CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 31, 2019 01:45 PM (EDT)
AM Best has revised the outlooks to stable from positive and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Ratings of “bbb-” of Memorial Hermann Health Plan, Inc. and Memorial Hermann Health Insurance Company (both domiciled in Houston, TX). Collectively, the group herein is referred to as Memorial Hermann Insurance Operations. Concurrently, AM Best has withdrawn the Credit Ratings (ratings) of Memorial Hermann Insurance Operations at the client’s request to no longer participate in AM Best’s interactive rating process.
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.
The outlook revisions to stable from positive reflect an underwriting loss for the first six months of 2019 and a continuing trend of declining net premium driven by membership losses, both of which AM Best projects to continue through year-end 2019. In addition, AM Best expects a lower level of risk-adjusted capitalization at year-end 2019 due to Memorial Hermann Insurance Operations’ projected return of capital to Memorial Hermann. Memorial Hermann Insurance Operations continues to be challenged by a limited business profile largely reflecting its modest market share and 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.
AM Best is a global credit rating agency and information provider with an exclusive focus on the insurance industry.