Best’s News & Research Service - July 09, 2015 10:20 AM (EDT)
A.M. Best Revises Outlook to Negative for Lifetime Healthcare, Inc.'s Subsidiaries
Oldwick //BestWire// - A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of B++ (Good) and the issuer credit ratings of "bbb" of Lifetime Healthcare, Inc.'s (Lifetime) primary insurance subsidiaries: Excellus Health Plan, Inc. (Excellus), MedAmerica Insurance Company (MedAmerica) (Pittsburgh, PA), MedAmerica Insurance Company of New York (MedAmerica NY) and MedAmerica Insurance Company of Florida (MedAmerica FL) (Orlando, FL). All companies are domiciled in Rochester, NY, unless otherwise specified.
The rating actions reflect underwriting losses over the past few years and the declining trend of statutory profitability. During 2014, Excellus was challenged with unprofitable Medicaid Managed Care and Family Health Plus business in a number of upstate New York counties, losses in its Medicare Advantage line of business, increased prescription drug costs as well as greater health care cost trends and fees related to health care reform. Furthermore, the level of risk-adjusted capitalization has been declining the past few years. Additionally, Lifetime's long-term care subsidiaries (the MedAmerica companies) continue to report statutory losses driven by the block's poor performance. Excellus provides implicit and explicit financial and operating support to these subsidiaries. During 2015, it is anticipated that the MedAmerica companies will need to strengthen reserves and Excellus is expected to infuse the necessary capital to cover the reserves.
The affirmation of the ratings reflects Excellus' strong market position in the central and upstate regions of New York as the state's largest not-for-profit health insurer. Excellus is Lifetime's largest business operating both BlueCross BlueShield and non-branded plans. The company has focused on operational improvements, reducing administrative expenses and initiatives to improve operating performance such as exiting unprofitable markets and taking corrective pricing actions, as needed.
This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best's Ratings & Criteria Center.
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