A.M. Best Assigns Issue Credit Ratings to Humana Inc.’s Senior Unsecured Notes
March 16 2017 - 3:37PM
Business Wire
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20170316006248/en/
A.M. BestWayne Kaminski, +1 908-439-2200, ext.
5061Senior Financial
Analystwayne.kaminski@ambest.comorChristopher
Sharkey, +1 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorSally Rosen,
+1 908-439-2200, ext. 5280Senior
Directorsally.rosen@ambest.comorJim Peavy, +1
908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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