Best’s News & Research Service - October 27, 2022 04:28 PM (EDT)
AM Best Assigns Issue Credit Ratings to Elevance Health, Inc.’s New Senior Unsecured Notes
- October 27, 2022 04:28 PM (EDT)
Oldwick //BestWire// - AM Best has assigned a Long-Term Issue Credit Rating (Long-Term IR) of “bbb+” (Good) to Elevance Health, Inc.’s (Elevance Health) (Indianapolis, IN) newly issued $400 million, 5.35 % senior unsecured notes, due 2025; $650 million, 5.5% senior unsecured notes, due 2032; and $750 million, 6.1% senior unsecured notes, due 2052. The outlook assigned to these Credit Ratings (ratings) is stable.
The proceeds from the issuance are intended to be utilized for general corporate purposes, including repayment of an upcoming debt maturity of Elevance Health’s $750 million, 2.95% senior unsecured notes, due in December 2022, as well as $1 billion, 3.3% senior unsecured notes, due in January 2023. Elevance Health’s proforma adjusted financial leverage is in line with its target of 40% and interest coverage has been good at over 10 times. In addition, Elevance Health continues to maintain strong liquidity through subsidiary dividends and access to a $4 billion revolving credit facility and a $4 billion commercial paper program, as well as access to Federal Home Loan Bank (FHLB) borrowings through its insurance subsidiaries. Elevance Health had $675 million in outstanding commercial paper and $265 million of FHLB borrowing as of Sept. 30, 2022. There were no borrowings outstanding at the company’s credit facility. Cash flows from operations have been very good over the last three years and exceeded net income levels.
The company continued to report double-digit revenue growth and strong earnings through the first nine months of 2022. Operating revenue growth was primarily driven by premium rate increase along with enrollment gains from government programs. Overall earnings were impacted by better-than-expected medical underwriting results offset by higher operating expenses in support of business expansion. Elevance Health continues to benefit from its leading market position supported by its Blue Cross Blue Shield-branded entities in 14 states. Furthermore, Elevance Health continues its efforts toward business diversification, including more focus on government programs and nonregulated operations.
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