Best’s News & Research Service - October 27, 2022 10:40 AM (EDT)
AM Best Assigns Issue Credit Ratings to UnitedHealth Group Incorporated’s New Senior Unsecured Notes
- October 27, 2022 10:40 AM (EDT)
Oldwick //BestWire// - AM Best has assigned Long-Term Issue Credit Ratings (Long-Term IRs) of “a” (Excellent) to UnitedHealth Group Incorporated’s (UnitedHealth Group) (Minnetonka, MN) [NYSE: UNH] recently issued $500 million 5.0% senior unsecured notes, due 2024; $750 million 5.15% senior unsecured notes, due 2025; $1 billion 5.25% senior unsecured notes, due 2028; $1.25 billion 5.3% senior unsecured notes, due 2030; $2.0 billion 5.35% senior unsecured notes, due 2033; $2.0 billion 5.875% senior unsecured notes, due 2053 and $1.5 billion 6.05% senior unsecured notes, due 2063. The outlook assigned to these Credit Ratings (ratings) is stable. UnitedHealth Group’s Long-Term Issuer Credit Rating of “a” (Excellent), its Long-Term IRs and the ratings of its insurance subsidiaries are unchanged.
The proceeds from the issuance will be used for general corporate purposes, including, refinancing short-term debt that was used to finance the Change Healthcare acquisition, valued at approximately $14 billion, which closed on Oct. 3, 2022. The company had no commercial paper outstanding at Sept. 30, 2022, but subsequently used commercial paper to fund the above-mentioned acquisition. Following the repayment of commercial paper and upcoming maturities, AM Best anticipates the issuance to increase the group’s adjusted financial leverage ratio above 40% at year-end 2022.
UnitedHealth Group has managed its financial leverage in the 40% range over the long term, with experiencing fluctuations following sizeable acquisitions. As of Sept. 30, 2022, the group’s financial leverage was 38%. The organization maintains strong earnings before interest and taxes interest coverage in the low double digits. UnitedHealth Group has excellent liquidity through parent company cash, insurance subsidiary dividend capacity, non-regulated cash flow, commercial paper program and a $15 billion revolving credit agreement. A steady stream of revenue development and earnings growth have resulted in a solid operating performance trend over the past several years underpinned by UnitedHealth Group’s operations at UnitedHealthcare Insurance and at Optum. The organization expects this growth to continue over the medium term.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.