A.M. Best Downgrades Five Aetna Units, Assigns Ratings to 23 Aetna HMOs.OLDWICK, N.J.--(BUSINESS WIRE)--Aug. 26, 1998--A.M. Best Co. today downgraded and removed from under review five Aetna operating entities from "A+" (Superior) to "A" (Excellent). The action affects three health maintenance organizations--United States Health Care Systems of Pennsylvania, Inc.; Aetna U.S. Healthcare U.S. Healthcare is a now-defunct healthcare company. The logo had an apple. The merger with Aetna In 1996, the company merged with Aetna, calling it Aetna U.S. Healthcare. The U.S. Healthcare apple logo was next to the Aetna name, and U.S. Healthcare under it. U.S. Inc. (a New Jersey corporation); and U.S. Healthcare Inc. (a 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 corporation)--and two insurance operations--Aetna Life Insurance & Annuity Co. and its direct subsidiary, Aetna Insurance Company of America. A.M. Best also lowered the ratings of Aetna U.S. Healthcare Inc. (a Connecticut corporation) and Aetna U.S. Healthcare Inc. (a Massachusetts corporation)--two other wholly owned 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, operating entities--from "A" (Excellent) to "A-". The Excellent ratings reflect Aetna's consolidated operating profile, financial strength, strong capitalization and excellent position in the managed health-care market. However, Aetna's total operating earnings--of which Aetna U.S. Healthcare is its largest operating unit--have not met A.M. Best's earnings expectations for Superior-rated companies over the past 12 months. The rating actions also reflect the presence of above-average goodwill and intangibles on the company's books. In view of market pressures, A.M. Best does not view the health-care market as maintaining a "Superior" operating profile. The managed health-care industry as a whole is experiencing increased medical costs and pricing pressures from employer groups employer group Association of employers Managed care An entity with a current group benefits agreement in effect with a health plan to provide covered health care services to its employee-subscribers and eligible dependents. and competitors. The industry also is challenged by tightened reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. for Medicare-risk business. These issues are at the heart of the drive for consolidation, whereby companies hope to achieve operating efficiencies through increased membership. In light of these challenges, A.M. Best believes Aetna's excellent ratings reflect its strengths and market position in this difficult market. Nevertheless, A.M. Best believes Aetna will have difficulty significantly improving its GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). operating performance over the near term. Aetna Inc. and its subsidiaries is one of the nation's largest health benefits companies. The Aetna U.S. Healthcare business segment is the largest operating unit operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon of Aetna Inc. Aetna U.S. Healthcare Inc. serves over 5.3 million insured HMO members, 8.7 million members in self-funded, administrative-services-only programs, and 1.8 million members receiving insurance under point-of-service, preferred-provider-organization and traditional indemnity contracts. Most of Aetna U.S. Healthcare's HMO membership is concentrated in the Mid-Atlantic and Northeast regions. The company also operates HMOs in another 29 states and the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). . In view of competitive pressures at the enterprise level, Aetna Life Insurance & Annuity Co.'s (ALIAC) rating also was revised to "A" (Excellent). Although ALIAC has continued to demonstrate strong operating fundamentals in its core businesses and its operating performance has been favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. , the rating reduction reflects its role within the Aetna enterprise, which is dominated by health-care business. In addition, A.M. Best has assigned initial ratings to 23 wholly owned health maintenance organizations of Aetna Inc. The 23 new ratings are as follows: An "A" (Excellent) rating has been assigned to Aetna Health Plans of Central and Eastern Pennsylvania, Inc.; Aetna Health Plans of New Jersey, Inc.; Aetna Health Plans of New York, Inc.; Aetna U.S. Healthcare Inc. (a Texas corporation); Aetna U.S. Healthcare of North Texas; and Aetna U.S. Healthcare Inc. (a Virginia corporation). An "A-" (Excellent) rating has been assigned to Aetna U.S. Healthcare of California, Inc.; Aetna Health Plan of Southern 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. , Inc.; NYLCare Health Plan of Connecticut; Aetna U.S. Healthcare, Inc. (a Florida corporation); Aetna U.S. Healthcare of Illinois Inc.; NYLCare Health Plan of the Midwest; Aetna U.S. Healthcare Inc. (a Louisiana corporation); NYLCare Health Plan 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. ; Aetna U.S. Healthcare of the Carolinas, Inc.; Aetna Health Plans of the Carolinas, Inc.; Aetna U.S. Healthcare, Inc. (an Arizona corporation); Aetna U.S. Healthcare Inc. (an Ohio corporation); and Aetna U.S. Healthcare Inc. (a Washington corporation). A financial performance rating of "FPR FPR Ford Performance Racing FPR Front Patriotique Rwandais (Rwanda Patriotic Front) FPR Floating-Point Register (CPU architecture) FPR Fuel Pressure Regulator (automotive) 6" (Good) was assigned to Aetna U.S. Healthcare Inc. ( a New Hampshire New Hampshire, one of the New England states of the NE United States. It is bordered by Massachusetts (S), Vermont, with the Connecticut R. forming the boundary (W), the Canadian province of Quebec (NW), and Maine and a short strip of the Atlantic Ocean (E). corporation); Aetna U.S. Healthcare Inc. (a Tennessee corporation); Aetna U.S. Healthcare Inc. (a Colorado corporation); and NYLCare Health Plan of Maine. An FPR is assigned to small or new companies that do not meet the criteria required for an A.M. Best letter rating. In addition to the new HMO ratings, A.M. Best affirmed and removed from under review the "A" (Excellent) ratings of Aetna U.S. Healthcare Inc. (a Delaware corporation A Delaware corporation is a corporation chartered in the U.S. state of Delaware. Delaware is well known as a corporate haven, and thus, over 50% of US publicly-traded corporations and 58% of the Fortune 500 companies are incorporated in the state. ); NYLCare Health Plan of New Jersey; NYLCare Health Plan of New York; NYLCare Health Plan of the Southwest; NYLCare Health Plan of the Gulf Coast; and NYLCare of the Mid Atlantic Mid Atlantic can mean:
The new ratings and affirmations reflect the health plans' roles as strategic subsidiaries of Aetna and the strength these plans bring to the insurance operations through broad product offerings, network access and strong management of medical costs and utilization. The rating differences reflect variations in operating performance and, in some cases, modest market presence resulting from the fact that some of the companies are recent startups. A.M. Best also has affirmed and removed from under review the "A" (Excellent) rating of Aetna Life Insurance Co. and the "A-" (Excellent) ratings of Corporate Health Insurance Co., U.S. Health Insurance Co. (New York) and U.S. Health Insurance Co. (Connecticut). The "A" rating on Aetna Life Insurance reflects its role as one of the principal operating entities of Aetna Inc. Each company supports the marketing efforts of the HMO operations by providing point-of-service plans, preferred-provider organizations and traditional indemnity coverages on both an insured and self-funded basis. Aetna Life Insurance's product portfolio also includes significant blocks of group life business, long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. , disability and dental coverage. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com. CONTACT: Jeffrey Dunsavage 908/439-2200, ext. 5618 dunsavj@ambest.com |
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