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By Staff Report
Nov. 5, 2008
Standard & Poor’s Corp. has revised its outlook on U.S. heath insurers to negative from stable.
The New York-based rating agency cited several factors in lowering its outlook, including pressure on earnings, a weaker economic forecast and unfavorable results. The change means that over the next 12 to 18 months, S&P expects the number of downgrades to exceed upgrades in that sector.
Health insurers, however, are not facing the level of investment and equity market losses hampering other financial institutions, nor do they appear to face “product-linked liquidity concerns,” S&P said.
But U.S. job losses, small-business failures and government budgetary shortfalls likely will weigh on health insurer revenues, the rating agency said.
“Furthermore, we believe the challenging operating environment could expose errors in strategic judgment and execution of business fundamentals (such as predicting medical trend and pricing to it) that would have had less of an impact on the bottom line when growth was high and operating margins were more robust,” S&P said.
Filed by Roberto Ceniceros of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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