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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - NOVEMBER 21, 2006 12:00 AM (EST)
A.M. Best Co. has assigned a financial strength rating of B (Fair) to Western Health Advantage (WHA) (Sacramento, CA). The rating outlook is stable.
WHA is a Sacramento area health plan sponsored by three well respected and financially strong health care systems. WHA's rating is driven by modest risk-based capitalization, demonstrated by its Best's Capital Adequacy Ratio (BCAR) score of 36% at fiscal year-end 2005. A.M. Best does not expect the BCAR score to increase significantly in the medium term, owing to WHA's mutual benefit corporation status and its obligations to sponsors.
A.M. Best's capital concerns are mitigated by the sponsors' financial guarantee to WHA. Moreover, the company has a trend of generating net income for the past five years, including mid-year 2006 results and keeping all lines of business profitable on an underwriting basis. The low-risk profile of WHA, with almost 99% of payments capitated to its sponsors, and a cap on the medical loss ratio further enhance WHA's stability and provide for a sustained competitive advantage.
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A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.