Best’s News & Research Service - June 27, 2007 04:01 PM (EDT)
A.M. Best Downgrades and Assigns Ratings to Health First Health Plans
OLDWICK, N.J. //BestWire// - A.M. Best Co. has downgraded the financial strength rating (FSR) to B (Fair) from B+ (Good) and assigned an issuer credit rating (ICR) of “bb” to Health First Health Plans (HFHP) (Rockledge, FL). The outlook for the FSR remains negative, and the outlook assigned to the ICR is negative.
HFHP’s stand-alone risk-based capital no longer supports a secure rating. A.M. Best believes HFHP’s Best’s Capital Adequacy Ratio (BCAR) score could improve modestly in 2007 and 2008; however, forecast Medicare business growth and modest net margins dilute meaningful BCAR improvement. HFHP’s parent—Health First, Inc.—has made the decision not to infuse additional capital into HFHP, but has chosen instead to maintain a modest level of capitalization over state statutory requirements.
Future profitability remains challenged on several fronts, despite HFHP’s strong quality of care reputation, product portfolio and network integration with its parent health care system. Profit margin pressures include pricing competition from national carriers and modest administrative cost structure erosion to finance implementation of a new claims, billing and enrollment technology platform.
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