Best’s News & Research Service - December 21, 2016 10:56 AM (EST)
A.M. Best Assigns Credit Ratings to Companion Life Insurance Co. of California; Affirms Ratings of Blue Cross Blue Shield of SC
- December 21, 2016 10:56 AM (EST)
Oldwick //BestWire// - A.M. Best has assigned a Financial Strength Rating (FSR) of A+ (Superior) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “aa-” to Companion Life Insurance Company of California (San Francisco, CA), a subsidiary of Blue Cross and Blue Shield of South Carolina (BCBS SC). The outlook assigned to these Credit Ratings (ratings) is stable. Companion Life Insurance Company of California is an entity utilized by BCBS SC and its subsidiaries for the group’s life insurance business in California.
Additionally, A.M. Best has affirmed the FSR of A+ (Superior) and a Long-Term ICR of “aa-” of BCBS SC and the subsidiaries, BlueChoice HealthPlan of South Carolina Inc., Companion Life Insurance Company (Companion Life) and Niagara Life and Health Insurance Company (Amherst, NY). The outlook of these ratings is stable. All companies are domiciled in Columbia, SC, unless otherwise specified.
The ratings of Companion Life Insurance of California reflect its strategic position within BCBS SC, its integration into BCBS SC’s overall corporate strategy and business plans. Additionally, the company’s products are expected to be sold through Companion Life’s exclusive agents and operate with the same management team within Companion Life. Companion Life has been focusing on growing its core business lines and the acquisition of Companion Life Insurance Company of California accelerates those aspirations. Furthermore, Companion Life Insurance Company of California should benefit from its brand recognition through its affiliation with Companion Life and BCBS SC. In addition, the company’s risk-adjusted capitalization is sufficiently strong to support underwriting, investment and business risks, as well as strategic objectives.
The rating affirmations of BCBS SC and its core subsidiaries reflect its dominant market share position in South Carolina, its role as one of the nation’s largest health care administrative services contractors for the government and private payers, favorable underwriting results and high level of risk-adjusted capitalization. The organization possesses strong brand recognition, good strategic relationships with a diverse group of provider networks and a balanced business profile and earnings mix. BCBS SC’s vast array of products and services enables it to compete effectively in the health insurance market in the state and beyond. The organization continues to grow its leading market share in South Carolina through its branded and non-branded products. Nationally, BCBS SC is one of the largest administrative service contractors, servicing Medicare, TRICARE and the Federal Employee Health Benefit Plan (FEHBP).
BCBS SC derives a material portion of corporate revenue and earnings from its non-regulated business, which somewhat offsets volatility in its insurance-related revenue and earnings. The group’s absolute and risk-adjusted capitalization is considered to be more than adequate for its current level of insurance and investment risks on a consolidated and individual operating entity base. In addition, the overall favorable risk-adjusted capital level is based on combination of positive earnings and low premium leverage.
Partially offsetting these positive rating factors is the high level of competition among health insurers in its core markets. In 2016, the group gained significant share of the individual market on exchange business. This segment was impacted by numerous factors, which included greater utilization and a larger number of high-risk individuals. BCBS SC has since implemented several strategic initiatives to help improve its overall performance. Moreover, BCBS SC continues to maintain a large portion of membership in state and federal government-sponsored programs, which may be challenged by potential future state budget shortfalls; timing of payments; future changes to state-sponsored programs; and new regulations around the Patient Protection and Affordable Care Act.
The ratings for Companion Life reflect its consistent operational profitability and favorable premium growth. Companion Life has a strong risk-adjusted capital position in support of its business and insurance risks. Companion Life is among the top largest non- administrative services organization stop-loss carriers in the nation. Companion Life is integrated into BCBS SC’s overall corporate strategy and business plans, and therefore, A.M. Best expects that the organization will continue to be supported operationally and financially if necessary.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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.
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