A.M. Best Revises Rating Outlook to Stable for Humana Inc. and Its Flagship Insurance Subsidiaries.

OLDWICK, N.J. -- A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength ratings (FSR), issuer credit ratings (ICR) and debt ratings of Humana Inc. (Humana) (NYSE: HUM) (Louisville, KY) and the majority of its insurance and HMO subsidiaries.

Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of "a-" of Kanawha Insurance Company (Lancaster, SC) and the FSR of B+ (Good) and ICRs of "bbb-" Humana Insurance of Puerto Rico, Inc. and Humana Health Plans of Puerto Rico, Inc. (both of San Juan, PR). The outlook for these ratings is negative.

A.M. Best also has assigned a FSR of B++ (Good) and ICRs of "bbb" to CompBenefits Company (Miami, FL), CompBenefits Dental Inc. (Chicago, IL), CompBenefits Insurance Company, DentiCare Inc. (both of Houston, TX), OSF Health Plans, Inc., OSF Health Plans, Inc. (HMO) (both of Peoria, IL) and The Dental Concern, Inc. (Louisville, KY). The outlook assigned to these ratings is stable.

In addition, A.M. Best has withdrawn the FSR of B++ (Good) and ICR of "bbb" and assigned a category NR-3 (Rating Procedure Inapplicable) to CHA HMO, Inc. (Lexington, KY). (See link below for a detailed listing of the companies and ratings.)

These rating actions reflect Humana's national product offerings, strong membership and revenue growth, expanding supplemental benefit revenue and record net income levels. Humana has achieved a significant Medicare market presence, achieving high membership levels in the Medicare Advantage and Medicare Part D product lines. Humana's national Medicare product offerings have aided in the expansion of its commercial market reach. Through the acquisitions of CompBenefits and KMG America, Humana has significantly expanded its supplemental product offerings, enrollment and revenue.

Partially offsetting these positive rating factors are the high concentration of Humana's revenue and net income in government sponsored programs, operating margins that are relatively low as compared to its peers and modest consolidated risked-based capitalization. While Humana continues to contribute capital to its insurance entities to finance membership growth, consolidated risk-based capital has improved but is still considered modest for the ratings.

Regarding the three entities with a negative outlook, A.M Best remains concerned with the operating results and capital levels at these companies and, going forward, will continue to monitor their operating results.

For a complete list of Humana Inc.'s FSRs, ICRs and debt ratings, please visit www.ambest.com/press/060503humana.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.