Analysts at the prominent rating agency Fitch Ratings have changed their outlook on players in the US health insurance industry.
According to a new report from Fitch, health insurers will have a better year in 2015 than they did this year. Analysts raised their outlook from “negative” to “stable,” based on hopeful expectations from group plan enrollment.
Fitch anticipates enrollment will grow to keep pace with US gross domestic product, leading to operating margins averaging about 7% to 8% of revenue.
“Fitch expects little change in balance sheet fundamentals,” the report said.
Stockholders’ equity in the insurers is also expected to increase, with carriers’ debt burden beginning to shrink slightly.
Fitch attributes these changes to increased stability in the market following the rollout of the Affordable Care Act. The analyst said it does not expect major changes to be made to the health law as opposition to it “is likely to decline over time.”
In addition to providing an outlook for the industry, these predictions may also impact carriers’ ability to borrow money and qualifications for premium interest rates. They may also impact how much insurers’ own ratings.
Fitch had similar good news for insurance brokers, forecasting a stable outlook in 2015 as they help both individuals and businesses navigate their new responsibilities under the ACA. Revenues and earnings for brokers are also likely to improve modestly as compared to the first nine months of 2014.
Fitch seems limited potential for rating changes for both brokers and carriers over the next 12 to 18 months.
