The Simplified Investor

A Blog about Stocks and Market Forces

Archive for August 5th, 2008

Why B/E’s More Important than P/E to WellPoint and Other Health Insurers

In the health insurance industry, the margin for error is slim.   Companies like WellPoint (NYSE:WLP) and UnitedHealth Group (NYSE:UNH) must pay particular attention to a single metric that separates the winners and losers in this massive market.  This statistic is the benefits expense ratio - also called the medical loss ratio - simply, the cost of providing health care to members divided by the revenues from the premiums paid by these members.

Benefits expense ratio, WLP and Competitors

Benefits expense ratio, WLP and Competitors

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