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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JULY 08, 2011 12:00 AM (EDT)
A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of Physicians Health Plan of Northern Indiana, Inc. (PHPNI) (Fort Wayne, IN).
The ratings of PHPNI reflect its current adequate risk-adjusted capitalization, its unique sponsoring physician network and support mechanism and its expansion growth initiatives. Offsetting factors include the company's negative net underwriting results in recent periods, its lack of external capital support and its geographic concentration.
PHPNI continues to maintain a more than adequate risk-adjusted capital position as measured by Best's Capital Adequacy Ratio (BCAR), which indicates that the company is currently well capitalized to implement its growth strategies, as well as its geographic and product expansion initiatives. The health plan had suffered deteriorating underwriting results in recent years, attributable to the abnormal severity and frequency of claims, as well as the implementation of its growth strategy through competitively priced products. However, operating results and capitalization improved significantly at year-end 2010 and through the first half of 2011. A.M. Best will continue to closely monitor the impact of PHPNI's expansion strategies and the financial impact of the health care reform regulations on its operations and capital levels going forward.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Rating Members of Insurance Groups"; "Rating Health Insurance Companies"; "Risk Management and the Rating Process for Insurance Companies"; "Update to BCAR for Life & Health Insurers"; and "Assessing Country Risk." Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.