A.M. Best Assigns Credit Ratings to Texas Health + Aetna Health Insurance Company and Texas Health + Aetna Health Plan, Inc.

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has assigned Financial Strength Ratings of A (Excellent) and Long-Term Issuer Credit Ratings of “a” to Texas Health + Aetna Health Insurance Company and Texas Health + Aetna Health Plan, Inc. (collectively, Texas Health Aetna). Both companies are domiciled in Arlington, TX. The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect support of the parent organizations, projected earnings growth and sufficient level of risk-adjusted capitalization. The Texas Health Aetna entities are the result of a 50/50 joint venture between Aetna ACO Holdings Inc. (Aetna), an affiliate of Aetna Inc. and Texas Health Resources (THR), a leading health system in the Dallas - Fort Worth area. Texas Health Aetna intends to focus on cost-efficient care delivery, customer convenience, and increased level of collaboration between payer and provider. Texas Health Aetna is expected to build on the strength of Aetna’s insurance operations and THR’s wide presence of hospitals and physicians in the service area. The premium at the new companies is expected to exhibit steady profitable growth over the next five years. The level of risk-adjusted capitalization is currently more than sufficient to support the anticipated level of business and investment risks. In addition, Aetna and THR have ample liquidity and capital resources to support the new entities if needed.

Offsetting rating factors include the start-up nature of operations and the highly competitive market in the service area.

Texas Health Aetna is susceptible to typical potential operational and business risks of a start-up company. The competitive advantage of Texas Health Aetna is tied to the ability of Aetna and THR to integrate their resources and build effective operations with a focus on the customer. Failure to execute may diminish the value proposition and make it difficult to achieve growth goals. The market in the Dallas - Fort Worth area remains very competitive, with a Blue plan and national carriers vying for business. Such market conditions create the potential for irrational pricing and pressure on carriers.

A.M. Best deviated from its “Rating Members of Insurance Groups” criteria report by providing the Texas Health Aetna entities with rating enhancement from Aetna and THR. As prescribed by the criteria, to be eligible for rating enhancement, an individual company must operate under common ownership (greater than 50%), with the entity providing lift or maintaining board control together with common management. In this case, Texas Health Aetna’s entities are not majority owned by Aetna or THR, but rather are equally owned by the two organizations.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20171003006532/en/

A.M. Best

Doniella Pliss, +1 908 439 2200, ext. 5104

Associate Director

[email protected]

or

Sally Rosen, +1 908 439 2200, ext. 5280

Senior Director

[email protected]

or

Christopher Sharkey, +1 908 439 2200, ext. 5159

Manager, Public Relations

[email protected]

or

Jim Peavy, +1 908 439 2200, ext. 5644

Director, Public Relations

[email protected]

Source: A.M. Best