AM Best Affirms Credit Ratings of Highmark Inc. and Its Subsidiaries
Thursday, September 01, 2022
AM Best Affirms Credit Ratings of Highmark Inc. and Its Subsidiaries
PITTSBURGH (August 30, 2022) —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 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. Additionally, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of Highmark Casualty Insurance Company (Highmark Casualty) (Pittsburgh, PA). Lastly, AM Best has affirmed the Long-Term Issue Credit Ratings (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 IRs).
The ratings reflect Highmark Inc. Group’s 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).
Highmark Inc. Group continues to maintain the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), based on earnings retention and profitability over the past five years. Highmark Inc. Group’s operating results in 2021 were driven by favorable underwriting results that arose due to continued levels of lower utilization in the health plan driving favorable underwriting ratios, combined with better-than-expected organic premium growth across health plan segments. Consolidated financial reporting of the affiliations with HealthNow New York Inc. (now Highmark Western and Northeastern New York) and Gateway Health Plan, Inc. (now Highmark Wholecare) also contributed to top-line growth. GAAP net results over the past five years have been enhanced by a series of one-time events including: 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 and Northeastern New York in 2021. Premium development had been challenged for the group due to competitive and economic pressure in its primary markets, but Highmark Inc. Group reported good growth in 2020 and 2021 due to a combination of organic enrollment growth, premiums additions through acquisitions and affiliations, and limited rate action. Premiums also were favorable in 2020 due to the receipt of the owed risk corridor payment from the federal government and due to the continuation of the public health emergency delaying Medicaid redeterminations. The Highmark organization is a top five largest Blue Cross Blue Shield plan in the United States across a range of key financial metrics, offering health products and services across four states, with the addition of New York in 2021. Highmark Inc. Group has good business diversification through its national medical stop-loss business, national dental operations and technology platform services. 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.
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, appropriate ERM, and strategic importance as the nationwide dental operations of Highmark Inc. Group.
United Concordia’s risk-adjusted capitalization increased in 2020 and 2021 after planned reductions over the previous two years, facilitated through dividend payments to its parent that exceeded net earnings. The current year increase in capitalization was due to earnings that exceeded the 2021 dividend payments. Risk-adjusted capital, as measured by BCAR, remains at the very strong level, but improved for the second consecutive year. 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 by reduced utilization due to the COVID-19 pandemic in 2020 and 2021. 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 and 2021. United Concordia has a large membership base, with more than nine million individuals, and a large national dental network with 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, appropriate ERM, and strategic importance to the parent through its contribution to Highmark Inc. Group’s stop loss business.
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.
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:
— “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 approximately 6.8 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.
Highmark Blue Cross Blue Shield serves the 29 counties of western Pennsylvania and 13 counties of northeastern Pennsylvania. Highmark Blue Shield serves the 21 counties of central Pennsylvania and also provides services in conjunction with a separate health plan in southeastern Pennsylvania. Highmark Blue Cross Blue Shield West Virginia serves the state of West Virginia plus Washington County. Highmark Blue Cross Blue Shield Delaware serves the state of Delaware. Highmark Western and Northeastern New York Inc., serves eight counties in Western New York under the trade name Highmark Blue Cross Blue Shield of Western New York and serves 13 counties in Northeastern New York under the trade name Highmark Blue Shield of Northeastern New York. Each of these companies is an independent licensee of the Blue Cross Blue Shield Association. Blue Cross, Blue Shield and the Blue Cross and Blue Shield symbols are registered marks of the Blue Cross Blue Shield Association, an association of independent Blue Cross and Blue Shield companies. 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.
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