Fitch Rates UnitedHealth Group's Planned Issuance 'A-(EXP)'

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has assigned an 'A-(EXP)' rating to UnitedHealth Group Incorporated's (UNH) planned issue of senior unsecured notes various maturities. The ratings are equivalent to Fitch's ratings on UNH's currently outstanding senior unsecured notes.

Fitch anticipates UNH using proceeds from the planned issuance to fund the acquisition of Catamaran Corp. (CTRX) that is expected to close before the end of July 2015 and other general corporate purposes.

KEY RATING DRIVERS

The 'A-(EXP)' rating reflects expectations that UNH's debt-to-EBITDA and financial leverage ratios will increase to approximately 2.4x and 48% from 1.5x and 37% respectively at March 31, 2015. In addition, Fitch expects UNH's post CTRX acquisition EBITDA-based interest coverage to decline to an estimated range of 10x - 12x, down from nearly 19x for the full year 2014.

There is currently a Negative Rating Outlook on UNH's Issuer Default rating. The Negative Outlook reflects uncertainty around UNH's ability to reduce its anticipated post CTRX close increase in financial leverage to levels more commensurate with the company's current ratings and to a lesser extent, the potential operational and earnings disruptions that could arise during the CTRX integration.

Favorably, the CTRX acquisition will further increase UnitedHealth's scale and diversity, particularly its sources of unregulated earnings and cash flows. Fitch continues to view UnitedHealth's overall market position within the health insurance and managed care sector favorably, in that it enjoys strength across a broad spectrum of products, services, and geographies.

RATING SENSITIVITIES

Key rating triggers that could result in a downgrade include:

--Lack of meaningful progress over the next 12 - 24 months towards debt-EBITDA and financial leverage ratios approximating 1.5x and 37% respectively;

--EBITDA-to-interest coverage below 10x.

Key rating triggers that could result in a revision of the Outlook to Stable include:

--Significant progress toward deleveraging targets of debt-to-EBITDA ratio below 1.8x and financial leverage ratio below 41%, while maintaining a double-digit EBITDA-to-interest coverage ratio.

FULL LIST OF RATING ACTIONS

The following rating has been assigned:

UnitedHealth Group Incorporated

--senior unsecured notes 'A-(EXP)'.

Additional information is available on www.fitchratings.com

Applicable Criteria

Insurance Rating Methodology (pub. 14 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=868367

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=988170

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=988170

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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View source version on businesswire.com: http://www.businesswire.com/news/home/20150720005819/en/

Fitch Ratings
Primary Analyst
Douglas M. Pawlowski, CFA
Senior Director
+1-312-368-2054
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Mark E. Rouck, CPA, CFA
Senior Director
+1-312-368-2085
or
Committee Chairperson
Douglas L. Meyer, CFA
Managing Director
+1-312-368-2061
or
Media Relations:
Alyssa Castelli, +1 212-908-0540
[email protected]

Source: Fitch Ratings

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