AM Best Affirms Credit Ratings of UnitedHealth Group Incorporated and Its UnitedHealthcare Subsidiaries

December 18, 2018

OLDWICK, N.J.--(BUSINESS WIRE)--Dec 18, 2018--AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a+” for the majority of the UnitedHealthcare insurance subsidiaries of UnitedHealth Group Incorporated (UnitedHealth Group) (Minnetonka, MN) (NYSE:UNH). Concurrently, AM Best has affirmed the Long-Term ICR of “a-” and the Long-Term and Short-Term Issue Credit Ratings (Long-Term; Short-Term IR) of UnitedHealth Group. The outlook of these Credit Ratings (ratings) is stable.

In addition, AM Best has upgraded the Long-Term ICR to “a+” from “a” and affirmed the FSR of A (Excellent) for Dental Benefit Providers of California, Inc. (San Francisco, CA), Nevada Pacific Dental (Las Vegas, NV) and National Pacific Dental, Inc. (Richardson, TX). The outlook of these ratings is stable. (See link below for a detailed listing of the companies and ratings.)

The ratings reflect UnitedHealthcare’s balance sheet strength, which AM Best categorizes as strong, as well as its strong operating performance, very favorable business profile and very strong enterprise risk management (ERM).

UnitedHealthcare has maintained a stable level of risk-adjusted capital. Although its insurance subsidiaries pay significant dividends to the holding company, earnings from operations are consistently favorable. Furthermore, UnitedHealth Group manages subsidiary capital and holding company cash on a quarterly basis to ensure that capital needs at the insurance entities are met. Invested assets for UnitedHealthcare are held predominantly in high quality fixed income securities. Liquidity is very good based on strong cash flow from operations supplemented by credit facilities with the parent company.

Operating performance continues to be strong, with steady premium growth and favorable operating earnings reported. Top line growth has been consistent over the years but most recently the main driver has been UnitedHealthcare’s Medicare business. Increased earnings from operations are being driven by increased revenues, appropriate pricing, good medical cost management and operational efficiencies. The company also benefits from the services, technology and innovations from its affiliate, Optum. Operating margins have remained stable with low volatility.

UnitedHealthcare has a nationwide presence and formidable market share in all market segments, especially in the Medicare business. The company has a large membership base with domestic enrollment of approximately 43 million members. Medicare business has been the primary driver of enrollment growth during 2018. A contributing factor to this growth is the company’s long-standing relationship with AARP.

UnitedHealth Group has a comprehensive ERM program that it deploys throughout the organization. This ERM framework is mature, governance is well-established and the company utilizes advanced stress testing and scenario testing, as well as economic capital modeling. ERM is incorporated within business decision making and strategic planning.

UnitedHealth Group continues to report strong and diversified earnings. Earnings growth is being reported for its UnitedHealthcare health insurance business, as well as from Optum, the company’s health services operations. UnitedHealthcare’s increased earnings are driven by premium growth and stable operating margins. Optum’s non-regulated earnings and operating cash flows have consistently shown a good level of growth generated by both new business and acquisitions with margin expansion.

UnitedHealth Group has favorable financial flexibility through its dividends from insurance subsidiaries, non-regulated earnings from Optum, substantial operating cash flows and a $10 billion credit facility. However, financial leverage is elevated and goodwill and intangible assets is high due to the company’s history of acquisitions. Financial leverage has moderated over the past few years and was at 38.3% as of the third quarter of 2018. This metric is expected to increase modestly for year-end 2018 due to a recent debt issue but will be within the company’s plan to manage financial leverage at approximately 40%. Goodwill and intangible assets to equity was at 130% at Sept. 30, 2018; however, the company has not had any material write-downs. UnitedHealth Group’s earnings before interest and taxes (EBIT) interest coverage remains strong at over 12 times based on solid earnings from operations.

A complete listing of UnitedHealth Group Incorporated and its subsidiaries’ FSRs, Long-Term ICRs and Long-Term and Short-Term Issue Credit Ratings also is available.

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 web page. For additional information regarding the use and limitations of Credit Rating opinions, please view . For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view .

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit for more information.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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CONTACT: Bridget Maehr

Associate Director

+1 908 439 2200, ext. 5321

bridget.maehr@ambest.comSally Rosen

Senior Director

+1 908 439 2200, ext. 5280

sally.rosen@ambest.comChristopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.comJim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644





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PUB: 12/18/2018 02:32 PM/DISC: 12/18/2018 02:32 PM


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