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FOR IMMEDIATE RELEASE
OLDWICK - MARCH 10, 2017 04:04 PM (EST)
A.M. Best has downgraded the Financial Strength Rating to C++ (Marginal) from B (Fair) and the Long-Term Issuer Credit Ratings to “b+“ from “bb” 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. Concurrently, A.M. Best has placed these Credit Ratings (ratings) under review with negative implications.
The rating downgrades reflect the sizeable decrease in capital at the lead operating company, HIP, and a significant decline in the group’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, in 2016. At year-end 2016, HIP noted in its financial statements that it was below New York state’s minimum statutory reserve requirements of 12.5% of net premiums written and submitted a plan to restore its statutory reserve requirement to the state. However, A.M. Best notes that both GHI and ConnectiCare were above their respective state’s statutory reserve requirements. Additionally, significant losses for 2016 were attributable to the Medicare Advantage and Medicaid lines of business. These losses were partially offset by the sale of real estate, which generated substantial realized gains.
The under review with negative implications status reflects the capital plan filed with New York state, the significant decline in EmblemHealth’s capital and surplus and a multi-year trend of sizeable losses. The ratings will remain under review with negative implications pending further discussion with the company’s management team in late April 2017 regarding the filed capital plan and observed current trends.
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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