Health insurer Highmark Inc. will financially survive the end of its contract with UPMC in December, Standard & Poor’s Ratings Service concluded.
S&P’s assessment was contained in a report this month that lowered Highmark’s long-term financial strength and credit ratings to “A-” from “A” with a stable outlook. The downgrade was due to weaker-than-anticipated earnings at the health insurer.
Highmark, the region’s dominant insurer, will maintain its competitive position with annual returns on revenue of 2 percent, under the 3 percent that was initially anticipated, S&P said. Highmark has the financial wherewithal to survive the breakup with hospital giant UPMC, ending a partnership that has lasted more than a decade.
“If a contract with UPMC is not renewed, we believe Highmark has sufficient capital strength at the current rating level to withstand the resulting dislocation caused in its operating environment,” S&P said.