A.M. Best has assigned issue ratings of “bbb+” to the recently
issued senior unsecured notes of UnitedHealth Group Incorporated
(UnitedHealth) (Minnetonka, MN) [NYSE:UNH]. The outlook assigned to all
ratings is stable. The existing ratings of UnitedHealth and its
subsidiaries are unchanged.
A.M. Best expects the proceeds from this offering to be used by
UnitedHealth to pay down the upcoming March debt maturity and a portion
of commercial paper outstanding.
Following these issuances, UnitedHealth’s financial leverage is expected
to remain unchanged. UnitedHealth’s debt-to-capital ratio exceeded 45%
at year-end 2015 following significant debt increase in July 2015 issued
to finance the acquisition of Catamaran Corporation (Catamaran) [NASDAQ:
CTRX]. Despite the increase in financial leverage, UnitedHealth
maintains strong interest coverage, which remains greater than 10 times.
In addition, UnitedHealth plans to bring the financial leverage to lower
than 40% by the end of 2017. UnitedHealth’s ratio of goodwill plus
intangibles to shareholders' equity increased substantially following
the Catamaran transaction and exceeded 140% at year-end 2015, putting
additional pressure on UnitedHealth’s balance sheet. However, there is
no history of sizeable goodwill write-downs at UnitedHealth.
UnitedHealth’s financial flexibility is supported by its commercial
paper program, parent company cash, subsidiary dividends and credit
facility. In addition, the Catamaran acquisition is likely to further
enhance UnitedHealth’s already strong and growing stream of income from
its profitable non-regulated businesses that remains much higher
compared with its peers.
The following issue ratings have been assigned:
UnitedHealth Group Incorporated—
-- “bbb+” on $750 million 1.7% senior unsecured notes due 2019
-- “bbb+” on $750 million 2.125% senior unsecured notes due 2021
-- “bbb+” on $1.0 billion 3.1% senior unsecured notes due 2026
This press release relates to rating(s) 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.
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 Company, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
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