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OLDWICK, N.J.--([ BUSINESS WIRE ])--A.M. Best Co. has affirmed the issuer credit rating (ICR) of abbb-a and all debt ratings of Coventry Health Care, Inc. (Coventry) (Delaware) (NYSE: CVH).

"Risk Management and the Rating Process for Insurance Companies"

At the same time, A.M. Best has upgraded the financial strength rating (FSR) to A- (Excellent) from B++ (Good) and the ICRs to aa-a from abbb+a for Coventry Health Care of Iowa, Inc. (Omaha, NE) and Coventry Health Care of Illinois, Inc. (Champaign, IL) (f/k/a PersonalCare Insurance of Illinois, Inc.). A.M. Best also has upgraded the FSR to A- (Excellent) from B++ (Good) and the ICR to aa-a from abbba for Coventry Health Care of Kansas, Inc. (Kansas City, MO) and upgraded the FSR to A- (Excellent) from B+ (Good) and the ICRs to aa-a from abbb-a for Coventry Health Care of Louisiana, Inc. (Metairie, LA) and Coventry Health Care of Delaware, Inc. (Newark, DE). The rating upgrades reflect each companyas strategic importance to the Coventry brand, as well as the geographic and earnings diversification in each companyas respective markets.

Additionally, A.M. Best has upgraded the ICR to abbb+a from abbba and affirmed the FSR of B++ (Good) of HealthCare USA of Missouri, LLC (St. Louis, MO), due to its improved operating performance and enrollment growth. Concurrently, A.M. Best has upgraded the FSR to B++ (Good) from B+ (Good) and the ICR to abbba from abbb-a for OmniCare Health Plan, Inc. (Detroit, MI) based on its favorable underwriting trend and the adequate capitalization for its ratings.

A.M. Best also has upgraded the FSR to B+ (Good) from B (Fair) and the ICRs to abbb-a from abb+a for Coventry Health Care of Florida, Inc. , Coventry Health Plan of Florida, Inc. and Coventry Summit Health Plan, Inc. (all domiciled in Sunrise, FL). The revised ratings for each company are attributed to the strategic importance of each to the Coventry brand in Florida by adding geographical and earnings diversification as a health insurance carrier. The outlook for all ratings is stable. (See link below for a detailed listing of the companies and ratings.)

Coventryas operating results were strong in 2011 and near-term results are indicative of its strong performance. The earnings generated by Coventry have geographic and product diversification with no single reliance on one market or product. The medical loss ratios have been managed well, and the company has strived to build low cost structures in the various markets in which it operates. The organization has done well over the medium term to expand its footprint by acquiring businesses and by servicing new Medicaid contracts. Coventryas financial flexibility and liquidity position is excellent, with cash flows from operations of approximately $400 million in 2011, and more recently, a reported $900 million of free cash. The company also has a new five-year $750 million revolving credit facility of which no balances were outstanding through the early part of 2012.

Offsetting these favorable rating attributes is the weakness in Coventryas individual line of business compared to its industry peers, a decline in membership in its commercial risk segment and the competitive pressure in its large group administrative services only line of business. Due to the size of Coventryas individual business segment, it may not have the size to compete in the exchanged based market system against other larger established carriers. Coventry has built critical scale in other segments through acquisitions, which is an avenue not available in the individual line. Additionally, membership in the health plan commercial risk segment continued to decline through March 31, 2012. These losses may be attributed to large groups converting from fully-insured products to self-funded, and the losses also highlight the competitive environment in the large group market space where higher group retention is critical to achieving scale.

While the Coventry organization is well positioned at its present ratings, positive rating actions could occur if there were substantial and sustained earnings growth trends, expansion of its total membership base and an increase in its level of risk-adjusted capital. Key rating drivers that could lead to negative rating actions include a material deterioration in the organizationas risk-adjusted capitalization, a weakening trend of operating performance on an overall basis or in core markets and unfavorable regulatory pressure upon the commercial and government lines of business as well as deterioration in total enrollment.

For a complete listing of Coventry Health Care, Inc. and its subsidiariesa FSRs, ICRs and debt ratings, please visit [ www.ambest.com/press/051707coventry.pdf ].

The methodology used in determining these ratings is Bestas Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestas rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: aRisk Management and the Rating Process for Insurance Companiesa; aUnderstanding BCAR for Life/Health Insurersa; aRating Members of Insurance Groupsa; aAssessing Country Riska; and aInsurance Holding Company and Debt Ratings.a Bestas Credit Rating Methodology can be found at [ www.ambest.com/ratings/methodology ].

Founded in 1899, 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 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.