A.M. Best Takes Various Rating Actions on Anthem Inc.OLDWICK, N.J. -- 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 financial strength ratings of Anthem anthem [ultimately from antiphon], short nonliturgical choral composition used in Protestant services, usually accompanied and having an English text. The term is used in a broader sense for "national anthems" and for the Latin motets still used occasionally in Inc.'s (Anthem) (NYSE NYSE See: New York Stock Exchange : ATH) (Indianapolis, IN) life/health insurance and health maintenance organization (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, ) subsidiaries. (See the address below for a detailed listing.) Concurrently, A.M. Best has affirmed the current debt ratings and assigned a rating to Anthem's issuance of $200 million 3.5% senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. notes, due 2007. Proceeds from the sale of the notes primarily consist of an outstanding aggregate principal amount of $190 million 4.655% subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before due 2006, which Anthem will cancel and retire. The outlook for the financial strength ratings is stable, the outlook for the existing debt ratings has been revised to stable from negative and the outlook for the new debt is stable. These rating actions follow A.M. Best's analysis of the proposed merger between Anthem and WellPoint Health Networks Inc.'s (WellPoint) (NYSE: WLP WLP WebLogic Portal (Bea Systems) WLP Wafer Level Packaging WLP Women's Learning Partnership (Bethesda, MD) WLP Workplace Learning & Performance WLP World Library Partnership, Inc. ) (Thousands Oaks, CA), should it be completed, as well as the debt issuance described above. The analysis includes the proposed financing required to complete the transaction, current and future expected earnings of the combined companies and the potential for synergies created in the new organization. The combined entity should be able to leverage the strengths of both operations, which should allow it to continue to grow in its existing markets, expand the geographical diversity and recognize synergies and cost savings. A.M. Best also recognizes the financial strength and strong earnings potential of Anthem and its market leadership in substantially all of its operating regions A.M. Best also considers Anthem's track record of successful integration. In this respect, the ratings are not expected to change should the merger with WellPoint not be completed. However, A.M. Best remains concerned about the quality of the combined entities' capital, should the merger be completed. While the debt to capital ratio is expected to remain within industry norms of 20%-25%, the magnitude of the amount of borrowings needed for the transaction, combined with the large increase of intangibles, weakens the quality of its capital structure. For a complete list of the financial and debt ratings of Anthem Inc. visit www.ambest.com/press/082602anthem.pdf. For current Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , independent data and analysis on more than 1,050 health companies and more than 130 HMO industry composites, please visit http://www.ambest.com/health/. For a list of A.M. Best's debt ratings, please visit http://www.ambest.com/debtratings/. 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