A.M. Best Assigns Issue Credit Ratings to Humana Inc.’s Senior Unsecured Notes

OLDWICK, N.J.--()--A.M. Best has assigned Long-Term Issue Credit Ratings of “bbb-” to the recently marketed $600 million 3.95% senior unsecured notes due 2027 and the $400 million 4.8% senior unsecured notes due 2047 of Humana Inc. (Humana) (headquartered in Louisville, KY) [NYSE:HUM]. The outlooks assigned to these Credit Ratings (ratings) are stable. All existing ratings for Humana and its subsidiaries are unchanged.

A.M. Best expects Humana to utilize the net proceeds for general corporate purposes, and the unused funds will be invested in short-term interest bearing obligations. While the company’s pro-forma financial leverage is expected to increase marginally to approximately 31% from 27% at year-end 2016, it is still below that of several of its peers. A.M. Best expects Humana’s debt-to-capital ratio to be managed to a range of 30 to 35% by year-end 2017. The company’s earnings before interest and taxes (EBIT) interest coverage is expected to remain at approximately eight times, including the new debt issuance. Humana’s financial leverage and EBIT interest coverage are within A.M. Best’s guidelines for its current ratings.

The ratings also are indicative of Humana’s strong business profile, favorable operating gains primarily driven by its robust Medicare product profitability and its ability to generate excellent cash flows from its regulated subsidiaries. Offsetting the favorable attributes are the operating losses from its individual commercial business at the health plan subsidiaries, high utilization of its closed block of long-term care business and a necessary reserve strengthening at year-end 2016, and Humana’s high concentration of government sponsored business premium.

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.

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

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Wayne Kaminski, +1 908-439-2200, ext. 5061
Senior Financial Analyst
wayne.kaminski@ambest.com
or
Christopher Sharkey, +1 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Sally Rosen, +1 908-439-2200, ext. 5280
Senior Director
sally.rosen@ambest.com
or
Jim Peavy, +1 908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best
Wayne Kaminski, +1 908-439-2200, ext. 5061
Senior Financial Analyst
wayne.kaminski@ambest.com
or
Christopher Sharkey, +1 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Sally Rosen, +1 908-439-2200, ext. 5280
Senior Director
sally.rosen@ambest.com
or
Jim Peavy, +1 908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com