A.M. Best Takes Various Rating Actions on UnitedHealth Group and Its Subsidiaries.OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ) of A- (Excellent) to Great Lakes Great Lakes, group of five freshwater lakes, central North America, creating a natural border between the United States and Canada and forming the largest body of freshwater in the world, with a combined surface area of c.95,000 sq mi (246,050 sq km). Health Plan (Southfield, MI), a subsidiary of UnitedHealth Group UnitedHealth Group Incorporated NYSE: UNH is a managed health care company. It is the parent of United Healthcare, one of the largest health insurers in the U.S. It was created in 1977, as UnitedHealthCare Corporation (it renamed itself in 1998), but traces its origin to a Inc. (UnitedHealth) (NYSE NYSE See: New York Stock Exchange : UNH Unh The symbol for the element unnilhexium. ) (Minnetonka, MN). A.M. Best also upgraded the FSRs to A (Excellent) from A- (Excellent) of MAMSI MAMSI Mid-Atlantic Medical Services, Inc. MAMSI Middle-Aged Men's Snowboarding Initiative (Minnesota) Life and Health Insurance Company (MAMSI L&H), MD-Individual Practice Association (MD-IPA) and Optimum Choice Inc. (Optimum Choice) (all of Rockville, MD). Concurrently, A.M. Best has assigned issuer credit ratings (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) and has affirmed all debt ratings of all UnitedHealth subsidiaries. Additionally, A.M. Best has assigned an ICR of "aa-" to UnitedHealth's lead insurance company, United Healthcare Insurance Company (Hartford, CT). All ratings have a stable outlook. (See link below for a detailed listing of the ratings.) Great Lakes Health Plan, Michigan's second-largest Medicaid health plan, was acquired by AmeriChoice, UnitedHealth's dedicated Medicaid services business unit, in February 2004. Prior to the acquisition, the health plan had been operating under state supervision because it failed to meet capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . Earnings and capitalization have improved, and A.M. Best expects this trend to continue in the near term. MAMSI L&H, MD-IPA and Optimum Choice were entities merged into UnitedHealth as a result of the Mid-Atlantic Medical Services, Inc.'s (MAMSI) acquisition in 2004. These companies have continually demonstrated increasing profitability, thus positively impacting their respective returns on revenue and already strong capitalization. A.M. Best believes that UnitedHealth's presence in the mid-Atlantic has been strengthened by this acquisition, and in the near term, profitability should continue to positively impact the organization. UnitedHealth's historically good capital position--consisting of significant retained earnings--provides a strong financial backing to its insurance companies and health maintenance organizations (HMOs). 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. from these activities provide ample funds to support UnitedHealth's other insurance companies and HMOs and to address capital expenditures for its change initiatives and merger and acquisition activities. Remaining excess funds are generally applied towards share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. . While financial leverage has increased, A.M. Best acknowledges the excellent credit-worthiness of UnitedHealth. Strong earnings and operating cash flows provide excellent debt service coverage capable of supporting a capital structure somewhat higher than the current level of debt. A.M. Best does not expect debt to capital to exceed the 30% range in the near to medium term. A.M. Best is concerned about the recent acceleration of large scale acquisitions undertaken by UnitedHealth and the increase in goodwill as a result of these endeavors. However, A.M. Best recognizes the successful, conservative and controlled acquisition and integration strategy UnitedHealth has applied to past acquisitions. A.M. Best also acknowledges that UnitedHealth utilizes mergers and acquisitions to strengthen an existing business or to provide a new platform for future growth. Thus far, these acquisitions have been immediately accretive to earnings. For a complete list of UnitedHealth Group Inc.'s financial strength, issuer credit and debt ratings, please visit http://www.ambest.com/press/062203unitedhealth.pdf. For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. 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 http://www.ambest.com. |
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