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FOR IMMEDIATE RELEASE
OLDWICK - JUNE 07, 2019 03:47 PM (EDT)
AM Best has upgraded the Long-Term Issuer Credit Rating to “ccc-” from “cc” and affirmed the Financial Strength Rating of C- (Weak) of Friday Health Plans of Colorado, Inc. (Friday Health) (Alamosa, CO). The outlook of these Credit Ratings has been revised to stable from negative.
The ratings reflect Friday Health’s balance sheet strength, which AM Best categorizes as very weak, as well as its marginal operating performance, limited business profile and weak enterprise risk management.
Friday Health’s absolute capital and quality of capital improved through the conversion of $3.2 million of surplus notes to paid-in capital and additional capital contributions of $2 million. Risk-adjusted capitalization at year-end 2018 was above statutory minimum, due in part to a decline in revenue as well as the aforementioned increase in capital.
Following years of net losses, Friday Health reported net income for 2018 driven by favorable prior year risk adjustment payment for Affordable Care Act members and rate increases on non-performing group business.
The upgrade of the Long-Term ICR reflects the improvement of risk-adjusted capitalization and the company’s continued focus on profitability and operational improvements. However, due to lack of size and scale, as well as deficiencies in its enterprise risk management practices, Friday Health could exhibit volatility in its financial performance, as seen in prior years’ results.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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