A.M. Best Removes From Under Review With Negative Implications and Affirms Credit Ratings of Aetna Inc. and Its Subsidiaries
The majority of Aetna’s operating entities, along with Coventry HC of FL, are part of the core subsidiaries of
While Aetna’s current financial leverage and interest coverage are in line with industry peers, the potential merger with CVS Health Corporation (CVS) may put additional pressure on the organization, as it is expected that financial leverage at the new parent will be approximately 60% with a very high level of goodwill and intangible assets at the combined organization. In addition, there is a significant integration risk related to the
The operating performance of Aetna’s insurance subsidiaries remains strong, with 2017 earnings supported by positive results in all lines of business and margins exceeding targets. Earnings in the commercial segment strengthened in 2017 following the exit from the majority of individual exchange markets where the organization experienced losses in 2015 and 2016. Medicare Advantage gains expanded, owing in part to a growing share of members enrolled in plans with higher Star ratings. However, the exit from individual business, combined with a loss of Medicaid contracts in several states, resulted in a material premium decline.
The rating upgrades of Coventry HC of FL reflect closer integration with
The ratings of AICL reflect its balance sheet strength, which
For a complete list of
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and
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