AM Best Downgrades Issuer Credit Ratings of HealthMarkets, Inc ... - Earthtimes (press release)
OLDWICK, N.J. - (Business Wire) A.M. Best Co. has downgraded the issuer credit rating (ICR) to “bbb” from “bbb+” and affirmed the financial strength rating (FSR) of B++ (Good) of HealthMarkets, Inc.’ s (HealthMarkets) (headquartered in North Richland Hills, TX) core subsidiaries, which include The MEGA Life and Health Insurance Company , The Chesapeake Life Insurance Company (both of Oklahoma City, OK) and Mid-West National Life Insurance Company of Tennessee (North Richland Hills, TX). A.M. Best also has downgraded the ICR to “bb” from “bb+” of HealthMarkets. The outlook for all ratings is negative.The rating downgrades primarily reflect a continued decline in premium revenue, increased financial leverage and declining subsidiary capitalization. Since HealthMarkets was acquired by a group of private equity firms led by the Blackstone Group, the organization has sold the assets for most of its other insurance divisions, leaving the self employed consumer health division as the primary revenue generator for the organization. Premium revenue for the self employed consumer health division continued to decline in 2008 due to lower agent sales, product changes, competitive pressure and general economic conditions. The 2008 operating results were negatively impacted by the organization’s entrance and exit of the Medicare Advantage market, product mix changes, a decline in investment income and realized losses.
