AM Best Revises Outlooks to Negative for UnitedHealth Group Incorporated and Its Subsidiaries

AM Best has revised the outlooks to negative from stable and affirmed the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” (Excellent) and the Long-Term Issue Credit Ratings (Long-Term IRs) of UnitedHealth Group Incorporated (UnitedHealth Group) (Minnetonka, MN) [NYSE: UNH]. AM Best also has affirmed the Short-Term IR of UnitedHealth Group. Concurrently, AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) of the health and dental insurance subsidiaries of UnitedHealth Group, collectively referred to as UnitedHealthcare. (See link below for a detailed listing of the companies and ratings.)

The ratings reflect UnitedHealthcare’s balance sheet strength, which AM Best assesses as strong, as well as its very strong operating performance, very favorable business profile and appropriate enterprise risk management (ERM).

The revision of the outlooks to negative from stable reflects the expected deterioration in operating performance in 2025 driven by the Medicare Advantage segment. In UnitedHealth Group’s first-quarter earnings, the company noted an acceleration in trends in the Medicare Advantage segment that occurred late in the quarter. In May 2025, the company announced that trends continued to accelerate and broadened to more types of benefit offerings. Additionally, UnitedHealth Group noted that the medical costs of many Medicare Advantage beneficiaries new to UnitedHealthcare remained higher than expected. Due to the design of the Medicare Advantage program, UnitedHealthcare is unable to implement corrective pricing actions until 2026, and the issues within the Medicare Advantage segment are expected to persist for the remainder of 2025. AM Best will continue to monitor UnitedHealth Group’s operating performance and may take rating action should operating performances no longer be in line with the very strong assessment.

UnitedHealthcare’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, is at the very strong level. Capital and surplus growth is supported by retained net earnings in excess of dividends to the parent. UnitedHealthcare actively manages subsidiary risk-adjusted capital on a near- to long-term basis to ensure capital levels are supportive of premium growth. Investment risk is on the low side with a conservative asset allocation and no material exposure to equities, real estate or schedule BA assets.

UnitedHealthcare holds a substantial market share in all lines of business and on a national basis. Premiums and earnings are well-diversified by business segment and geography. Furthermore, its large membership base provides economies of scale.

UnitedHealth Group’s ERM program is developed, and the group’s risk management capabilities are aligned with its risk profile. The ERM program is dynamic and utilized in daily operations and strategic business planning. However, AM Best recognizes the missteps that have occurred within the organization, including the Change Healthcare cyber-attack as well as the issues addressed in the recent earnings announcements. AM Best evaluates UnitedHealth Group’s ERM as appropriate.

UnitedHealth Group has strong financial flexibility with material non-regulated operating cash flows from its Optum operations. Equity has shown consistent growth over the past five years, driven entirely by retained earnings despite large share repurchases and growing dividend programs. Strong liquidity is driven by favorable operating cash flows, parent company cash, a commercial paper program and a $21 billion revolving credit facility. Financial leverage at year-end 2024 was elevated at 43.7%, as measured by AM Best, and is above the company’s long-term target of 40%. Additionally, earnings before interest and tax coverage remained good but declined in 2024 to about eight times. Furthermore, UnitedHealth Group had a large amount of goodwill and intangibles on the balance sheet totaling approximately 132% of equity. There has been no history of any material impairments and acquired assets continue to contribute favorably to revenues and earnings.

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.

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