CVS Health's Insurance Arm Maintains Top-Tier Credit Ratings Amid Operational Turnaround

AM Best has confirmed the A (Excellent) Financial Strength Ratings and credit credentials for Aetna Inc. and its network of health insurance subsidiaries—all wholly owned by CVS Health. The outlook across these ratings remains stable, signaling confidence in the group’s near-term trajectory.

The Picture Gets Complicated at the Parent Level

While Aetna Health & Life Group showcases impressive capital adequacy metrics and risk-adjusted capitalization at their strongest levels, the parent company CVS Health paints a different story. Elevated financial leverage and substantial goodwill on the balance sheet—which spiked beyond 120% of shareholder equity following the acquisitions of Oak Street Health and Signify Health—have weighed on the overall group dynamics.

The 2024 underwriting challenges forced CVS Health to inject capital into its insurance subsidiaries, sidelining deleveraging ambitions temporarily. Increased medical utilization and unfavorable Medicare Advantage star rating declines hit earnings hard last year.

Why 2025 Could Be a Turning Point

Here’s where the narrative shifts. Medicare Advantage star ratings rebounded for 2025, with roughly 90% of members now enrolled in 4+ star plans. Combined with pricing adjustments and operational improvements, management expects material profitability gains across the health insurance business during the year.

Investment income has remained steady and should continue boosting overall earnings. The reinsurance strategy—featuring both traditional carriers and specialized arrangements with Health Re Inc. and Vitality Re—provides additional protection against adverse claims development.

Market Position Remains Solid

Aetna continues operating as a leading national health insurance provider with diversified product lines spanning commercial, Medicare, and Medicaid segments. The group maintains strong competitive positioning across nearly every U.S. state, which provides resilience and geographic diversification.

Premium growth in commercial lines faces headwinds, but Medicare Advantage growth has offset declines. The broader CVS subsidiaries network, including Allina Health and CVS Caremark Indemnity, collectively maintain adequate to very strong balance sheet assessments.

The stable outlook reflects AM Best’s view that while parent-level leverage remains elevated, improving operating performance in 2025 should support gradual delevering and sustained capital strength across the CVS subsidiaries ecosystem.