A.M. Best Affirms Rating of Blue Cross Blue Shield of Michigan.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) of Blue Cross Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. of Michigan (BCBSMI BCBSMI Blue Cross Blue Shield of Michigan ) (Detroit, MI) and its subsidiary, Blue Care Network of Michigan (Southfield, MI). The outlook for the rating is stable. The rating for BCBSMI reflects its solid market position in Michigan. The company has the broadest geographies of service coverage in the state. BCBSMI, along with its subsidiary, continues to demonstrate strong operating results, with both companies contributing to reserves for the last four years. Underwriting margins have reduced slightly following the planned strategy of rate moderation; however, the margins remain above the target level. A.M. Best expects earnings to temper in 2006 as BCBSMI continues to reduce its margins and improve its favorable capitalization level. Recent business production and organic surplus growth through retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. have also contributed to an improved risk-adjusted capital position, along with supporting business re-investment. Offsetting factors include BCBSMI's inability to control the individual rates. The company's status of the insurer of last resort insurer of last resort An insurance plan that accepts 'uninsurable' persons who have expensive and/or chronic diseases, and cannot obtain coverage at market rates. See Blues. leads to adverse selection and inability to promptly adjust rates for individual lines of business; however, A.M. Best expects results in individual lines of business to improve over the next few years. In addition, the pending 2006 launch of its new long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. subsidiary, LifeSecure, may interfere with BCBSMI's improved capital position, as this is a new and complex line of business with substantial risks involved. Also, after the recently announced acquisition of M-Care Health Plans (Ann Arbor Ann Arbor, city (1990 pop. 109,592), seat of Washtenaw co., S Mich., on the Huron River; inc. 1851. It is a research and educational center, with a large number of government and industrial research and development firms, many in high-technology fields such as , MI), which is still subject to review by state and federal regulators, BCBSMI may face integration risks that are inherent with any acquisition. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. For current Best's Ratings, independent data and analysis on more than 1,050 health companies and A.M. Best groups, please visit www.ambest.com/health. 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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