A.M. Best Assigns Rating to Carolina Care Plan, Inc.

OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating of B (Fair) to Carolina Care Plan, Inc. (CCP) (Columbia, SC). The rating outlook is stable.

The rating reflects challenges of maintaining adequate levels of risk-adjusted capitalization, high competitive pressure and difficulties of building up credibility after many years of poor performance under outsourced management.

Partially offsetting these factors are CCP's new management team, growing membership and net income, growth in capital and surplus, good risk management and cost control measures put in place by the new management team over the last two years.

The company's capital position, low for the rating, has improved significantly due to favorable operating performance in 2005. The reorganization and cost control measures implemented by the new management team in 2003-2004 have brought both medical and administrative expenses under tight control, resulting in the lower trends. A.M. Best expects CCP's capital to continue to strengthen over the next two years. Blue Cross Blue Shield's dominant position in South Carolina leaves CCP vulnerable to the competition. However, this is partially balanced by the community need for a local, flexible and service-oriented carrier as an alternative to large companies' dominancy.

While CCP's change in management led to an initial drop in service levels and customer satisfaction, the company has been successfully rebuilding its name recognition and credibility. By filling critical gaps in the hospital and provider network in 2005, CCP can now offer competitive coverage in all regions of South Carolina. This expansion, combined with numerous sales initiatives, community outreach work and good customer service, has resulted in a gradual return of membership that was lost in 2002-2004.

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