AM Best Assigns Issue Credit Ratings to UnitedHealth Group Incorporated’s Senior Unsecured Notes

Rhea-AI Summary

AM Best has assigned Long-Term Issue Credit Ratings of “a-” (Excellent) to UnitedHealth Group's (UNH) recent issuance of $6 billion in senior unsecured notes maturing between 2024 and 2051. The outlook is positive, indicating strong financial stability. Proceeds will be used for debt repayment and general corporate purposes. UnitedHealth Group reports a solid financial position with a 40% debt-to-capital ratio and excellent liquidity. Its diverse operations and integrated business model are expected to continue driving revenue growth.

Positive

• Assigned Long-Term Issue Credit Ratings of 'a-' (Excellent).
• Proceeds will improve financial stability by paying off outstanding debts.
• Maintains a strong liquidity position with a $12.5 billion revolving credit agreement.
• Strong revenue development and earnings growth expected to continue.

Negative

• None.

AM Best has assigned Long-Term Issue Credit Ratings (Long-Term IR) of “a-” (Excellent) to UnitedHealth Group Incorporated’s (UnitedHealth Group) (Minnetonka, MN) [NYSE: UNH] recently issued $1.0 billion .55% senior unsecured notes, due 2024; $1.0 billion 1.15% senior unsecured notes, due 2026; $1.5 billion 2.3% senior unsecured notes, due 2031; $1.5 billion 3.05% senior unsecured notes, due 2041; and $2.0 billion 3.25% senior unsecured notes, due 2051. The outlook assigned to these Credit Ratings (ratings) is positive. UnitedHealth Group’s Long-Term Issuer Credit Rating of “a-’’ (Excellent), its Long-Term IRs and the ratings of its insurance subsidiaries are unchanged.

The proceeds from this issuance are expected to be used to pay off outstanding commercial paper, $750 million of senior unsecured notes maturing in June 2021 and for general corporate purposes. UnitedHealth Group had $5.4 billion of commercial paper outstanding at March 31, 2021. AM Best anticipates the issuance will be neutral to financial leverage ratio, which measured 40% as of March 31, 2020. UnitedHealth Group manages its total debt to capital at approximately 40% and maintains strong earnings before interest and taxes interest coverage in the low double digits. Furthermore, UnitedHealth Group has excellent liquidity through parent company cash, subsidiary dividend capacity, non-regulated cash flow and a $12.5 billion revolving credit agreement.

UnitedHealth Group has reported strong revenue development and earnings growth over the past several years from its UnitedHealthcare insurance business and its Optum operations, a trend that is expected to continue over the medium term. UnitedHealth Group’s business is well-diversified and its integrated business model has performed well during the COVID-19 pandemic. Investments are predominantly investment grade fixed income securities with low volatility of income streams and asset valuation, which contribute favorably to cash flows. These favorable earnings trends are driving balance sheet strengthening of the organization, which is reflected in the positive outlook.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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FAQ

What is the recent credit rating assigned to UnitedHealth Group by AM Best?

AM Best assigned Long-Term Issue Credit Ratings of 'a-' (Excellent) to UnitedHealth Group's recently issued notes.

How much did UnitedHealth Group issue in senior unsecured notes?

UnitedHealth Group issued a total of $6 billion in senior unsecured notes.

What will UnitedHealth Group do with the proceeds from the note issuance?

The proceeds will be used to pay off outstanding commercial paper, senior unsecured notes maturing in June 2021, and for general corporate purposes.

What is UnitedHealth Group's debt-to-capital ratio?

UnitedHealth Group's debt-to-capital ratio is approximately 40%.