AM Best has assigned a Long-Term Issue Credit Rating (Long-Term IR) of “a-” to UnitedHealth Group Incorporated’s (UnitedHealth) (Minnetonka, MN) [NYSE:UNH] recently announced $750 million 2.375% senior unsecured notes due 2024; $1 billion 2.875% senior unsecured notes due 2029; $1.25 billion 3.50% senior unsecured notes due 2039; $1.25 billion 3.70% senior unsecured notes due 2049; and $1.25 billion 3.875% senior unsecured notes due 2059. The outlook assigned to the Credit Rating (rating) is stable.
AM Best expects the proceeds to be used for general corporate purposes including to pay down outstanding commercial paper borrowings and other outstanding debt. UnitedHealth’s Long-Term Issuer Credit Rating of “a-’’, its existing Long-Term IRs and the ratings of its insurance subsidiaries are unchanged.
Financial leverage at the end of second-quarter 2019 was above UnitedHealth’s target of 40% primarily due to the close of its acquisition of DaVita Medical Group. AM Best expects the new debt issues to be neutral to financial leverage and that UnitedHealth will deleverage back to its target range in the near term. UnitedHealth’s coverage ratio remains very strong at over 11 times based on strong operating results with material top line growth and modest margin expansion through the first half of the year. Additionally, UnitedHealth has material non-regulated cash flow and earnings that are substantially higher than that of its peers. Furthermore, UnitedHealth had very good financial flexibility through its commercial paper program, parent company cash, subsidiary dividends and $12.5 billion credit facility.
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