A.M. Best Comments on UnitedHealth Group Incorporated's Intent to Acquire Amil Participacoes SA

A.M. Best Comments on UnitedHealth Group Incorporated's Intent to Acquire Amil Participacoes SA

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has commented that the financial strength rating, issuer credit ratings and debt ratings of UnitedHealth Group Incorporated (UnitedHealth) (Minnetonka, MN) [NYSE: UNH] and its insurance and health maintenance organization (HMO) subsidiaries are unchanged following the announcement that UnitedHealth has entered into an agreement to acquire Amil Participacoes SA (Amil) (Brazil) [AMIL3:BZ], the largest managed care company in Brazil, for approximately $5 billion.

The transaction, subject to regulatory approval, is expected to be executed in two steps, with UnitedHealth to acquire 60% of Amil's 363 million shares from founders/management by the end of October 2012, and to acquire an additional 30% from public shareholders through a tender offer in the first half of 2013. The transaction is expected to be funded through a combination of cash, long and short-term debt. As of June 30, 2012, UnitedHealth's debt-to-capital ratio was approximately 30.1%, and its financial leverage will significantly increase following the planned debt issuance to finance the acquisition. However, the company's debt-to-capital ratio and its interest coverage are expected to remain adequate for UnitedHealth's current ratings. Furthermore, A.M. Best expects UnitedHealth's financial leverage to gradually moderate over time driven in part by reduced share repurchase activity. A.M. Best also has concerns with UnitedHealth's expected increase in goodwill and intangible assets to equity.

This acquisition will allow UnitedHealth to enter one of the world's fastest growing economies where the demand for private health insurance coverage is rising. In addition to its leading position in the Brazilian managed care market, Amil owns a delivery network that includes hospitals and clinics.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Insurance Holding Company and Debt Ratings." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visitwww.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

Doniella Pliss
Senior Financial Analyst
908-439-2200, ext. 5104
Rachelle Morrow
Senior Manager, Public Relations
908-439-2200, ext. 5378
Kenneth Frino
Group Vice President
908-439-2200, ext. 5012
Jim Peavy
Assistant Vice President, Public Relations
908-439-2200, ext. 5644

KEYWORDS: United States Brazil Europe North America South America Minnesota New Jersey


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