A.M. Best Affirms Ratings of HealthMarkets, Inc. and Its Subsidiary

OLDWICK, N.J.--()--A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating (ICR) of “bbb” of The Chesapeake Life Insurance Company (Chesapeake) (Oklahoma City, OK), the core insurance subsidiary of HealthMarkets, Inc. (HealthMarkets) (headquartered in North Richland Hills, TX). Additionally, A.M. Best has affirmed the ICR of “bb” of HealthMarkets. The outlook for each rating is stable.

The rating affirmations reflect Chesapeake’s more-than-adequate risk-adjusted capitalization and trend of premium growth. The ratings also reflect the implementation of the organization’s change in business strategy over the past few years, which has shifted focus to supplemental insurance plans underwritten exclusively by Chesapeake under the name, SureBridge. The growth of Insphere d/b/a HealthMarkets Insurance Agency, Chesapeake’s affiliated company and distribution channel, combined with the growth of third-party agency distribution, has enabled Chesapeake to realize significant premium growth in recent years.

A.M. Best remains concerned about the lack of profitability at HealthMarkets on a consolidated basis. The losses have been driven by a decline in its premium revenue, attributable to the exit from major medical, net investment income and ongoing capital investment in Insphere. Furthermore, A.M. Best is concerned about the high level of financial leverage and the absence of interest coverage on a consolidated basis due to ongoing operating losses. While the organization’s adjusted financial leverage ratio considerably improved compared with the past, A.M. Best notes that HealthMarkets’ unadjusted financial leverage of more than 50% remains high relative to other companies of its size.

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 see A.M. Best’s Recent Rating Activity web page.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2016 by A.M. Best Rating Services, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Jeffrey Lane, +1 908-439-2200, ext. 5567
Managing Senior Financial Analyst
jeffrey.lane@ambest.com
or
Sally Rosen, +1-908-439-2200, ext. 5520
Vice President
sally.rosen@ambest.com
or
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1-908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best
Jeffrey Lane, +1 908-439-2200, ext. 5567
Managing Senior Financial Analyst
jeffrey.lane@ambest.com
or
Sally Rosen, +1-908-439-2200, ext. 5520
Vice President
sally.rosen@ambest.com
or
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1-908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com