AM Best Assigns Issue Credit Rating to Humana Inc.’s Senior Unsecured Notes
AM Best has assigned a Long-Term Issue Credit Rating
(Long-Term IR) of “bbb-” (Good) to Humana Inc.’s (Humana)
(headquartered in Louisville, KY) [NYSE:HUM] recently announced
$500 million of 5.75% senior unsecured notes due March 1, 2028, and
$750 million of 5.875% senior unsecured notes due March 1, 2033.
The outlook assigned to these Credit Ratings (rating) is stable.
Humana’s Long-Term Issuer Credit Rating of “bbb-” (Good), its
existing Long-Term IRs and the ratings of its insurance
subsidiaries are unchanged.
It is anticipated that the proceeds of this debt issue will be
used for repayment of debt maturities coming due in December
totaling $1 billion, as well as for general corporate purposes,
including the repayment of outstanding short-term borrowings. As a
result, AM Best expects that this issue will be neutral to Humana’s
financial leverage. Financial leverage remains somewhat elevated at
approximately 41%, as measured by AM Best, at third-quarter 2022,
including the new debt issuances. Additionally, the financial
leverage remains in line with industry peers. The total debt
outstanding also is impacted by the 2021 debt issuance to finance
the acquisition of Kindred at Home. On a long-term basis, Humana
targets a more conservative debt-to-capital ratio of below 40%.
This target is in line with its earlier announced plans to
deleverage, using a portion of the proceeds from the sale of
Kindred at Home’s hospice, which was completed in August 2021.
However, Humana’s financial flexibly remains strong with holding
company cash and subsidiary dividend capacity, as well as its
commercial paper program and revolving credit facilities totaling
$4 billion. Furthermore, operating cash flow remains very good in
2022. Humana’s operating results have been favorable with material
growth of premium and service revenues with fairly consistent
operating margins and strong return-on-equity metrics. Coverage
remains strong in the low double-digit range during 2022.
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 use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
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,
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