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Over the next 12 – 24 months, Fitch expects the sector's earnings and interest coverage to remain strong and balance sheet and liquidity metrics to approximate current levels. As a result, most health insurance and managed care companies' ratings are likely to be affirmed over that time.
Fitch expects the sector to continue to generate strong absolute earnings and EBITDA-based interest coverage. Margins are likely to remain solid but decline somewhat as insurers are challenged to wring costs out of the healthcare system given pressure on premium rates and low interest rates.
Fitch views the on-going implementation of the Patient Protection and Affordable Act (PPACA) as the key issue currently impacting the sector. PPACA's full implementation, at least in its current form, remains uncertain, due to legal issues that may be settled after the
Fitch's view is that the most credit-negative outcome would be a
If such a decision is not accompanied by subsequent legislative revisions to mandated coverage provisions and is expected to lead to material declines in earnings and interest coverage, Fitch would consider revising the outlook to negative.
Notwithstanding the current debate PPACA, Fitch believes that the sector will continually be subject to political and legislative concerns that effectively make a move to a positive outlook unlikely.
The report '2012 Outlook:
In connection with the publication of this report, Fitch will host a teleconference on Thursday, Dec, 15, 2011 at
— Date and Time:
— Dial-In: +1-877-467-8597 (U.S./
— Conference ID: #35593871
— Call Leader:
For those unable to listen to the live call, a replay will be available starting approximately one hour after the call ends. To listen to the relay, interested participants can dial +1-855-859-2056 (U.S./
Additional information is available at 'www.fitchratings.com'.
–'Insurance Rating Methodology' (
–'U.S. Health Insurance and Managed Care Rating Methodology' (
Insurance Rating Methodology
Source: Fitch Ratings
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