AM Best Assigns Indicative Issue Credit Ratings to Humana Inc.’s New Shelf Registration

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has assigned indicative Long-Term Issue Credit Ratings of “bbb-” to senior unsecured issues, “bb+” to subordinated issues and “bb” to preferred stock to the recently filed shelf registration of Humana Inc. (Humana) (headquartered in Louisville, KY) [NYSE: HUM]. The outlook assigned to these Credit Ratings (ratings) is positive. Concurrently, AM Best has withdrawn the ratings on the previous shelf registration. The existing ratings of Humana and its insurance subsidiaries are unchanged.

Financial leverage, as calculated by AM Best, was at 33.3% at year-end 2020, within Humana’s targets. The leverage had increased in the first quarter 2020 following Humana’s issuance of $1.1 billion of debt, which had increased financial leverage temporarily to 39.2%. Earnings before interest and taxes interest coverage is strong at approximately 17 times earnings at year-end 2020. AM Best expects Humana’s coverage ratio to remain in a range above 10 times earnings in the near term. Additionally, 2020 net operating earnings results were very strong, reflecting strengthening Medicare Advantage membership gains in Humana’s core business.

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