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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 19, 2014 04:48 PM (EDT)
A.M. Best has affirmed the financial strength rating (FSR) of B+ (Good) and the issuer credit ratings (ICR) of "bbb-" of MVP Health Plan, Inc. and MVP Health Services Corp. Additionally, A.M. Best has affirmed the FSR of B (Fair) and ICR of "bb" of MVP Health Insurance Company and MVP Health Insurance Company of New Hampshire, Inc. (Bedford, NH). The outlook for all ratings is stable, except for MVP Health Services Corp, which was revised to negative from stable. Collectively, all companies are subsidiaries of their direct parent, MVP Health Care, Inc. and domiciled in Schenectady, NY, unless otherwise specified.
The rating affirmations reflect MVP Health Plan, Inc.'s good level of risk-adjusted capitalization, its fairly conservative investment portfolio and good brand name recognition in the upstate New York region. MVP Health Plan, Inc. remains the primary contributor to MVP Health Care, Inc.'s operations and its main source of dividends, including a dividend of approximately $95 million through June 2014 that was used to provide capital contributions to affiliated entities and funds various other initiatives in the group.
A.M. Best remains concerned about the recent deterioration in the organization's overall operating performance through mid-2014. Moreover, the organization faces continued challenges in the operating performance of its Medicare Advantage business line, which is government funded and heavily impacted by reimbursement rate cuts. Concerns over the lack of material capital improvement also remain, as well as over the lack of material signs of progress on its various strategic initiatives aimed at improving the organization's operating results.
In August 2013, MVP Health Plan, Inc. acquired Hudson Health Plan (HHP), a Tarrytown, NY-based Medicaid managed care organization. A.M. Best will continue to assess the ultimate impact of the HHP acquisition on the organization's overall operations, strategic plans, earnings and capitalization, as well as integration of this entity into MVP Health Plan, Inc.
The negative outlook assigned to MVP Health Service Corp. reflects A.M. Best's concerns over this entity's change in strategic direction; this has resulted in rapid growth in premium through the first half of 2014 and deterioration in earnings, causing further strain on its risk-adjusted capital position and requiring a capital infusion from the parent.
A.M. Best believes MVP Health Care, Inc. and its sister companies are well positioned at their current rating levels. Future negative rating actions could occur if these companies report further deterioration in operating results, have continued challenges in operating performance of government funded and/or commercial
small-group lines of business, or if a significant decline in risk-adjusted capitalization occurs.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.