AM Best Affirms Credit Ratings of Humana Inc. and Its Subsidiaries

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) for the health and dental insurance subsidiaries of Humana Inc. (Humana) (headquartered in Louisville, KY) [NYSE: HUM]. These subsidiaries collectively are referred to as Humana Health Group. In addition, AM Best has affirmed the Long-Term ICR of “bbb” (Good) and the Long-Term Issue Credit Ratings (Long-Term IRs) of Humana Inc. (Humana). AM Best also has affirmed the Short-Term Issue Credit Rating of AMB-2 (Satisfactory) for Humana. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of Humana Health Group members and Long-Term IRs.)

Lastly, AM Best has affirmed the FSR of B+ (Good) and the Long-Term ICRs of “bbb-” (Good) of Humana Insurance of Puerto Rico, Inc. and Humana Health Plans of Puerto Rico, Inc. These companies are domiciled in Puerto Rico and are collectively referred to as Humana Health of Puerto Rico Group. The outlook of these ratings is negative.

The ratings of Humana Health Group reflect its balance sheet strength, which AM Best assesses as adequate, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

Humana Health Group’s balance sheet strength is assessed as adequate. Even with a slight improvement in the group’s risk-adjusted capitalization, it is maintained at the weak level, as measured by Best’s Capital Adequacy Ratio (BCAR). The group has experienced substantive growth in its premium revenue in recent years, which has outpaced the group’s capital growth due mainly to dividends from the regulated entities to the parent, Humana.

The Humana Health Group maintains a conservative invested asset portfolio that is primarily composed of investment grade fixed income securities, cash and short-term investments meant to help provide some level of stability to capitalization and supplement operating gains. Despite the dividend activity, the group has grown its capital annually over the past five years, rising by a near double-digit percentage compound annual growth rate over the period. The group has reported a profitable growth trend over this period. Recently, the group’s operating performance has been pressured, as has the entire health industry, by challenges in its core business line, Medicare Advantage (MA). In addition, Humana has been impacted by several regulatory factors related to lower payment rates, its Star Ratings bonus payments and rebate revenue from the Centers for Medicare and Medicaid Services, which will further impact results in the upcoming years.

Humana Health Group has continued to exhibit strong yet fluctuating operating results in 2024 and 2025, owing to the steady growth of MA and higher claims trends that continued to be influenced by COVID-19 pandemic deferrals of care. Additional impact to operating results has come from a combination of inpatient stays, physician visits, outpatient services, and general escalation in prescription drug costs-particularly specialty drugs, and new/or label expansion drugs. The company remains committed to margin re-stabilization in its individual MA segment, targeting a 3% pretax margin (excluding the impact of STARs) through 2028. As a result of these trends, Humana has made the decision to exit certain counties or states that are unprofitable. This has caused a decline in MA membership in 2025, but a return to growth is expected in 2026. AM Best expects MA challenges to persist in the near to mid-term, but Humana Health Group to continue to report overall profitability, albeit with some margin compression as it navigates certain of the challenges in the business.

Humana Health Group generates most of its earnings from its core MA segment. Additionally, its premium is further rounded out by its Medicaid managed care and supplementary lines, including dental and vision. While its concentration of business in the MA and Medicaid business makes the organization susceptible to regulatory related headwinds, Humana maintains an excellent nationwide market position, which supports its favorable business profile assessment.

Humana’s non-insurance segment, CenterWell provides the company with a diversified source of revenue and earnings. The CenterWell segment is mainly focused on building a value-based care platform through primary care, home care and pharmacy services operations, which all should benefit the company across the areas where it has recently seen claims challenges. This non-regulated business has grown substantially over the past few years and makes up a sizeable portion of the company’s consolidated earnings and is a meaningful contributor to the group’s earnings thus far in 2025. Furthermore, Humana Health Group holds the TRICARE East contract, which was renewed for an extended period. All of the group’s operations are strengthened by a well-developed ERM program to ensure proper oversight and mitigation of key risks.

The ratings of Humana Health of Puerto Rico Group reflect its balance sheet strength, which AM Best assesses as weak, as well as its marginal operating performance, limited business profile and appropriate ERM.

The ratings of Humana Health of Puerto Rico Group and outlook reflect its weak risk-adjusted capitalization measures, which was largely initially impacted by significant operating losses several years ago. These operating losses improved in 2024, as a result of changes in the premium deficiency reserve but have worsened significantly through the third quarter of 2025. This was due to a continuous increase in the MA medical cost trend, which is also the core business segment for the Puerto Rico operations. As a result of an elevated medical utilization trend, the larger of the two entities in the group, Humana Health Plans of Puerto Rico, Inc. reported a net loss of $33.6 million through the third quarter of 2025.

