A.M. Best Affirms Ratings of Premera Blue Cross and Its Subsidiaries.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Aug. 29, 2002 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 (Seattle, WA). The rating for the insurance subsidiaries of Premera have also been affirmed. The rating of Premera reflects its strong market presence in the Pacific Northwest and Alaska and its improving 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 the HealthPlus HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, and certain segments of the government business market and the significant contribution from the Medicare Supplement product for overall profitability. Premera and its subsidiaries have approximately 1.2 million members combined in the Washington, Alaska and Oregon markets. Overall member months grew by 8.8% in 2001, driven by growth 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. On a consolidated basis, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $28 million, an improvement from $13.7 million in 2000. The improvement in operating results is attributable to discipline pricing and underwriting along with the easing of the regulatory environment related to the individual market in Washington. Premera is one of the leading healthcare providers in both Washington and Alaska and is establishing a strong niche position in the more densely populated pop·u·late tr.v. pop·u·lat·ed, pop·u·lat·ing, pop·u·lates 1. To supply with inhabitants, as by colonization; people. 2. areas of Oregon through its LifeWise affiliate. The membership base is predominantly PPO PPO abbr. preferred provider organization PPO Managed care Preferred provider organization, see there Infectious disease Pleuropneumonia-like organism, see there and indemnity product segments, which account for more than 87% 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. . A.M. Best considers the quality of earnings to be stronger compared to prior years due to improved underwriting fundamentals, while reducing the reliance on investment returns for profitability. Premera has reported an underwriting gain over the last three years; however, the margin has been impaired by losses in certain segments with the largest losses from the HealthPlus HMO business and Government business, which consists of Public Employees Benefits Board (PEBB PEBB Percutaneous excisional breast biopsy, see there ) and Medicare+Choice. A.M. Best believes that while operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. occurred in certain segments, they were more than offset by the gains in the commercial, Medicare Supplement and Medicaid lines of business. A.M. Best also expects that as Premera continues to address the issues related to the poor experience in certain segments and 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. The company's underwriting profitability is highly dependent on the operations from the Medicare Supplement line of business, which accounted for $12.4 million of underwriting gain and represented 4.5% of the premiums. A.M Best notes that the plan's profitability in certain segments can be negatively impacted by both regulatory and competitive environment. A.M. Best has a positive outlook on the rating. The financial strength rating of B+ (Very Good) for the following subsidiary of Premera Blue Cross has been affirmed: - LifeWise, a Premera Health Plan The financial strength rating of B++ (Very Good) for the following subsidiaries of Premera Blue Cross have been affirmed: - States West Life Insurance Company - MSC Life Insurance 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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