AM Best Affirms Aetna's Financial Strength Ratings
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
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Source: Newsfilter
- Rating Affirmation: AM Best has affirmed the Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Ratings of 'a' (Excellent) for Aetna Life Insurance Company and its subsidiaries, reflecting strong balance sheet strength and operational performance, which is expected to bolster investor confidence.
- Capital Structure Changes: Historically, Aetna has paid substantial dividends to its parent, but in 2024, capital contributions from CVS Health to support business growth led to a reduction in dividends, with expectations to return to historical levels, thereby improving capital adequacy ratios.
- Growth in Health Insurance: In 2025, Aetna's net premium written growth was primarily driven by government programs, particularly due to the Inflation Reduction Act's impact on Medicare Part D, although membership declined due to repricing strategies, with overall profitability showing improvement.
- Reinsurance Arrangements: Aetna Health & Life Group maintains moderate reinsurance leverage, utilizing traditional reinsurance with highly rated carriers and a quota share agreement with Health Re, Inc., enhancing its risk management capabilities and ensuring financial stability.
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Analyst Views on CVS
Wall Street analysts forecast CVS stock price to rise
17 Analyst Rating
16 Buy
1 Hold
0 Sell
Strong Buy
Current: 94.820
Low
91.00
Averages
96.71
High
105.00
Current: 94.820
Low
91.00
Averages
96.71
High
105.00
About CVS
CVS Health Corporation is a health solutions company. The Company's segments include Health Care Benefits, Health Services, Pharmacy & Consumer Wellness and Corporate/Other. The Health Care Benefits segment offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental and behavioral health plans, PDPs and Medicaid health care management services. The Health Services segment provides a full range of pharmacy benefit management (PBM) solutions through its CVS Caremark operations and delivers health care services in its medical clinics, virtually, and in the home. The Pharmacy & Consumer Wellness segment dispenses prescriptions in its CVS Pharmacy retail locations and, through its infusion operations, provides ancillary pharmacy services including pharmacy patient care programs, and vaccination administration, and sells a wide assortment of health and wellness products and general merchandise.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
AM Best Affirms Aetna's Financial Strength Ratings
- Rating Affirmation: AM Best has affirmed the Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Ratings of 'a' (Excellent) for Aetna Life Insurance Company and its subsidiaries, reflecting strong balance sheet strength and operational performance, which is expected to bolster investor confidence.
- Capital Structure Changes: Historically, Aetna has paid substantial dividends to its parent, but in 2024, capital contributions from CVS Health to support business growth led to a reduction in dividends, with expectations to return to historical levels, thereby improving capital adequacy ratios.
- Growth in Health Insurance: In 2025, Aetna's net premium written growth was primarily driven by government programs, particularly due to the Inflation Reduction Act's impact on Medicare Part D, although membership declined due to repricing strategies, with overall profitability showing improvement.
- Reinsurance Arrangements: Aetna Health & Life Group maintains moderate reinsurance leverage, utilizing traditional reinsurance with highly rated carriers and a quota share agreement with Health Re, Inc., enhancing its risk management capabilities and ensuring financial stability.
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- Payment Rate Increase: The Centers for Medicare & Medicaid Services finalized a 3% payment hike for Medicare Advantage players for next year, reflecting an improving backdrop of care utilization that further fuels optimism in the industry.
- Analyst Rating Upgrade: Following Bank of America's upgrade of UnitedHealth from Neutral to Buy, the stock rose about 5% on Thursday, with analyst Kevin Fischbeck projecting a broader managed care rally if utilization trends continue to improve.
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- Significant Market Potential: Eli Lilly's sales surged 56% year-over-year to $19.8 billion in Q1, with adjusted net earnings per share soaring 156% to $8.55, demonstrating strong performance and future growth potential in the weight loss market.
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- New Drug Coverage Expansion: CVS will also cover Eli Lilly's new GLP-1 pill, Foundayo, starting June 1, meaning all three largest PBMs in the U.S. will cover both drugs, further solidifying Eli Lilly's market position against competitors.
- Significant Sales Growth: Eli Lilly's first-quarter sales surged by 56% year-over-year to $19.8 billion, with adjusted net earnings per share soaring 156% to $8.55, demonstrating its strong performance and ongoing revenue growth potential in the weight loss sector.
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- Jobs Report Anticipation: The market is focused on the May jobs report set to be released before Friday's open, as it is expected to provide crucial insights into the strength of the economic recovery, thereby impacting stock performance and investor decisions.
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AM Best Affirms Aetna's Financial Strength Ratings
- Rating Affirmation: AM Best has affirmed the Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Ratings of 'a' (Excellent) for Aetna Life Insurance Company and its subsidiaries, reflecting strong balance sheet strength and operational performance, which is expected to bolster investor confidence.
- Capital Structure Changes: Historically, Aetna has paid substantial dividends to its parent, but in 2024, capital contributions from CVS Health to support business growth led to a reduction in dividends, with expectations to return to historical levels, thereby improving capital adequacy ratios.
- Growth in Health Insurance: In 2025, Aetna's net premium written growth was primarily driven by government programs, particularly due to the Inflation Reduction Act's impact on Medicare Part D, although membership declined due to repricing strategies, with overall profitability showing improvement.
