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A.M. Best Co. has assigned debt ratings of “bbb+” to $2 billion of senior unsecured notes recently issued in three tranches by
Aetna Inc. (Aetna) (Hartford, CT) [NYSE: AET]. The ratings have been placed under review with negative implications, consistent with the under review status of the existing ratings of Aetna and its insurance subsidiaries. (See A.M. Best’s press release dated August 21, 2012 for further information.)
The proceeds from the securities will be used to finance a portion of the purchase price of the acquisition of
Coventry Health Care, Inc. (Coventry). Although Aetna’s pro forma financial leverage—as well as its goodwill and intangibles to equity ratio—will be somewhat higher than similarly-rated peers, A.M. Best views favorably the low cost of capital and the laddering of maturities within Aetna’s capital structure. Additionally, the issuance is consistent with A.M. Best’s expectations with respect to Aetna’s capital structure incorporating the financing for the previously announced $7.3 billion (approximate) acquisition of Coventry.