S&P affirms PacifiCare

Standard & Poor's said it affirmed its BBB- counterparty credit rating on PacifiCare Health Systems Inc. and removed it from CreditWatch, where it was placed on Sept. 15. S&P also said that the outlook on PacifiCare is negative.

"The ratings on PacifiCare are based on the company's good business position as a regional managed care organization, strong earnings performance, very strong interest coverage ratios, conservative debt-to-capital ratios and good capitalization at all of its operating units," said S&P credit analyst Phillip C. Tsang. "Partially offsetting these strengths is PacifiCare's concentration of business in Medicare products."

The negative outlook primarily reflects AMS's status as PacifiCare's first sizeable acquisition and S&P said it expects the acquisition to carry some degree of risks, as with other similar acquisitions relative to a company's existing business.

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