S&P downgrades Highmark to A-

Standard & Poor's said it lowered its long-term financial strength and counterparty credit ratings on Highmark Inc. to A- from A.

The outlook is stable.

"The downgrade reflects our expectation for weaker future earnings than we had previously anticipated," S&P credit analyst Jon Reichert said in a news release.

Whereas the previous expectation was that the company would generate annual returns on revenue (ROR) of around 3%, S&P now expects longer-term RORs of only around 2%, with 2014 and 2015 RORs being profitable, but less than 2%.

The competitive pricing actions taken by Highmark to retain membership in light of the contentious contract renegotiation process with the University of Pittsburgh Medical Center and in response to other competitive pressures drove the lower expectation for earnings, the agency said.

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