AM Best has assigned a Long-Term Issue Credit Rating of “bbb+” (Good) to Elevance Health, Inc.’s (Elevance Health) (Indianapolis, IN) newly issued $350 million, 4.5% senior unsecured bonds, due 2026; $750 million, 4.750% senior unsecured bonds, due 2030; $750 million, 4.95% senior unsecured bonds, due 2031; $1.2 billion, 5.2% senior unsecured bonds, due 2035; $1.35 billion, 5.7% senior unsecured bonds, due 2055; and $800 million, 5.85% senior unsecured bonds, due 2064. The outlook assigned to these Credit Ratings (ratings) is stable.

The proceeds from Elevance Health’s recent $5.2 billion debt issuance are expected to be used for general corporate purposes, including repayment of upcoming maturities. The company has approximately $850 million, 3.35% senior unsecured notes due in late 2024 and $1.25 billion, 2.375% senior unsecured notes due in January 2025. Financial leverage, as measured by AM Best, rose to approximately 42% at the end of third-quarter 2024, including this debt issuance. Financial leverage should moderate after the repayment of the two upcoming maturities but will remain slightly over Elevance Health’s long-term target of 40% going into the first quarter of 2025. However, AM Best expects Elevance Health’s financial leverage to return to the 40% range by the end of 2025. Furthermore, Elevance Health has demonstrated strong interest coverage and operating cash flows, with a consistent growth trend in revenues and earnings, although some lines of business will remain challenged for the remainder of 2024 and throughout 2025.

Additionally, AM Best notes that non-regulated cash flows are solid for the organization and support the financial flexibility and operating performance for the organization. Financial flexibility and liquidity are also supported by the organization’s commercial paper program, revolving credit facility, parent company cash and dividends from its regulated insurance subsidiaries.

Elevance Health has reported consistent revenue growth and solid operating earnings from its business segments. The company reported double-digit revenue growth through the first nine months of 2024. Operating revenue growth has been driven by a combination of new business expansion and premium rate increases. Commercial enrollment gains were offset by attrition in the Medicaid segment through the redetermination process. Overall earnings, although solid, have been impacted by higher-than-expected acuity and a shift in the mix in Medicaid membership base, related to eligibility redetermination and the change in this membership population. Elevance Health continues to benefit from its leading market positions supported by its Blue Cross Blue Shield-branded entities in 14 states.

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