A.M. Best Assigns Ratings to MHealth Insurance Company

  A.M. Best Assigns Ratings to MHealth Insurance Company

Business Wire

OLDWICK, N.J. -- November 30, 2012

A.M. Best Co. has assigned a financial strength rating of B (Fair) and an
issuer credit rating of “bb+” to MHealth Insurance Company (MHealth) (Houston,
TX). The outlook assigned to both ratings is stable.

The ratings recognize the strategic role MHealth plays and the explicit
support it receives from its ultimate parent, Memorial Hermann Healthcare
System. The parent company has demonstrated explicit financial support through
capital contributions and the implementation of a risk-based capital support
guarantee in the latter part of 2012. The ratings also reflect MHealth’s
strong risk-adjusted capital levels and its very conservative investment

Offsetting these positive rating factors are MHealth’s continued but improved
operating losses through 2012, which are projected to continue through
year-end 2013. Additionally, the company has a limited service area, coupled
with some concentration in small group business. A.M. Best believes the small
group business could be negatively impacted by healthcare reform and the setup
of exchanges, with MHealth potentially losing some business at a time when it
is trying to grow. However, the management at MHealth feels that healthcare
reform could have a positive impact based on its integrated approach and the
potential to offer competitively priced narrow network products and customer
friendly plan designs in a business-to-consumer marketplace. A.M. Best will
continue to monitor what the ultimate impact will be of these federal
regulatory changes on the plans business model, production and profitability
going forward. The outlook is based on the organization’s ability to maintain
its underwriting operating results and eventually produce favorable premium
growth trends and operating results in the near term.

On September 2011, MHealth (formerly known as UNICARE Health Insurance Company
of Texas) was sold by WellPoint Inc. to MHealth, Inc., and subsequently, its
name was changed to MHealth Insurance Company. Prior to the change in
ownership, UNICARE Health Insurance Company of Texas primarily wrote Medicare
supplement policies. This business was reinsured back to a subsidiary within
WellPoint Inc., and MHealth assumed a smaller amount of the commercial
individual and group accident and health business it was previously writing
through a fronting company.

Positive rating actions could occur if MHealth records favorable membership,
premium and underwriting/operating results, leading to organic capital
expansion. However, the ratings could be negatively impacted by significant
deterioration in the company’s operating performance and/or risk-adjusted
capitalization, a reduction in or stoppage of financial support from the
parent or a substantive impact of the regulatory environment relating to
healthcare delivery mandates and reform measures.

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at

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.


A.M. Best Company
Jennifer Afriyie, 908-439-2200, ext. 5203
Financial Analyst
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Joseph Zazzera, MBA, 908-439-2200, ext. 5797
Assistant Vice President
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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