AM Best Comments on Humana Inc.’s Re-Opened Senior Unsecured Notes

AM Best has commented that the Long-Term Issue Credit Rating of “bbb” (Good) on the $1.25 billion 5.375% senior unsecured notes, due 2031, originally issued on March 13, 2024, by Humana Inc. (Humana) (headquartered in Louisville, KY) [NYSE: HUM] remains unchanged despite the additional notes being added as part of the same series. Humana has announced that it has issued an additional $250 million of senior unsecured notes under that offering, bringing the total to $1.5 billion. The outlook of the Credit Rating (rating) is stable.

Humana expects to use the proceeds from the senior unsecured notes issuance for general corporate purposes, including the repayment of existing debt and short-term borrowings outstanding under its commercial paper program. Humana issued $1.25 billion of senior notes earlier this month and AM Best expects the issuance to have only a modest increase to financial leverage in the immediate term and then be reduced after the repayments. Humana’s financial leverage, as measured by AM Best, was just over 45% with the new issuance. Financial leverage has exceeded the organization's long-term target debt-to-capital ratio of 40%, but management expects that through increases in equity and continued deleveraging over the course of the year, it will get closer to this target. Humana’s earnings before interest and taxes (EBIT) interest coverage remains solid at 5-8 times in recent years.

Humana has sound liquidity measures as the organization generates consistently strong operating cash flows, which totaled $3 billion in 2024. Liquidity is also supported by dividends primarily from subsidiaries, which totaled $1.5 billion for 2024, as well as its lines of credit totaling $4.75 billion, its $4.75 billion commercial paper program and access to short-term borrowings from the Federal Home Loan Bank of Cincinnati through its subsidiary, Humana Insurance Company. For additional information on Humana, please refer to the press release issued March 5, 2025.

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