AM Best Assigns Issue Credit Ratings to Anthem, Inc.’s New Senior Unsecured Notes

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has assigned a Long-Term Issue Credit Rating (Long-Term IR) of “bbb+” (Good) to Anthem Inc.’s (Anthem) (Indianapolis, IN) newly issued $600 million 4.1 % senior unsecured notes due 2032 and $700 million 4.55% senior unsecured notes due 2052. The outlook assigned to these Credit Ratings (ratings) is stable.

The proceeds are expected to be utilized for general corporate purposes, including repayment of an upcoming debt maturity of $850 million 3.125% senior unsecured notes due in May 2022.

The new issuance will increase Anthem’s financial leverage to slightly above 40%, compared with approximately 39% at year-end 2021. The company’s interest coverage remains good at over nine times. Anthem’s management expects its financial leverage to moderate slightly by year-end 2022 and remain within the target of 40%. Anthem continues to maintain strong liquidity through subsidiary dividends and access to a $4 billion revolving credit facility and a $3.5 billion commercial paper program, as well as access to Federal Home Loan Bank (FHLB) borrowings through its insurance subsidiaries. Anthem had $525 million in outstanding commercial paper and $275 million of FHLB borrowing as of March 31, 2022. There were no borrowings outstanding at the company’s credit facility. Cash flows from operations have been very good over the last three years and exceeded net income levels.

Anthem continued to report double-digit revenue growth and strong earnings in 2021 and through the first quarter of 2022. Both revenue and earnings growth was driven primarily by expansion and improved margins in government programs. Anthem continues to benefit from its leading market position supported by its Blue Cross Blue Shield-branded entities in 14 states. Anthem continues its efforts toward business diversification, including more focus on government programs and non-regulated operations.

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