AUSHCAetna US Healthcare
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AUSHC is strongly positioned as the market leader in the health benefits and group insurance business, with strong competitive positions in several key markets and product lines.
Fitch expects AUSHC to maintain financial leverage at or below 20% following the completion of the spin-off.
AUSHC has experienced lower-than-expected operating performance in 2000 driven by higher-than-expected medical costs, challenges associated with recent acquisitions and shifting market demand to more open network-type products at a time when AUSHC has been emphasizing its traditional HMO products.
The surviving corporate entity will consist of AUSHC and its HMO subsidiaries; various HMOs, including some acquired from NYLCare Health Plans Inc.
Aetna's existing long-term debt will be assumed by ING as part of the sale, but AUSHC will issue commercial paper to replace existing commercial paper issued by Aetna.
While earnings at the largest operating unit, AUSHC, are considered very strong, they have been lower than Standard & Poor's earnings expectations for AUSHC at the time of the merger.
OUTLOOK: NEGATIVE While AUSHC plans to integrate NYLCare over a longer time period than the integration of U.