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) (NYSE: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 Concurrently, AM Best has withdrawn the ratings on the previous shelf registration.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.

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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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