AM Best Downgrades Credit Ratings of UnitedHealth Group Incorporated and Its Subsidiaries; Revises Outlooks to Stable
AM Best has downgraded the Long-Term Issuer Credit Ratings (Long-Term ICR) to "a-" (Excellent) from "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 downgraded the Financial Strength Rating (FSR) to A (Excellent) from A+ (Superior) and the Long-Term ICRs to "a+" (Excellent) from "aa-" (Superior) of the health and dental insurance subsidiaries of UnitedHealth Group, collectively referred to as UnitedHealthcare. The outlook of these Credit Ratings (ratings) has been revised to stable from negative. (See link below for a detailed listing of the companies and ratings.)
Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of "a" (Excellent) of Centurion Casualty Company (Centurion Casualty) (Omaha, NE). The outlook of these ratings is stable.
The ratings of UnitedHealthcare reflect its balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, very favorable business profile and appropriate enterprise risk management (ERM).
The downgrade of UnitedHealthcare's ratings is due to the significant deterioration in its operating performance, which is no longer supportive of a very strong operating performance assessment. While UnitedHealthcare is expected to report overall profitability, earnings will be materially lower than historical levels. The company now expects $6.5 billion in additional medical expenses for full-year 2025 with increased costs being seen across all lines of business, but more heavily focused in Medicare Advantage. The company's full-year 2025 outlook, which was released along with second quarter 2025 results, showed expected operating margins for the health insurance business to be approximately half of what it reported for 2024.
UnitedHealthcare's strong balance sheet strength assessment is supported by very strong risk-adjusted capital, as measured by Best's Capital Adequacy Ratio (BCAR). There has been a low level of volatility in risk-adjusted capital over the past five years. The organization manages statutory capital in the 225-250% range. Invested assets are conservative, being mostly held in investment grade fixed income securities and cash and short-term investments. Liquidity has historically been good with favorable operating cash flow and high cash balances, supplemented by internal lines of credits for the majority of statutory entities.
UnitedHealthcare maintains a leading market share in all lines of business and nationally. The company has good business and geographic diversification, with product offerings in all market segments.
UnitedHealthcare has material scale with a large diverse membership base. UnitedHealthcare continues to emphasize value-based care arrangements as an avenue to better manage medical costs and improve quality of care. The company embraces innovation to create efficiencies and control administrative costs.
UnitedHealth Group has a mature ERM program that spans its health insurance and health services businesses. ERM is used both in daily operations and for strategic long term business planning. However, AM Best notes that the company's governance is an area that has shown some weakness. There have been notable changes in senior management and the financial outlook has been reduced considerably as pricing and product design have not kept pace with emerging medical trends.
The ratings of Centurion Casualty reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate ERM.
Centurion Casualty is a property/casualty company offering travel protection products, including trip cancellation and medical coverage branded as UnitedHealthcare Global Safe Trip. The company is relatively new with 2023 being its first full year of operation. Premium development remains modest as the company works to secure licenses and have products approved in all states. The company is strategically important to UnitedHealthcare in offering these travel products.
UnitedHealth Group has strong financial flexibility with a high level of unregulated cash flow from its Optum health services business segment. Overall earnings are expected to remain positive but will be lower than historical levels, most notably in the UnitedHealthcare business. UnitedHealth Group's equity has shown consistent growth over the past five years, driven entirely by retained earnings, despite large share repurchases and growing dividend programs. The group's financial leverage has been elevated over the past year and was 44.1% at the end of second quarter 2025, which is above the company's stated long term target of approximately 40%. UnitedHealth Group has historically shown flexibility in its share repurchase program to support long term capital management and balance sheet metrics. AM Best expects that UnitedHealth Group will deleverage to its targeted financial leverage over the near to medium term. Strong liquidity is driven by favorable operating cash flows, parent company cash, a commercial paper program and a $21 billion revolving credit facility.
A complete listing of UnitedHealth Group's FSRs and Long-Term ICRs, as well as Short- and Long-Term IRs, 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 www.ambest.com.
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