Press Release - DECEMBER 20, 2017
A.M. Best Assigns Issue Credit Ratings to Humana Inc.’s Senior Unsecured Notes
FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 20, 2017
A.M. Best expects Humana to utilize the net proceeds to fund the redemption of notes: $500 million and $300 million with maturity dates of June 15, 2018, and Aug. 1, 2018, respectfully. A.M. Best expects Humana’s financial leverage to remain below 35% at year-end 2017. Additionally, A.M. Best expects Humana’s earnings before interest and taxes (EBIT) interest coverage to be well above 10 times earnings.
The ratings reflect Humana’s strong earnings trend, primarily driven by its senior products, robust cash from operations and strong interest coverage. Humana has a solid business profile, which will improve further following the announced sale of long-term care business. Near term earnings reflect the strong earnings results from Humana’s Medicare Advantage business, which has been a source of growth for a number of years. Cash flows from operations for the nine-month period ending Sept. 30, 2017, totaled approximately $7.0 billion. The results partially reflect the timing of an early $3.1 billion premium payment from CMS and the inclusion of the break-up fee of $1.0 billion from the termination of the proposed Aetna merger.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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