AM Best Assigns Indicative Issue Credit Ratings to UnitedHealth Group Incorporated's New Shelf Registration

AM Best has assigned indicative Long-Term Issue Credit Ratings of "a-" to senior unsecured issues, "bbb+" to subordinated issues and "bbb" to preferred stock to the recently filed shelf registration of UnitedHealth Group Incorporated (UnitedHealth Group) (Minnetonka, MN) UNH. 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 Concurrently, AM Best has withdrawn the ratings on the previous shelf registration.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 UnitedHealth Group and its insurance subsidiaries are unchanged.

UnitedHealth Group filed a shelf registration for securities on Feb. 24, 2020, as its previous shelf registration had expired. UnitedHealth Group manages its financial leverage at approximately 40% on a long term basis. Debt to capital, as measured by AM Best, was 38% at year-end 2019. UnitedHealth Group is an active issuer of debt with scheduled debt maturities totaling $3.1 billion for 2020. Furthermore, its acquisition of specialty pharmacy manager, Diplomat Pharmacy, Inc., closed on Feb. 10, 2020. However, the company continues to report strong and growing earnings, and its unregulated cash flow from its Optum operations are material. As a result, AM Best expects that there will no material change in financial leverage for the organization. The company maintains strong earnings before interest and taxes interest coverage, which was over 11 times for 2019. Nevertheless, the company has a high level of goodwill and intangible assets; however, the ratio of goodwill and intangibles to equity has remained stable over the past two years at 126%, and there is no history of material write-downs.

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