NEW YORK—Standard & Poor's Ratings Services lowered its counterparty credit rating for health insurer WellCare Health Plans Inc. Thursday, citing a lower-than-expected surplus of funds.
S&P lowered the rating to "B" from "B+," which are both highly speculative ratings. The company's credit outlook remains negative, S&P said.
"The downgrade reflects WellCare's lower-than-expected level of statutory surplus," said S&P credit analyst Hema Singh in a statement. "Based on a review of unaudited statutory results for its insurance operating subsidiaries for year-end 2007, the level of statutory surplus is significantly lower than our 2007 expectation."
Also, S&P said the company's margin eroded during the first quarter because of a higher medical-loss ratio in Florida. The medical-loss ratio is a percentage of premium dollars paid out on benefit claims.
Shares of WellCare fell $7.65, or 16 percent, to close at $40.28. The stock has traded between $20.81 and $128.42 over the last 52 weeks.
