AM Best Upgrades Issuer Credit Ratings of Highmark Inc. and Its Subsidiaries
Monday, September 20, 2021
AM Best Upgrades Issuer Credit Ratings of Highmark Inc. and Its Subsidiaries
Oldwick, N.J. (September 20, 2021) — AM Best has upgraded the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a+” (Excellent) from “a” (Excellent) and affirmed the Financial Strength Rating (FSR) of A (Excellent) of Highmark Inc. (Camp Hill, PA) and its life/health subsidiaries, collectively known as Highmark Inc. Group. Concurrently, AM Best has upgraded the Long-Term ICRs to “a+” (Excellent) from “a” (Excellent) and affirmed the FSR of A (Excellent) of Highmark Inc.’s dental subsidiaries, which operate under the United Concordia brand name. AM Best also has upgraded the Long-Term ICRs to “a+” (Excellent) from “a” (Excellent) and affirmed the FSR of A (Excellent) of Highmark Casualty Insurance Company (Highmark Casualty) (Pittsburgh, PA), a member of HM Insurance Group (HMIG). Lastly, AM Best has upgraded the Long-Term Issue Credit Rating (Long-Term IR) to “a” (Excellent) from “a-” (Excellent) on Highmark Inc.’s senior unsecured note. 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 Inc. Group 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 Long-Term ICR upgrades reflect improvement in Highmark Inc. Group’s business profile to favorable, based on the organization’s expanding geographic and product diversification. The affiliation with Highmark of Western & Northeastern New York (formerly known as HealthNow New York Inc.) and acquisition of Gateway Health Plan, Inc., expands the organization’s geographic presence into a fourth state, New York, and enhances its overall scale and business capabilities specifically within the Medicaid and Medicare Advantage markets. This increase in geographic reach and market presence, combined with the organization’s continued innovation efforts and expertise in the provider space, is expected to enhance the Highmark organization’s market position through a combination of organic- and affiliate-based growth. Furthermore, Highmark Inc.’s national stop-loss business, which operates as HMIG, as well as its national dental business under the United Concordia name, add to the product and geographic diversification of the organization.
Highmark Inc. Group continues to maintain the strongest level of risk-adjusted capital, as measured by Best’s Capital Adequacy Ratio (BCAR), based on earnings retention and profitability over the past four years. Highmark Inc. Group’s operating results in 2020 were driven by favorable underwriting results that arose due to a combination of the receipt of a risk-corridor payment relating to the 2014-2016 terms from the federal government, and decreased benefit utilization due to economic restrictions put in place to combat the COVID-19 pandemic. Net results in 2017-2020 and into 2021 were enhanced by a series of one-time events: the sale of subsidiaries Davis Vision in 2017 and Visionworks in 2019; the risk corridor payment and benefit reductions due to COVID-19 in 2020; and a large gain on the affiliation with Highmark of Western & Northeastern New York in 2021. Premium development has been challenging for the group due to competitive and economic pressure in its primary markets, but Highmark Inc. Group reported growth in 2020 due to a combination of higher rates and the risk-corridor payment recorded as premium revenue. The Highmark organization is the fourth-largest Blue Cross Blue Shield plan in the United States, offering health products and services across four states with the addition of New York in 2021. Highmark Inc. has good business diversification through its national medical stop-loss business, national dental operations and technology platform services. Highmark Inc. 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.
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.
The upgrade of the Long-Term ICRs of United Concordia reflect the strategic importance as the nationwide dental operations of Highmark Inc.
United Concordia’s risk-adjusted capitalization increased in 2020 after planned reductions over the previous two years due to dividend payments to its parent that exceeded net earnings. The current year increase in capitalization was due to earnings that exceeded the 2020 dividend payments. Risk-adjusted capital, as measured by BCAR, remains at the very strong level. Underwriting income trends have been favorable, driven in part by the company’s government contracts, including the Federal Employees Dental and Vision Insurance Program and TRICARE Dental Plan, and in 2020 by reduced utilization due to the pandemic. Premium growth had been consistent pre-pandemic, but the economic fallout and the premium credits granted as a result of pandemic restrictions drove minimal growth in 2020. United Concordia has a large membership base, with more than nine million individuals, and a large national dental network with over approximately 126,000 dentists.
