Ratings Roundup: Centene, Illinois Casualty, States Self-Insurers

Standard & Poor’s Ratings Services has lowered its counterparty credit rating on Centene Corp .to ‘BB-‘ from ‘BB’ and removed it from CreditWatch, where it was placed on March 19, 2008, with negative implications. The outlook is now stable. “We lowered the rating one notch because of Centene’s full-year 2008 operating performance, which will likely be lower than our prior expectations,” explained S&P credit analyst Hema Singh. The change is “mainly attributable to adverse claim development in certain products and geographies, including higher-than-budgeted medical costs in the Ohio aged, blind, and disabled population,” S&P added. “Other factors that hurt the company’s performance include the harsher-than-expected flu season and lower investment income.”

A.M. Best Co. has downgraded the financial strength rating to ‘A’- (Excellent) from ‘A’ (Excellent) and issuer credit rating to “a-” from “a” of Illinois Casualty Company, and has revised its outlook on both ratings to stable from negative. “These rating actions reflect Illinois Casualty’s significant deterioration in underwriting and operating results that occurred in 2007 and the resultant negative impact on risk-adjusted capitalization,” Best explained. “The poor results in 2007 primarily were due to higher current accident year reserves as well as continued adverse loss reserve development on prior accident years. While management has implemented various initiatives to improve loss reserve development trends, it will take some time to determine the effectiveness of these measures, especially considering the company’s expansion, both geographically and into new lines of business, during a period of soft market conditions.”

A.M. Best Co. has affirmed the financial strength rating of ‘B+’ (Good) and issuer credit rating of “bbb-” of Vermont’s States Self-Insurers Risk Retention Group, Inc. (States Self-Insurers) with a negative outlook. Best concurrently withdrew the ratings and assigned a category NR-4 (Company Request) to States Self-Insurers in response to management’s request that the company be removed from A.M. Best’s interactive rating process. Best said the “ratings reflect States Self-Insurers’ good level of capitalization relative to the risks assumed, its history of moderate pretax operating income and its sound liquidity position. The ratings also reflect the niche market expertise States Self-Insurers exhibits as a provider of excess liability insurance to medium-sized public entities.”

Topics Illinois