NEW YORK_Fitch Ratings on Wednesday downgraded ratings for Health Net Inc. after the Pentagon decided not to renew a contract with the health insurance company.

On Monday, the Pentagon awarded military health care contracts worth tens of billions of dollars to managed care providers Aetna Inc. and UnitedHealth Group Inc. Humana Inc. and Health Net are currently holding those contracts for Tricare, which is the Defense Department's health care program for military members, their families and survivors.

Fitch downgraded Health Net's issuer default rating to "BB-" from "BBB-," or to speculative from a lower medium grade rating. It also downgraded the senior debt rating to "B+," or highly speculative, from "BB+," or non-investment grade. The insurer financial strength rating was downgraded to "BBB-" from "BBB+," both of which are lower medium grade ratings.

The outlook for the Woodland Hills, Calif.-based company remains negative, Fitch said.

Fitch said the loss of the Tricare contract is significant to Health Net, as it comprises 49 percent of the company's enrollment and 90 percent of its 2008 earnings. The current contract ends March 31, 2010.

Shares of Health Net rose 25 cents, or 2.1 percent, to reach $12.31 in afternoon trading. The stock has traded between $7.38 and $29.87 over the last 52 weeks.