AM Best has affirmed the Financial Strength Rating (FSR)
of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term
ICR) of “a” (Excellent) of Aetna Life Insurance Company (ALIC)
(Hartford, CT) and the other members of Aetna Health & Life
Group, which are operating entities of Aetna Inc. (Aetna) and
wholly owned subsidiaries of CVS Health Corporation (CVS Health)
[NYSE: CVS]. The outlook of the FSR is stable, while the outlook of
the Long-Term ICR is positive. (Please see below for a detailed
listing of the companies.)
Concurrently, AM Best has affirmed the FSR of A (Excellent) and
the Long-Term ICRs of “a” (Excellent) of Texas Health + Aetna
Health Insurance Company, as well as Texas Health + Aetna Health
Plan Inc. Both companies are domiciled in Arlington, TX, and
collectively referred to as Texas Health Aetna. In addition, AM
Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of
“a” (Excellent) of Allina Health and Aetna Insurance Company (St.
Louis Park, MN). Texas Health Aetna and Allina Health and Aetna
Insurance Company are joint ventures with subsidiaries of Aetna
Inc. The outlook of these Credit Ratings (ratings) is stable.
The 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 (ERM).
The positive outlook on the Long-Term ICR for Aetna Health &
Life Group reflects the strengthening of its risk-adjusted
capitalization, which remains at the strongest level, as measured
by Best Capital Adequacy Ratio (BCAR). Capital expansion in recent
years has been supported by strong earnings and lower dividends
paid to the parent. The growth of its absolute level of capital and
surplus exceeded premium growth, a trend that has been continuing
over the last few years. Additionally, the share of high-risk
investments –commercial mortgage loans and BA assets –continued to
decrease further contributing to improved risk-adjusted
The balance sheet strength is supported by good overall
liquidity measures, which is further enhanced by the access to the
Federal Home Loan Bank of Boston, borrowing at the largest
insurance company within the Aetna Health & Life Group, Aetna
Life Insurance Company. Furthermore, the quality of capital is good
as the group does not have any debt.
Premium development over the last three years has been driven by
the expansion of Aetna’s government business in Medicare Advantage
(MA) and Medicaid, which composed three quarters of total
membership through year-end 2022. Medicaid’s double-digit growth
over the last two years is attributed to the relaxation of
eligibility checks, known as redeterminations, which have been
suspended until April 2023. Medicaid enrollment is expected to
moderate during 2023 and into early 2024. However, with Aetna’s
expansion in the individual public health exchanges during 2022,
the contraction in Medicaid might be offset partially by growth in
the individual segment. Premium growth has impacted operating
earnings trends favorably over the last three years. While claims
experience has fluctuated, resulting in improved loss ratios in the
early stages of the COVID-19 pandemic in 2020 before increasing in
2021 due to higher-than-expected COVID-19-related medical costs,
overall profitability metrics have improved. Despite the recent
volatility, which was largely attributable to COVID-19, the Aetna
Health & Life Group has reported underwriting and net income of
$2 billion in each of the last five years, with one-year return on
equity (ROE) exceeding 20% and one-year operating return on revenue
(ROR) in the 5-7% range.
Aetna remains one of the leading players in the managed care
markets throughout the United States. While Aetna’s government
segments have experienced significant membership growth, the
company remains competitive in its other segments. The relationship
with CVS Health adds a competitive advantage, as some Aetna
insurance products emphasize affiliated MinuteClinic as a low-cost
provider of primary care services.
The ratings of Aetna Health & Life Group reflect the
ultimate parent, CVS Health, and an expectation of elevated
leverage due to the recently announced acquisitions. The financial
leverage at CVS Health has declined to 41% at year-end 2022 as part
of the organization’s deleveraging efforts. However, financial
leverage is expected to increase during 2023 as CVS Health is
expected to finance a portion of two recently announced
acquisitions, Signify Health and Oak Street Health, which are both
expected to close this year. Goodwill to shareholders equity
exceeded 100% at year-end 2022, which is likely to increase upon
the close of Signify Health and Oak Street Health. While AM Best
recognizes that these acquisitions are part of the organization’s
health care services strategy, as with any transaction there is
The ratings of Texas Health Aetna reflect its balance sheet
strength, which AM Best assesses as strong, as well as its adequate
operating performance, limited business profile, appropriate ERM
and support of its parents. During 2022, the joint venture’s
risk-adjusted capitalization improved, supported by net income of
approximately $10 million. Marking the first year of profits, net
income was supported by underwriting gains and lower amortization
The ratings of Allina Health and Aetna Insurance Company reflect
its balance sheet strength, which AM Best assesses as adequate, as
well as its marginal operating performance, limited business
profile, appropriate ERM and support of its parents. The joint
venture’s net results continue to be negative as the amortization
of intangibles exceeded underwriting income. However, underwriting
results in 2022 were positive for the first time since inception,
primarily driven by growth in its Medicare segment.
The FSR of A (Excellent) and the Long-Term ICRs of “a”
(Excellent) have been affirmed, with a stable outlook for the FSR
and a positive outlook for the Long-Term ICR, 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 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 Inc. (LA)
- 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
- HealthAssurance Pennsylvania, Inc.
- 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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data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
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