Press Release - MARCH 08, 2019
AM Best Revises Outlooks to Positive for Memorial Hermann Health Plan, Inc. and Memorial Hermann Health Insurance Company
FOR IMMEDIATE RELEASE
OLDWICK - MARCH 08, 2019
The ratings reflect Memorial Hermann Insurance Operations’ balance sheet strength, which AM Best categorizes as adequate, as well as its weak operating performance, limited business profile, and appropriate enterprise risk management.
The ratings also reflect Memorial Hermann Insurance Operations’ strategic role as the managed care subsidiary of Memorial Hermann Health System (Memorial Hermann), a fully integrated health care delivery system, as well as Memorial Hermann’s established network and overall creditworthiness, which enhances each entity’s assessment. Furthermore, the parent organization has historically demonstrated explicit financial support in the form of capital contributions to Memorial Hermann Insurance Operations.
After reporting significant underwriting losses in recent years, Memorial Hermann Insurance Operations became profitable in 2018 due to several implemented performance improvement initiatives, including an exit from the individual exchange market, a shift of membership mix toward HMO products, and improved operations and medical management. These earnings were accretive to growth in absolute capital and surplus and, combined with reduced premium, strengthened projected risk-adjusted capitalization. The positive outlooks reflect this enhanced projected risk-adjusted capitalization, as well as continuing financial and operational support from its parent company.
Memorial Hermann Insurance Operations continues to be challenged by a limited business profile largely reflecting its modest market share, geographically concentrated operations within the Houston, TX metro area, as well as highly competitive major medical and Medicare Advantage markets, which include larger national and regional health carriers.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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