OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned an issue rating of “bbb+” to the recently issued senior unsecured notes of UnitedHealth Group Incorporated (UnitedHealth) (Minnetonka, MN) [NYSE:UNH]. The outlook assigned to all ratings is stable. The existing ratings of UnitedHealth and its subsidiaries are unchanged. (See below for a detailed list of the issue ratings.)
A.M. Best expects the proceeds from this offering to be used by UnitedHealth for the completion of the acquisition of Catamaran Corporation (Catamaran) [NASDAQ: CTRX].
Following these issuances, UnitedHealth's financial leverage has increased significantly and A.M. Best expects it to exceed 45% at year-end 2015. This is somewhat mitigated by UnitedHealth's strong interest coverage, which is expected to decline slightly but still remain greater than 10 times. In addition, UnitedHealth plans to bring the financial leverage to lower than 40% by the end of 2017. UnitedHealth's ratio of goodwill plus intangibles to shareholders' equity exceeded 100% at year-end 2014 and A.M. Best expects that this ratio will increase to a range of 128%-130% as a result of the Catamaran transaction, putting additional pressure on UnitedHealth’s balance sheet. However, there is no history of sizeable goodwill write-downs at UnitedHealth.
UnitedHealth’s financial flexibility is supported by its commercial paper program, parent company cash, subsidiary dividends and credit facility. In addition, the Catamaran acquisition is likely to further enhance UnitedHealth’s already strong and growing stream of income from its profitable non-regulated businesses that remains much higher compared with its peers.
The following issue ratings have been assigned:
UnitedHealth Group Incorporated—
-- “bbb+” on $750 million floating rate senior unsecured notes due 2017
-- “bbb+” on $750 million 1.45% senior unsecured notes due 2017
-- “bbb+” on $1.5 billion 1.9% senior unsecured notes due 2018
-- “bbb+” on $1.5 billion 2.7% senior unsecured notes due 2020
-- “bbb+” on $1.0 billion 3.35% senior unsecured notes due 2022
-- “bbb+” on $2.0 billion 3.75% senior unsecured notes due 2025
-- “bbb+” on $1.0 billion 4.625% senior unsecured notes due 2035
-- “bbb+” on $2.0 billion 4.75% senior unsecured notes due 2045
This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.
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