A.M. Best Affirms Ratings of Health Care Service Corporation, a Mutual Legal Reserve Company and Its Affiliates

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OLDWICK, N.J.--(BUSINESS WIRE)--

A.M. Best Co. has affirmed the financial strength ratings (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of Health Care Service Corporation, a Mutual Legal Reserve Company (d/b/a Blue Cross Blue Shield of Illinois/Texas/New Mexico/Oklahoma) (HCSC), its affiliates, Health Care Service Corporation – Texas HMO Line of Business, Health Care Service Corporation – Illinois HMO Line of Business, HCSC Insurance Services Company and GHS Health Maintenance Organization (GHS HMO) (Tulsa, OK). Concurrently, A.M. Best has affirmed the debt rating of “a+” on $500 million 4.70% senior unsecured notes, due 2021 of HCSC. The outlook for these above ratings is stable.

A.M. Best also has affirmed the FSR of A+ (Superior) and the ICR of “aa-” of Fort Dearborn Life Insurance Company (FDL) (Downers Grove, IL) and Fort Dearborn Life Insurance Company of New York (FDLNY) (Pittsford, NY), a subsidiary of FDL. The outlook for these ratings is negative.

Additionally, A.M. Best has revised the outlook to stable from negative and affirmed the FSR of A (Excellent) and ICR of “a” of Colorado Bankers Life Insurance Company (CBL) (Greenwood Village, CO). The revised outlook is based on the improvement in CBL's earnings and the capital support the company receives from its ultimate parent, HCSC.

The ratings of HCSC and its affiliates reflect an established market presence in their respective markets, minimal geographic and regulatory risk as it operates in four states; as well as leading market shares in each of diversified product offerings and strong capitalization. HCSC's business profile includes regional diversity to its respective state health insurance markets. HCSC's underwriting earnings have increased over the near term and have contributed to consistent surplus growth and strong capital adequacy on a risk-adjusted basis.

HCSC may be challenged to grow its business as external economic and regulatory conditions continue to affect both the local markets and the company's operational changes due to the Patient Protection & Affordable Care Act. Unemployment rates have remained high through 2011 and employer groups continue to downsize or consolidate, which may limit enrollment growth over the medium term. Moreover, HCSC operates in competitive markets, where strong national competitors compete for large national employer groups. However, A.M. Best does acknowledge HCSC's strong financial position, which may allow the company to withstand these pressures over the medium term.

The principal methodology used in determining these ratings is Best's Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Rating Health Insurance Companies”; “Understanding BCAR Life and Health Insurers”; “A.M. Best's Rating & the Treatment of Debt”; “Rating Members of Insurance Groups”; “Risk Management and the Rating Process for Insurance Companies”; and “Assessing Country Risk.” Methodologies 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 © 2011 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Co.
Wayne Kaminski
Financial Analyst
(908) 439-2200, ext. 5061
wayne.kaminski@ambest.com
or
Joseph Zazzera, MBA
Managing Senior Financial Analyst
(908) 439-2200, ext. 5797
joseph.zazzera@ambest.com
or
Carole Lovell
Public Relations Associate
(908) 439-2200, ext. 5445
carole.lovell@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

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Posted In: Press Releases
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