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CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has assigned a 'BBB+' rating to WellPoint's issuance of $1.35 billion in senior unsecured convertible debentures due 2042. The notes
are to be issued under Rule 144A of the Securities Act of 1933. Fitch expects proceeds from the issuance to be combined with existing holding company cash and used for general corporate
purposes, including funding a portion of WellPoint's acquisition of Amerigroup Corporation, continuation of the company's share repurchase program and the repayment of existing
debt. WellPoint's ratings continue to be supported by strong and generally stable historical operating performance, very strong competitive position, and solid statutory capitalization
of its operating subsidiaries. The ratings also reflect WellPoint's relatively high financial leverage, very strong competition in the commercial health sector, ongoing uncertainty
around the ultimate effects of health reform legislation, and continued concerns related to unsustainable medical cost trends. WellPoint's ratings are currently on Negative Outlook
reflecting uncertainty around integration of recent acquisitions, modestly weaker operating performance in recent quarters, and management transition following the recent resignation of
WellPoint's chief executive officer. On Sept. 5, 2012, Fitch downgraded WellPoint's debt ratings upon its issuance of the first round of financing for the Amerigroup transaction,
citing a significant deterioration in WellPoint's financial leverage metrics as a result of the new debt. At the same time, Fitch affirmed the ratings of WellPoint's insurance
operating subsidiaries. With approximately 33.5 million medical members, Indianapolis-based WellPoint is the nation's second largest publicly traded health insurance and managed care
company. WellPoint reported net income of $1.5 billion in first half-2012 on total revenues of approximately $30.8 billion. The key rating triggers that could result in Fitch revising
WellPoint's Rating Outlook to Stable include substantial progress toward a return of financial leverage metrics to levels appropriate for its ratings (specifically a debt/EBITDA ratio
of 2.2x or below) as well as a reduction in the previously discussed uncertainties. The key rating triggers that could result in an upgrade include: --A material reduction in leverage,
specifically expectations for a long-term period of debt/EBITDA below 1.8x; --Debt/total capital below 25% and EBITDA/interest above 10x; --Run-rate EBITDA margins in excess of 9%;
--Run-rate consolidated RBC ratio in excess of 300% of CAL. Conversely, key rating triggers that could result in a downgrade include: --Run-rate EBITDA margin less than 6%; --Run-rate
EBITDA/interest of less than 7x; --Run-rate debt/EBITDA ratio in excess of 2.2x and debt-to-total capital in excess of 38%; --Run-rate consolidated RBC ratio of less than 220% of CAL. Fitch
assigns the following rating: WellPoint, Inc. --Senior convertible debentures due 2042 at 'BBB+'. Additional information is available at 'www.fitchratings.com'. The
ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable Criteria and Related Research:
--'Insurance Rating Methodology' (Sept. 19, 2012); --'Health Insurance and Managed Care (U.S.) Sector Credit Factors' (August 21, 2012); --'WellPoint, Inc. (And
Operating Subsidiaries)' (Feb. 28, 2012); --'2012 Outlook: U.S. Health Insurance and Managed Care' (Dec. 14, 2011); --'WellPoint, Inc.' (Sept. 6, 2011). Applicable
Criteria and Related Research: Insurance Rating Methodology http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=688011 Health Insurance and Managed Care (U.S.) Sector
Credit Factors http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686930 WellPoint, Inc. http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=650230
2012 Outlook: U.S. Health Insurance and Managed Care http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=659847 WellPoint, Inc. (And Operating Subsidiaries)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=672474 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND
DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE
AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT,
CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS
SITE. Fitch Ratings Brian Bertsch, +1-212-908-0549 Media Relations, New York [email protected] or Primary Analyst: Bradley S. Ellis, CFA, +1-312-368-2089 Director Fitch, Inc. 70
W. Madison St. Chicago, IL 60602 or Secondary Analyst: Mark E. Rouck, CPA, CFA, +1-312-368-2085 Senior Director or Committee Chairperson: James B. Auden, CFA, +1-312-368-3146 Managing
Director Source: Fitch Ratings