Highmark Inc.’s unfavorable earning trends, forecasted to show little improvement in the coming year or two, led a rating service to revise the health insurer’s credit rating to “negative.”

Pittsburgh, Pa.-based Highmark, the state’s largest health insurance company, had previously held a “stable” rating from Standard & Poor’s Ratings Services.

The ratings service attributed the lowered ratings to a decline in earnings, as well as market-specific challenges such as an unfavorable regulatory environment, and broader macroeconomic issues, according to a statement from Standard & Poor’s.

“Our outlook revision is based on Highmark’s unfavorable earnings trend over the past twelve months and our view that earning are unlikely to improve meaningfully over the next twelve to twenty-four months,” said James Sung, credit analyst for Standard and Poor’s.

The financial strength rating and issuer credit rating assigned to Highmark were both “A.”  The ratings service suggested that in 2009, Highmark’s earnings were affected by margin erosion in key markets in central Pennsylvania, senior markets, guaranteed-issue and state-sponsored products and Mountain State BCBS. The statement indicates that how Highmark develops its earnings in relation to its budget and versus similar rated health plans will be a factor in determining its future outlook.

Last January, Highmark, a Blue Shield licensee that focuses on the western and central regions of Pennsylvania, and Independence Blue Cross, a Blue Cross licensee focusing on the southeastern region of the state, withdrew a proposal to merge, which would have created the fourth largest health plan in the nation.