A.M. Best Upgrades and Affirms Ratings of Molina Healthcare, Inc.’s HMO Subsidiaries

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--August 11, 2008--A.M. Best Co. has upgraded and affirmed the financial strength ratings (FSR) and issuer credit ratings (ICR) of the health maintenance organization (HMO) subsidiaries of Molina Healthcare, Inc. (Molina) (Long Beach, CA) [NYSE: MOH]. (Please see below for a detailed listing of the companies and ratings.)

These ratings are based solely upon public information and present the most informed view A.M. Best can offer, short of an insurer participating in the full interactive rating process. A.M. Best uses the same rating scale and definitions as it does for its long-term financial strength interactive ratings but applies a pd modifier to ensure the user is aware of the more limited information basis for the rating.

Molina’s HMO ratings reflect its various companies’ sufficient level of capitalization, mostly favorable underwriting performance and relatively consistent operating results. In addition, the recent acquisition of Mercy CarePlus will allow Molina to expand its operations into Missouri. Offsetting rating factors include a reliance on government sponsored programs, which A.M. Best believes could pose future profitability challenges for the organization should reimbursement rates be cut.

The FSR of B pd (Fair) and ICR of “bb” have been affirmed for Molina Healthcare of Washington, Inc.

The FSR has been upgraded to B- pd (Fair) from C++ pd (Marginal) and the ICR to “bb-”

from “b” for Molina Healthcare New Mexico.

The FSR of B- pd (Fair) and ICR of “bb-” have been affirmed for Alliance for Community Health, LLC (d/b/a Mercy CarePlus).

The FSR has been upgraded to C++ pd (Marginal) from C+ pd (Marginal) and the ICR to “b” from “b-” for Molina Healthcare of California, Inc.

The FSR of C++ pd (Marginal) and ICR of “b” have been affirmed for Molina Healthcare of Michigan, Inc.

The FSR of C+ pd (Marginal) and ICR of “b-” have been affirmed for Molina Healthcare of Utah, Inc.

For Best’s Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.