH]. The outlook assigned to the Credit Rating (rating)
is stable. The existing ratings of UnitedHealth and its
subsidiaries are unchanged.
The notes will be issued in two tranches: $750 million senior
unsecured notes, due January 2027 and $750 million senior unsecured
notes due, January 2047. A.M. Best expects the proceeds from this
offering to be used by UnitedHealth to pay down outstanding
commercial paper borrowings and for general corporate purposes.
Following these issuances, UnitedHealth’s financial leverage is
expected to remain unchanged. UnitedHealth’s debt-to-capital ratio
was at 47% at the end of third-quarter 2016. The elevated ratio
mainly is due to a significant increase in debt in the prior year
for the financing of the acquisition of Catamaran Corporation
(Catamaran). Despite the increase in elevated financial leverage,
UnitedHealth maintains strong interest coverage, which remains
greater than 10 times. In addition, UnitedHealth plans to lower its
financial leverage to approximately 40% by the end of 2017.
UnitedHealth’s ratio of goodwill plus intangibles to shareholders’
equity increased substantially following the Catamaran transaction
and exceeds 140%, which pressures UnitedHealth’s balance sheet.
However, the company has no history of sizeable goodwill
write-downs, and the acquisition of Catamaran has had a favorable
effect on operating earnings for UnitedHealth’s OptumRx
division.
UnitedHealth has a good level of financial flexibility that is
supported by its commercial paper program, parent company cash,
subsidiary dividends and credit facility. In addition, UnitedHealth
has significant non-regulated operating earnings and cash flows
that are materially higher than that of its peers.
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.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2016 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/20161215006437/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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