OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has assigned a Long-Term Issue Credit Rating of “bbb+” to the three tranches of senior unsecured notes totaling $2.5 billion recently issued by Anthem, Inc. (Anthem) (headquartered in Indianapolis, IN) [NYSE: ANTM]. The outlook assigned to these Credit Ratings (rating) is stable. All other ratings of Anthem and its subsidiaries are unchanged. See below for details on individual tranches.
Proceeds of these notes issuances are expected to be used for general corporate purposes, including refinancing/repurchasing of debt and funding M&A.
AM Best expects that the issuance will not have a major impact on financial leverage for Anthem and will modestly increase the total amount of debt outstanding. Anthem’s financial leverage, as calculated by AM Best, was approximately 39% and interest coverage is good at over eight times and has improved through June 30, 2019. Based on discussions with management, financial leverage is expected to continue to moderate somewhat over time, through the elimination of existing debt and an increase in equity through retained earnings.
Anthem maintains very good liquidity through favorable cash flows from its various operating subsidiaries. Additional sources of contingent liquidity for the organization are Anthem’s cash and investments and $3.5 billion available under its long- and short-term credit facilities. Capitalization levels and operating results at its regulated entities continue to be strong. Anthem has reported strong operating results in 2018 and through second quarter 2019, and maintains a leading market share across many of its Blue Cross Blue Shield states.
AM Best has assigned the following Long-Term IRs with a stable outlook:
- “bbb+” on $850 million, 2.375% Senior Unsecured Notes, due 2025
- “bbb+” on $825 million, 2.875% Senior Unsecured Notes, due 2029
- “bbb+” on $825 million, 3.70% Senior Unsecured Notes, due 2049
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