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FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 23, 2016 10:38 AM (EST)
A.M. Best has removed from under review with negative implications, downgraded the Long-Term Issuer Credit Ratings to “bb” from “bb+” and affirmed the Financial Strength Rating of B (Fair) of Health Insurance Plan of Greater New York (HIP), HIP Insurance Company of New York, Group Health Incorporated (GHI) and ConnectiCare, Inc. (ConnectiCare) (Farmington, CT). All companies are subsidiaries of EmblemHealth, Inc. and domiciled in New York, NY, unless otherwise specified. The outlook assigned to these Credit Ratings (ratings) is negative.
The rating downgrades reflect the sizeable decrease in capital at the lead operating company from historical levels following continued volatility in operating and net results. Significant losses through third-quarter 2016 were attributed largely to ConnectiCare Insurance Company, Inc., which previously had been a stable source of earnings for the organization. Furthermore, these losses were driven primarily by the organization’s individual exchange business. Additionally, EmblemHealth’s capital has been impacted negatively by unrealized losses due to the decline in valuation of its subsidiaries, a result of their unfavorable operating results. The negative outlooks reflect the decline in EmblemHealth’s capital and increase in premium leverage, as well as A.M. Best’s expectation of significant deterioration in risk-adjusted capitalization for full-year 2016. A.M. Best will continue to monitor the organization’s strategy toward potential improvement in earnings and capitalization strengthening.
These negative rating factors are partially offset by EmblemHealth’s solid market share in its core market. Through HIP and GHI, the organization holds a sizeable market share in the Greater New York area, which includes the New York City account. Also, ConnectiCare and its subsidiaries have continued to report enrollment gains over the past couple of years, driven mainly by individual and Medicare Advantage membership gains. Furthermore, EmblemHealth has no debt.
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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