Humana Inc. Receives Affirmation of Credit Ratings from AM Best

On December 16, 2025, AM Best, a leading global credit rating agency, 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. (NYSE: HUM), collectively known as the Humana Health Group. Additionally, the Long-Term ICR of “bbb” (Good) and the Long-Term Issue Credit Ratings (Long-Term IRs) of Humana Inc. were also affirmed, alongside a Short-Term Issue Credit Rating of AMB-2 (Satisfactory). Notably, the outlook for these ratings remains stable.

AM Best highlighted that the ratings for Humana Health Group are a reflection of the organization's balance sheet strength, categorized as adequate, coupled with strong operational performance and a favorable business profile. The group has demonstrated robust growth in premium revenues over recent years, although it has not been without challenges. Despite a slight improvement in risk-adjusted capitalization, measured by Best’s Capital Adequacy Ratio (BCAR), it remains at a weak level due to capital growth lagging behind premium revenue increases.

The organization has adopted a conservative investment strategy, primarily maintaining an asset portfolio composed of investment-grade fixed income securities, cash, and short-term investments. This approach aims to provide stability and bolster operating gains. Over the past five years, despite dividend payouts to the parent company, Humana, the group has reported an annual capital growth nearing double digits, although recent operating performance has faced pressures from the Medicare Advantage (MA) segment due to regulatory impacts such as lower payment rates and changes in bonus payments.

Humana Health Group's operating results have shown fluctuation during 2024 and 2025, influenced by the ongoing growth in the MA segment and rising claims trends attributed to deferred care during the COVID-19 pandemic. The company has experienced increased medical costs across a range of services, including inpatient stays and prescription drugs, particularly specialty medications. In response, Humana is focusing on margin stabilization within its MA segment, aiming for a 3% pretax margin (excluding STARs impact) by 2028. However, this strategy has led to a reduction in MA membership as the company exits certain unprofitable markets, with an anticipated rebound in growth projected for 2026.

Humana's non-insurance segment, CenterWell, plays a pivotal role in diversifying the company’s revenue streams. This segment focuses on value-based care through primary care, home care, and pharmacy services, contributing significantly to Humana's overall earnings in 2025. Furthermore, the renewal of the TRICARE East contract fortifies the group’s operations, ensuring continued support from a well-structured enterprise risk management (ERM) program.

In contrast, the Humana Health of Puerto Rico Group received a FSR of B+ (Good) and Long-Term ICRs of “bbb-” (Good), with a negative outlook. These ratings reflect the group’s weak balance sheet strength and marginal operating performance, compounded by challenges such as elevated medical utilization trends leading to substantial operating losses. Despite these difficulties, Humana’s support through capital contributions has been significant, providing essential backing to help restore capitalization levels.

Humana Inc. has demonstrated strong financial flexibility, supported by robust operating cash flows, subsidiary dividends, and a solid cash position. The company’s high unadjusted financial leverage, measured at 40.5% at year-end 2024, remains a concern but is mitigated by sufficient interest coverage ratios. The favorable market position of Humana, particularly in the MA and Medicaid segments, helps maintain its positive business profile, despite facing regulatory headwinds.

The affirmation of Humana Inc.'s credit ratings by AM Best underscores the organization's resilience and strategic positioning within the health insurance sector. While challenges persist—particularly in the Medicare Advantage segment—the company’s commitment to operational excellence and its diversified revenue streams through the CenterWell segment suggest a cautious optimism for continued profitability and growth in the years to come.