AM Best Downgrades Credit Ratings of Humana Health of Puerto Rico Group’s Subsidiaries; Affirms Credit Ratings of Humana Inc. and Most of Its Health Insurance Subsidiaries
AM Best has downgraded Humana Health of Puerto Rico Group's subsidiaries' ratings while affirming ratings for Humana Inc. and most health insurance subsidiaries. The Puerto Rico group's Financial Strength Rating was lowered to B+ from B++ with a negative outlook, following significant operating losses since 2023. The downgrade reflects weakening risk-adjusted capitalization and substantial operating losses, particularly in Medicare Advantage operations.
For Humana's main health subsidiaries, AM Best affirmed an A (Excellent) rating with stable outlook. However, the group faces challenges in its Medicare Advantage business due to increased medical costs and regulatory factors affecting payment rates and Star Ratings. Despite these pressures, Humana maintains strong market position and diversification through its CenterWell segment.
AM Best ha declassato i rating delle filiali di Humana Health di Porto Rico, mentre ha confermato i rating per Humana Inc. e la maggior parte delle filiali di assicurazione sanitaria. Il rating di Solidità Finanziaria del gruppo di Porto Rico è stato abbassato a B+ da B++ con un outlook negativo, a seguito di perdite operative significative dal 2023. Il declassamento riflette un indebolimento della capitalizzazione corretta per il rischio e perdite operative sostanziali, in particolare nelle operazioni Medicare Advantage.
Per le principali filiali sanitarie di Humana, AM Best ha confermato un rating di A (Eccellente) con outlook stabile. Tuttavia, il gruppo affronta sfide nel suo business Medicare Advantage a causa dell'aumento dei costi medici e dei fattori normativi che influenzano le tariffe di pagamento e le Star Ratings. Nonostante queste pressioni, Humana mantiene una forte posizione di mercato e diversificazione attraverso il suo segmento CenterWell.
AM Best ha rebajado las calificaciones de las filiales de Humana Health de Puerto Rico, mientras confirma las calificaciones para Humana Inc. y la mayoría de las filiales de seguros de salud. La Calificación de Solidez Financiera del grupo de Puerto Rico se disminuyó a B+ desde B++ con una perspectiva negativa, tras pérdidas operativas significativas desde 2023. La rebaja refleja un debilitamiento de la capitalización ajustada por riesgo y pérdidas operativas sustanciales, particularmente en las operaciones de Medicare Advantage.
Para las principales filiales de salud de Humana, AM Best ha confirmado una calificación de A (Excelente) con perspectiva estable. Sin embargo, el grupo enfrenta desafíos en su negocio de Medicare Advantage debido al aumento de los costos médicos y factores regulatorios que afectan las tarifas de pago y las calificaciones Star. A pesar de estas presiones, Humana mantiene una fuerte posición en el mercado y diversificación a través de su segmento CenterWell.
AM Best는 푸에르토리코의 후마나 헬스 계열사에 대한 신용등급을 하향 조정하였으며, 후마나 Inc.와 대부분의 건강보험 계열사에 대한 신용등급은 유지하였습니다. 푸에르토리코 그룹의 재무건전성 등급은 2023년 이후 상당한 운영 손실로 인해 B++에서 B+로 하향 조정되었으며, 전망은 부정적입니다. 이번 하향 조정은 위험 조정 자본의 약화와 상당한 운영 손실을 반영합니다. 특히, 메디케어 어드밴티지 사업부문에서의 손실이 큽니다.
후마나의 주요 건강 보험 계열사에 대해서는, AM Best는 A(우수) 등급을 유지하며 안정적인 전망을 제시하였습니다. 그러나 그룹은 의료비 상승과 지급 비율 및 스타 등급에 영향을 미치는 규제 요소로 인해 메디케어 어드밴티지 사업에서 어려움을 겪고 있습니다. 이러한 압박에도 불구하고, 후마나는 CenterWell 부문을 통해 강력한 시장 위치와 다각화를 유지하고 있습니다.
AM Best a abaissé les notations des filiales de Humana Health de Porto Rico, tout en affirmant les notations de Humana Inc. et de la plupart des filiales d'assurance santé. La note de Solidité Financière du groupe de Porto Rico a été réduite à B+ depuis B++ avec une perspective négative, suite à d'importantes pertes d'exploitation depuis 2023. Cette dégradation reflète un affaiblissement de la capitalisation ajustée au risque et d'importantes pertes d'exploitation, notamment dans les opérations Medicare Advantage.
Pour les principales filiales de santé de Humana, AM Best a confirmé une note de A (Excellente) avec une perspective stable. Cependant, le groupe fait face à des défis dans son activité Medicare Advantage en raison de l'augmentation des coûts médicaux et de facteurs réglementaires affectant les taux de paiement et les Évaluations Star. Malgré ces pressions, Humana maintient une forte position sur le marché et une diversification grâce à son segment CenterWell.
AM Best hat die Ratings der Tochtergesellschaften von Humana Health in Puerto Rico herabgestuft, während die Ratings für Humana Inc. und die meisten Krankenversicherungs-Tochtergesellschaften bestätigt wurden. Das Finanzstärke-Rating der Puerto Rico-Gruppe wurde von B++ auf B+ gesenkt, mit einem negativen Ausblick, nachdem seit 2023 erhebliche Betriebsverluste aufgetreten sind. Die Herabstufung spiegelt eine Schwächung der risikoadjustierten Kapitalisierung und erhebliche Betriebsverluste wider, insbesondere im Bereich der Medicare Advantage-Operationen.
