A.M. Best Assigns Debt Ratings to WellPoint, Inc.’s New Senior Unsecured Notes

  A.M. Best Assigns Debt Ratings to WellPoint, Inc.’s New Senior Unsecured

Business Wire

OLDWICK, N.J. -- August 8, 2014

A.M. Best has assigned a debt rating of “bbb+” to $2.7 billion of senior
unsecured notes issued by WellPoint, Inc. (WellPoint) (Indianapolis, IN)
[NYSE: WLP]. The outlook assigned to the ratings is stable. The existing
ratings of WellPoint and its subsidiaries are unchanged.

The securities are being issued in four separate tranches consisting of $850
million 2.25% five-year notes, $800 million 3.50% ten-year notes, $800 million
4.65% 30-year notes and $250 million 4.85% 40-year notes. A portion of the
proceeds from the issuance is anticipated to be used to repay the company’s
$500 million 5.0% senior notes due December 2014 and to redeem or repurchase
all or a portion of its $1.1 billion senior notes due in 2016. The remaining
proceeds will be used for general corporate purposes, which could include
share repurchase and repayment of outstanding commercial paper and/or
long-term debt.

Although sizable, the debt issuance will effectively increase WellPoint’s
financial leverage only modestly, assuming the majority of proceeds is
ultimately used to retire debt. WellPoint’s debt-to-capital ratio was about
38% at June 30, 2014, which A.M. Best considers relatively high. WellPoint’s
elevated leverage is mostly related to the financing of the company’s
acquisition of Amerigroup in 2012 and debt refinancing activity in 2013. It is
anticipated that leverage will remain high for the remainder of the year due
to the company’s limited ability to reduce long-term debt, continued dividends
to shareholders and its substantial share repurchase program. Although
WellPoint’s interest coverage is good at approximately seven times, it is
lower than industry peers. Prospectively, A.M. Best expects the organization’s
interest coverage to increase and overall financial leverage to moderate
slightly, which could facilitate a positive rating action in the medium term.

WellPoint continues to produce strong operating cash flows. Additionally, the
company maintains strong liquidity with a high level of holding company cash
and marketable investments, robust subsidiary dividends, its $2.5 billion
commercial paper program and its undrawn $2.0 billion credit facility.

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 © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Company
Bridget Maehr, 908-439-2200, ext. 5321
Senior Financial Analyst
Joseph Zazzera, MBA, 908-439-2200, ext. 5797
Assistant Vice President
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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