A.M. Best Assigns Initial Debt Rating to Health Net, Inc.; Affirms Ratings of Operating Companies.Business Editors A.M. Best Co. has assigned a "bbb-" to Health Net, Inc.'s (NYSE NYSE See: New York Stock Exchange : HNT HNT Hostage Negotiation Team ), Woodland Hills, California, $400 million, 8.375% senior notes, issued April 2001 and due April 2011. Additionally, the financial strength ratings of the group's life/health insurance subsidiaries were affirmed. The ratings of the companies of Health Net reflect their leadership position in most of the states which they operate, their diverse product portfolio and the historically profitable operations of Health Net's principal health plan subsidiary, Health Net of California, Inc., and Health Net's government operations This article aims to describe the financial expenditure associated with the operations and processes of world governments of all levels. Size of economic footprint
Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. at the Arizona and Oregon health plans The Oregon Health Plan is the Oregon state healthcare program for low income residents of Oregon. Eligibility Basic eligibility requires that the applicant be a resident of Oregon, as a citizen or otherwise. and overall moderate capitalization at the regulated entities. Health Net, one of the nation's largest publicly traded managed health care companies, provides health benefits to approximately 5.3 million individuals in 15 states through group, individual, Medicare, Medicaid and TRICARE programs. Over the last several years, Health Net has made significant progress in realigning its businesses to stem operating losses and return the business to profitability. The company has consistently increased premiums while culling culling removal of inferior animals from a group of breeding stock. The removal is premature, i.e. before completion of its life span, disposal of an animal from a herd or other group. unprofitable membership and produced good operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before . Strategy has focused on achieving economies of scale, which permit the company to compete effectively and further transform the organization to a higher level of care management through integration. Health Net's earnings have grown dramatically over the last four years, largely in response to its business improvement plan. Pre-tax loss of $254 million in 1998 has been replaced with pre-tax earnings of $137 million for 2001, including the impact of an $80 million restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. from consolidation of operations and a $76 million loss related to the Florida plan sale. Health Net also increased its equity to $1.2 billion as of December 31, 2001, and continued to achieve strong operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. . A.M. Best believes that these trends will continue in the near term. Although most of the regulated subsidiaries' risk-based capital (RBC RBC red blood cell. RBC or rbc abbr. red blood cell RBC, n See red blood cell count. RBC red blood cells; red blood (cell) count (see blood count). ) is in excess of mandatory RBC thresholds, A.M. Best believes the Health Net companies are moderately capitalized to support their level of business risks. Health Net is committed to maintaining overall subsidiary capital at approximately 300% of the authorized control level. However, when compared to its peers, A.M. Best considers this level to be somewhat low. Excess cash has been used to pay down debt and reduce financial leverage. Health Net's total debt to capital has declined from 63% in 1998 to 29.8% as of March 31, 2002, which is still slightly higher than the average of its peers. Over the near term, A.M. Best expects Health Net, Inc. will continue to manage its financial leverage at or below 30% of total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. . A.M. Best acknowledges that financial flexibility is good, given a borrowing capacity at over $500 million from a bank line of credit should any need arise. The following debt rating was assigned: - Health Net, Inc. --"bbb-" rating on $400 million 8.375% senior notes maturing in 2011 The following subsidiaries' financial strength ratings have been affirmed: - Health Net of California, Inc. A- (Excellent) - Health Net Life Insurance Co. A- (Excellent) - Health Net of AZ, Inc. B++ (Very Good) - Health Net Health Plan of OR, Inc. B++ (Very Good) - Health Net of Connecticut, Inc. B++ (Very Good) - Health Net Insurance of Connecticut, Inc. B++ (Very Good) - Health Net of New Jersey, Inc. B++ (Very Good) - Health Net of New York, Inc. B++ (Very Good) - Health Net Insurance of New York, Inc. B++ (Very Good) - Health Net of Pennsylvania, Inc. B++ (Very Good) 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. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion