United Healthcare 2007 Annual Report Download - page 36

Ratings. Currently, our senior debt is rated “A-” with a stable outlook by S&P, “A-” with a stable outlook by
Fitch, and “Baa1” with a stable outlook by Moody’s. Our commercial paper is rated “A2” with a stable outlook
by S&P, “F-1” with a stable outlook by Fitch, and “P-2” with a stable outlook by Moody’s.
Debt Covenants. Our debt arrangements and credit facilities contain various covenants, the most restrictive of
which require us to maintain a debt-to-total-capital ratio (calculated as the sum of commercial paper and debt
divided by the sum of commercial paper, debt and shareholders’ equity) below 50%. We were in compliance
with the requirements of all debt covenants as of December 31, 2007. On August 28, 2006, we received a
purported notice of default from persons claiming to hold our 5.8% Senior Unsecured Notes due March 15, 2036
alleging a violation of the indenture governing those debt securities. This followed our announcement that we
would delay filing our quarterly report on Form 10-Q for the quarter ended June 30, 2006. See Note 13 of Notes
to the Consolidated Financial Statements for details.
Bank Credit Facilities. In November 2007, we entered into a $1.5 billion 364-day revolving credit facility in
order to expand our access to liquidity. The credit facility supports our commercial paper program and is
available for general working capital purposes. As of December 31, 2007, we had no amounts outstanding under
this bank credit facility.
In May 2007, we amended and restated our $1.3 billion five-year revolving credit facility supporting our
commercial paper program. We increased the credit facility to $2.6 billion and extended the maturity date to May
2012. As of December 31, 2007 and 2006, we had no amounts outstanding under this credit facility.
In October 2006, we entered into a $7.5 billion 364-day revolving credit facility. Effective August 3, 2007, we
elected to reduce the amount of this facility to $1.5 billion. This credit facility expired on October 15, 2007.
Dividend Restrictions. We conduct a significant portion of our operations through subsidiaries that are subject to
standards established by the National Association of Insurance Commissioners. These standards, among other
things, require these subsidiaries to maintain specified levels of statutory capital, as defined by each state, and
restrict the timing and amount of dividends and other distributions that may be paid to their parent companies.
Generally, the amount of dividend distributions that may be paid by a regulated subsidiary, without prior
approval by state regulatory authorities, is limited based on the entity’s level of statutory net income and
statutory capital and surplus.
In 2007 and 2006, based on the previous years’ statutory net income and statutory capital and surplus levels, the
maximum amounts of dividends which could be paid without prior regulatory approval were $2.5 billion and
$2.2 billion, respectively. For the years ended December 31, 2007 and 2006, the Company’s regulated
subsidiaries paid approximately $2.9 billion and $2.5 billion in dividends to their parent companies, including
approximately $400 million and $300 million of special dividends approved by state insurance regulators,
respectively.
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