A.M. Best Co. has affirmed the financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” for the majority of the insurance subsidiaries of Humana Inc. (Humana) (Louisville, KY) (NYSE: HUM). A.M. Best also has affirmed Humana’s ICR of “bbb-” and existing debt ratings. Ratings also have been assigned on new debt for Humana. The outlook for all ratings remains stable. Additionally, A.M. Best has affirmed the FSR of B++ (Good) and ICR of “bbb+” of Kanawha Insurance Company (Lancaster, SC) (Kanawha). The outlook for the FSR is stable, while the outlook for the ICR is negative. Concurrently, A.M. Best has upgraded the FSR to B++ (Good) from B+ (Good) and the ICR to “bbb+” from “bbb-” of Humana’s Puerto Rico insurance subsidiaries, Humana Insurance of Puerto Rico, Inc. and Humana Health Plans of Puerto Rico, Inc. The outlook for these ratings remains stable. (See link below for a detailed listing of all companies and ratings.) The rating affirmation for Humana’s U.S. subsidiaries reflects strong membership gains over the last year, partly as a function of organic growth, acquired members and being awarded additional Medicare members by CMS, as well as large quantities of prescription drug members. The organization continues to report solid underwriting gains and favorable overall earnings trends. Humana has followed a strong merger and acquisition strategy. The organization is also pursuing an integrative care initiative, requiring the coming together of various medical, administrative and health insurance services, making for a more complete, sophisticated, efficient and complementary operating environment that is expected to provide more comprehensive care delivery services at a lower cost. Expanding the integrated care environment drove several acquisitions in order to complete underrepresented parts of the service delivery process. Offsetting rating factors include Humana’s somewhat lower earnings after the historical peak of the prior year and business concentration risk. The overall organization reported strong earnings in 2012; however, the results were somewhat below the prior year as significant membership growth led to some margin suppression. Additionally, A.M. Best has observed an increase in the concentration of government-sponsored programs in the overall product mix. This is of concern because any significant interruption in benefits reimbursement cash flows could have unfavorable repercussion in the delivery of services and disruptions within the vast provider community. Federal and state governments have reported many challenges maintaining the mandates of their budgets, where health care services are a significant part.