The weak economy will make 2010 a tough year for health insurers, Standard & Poor’s Ratings Service said late Wednesday.
Credit analyst Joseph Marinucci said competition in the industry is getting more intense because of high unemployment levels, which result in fewer people getting health insurance from their employer.
High unemployment has also limited insurers’ ability to gain new members. Marinucci added that profits are under pressure because of increased demand for medical care.
He said he expects more downgrades of health insurer stocks than upgrades over the next six to 12 months. The analyst said impending health care reform legislation is still an important issue for the industry, but won’t lead to rating changes on its own.
Earlier this week, Hartford managed-care provider Aetna Inc. said it expects to post 2009 operating earnings below Wall Street expectations and that its sees its 2010 operating earnings coming in “modestly lower” than last year.
The insurer said it expects 2009 operating earnings per share of $2.75. Operating earnings exclude capital gains and other one-time items.
That figure was lower than Wall Street’s expectations. Analysts polled by Thomson Reuters expect, on average, earnings per share of $2.76 in 2009 and $3.09 in 2010. (AP)
