Although almost all businesses were touched by the slowdown, some weathered the recession better than others. In particular, large health insurers flush with cash had been buying up regional provider-owned plans — but that buying spree is slowing down, says A.M. Best, the credit rating company.
A.M. Best says provider-owned plans have remained disciplined, with seven plans reporting a more favorable membership trend over the past five years than the rest of the industry and a relatively stable underwriting margin, except for the decrease in 2009. A.M. Best says these regional provider-owned plans focused on spending reductions and controlled growth. Profit margins for industry-owned plans dropped 11 percent from 2007 to 2008, more than their provider-owned counterparts. The company says industry-owned plans usually have riskier investments and experienced larger realized losses.
Source: A.M. Best’s Special Report. “Segment under pressure; but may see renewed interest.” September 2010