Für die Hauptgesundheits-Tochtergesellschaften von Humana bestätigte AM Best ein A (Exzellent) Rating mit stabilem Ausblick. Der Gruppe stehen jedoch Herausforderungen im Bereich der Medicare Advantage aufgrund gestiegener Behandlungskosten und regulatorischer Faktoren bevor, die die Zahlungssätze und Star Ratings beeinflussen. Trotz dieser Drucksituationen behält Humana eine starke Marktposition und Diversifikation durch sein CenterWell-Segment bei.
- Strong market position nationwide
- Diversified revenue through CenterWell non-insurance segment
- TRICARE East contract renewal secured
- 7.5% compound annual growth rate in capitalization over past five years
- Significant operating losses in Puerto Rico subsidiaries ($63.9M in 2023, $16.4M through Q3 2024)
- Decline in risk-adjusted capitalization to weak level
- Increased medical cost trends in Medicare Advantage business
- High financial leverage at 41.8% as of year-end 2023
- Lower payment rates and reduced Star Ratings bonus revenue from CMS
Insights
The ratings of Humana Health Group reflects its balance sheet strength, which AM Best assesses as adequate, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).
Humana Health Group’s balance sheet strength is assessed as adequate, despite a decline in risk-adjusted capitalization to a weak level, as measured by Best’s Capital Adequacy Ratio (BCAR). The decline was primarily driven by strong premium growth in 2023 and related required capital to support these risks. The group’s premium expansion has outpaced capital growth in recent years, due largely to dividends from the regulated entities to the parent, Humana.
The Humana Health Group maintains a conservative invested asset portfolio that is mainly composed of investment grade fixed income securities, cash, and short-term investments in order to preserve capital and to supplement operating gains. Capitalization has increased annually over the past five years, rising at a
Humana Health Group generates the majority of its premium base from MA, but premium income is also sourced from Medicaid managed care and supplementary lines, including dental and vision. Effective 2023, Humana exited the commercial market. While its concentration of business in government health programs makes the organization susceptible to headwinds in the MA and Medicaid businesses, Humana benefits from an excellent market position that spans nationwide, which supports its favorable business profile assessment. Revenue and earnings are also diversified through Humana’s non-insurance segment, CenterWell. The CenterWell entities focus on value-based care initiatives through primary care, home care and pharmacy services operations. Furthermore, Humana Health Group holds the TRICARE East contract, which was recently renewed for an extended period. All of the group’s operations are supported by a well-developed ERM program to ensure proper oversight and mitigation of key risks.
The ratings of Humana Health of Puerto Rico Group reflect its balance sheet strength, which AM Best assesses as weak, as well as its marginal operating performance, limited business profile and appropriate ERM.
The ratings downgrade Humana Health of Puerto Rico Group and outlook revision to negative reflect its weakening risk-adjusted capitalization measures, driven by significant operating losses since 2023. These operating losses were predominantly brought on by a material increase in the MA medical cost trend, its primary business segment, which has persisted through 2024. This has caused a substantial deterioration of the group’s surplus, especially at Humana Health Plans of
Humana Health of Puerto Rico Group maintains the support of its parent company, Humana, as evidenced by material capital support within the past year in the form of two
The parent, Humana, has a good level of financial flexibility due to its strong operating cash flows, subsidiary dividends and material available cash position. This is further enhanced by its commercial paper program, revolving credit agreement and access to a borrowing capacity through the Federal Home Loan Bank of
AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) with stable outlooks for the following health and dental insurance subsidiaries of Humana Inc.:
- Humana Medical Plan, Inc.
- Humana Insurance Company
- Humana Health Plan, Inc.
-
Humana Health Benefit Plan of
Louisiana , Inc. -
Humana Health Plan of
Texas , Inc. -
Humana Health Insurance Company of
Florida , Inc. -
Humana Benefit Plan of
Illinois , Inc. -
Humana Health Plan of
Ohio , Inc. -
Humana Employers Health Plan of
Georgia , Inc. -
Humana Insurance Company of
New York - Humana Wisconsin Health Organization Insurance Corporation
-
Humana Insurance Company of
Kentucky - Cariten Health Plan Inc.
- CarePlus Health Plans, Inc.
- HumanaDental Insurance Company
- CompBenefits Insurance Company
- CompBenefits Company
- CompBenefits Dental, Inc.
- The Dental Concern, Inc.
- DentiCare, Inc.
The following Long-Term IRs have been affirmed with stable outlooks:
Humana Inc.-
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
— “bbb” (Good) on
The following indicative Long-Term IRs have been affirmed with stable outlooks for the following shelf registrations:
Humana Inc.—
— “bbb” (Good) on senior unsecured debt securities
— “bbb-” (Good) on subordinated debt securities
— “bb+” (Fair) on preferred stock
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in
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Timothy Willey
Financial Analyst
+1 908 882 2433
timothy.willey@ambest.com
Joseph Zazzera
Director
+1 908 882 2442
joseph.zazzera@ambest.com
Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310
christopher.sharkey@ambest.com
Al Slavin
Senior Public Relations Specialist
+1 908 882 2318
al.slavin@ambest.com
Source: AM Best
FAQ
Why did AM Best downgrade Humana's Puerto Rico subsidiaries in 2024?
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