A.M. Best Affirms Rating of Aetna Life Insurance Company.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 14, 2000 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the A (Excellent) financial strength rating of Aetna Life Insurance Company (ALIC ALIC Advanced Learning Infrastructure Consortium ALIC Arid Lands Information Center ALIC Allstate Life Insurance Company ALIC Aircraft Launcher Interface Computer ALIC Asset Limited, Income Constrained ) and removed the rating from under review with developing implications. The rating action, which follows the close of the sale of Aetna Inc.'s financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. to ING, is based upon a detailed review of the balance sheet strength and operating fundamentals of the organization's core health care and employee benefits businesses. In addition, A.M. Best has taken rating actions on Aetna Inc.'s many core subsidiary and HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, affiliate companies. Yesterday, Aetna Inc. completed the sale of its financial services and international business to the ING Group ING Groep N.V. (NYSE: ING, Euronext: INGA) (known as ING Group) is a financial institution of Dutch origin offering banking, insurance and asset management services. ING once stood for Internationale Nederlanden Groep. . The sale transaction was valued at approximately $7.7 billion consisting of approximately $5 billion in cash and the assumption of $2.7 billion in long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . Immediately prior to the close, Aetna Inc. spun off Aetna U.S. Healthcare U.S. Healthcare is a now-defunct healthcare company. The logo had an apple. The merger with Aetna In 1996, the company merged with Aetna, calling it Aetna U.S. Healthcare. The U.S. Healthcare apple logo was next to the Aetna name, and U.S. Healthcare under it. U.S. Inc. (AUSHC AUSHC Aetna US Healthcare )--a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. and parent holding company to the organization's core group life and health operating affiliates--to its existing shareholders. Concurrent with the close, AUSHC was renamed Aetna Inc. The new Aetna Inc. (Aetna) includes the organization's HMO, Group Insurance, Large Case Pension and Aetna Global Benefits operations. ALIC is the group's lead life and health insurance company, and is the primary provider of indemnity health and group non-medical insurance products throughout the enterprise. While A.M. Best believes the transaction somewhat reduces the diversity and stability of earnings for the organization, Aetna continues to be one of the predominant employee benefits organization in the U.S. with a sound balance sheet and strong operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. . In addition, A.M. Best notes that as a result of the transaction, Aetna's financial leverage will improve. ALIC's rating reflects its role as the core, group life and health insurance company of Aetna Inc. and the leading market presence of the Aetna organization in the employee benefits marketplace. Aetna is the nation's largest health care benefits company, with 19.2 million health members, 14.5 million dental members and 11.4 million group life insurance members as of September 30, 2000. In addition to the organization's large membership base, other competitive strengths include: broad geographic reach, extensive provider networks and information technology expertise. The rating also acknowledges ALIC's historical trend of strong earnings, excellent liquidity and strong risk-adjusted capitalization. ALIC is one of the top five domestic providers of group life, disability and long term care products. ALIC's integrated product strategy, its national scope and strong brand recognition, and its ability to provide a full array of employee benefits products and services, allow the company to compete favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. in the mid-size and large case markets. Offsetting these strengths are the organization's substantial level of goodwill and other intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , relative to its capital base, as well as integration challenges facing Aetna Inc. related to its acquisition of Prudential Healthcare. Known for its aggressive acquisition strategy, Aetna Inc. has accumulated approximately $9 billion of goodwill ensuing en·sue intr.v. en·sued, en·su·ing, en·sues 1. To follow as a consequence or result. See Synonyms at follow. 2. To take place subsequently. from its acquisitions of U.S. Healthcare in 1995, NYL NYL Nylon NYL New York Life NYL New York Liberty NYL New York Lottery NYL National Youth Leadership NYL MCAS Yuma (airport code) Care Health Plans in 1998 and Prudential Healthcare in 1999. Subsequently, A.M. Best is somewhat concerned with the quality of the capital structure of Aetna Inc. due to the level of intangible assets on its balance sheet. Additionally, A.M. Best acknowledges the integration issues within Aetna's health care business following the acquisitions, including: overlapping networks, pricing differentials and assimilation Assimilation The absorption of stock by the public from a new issue. Notes: Underwriters hope to sell all of a new issue to the public. See also: Issuer, Underwriting Assimilation of personnel. Despite these significant challenges, Best notes that the health business is profitable, and the Aetna organization has implemented several strategic initiatives to improve the performance of the health business. In addition, Best recognizes the strong, stable contributions to overall earnings made by Aetna's non-medical businesses. A.M. Best has affirmed the A- ratings on the following core HMO affiliates of Aetna Inc. and removed them from under review:
- Prudential Healthcare of Texas
- Prudential Healthcare of California
- Aetna U.S. Healthcare of California
- Aetna U.S. Healthcare of Florida
- Aetna U.S. Healthcare of Ohio
- Prudential Healthcare of Georgia
- Aetna U.S. Healthcare of Georgia
- Aetna U.S. Healthcare of Connecticut
- Aetna U.S. Healthcare of Arizona
- Aetna U.S. Healthcare of Illinois
- Aetna U.S. Healthcare of Colorado
- Aetna U.S. Healthcare of Louisiana
- Aetna U.S. Healthcare of the Carolinas
- Aetna U.S. Healthcare of Massachusetts
- Aetna U.S. Healthcare of Maine
- Aetna U.S. Healthcare of Washington
- Aetna U.S. Healthcare of Tennessee
- Aetna U.S. Healthcare of New Hampshire
- Prudential Healthcare of Connecticut
A.M Best has affirmed the A ratings on the following core
subsidiaries of Aetna Inc. and removed them from under review:
- U.S. Healthcare of Pennsylvania
- U.S. Healthcare of New York
- Aetna U.S. Healthcare of New Jersey
- Aetna U.S. Healthcare of Maryland
- Aetna U.S. Healthcare of Texas
- Aetna U.S. Healthcare of North Texas
- NYL Care Health Plan of New Jersey
A.M. Best has raised the ratings of the following core
subsidiaries of Aetna Inc. to A (Excellent) from A- (Excellent):
- Corporate Health Insurance Co.
- U.S Healthcare Insurance Company of Connecticut
- U.S. Healthcare Insurance Company of New York
A.M. Best has lowered the ratings of the following core
subsidiaries of Aetna Inc. to A- (Excellent) from A (Excellent) and
removed them from under review:
- Aetna U.S. Healthcare of Delaware
- Prudential Healthcare of New York
A.M. Best has assigned initial ratings of A- (Excellent) to the
following core subsidiaries of Aetna Inc.:
- U.S. Healthcare of Missouri
- Aetna U.S. Healthcare of Oklahoma
- Aetna U.S. Healthcare of Michigan
A.M. Best has assigned an initial rating of A (Excellent) to Prudential Dental Maintenance Organization. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion