(The following statement was released by the rating agency) CHICAGO, November 14 (Fitch) Fitch Ratings has assigned a ‘BBB’ rating to Anthem Inc.’s (ANTM) planned issue of new senior notes of various maturities. The rating on the planned issuance is equivalent to Fitch’s ratings on ANTM’s currently outstanding senior notes. Fitch has concurrently affirmed ANTM’s previously outstanding ratings and maintained their Negative Outlook. A full list of rating actions can be found at the end of this release. Prior to today’s action, Fitch’s last took actions on ANTM on May 19, 2017, when the agency affirmed ANTM’s ratings and assigned the Negative Outlook. Fitch expects proceeds from the notes to be used to finance ANTM’s previously announced acquisitions of HealthSun and America’s 1st Choice and to fund redemption or tender offers for various issues of ANTM’s outstanding senior notes. KEY RATING DRIVERS The ‘BBB’ rating assigned to the new senior notes and the affirmation of ANTM’s existing ratings reflect the company’s good capitalization and leverage characteristics, strong debt service and financial flexibility attributes and very strong business profile. The Negative Outlook considers the increase in ANTM’s financial leverage metrics resulting from the new senior notes issue and uncertainty as to whether the company will reduce those metrics to levels supportive of its current ratings, over the next 12 to 18 months. Key factors underlying this uncertainty are ANTM’s reliance on debt financing to fund acquisitions as well as the company’s ongoing share-repurchase efforts. The Negative Outlook also considers Fitch’s near-term projections for modestly lower coverage ratios, including the new issue on a pro forma basis and the potential for adverse financial effects from ANTM’s ongoing litigation with Cigna Corp. (CI) related to the May 2017 termination of the companies’ merger agreement. Fitch projects ANTM’s year-end 2017 debt-to-EBITDA ratio and financial leverage ratio (FLR), including the planned issue and anticipated debt redemptions or repurchases via tender offers on a pro forma basis, to be approximately 3.0x and 43%, respectively. Given Fitch’s understanding of ANTM’s plans to redeem or conduct tender offers for various ANTM notes as well as the company’s share repurchase plans, Fitch projects these ratios declining to approximate 2.7x and 40% by year-end 2018. Fitch projects ANTM’s near-term EBITDA-based fixed-charge coverage ratios including the new debt issue on a pro forma basis to be 7.5x-8.5x; a modest decline from the company’s 2014-2016 average of 9.2x. In 2017, ANTM anticipated receiving $1.9 billion of dividends from its subsidiaries, which Fitch estimates is approximately 2.2x pro forma interest expense. Debt service capabilities and financial flexibility continue to be supported by $2 billion of holding company cash and investments as of Sept. 30, 2017 and an untapped $3.5 billion bank credit facility. Fitch notes that ANTM and CI are currently litigating a $1.85 billion termination fee CI alleges it is due under terms of the merger agreement that was terminated in May 2017, as well as various damages claims and counter-claims. Fitch believes there is significant uncertainty around any amount and timing of payments between the companies resulting from the litigation. If the entire $1.85 billion termination fee is included in Fitch projections of ANTM’s year-end 2018 debt-to-EBITDA ratio and FLR the ratios increase to 3.1x and 42%, respectively. Similarly, if the entire $1.85 billion termination is included in Fitch’s projections of ANTM’s near-term EBITDA-based fixed-charge coverage ratios, the ratios decline to 5.3x-6.2x.