Fitch: Health Insurance Plan on watch

Fitch Ratings said it placed the ratings of Health Insurance Plan of Greater New York (HIP-NY) on Rating Watch Negative, following the company's announcement today of plans to merge with Group Health, Inc. (GHI).

The rating action is based on Fitch's view that the financial profile of the combined companies will be weaker than HIP-NY's current stand-alone financial profile.

Fitch said it believes that concerns regarding the impact on HIP-NY's near-term financial profile and integration risks more than offsets the long-term strategic benefits of the merger.

Fitch added it believes that the proposed merger with GHI does provide a number of important strategic benefits, including increased scale, improved diversification and an expanded product offering.

HIP-NY's current ratings reflect the company's improved earnings profile, good regional position in the New York metropolitan market and good statutory capital position, the agency said.

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