A.M. Best Assigns Rating to John Deere Health Plan

Business Wire, Oct 18, 2004

OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating of B (Very Good) to John Deere Health Plan, Inc. (JDHP) (Moline, IL). The rating outlook is stable.

This rating reflects consistent long-term earnings prior to 2004, stable membership and a good capital position. Lending additional strength to the rating is the integral role that JDHP plays for its ultimate parent, Deere & Company (Deere) (NYSE: DE), which offers implicit support to JDHP. Offsetting factors include margin declines JDHP experienced in 2004, a narrow geography of operation and competitive pressures within the industry.

Prior to margin declines in recent quarters, JDHP generated stable operating margins while maintaining a stable membership base and solid capital. JDHP plays an integral part delivering employee health care cost savings as well as earnings to Deere's consolidated bottom line.

Margin declines in recent quarters were attributed to various factors, including participation in the Iowa Medicaid program, an unprofitable large group account and an unfavorable contract with a hospital system in central Illinois. A.M. Best believes the problems triggering the losses have been substantially mitigated and expects JDHP to produce strong earnings in 2005.

JDHP's health network is located substantially within a narrow geographic region concentrated around John Deere manufacturing sites. Coupled with competitive and regulatory pressures within the industry, this could impact future membership growth and earnings.

For current Best's Ratings, independent data and analysis on more than 1,050 health companies and more than 130 HMO industry composites, please visit http://www.ambest.com/health/.> A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.