Humana Establishes $1.5 Billion Pre-Capitalized Trust Securities Program for On-Demand Capital

summarizeSummary

Humana established a $1.5 billion pre-capitalized trust securities program, providing access to on-demand capital through the potential issuance of senior notes due 2036 and 2055.

check_boxKey Events

• $1.5 Billion Pre-Capitalized Trust Securities Program

  Humana established two trusts (Horseshoe Funding Trust I and II) which issued and sold $1.5 billion in aggregate Pre-Capitalized Trust Securities (P-Caps) to initial purchasers.

• Access to On-Demand Capital

  The proceeds from the P-Cap sales were invested in U.S. Treasury securities. Humana now has the right to issue up to $750 million in 6.062% Senior Notes due 2036 and up to $750 million in 6.887% Senior Notes due 2055 to these trusts, effectively accessing the capital held by the trusts.

• Financial Flexibility and Mandatory Drawdowns

  This arrangement provides Humana with a source of liquidity, with mandatory drawdowns triggered by certain financial conditions, such as consolidated net worth falling below $4.0 billion, or specific payment defaults.

auto_awesomeAnalysis

Humana has secured access to $1.5 billion in future capital through a new pre-capitalized trust securities program. This arrangement provides the company with a significant source of liquidity, allowing it to issue senior notes to the trusts in exchange for U.S. Treasury securities held by the trusts. The facility includes provisions for mandatory drawdowns under certain financial conditions, such as a decline in consolidated net worth, ensuring a capital buffer.