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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 25, 2006 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating to B+ (Very Good) from B (Fair) of Physicians Health Plan of Northern Indiana, Inc. (PHPNI) (Fort Wayne, IN). The rating outlook is stable.
PHPNI's net earnings and underwriting results, as well as risk-based capitalization, have improved substantially over the past two years. This favorable trend is expected to continue in the medium term, owing to the organization's continued profitable financial results, strong physician support and modest business diversification.
PHPNI's continuing strategy of re-pricing unprofitable contracts has also proved beneficial. The Best's Capital Adequacy Ratio score improved almost 100 basis points since 2003 and reached 187% at year-end 2005. A.M. Best expects this strong level to continue in the medium term, along with very moderate membership growth due to PHPNI's declining exposure to large employer groups and focus on small to mid-sized (10 to 250 employees) groups in local markets. PHPNI's service excellence, secure capital position and focus on small to mid-sized employers present a significant barrier to competitors in northern Indiana.
Partially offsetting PHPNI's positive factors are lack of external capital support, competitive pricing pressures and geographic concentration. Membership growth is targeted to counties in the northern part of Indiana, which limits PHPNI's growth capabilities.
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