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S&P drops Medical Card to B-
Standard & Poor’s said it lowered its long-term counterparty credit rating on Medical Card System Inc. to B- from B.
At the same time, the agency lowered its financial strength and long-term counterparty credit ratings on Medical Card’s operating subsidiaries, MCS Advantage Inc. and MCS Life Insurance Co., to BB- from BB.
The outlook is stable.
S&P said the primary reason behind the downgrade was Medical Card’s worse-than-expected claims experience in its Medicare Advantage (MA) business. This resulted in expected year-end 2014 operating EBIT (which excludes realized gains and losses, special charges and discontinued operations) return on revenue being significantly less than the prior expectations of about 2%.
At the same time, the poorer operating performance has strained risk-adjusted capitalization, resulting in a significant drop in the company’s regulatory risk-based capital ratio, the agency said.
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