A.M. Best Affirms Rating for Premera Blue Cross of Washington.Business/Insurance Editors OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 17, 2001 A.M. Best Co. has affirmed the financial strength rating of B++ (Very Good) for Premera Blue Cross Premera Blue Cross is a nonprofit Blue Cross Blue Shield licensed health insurance company based in Mountlake Terrace, Washington. It sells health insurance plans under the Blue Cross license in Washington state except Clark County and under both the Blue Cross and Blue Shield of Washington, Seattle. The rating reflects the company's strong market presence in the Pacific Northwest and Alaska and its improved underwriting and operating performance. In addition, the rating recognizes the continuing progress made to improve the organization's financial management and administrative service and support capabilities. Offsetting factors include continued unfavorable underwriting performance in certain segments of the Washington group market and the decline in the company's risk-adjusted capital position due to rapid growth in premiums. Premera and its affiliates have more than 1.2 million members combined in the Washington, Alaska and Oregon markets. Overall membership grew by 13% in 2000, which was driven by strong results in the western Washington
Western Washington is a region of the United States defined as that part of Washington west of the Cascade Mountains. and Oregon markets. Premera is one of the leading healthcare providers in both Washington and Alaska and is establishing a strong niche position through its LifeWise affiliate in the more densely populated areas of Oregon. The membership base is heavily skewed skewed curve of a usually unimodal distribution with one tail drawn out more than the other and the median will lie above or below the mean. skewed Epidemiology adjective Referring to an asymmetrical distribution of a population or of data toward the indemnity and PPO PPO abbr. preferred provider organization PPO Managed care Preferred provider organization, see there Infectious disease Pleuropneumonia-like organism, see there product segments, which accounted for more than 85% of its core market earned premium Earned premium is the portion of an insurance written premium which is considered "earned" by the insurer, based on the part of the policy period that the insurance has been in effect, and during which the insurer has been exposed to loss. . Operating results have improved dramatically on a consolidated basis due to lower medical and administrative cost administrative cost Managed care A cost incurred by the 'business' end of a health care facility or university–eg, staffing and personnel costs, nursing home and hospital administration, insurance, and overhead expenses. Cf Indirect costs. ratios, growth in membership and the easing of the regulatory environment related to the individual market in Washington. Premera and other carriers in Washington have re-entered the individual market in 2001 after substantial changes were made by the state to create a more viable competitive environment. A.M. Best considers the quality of earnings to be stronger compared to prior years due to improved underwriting fundamentals and a reduced reliance on investment returns for profitability. Furthermore, the nature of investment income has also been altered by the company's transition to a more conservative portfolio. Premera's risk adjusted capitalization was strengthened via a merger with Medical Service Corporation of Eastern Washington (MSC (1) (MSC.Software Corporation, Santa Ana, CA, www.mscsoftware.com) Founded in 1963 by Richard H. MacNeal and Robert G. Schwendler, MSC is the world's largest provider of mechanical computer aided engineering (MCAE) strategies, simulation software and services. ) in 1998. In addition, Premera's improved underwriting profitability has helped generate additional capital in the last two years. However, growth in premiums has outpaced the growth in capital, and consequently, Premera's risk-adjusted capital position declined somewhat in 2000, while the ratio of net premiums written to capital and surplus (a measure of operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. ) increased. A.M. Best expects that as Premera addresses the issues related to the poor experience in certain segments of the Washington group market and continues to aggressively manage medical and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. in all market segments, overall profitability will improve and should be sufficient to fund the growing book of business. Additionally, A.M. Best affirmed the financial strength ratings of B++ (Very Good) for States West Life Insurance Company and MSC Life Insurance Company. The B+ (Very Good) financial strength rating for LifeWise, a Premera Health Plan, Inc. was also affirmed. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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