A.M. Best Corrects and Replaces Previous Announcement for UnitedHealth Group Insurance Subsidiaries, BW2208, NJ-A.M.-BEST.Business Editors NOTE: The following news release replaces and corrects the previous A.M. Best news release, which ran earlier today on Business Wire, BW2208 (NJ-A.M.-BEST) NEW YORK--(BUSINESS WIRE)--July 3, 2001 A.M. Best Affirms Rating for UnitedHealth Group UnitedHealth Group Incorporated NYSE: UNH is a managed health care company. It is the parent of United Healthcare, one of the largest health insurers in the U.S. It was created in 1977, as UnitedHealthCare Corporation (it renamed itself in 1998), but traces its origin to a Insurance Subsidiaries And Takes Various Actions on 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 Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--July 3, 2001 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength rating of A (Excellent) for all the insurance subsidiaries of the UnitedHealth Group (UnitedHealth), Minnetonka, Minn. In addition, various UnitedHealth HMO subsidiaries have been raised, lowered and affirmed. The rating reflects their role as strategic subsidiaries of UnitedHealth, the operational and financial support they receive from their parent, diversity of product offerings, market dominance Market dominance is a measure of the strength of a brand, product, service, or firm, relative to competitive offerings. There is often a geographic element to the competitive landscape. in targeted geographic areas and continuous membership growth. These strengths are partially offset by exposure to a large AARP AARP, a nonprofit, nonpartisan national organization dedicated to "enriching the experience of aging"; membership is open to people age 50 or older. Founded in 1958 by Ethel Percy Andrus as American Association of Retired Persons, AARP now has over 30 million contract; continued strong competition and since 1998, significantly increased debt and financial leverage. The organization serves over 5 million commercial risk-based members as part of its UnitedHealthcare segment as of March 31, 2001. Additionally, UnitedHealth provides fee based and experience rated health care products to approximately 11 million members and serves another 3.5 million members through its contract with AARP. Differentiating UnitedHealth from its competitors are information systems, data conversion and process re-engineering, as well as flexibility in product packaging and design through insurance operations along with a strong consumer focus. UnitedHealth's medical-care ratio has declined recently, primarily as a result of commercial premium yield increases that have exceeded underlying medical cost increases. The ten-year AARP contract covers approximately 3.5 million members--a number that has been recently increasing as a result of new products and services offered. Even through underwritten risk is well managed and the contract is profitable, the size of the contract represents a concentration risk to UnitedHealth. UnitedHealth's historically good capital position--consisting of significant retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. and debt--maintains a strong financial backing for its insurance companies and HMOs. As of March 31, 2001, UnitedHealth's total debt increased from $708 million as of December 31, 1998, to $1.2 billion. During the same period, the company's financial leverage increased to approximately 23% from 14% and before 1998, it was debt free. Utilization of financial leverage is a key element of changes in financial policy begun in 1997, that allowed for a common stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program and redemption $500 million of convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". , to reduce the cost of capital. UnitedHealth has faced greater competition in virtually all of its markets. Although competition may temper tem·per n. 1. A state of mind or emotions; mood. 2. A tendency to become easily angry or irritable. 3. An outburst of rage. the growth of profit margins in the near-term and/or curtail cur·tail tr.v. cur·tailed, cur·tail·ing, cur·tails To cut short or reduce. See Synonyms at shorten. [Middle English curtailen, to restrict its operating presence in non-strategic markets, A.M. Best believes UnitedHealth has positioned itself to be a long-term player. UnitedHealth has leveraged its core strengths of managing health care and administrative operations to compete successfully as a national account business, an area that traditional insurers have been exiting for years. Likewise, A.M. Best has raised the financial strength rating of the following UnitedHealth HMOs to A (Excellent): -- United HealthCare of the Midlands -- UnitedHealthcare of New York -- UnitedHealthcare of Upstate New York A M. Best has lowered the financial strength rating of the following UnitedHealth HMO to A- (Excellent): -- United HealthCare of Texas Correspondingly, A M. Best has assigned a positive outlook to the financial strength rating of A- (Excellent) to UnitedHealth HMO United HealthCare of Arkansas. The A (Excellent) rating of the following life insurance companies was affirmed: -- United HealthCare Insurance Co. -- United HealthCare Insurance Company of Illinois -- United HealthCare Insurance Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- United HealthCare Insurance Company of Ohio The A (Excellent) rating of the following HMOs was affirmed: -- United HealthCare of Alabama -- United HealthCare of Florida -- United HealthCare of Georgia -- United HealthCare of Illinois -- United HealthCare of the Midwest -- United HealthCare of New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. -- UnitedHealthcare of North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. -- United HealthCare of Ohio -- UnitedHealthcare of Wisconsin The A- (Excellent) rating of the following companies also was affirmed: -- United HealthCare of Arizona -- United HealthCare of Colorado -- United HealthCare of Kentucky -- United HealthCare of Louisiana CODE, OF LOUISIANA. In 1822, Peter Derbigny, Edward Livingston, and Moreau Lislet, were selected by the legislature to revise and amend the civil code, and to add to it such laws still in force as were not included therein. -- United HealthCare of the Mid-Atlantic -- United HealthCare of Mississippi -- UnitedHealthcare of New Jersey -- United HealthCare of Tennessee -- United HealthCare of Utah -- United HealthCare of Virginia 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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