A.M. Best Affirms Rating of Oxford Health Plans.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--April 19, 2004 A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) of Oxford Health Plans, Inc.'s (OHP OHP Oregon Health Plan OHP Overhead Projector OHP Observatoire de Haute-Provence (French observatory) OHP Office of Historic Preservation OHP Oral History Project OHP Occupational Health Psychology OHP Oxford Health Plans Inc. ) (NYSE NYSE See: New York Stock Exchange : OXHP) (Trumbull, CT) insurance and health maintenance organization (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, ) subsidiaries. The rating outlook is stable. The rating reflects OHP's strong operating performance, improved level of statutory capital and brand name recognition. Offsetting factors include an increase in the parent company's debt level, stagnant stagnant /stag·nant/ (stag´nant) 1. motionless; not flowing or moving. 2. inactive; not developing or progressing. enrollment growth and concentration in a narrow geographic market. Should a merger opportunity materialize in the future, per recent uncorroborated news, A.M. Best will re-evaluate the rating. OHP's net and underwriting income Underwriting income For an insurance company, the difference between the premiums earned and the costs of settling claims. have been strong, with underwriting income in excess of $250 million and net income at approximately $200 million for the past several years. The medical loss ratio has remained below 80% since 1999, and the administrative loss ratio has remained below 12% during the same period. The combined ratio, currently in the low 90% range, is one of the lowest among its peers. OHP's positive income flows have allowed the consolidated organization to increase the level of capital over the past three years. In addition, the insurance subsidiaries have strengthened their statutory capital over the past two years. These strengths are offset by the increase in debt that occurred during 2003 when OHP borrowed $400 million via a senior secured term bank loan. The new borrowings increased the company's debt to capital ratio to 35% at year-end 2003, compared with 20% at year-end 2002. While cash flows from operations and interest coverage have been strong, A.M. Best remains concerned about the debt to capital ratio, which is higher than its peers. Membership growth has been constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. . The company's total enrollment has remained relatively flat over the past few years. Membership declined by over 3% in 2003 and has grown by only 3% since 2000. The lack of enrollment growth is attributable to OHP's concentration in the highly competitive New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. metropolitan area, which represents over 60% of commercial premiums and the effect of the economic downturn since 2001. The financial strength rating of A- (Excellent) has been affirmed for the following insurance and HMO subsidiaries of Oxford Health Plans, Inc.: -- Oxford Health Insurance Incorporated -- Oxford Health Plans (NY), Inc. -- Oxford Health Plans (NJ), Inc. -- Oxford Health Plans (CT), Inc. 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 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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