A.M. Best Revises Rating Outlook of Health Net, Inc. and Its Subsidiaries to Negative.OLDWICK, N.J. -- A.M. Best Co. has revised the rating outlook to negative from stable and has affirmed the financial strength ratings (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ), issuer credit ratings (ICR) and debt ratings of Health Net, Inc. (Health Net) (Woodland Hills, CA) [NYSE NYSE See: New York Stock Exchange : HNT] and its subsidiaries. The revised outlook reflects a declining risk-based capitalization (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). ) percentage trend owing to weakening health insurance earnings. A.M. Best recognizes that Health Net management forecasts improved medium term operating performance, driven partially by recently announced strategy related investments. However, Health Net remains subject to execution risk, as well as 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. risk. Furthermore, debt-to-capital increased to 27.5% during first quarter 2008. Coupled with Health Net's declining RBC percentage trend, these indicators jointly reflect the enterprise's reduced financial flexibility-heightening execution risk. Moreover, Health Net's management's goal is to reduce financial leverage to 25% or below by year-end 2008 with full-year forecast earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ) interest coverage approximating 10 times. A.M. Best plans to meet with Health Net executive management in the near term to further discuss 2008 and 2009 financial projections. The ratings also reflect Health Net's strength in its core California market and the enrollment and premium growth in the Medicare Advantage plans, in addition to favorable revenue and earnings contribution from the TRICARE North contract. For a complete list of HealthNet, Inc.'s FSRs, ICRs and debt ratings, visit www.ambest.com/press/051402healthnet.pdf. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com. |
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