AM Best Information Services

APRIL 29, 2015 10:39 AM (EDT)

A.M. Best Affirms Ratings of Blue Cross and Blue Shield of Florida, Inc. d.b.a. Florida Blue and its Affiliates

 Doniella Pliss
Senior Financial Analyst
(908) 439-2200, ext. 5104

Sally Rosen
Assistant Vice President
(908) 439-2200, ext. 5280
Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK - APRIL 29, 2015 10:39 AM (EDT)
A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of "aa-" of Blue Cross and Blue Shield of Florida, Inc. d.b.a. Florida Blue (Jacksonville, FL) and its affiliates, Health Options, Inc. (HOI) (Jacksonville, FL), Capital Health Plan, Inc. (CHP) (Tallahassee, FL) and Florida Health Care Plan, Inc. (FHCP) (Holly Hill, FL). Concurrently, A.M. Best has assigned an ICR of "a-" to GuideWell Mutual Holding Corporation (GuideWell) (Jacksonville, FL), a mutual holding company formed in 2014 by the Florida Blue organization. The outlook for all ratings is stable.

The affirmation of the ratings for Florida Blue and its affiliates reflects the trend of profitable earnings. The company manages results through pricing discipline combined with a controlled administrative expense structure, efficient and innovative provider contracting and enhanced medical management. In addition, the organization's strong market share, supported by recent membership growth and high brand recognition are further enhanced through its growing retail strategy and various new product offerings. Florida Blue successfully built on its historic leadership in the individual market and actively participated in the Florida public health insurance exchange marketplace leading to substantial growth in individual membership during 2014. Furthermore, the transition to the mutual holding company structure provided the organization with the opportunity for more efficient capital deployment that may help to support various business diversification initiatives and improve Florida Blue's competitive position.

Offsetting factors include lower earnings and declined capitalization at Florida Blue. Florida Blue's underwriting results declined over the past two years as the company was pricing closer to trend to preserve affordability and grow membership. During 2014, new exchange products experienced a very high medical loss ratio which resulted from both lower pricing and the impact of last minute regulatory changes at the end of 2013. The company expects future returns to improve, but remain modest due to market changes, increased competition, affordability focus and the impact of the growing Patient Protection and Affordable Care Act (PPACA) industry fees. In addition, the level of risk-based capitalization at Florida Blue remained sound, although declined substantially in 2014 due to the transfer of $1.6 billion of assets to the new parent, GuideWell. A.M. Best is concerned that recent and near term earnings pressure combined with the premium growth may further weaken the level of risk-adjusted capitalization. However, A.M. Best does acknowledge that GuideWell provides additional financial flexibility to the organization and A.M. Best expects Guidewell to provide capital to Florida Blue if needed.

Positive rating actions are unlikely in the near to medium term. Factors that could lead to negative rating actions include a substantial deterioration in the consolidated risk-adjusted capitalization, sizeable membership losses or a significant decline in operating performance.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at

Key insurance criteria reports utilized:

  • Rating Members of Insurance Groups

  • Risk Management and the Rating Process for Insurance Companies

  • Understanding BCAR for U.S. and Canadian Life/Health Insurers

  • A.M. Best's Perspective on Operating Leverage

  • Insurance Holding Company and Debt Ratings

  • Understanding Universal BCAR

This press release relates to rating(s) 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 visit A.M. Best's Ratings & Criteria Center.

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