Weiss Ratings


HMO Profits Jump 60% in First Quarter 2003
More than 80% of Companies Profitable

JUPITER, Fla., January 20, 2004 — The nation's HMOs recorded a $2.3 billion profit for the first three months of 2003, representing an $854 million, or 60 percent, increase over the $1.4 billion earned during the first quarter of 2002, according to Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks.

HMOs reporting the largest year-over-year increases in net income include:

Company

Headquarters

Weiss Safety Rating

Net Income (Loss)

1st Qtr
2003
($Mil)

1st Qtr
2002
($Mil)


$
Change

Aetna Health Inc. (a Florida Corp.)

Tampa, Fla.

C-

61.4

5.3

56.1

Pacificare of Calif. Inc.

Cypress, Calif.

C-

38.3

-8.7

47.1

Health Ins. Plan of Greater N.Y.

New York, N.Y.

B+

81.1

35.3

45.8

Blue Cross Blue Shield of N.C.

Chapel Hill, N.C.

B

44.2

8.3

35.9

Aetna Health of Calif. Inc.

San Ramon, Calif.

C

21.0

-11.9

32.9

Weiss Safety Rating: A = Excellent, B=Good, C=Fair, D=Weak, E=Very Weak

"HMOs continue to thrive as a result of ongoing premium increases and effective cost-cutting measures," said Melissa Gannon, vice president of Weiss Ratings, Inc. "However, the boundless rate hikes, which helped the industry regain its strength the past several years, will eventually wane, giving consumers some much needed relief."

More than 80% of All HMOs Profitable in First Quarter

In analyzing the industry's first-quarter profitability, Weiss found that the number of HMOs earning a profit climbed to 80.2 percent in 2003 from 61.6 percent in 2001. The improved performance was evident across all HMO size categories, as illustrated by the following table:


Membership
(# of individuals)

# of HMOs
1st Qtr 2003

HMOs Reporting Profits
1st Qtr 2003

# of HMOs
1st Qtr 2001

HMOs Reporting Profits
1st Qtr 2001

Fewer than 100,000

318

73.9%

355

56.3%

100,000 to 250,000

114

86.8%

114

66.7%

250,000 to 500,000

56

94.7%

43

74.4%

500,000 or More

51

88.2%

51

76.5%

Total

539

80.2%

563

61.6%

No HMOs Downgraded in First Quarter

Of the 451 HMOs reviewed by Weiss using first-quarter 2003 data, 27 companies were upgraded, while none were downgraded. Notable upgrades include:

The Weiss Safety Ratings are based on an analysis of a company's risk-adjusted capital, five-year historical profitability, quality of investments, liquidity, and stability. The latter category combines a series of factors including asset growth, premium growth, strength of affiliate companies, and risk diversification.

Weiss issues safety ratings on more than 15,000 financial institutions, including insurance companies, banks, and brokerage firms. Weiss also rates the risk-adjusted performance of more than 12,000 mutual funds and more than 8,000 stocks. Weiss Ratings is the only major rating agency that receives no direct or indirect compensation from the companies it rates for issuing its ratings. Revenues are derived strictly from sales of its products to consumers, institutions, businesses, libraries, and governmental agencies.

Consumers needing more information on the financial safety of a specific company can purchase a rating and summary analysis for as little as $7.95 through www.WeissRatings.com, or starting at $15 by calling 800-289-9222.

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