The ratings of Highmark Casualty reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, limited business profile and appropriate ERM.
The Long-Term ICR upgrade for Highmark Casualty reflects its strategic importance to Highmark Inc. as it assumes stop-loss business from HM Life Insurance Company, and is considered part of HMIG’s operations.
The Long-Term ICR has been upgraded to “a+” (Excellent) from “a” (Excellent) and the FSR of A (Excellent) has been affirmed, with stable outlooks, for Highmark Inc. and its following life/health subsidiaries:
HM Health Insurance Company
HM Life Insurance Company
HM Life Insurance Company of New York
Highmark Choice Company
Highmark West Virginia Inc.
The Long-Term ICR has been upgraded to “a+” (Excellent) from “a” (Excellent) and the FSR of A (Excellent) has been affirmed, with stable outlooks, for the following dental subsidiaries of Highmark Inc.:
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 upgraded, with a stable outlook:
Highmark Inc. — to “a” (Excellent) from “a-” (Excellent) on $250 million 6.125% senior unsecured notes, due 2041
About Highmark Inc. One of America's leading health insurance organizations and an independent licensee of the Blue Cross Blue Shield Association, Highmark Inc. (the Health Plan) and its affiliated health plans (collectively, the Health Plans) work passionately to deliver high-quality, accessible, understandable, and affordable experiences, outcomes, and solutions to customers. As the fourth-largest overall Blue Cross Blue Shield-affiliated organization, Highmark Inc. and its Blue-branded affiliates proudly cover the insurance needs of more than 6 million members in Pennsylvania, Delaware, New York and West Virginia. Its diversified businesses serve group customer and individual needs across the United States through dental insurance and other related businesses. For more information, visit www.highmark.com.
All references to “Highmark” in this document are references to the Highmark company that is providing the member’s health benefits or health benefit administration and/or to one or more of its affiliated Blue companies. This website is operated by Highmark, Inc. and is not the Health Insurance Marketplace website. It also does not display all Qualified Health Plans available through the Health Insurance Marketplace website. To see all available Qualified Health Plan options, go to the Health Insurance Marketplace website at HealthCare.gov.
Highmark Blue Cross Blue Shield or Highmark Blue Shield are Medicare Advantage HMO, PPO, and/or Part D plans with a Medicare contract. Enrollment in these plans depends on contract renewal. ®Blue Cross, Blue Shield and the Cross and Shield symbols are registered service marks of the Blue Cross Blue Shield Association, an association of independent Blue Cross and Blue Shield plans. Benefits and/or benefit administration may be provided by or through the following entities, which are independent licensees of the Blue Cross Blue Shield Association: Western and Northeastern PA: Highmark Inc. d/b/a Highmark Blue Cross Blue Shield, Highmark Choice Company, Highmark Health Insurance Company, Highmark Coverage Advantage Inc., Highmark Benefits Group Inc., First Priority Health, First Priority Life or Highmark Senior Health Company. Central and Southeastern PA: Highmark Inc. d/b/a Highmark Blue Shield, Highmark Benefits Group Inc., Highmark Health Insurance Company, Highmark Choice Company or Highmark Senior Health Company. PA: Your plan may not cover all your health care expenses. Read your plan materials carefully to determine which health care services are covered. For more information, call the number on the back of your member ID card or, if not a member, call 866-459-4418. Delaware: Highmark BCBSD Inc. d/b/a Highmark Blue Cross Blue Shield. West Virginia: Highmark West Virginia Inc. d/b/a Highmark Blue Cross Blue Shield, Highmark Health Insurance Company or Highmark Senior Solutions Company. Visit our website to view the Access Plan required by the Health Benefit Plan Network Access and Adequacy Act. You may also request a copy by contacting us at the number on the back of your ID card. Western NY: Highmark Western and Northeastern New York Inc. d/b/a Highmark Blue Cross Blue Shield. Northeastern NY: Highmark Western and Northeastern New York Inc. d/b/a Highmark Blue Shield.
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