Fitch Says UnitedHealth Plans To Acquire Golden Rule
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UnitedHealth Group, Minneapolis, plans to acquire Golden Rule Financial Corp., Indianapolis, a report by Fitch Rating Service, Chicago, says.

A spokeswoman for UnitedHealth declined to comment on the acquisition, first reported in The Indianapolis Star, and terms of the acquisition were not disclosed.

Fitch says UnitedHealth confirmed the transaction Sept. 19.

Fitch expects Golden Rules total 2003 revenue to be less than 4% of UnitedHealths total revenue for the year. Another rating service, Standard and Poors, New York, estimates Golden Rules total 2003 revenues and earnings would be 3% of UnitedHealths.

“Fitch does not expect UnitedHealths risk profile, liquidity position or financial leverage to be significantly affected by the transaction,” the rating service says.

Golden Rules position in the individual health insurance market is probably a big attraction for UnitedHealth, according to Fitch.

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

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

UnitedHealth is the largest player in health care benefits in the United States, Fitch adds.

For the first six months of 2003 through June 30, the company reported total enrollment of 18.3 million, consolidated revenue of $14.1 billion and net income of $842 million.

S&P predicts UnitedHealth will have about $28 billion of revenue and $2.8 billion of operating earnings in 2003.

S&P put Golden Rule Insurance Company, a subsidiary, on credit watch “with negative implications” due to “concerns about Golden Rules prospective capitalization.”

S&P currently rates both companies creditworthiness at “A+.”

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


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 26, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.