- Reinsurance Arrangements: Aetna Health & Life Group maintains moderate reinsurance leverage, utilizing traditional reinsurance with highly rated carriers and a quota share agreement with Health Re, Inc., enhancing its risk management capabilities and ensuring financial stability.
See More
Managed Care Stocks Surge Led by UnitedHealth
- Market Recovery: After a 35% decline last year, UnitedHealth (UNH) has surged approximately 21% year-to-date, indicating a strong rebound in the managed care sector, particularly led by the Medicare Advantage market.
- Payment Rate Increase: The Centers for Medicare & Medicaid Services finalized a 3% payment hike for Medicare Advantage players for next year, reflecting an improving backdrop of care utilization that further fuels optimism in the industry.
- Analyst Rating Upgrade: Following Bank of America's upgrade of UnitedHealth from Neutral to Buy, the stock rose about 5% on Thursday, with analyst Kevin Fischbeck projecting a broader managed care rally if utilization trends continue to improve.
- Attractive Valuations: Despite the positive outlook, UnitedHealth's EV/EBITDA valuation is roughly in line with its five-year average, while CVS Health shows only a ~7% premium, suggesting that the sector still has room for further upside given the favorable setup.
See More
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- Price Range Analysis: The IWD ETF has a 52-week low of $188.55 and a high of $241.35, with the latest trade at $239.16, indicating stability near its high point, which may attract investor interest in its price fluctuations.
- Technical Analysis Tool: Comparing the current share price to the 200-day moving average can provide investors with valuable insights for technical analysis, helping to assess market trends and potential buying opportunities, thereby optimizing investment decisions.
- ETF Trading Mechanism: ETFs trade in 'units', meaning investors are buying and selling these units rather than traditional 'shares', allowing ETFs to flexibly respond to market demand and enhance liquidity.
- Inflows and Outflows Monitoring: Weekly monitoring of changes in shares outstanding for ETFs highlights notable inflows (new units created) or outflows (old units destroyed), which impacts the underlying holdings of the ETF and subsequently affects the market performance of related stocks.
See More
CVS to Cover Eli Lilly's Weight Loss Drugs
- Insurance Coverage Reinstated: CVS Caremark announced it will start covering Eli Lilly's weight loss drug Zepbound on October 1, reversing its previous decision to remove it, which could significantly boost Eli Lilly's sales.
- New Drug Coverage Expansion: CVS will also cover Eli Lilly's new GLP-1 pill, Foundayo, starting June 1, allowing Eli Lilly to compete more effectively with Novo Nordisk and further solidifying its market position.
- Significant Market Potential: Eli Lilly's sales surged 56% year-over-year to $19.8 billion in Q1, with adjusted net earnings per share soaring 156% to $8.55, demonstrating strong performance and future growth potential in the weight loss market.
- Increased Competitive Pressure: Despite competition from telemedicine companies, Eli Lilly is expected to maintain its leading position in the weight loss market through its broad product portfolio and robust pipeline, indicating ongoing growth opportunities.
See More
Eli Lilly's Weight Management Market Developments
- Insurance Coverage Restoration: CVS Caremark announced it will start covering Eli Lilly's weight loss drug Zepbound on October 1, reversing its previous decision to remove it from the formulary, which will allow more patients to access the medication at reasonable prices, thereby enhancing Eli Lilly's competitiveness in the weight management market.
- New Drug Coverage Expansion: CVS will also cover Eli Lilly's new GLP-1 pill, Foundayo, starting June 1, meaning all three largest PBMs in the U.S. will cover both drugs, further solidifying Eli Lilly's market position against competitors.
- Significant Sales Growth: Eli Lilly's first-quarter sales surged by 56% year-over-year to $19.8 billion, with adjusted net earnings per share soaring 156% to $8.55, demonstrating its strong performance and ongoing revenue growth potential in the weight loss sector.
- Optimistic Market Outlook: Despite intensifying competition, Eli Lilly is expected to ramp up sales of non-GLP-1 drugs over the next five years, leveraging its broad product portfolio and robust pipeline to maintain its leadership in the weight management market.
See More
Dow Jones Futures Flat, Nasdaq Futures Decline Ahead of Jobs Report
- Futures Market Movement: Dow Jones futures remained flat overnight, while S&P 500 and Nasdaq futures declined, reflecting market caution ahead of the upcoming jobs report, which could influence investor sentiment and market direction.
- Jobs Report Anticipation: The market is focused on the May jobs report set to be released before Friday's open, as it is expected to provide crucial insights into the strength of the economic recovery, thereby impacting stock performance and investor decisions.
- IPO Inclusion Standards: S&P Dow Jones Indices announced it will not fast track SpaceX and other upcoming megacap IPOs, such as Anthropic and OpenAI, into the benchmark index, which may affect market performance and investor expectations for these companies.
- Market Reaction Analysis: Given the sensitivity to employment data, investors may adopt a wait-and-see approach before the report's release, potentially leading to increased volatility in the market, particularly among tech stocks and those related to large IPOs.
See More
