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Press release from Business Wire

A.M. Best Affirms Ratings of Medco Containment Company and Medco Containment Insurance Company of New York

Monday, July 09, 2012

A.M. Best Affirms Ratings of Medco Containment Company and Medco Containment Insurance Company of New York14:50 EDT Monday, July 09, 2012 OLDWICK, N.J. (Business Wire) -- A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit ratings of “a-” of Medco Containment Life Insurance Company (MCLIC) (headquartered in Franklin Lakes, NJ) and Medco Containment Insurance Company of New York (MCICNY) (Clifton Park, NY). The outlook for all ratings is stable. The ratings are based on MCLIC and MCICNY's medium-term premium growth, favorable operating results and strong capitalization. Growth in net premiums written at the two companies has been exceptional over the past few years, and aggregate underwriting results have been stable since 2008. Capital levels at the companies are more than adequate for their current level of business. Capital growth had been supported in the past by their former parent, Medco Health Solutions, Inc.; however, this entity was acquired on April 2, 2012 by Express Scripts Holding Company (Express Scripts) [NASDAQ: ESRX], and A.M. Best expects this support to continue under the new ultimate parent company. MCLIC and MCICNY have very limited product portfolios, consisting primarily of Medicare Part D business that is offered to Medco Health Solutions' clients and individuals, as well as automatic enrollment of individuals eligible for Medicare and Medicaid in various Centers for Medicare and Medicaid Services (CMS) regions. All long-term revenues are expected to be derived from Medicare Part D products. This narrow focus on Medicare poses a market concentration risk. A.M. Best expects that MCLIC and MCICNY will focus their business in support of Medco Health Solutions' clients under the guidance of Express Scripts. The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Evaluating Non-Insurance Ultimate Parents”; “Risk Management and the Rating Process for Insurance Companies”; “Rating Members of Insurance Groups”; and “Understanding BCAR for Life/Health Insurers.” Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.A.M. Best Co.Wayne Kaminski, 908-439-2200, ext. 5061Senior Financial Analystwayne.kaminski@ambest.comorRachelle Morrow, 908-439-2200, ext. 5378Senior Manager, Public Relationsrachelle.morrow@ambest.comorSally Rosen, 908-439-2200, ext. 5280Managing Senior Financial Analystsally.rosen@ambest.comorJim Peavy, 908-439-2200, ext. 5644Assistant Vice President, Public Relationsjames.peavy@ambest.com