N@N

A.M. Best Revises Outlook to Stable for Coventry Health Care, Inc. and Its Subsidiaries

_{//health-fitness.news-articles.net/content/2011/ .. ventry-health-care-inc-and-its-subsidiaries.html}
^{Published in Health and Fitness on Wednesday, March 9th 2011 at 10:35 GMT by Market Wire}  

OLDWICK, N.J.--([ BUSINESS WIRE ])--A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength ratings (FSR) and issuer credit ratings (ICR) of the majority of health care subsidiaries of Coventry Health Care, Inc. (Coventry) (Delaware) (NYSE: CVH). At the same time, A.M. Best has revised the outlook to stable from negative and affirmed the ICR of abbb-a and all debt ratings of Coventry.

"Understanding BCAR for Life and Health Insurers"

Additionally, A.M. Best has upgraded the FSR to B++ (Good) from B+ (Good) and ICRs to abbba from abbb-a of HealthCare USA of Missouri, LLC (St. Louis, MO) due to its improved operating performance and capitalization. The outlook for these ratings also has been revised to stable from negative. (See below for a detailed listing of the companies and ratings.)

Coventrya�s operating results improved substantially, as net income increased 81% in 2010 following two consecutive years of net earnings decline. The underwriting and operating gains grew at the majority of the subsidiaries in 2010, following their exit from the Medicare Advantage Private Fee For Service (PFFS) line of business, along with improved commercial pricing, some benefit changes for Medicare Advantage and reductions in administrative expenses. In addition, stronger earnings and premium reductions due to the exit from the PFFS business led to risk-based capitalization improvement. Furthermore, Coventry substantially improved its financial leverage during 2010, as the debt/capital ratio was 27.6% at year-end 2010, compared to 30.1% in the fourth quarter of 2009 and 35.7% in the fourth quarter of 2008. Coventry has a strong liquidity position, with $850 million cash on hand and $390 million of revolving credit available as of December 31, 2010.

Though Coventrya�s regulated earnings have improved, both the current and historical medical loss ratio at a number of Coventry subsidiaries is below the minimum loss ratio requirement for 2011. A.M. Best is concerned that Coventrya�s future regulated earnings may decline driven by mandatory rebates and eventually a higher medical loss ratio. In addition, earnings may be pressured by a growing share of lower margins in the Medicare and Medicaid businesses, as Coventrya�s commercial membership, though improved in 2010 compared to 2009, declined as a share of total enrollment over time.

The FSR of A- (Excellent) and ICRs of aa-a have been affirmed for the following subsidiaries of Coventry Health Care, Inc.:

• Coventry Health and Life Insurance Company
• Carelink Health Plans, Inc.
• Group Health Plan, Inc.
• HealthAmerica Pennsylvania, Inc.
• HealthAssurance Pennsylvania, Inc.
• Coventry Health Care of Georgia, Inc.

The FSR of B++ (Good) and ICRs of abbb+a have been affirmed for the following subsidiaries of Coventry Health Care, Inc.:

• PersonalCare Insurance of Illinois, Inc.
• Southern Health Services, Inc.
• Altius Health Plans
• Coventry Health Care of Iowa, Inc.
• WellPath Select, Inc.

The FSR of B++ (Good) and ICRs of abbba have been affirmed for the following subsidiaries of Coventry Health Care, Inc.:

• Coventry Health Care of Kansas, Inc.
• First Health Life & Health Insurance Company
• Cambridge Life Insurance Company

The FSR of B+ (Good) and ICRs of abbb-a have been affirmed for the following subsidiaries of Coventry Health Care, Inc.:

• Coventry Health Care of Louisiana, Inc.
• Coventry Health Care of Delaware, Inc.
• OmniCare Health Plan, Inc.
• Coventry Health Care of Nebraska, Inc.
• Mercy Health Plans of Missouri, Inc.
• Mercy Health Plans

The FSR of B (Fair) and ICRs of abb+a have been affirmed for the following subsidiaries of Coventry Health Care, Inc.:

• Coventry Health Care of Florida, Inc.
• Coventry Health Plan of Florida, Inc.
• Coventry Summit Health Plan, Inc.

The following debt ratings have been affirmed:

Coventry Health Care, Inc.a"

-- abbb-a on $400 million 6.3% senior unsecured notes, due 2014

-- abbb-a on $250 million 5.875% senior unsecured notes, due 2012

-- abbb-a on $250 million 6.125% senior unsecured notes, due 2015

-- abbb-a on $400 million 5.950% senior unsecured notes, due 2017

The principal methodology used in determining these ratings is [ Besta�s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition ], which provides a comprehensive explanation of A.M. Besta�s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: aRating Health Insurance Companiesa; aRisk Management and the Rating Process for Insurance Companiesa; aUnderstanding BCAR for Life and Health Insurersa; a[ Rating Members of Insurance Groups ]a; and a[ A.M. Besta�s Ratings & the Treatment of Debt ].a Methodologies can be found at [ www.ambest.com/ratings/methodology ].

Founded in 1899, A.M. Best Company is the worlda�s oldest and most authoritative insurance rating and information source. For more information, visit [ www.ambest.com ].

Copyright � 2011 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.