A Less Healthy Health Insurance Sector

The weakened economy will pressure profitsand credit qualityin the managed care industry

The U.S. economy is in a recession, and the health insurance industry has not proved immune to what ails the nation. With joblessness on the rise, volatile financial markets, and consumer income either flat or falling by most measures, Standard & Poor's Ratings Services on Nov. 3 revised the outlook on the managed care industry to negative from stable. The impact of the deteriorating economy, slowing top-line growth, aggressive pricing strategies, and negative medical trend development were the key factors in our decision. As a result, over the next six to 12 months, we anticipate there will be more downgrades than upgrades in this sector.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.