A.M. Best Affirms Majority of Highmark's Financial Strength Ratings; Affirms Debt Rating and Revises Both Outlooks to Negative.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--March 1, 2004 A.M. Best Co. has affirmed the majority of the financial strength ratings and a senior debt rating of Highmark Inc. (Highmark) (Pittsburgh, PA). All of these rating outlooks have been revised to negative from stable. These rating actions affect Highmark's $375 million 6.8% of senior notes due 2013 and 13 interactively-rated subsidiaries. Concurrently, A.M. Best has downgraded the financial strength rating to A- (Excellent) from A (Excellent) of Highmark Casualty Insurance Company (HCIC HCIC Hurricane Contracting Information Center HCIC Hawaii Captive Insurance Council ) (Pittsburgh, PA), revising the rating outlook to stable from negative. Two issues that place near-to-medium term downward pressure on Highmark's financial strength include the Commonwealth of Pennsylvania's upcoming regulatory review of Highmark's--and the other three not-for-profit Blue plans'--surplus and claim reserve levels and Highmark's health insurance business' operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in Central Pennsylvania's 21-county service area. Pennsylvania's insurance regulator will scrutinize scru·ti·nize tr.v. scru·ti·nized, scru·ti·niz·ing, scru·ti·niz·es To examine or observe with great care; inspect critically. scru Highmark's surplus and reserve levels and quantify any excess by mid-2004. Any resulting surplus and claim reserve caps and mandated policyholder refunds could hinder Highmark's--and the other not-for-profit Blue plans'--ability to weather any softening of the pricing market for health insurance products, as well as an equity market downturn and/or deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the credit market, should they occur. The regulator's analysis--and resulting mandate--would not apply to the commonwealth's for-profit health underwriters, potentially placing the Blues at a financial strength disadvantage. Highmark Blue Shield's Central Pennsylvania health insurance business continues to generate sizeable operating losses. Although Highmark's management team is seeking proactively to stem the operating losses, A.M. Best does not foresee Highmark generating operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. in that region in the near term. The assignment of a negative outlook to the financial strength rating of United Concordia (Harrisburg, PA) and Highmark Life Insurance Company (Pittsburgh, PA) is driven by the pressure on the parent company's surplus. The negative outlook does not reflect any deterioration in these subsidiaries' stand-alone financial strength rating criteria. The downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. of HCIC reflects the deterioration of the company's operating performance over the last three years, driven by adverse development of workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. and loss reserves. For a complete listing of Highmark Inc.'s financial strength and debt ratings, visit www.ambest.com/press/030104highmark.pdf. For a list of A.M. Best's debt ratings, please visit http://www3.ambest.com/debtratings/. For current Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , independent data and analysis on more than 1,050 health companies and more than 130 HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, industry composites, please visit http://www3.ambest.com/health/ A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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