OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has upgraded the Financial Strength Rating (FSR) to B++
(Good) from B+ (Good) and the Long-Term Issuer Credit Rating (Long-Term
ICR) to “bbb” from “bbb-” of Physicians Health Plan of Northern Indiana,
Inc. (PHP) (Fort Wayne, IN). The outlook of these Credit Ratings
(ratings) is stable.
The ratings reflect PHP’s balance sheet strength, which AM Best
categorizes as strong, as well as its marginal operating performance,
limited business profile and appropriate enterprise risk management.
The upgrade of the ratings reflect the trend of balance sheet
strengthening for the company. PHP’s risk-adjusted capitalization, as
measured by Best’s Capital Adequacy Ratio, increased materially over the
past two years based on retained earnings and a decline in business
risk. The company exited the individual line of business after the end
of the 2016 benefit year, which drove a decrease in risk premiums and a
marked improvement in operating results that was the main driver of
capital and surplus growth. Premium growth resumed over the past year as
the company reported enrollment gains in its small group business. The
company’s fee revenue from its third party administration business also
has increased.
PHP rebalanced its investment portfolio in 2018, which drove an increase
in investment income and realized gains for the year. PHP’s investment
portfolio equity exposure declined as the allocation shifted from
single-issue equities to mutual funds and fixed-income securities.
However, as part of the change in investment strategy, the fixed-income
portfolio credit quality changed from predominately NAIC 1 bonds to an
equal mix of NAIC 1 and NAIC 2 bonds.
Partially offsetting these positive rating factors is PHP’s business
concentration in the small to mid-size group commercial segment in the
company’s core service area of Northern Indiana. PHP’s service area is
aligned with its network of sponsoring providers. PHP does not have a
material market share and it faces competition from large national
carriers. Furthermore, the company is exposed to regulatory risk as
about two-thirds of its small group business is in the Affordable Care
Act (ACA) compliant products.
This press release relates to Credit Ratings that have been published
on AM 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 AM 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. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
Bridget Maehr
Associate Director
+1 908 439
2200, ext. 5321
[email protected]
Sally Rosen
Senior Director
+1 908 439 2200,
ext. 5280
[email protected]
Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
[email protected]
Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
[email protected]
