1. One of the most prominent reasons behind the downgrade is the Cigna/Anthem merger. The companies are in the midst of a long and expensive legal battle with the Department of Justice over said merger that could end with Anthem paying Cigna $1.85 billion if merger fails.
2. Zacks coupled that with the losses on the public exchange Anthem has had to other insurers.
3. In 2016, the company expects it will lose 300,000 individual memberships, and it expects to see a “mid-single-digit” loss margin in this business.
4. The lingering low interest rates are making an impact on Anthem also. “In 2015, net investment income declined 6.5 percent year over year. For 2016, the company is projecting a 4 percent decline from 2015.”
5. Anthem also projects a medical loss ratio of 84.9 percent, plus or minus 30. That’s based on high claim rates from ACA plans, and an elevated Medicaid level.
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