A.M. Best Assigns A- -Excellent- Rating To Regence Blue Cross Blue Shield of Oregon.OLDWICK, N.J.--(BUSINESS WIRE)--July 26, 1999-- A.M. Best Co. today assigned an A- (Excellent) rating to Regence 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 Oregon, Portland. The rating reflects the company's strong market profile, adequate capitalization and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. investment performance. Offsetting factors include material underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. losses associated with key market segments and an increased reliance on portfolio returns for overall profitability. On a combined basis, Regence and its affiliated health maintenance organizations support health insurance products and services for approximately 1.2 million members, making it the largest provider of health benefits in Oregon. The organization provides health-care access for 31% of Oregon's population and has established a leading share in each market segment. Regence is well capitalized in support of its business and financial risks. 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. has remained fairly stable over the past four years, although an increasing amount of capital has been allocated to the affiliated 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, operations via surplus notes to compensate for increased underwriting losses. Underwriting results have been hurt by unfavorable utilization trends, particularly associated with the HMO market. A.M. Best expects earnings pressure to persist for the rest of 1999, constraining con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. surplus growth. Financial performance has been driven mainly by an investment portfolio that has produced nearly all of the earnings needed to sustain surplus strength. Also, the present portfolio structure serves to further pressure the company's capital on a risk-adjusted basis. A.M. Best considers the continued reliance upon portfolio returns, particularly realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. , to be detrimental to the overall assessment of earnings quality. Regence has recently begun to implement various rate increases, which should begin to alleviate some of the present-year earnings pressure and provide the basis for a more favorable and balanced earnings outlook that is necessary to support the current rating assignment. In addition, A.M. Best has assigned A- ratings to Regence HMO Oregon and Regence Health Maintenance of Oregon, which are Regence-controlled HMO affiliates. A.M. Best also has lowered the rating of Regence Life & Health Insurance Co. from A (Excellent) to A- (Excellent). As a strategic majority-owned subsidiary majority-owned subsidiary A firm in which more than 50% of outstanding voting stock is owned by the parent company. , Regence Life & Health derives a substantial portion of its business serving as the underwriter of life and disability products offered in conjunction with health-care products insured or administered primarily by Regence. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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