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Strategies & Market Trends : Value Investing
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To: Kapusta Kid who wrote (2688)12/6/1997 4:52:00 PM
From: jeffbas  Read Replies (3) of 78565
 
I bumped into to a friend of mine in the HMO/Health Insurance industry
today. As I said before, I still recommend avoiding Oxford. Colossal mismanagement and the ethical questions regarding insider selling would be enough for me. But add on top the fact that premium rate guarantees cause it to take quite some time to get all of your prices to where they need to be. That's assuming you know where they need to be, which I would not assume is the case here, because they lost control of the data (as a consequence of their not billing and collecting premiums properly as well as serious claims problems).

With 30 years of experience in this industry, I am telling the folks on this thread that if you lose control of the data you have a real problem. What happens most often is that you find out you need an oversized rate increase. Your future then becomes very difficult to predict. Whenever, you put in larger rate increases than your peers, an increased number of your customers will shop around. It is difficult to predict who you will lose, but on average it tends to be companies with better than average claims experience recently. That can leave you with a book of business where the rate increase you got is not enough - and with those rates guaranteed for a year you have another year of inadequate pricing.

I would not trust any earnings projection. I know for a fact that the NY/NJ market has been a difficult one for some competitors for years.
Maybe OXHP is really not different.
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