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A.M. Best Revises Outlook to Negative for EmblemHealth, Inc.'s Insurance SubsidiariesA.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of B+ (Good) and the issuer credit ratings of "bbb-" for 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 negative outlook reflects the material operating losses and decline in capital and surplus reported by HIP and GHI in 2014. HIP and GHI are the organization's core-operating entities for its New York business. The losses are predominantly in their health maintenance organization and Medicare Advantage products, which had previously been the main drivers of earnings for the organization. HIP and GHI continue to report losses in 2015, however, they have shown considerable moderation through the third quarter 2015. HIP's risk-adjusted capital has also declined substantially, and additional operating or net losses could further stress capitalization. The rating affirmations reflect EmblemHealth's solid market share in its core market, its growing enrollment in Connecticut, strength of its management team and evolving integrated delivery system model. Additionally, on a consolidated basis, EmblemHealth had consistently reported strong net gains through 2013. Through HIP and GHI, the organization holds a solid market share in the Greater New York Area, which includes the City of New York account. Furthermore, ConnectiCare and its subsidiaries have reported mterial enrollment gains over the past two years driven by individual and Medicare Advantage membership gains. EmblemHealth's management team has been strengthened through the addition of Karen Ignagni as the new president and chief executive officer. Ms. Ignagni had previously been the president of America's Health Insurance Plans, a national health insurance industry association. EmblemHealth is also working to more fully integrate its New York City health insurance operations with its affiliated multi-specialty physician group, AdvantageCare Physicians (ACP). ACP has 350 physicians and specialists and operates through 36 locations across the five boroughs of New York City. ACP provides high- quality cost-efficient care, which can benefit the members of HIP and GHI while improving operating results. Integrated healthcare systems can have a positive effect on medical expenditures through decreased unit cost and medical trend. They provide increased access to care in convenient locations, provide on-site ancillary services such as lab, pharmacy and imaging, as well as provide coordination of care, which can produce better outcomes and increase quality of care. A revision of the outlook to stable from negative could occur if EmblemHealth reports a trend of favorable operating results and materially improves its level of risk-adjusted capital. Negative rating movement could occur if the organization continues to report a trend of operating and net losses, if there is additional deterioration of risk-adjusted capital beyond current levels or if the organization experiences a material decrease in its market position in the Greater New York City area. This press release relates to rating(s) 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 visit A.M. Best's Ratings & Criteria Center. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
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