Fitch Maintains Rating Watch Negative for UnitedHealth Group.CHICAGO -- Fitch is currently maintaining all ratings 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 (UNH Unh The symbol for the element unnilhexium. ) on Rating Watch Negative. A list of Fitch's ratings on UNH can be found below. UNH filed a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. with the Securities and Exchange Commission this morning disclosing several new developments related to ongoing issues involving its stock option granting practices. The disclosures included the following: --The company expects to recognize non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for stock-based compensation expense which are likely to be material, and significantly greater than the estimate contained in its 10-Q for the first quarter of 2006. The company will also incur higher than previously estimated additional cash charges resulting from potential tax liabilities associated with improper accounting for the stock-based compensation. --The company has determined that it had a material weakness in internal control over financial reporting relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc stock option plan administration and accounting for and disclosure of stock option grants as of December 31, 2005. --Patrick Erlandson, the company's former Chief Financial Officer, had resigned effective yesterday, and was replaced by G. Mike Mikan, who has performed various roles within the company and its subsidiaries, most recently Senior Vice President of Finance at UNH. Despite the company's disclosure that the restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of earnings will be material, Fitch notes that this is a non-cash charge that does not affect overall shareholder capital or the company's ability to service its debt obligations. Although the additional taxes, interest and penalties related to the accounting adjustment will certainly have cash flow implications, given management estimates, Fitch does not consider the amount to be sufficient to significantly impede the company's ability to meet its obligations. Fitch continues to consider UNH's cash flow coverage, although adversely affected by issues surrounding the company's stock option granting practices, to be more than sufficient to justify the company's current ratings given its financial leverage. Fitch considers the company's disclosure of a material weakness under Sarbanes-Oxley 404 to be troubling. Clearly, such weaknesses in governance can tarnish tarnish, n 1. surface discoloration or loss of luster by metals. Under oral conditions, it often results from hard and soft deposits. 2. a chemical process by which a metal surface is discolored or its luster destroyed. a company's image, sometimes adversely affecting the company's ability to attract and retain business, and often lead to difficulties similar to those being faced by UNH's management today. However, although too late to aid the company in heading off its current difficulties, Fitch views recent and ongoing changes within the company's governance practices as important in bolstering the company's governance going forward. Fitch originally placed UNH's ratings on Rating Watch Negative on August 30, 2006, following the company's announcement that it had received a notice of default from a group of persons claiming to hold certain of its debt securities alleging a violation of UNH's indenture governing its debt securities. The company has stated that it believes it is not in default. The company received a purported notice of acceleration on November 2, 2006, from the holders who previously sent the notice of default that purports to declare an acceleration of the Company's 5.80% Notes due March 15, 2036 as a result of the Company's not filing its quarterly report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended June 30, 2006. Given developments to date, Fitch is working under the assumption that this issue will be tied up in litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. for some time. Despite the recent departure of several senior executives and board members, Fitch continues to view UNH's management team as being strong in breadth and depth. In addition, Fitch acknowledges that UNH's operating fundamentals remain very strong, and does not believe that the developments announced in recent weeks significantly diminish the company's ability to meet its debt and policyholder obligations. Fitch will continue to closely monitor UNH's operating performance and other issues that have developed since questions surrounding the company's options granting practices were disclosed, and will take appropriate rating action as conditions warrant. Fitch's ratings on UnitedHealth reflect the inherent strength and diversity of the company's health services health services Managed care The benefits covered under a health contract operations, good balance sheet fundamentals, very strong earnings track record, and excellent cash flow. UnitedHealth has a balanced mix of risk-based and fee-based businesses, which have contributed significantly to the stability of the company's financial performance. The ratings also consider the competitive pressures in several of the company's markets driven by price competition, increasing medical cost trends, and the evolving regulatory and political environment affecting the health insurance and managed care industry. Fitch's existing ratings on UnitedHealth and its operating subsidiaries are listed below: UnitedHealth Group, Inc. --Long-term Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) 'A+' --Floating-Rate Senior notes due 2009 at 'A'; --5.250% Senior notes due Mar. 15, 2011 at 'A'; --5.375% Senior notes due Mar. 15, 2016 at 'A'; --5.800% Senior notes due Mar. 15, 2036 at 'A'. --3.375% senior notes due Aug. 15, 2007 at 'A'; --5.200% senior notes due Jan. 17, 2007 at 'A'; --3.300% senior notes due Jan. 30, 2008 at 'A'; --3.750% senior notes due Feb. 10, 2009 at 'A'; --4.125% senior notes due Aug. 15, 2009 at 'A'; --4.875% senior notes due April 1, 2013 at 'A'; --4.750% senior notes due Feb. 10, 2014 at 'A'; --5.000% senior notes due Aug. 15, 2014 at 'A'; --4.875% Senior notes due March 15, 2015 at 'A' -- Commercial Paper at 'F1'. United HealthCare Insurance Company United HealthCare Insurance Company of Illinois United HealthCare Insurance Company of Ohio United HealthCare Insurance Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of --Insurer financial strength at 'AA-'. United HealthCare of Florida, Inc. United HealthCare of Ohio, Inc. United HealthCare of the Midwest, Inc. UnitedHealthcare of North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. , Inc. UnitedHealthcare of New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. , Inc. UnitedHealthcare of Illinois, Inc. UnitedHealthcare of Wisconsin, Inc. United HealthCare of Alabama, Inc. United HealthCare of Kentucky, Ltd. UnitedHealthcare of New York, Inc. United HealthCare of Georgia, Inc. UnitedHealthcare of New Jersey, Inc. United HealthCare of the Midlands, Inc. United HealthCare of Arkansas, Inc. United HealthCare of Mississippi, Inc. MAMSI MAMSI Mid-Atlantic Medical Services, Inc. MAMSI Middle-Aged Men's Snowboarding Initiative (Minnesota) Life and Health Insurance Company AmeriChoice of New York, Inc. Optimum Choice, Inc. MD-Individual Practice Association, Inc. Oxford Health Insurance, Inc. Oxford Health Plans of Connecticut, Inc. Oxford Health Plans of New Jersey, Inc. Oxford Health Plans of New York, Inc. --Insurer financial strength (IFS) at 'A+'. United HealthCare of Texas, Inc. United HealthCare of Arizona, Inc. UnitedHealthcare of the Mid-Atlantic, Inc. United HealthCare of Utah, Inc. United HealthCare of Tennessee, Inc. United HealthCare of Louisiana CODE, OF LOUISIANA. In 1822, Peter Derbigny, Edward Livingston, and Moreau Lislet, were selected by the legislature to revise and amend the civil code, and to add to it such laws still in force as were not included therein. , Inc. United HealthCare of Colorado, Inc. AmeriChoice of New Jersey, Inc. AmeriChoice of Pennsylvania, Inc. 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, Inc. --IFS at 'A'. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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