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Life Health > Health Insurance

Rating Agencies: UnitedHealth To Acquire Golden Rule

By Trevor Thomas

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NU Online News Service, Sept. 23, 2003, 4:47 p.m. EDT – UnitedHealth Group Inc., Minnetonka, Minn., plans to acquire Golden Rule Financial Corp., Indianapolis, according to Fitch Ratings, Chicago.

A spokeswoman for UnitedHealth declined to comment on reports about the alleged deal.

The Indianapolis Star printed a description of the deal Sept. 18. Fitch says UnitedHealth confirmed the existence of the deal Sept. 19 but would not discuss the terms.

Fitch predicts Golden Rule’s total 2003 revenue will be less than 4% of UnitedHealth’s total revenue for the year. “Fitch does not expect UnitedHealth’s risk profile, liquidity position or financial leverage to be significantly affected by the transaction,” the rating service says.

Golden Rule’s position in the health insurance market is probably a big attraction for UnitedHealth, Fitch says.

“Golden Rule’s solid position in medical savings accounts is also likely of significant interest to UnitedHealth,” Fitch says.

Golden Rule is also a strong player in the bank channel. It placed sixth in new life premiums in banks in 2002, reports Kenneth Kehrer Associates, Princeton, N.J.

Fitch gave high marks to UnitedHealth because of strong and diversified health services operations along with “good balance sheet fundamentals, strong earnings track record and excellent cash flow.”

UnitedHealth, the largest private U.S. managed care company, provides or administers major medical coverage for 18 million people. It reported $842 million in net income for the first half on $14 billion in revenue.

Standard & Poor’s, New York, put Golden Rule Insurance Company, a subsidiary of Golden Rule, on “CreditWatch with negative implications” due to “concerns about Golden Rule’s prospective capitalization.”

S&P gives both Golden Rule Insurance Company and United HealthCare Insurance Company a financial strength rating of A+.

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