A.M. Best Special Report: Earnings Decline, Expenses Are Up, But BCBS Results Remain Favorable.OLDWICK, N.J. -- Despite declines in some key measures, overall results remained favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. for Blue Cross Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. companies in 2007 and are expected to remain that way in 2008. Investment income has been negatively impacted by volatile credit markets and lower interest rates, but only a few companies are exposed to the subprime and equity markets and A.M. Best Co. believes the exposure is manageable. While some companies, such as WellPoint Inc., the largest for-profit Blue Cross Blue Shield plan, have lowered earnings guidance, earnings are expected to remain favorable. Other trends for 2007 included: * Consolidated 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. earnings declined for the second consecutive year, with 2007 showing the largest decline. * Net income declined, after remaining flat for 2005 and 2006. Net earnings, however, were aided by an improvement in 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. , which more than doubled from 2006. * Despite membership growth and rate increases, premium growth slowed due to the combined effects of competition for commercial business, premium rate actions and a shift of employer groups employer group Association of employers Managed care An entity with a current group benefits agreement in effect with a health plan to provide covered health care services to its employee-subscribers and eligible dependents. from fully insured to self-insured plans. * The health care expense ratio showed the highest increase in more than three years. * The sales, general & administrative (SG&A) expense ratio remained fairly constant, with the for profit publicly traded segment the only one with a decline. * Total capital grew, although at a lower rate than in 2006 and 2005. BestWeek subscribers can download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. a PDF (Portable Document Format) The de facto standard for document publishing from Adobe. On the Web, there are countless brochures, data sheets, white papers and technical manuals in the PDF format. copy of all full special reports at no additional cost or a combination of the PDF copies plus all related spreadsheet files of the report data at no additional cost from our Web site at www.bestweek.com. Nonsubscribers can download a PDF copy of the full special report (16 pages) for $55 or a combination of the PDF copy plus the spreadsheet file of the report data for $140 from our Web site at www.bestweek.com. Call customer service for more information, (908) 439-2200, ext. 5742. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com. |
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