A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating (FSR) of A+ (superior) and issuer credit ratings (ICR) of “aa-” of RiverSource Life Insurance Co. and its wholly owned subsidiary, RiverSource Life Insurance Co. of New York. A.M. Best also has upgraded the ICRs to “a+” from “a” and affirmed the FSR of A (excellent) of Ameriprise P&C Companies and its members. The outlook for these ratings is stable.
The Ameriprise P&C Companies’ ratings are based on the consolidated operating results and financial position of IDS Property Casualty Insurance Co. and its wholly owned, fully reinsured subsidiary, Ameriprise Insurance Co., A.M. Best says. Together, these companies represent the key life insurance and property/casualty subsidiaries of Ameriprise Financial Inc. (Ameriprise).
Concurrently, A.M. Best has revised the outlook to stable from negative and affirmed the ICR of “a-” and the existing debt ratings of Ameriprise. The revised outlook for the life insurance companies primarily reflects their strong risk-adjusted capital position and the improved liquidity and overall balance sheet strength of Ameriprise, the rating agency says.
S&P announced that ratings on Bermuda-based AXIS Capital Holdings Ltd. (A-/Stable/--) and its operating subsidiaries are not affected by the announcement of the resignation of the CFO, David Greenfield, effective Nov. 30, 2010. Greenfield is leaving the company on good terms to pursue other interests. AXIS has initiated a search for a successor to Greenfield. S&P doesn’t believe this management change is a concern given the strong executive management team and its proven track record.
Moody’s and S&P reacted to the announcement that Bravo Health Inc. will be purchased by HealthSpring Inc. for $545 million in cash. The targeted completion date for the acquisition is on or before the end of 2010, pending regulatory approval.
Moody's affirmed the debt ratings of Bravo (senior secured at B1; stable outlook) and the Ba1 IFS rating of its operating subsidiary. The rating affirmation reflects the similar lines of business in which HealthSpring operates as well as their similar credit profiles and the profile of the combined organization following the completion of the transaction, Moody’s says. Bravo's ratings reflect its small membership base, its concentration in the Medicare Advantage (MA) segment, its historically low, but improving, earnings margins, its adequate capitalization level and moderate financial leverage. The ratings also reflect the company's strong market position in the Philadelphia area and its experienced management team.
S&P announced that ratings on Bravo Health Inc. (B+/Stable/--) were unaffected by the announcement. Because of Bravo's improved financial profile, strong membership growth, and continued emphasis on and proficiency with managing medical cost and utilization, S&P’s recently (July 22) raised its counterparty credit rating on Bravo to 'B+', from 'B'. However, the rating is constrained by the company's concentration in the government-sponsored market segment and a geographic concentration in Pennsylvania. The company's operating performance is a key strength to the rating, S&P says.
A.M. Best downgraded the FSR to B++ (good) from A- (excellent) and the ICR to “bbb+” from “a-” of Glacier Reinsurance AG (Glacier Re). At the same time, A.M. Best has placed both ratings under review with negative implications.
These actions follow Glacier Re’s announcement that it will cease underwriting new business and place its existing portfolio into a self-managed run off effective immediately. A.M. Best’s review will encompass an assessment of the financial position of Glacier Re as a run-off company, its staffing and other related issues.
Moody’s and S&P reacted to the announcement that HealthSpring Inc. will purchase Bravo Health Inc. (Ba1 operating company IFSR), a Medicare Advantage health insurer, for $545 million in cash. The targeted completion date for the acquisition is on or before the end of 2010, pending regulatory approval.
Moody's affirmed the debt ratings of HealthSpring (senior secured at Ba3; stable outlook) and the Ba1 IFS ratings (IFSR) of its operating subsidiaries. In affirming HealthSpring's ratings and maintaining a stable outlook, Moody's states that while the company will increase its outstanding debt by $500 million to finance the acquisition, raising Debt to EBITDA from its current level of approximately 0.7 times, as a standalone entity, to approximately two times, this metric is expected to remain consistent with the current rating level. However, given the company's concentration in Medicare Advantage and the uncertainty as to the popularity and profitability of these products as a result of healthcare reform, the rating agency noted that HealthSpring's financial flexibility will be somewhat diminished at the higher leverage ratio.
