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

A.M. Best has assigned indicative Long-Term Issue Credit Ratings of “bbb-” to senior unsecured notes, “bb+” to subordinated debt and “bb” to preferred stock, to the recently filed universal shelf registration of Humana Inc. (Humana) (headquartered in Louisville, KY) [NYSE: HUM]. The outlook assigned to these Credit Ratings (ratings) is stable. Concurrently, A.M. Best has withdrawn the ratings on the previous shelf registration. The existing ratings of Humana and its subsidiaries are unchanged.

Humana’s debt-to-capital leverage is approximately 33% at year-end 2017, where it is expected to remain in a range below 35% over the medium term. The ratio had increased following Humana’s recent issuance of $800 million of debt, and the proceeds were to be used to fund the redemption of expiring notes in 2018. Earnings before interest and taxes interest coverage is approximately 17 times earnings at year-end 2017. A.M. Best expects Humana’s coverage ratio to remain in a range above 10 times earnings in the near term. Additionally, in 2017, net operating earnings results of $2.4 billion were partially reflective of the $1.0 billion break-up fee paid by Aetna Inc., in addition to very strong Medicare Advantage results and favorable results from its residual individual commercial line of business.

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. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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