Not everyone is in a position to shop around for health insurance. People who work for large companies are typically stuck with the provider of their employer's choice, not their own.

But the first wave of baby boomers is approaching retirement, and ever larger numbers of people are uninsured, because they're self-employed, or the premiums for their employers' plans are prohibitively expensive, or some other reason. Moreover, the growing interest in high-deductible health plans and health savings accounts makes it increasingly important to compare the financial strength of different providers.

Every quarter, TheStreet.com Ratings looks at the financial strength of nearly 700 health insurers. The firm's quantitative analytical model assigns a rating, on a scale of A to E, based on each insurer's five-year financial performance, including an analysis of profitability, liquidity, stability and capitalization.

A lower rating doesn't necessarily mean policyholders are likely to be stuck with unpaid claims. But those companies at the bottom of the scale are more likely to be acquired, wind down their business or withdraw from unprofitable business lines. The real issue is continuity of care -- whether you would have to be concerned about a change in benefits and provider network.

The latest review of second-quarter 2006 financial statements indicates that the industry continues to be profitable while also maintaining adequate capital levels. These trends are reflected in TheStreet.com ratings, with nearly 60% of the ratings assigned in the good or excellent range

After years of raising premiums to meet rising medical cost trends and expanding coverage through acquisitions and mergers, health insurers are seeking new ways to maintain profitability going forward.

They are using their improved financial condition to spend more on technology and expand into new products such as high-deductible health plans and Medicare prescription drug coverage, while also expanding their low-risk administrative-service-only line of business.

Many of the largest managed care organizations in the country, which as a group have over 48 million members, are rated in the top two ranges of the scale -- A and B.

The health insurance industry is dominated by a few large national players including UnitedHealth Group ( UNH), Wellpoint ( WLP), Kaiser , Aetna ( AET), HCSC (which does business under several Blue names) and Humana ( HUM).

Below is the list of the largest, on the basis of 2005 health premiums, that received A or B ratings. Included on this list are four United HealthCare insurance operating entities. TheStreet.com issues ratings on 57 of the UNH insurance subsidiaries for a composite rating, based on a weighted average of assets and rating, of B.

The good rating reflects the insurance group's strong capitalization and profitability while also recognizing the challenges that incorporating and leveraging acquisitions into operations, including the Pacificare and Oxford companies, can have on the financial strength of the group.

Six Wellpoint insurance operating entities make the list below, while on a group basis the 33 rated entities combine for a composite rating of A-minus. Wellpoint does business under the Blue Cross Blue Shield, Anthem and Unicare names, among others, and is led by the Blue Cross of California entity with an A-plus rating that covers 4.5 million members.

The Largest Top-Rated Health Insurance Companies
Premiums culled from statutory filings
Company Group Annual Health Premiums (billions) Members (millions) Financial Safety Rating
Kaiser Foundation Health Plan (CA) Kaiser Foundation $29.20 6.7 B+
United Healthcare Insurance Company (CT) UnitedHealth Group (UNH) $17.90 Not Available B
Health Care Svc Corp (IL)* HCSC Group $11.70 4.5 A+
Blue Cross of California (CA) Wellpoint (WLP) $11.10 4.5 A+
California Physicians Service (CA) Blue Shield of California $7.20 2.6 A
Pacificare of California (CA) UnitedHealth Group (UNH) $6.60 1.7 B+
Health Net (CA) Health Net (HNT) $6.30 2.2 B+
Blue Cross Blue Shield of Michigan (MI) $5.50 2.6 A
Excellus Health Plan (NY) Lifetime Healthcare $4.40 1.9 A+
Highmark (PA) $4.20 2.6 B
Blue Cross Blue Shield of Florida (FL) $4.00 1.5 B+
Empire Healthchoice Assurance (NY) Wellpoint (WLP) $3.70 2.6 A
Horizon Healthcare Services (NJ) (dba Horizon Blue Cross Blue Shield of New Jersey) $3.60 1.6 A+
Blue Cross & Blue Shield MA HMO Blue (MA) Blue Cross & Blue Shield Massachusetts $3.60 1 A
Community Ins Co (OH) Wellpoint (WLP) $3.60 1.7 A-
Health Insurance Plan of Greater NY (NY) HIP Holdings $3.60 1 A
Keystone Health Plan East (PA) Independence Blue Cross $3.30 0.9 B+
Anthem Health Plans of Virginia (VA) Wellpoint (WLP) $3.30 1.1 A-
Blue Cross Blue Shield of Alabama $3.10 1.7 A
Humana Medical Plan (FL) Humana (HUM) $3.00 0.5 B
Anthem Health Plans (CT) Wellpoint (WLP) $2.90 0.9 B+
Oxford Health Plans (NY) UnitedHealth Group (UNH) $2.80 0.5 A+
Oxford Health Ins (NY) UnitedHealth Group (UNH) $2.60 1.2 B+
Blue Cross Blue Shield of Georgia Wellpoint (WLP) $2.50 0.8 A+
Aetna Health (A New Jersey Corp) Aetna (AET) $2.40 0.6 B+
* Does business as Blue Cross Blue Shield of Oklahoma, Blue Cross Blue Shield of Illinois, Blue Cross Blue Shield of Texas and Blue Cross Blue Shield of New Mexico.

Donna O'Rourke joined Weiss Ratings, now TheStreet.com Ratings, Inc., in 1999, and is the senior analyst responsible for assigning financial safety ratings to health insurers and supporting other health care-related consumer products including Medicare supplement insurance, long-term care insurance and elder care information. She conducts industry analysis in these areas. She has more than 10 years experience in credit risk management and analyses. Previously she served as an assistant vice president at the Union Bank of Switzerland, where she analyzed hedge funds, insurance companies and structured products in support of the derivatives and foreign exchange businesses. She holds a bachelor of science in management from Binghamton University and a master's of science in health systems administration from the Rochester Institute of Technology.

While O'Rourke cannot provide investment advice or recommendations, she appreciates your feedback; click here to send her an email.

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