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AM Best Upgrades Credit Ratings of The Chesapeake Life Insurance Company; Affirms Credit Ratings of UnitedHealth Group Incorporated and Its Subsidiaries

AM Best has upgraded the Financial Strength Rating (FSR) to A+ (Superior) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “aa-” (Superior) from “a” (Excellent) of The Chesapeake Life Insurance Company (Chesapeake Life) (Oklahoma City, OK). In addition, AM Best has affirmed the Long-Term ICR of “a” (Excellent) and the Long- and Short-Term Issue Credit Ratings (Long-Term IR; Short-Term IR) of UnitedHealth Group Incorporated (UnitedHealth Group) (Minnetonka, MN) [NYSE: UNH]. Concurrently, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) of the health and dental insurance subsidiaries of UnitedHealth Group, collectively referred to as UnitedHealthcare. The outlook of these Credit Ratings (ratings) is stable. (See link below for a detailed listing of the companies and ratings.)

The ratings reflect UnitedHealthcare’s balance sheet strength, which AM Best assesses as strong, as well as its very strong operating performance, very favorable business profile and very strong enterprise risk management.

The rating upgrades for Chesapeake Life are based on its strategic importance as a writer of UnitedHealthcare branded ancillary products.

The rating affirmations of UnitedHealthcare reflect its continued favorable balance sheet and operating performance trends. The company’s risk-adjusted capitalization is at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR). Consistent capital and surplus growth, driven by favorable net earnings, generally has outpaced premium growth driving increased risk-adjusted capitalization. AM Best anticipates that this ratio will moderate in the near term based on tighter management of statutory capital and growth in higher risk charge business, mostly Medicare Advantage. At the same time, while not fully captured in risk-adjusted capital metrics, UnitedHealthcare’s overall underwriting risk has trended downward as the organization has increased its value-based and capitation arrangements under which a growing amount of risk is shared with providers.

UnitedHealthcare’s invested assets are held predominantly in investment grade fixed income securities and cash/cash equivalents. There is no material exposure to equities, real estate or Schedule BA assets. The company’s investment portfolio is quite liquid and has relatively low risk. Operating performance is very strong with a consistent trend of premium and earnings growth. Premium growth is driven by enrollment gains in most lines of business. The company’s Medicaid membership is contracting with state redeterminations of eligibility driving declines offsetting growth from new contracts. Net earnings are mostly driven by the favorable underwriting results. Although investment income is positive, it contributes modestly to overall net earnings. UnitedHealthcare’s operating earnings benefit from its large membership and the economies of scale it provides the organization on both medical expenditures and administrative expenses. UnitedHealthcare is focused on medical cost reduction through targeted direction of care to low cost, high quality providers, as well as an expansion of home care and virtual care options where appropriate.

UnitedHealthcare maintains solid market shares by line of business and geography. The strategic relationship between UnitedHealthcare and its affiliate, Optum, is a significant competitive advantage in that it provides quality cost effective healthcare delivery, pharmacy and other healthcare services, as well as access to innovative technology and strong data analytical capabilities.

UnitedHealth Group has very strong financial flexibility with strong operating cash flow over half of which is derived from non-regulated businesses. The company has a solid equity position despite significant use of capital for return to shareholder and merger & acquisition (M&A) activity. Financial leverage is managed at approximately 40% on a long-term basis with a tolerance to exceed this for strategic M&A with the expectation of moderation of this metric over time. Earnings before interest and tax coverage have remained strong at about 14 times. Ample liquidity is supported by operating cash flows, parent company cash, an active commercial paper program and an $18 billion revolving credit facility. Nevertheless, there is a large amount of goodwill and intangibles on the balance sheet totaling approximately 130% of equity. There have been no material impairments and acquired assets historically have contributed favorably to earnings.

UnitedHealth Group’s favorable balance sheet and operating trends are sustainable. The company has demonstrated a history of attaining solid growth in both revenues and earnings annually. The company has significant scale and is well-diversified between business segments in its insurance operations as well as within its non-regulated Optum healthcare service businesses. Business development and retention are supported by the organization’s focus on innovation around member experience, operations, product design, provider reimbursement, care management and health-related services with an emphasis on the use of technology and data analytics. Due to its geographic diversity of operations and segmented customer base, UnitedHealth Group has no undue reliance on any single market, customer or health-care provider. However, similar to industry trends, the share of revenue and earnings from government programs has increased materially over the years. Furthermore, the very strong earnings and cash flow from operations support the organization’s strong balance sheet strength and liquidity.

A complete listing of UnitedHealth Group Incorporated and its subsidiaries’ FSRs, Long-Term ICRs and Long-Term IRs also is available.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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