Credit rating agency A.M. Best Co. affirmed the issuer credit rating (:ICR) of Coventry Health Care Inc. (CVH) at “bbb-”. The rating agency also reiterated all the debt ratings of the company.
Additionally, A. M. Best raised the financial strength rating (FSR) of Coventry’s subsidiaries – Coventry Health Care of Iowa Inc. and Coventry Health Care of Illinois Inc. – to “A-” from “B++” and the ICR of the subsidiaries to “a-” from “bbb+”. The rating agency also raised the FSR of two other subsidiaries - Coventry Health Care of Louisiana Inc. and Coventry Health Care of Delaware Inc. – to “A-” from B+” and their ICRs to “a-” from “bbb-”.
The FSR and ICR of Coventry Health Care of Kansas Inc. were also raised to “A-” and “a-” from “B++” and “bbb”, respectively. A. M. Best also raised the FSR of three other subsidiaries - Coventry Health Care of Florida Inc., Coventry Health Plan of Florida Inc. and Coventry Summit Health Plan Inc. – to “B+” from “B” and ICR to “bbb-“ from “bb-“.
Enhanced operating efficiency and expanding membership base of another subsidiary, HealthCare USA of Missouri LLC, led to reaffirmation of its FSR at “B++” and upgradation of its ICR to “bbb+” from “bbb”. Meanwhile, improved underwriting trend and satisfactory capitalization of OmniCare Health Plan Inc. prompted A. M. Best to upgrade the subsidiary’s FSR to “B++” from “B+” and ICR to “bbb” from “bbb-“.
A. M. Best has a stable outlook on all the ratings, indicating low possibility of any rating change in the near term.
Earlier this week, Coventry cancelled its agreement with Sequenom Inc. (SQNM) to provide coverage for the latter’s MaterniT21 PLUS test to its 2.2 million policyholders. Sequenom’s subsidiary, Sequenom Center for Molecular Medicine LLC, had signed a provider network participation agreement with Coventry on May 4, 2012, effective July 1, 2012.
However, on May 14, 2012, Coventry cancelled the agreement without citing any reason. The company will stop its overage of Sequenom’s tests from August 31, 2012.
Coventry currently carries a Zacks #5 Rank, which translates into a short-term ‘Strong Sell’ rating.
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