Risks Rise for U.S. Health Insurers in Troubled Economy
The outlook for health insurance companies rated by Standard and Poor’s has turned negative for the coming year to 18 months, the ratings agency said, as healthcare feels the pinch of the slumping U.S. economy.
More competition and aggressive pricing are contributing to the negative outlook as well, S&P said.
We believe job loss, small business failures, sustained competitive pricing, and budgetary shortfalls (particularly at state and local governments) likely will affect many U.S. health insurers, reducing revenue growth and gross underwriting margin (partly through business mix changes) and pressuring operating expense levels.
Health insurers have largely dodged the liquidity problems plaguing other financial institutions, and those with strong balance sheets will weather 2009 well, S&P said. Still, the ratings agency expects more downgrades than upgrades in 2009 and additional pressures from healthcare reform movements in 2010.
For details, Outlook On U.S. Health Insurance Sector Revised To Negative From Stable.
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