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U.S. Insurance Services 2020 Outlook: Stability Amid Increased Deals And Maturing Credit Cycle

S&P Global Ratings' outlook on the U.S. insurance services sector is stable, reflecting our expectation for limited rating changes in the next 12 months.

Insurance services companies are a subset within the corporate business and consumer services sector. These companies mainly provide business services to the insurance sector, enabling exposure to a large and well-established marketplace with little to no exposure to underlying insurance risk. Insurance brokers make up the largest group among the insurance services companies we rate, which also include health insurance and cost-containment servicers, claims managers, and warranty administrators.

Economic Outlook: End Of Cycle Taking On Greater Importance Amid Signs Of Slowing GDP Growth

In the U.S., where insurance services companies are most concentrated, S&P Global economists forecast full-year GDP growth of 2.3% for 2019 and 1.9% for 2020, followed by average annual expansion of 1.8% for 2021-2022 (see table 1). They expect unemployment to drift lower, to 3.5% in 2020 from an estimated 3.7% for 2019, before starting to drift higher in 2021, with the core Consumer Price Index stable at 2%.

We expect Federal Reserve policymakers will keep the benchmark federal funds rate at 1.50%-1.75% through 2020 (remaining data dependent). Our qualitative assessment, combined with calculated odds, now puts the overall risk of a recession in the next 12 months at 25%-30% with the probability near the top of this range. Recession risk was 15%-20% a year ago.

Table 1

S&P Global U.S. Economic Outlook
Key indicator 2017 2018 2019e 2020e 2021e 2022e
Real GDP (% GDP) 2.4 2.9 2.3 1.9 1.8 1.8
Core CPI (%) 1.8 2.1 2.2 2.0 2.0 1.9
Unemployment rate (%) 4.4 3.9 3.7 3.5 3.6 3.9
Payroll employment (mil.) 146.6 149.1 151.4 152.8 153.7 154.2
Housing starts (mil.) 1.2 1.2 1.3 1.3 1.3 1.3
Unit sales of light vehicles (mil.) 17.2 17.3 17.0 16.4 16.3 16.4
S&P 500 Index 2,448.2 2,744.7 2,900.4 3,101.9 3,160.8 3,255.3
Federal funds rate (%) 1.0 1.8 2.2 1.6 1.6 1.9
10-year Treasury note yield (%) 2.3 2.9 2.1 2.2 2.4 2.5
Three-month Treasury bill rate (%) 0.9 2.0 2.1 1.6 1.7 1.9
e--Estimated.

General economic conditions (such as GDP) could materially affect insurance broker revenue because the premium exposure base from which commissions and fees derive fluctuates depending on the level of payroll, inventories, and other insured risk. Given our expectation of low-single-digit GDP growth, macroeconomic factors are very modestly benefiting the sector.

While financial conditions remain generally supportive, as reflected by the more recent trend of tightening speculative-grade spreads and favorable repricing activity, the end of the cycle is imminent--and with it, an inherent pickup in ratings volatility.

Rating And Outlook Overview: Mostly 'B' Category And Stable

We currently rate 36 insurance services companies, following a growing trend of private equity buyouts supported by syndicated financing. These buyers, along with the more recent addition of pension fund participants, continue to be enticed by key sector attributes, including growth and retention, predictable cash flow, and limited working capital expenditure requirements.

Rating change activity was modest overall in 2019, and we expect this trend to persist in 2020. Upgrades and downgrades were mainly aligned with health insurance and cost-containment servicers and skewed modestly negative, including two selective defaults from one credit for a distressed exchange (viewed as de facto restructuring). Over the next 12 months, we expect credit quality to hold as the sector broadly contends with key risks relating to competition, deal-making, and scaling of operations.

Chart 1

image

Unlike the insurance carrier sector, which is primarily investment grade (rated 'BBB-' or higher), insurance services companies are mostly speculative grade (rated 'BB+' or lower), predominantly in the 'B' rating category. Insurance services companies generally operate with high leverage and relatively weak credit-protection measures, mainly due to financial sponsor ownership and aggressive financial policies related to capital structure.

Chart 2

image

Through late January 2020, a significant majority (89%) of insurance services companies we rate had stable outlooks, with the remaining few reflecting a modestly negative bias (see chart 3). The positive and negative outlooks are mainly idiosyncratic to each issuer.

Chart 3

image

Lender Recovery: Mostly Meaningful For Higher-Priority Debt

Insurance services companies (especially brokers) often have asset-light business models, which could challenge lender recovery prospects in the event of default. Generally, we expect meaningful recovery (50%-70%) for first-lien lenders and negligible recovery (0%-10%) for second-lien or unsecured lenders. We use distressed EBITDA multiples of 5x-6x with average EBITDA stress of 25%-35% under our simulated default and lender recovery assessment.

Our distressed valuation multiples are meaningfully lower than trading and leveraged buyout (LBO) multiples, which have reached high single digits to low double digits. In a down cycle, given the cyclical demand of the sector, we believe lenders will have little time to exit their positions quickly or effectively. We expect many companies will use their variable cost structures and the significant flexibility provided within their mostly covenant-lite credit agreements to extend restructuring timelines in highly stressed situations.

Insurance Brokers: Steady Performance Buoyed By Firming Pricing

Overall, we believe insurance brokers will demonstrate steady performance in 2020, generally supporting current ratings. Organic growth and EBITDA margin should hold up fairly well relative to the prior year, supported by a continued uptick in insurance pricing and sustained, albeit slowed, economic growth. We expect acquisitions to remain robust and lend support to strengthening scale, scope, and diversification. However, we expect this to temper any deleveraging, given the still-escalating purchase price multiples.

We believe economic growth should support increasing insured exposure (i.e., risk assumption) trends, which, combined with positive rates, are likely to result in a slightly favorable market impact for brokers. With slight uplift from the market, we expect overall organic growth in 2020 to be similar to the growth in 2019, at 3%-5% on average across the sector.

Company-specific trends, however, will likely vary greatly based on product diversification and geographic presence, as well as new business and retention strategies and success rates. In an increasingly complex business environment, the standouts will be those brokers that can differentiate themselves through value-added services and products, including data and analytical capabilities, and risk management expertise in existing and emerging risks (such as cyber risks, extreme weather, and social inflation).

Insurance rates providing a tailwind for brokers

Following many years of contending with a modestly negative property/casualty insurance pricing market, brokers finally started to benefit from modest insurance pricing uplift in 2018 (see chart 4). Marsh's Global Insurance Market Index has shown consecutive price increases since the fourth quarter of 2017.

Chart 4

image

We view 2019 as an inflection point, as pricing momentum significantly accelerated and is finally keeping pace with loss cost trends, although pricing adequacy is a mixed story, depending on the line of business. On a composite basis, pricing (except workers' compensation) was up in the mid to high single digits during 2019, and we are optimistic that rate increases will continue into 2020. Rising rates should translate into incremental revenue and earnings benefits for brokers. This assumes commission and fee rates remain relatively steady and insureds don't reduce coverage in light of insurance price increases.

No doubt, the positive rate momentum is a plus for brokers. We believe the true market impact on brokers is best captured by insurance premium growth (the base from which broker commissions and fees are largely derived), which encompasses not only insurance rates but, even more important, insured exposures. The insured exposure part of the premium equation remains strongly aligned with economic variables, since exposures will fluctuate depending on the level of payroll, inventories, and other insured risk.

Although rate inadequacy still exists in many product lines, we believe more significant increases are unlikely in the next 12 to 24 months, given the abundant market capacity, with carrier capital levels at all-time highs.

Operating performance: steady margins with some upside bias

We expect margins, which are strong on an absolute basis but assessed as average for the industry (mid to high 20% range across the sector), to remain relatively steady or perhaps increase relative to the prior year, bolstering cash flow generation to balance incremental leverage and support escalating debt servicing requirements. While highly variable cost structures in terms of producer compensation provide a shield against volatility when revenue is down, they also mitigate margin improvement as revenue rises.

We remain mindful of tightening labor market conditions, with S&P Global economists predicting unemployment to remain under 4%, combined with average year-over-year wage growth of 3.1%. Insurance brokering is an intangible, asset-oriented sector strongly reliant on people talent. As a result, compensation costs are by far the largest operating expense in the sector--often well exceeding half of a broker's total operating expenses (excluding depreciation and amortization).

We believe brokers are likely to benefit from improving operating leverage as they continue to grow, as well as from continued technological and cost-efficiency initiatives. However, we expect restructuring and integration costs to continue to temper earnings and cash flow generation (we do not give credit for these costs in our credit measure calculations, viewing them as the cost of doing business), particularly as rated brokers continue to pursue acquisition-oriented growth strategies.

Our ratings derive from our forecasts and views of expected synergies and future EBITDA. Marketing leverage and the language around add-backs, as defined in debt agreements, do not determine our view of credit risk (other than when assessing compliance with financial maintenance covenants).

Similar to the EBITDA add-back analysis conducted by S&P Global Ratings in September 2019 (see "Related Research"), we reviewed a cross-section of 2019 merger & acquisition (M&A) and buyout transactions in the leveraged broker sector to assess the differential between reporting and marketing EBITDA at deal inception. On average, we found that EBITDA add-backs inflated marketing EBITDA by 50% above reporting EBITDA among 'B' rated brokers.

While we often do give some credit to certain add-backs or synergies, we base our ratings on our calculation of leverage, which typically is two to three turns higher than what is presented to us in the deal books. Our view of capital structure may also differ, especially when it relates to treatment of preferred shares, which we often assess as "debt equivalents" per our criteria, further widening the credit metrics gap.

M&A activity: sustained momentum expected for 2020

In 2019, brokerage deal activity beat its prior-year record with almost 650 deals in the U.S. insurance brokerage market alone, by far the insurance market's most active subsector in terms of transaction volume (see chart 5). We see no material slowdown on the horizon and expect another highly active year on the M&A front.

Part of this frenzy of activity stems from the plentiful acquisition opportunities on the supply side. While the industry is rapidly consolidating, it remains highly fragmented (with more than 30,000 insurance brokers in the U.S. alone). Meanwhile, on the demand side, capital remains abundant, buoyed by easy access to still-inexpensive credit and the abundance of interested buyers, most notably a growing pool of private-equity-backed buyers.

We expect Marsh & McLennan to likely slow down deal activity through 2020 (with the exception of select deals in its U.S. middle-market Marsh & McLennan Agency platform) as it absorbs JLT and focuses on lowering leverage. Willis Towers Watson may ramp up activity, given its merger-related integration initiatives are largely completed.

Chart 5

image

In our view, the question is not whether the frenzy of acquisitions will continue, but at what price. While valuations have been high and growing, most buyers (core to our portfolio) are valued at even higher multiples, keeping the deals accretive to value. If interest rates begin to rise as we move closer to 2022, when interest deductibility shifts to EBIT from EBITDA (very material for brokers, given all of the acquisition-related amortization), then it is possible these factors will temper the valuation creep.

Many rated brokers are successfully expanding geographic reach, scale, and capabilities via M&A. Most deals are small and "tuck-in" (wherein a target blends into the acquirer to enhance its existing market share or resource base) by nature, with occasional platform or transformational activity. We continue to monitor post-acquisition performance carefully and note few material operational hiccups historically. However, marketplace zeal has resulted in escalating purchase price multiples and earn-out obligations (treated as debt in our leverage calculations). This core industry strategy often stalls deleveraging, especially when excess cash flow sweep provisions (that require debt paydown) in many broker credit agreements include carve-outs for acquisition funding.

Escalating multiples are bringing more deals to the marketplace but also inviting increasing deal scrutiny and selectivity. We believe more established middle-market brokers with stronger cash-flow-generating capacity and equity to support funding have more flexibility to support and grow their deal pipelines. Conversely, higher multiples are likely to pressure smaller brokers that may not be able to achieve inorganic targets or that may pursue pricier transactions at the risk of higher leverage and potentially less stable ratings.

