While there were no Life/Health impairments in 2014, four have emerged since
OLDWICK, N.J., February 18, 2015— A new A.M. Best report provides an update with the most recent property/casualty (P/C), life/health (L/H) and health and health maintenance organizations (HMO) impairments in 2014.
According to a Best Special Report titled, “Insurer Impairments Remain Low, Include First Health Co-Op Impairment,” of the 14 financially impaired insurance companies (FIC) known to date for 2014, five had been rated by A.M. Best at one time, all within the three years leading up to impairment.
Of the four that had ratings in the year of impairment, none were in A.M. Best’s secure range. Noteworthy among the 2014 impairments is the first involving a health co-op established under the Patient Protection and Affordable Care Act (ACA) – Iowa-based CoOportunity Health Inc. (CoOportunity). In seeking a court-ordered rehabilitation for CoOportunity, regulators attributed the impairment in part to the cut-off of risk corridor funding from the ACA in the federal spending bill passed by Congress and signed by President Barack Obama in December.
This jeopardized the plan’s risk corridor asset, with CoOportunity estimating the asset reduction at USD 60 million. Upon receiving confirmation that the U.S. Centers for Medicare & Medicaid Services would provide no further solvency funding to the plan, the Iowa insurance commissioner placed CoOportunity under supervision.
In its 1969-2013 U.S. P/C Impairment Review, published in June 2014, A.M. Best noted four 2014 P/C impairments. Since then, three more 2014 P/C impairments have emerged. The 1969-2013 U.S. Life/Health Impairment Review, published in July 2014, reported no 2014 L/H impairments, but four have emerged since.
Three HMOs also were reported as impaired in 2014. A.M. Best designates an insurer as an FIC as of the first official regulatory action taken by an insurance department, whereby the insurer’s ability to conduct normal insurance operations is adversely affected; capital and surplus have been deemed inadequate to meet legal requirements; and/or general financial condition has triggered regulatory concern.
For A.M. Best’s full FIC definition, please see the 2014 impairment reviews found at www.ambest.com. For a copy of this special report, please visit here. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.