A.M. Best Assigns Ratings to Aetna Inc.’s Senior Notes

OLDWICK, N.J.--()--A.M. Best has assigned debt ratings of “bbb+” to the recently marketed $375 million 2.20% senior unsecured notes due 2019 and the $375 million 4.75% senior unsecured notes due 2044 of Aetna Inc. (Aetna) (Hartford, CT) [NYSE: AET]. The outlook assigned to both ratings is stable. All existing ratings for Aetna and its subsidiaries are unchanged.

A.M. Best expects Aetna to utilize the proceeds, along with other available resources, to redeem all of its 6.00% senior notes that are due in 2016. While the company’s pro-forma financial leverage is expected to marginally increase, A.M. Best expects Aetna’s debt-to-capital ratio to be managed back to or slightly above 36% by year-end 2014. The company’s earnings before interest and taxes (EBIT) interest coverage is expected to remain above 10 times, including the new debt issuance. Aetna’s financial leverage and EBIT interest coverage are within A.M. Best’s guidelines for its current ratings.

The ratings also are indicative of Aetna’s strong earnings, diverse business profile, its ability to generate excellent cash flows, including non-regulated cash flow, and its steady stream of dividends from its regulated subsidiaries.

Offsetting these favorable rating factors are competitive industry pressures and Aetna’s elevated goodwill-to-equity ratio. The heightened goodwill is attributable to a large acquisition made in 2013, which contributed to Aetna’s strategic business growth.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Wayne Kaminski, 908-439-2200, ext. 5061
Senior Financial Analyst
wayne.kaminski@ambest.com
or
Sally Rosen, 908-439-2200, ext. 5280
Assistant Vice President
sally.rosen@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Sharing

Contacts

A.M. Best
Wayne Kaminski, 908-439-2200, ext. 5061
Senior Financial Analyst
wayne.kaminski@ambest.com
or
Sally Rosen, 908-439-2200, ext. 5280
Assistant Vice President
sally.rosen@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com