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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 29, 2010 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of Physicians Health Plan of Northern Indiana, Inc. (PHP) (Fort Wayne, IN). The outlook has been revised to negative from stable.
The ratings reflect PHP's adequate level of both absolute and risk-adjusted capitalization, which are currently sufficient to support its business and investment risk. The ratings also consider the company's continued effort to expand its product offering into additional counties in Indiana, as well as PHP's recently implemented initiatives for continued business and market share growth within the state through product and market segment diversification.
The revised outlook is largely driven by several factors, including PHP's significant and increasing operating losses over the last several years and its continued negative net underwriting income, mainly related to losses in its commercial line of business. A.M. Best remains concerned as to how PHP will perform in its expansion initiative without external capital support and in a market that is currently dominated by several established competitors.
A.M. Best will continue to monitor the company's ability to perform and prosper due to the recent health care reform changes as a stand-alone company with no capital support and its challenges in building operating scale to maintain lower loss and administration ratios.
These factors could be somewhat mitigated by PHP's focus on small and mid-sized groups through product diversification and cost saving initiatives. A.M. Best will continue to monitor PHP's capitalization, sale and marketing initiatives, as well as the financial impact on expansion initiatives as the company's strategy evolves.
For Best's Credit Ratings, an overview of the rating process and rating methodologies,. please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.