Fitch Ratings Upgrades Ratings of Anthem, Inc.Business Editors CHICAGO--(BUSINESS WIRE)--Aug. 13, 2002 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has upgraded Anthem, Inc.'s (Anthem) senior debt rating to 'A-' from 'BBB+', and raised the insurer financial strength rating of Anthem Insurance Companies, Inc. (AICI AICI Association of Image Consultants International AICI Acç o para o Acesso da Indùstria a Circuitos Integrados (Portugal) ) to 'AA-' from 'A+'. At the same time, Fitch has affirmed the 'A-' surplus notes rating of AICI and the 'AA-' insurer financial strength ratings of HealthKeepers, Inc., Priority Health Care, Inc. and Peninsula Health Care, Inc., which became subsidiaries of Anthem, Inc. following its acquisition of Trigon Healthcare, Inc. Also, Fitch is assigning a rating of 'BBB+' to Anthem, Inc.'s unsecured subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before that were issued as part of the 4.6 million equity security units that the company sold in connection with its demutualization Demutualization The process of changing corporate structure from a mutual fund company to some other form, such as a limited liability or corporation. Notes: This means mutual/life insurance companies convert from policyholder companies to stock companies. in 2001. The Rating Outlook is Stable. Today's rating action reflects a trend of consistent performance improvement at Anthem over the past several years, growing geographic diversification of the company's businesses, strengthening competitive position within various regions and enhanced financial flexibility. Anthem has shown a stable trend of operating improvements over the past several years. For 2001, the company reported pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 4.5%, up from 3.5% the previous year, reflecting enrollment growth, a lower medical cost ratio and improvements in administrative efficiency. The company's consolidation of a number of Blue Cross Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. plans over the past several years has substantially diversified the regions from which it draws its premium revenue. The company currently operates Blues plans in nine states organized into four regions. As a result of its performance and ability to use the Blue Cross and Blue Shield names, Anthem's competitive position in each of these states is considerable. Anthem became a publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. in October of 2001 in a very successful demutualization. The company has recently employed its strengthened financial flexibility through its July 31, 2002 acquisition of Trigon Healthcare, Inc. (Trigon) in a cash and stock transaction valued at over $4 billion. Although Fitch considers Trigon to be an excellent strategic fit for Anthem, and has taken a positive view of the overall transaction, today's rating action is driven more by Fitch's ongoing review of Anthem rather than the closure of the transaction itself. Anthem's ratings continue to be supported by the company's strong balance sheet fundamentals, expanding geographic diversification, solid management team, and strong competitive position in its chosen markets. These strengths are offset to some extent by the considerable issues facing the health insurance industry, including the rapidly increasing cost of providing healthcare services, as well as regulatory and legal challenges that may affect the extent to which industry participants can manage costs and price their products appropriately. Indianapolis-based Anthem reported consolidated operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. of approximately $5.6 billion in the first half of 2002. The company is one of the largest health insurers in the nation, providing a variety of health insurance products and services to approximately 10.5 million people following its acquisition of Trigon. Anthem currently provides health benefits under the Blue Cross and Blue Shield names and marks in Indiana, Kentucky, Ohio, Connecticut, 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). , Maine, Colorado, Nevada and the vast majority of Virginia. Entity/Issue/Action/Rating/Outlook Anthem, Inc. --Senior debt Upgrade 'A-'/Stable; --Subordinated debt Assign 'BBB+'/Stable. Anthem Insurance Companies, Inc. --Insurer financial strength Upgrade 'AA-'/Stable; --Surplus notes Affirm To ratify, establish, or reassert. To make a solemn and formal declaration, as a substitute for an oath, that the statements contained in an Affidavit are true or that a witness will tell the truth. 'A-'/Stable. HealthKeepers, Inc. --Insurer financial strength Affirm 'AA-'/Stable. Priority Health Care, Inc. --Insurer financial strength Affirm 'AA-'/Stable. Peninsula Health Care, Inc. --Insurer financial strength Affirm 'AA-'/Stable. |
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