A.M. Best Upgrades Ratings of EmblemHealth, Inc.’s Insurance Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has upgraded the financial strength rating (FSR) to B+ (Good) from B (Fair) and issuer credit ratings (ICR) to “bbb-” from “bb+” for Health Insurance Plan of Greater New York(HIP), HIP Insurance Company of New York and (Farmington, CT).

Concurrently, A.M. Best has upgraded the FSR to C+ (Marginal) from C (Weak) and ICRs to “b-” from “ccc+” for Group Health Incorporated (GHI) and GHI HMO Select, Inc. The outlook for all ratings is stable. All companies are subsidiaries of EmblemHealth, Inc. (EmblemHealth) and domiciled in New York, NY, unless otherwise specified.

The upgrading of the ratings for HIP and ConnectiCare reflect their continued favorable operating results and strengthening of their risk-adjusted capitalization through retained earnings. HIP’s favorable operating results mainly are from its Medicare and state sponsored businesses, and are the main source of earnings for EmblemHealth in New York State, while ConnectiCare is the main source of its earnings in Connecticut.

The upgrading of the ratings for HIP Insurance Company of New York acknowledge the explicit support of its intermediate parent, HIP, as well as its role as a strategic operating entity for the organization.

Positive rating movement could occur if HIP continues to record favorable operating results, reports improved operating results for its fee-for-service business and improves the quality of capital for all EmblemHealth subsidiaries. Negative rating actions could occur if HIP reports a significant decline in premium revenue, records large operating losses or experiences material deterioration of its risk-adjusted capital.

The rating upgrades of GHI and GHI HMO Select recognize their favorable operating performance, strengthened capitalization and financial support of their intermediate parent, HIP, as well as their profitable operating results for the first half of 2012. GHI’s operating results turned profitable in the first quarter of 2012, and its favorable earnings continued into the second quarter mainly from its Medicare business. This comes after it reported significant underwriting losses over the last three years mainly in its commercial business. GHI’s capitalization remains weak but has been supplemented through the issuance of surplus notes by HIP, which A.M. Best believes has a negative impact on its quality of capital.

Positive rating actions could occur if GHI reports consistently favorable operating results, shows substantive improvement in its risk-adjusted capital level and quality and reports improvement in the operating results from its commercial exclusive provider organization/preferred provider organization product lines. Negative rating movement could occur if GHI reports a return to operating losses, has a significant decline in premium revenue or experiences deterioration of its risk-adjusted capital.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Life/Health Insurers”; “Rating Members of Insurance Groups”; and “Evaluating Country Risk.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Co.
Bridget Maehr, 908-439-2200, ext. 5321
Senior Financial Analyst
[email protected]
or
Joseph Zazzera, MBA, 908-439-2200, ext. 5797
Managing Senior Financial Analyst
[email protected]
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
[email protected]
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Co.