A.M. Best Comments on Health Net Inc.'s Litigation Verdict.OLDWICK, N.J. -- A.M. Best Co. announced today that the financial strength ratings of Health Net, Inc.'s (Health Net) (NYSE NYSE See: New York Stock Exchange :HNT HNT Hostage Negotiation Team ) (Woodland Hills, CA) life/health and health maintenance organizations (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 and Health Net's debt rating remain under review with negative implications, subsequent to the $117 million verdict in a lawsuit against Health Net, which arose from the 1999 sale of one health plan subsidiary in Texas. Former rating actions include the placing of the ratings under review following the disclosure of lower consolidated risk-based capital levels than previously disclosed, specifically impacting Health Net of California, Inc., the organization's flagship entity. A.M. Best will continue to monitor the status of the organization through additional discussions with management, focusing its review on the exact charges and their impact on the quality of the holding company's capital. Estimates of charges related to the verdict as well as verdicts on litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. related to the sales of the Oklahoma and Louisiana plans are currently unknown. Cash outlays Outlays Payments on obligations in the form of cash, checks, the issuance of bonds or notes, or the maturing of interest coupons. are not expected for one-two years. A.M. Best continues to monitor Health Net's business strategy, membership retention, earnings growth and capitalization after the completion of corrective actions A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or following provider negotiations. Health Net's operating results improved in the first quarter of 2005 and the resolution of provider disputes is on track. Flexibility is also presently deemed good, given a borrowing capacity of $700 million from an unused bank of line credit. For Best's Debt Ratings, all other 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. , an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. For current Best's Ratings, independent data and analysis on more than 1,050 health companies and A.M. Best groups, please visit http://www.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 http://www.ambest.com. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion