boutons_deux
10-20-2010, 04:40 AM
The All-Important "Medical Loss Ratio"
During my years as a corporate executive at CIGNA, another one of the big for-profit insurers, one of the things I did was to explain to the financial media why the company's MLR went up or down during a specific period of time. There is constant pressure from investors and Wall Street analysts for insurance company executives to take whatever means are necessary to keep pushing the MLR lower and lower. If they don't succeed, they get punished, often severely, in the stock market. Aetna's stock price once fell more than 20% in a single day after executives disclosed that the company had spent slightly more on medical claims during the most recent quarter than in a previous period. What triggered the "sell" alarm was the company's announcement that its first quarter MLR increased to 79.4% from 77.9% the previous year.
Insurance company executives will never forget the beating that Aetna took that day. Not only did the company's market cap shrink, but so did the stock options held by Aetna's senior executives. The CEO alone lost millions in compensation by reporting an MLR that didn't meet Wall Street's expectations.
http://www.huffingtonpost.com/wendell-potter/thank-you-unitedhealth-gr_b_768811.html?view=print
.
During my years as a corporate executive at CIGNA, another one of the big for-profit insurers, one of the things I did was to explain to the financial media why the company's MLR went up or down during a specific period of time. There is constant pressure from investors and Wall Street analysts for insurance company executives to take whatever means are necessary to keep pushing the MLR lower and lower. If they don't succeed, they get punished, often severely, in the stock market. Aetna's stock price once fell more than 20% in a single day after executives disclosed that the company had spent slightly more on medical claims during the most recent quarter than in a previous period. What triggered the "sell" alarm was the company's announcement that its first quarter MLR increased to 79.4% from 77.9% the previous year.
Insurance company executives will never forget the beating that Aetna took that day. Not only did the company's market cap shrink, but so did the stock options held by Aetna's senior executives. The CEO alone lost millions in compensation by reporting an MLR that didn't meet Wall Street's expectations.
http://www.huffingtonpost.com/wendell-potter/thank-you-unitedhealth-gr_b_768811.html?view=print
.