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FOR IMMEDIATE RELEASE
OLDWICK - MAY 14, 2020 12:29 PM (EDT)
AM Best has assigned Long-Term Issue Credit Ratings (Long-Term IR) of “a-” to UnitedHealth Group Incorporated’s (UnitedHealth Group) (Minnetonka, MN) [NYSE: UNH] recently issued $500 million 1.25% senior unsecured notes due 2026; $1.25 billion 2.0% senior unsecured notes due 2030; $1.0 billion 2.75% senior unsecured notes due 2040; $1.25 billion 2.9% senior unsecured notes due 2050; and $1.0 billion 3.125% senior unsecured notes due 2060. The outlook assigned to these Credit Ratings (ratings) is positive. UnitedHealth Group’s Long-Term Issuer Credit Rating of “a-’’, its existing Long-Term IRs and the ratings of its insurance subsidiaries are unchanged.
The proceeds from UnitedHealth Group’s newly issued senior unsecured notes are expected to be used to pay down short term borrowings, for $1.5 billion of senior unsecured notes coming due in July 2020 and for general corporate purposes. UnitedHealth Group manages its financial leverage at approximately 40% on a long-term basis. The company’s debt-to-capital ratio, as measured by AM Best, was 45% at March 31, 2020. However, this metric was elevated as UnitedHealth Group had $10 billion outstanding on its revolving credit agreements during the first quarter. The new debt issuance is expected to be neutral to UnitedHealth Group’s leverage ratio. UnitedHealth Group is an active issuer of debt with additional scheduled debt maturities totaling $1.65 billion in October 2020.
The outlook for UnitedHealth Group remains positive. The company reported strong earnings from operations for the first quarter of 2020, and has reaffirmed its full-year 2020 guidance. The organization’s earnings are well-diversified from its health insurance operations, UnitedHealthcare, and its unregulated healthcare services business, Optum. The company continues to maintain strong earnings before interest and taxes (EBIT) interest coverage, which was over 11 times for 2019. UnitedHealth Group has a history of strong operating results and benefits from its integrated healthcare model. The company’s health insurance business is well-diversified by business segment and geography, both of which offer a balance in the current operating environment due to the impact of COVID-19. UnitedHealth Group has a conservative investment portfolio with low exposure to the equity market and has strong cash flows and financial flexibility, which allows them to hold fixed-income securities to maturity. UnitedHealth Group has a nationwide presence with strong brand and market share across business segments and geographies. The company has adapted quickly to the current operating environment and is making meaningful contributions to the healthcare industry.
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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.