Weiss Ratings


HMO Profits Skyrocket to $6.7 Billion
in First Nine Months of 2003

JUPITER, Fla., May 3, 2004 — The nation's HMOs continue to post robust profits, earning $6.7 billion in the first nine months of 2003, a 52 percent increase over the $4.4 billion reported a year ago, according to Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks. The strength of HMOs has improved substantially since 1999, the year in which the industry, following two years of losses, recorded a mere $524 million profit for the same nine-month period.

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

Company

Headquarters

Weiss Safety Rating

Net Income (Loss)

3rd Qtr
2003
($Mil)

3rd Qtr
2002
($Mil)

$
Change

Aetna Health Inc. (A FL Corp.)

Tampa, Fla.

C

120.0

(47.0)

167.0

California Physicians Service[1]

San Francisco, Calif.

A-

262.0

133.5

128.5

Blue Cross Blue Shield of Michigan

Detroit, Mich.

B

255.7

136.8

118.9

Scan Health Plan

Long Beach, Calif.

E+

88.3

(21.0)

109.3

Pacificare of California, Inc.

Cypress, Calif.

C+

145.6

49.7

95.9

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

"The health of the industry has never been stronger, yet consumers are feeling weary from the skyrocketing costs of healthcare," commented Melissa Gannon, vice president of Weiss Ratings, Inc. "Until consumers see how the industry's profitability can enhance their healthcare experience through the use of new technologies and improved treatment options, they will continue to question the rise in premiums."

22 Percent of Insurers Report Losses

Despite the overwhelming profitability of the industry, 116 insurers — nearly 22 percent — struggled, posting losses for the first nine months of 2003. HMOs reporting the largest losses during this period include:

Company

Headquarters

Weiss Safety Rating

Net Income (Loss) ($Mil)

3rd Qtr 2003

Capital Advantage Ins. Co.

Harrisburg, Pa.

C-

(101.0)

Christiana Care Health Plans

New Castle, Del.

E-

(40.4)

Highmark Inc.

Camp Hill, Pa.

B-

(21.4)

Regence Blue Cross Blue Shield Oregon

Portland, Ore.

B-

(19.5)

Health Net of New Jersey, Inc.

Neptune, N.J.

C

(18.0)

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

Notable Upgrades and Downgrades

Of the 487 HMOs reviewed by Weiss, 67 received upgrades, while only seven were downgraded based on third quarter 2003 data. Notable upgrades include:

Notable downgrades 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 and banks. 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 $14.99 through www.WeissRatings.com, or starting at $19 by calling 800-289-9222.

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[1] DBA as Blue Shield of California


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