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Life Health > Health Insurance > Health Insurance

Fitch Rates Life Negative, Health Stable, LTCI Mixed

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The following is a reformatted version of an article originally published Jan. 18, 2002.

NU Online News Service, Jan. 18, 4:50 p.m. – Fitch Inc., Chicago, has published annual forecast reports for the health, life and long-term care insurance industries.

Analysts at the credit rating agency are giving outlook ratings of stable for health, negative for life and mixed for LTC.

Health insurers and managed care companies should do about as well this year as they did in 2001, because they are continuing to charge sensible prices, pull away from the troubled Medicare health maintenance organization program, and fix problems with past acquisitions, the Fitch health insurance analysts write.

Enforcement of tough new capital requirements should help the stronger players by weeding out the weaker players, the analysts add.

But the analysts warn the health insurance industry still faces uncertainty about changes in product structures and changes in government programs and laws.

Fitch analysts see life insurers continuing to fight the same ferocious competition and distribution upheaval that they have faced for the past three years.

Life insurers are also coping with the aftermath of the Sept. 11 attacks and the effects of big changes in federal tax laws, the analysts write.

But the analysts say the pressure is starting to moderate, and that they may soon raise their life outlook rating to stable.

“Despite the negative rating outlook, the North American life industry continues to demonstrate very high financial strength and credit profile,” the analysts write. “This very strong financial profile compares favorably to [that of] other financial services competitors such as banks, securities firms, mutual fund companies and asset management firms.”

The Fitch long-term care analysts have not published an overall industry outlook rating for LTC insurance, but they observe that LTC issuers face a combination of strong potential market demand and the difficulty of learning to manage a complicated, capital-intensive product with a long liability tail.

“LTC insurance could become a highly rewarding niche for those companies that understand the risk and price correctly, or a misfortune for those without the proper discipline,” the analysts conclude.

The Fitch reports are available on the Web, at


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