Cash flow additions mostly offset capital markets activity, keeping rating changes in check

Transaction activity has been robust over the past year, with nearly all companies in the insurance broker segment accessing the capital markets in some form for incremental financing (see table 2), generally to fund M&A and sometimes to fund dividends to owners or for refinancing purposes. In nearly all cases, we affirmed the ratings or the ratings and outlooks were unaffected. Since January 2019, we have evaluated and assigned ratings to approximately $25 billion of new debt issuance (excluding revolver upsize and loan reprice activity--generally achieved via amendments to existing credit agreements).

Table 2

Insurance Broker Capital Markets Activity
Company Timing Capital markets activity

Achilles Acquisition LLC (d/b/a OneDigital)

Jun-19 New second-lien term loan and privately placed first-lien delayed draw term loan to pay down outstanding balance on revolving credit facility and fund future acquisitions
Dec-19 First-lien term loan add-on and delayed draw first-lien term loan facility issuance to fund acquisitions, pay down the outstanding balance on its revolving credit facility, and fund cash to the balance sheet

Acrisure LLC

Jan-19 Senior secured notes issuance to fund bolt-on acquisitions and for general corporate purposes
Jul-19 Senior unsecured notes issuance to fund acquisitions
Oct-19 Senior secured notes issuance to fund acquisitions and general corporate purposes
Jan-20 Term loan add-on, repricing and maturity extension on all first-lien debt, and revolving facility upsize to acquisition pipeline and general corporate purposes

Alera Group

Feb-19 Issued first-lien add-on, new first-lien delayed draw facilities, and new second-lien debt to fund forward acquisition pipeline

Alliant Holdings L.P.

Jan-19 Incremental preferred equity issuance (debt equivalent) as part of an equity recapitalization
May-19 Incremental term loan issuance to repurchase equity, repay outstanding revolver balance, and fund general corporate purposes
Oct-19

Senior unsecured notes issuance to pay down existing notes

AmeriLife

May-19 First-lien and second-lien recapitalization to refinance existing debt, finance tuck-in acquisitions, fund a shareholder distribution, and for general corporate purposes
Jan-20 First-lien and second-lien recapitalization to fund Thomas H. Lee Partners' acquisition of Amerilife

AmWINs Group Inc.

Jul-19 Incremental first-lien term loan add-on to fund acquisitions
Dec-19 Incremental first-lien term loan add-on and senior unsecured notes issuance to pay a dividend

AssuredPartners Inc.

Apr-19 Senior unsecured notes and preferred shares (debt equivalent) issuance to fund leveraged buyout by private equity firm GTCR LLC
Nov-19 Term load add-on issuance to fund acquisition pipeline
Feb-20

Recapitalization and upsize of term loan and revolver to repay revolver borrowings and fund acquisition pipeline

Aon Corp.

Apr-19

Senior unsecured notes issuance to pay down a portion of outstanding commercial paper and for general corporate purposes
Nov-19 Senior unsecured notes issuance to pay down a portion of outstanding commercial paper and for general corporate purposes

BroadStreet Partners Inc.

Jul-19 Incremental term loan add-on issuance to pay down revolver and fund future acquisitions
Jan-20 Refinance of first-lien facilities; proceeds used to pay down old structure and fund acquisitions

Brown & Brown

Mar-19 Senior unsecured notes issuance to pay down balance on revolving credit facility and general corporate purposes

HUB International Ltd.

Oct-19 Incremental term loan add-on issuance to repay borrowing under revolving credit facility, fund acquisitions, and pay a distribution to shareholders

Marsh & McLennan Cos.

Jan-19 Issued multiple tranches of senior unsecured notes to fund the acquisition of JLT as well as general corporate purposes
Mar-19 Issued multiple term loan facilities and multiple senior unsecured USD/euro notes to fund the acquisition of JLT as well as general corporate purposes

NFP Corp.

Feb-19 Senior secured notes issuance to fund acquisition pipeline
Oct-19 Senior secured note issuance to fund acquisitions and repurchase common equity
Dec-19 Incremental term loan add-on issuance to fund acquisition pipeline
Jan-20 Recapitalization of first-lien facilities; proceeds used to pay down old structure

USI Inc.

Nov-19 Incremental term loan add-on issuance to pay down revolver and purchase a portion of outstanding preferred stock

Willis Towers Watson PLC

Apr-19

Obtained one-year term loan financing in connection with acquisition of Tranzact

Sep-19

Issued multiple tranches of senior notes to pay down maturing debt and borrowings under the company's revolving credit facility
Note: Listed alphabetically by company and chronologically.

Amid all the activity, a few takeaways contribute to our stable outlook on the sector. Nearly all insurance brokers we rate have engaged in capital market activity since the beginning of last year and did so in a manner essentially within the bounds of our rating downside triggers. For many that were adding on debt to fund M&A, the add-ons came with incremental EBITDA of acquired targets, which we include on a pro forma basis, which mitigated the increase in debt. Moreover, most of the companies had shown some deleveraging trend from profitable growth since the last time they accessed the capital markets, establishing incremental capacity within our leverage bounds.

Brokers have relatively low working capital and capital expenditure needs that underpin relatively high cash flow conversion rates. These characteristics, combined with relatively predictable and recurring revenue streams, allow for a business model resulting in diminishing leverage via strengthening internal cash flow generation. However, we rarely see deleveraging for long because brokers tend to revert to an expected range more common for the sector through debt recapitalizations.

For privately owned brokers (generally controlled by financial sponsors), recapitalizations are driven by shareholder dividends, frequent ownership flips between sponsors, and debt-funded M&A, all norms in the segment. For public brokers, increased earnings generally translate into increased debt capacity for share repurchase, internal initiatives, and acquisitions. We expect this cycle of falling and rising leverage to remain in place for 2020, with the former limiting rating downside and the latter limiting rating upside.

Health Insurance And Cost-Containment Servicers: Resilience As Sector Evolves

We have a stable outlook on insurance-focused health care services companies. This is a smaller but still diverse group of companies that manage medical costs on behalf of health care payers, including health insurers, property/casualty insurers, government entities, and employers.

The premium growth rate for the U.S. health insurance sector has been robust over the past few years in connection with sustained market expansion, and we expect this trend to persist. Strong payroll employment continues to bolster the commercial segment, the aging of the Baby Boomers is spurring Medicare Advantage growth, and states are increasingly shifting their "high-acuity" (with greater relative care needs) Medicaid-eligible populations into managed Medicaid, while the Affordable Care Act exchanges are stabilizing and attracting new competition.

We expect this trend to provide revenue opportunity for health services companies, so long as outsourcing continues. In 2020, we believe these companies will generally benefit from a positive revenue outlook, but with a potentially wide range based on various product niches and company-specific factors. We expect industry factors such as price competition and new client and contract implementations to at least partly mitigate improving cost efficiencies. In addition, risk associated with rapid growth and technology and systems investments may present headwinds that keep operating margins from materially improving year over year.

We expect health services companies to continue focusing on small to midsize tuck-in acquisitions instead of transformative deals, since most are already top-three players in their segments. However, acquisitions could become more competitive (and expensive) as large, strategic buyers in the health care sector (health insurers, providers, etc.) express growing interest in services. Health insurers have increasingly focused on vertical integration, as seen with the mega mergers of CVS and Aetna and of Cigna and Express Scripts, and we expect this to continue as M&A in the services sector provides insurers with the ability to manage the supply chain and gain diversification.

Additionally, health insurers are expanding their presence in the sector by attempting to be more retail-focused and technology-enabled, which presents opportunity and risk. In terms of opportunity, health care services companies could gain business because many merger rationales include scale-based cost synergy assumptions. Merger integration plans that depend on aggressive saving targets could motivate increased outsourcing of certain services. Conversely, larger health insurers could use their increased scale to gain pricing leverage with their outsourcing vendors and partners or may reconsider outsourcing by moving to build their own health care services businesses.

Similar to brokers, almost all health care service companies are private equity owned with generally aggressive financial risk tolerances. While most remain highly leveraged, many are somewhat less aggressive with leverage than brokers, due in some part to generally weaker business risk profiles, reflecting relatively lower margins, greater client concentration, and narrower size and scope (often, niches within niches). Given the weaker business risk profiles, there tends to be less margin for error. As a result, we tend to be more cautious about leverage in the capital structure when assessing the rating than we are for most of the brokers we rate.

