Standard & Poor's has downgraded Highmark Inc.'s credit rating from A to A-, with a stable outlook, citing "our expectation for weaker future earnings than we had previously anticipated."
The expectation of lower revenue, the New York ratings agency said in a release Tuesday, "results from the competitive pricing actions taken by Highmark to retain membership in light of the contentious contract renegotiation process" with UPMC as well as other competitive pressures.
The Pittsburgh insurer is in the final year of a contract with health services giant UPMC that provides Highmark members with in-network access to UPMC physicians and facilities. UPMC has said it will not renegotiate the contract now that Highmark is building its own integrated delivery network, the Allegheny Health Network.
Even if the contract is not renewed, said S&P, "We believe Highmark has sufficient capital strength at the current rating level to withstand the resulting dislocation caused in its operating environment."
Highmark spokesman Aaron Billger said Tuesday the stable outlook "underscores how Highmark is succeeding in our challenging and changing health care environment."
Steve Twedt: firstname.lastname@example.org or 412-263-1963.