Fitch affirms Humana

Fitch Ratings said it affirmed Humana Inc.'s BBB issuer default ratings following the announcement that the company is lowering earnings expectations announced in early February for 2008 by 25%.

The outlook is stable.

According to Fitch, the lower earnings expectation is related to changes in actuarial assumptions made in the company's standalone enhanced Medicare Part D product for 2008 based on experience witnessed during the first two months of the year.

The affirmation reflects strong growth in earnings and cash flow in recent years and membership trends, Fitch said.

Ratings reflect the company's stable balance sheet fundamentals, good cash flows and competitive position in several markets and product lines, the agency said.

Concerns include the increasing capital demands from rapid business growth in the Medicare market and the overall growing dependence on government business, Fitch said.

While Humana's debt-to-EBITDA ratio improved with strong cash flow generation in 2007, the company is expected to return to about 1.3 times in 2008, the agency added.

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