S&P affirmed its 'B+' counterparty credit rating on HealthSpring Inc. The outlook on HealthSpring remains stable. The speculative-grade rating reflects rating weaknesses such as its very narrow product scope in Medicare programs, its limited historical geographic diversification (which it expects improve), a slight capital deficiency at the regulated subsidiaries, and a large amount of intangibles relative to equity on the balance sheet. In addition, S&P believes reduced government funding of the Medicare Advantage program over the next 10 years will likely pressure the company's long-term operating margins.
Fitch Ratings affirmed Humana Inc.'s (Humana) 'BBB' issuer default rating (IDR) and the 'BBB-' ratings on Humana's various senior unsecured note issues. Additionally, Fitch affirmed the insurer financial strength (IFS) ratings of Humana's various insurance company subsidiaries. All of the rating outlooks are negative.
Fitch's rating rationale includes Humana's record of solid interest coverage and earnings, reasonable financial leverage, and support provided by the company's high-quality and liquid investment portfolio. The rating rationale also includes the impact of Humana's comparatively high concentration to Medicare business, which has contributed 85% of pretax earnings through the first half of 2010, and targeted operating company capital levels, which are adequate for the current ratings. Additionally, the rationale considers risks associated with Humana's comparatively rapid growth, both organically and through acquisitions.
S&P affirmed the negative outlook on Markel. The affirmation reflects Markel's strong competitive position in the excess and surplus market as a specialty underwriter focusing on hard-to-place risks, the rating agency says. Markel has strong and redundant capital adequacy, as measured by Standard & Poor's risk-adjusted capital model at year-end 2009 and as of June 30, 2010. In addition, the company's liquidity is strong, with various capital sources.
Markel's operating performance has deteriorated because of soft market conditions and a high expense ratio. Other weaknesses include Markel's potential to incur adverse development on legacy asbestos and environmental reserves. The company also has an aggressive investment strategy with a great appetite for equities.
S&P revised its outlook on UnitedHealth Group Inc. and UnitedHealth's subsidiaries to stable from negative. The rating agency also affirmed its 'A-/A-2' counterparty credit rating on UNH, its 'A+' counterparty credit and FSRs on UnitedHealth's core operating companies, and its 'A' counterparty credit and FSRs UnitedHealth's strategically important operating companies.
UnitedHealth's business and financial profile are strong compared with peers', and the company is reasonably well positioned to preserve its credit profile in a stabilizing but still stressed marketplace, the rating agency says. The group's financial performance exceeded expectation for 2009, and results have strengthened through June 2010. S&P expects that UnitedHealth' cash-flow generation and liquidity will be strong for the remainder of 2010 and into 2011
S&P rates the holding company, UnitedHealth Group Inc., two notches lower than the core operating companies to reflect the holding company's dependence on dividends from them for debt servicing and the regulatory restrictions that prevent the free flow of funds within the organization.
S&P revised its outlook on Wellmark Inc. (doing business as Blue Cross and Blue Shield of Iowa), Wellmark of South Dakota Inc. (doing business as Blue Cross & Blue Shield of South Dakota), Wellmark Community Insurance Inc., and Wellmark Health Plan of Iowa Inc. to negative from stable. S&P also affirmed its 'A+' counterparty credit and FSRs on these companies.
The rating agency subsequently withdrew its ratings on Wellmark Community Insurance Inc. at the parent company's request because it has sold Wellmark Community Insurance Co.
The companies' continued weak operating earnings relative to peers, drop in membership, and flat investment returns led to outlook revision to negative, the rating agency says.
