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Best’s Special Report: U.S. Publicly Traded Health Insurers Take on Debt to Support M&A Strategy

OLDWICK, N.J.–(BUSINESS WIRE)–Debt obligations of publicly traded U.S. health insurers more than quadrupled over the last decade, to $138.3 billion in 2020 from $32.7 billion in a 2011, according to a new AM Best special report.

The Best’s Special Report, titled, “U.S. Publicly Traded Health Insurers Take on Debt to Support M&A Strategy,” states that the aggregate increase in debt obligations was driven by long-term debt, which rose $97.5 billion over this period to almost $127.0 billion, while short-term debt increased by just $8.2 billion, to $11.3 billion. The eight publicly traded health insurers followed in this report reported record earnings despite the COVID-19 pandemic, primarily the result of lower utilization, and accumulated a significant amount of cash. With the low interest rate environment, health insurers have maintained a heightened appetite for debt.

Additionally, according to the report, given the lack of organic growth in the commercial/employer sector in recent years, the expansion of government-sponsored programs such as Medicare and Medicaid and the potential opportunities to expand revenue and earnings, companies have become more interested in diversification, as well as mergers and acquisitions (M&A). Smaller-scale acquisitions by the larger carriers are likely to continue and may include not just insurance companies, but also other operations that support the health insurance business. Carriers will likely continue to attain greater product and geographical diversity, for insurance and non-insurance lines of business, as well as seek ways to realize greater economies of scale to reduce administrative expenses and improve bargaining power when contracting with providers.

With the uncertainty of COVID-19, many companies paused their share repurchase programs and cut back on dividends in 2020 in order to be prepared financially for worst-case scenarios. Many companies have since restarted their buyback and dividend programs. The aggregate return of capital for the publicly traded health insurers decreased by 4.1% in 2020 to approximately $19.6 billion. In 2020, despite recording the highest net income over the last decade, the total capital returned by the population was just 50% of the net income on the year, the second lowest percentage over the last decade.

Share repurchase programs and dividends are expected to return to normal in 2021. Through the first quarter, health insurers have returned approximately $7.9 billion, up $2.6 billion compared with first-quarter 2020.

To access the full copy of this special report, please visit

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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


Brian Keleher
Financial Analyst
+1 908 439 2200, ext. 5586

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644


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