AM Best

AM Best Affirms Credit Ratings of Highmark Inc. and Its Subsidiaries


John McGlynn
Senior Financial Analyst
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Bridget Maehr
Associate Director
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Christopher Sharkey
Associate Director, Public Relations
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Al Slavin
Senior Public Relations Specialist
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OLDWICK - SEPTEMBER 22, 2023 11:11 AM (EDT)
AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a+” (Excellent) of Highmark Inc. (Highmark) (Camp Hill, PA) and its life/health (L/H) subsidiaries, collectively known as Highmark Inc. Group. Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) of Highmark’s dental subsidiaries, which operate under the United Concordia brand name. Lastly, AM Best has affirmed the Long-Term Issue Credit Rating (Long-Term IR) of “a” (Excellent) of Highmark’s existing senior unsecured notes. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and the Long-Term IR).

The ratings of Highmark reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The ratings of United Concordia reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.

Highmark Inc. Group continues to maintain the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), despite a small decline in capital and surplus in 2022. Highmark, Inc. Group was profitable in 2022 due to very favorable premium growth and underwriting income despite large, realized investment losses and lower investment income. However, unrealized investment losses more than offset profitability to reduce capital and surplus. Operating results were strong across segments, but strong commercial growth and delays in Medicaid redeterminations were more impactful to Highmark Inc. Group’s favorable operating results in 2022. Operating results likely will moderate over the near term as Medicaid redeterminations in Highmark’s core markets take place in 2023, but results are expected to remain favorable. Highmark remains a top five Blue Cross Blue Shield plan in the United States across a range of key financial metrics, offering health products and services across four states. Highmark Inc. Group has good business diversification through its national medical stop-loss business, national dental operations, and technology platform services in addition to its core health insurance business. Highmark Inc. Group also is part of an integrated delivery system with its affiliate, Allegheny Health Network, in its Western Pennsylvania service area, offering coordinated, high-quality and cost-effective care and health insurance products. The Highmark organization also has a well-developed and comprehensive ERM program, which is incorporated into business operations and strategic planning. Highmark Casualty Insurance Company, previously having a stand-alone Long-Term ICR of “a+” (Excellent), was added to the Highmark, Inc. Group ratings as a strategically important member providing necessary licensing for certain casualty products.

United Concordia’s risk-adjusted capitalization increased for the third consecutive year and is assessed strongest by BCAR, an improvement from the very strong assessment in 2021. Earnings in excess of dividends drove the improved risk-adjusted capitalization. United Concordia’s earnings fell in the period, but fewer dividends were paid resulting in capital accumulation in the period. Underwriting income trends have been favorable over the past few years, driven in part by the company’s government contracts, including the Federal Employees Dental and Vision Insurance Program and TRICARE Dental Plan, and by reduced utilization due to the COVID-19 pandemic in 2020 and 2021. However, premiums and underwriting results declined slightly in 2022 as membership shifted toward administrative service arrangements, and dental utilization increased slightly year over year. Results are expected to remain favorable over the near term. United Concordia has a large membership base, with more than nine million individuals, and a large national dental network with approximately 130,000 dentists. The company also benefits from the developed ERM program of the larger Highmark organization.

AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) with stable outlooks, for Highmark Inc. Group and its following L/H subsidiaries:

  • HM Health Insurance Company

  • HM Life Insurance Company

  • HM Life Insurance Company of New York

  • Highmark Choice Company

  • Highmark West Virginia Inc.

  • Highmark Casualty Insurance Company

AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) with stable outlooks for the following dental subsidiaries of Highmark Inc. Group:

  • United Concordia Companies, Inc.

  • United Concordia Insurance Company

  • United Concordia Insurance Company of New York

  • United Concordia Dental Plans of California, Inc.

  • United Concordia Dental Plans of Pennsylvania, Inc.

  • United Concordia Dental Plans, Inc.

The following Long-Term IR has been affirmed with a stable outlook:

Highmark Inc.-

— “a” (Excellent) on $250 million 6.125% senior unsecured notes, due 2041

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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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.

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