AM Best Revises Issuer Credit Rating Outlooks to Stable for Most of CVS Health Corporation’s Aetna Inc. Subsidiaries
The Credit Ratings (ratings) of Aetna Health & Life Group reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.
The revision of the Long-Term ICR outlooks to stable from positive reflects continued unfavorable operating trends during the first half of 2024. These unfavorable operating trends were driven by increased utilization in the group’s Medicare Advantage business, higher acuity in Medicaid attributable to the resumption of redeterminations, and a change in the estimate related to the individual exchange business risk adjustment accrual for the 2023 plan year recorded in the second quarter of 2024. As a result, CVS Health has announced a decline in its full-year 2024 profit outlook for the second straight quarter especially as it relates to the health care benefits segment (Aetna). Furthermore, the group continued to grow membership through the first half of 2024, particularly in Medicare Advantage. AM Best notes that Aetna Health and Life Group is expected to remain profitable over the near-term, just not at historical levels. AM Best expects earnings and margins at the Aetna Health and Life Group to improve in 2025 due to corrective actions being implemented and return to historical levels in the medium term.
In addition, unfavorable operating trends could potentially affect risk-adjusted capitalization as premium growth may outpace capital and surplus. This could negatively impact risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). However, the group’s balance sheet strength is expected to remain very strong, even with a potential decline to its BCAR, and is supported by adequate liquidity measures, which are strengthened by access to the Federal Home Loan Bank of
The ratings of Aetna Health & Life Group reflect the negative impact from its ultimate parent, CVS Health, which has elevated financial leverage and goodwill that is not expected to change materially in the near to medium term. CVS Health’s financial leverage increased in 2023 following the acquisitions of Signify Health, Inc. and Oak Street Health, Inc. The operating challenges in the health care benefits segment (Aetna) could reduce the amount of dividend payments from the Aetna subsidiaries to the parent, CVS Health. This may impact CVS Health’s plans to de-lever or should the need arise, result in the potential issuance of more debt, increasing financial leverage.
The FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) have been affirmed, with the Long-Term ICR outlooks revised to stable from positive and the FSR outlook maintained at stable, for the following members of Aetna Health & Life Group:
- Aetna Life Insurance Company
- Aetna Health and Life Insurance Company
-
Aetna Life & Casualty (
Bermuda ) Ltd. -
Aetna Health Inc. (a
Connecticut corporation) -
Aetna Health Inc. (a
Florida corporation) -
Aetna Health Inc. (a
Georgia corporation) -
Aetna Health Inc. (a
Louisiana corporation) -
Aetna Health Inc. (a
New Jersey corporation) -
Aetna Health Inc. (a
New York corporation) - Aetna Health Inc. (a Maine Corporation)
-
Aetna Health Inc. (a
Pennsylvania corporation) -
Aetna Health Inc. (a
Texas corporation) - Aetna Health Insurance Company
-
Aetna Health Insurance Company of
New York -
Aetna Better Health of
Florida , Inc. - Aetna Health of California Inc.
-
Aetna Health of
Iowa , Inc. -
Aetna Health of
Utah , Inc. - Aetna Dental of California Inc.
-
Aetna Dental Inc. (a
New Jersey corporation) -
Aetna Dental Inc. (a
Texas corporation) - American Continental Insurance Company
- Accendo Insurance Company
-
Continental Life Insurance Company of
Brentwood, Tennessee - Coventry Health and Life Insurance Company
-
Aetna Better Health of
Michigan , Inc. -
Aetna Better Health of
Missouri , LLC -
Coventry Health Care of
Illinois , Inc. -
Coventry Health Care of
Kansas , Inc. -
Coventry Health Care of
Missouri , Inc. -
Coventry Health Care of
Nebraska , Inc. -
Coventry Health Care of
Virginia , Inc. -
Coventry Health Care of
West Virginia , Inc. - First Health Life & Health Insurance Company
- SilverScript Insurance Company
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.
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Jon Housel
Financial Analyst
+1 908 882 1898
jon.housel@ambest.com
Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310
christopher.sharkey@ambest.com
Sally Rosen
Senior Director
+1 908 882 2284
sally.rosen@ambest.com
Al Slavin
Senior Public Relations Specialist
+1 908 882 2318
al.slavin@ambest.com
Source: AM Best
