OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating of C+ (Marginal) and the Long-Term Issuer Credit Ratings of “b-” of Health Insurance Plan of Greater New York (HIP), EmblemHealth Insurance Company, EmblemHealth Plan, Inc. (EHPI) 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 removal of the ratings from under review follows the completion of AM Best’s assessment of the consolidated financials of the group through year-end 2020 and assessment of the capital restoration plan.
The ratings reflect EmblemHealth Group’s balance sheet strength, which AM Best assesses as very weak, as well as its marginal operating performance, neutral business profile and marginal enterprise risk management.
The negative outlooks reflect continued pressures on the balance sheet strength assessment. EmblemHealth Group’s balance sheet strength is underpinned by its reserve levels, which AM Best expects to remain at the very weak level. The lead operating company, HIP, has been under a capital restoration plan with the New York Department of Financial Services since 2016. That restoration plan calls for meeting and complying with a reduced reserve requirement. AM Best notes that while HIP’s capital and surplus exceeded the reduced reserve requirement at year-end 2020 and is expected to increase in 2021 due to earnings improvement and other initiatives being taken to improve HIP’s capital position, the improvement in capital has taken longer than AM Best’s expectations. AM Best will continue to monitor the organization’s strategy and results regarding improvement in earnings and the strengthening of capitalization.
The rating affirmations reflect EmblemHealth Group’s solid market share in its core market and profitable net income the past few years. The business profile assessment also recognizes the group’s market position as one of the leading health insurers in its market. Through HIP and EHPI, the organization holds a solid market share in the Greater New York area, which includes the City of New York account. EmblemHealth Group has worked hard to more fully integrate its New York City health insurance operations with its affiliated multi-specialty physician group, AdvantageCare Physicians (ACP). ACP includes primary care physicians as well as specialists and operates through over 30 locations across the five boroughs of New York City. ACP provides high-quality, cost-efficient care, which benefits the members of HIP and EHPI while improving operating results. EmblemHealth Group has implemented several initiatives to improve operating performance, primarily driven by cost savings associated with the completion of its migration to a new operating platform, which has been outsourced. Furthermore, ConnectiCare and its subsidiaries have reported significant improvement in its financial results through 2020. While EmblemHealth has reported positive net income the past two years, the group has had a trend of underwriting losses driven by higher medical costs amid intensifying market competition.
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