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 South Carolina (BCBS SC) and its subsidiaries, BlueChoice HealthPlan of South Carolina Inc., Companion Life Insurance Company (Companion Life) and Niagara Life and Health Insurance Company (Amherst, NY). Additionally, A.M. Best has downgraded the FSR to A- (Excellent) from A (Excellent) and the ICR to “a-” from “a” of BCBS SC’s separately rated insurance subsidiary, InStil Health Insurance Company (InStil), which is an entity the group utilizes for the TRICARE program in South Carolina. The outlook for all ratings is stable. All companies are domiciled in Columbia, SC, unless otherwise specified.
The affirmation of BCBS SC and its core subsidiaries reflect its leading market share position in the state, its role as one of the nation’s largest health care administrative services contractors for the government and private payers, its favorable underwriting results and high level of risk-adjusted capitalization. The organization possesses strong brand recognition, good strategic relationships with a diverse group of provider networks and a balanced business profile and earnings mix. BCBS SC’s vast array of products and services enables it to compete effectively in the health insurance market in the state and beyond. The organization continues to grow its leading market share in South Carolina through its branded and non-branded products. Nationally, BCBS SC is one of the largest administrative service contractors, servicing TRICARE and the Federal Employee Health Benefit Plan (FEHBP). Furthermore, the organization remains focused on technology and the development of advanced data management systems, which continues to strengthen its overall underwriting and servicing processes.
Additionally, BCBS SC derives a material portion of corporate revenue and earnings from its non-regulated business, which somewhat offsets volatility in its insurance-related revenue and earnings. The group’s overall favorable risk-adjusted capital is based on combination of positive earnings and low premium leverage.
Somewhat offsetting BCBS SC’s positive rating factors is the continued competition among health insurers in the group’s core markets. Additionally, the group’s underwriting results could be impacted by adverse experience from the new exchange business. Moreover, BCBS SC maintains a large portion of its membership in state and federal government-sponsored programs, which may be challenged by potential future state budget shortfalls, timing of payments, future changes to state-sponsored programs and expended regulations with the Affordable Care Act.
The ratings for Companion Life reflect the stable premium and earnings growth it has reported, as well as its strong level of risk-adjusted capitalization in support of its business and insurance risk. A.M. Best believes Companion Life is integrated into BCBS SC’s overall corporate strategy and business plans, and therefore, it is expected that the organization will continue to be supported operationally and financially if necessary.
The downgrade of InStil’s ratings primarily reflects A.M. Best’s view of its reduced strategic importance to the overall organization and its limited business profile. However, management at BCBS SC is in the process of re-assessing the future strategic direction for this entity.
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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