A.M. Best Upgrades Ratings of Several Subsidiaries of UnitedHealth Group Incorporated

  A.M. Best Upgrades Ratings of Several Subsidiaries of UnitedHealth Group

Business Wire

OLDWICK, N.J. -- December 11, 2013

A.M. Best Co. has upgraded the financial strength ratings (FSR) to A
(Excellent) from A- (Excellent) and the issuer credit ratings (ICR) to “a”
from “a-” of the following subsidiaries of UnitedHealth Group Incorporated
(UnitedHealth) (Minnetonka, MN) (NYSE: UNH): AmeriChoice of New Jersey, Inc.
(Newark, NJ), UnitedHealthcare Community Plan, Inc. (Southfield, MI),
UnitedHealthcare of Pennsylvania, Inc. (Pittsburgh, PA) and UnitedHealthcare
Community Plan of Ohio, Inc. (Westerville, OH). Additionally, A.M. Best has
affirmed the FSRs and ICRs of the remaining subsidiaries of UnitedHealth.
Concurrently, A.M. Best has affirmed the ICR of “bbb+” and debt ratings of
UnitedHealth. The outlook for all ratings is stable, with the exception of the
commercial paper program, which does not have an outlook. (See link below for
a detailed listing of the companies and ratings.)

The rating affirmations reflect the organization’s high degree of business
diversification, strong earnings, highly liquid assets, its ability to adjust
to market changes and its high degree of technological innovations. These
strengths are further supported by the significant market presence, diverse
non-insurance operations and financial strength of UnitedHealth. UnitedHealth
continues to expand its profitable non-regulated Optum businesses and its
share of non-regulated earnings remains significantly higher compared to its
peers. Furthermore, UnitedHealth’s non-regulated subsidiaries are well
positioned for continuous revenue growth. The affirmation of the debt ratings
and the notching of two reflect UnitedHealth’s financial flexibility, which is
enhanced through robust non-regulated earnings that contribute to its already
strong interest coverage as well as the reduce reliance on dividends from its
regulated subsidiaries.

Partially offsetting these strengths are the organization’s recent lower
operating margins, managing to a lower level of risk-based capitalization
compared to peers and its high dividend payments to the parent company.
However, the dividends are expected to decline in 2013 compared to prior
years. The reduced profitability of the regulated business is in line with the
industry trend and is a result of reduced Medicare Advantage reimbursement,
including sequestration, competitive pressure, higher capital expenditures and
a changing business mix with a growing share of lower margin Medicare and
Medicaid products. The earnings at the health benefits segment are expected to
decline further in 2014 driven by losses in commercial enrollment, as
individuals are migrating to public exchanges where UnitedHealth decided to
have a limited presence in 2014. In addition, profitability will be affected
by new non-deductible insurance fees imposed by The Patient Protection and
Affordable Care Act of 2010.

The rating upgrades for AmeriChoice of New Jersey, Inc., UnitedHealthcare
Community Plan, Inc,, UnitedHealthcare of Pennsylvania, Inc. and
UnitedHealthcare Community Plan of Ohio, Inc. reflect their integration into
UnitedHealth and their increased strategic importance to the organization, as
the Medicaid segment is expected to expand substantially in the near term.

Key rating drivers that may lead to positive rating actions for UnitedHealth
and its subsidiaries include earnings growth within the UnitedHealthcare
division, successful absorption of new membership in government programs,
improvement in risk-adjusted capital at regulated entities and a reduction in
financial leverage. Key rating drivers that may lead to negative rating
actions include a sizeable decline in risk-adjusted capital at UnitedHealth’s
lead operating entity, UnitedHealthcare Insurance Company; a significant
weakening of operating performance across the enterprise; deterioration of
market share; an increase in financial leverage beyond A.M. Best's
expectations or a substantial deterioration in interest coverage.

For a complete list of UnitedHealth Group Incorporated and its subsidiaries’
FSRs, ICRs and debt ratings, please see

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at

A.M. Best Company is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.

       Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Co.
Doniella Pliss
Senior Financial Analyst
(908) 439-2200, ext. 5104
Kenneth Frino
Group Vice President
(908) 439-2200, ext. 5012
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
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