OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Besthas affirmed the financial strength rating of A-
(Excellent) and issuer credit ratings of ďa-Ē of Medco Containment
Life Insurance Company (MCLIC) (Mechanicsburg, PA) and Medco
Containment Insurance Company of New York (MCICNY) (Troy, NY). The
outlook for all ratings is stable.
The ratings are based on MCLIC and MCICNYís continued positive financial
results, favorable risk-adjusted capitalization at both entities and the
strategic importance of their ultimate parent company, Express
Scripts Holding Company (Express Scripts) [NASDAQ:ESRX]. Margins for
both companies have trended favorably over the medium term and capital
levels are more than adequate for their current level of the Medicare
Part D Stand-Alone Prescription Drug Plan business. The margin
improvement is attributed to a decline in utilization at both Medco
plans. The growth of the capital levels is mainly the result of strong
net earnings and lack of dividends paid. A.M. Best expects capital
support will be provided by Express Scripts when necessary.
Offsetting these positive rating factors are declines in near-term
membership and uneven growth over the long term. Furthermore, the
companies' product portfolios have very little diversification and
consist of only Medicare Part D products. In addition, marketing efforts
mainly target the senior population. All revenues are expected to be
derived from Medicare Part D products in the long term.
Factors that may positively affect the companiesí ratings include
additional product diversity and sustained long-term earnings. Key
drivers that could lead to negative rating actions include a trend of
losses or capital deterioration beyond A.M. Best's expectations.
Negative rating pressure also could occur if MCLIC and MCICNY become
less strategically important to Express Scripts.
The methodology used in determining these ratings is Bestís Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Bestís rating process and contains the different rating criteria
employed in the rating process. Bestís Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS
Wayne Kaminski, 908-439-2200, ext. 5061
Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
Lane, 908-439-2200, ext. 5567
Managing Senior Financial Analyst
Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public
Source: A.M. Best