Warranty Administrators And Claims Adjusters: Consumer Activity And Weather Influence Credit

The remainder of the insurance services companies we rate are mainly warranty administrators (covering handset protection, automobiles, and home appliances and electronics) and insurance claims adjusters. For warranty administrators, growth is strongly tied to consumer purchases (the base for warranty sales), so product focus typically depends more on discretionary spending than it does for most other insurance services firms, which can increase susceptibility to macroeconomic factors.

However, we expect economic conditions to continue to propel underlying consumer product sales (smartphones, autos, etc.). In addition, for various retailers and auto dealers, warranty products are some of the highest-margin products, so the warranty component of the sale takes on greater focus for the seller when general product volumes slow.

For claims managers, organic growth is somewhat tied to overall trends in claims volume and insurance carriers' decisions on levels of outsourcing versus insourcing of claims. Unlike in the carrier segment, where higher claims reduce profitability, claims managers benefit from higher claim trends, given their lack of underwriting risk and a fee structure that depends on volume of claims.

Claims volume will depend on the line of business. We see workers' compensation claims volume rising from continued payroll increases, whereas property claims will depend highly on weather trends. As carriers continue to contend with subpar pricing in many lines, and as claims adjusters continue to invest in client services and technological capabilities, we expect continued stable utilization and demand from carriers for outsourced claims solutions from independent adjusters.

Sustained Focus On Strategy And Execution

Considering the generally supportive underlying market conditions for U.S. insurance services, we expect modest rating volatility in the sector in 2020, with movement hinging on balance sheet management and strategic execution.

Appendix: Insurance Services Rating Distribution--Strongest To Weakest

Table 3

Insurance Services Ratings: Strongest To Weakest
As of Jan. 30, 2020
Company Rating Outlook Business risk profile Financial risk profile Anchor Modifier (active) Subsector

Aon PLC/Aon Corp.

A- Stable [2] Strong [3] Intermediate a- Neutral Broker

Marsh & McLennan Cos. Inc.

A- Negative [2] Strong [3] Intermediate a- Neutral Broker

Willis Towers Watson PLC

BBB Stable [2] Strong [4] Significant bbb Neutral Broker

Brown & Brown Inc.

BBB- Stable [3] Satisfactory [2] Modest bbb+ Financial policy: Negative (-1 notch), Comparative rating analysis: Negative (1 notch) Broker

Magellan Health Inc.

BB+ Stable [4] Fair [3] Intermediate bb+ Neutral Health services

Frontdoor Inc.

B+ Positive [4] Fair [5] Aggressive bb- Comparative rating analysis: Negative (1 notch) TPA - warranty

NEWAsurion Corp./Asurion LLC/Lonestar Intermediate Super Holdings LLC

B+ Stable [3] Satisfactory [6] Highly/Leveraged [FS-6] b+ Neutral TPA - warranty

AmWINS Group Inc.

B+ Stable [4] Fair [6] Highly/Leveraged [FS-6] b Comparative rating analysis: Favorable (1 notch) Broker

Polaris Intermediate Corp./MPH Acquisition Holdings LLC/Multiplan Inc.

B+ Stable [4] Fair [6] Highly/Leveraged [FS-6] b Comparative rating analysis: Favorable (1 notch) Health services

Acrisure LLC/Acrisure Holdings Inc.

B Stable [4] Fair [6] Highly/Leveraged b Neutral Broker

Alliant Holdings L.P./Alliant Holdings Intermediate LLC

B Stable [4] Fair [6] Highly/Leveraged [FS-6] b Neutral Broker

AssuredPartners Inc./AssuredPartners Capital Inc.

B Stable [4] Fair [6] Highly/Leveraged [FS-6] b Neutral Broker

HUB International Ltd.

B Stable [4] Fair [6] Highly/Leveraged [FS-6] b Neutral Broker

NFP Corp./NFP Parent Co. LLC

B Stable [4] Fair [6] Highly/Leveraged [FS-6] b Neutral Broker

USI Inc.

