TEXT-S&P revises Coventry Health Care outlook to positive

Overview
-- Bethesda, Md.-based health insurer Coventry Health Care Inc.
announced today that it has entered into a definitive agreement to be acquired
by Aetna Inc.
-- As a result, we are affirming our 'BBB-' counterparty credit rating on
Coventry Health Care and revising the outlook to positive from stable.
-- The positive outlook reflects the likelihood that we will raise our
ratings on Coventry and its debt issues once the transaction closes, which
could occur in the next 12 months.

Rating Action
On Aug. 20, 2012, Standard & Poor's Ratings Services affirmed its 'BBB-'
counterparty credit rating on Coventry Health Care Inc. (NYSE: CVH). At the
same time, we revised the outlook to positive from stable.

Rationale
The outlook revision to positive from stable reflects our view that Coventry's
credit quality will improve as a result of its acquisition by Aetna Inc.
(A-/Stable/A-2), a significantly larger organization with a higher rating.
Upon closing of the transaction, we will likely treat Coventry as a
"strategically important" subsidiary of Aetna as defined by our criteria. This
means that our rating on Coventry would be initially capped at 'BBB+', or one
notch below that of Aetna. We usually view significant acquisitions as no more
than strategically important, rather than core, within a new organization at
least during the first year or two within the group.

This initial rating cap will not apply to Coventry's debt issues because Aetna
will be assuming all of Coventry's debt. After the transaction closes, we will
likely raise our rating on these debt issues to the same level as on Aetna's
debt.

Outlook
The positive outlook reflects the likelihood that we will raise our rating on
Coventry over the next 12 months. In the interim, we will continue to monitor
Coventry's financial results, which could still affect the rating until
transaction closing. For full-year 2012, we expect the company to generate
total revenues of $14.1 billion-$14.3 billion (including investment income),
adjusted EBIT of $680 million-$720 million, and a pretax return on revenues of
about 5%. We also expect year-end 2012 membership of 1.5 million commercial
risk members, at least 250,000 Medicare Advantage members, more than 1.5
million Medicare Part D members, and close to 1 million Medicaid members. We
also expect the company's capital redundancy will remain at least 'AA' based
no our capital model.

Related Criteria And Research
-- Group Methodology, April 22, 2009
-- Aetna Inc. Outlook Revised To Stable From Positive On Announced
Acquisition Of Coventry, Aug. 20, 2012

Ratings List
Ratings Affirmed; Outlook Action
To From
Coventry Health Care Inc.
Counterparty Credit Rating
Local Currency BBB-/Positive/-- BBB-/Stable/--

Ratings Affirmed

Coventry Health Care Inc.
Senior Unsecured BBB-