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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - DECEMBER 02, 2004 12:00 AM (EST)
A.M. Best Co. has upgraded the financial strength rating to A- (Excellent) from B++ (Very Good) of Blue Cross Blue Shield of Kansas, Inc. (BCBSKS) (Topeka, KS). Additionally, A.M. Best has upgraded the financial strength rating to A- (Excellent) from B++ (Very Good) for Premier Health Inc; affirmed the B++ (Very Good) rating of Advance Insurance Company (AIC), which is in the process of run out; and assigned a financial strength rating of A- (Excellent) to a newly formed company, Advance Insurance Company of Kansas (AICK), which has assumed the Kansas-only business from AIC. The rating outlook for all of the companies is stable.
The rating upgrade reflects BCBSKS' very good operating performance, excellent risk-based capitalization and a leading market position within Kansas. This has been a direct result of two years of strong operating earnings, which were driven in part by the turnaround of its operating results in the small group market segment. Further, BCBSKS continues to experience positive margins in all lines of business. The company's risk-based capital and surplus has also increased over the last several years as a result of its favorable operating performance, and A.M. Best expects the company to maintain a strong risk-adjusted capital position.
Partially offsetting these rating factors is BCBSKS' challenge to maintain the growth and profitability in its small group market segment. A.M. Best notes that the volatility and competitiveness within this line of business may place pressure on the company's future earnings and growth. BCBSKS' ability to be price-sensitive and competitive within the small group market is critical to its success. A.M. Best expects that BCBSKS' operating results will be lower in 2005 but still very good as compared to other managed care organizations.
A.M. Best believes that BCBSKS' market position creates the opportunity for increased competition from both national and local competitors due to the limited number of healthcare companies within the Kansas market. However, BCBSKS' brand awareness and ability to offer a full portfolio of health products and ancillary services has positioned the company to be competitive with any new competitor that is considering entering the Kansas market.
For current Best's Ratings, independent data and analysis on more than 1,050 health companies and more than 130 HMO industry composites, please visit Best's Health Center.
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