Best’s News & Research Service - December 10, 2025 04:54 PM (EST)
AM Best Affirms Credit Ratings of UPMC Health Plan, Inc., Its Affiliates and Revises Outlooks for Members of UPMC Workers’ Compensation Group
- December 10, 2025 04:54 PM (EST)
//BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of UPMC Health Plan, Inc. (UPMC Health Plan) and its affiliates: UPMC For You, Inc., UPMC Health Network, Inc., UPMC Health Coverage, Inc., UPMC Health Options, Inc. and Community Care Behavioral Health Organization. Collectively, the group is referred to as UPMC Health Insurance Group (UPMC Health Plans). The outlook of these Credit Ratings (ratings) is negative.
Concurrently, AM Best has revised the outlooks to stable from negative and affirmed the FSR of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) of UPMC Health Benefits Inc, UPMC work Alliance, Inc and WorkPartners National Inc., which primarily offers workers’ compensation products. These companies collectively are referred to as UPMC Workers’ Compensation Group. All companies are headquartered in Pittsburgh, PA. The ultimate parent for both groups is University of Pittsburgh Medical Center (UPMC).
The ratings reflect UPMC Health Plan’s balance sheet strength, which AM Best assesses as weak, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
UPMC Health Plans’ risk-adjusted capitalization is very weak at year-end 2024, as measured by Best’s Capital Adequacy Ratio (BCAR). UPMC Health Plans’ capital and surplus grew at a five-year compounded annual growth rate of approximately 6.3% prior in 2024; however, due to sizeable operating losses, capital saw a decline at year-end 2024, and through third-quarter of 2025, capital and surplus saw a slight increase due to improved earnings. Capital contributions to the health insurance subsidiaries over the last few years were to support growth, and further contributions are anticipated before year-end 2025, which AM Best anticipates will result in marginal improvement in the group’s BCAR, although the BCAR will remain weak overall. Premium leverage remains high, as it was approximately eight times in 2024.
UPMC Health Plans maintains favorable financial flexibility through its ultimate parent, UPMC, where it has access to a $600 million line of credit, providing additional financial and operational flexibility. UPMC Health Plans also maintains a relatively conservative and high-quality investment portfolio, with a focus on liquidity, as it has allocated approximately one-third of invested assets in cash and short-term investments in recent years. Over the last five years, the group has exhibited continued favorable liquidity ratios ranging above 200%; however, overall liquidity ratio fell below that 200% benchmark. Additionally, UPMC Health Benefits Inc. received capital contributions to pay off outstanding surplus notes at the property/casualty company level. This strategy reduced the total amount of surplus notes, which leaves a small portion left over that the group plans to convert to equity in 2026.
AM Best assesses UPMC Health Plans’ operating performance as adequate based upon its improved profitability in 2025 and steady premium growth. UPMC Health Plans’ net premium has grown each year in the most recent five-year period with an 8.9% compound annual growth rate. UPMC Health Plans continued to see increased membership across most of its products, contributing to premium growth. Medicaid revenue has a five-year growth rate of 11.7% due to statewide expansion and continued organic growth. Additionally, revenue retention rates of over 96.0% for both Medicare Advantage and special needs plans, as well as membership growth, are supported by expansion and organic growth.
AM Best notes that underwriting results decreased significantly in 2024, and five-year underwriting results have fluctuated widely, largely driven by competitive market conditions and challenging individual and government programs markets. Nevertheless, underwriting results have shown marked improvements through third-quarter 2025, while AM Best anticipates this will moderate in the fourth quarter. Corrective measures have begun to have a notable impact on results across most of UPMC Health Plans’ core lines of business.
Factors recently impacting overall operating results include increased medical and pharmacy trends, which have impacted all segments of UPMC Health Plans’ business across its various operating entities. However, the government programs business has been impacted the most heavily in 2024—as has been an industry-wide trend. Challenges in the Medicaid business were a main driver in losses through year-end 2024, primarily due to continuous coverage, unwinding assumptions, provider rate increases and higher utilization. These challenges have impacted not only UPMC For You, Inc., but also Community Health Choices (part of UPMC For You, Inc.), which saw its product underfunded due to risk adjustment assumptions. Through 2025, though, both products are seeing a slow recovery as medical trends decline and stabilize due to improved costs. The commercial market also faced challenges related to margin pressures, as rising trends in medical and pharmacy are driving above-average rate increases as well.
Medicare Advantage (MA) continued to face upward pressure on medical expenses in 2024 and 2025. The MA market has seen double digit trends related to increased utilization of specialty drugs, specialty care and behavioral health services. Additionally, elevated unit cost increases, related to higher billing intensity and higher out of network payment increases, impacted medical expenses as well. UPMC Health Plans is in the process of multiple targeted initiatives toward medical claims and pharmacy cost reductions. Furthermore, improvement in its risk capture has improved diagnosis capture and resulted in accurate risk scores for current memberships.
UPMC Health Plans has favorable brand recognition in its respective markets and maintains a solid market share with profitable operations. The ultimate parent company, UPMC, is a well-known and nationally recognized health system. UPMC Health Plan maintains high quality metrics with the National Committee for Quality Assurance and Medicare Star quality program, which also contributes to additional revenues for the group’s government business. UPMC Health Plan is an integrated global health enterprise leveraging medical expertise, geographic reach and financial stability, and comprises nonprofit and for-profit entities offering medical and health care-related services, including health insurance products. UPMC Health Plans has expanded its presence in Pennsylvania beyond the western parts of the state. The ratings received a substantive lift due to UPMC Health being an integral part of UPMC’s integrated delivery system and is nationally recognized as a financially strong organization. Additionally, the parent has a history of providing capital support to its health insurance subsidiaries. Furthermore, geographic market expansion is based on the parent’s health system acquisitions and affiliations.
The ratings of UPMC Workers’ Compensation Group reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM.
AM Best has changed the group’s balance sheet strength assessment to very strong from strong and reduced lift to one notch from two notches. The balance sheet assessment change is due to the improvement in the quality of capital, given the conversion of $86 million in surplus notes to permanent contributed capital. The one notch of lift comes from the broader organization which includes UPMC Health Insurance Group and UPMC.
The revised outlooks to stable from negative are due to the expectation that the UPMC Workers’ Compensation Group will maintain its very strong balance sheet strength assessment, supported by its profitable earnings, as well as continued stability in reserves. The stable outlooks also reflect the group’s operating performance, which is expected to remain adequate over the intermediate term, contributing to continued surplus expansion.
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AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.