However, despite these operating challenges, Humana Health of Puerto Rico Group maintains the support of its parent company, Humana, as evidenced by material capital support in the form of capital contributions in 2024 and planned for year-end 2025. AM Best believes this support should help to restore capitalization and ensure compliance with this group’s regulatory capital position. This should mitigate the deterioration of Humana Health of Puerto Rico Group’s surplus in 2025. AM Best expects capital support to continue as needed to support these regulated entities as Humana Health of Puerto Rico Group navigates its current operating challenges. AM Best notes that these entities derive rating lift from the parent, and continued support is required for this to continue.

The parent, Humana, has demonstrated good financial flexibility due to its strong operating cash flows, subsidiary dividends and material available cash position, which has increased year-over-year. This is supplemented by the company’s commercial paper program, revolving credit agreement and access to borrowings from the Federal Home Loan Bank of Cincinnati through one of its core operating insurance entities, Humana Insurance Company. In line with other public health insurance carriers, unadjusted financial leverage was relatively high at 40.5% at year-end 2024 and remained elevated through the third quarter of 2025. While this slightly exceeds the entity’s target leverage ratio, interest coverage ratios remain sufficient to support Humana’s debt.

AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) with stable outlooks for the following health and dental insurance subsidiaries of Humana Inc.:

Humana Insurance Company
Humana Medical Plan, Inc.
Humana Health Plan, Inc.
Humana Health Benefit Plan of Louisiana, Inc.
Humana Health Plan of Texas, Inc.
Humana Health Insurance Company of Florida, Inc.
Humana Benefit Plan of Illinois, Inc.
Humana Health Plan of Ohio, Inc.
Humana Employers Health Plan of Georgia, Inc.
Humana Insurance Company of New York
Humana Wisconsin Health Organization Insurance Corporation
Humana Insurance Company of Kentucky
Cariten Health Plan Inc.
CarePlus Health Plans, Inc.
HumanaDental Insurance Company
CompBenefits Insurance Company
CompBenefits Company
CompBenefits Dental, Inc.
The Dental Concern, Inc.
DentiCare, Inc.

The following Long-Term IRs have been affirmed with stable outlooks:

Humana Inc.-

— “bbb” (Good) on $750 million 1.35% senior unsecured notes, due 2027

— “bbb” (Good) on $600 million 3.95% senior unsecured notes, due 2027

— “bbb” (Good) on $500 million 5.75% senior unsecured notes, due 2028

— “bbb” (Good) on $500 million 5.75% senior unsecured notes, due 2028

— “bbb” (Good) on $500 million 3.125% senior unsecured notes, due 2029

— “bbb” (Good) on $750 million 3.7% senior unsecured notes, due 2029

— “bbb” (Good) on $500 million 4.875% senior unsecured notes, due 2030

— “bbb” (Good) on $1.5 billion 5.375% senior unsecured notes, due 2031

— “bbb” (Good) on $750 million 2.15% senior unsecured notes, due 2032

— “bbb” (Good) on $750 million 5.875% senior unsecured notes, due 2033

— “bbb” (Good) on $850 million 5.95% senior unsecured notes, due 2034

— “bbb” (Good) on $750 million 5.5% senior unsecured notes, due 2035

— “bbb” (Good) on $250 million 8.15% senior unsecured notes, due 2038

— “bbb” (Good) on $400 million 4.625% senior unsecured notes, due 2042

— “bbb” (Good) on $750 million 4.95% senior unsecured notes, due 2044

— “bbb” (Good) on $400 million 4.8% senior unsecured notes, due 2047

— “bbb” (Good) on $500 million 3.95% senior unsecured notes, due 2049

— “bbb” (Good) on $750 million 5.5% senior unsecured notes, due 2053

— “bbb” (Good) on $1 billion 5.75% senior unsecured notes, due 2054

— “bbb” (Good) on $500 million 6% senior unsecured notes, due 2055

The following indicative Long-Term IRs have been affirmed with stable outlooks for the following shelf registrations:

Humana Inc.—

— “bbb” (Good) on senior unsecured debt securities

— “bbb-” (Good) on subordinated debt securities

— “bb+” (Fair) on preferred stock

The following Short-Term IR has been affirmed:

— AMB-2 (Satisfactory) on commercial paper program

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.

AM Best is a global credit rating agency, news publisher and 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, visit www.ambest.com.

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