Fitch drops HealthMarkets

Fitch Ratings said it has downgraded the issuer default rating of HealthMarkets, Inc. to B+ from BB and the issuer financial strength rating of its primary insurance subsidiaries to BB+.

The outlook is negative.

The action reflects, in Fitch's opinion, that HealthMarkets faces significant challenges related to health care reform and its impact on the company's legacy health insurance manufacturing business model, including requirements related to medical loss ratios.

The agency said that regulations in the new law are expected to affect the company's ability to price competitively and generate future earnings.

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