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Health Insurers Doing Ok

The publicly traded health insurers and managed care companies that it monitors will generate strong second-half 2011 interest coverage (the ability to meet interest payments on outstanding debt), Fitch says. Earnings and interest coverage in the second half "will be pressured by minimum loss ratio requirements," but this should be "partially offset by modest membership growth." Furthermore, the cash flow picture for the monitored companies is "more than sufficient to meet ongoing business needs" and strategic acquisitions.

As for debt, Fitch is predicting that the carriers are "unlikely" to add meaningful leverage to balance sheets, especially in light of ongoing economic and healthcare reform uncertainties.

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