Press Release - OCTOBER 18, 2017
A.M. Best Assigns Issue Credit Ratings to UnitedHealth Group Incorporated’s Forthcoming New Senior Unsecured Notes
FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 18, 2017
A.M. Best anticipates that these issuances will be within UnitedHealth’s plan for its financial leverage to be approximately 40% by the end of 2017. Furthermore, UnitedHealth maintains good interest coverage of 12 times driven by the strong operating earnings from its UnitedHealthcare and Optum platforms. Nevertheless, UnitedHealth’s ratio of goodwill plus intangibles to shareholders’ equity remains high due to the company’s history of acquisition activity and exceeds 130%, which puts pressure on UnitedHealth’s balance sheet. However, the company has no history of sizeable goodwill write-downs and recent acquisitions, including Catamaran Corporation, have had a favorable impact on revenues and earnings.
UnitedHealth has a good level of financial flexibility, which is supported by its commercial paper program, parent company cash, subsidiary dividends and credit facility. Moreover, UnitedHealth’s non-regulated operating earnings and cash flows are materially higher than that of its peers. The company’s net income increased significantly over the past two years driven by enrollment growth and margin expansion for its core UnitedHealthcare business, and the strong and growing earnings contribution from the Optum operations. Consolidated earnings are anticipated to remain strong through year-end 2017.
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