B Stable [4] Fair [6] Highly/Leveraged [FS-6] b Neutral Broker

Sedgwick Claims Management Services Inc.

B Stable [4] Fair [6] Highly/Leveraged [FS-6] b Neutral TPA - claims

Versant Health Holdco Inc./Wink Holdco Inc.

B Negative [4] Fair [6] Highly/Leveraged [FS-6] b Neutral Health services

Achilles Acquisition LLC (OneDigital)

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral Broker

AIS HoldCo LLC (AIS)

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral Broker

Alera Group Intermediate Holdings Inc./Alera Group

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral Broker

AmeriLife Holdings LLC/AmeriLife Group LLC

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral Broker

APCO Holdings Inc./APCO Super Holdco L.P.

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral TPA - warranty

Broadstreet Partners Inc.

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral Broker

CP VI Bella Midco LLC/MedRisk Midco LLC/ MedRisk LLC (MedRisk)

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral Health services

Integro Parent Inc./Integro Group Holdings L.P.

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral Broker

KWOR Holdings L.P. (Worley Claims Services LLC)

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral TPA - claims

Nomad JV L.P. (naviHealth)

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral Health services

Outcomes Group Holdings Inc. (Paradigm)

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral Health services

SG Acquisition Inc.

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral TPA - warranty

Zelis Holdings

B Stable [5] Weak [6] Highly/Leveraged [FS-6] b Neutral Health services

KeyStone Acquisition Corp. (KePRO)

B Negative [5] Weak [6] Highly/Leveraged [FS-6] b Neutral Health services

Amynta Holdings LLC

B- Stable [5] Weak [6] Highly/Leveraged [FS-6] b- Neutral TPA - warranty

Confie Seguros Holding II Co.

B- Stable [5] Weak [6] Highly/Leveraged [FS-6] b- Neutral Broker

FHC Health Systems Inc.

B- Stable [5] Weak [6] Highly/Leveraged [FS-6] b Comparative rating analysis: Negative (1 notch) Health services

Huskies Parent Inc. (Insurity Inc.)

B- Stable [5] Weak [6] Highly/Leveraged [FS-6] b- Neutral TPA - claims

One Call Corp.

B- Stable [5] Weak [6] Highly/Leveraged [FS-6] b- Neutral Health services
Note: Companies with the same ratings and scores are listed alphabetically.

Related Research

  • 2020 U.S. Business Services Industry Outlook: Still Fragmented, Pressured, But Nuanced; Opportunities Abound To Serve Up Profits, Feb. 11, 2020
  • U.S. Health Insurer Outlook: Stability In 2020 Will Give Way To Major Change Over The Next Decade, Jan. 15, 2020
  • The Outlook On The U.S. Property/Casualty Insurance Sector Remains Stable; "Social Inflation" Puts A Spotlight On Pricing Complacency, Jan. 13, 2020
  • Fewer Signs Of Scrooge-ing Up U.S. Growth In The New Year, Dec. 4, 2019
  • Credit Conditions North America: Recession Risk Has Eased For Now, Dec. 3, 2019
  • When The Credit Cycle Turns: The EBITDA Add-Back Fallacy, Sept. 24, 2019

This report does not constitute a rating action.

Primary Credit Analysts:Joseph N Marinucci, New York (1) 212-438-2012;
joseph.marinucci@spglobal.com
Francesca Mannarino, New York (1) 212-438-5045;
francesca.mannarino@spglobal.com
Julie L Herman, New York (1) 212-438-3079;
julie.herman@spglobal.com
Secondary Contacts:Stephen Guijarro, New York + 1 (212) 438 0641;
stephen.guijarro@spglobal.com
Brian Suozzo, New York + 1 (212) 438 0525;
brian.suozzo@spglobal.com
Kevin T Ahern, New York (1) 212-438-7160;
kevin.ahern@spglobal.com
Support Analyst:Colleen Sheridan, New York + 1 (212) 438 2162;
colleen.sheridan@spglobal.com

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