AM Best Downgrades Credit Ratings of Health Alliance Medical Plans, Inc. and Health Alliance-Midwest, Inc.

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to “bbb-” (Good) from “bbb” (Good) of Health Alliance Medical Plans, Inc. and its wholly owned subsidiary, Health Alliance-Midwest, Inc. The outlook of these Credit Ratings (ratings) is negative. Both companies are domiciled in Champaign, IL, and collectively are referred to as Health Alliance.

The ratings reflect Health Alliance’s balance sheet strength, which AM Best assesses as adequate, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM). In addition, the ratings consider the financial and operational support provided to the organization by its ultimate parent, The Carle Foundation, as Health Alliance plays an integral role within The Carle Foundation’s integrated health care delivery system.

The rating downgrades are attributed to a significantly higher-than-projected net loss reported through the second quarter of 2023, which was impacted by higher-than-expected cost and utilization trends. The losses in the first half of 2023 follow growing underwriting and net losses in 2021 and 2022. Additionally, the underwriting and net losses reported in the second quarter of 2023 were greater than AM Best had expected, leading to concern that the losses may accelerate throughout the year, similar to 2022.

The negative outlooks reflect AM Best’s concerns that the turnaround in operating performance and improvement in risk-adjusted capitalization may take longer than anticipated, as well as uncertainty over Health Alliance’s ability to meet its 2023 projection. AM Best will monitor the status of the organization’s operating performance and balance sheet position as the company implements corrective measures.

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 Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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