A.M. Best Upgrades Rating of Wellmark Health Plan of Iowa; Affirms Rating of Wellmark, Inc. and Wellmark of South Dakota.OLDWICK, N.J. -- A.M. Best Co. has upgraded the financial strength rating to A (Excellent) from A- (Excellent) of Wellmark Health Plan of Iowa, Inc. (WHPI) (Des Moines Des Moines, city, United States Des Moines (dĭ moin`), city (1990 pop. 193,187), state capital and seat of Polk co., S central Iowa, at the junction of the Des Moines and Raccoon rivers; inc. , IA) and has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength ratings of A (Excellent) of Wellmark, Inc. (d/b/a Wellmark 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 Iowa) (Wellmark) and Wellmark of South Dakota South Dakota (dəkō`tə), state in the N central United States. It is bordered by North Dakota (N), Minnesota and Iowa (E), Nebraska (S), and Wyoming and Montana (W). , Inc. (d/b/a Wellmark Blue Cross & Blue Shield of South Dakota) (Wellmark SD). All ratings have a stable outlook. The upgrade of WHPI reflects the improvement of operating performance, capitalization and enrollment. 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. results at WHPI have steadily improved since turning positive in 2003 and have more than doubled since that time. As a result of earnings growth, capitalization has improved and is more than adequate for its level of business risk. Insured membership has grown by more than 45% over the past two years. These factors are offset by WHPI's small membership compared to total Iowa enrollment. However, Iowa is a largely rural state, and 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, coverage is predominantly in the metropolitan areas. The rating affirmations of Wellmark and Wellmark SD reflect their strong market presence in selected health insurance markets and strong operating performance. The companies have an established market presence in their respective markets, with leading market shares in Iowa and South Dakota. Underwriting results have strengthened since 2001, with 2004 reported earnings the highest in five years. The improved operating performance has been the result of a disciplined pricing strategy, leveraging of information technology to cut transaction processing Updating the appropriate database records as soon as a transaction (order, payment, etc.) is entered into the computer. It may also imply that confirmations are sent at the same time. Transaction processing systems are the backbone of an organization because they update constantly. costs and lower than expected medical cost trends. The offsetting rating factor for the entire organization is its somewhat high investment risk from allocation to equity securities. While Wellmark's capital position is more than adequate to support operations, exposure to investment in equities at 77% of total capital and surplus, excluding investment in subsidiaries, remains higher than its peers. A.M. Best remains concerned about the overall balance sheet risk. As a health insurer, Wellmark bears considerable liability risk. This is further augmented by asset risk from its high exposure to equities. A.M. Best does recognize that the growth in the company's 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. has resulted in a much stronger capital position and has made Wellmark less dependent on investment income. However, A.M. Best remains concerned about the effect of a significant equity market downturn on Wellmark's capital position. 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 http://www.ambest.com/ratings. For current Best's Ratings, independent data and analysis on more than 1,100 individual life/health companies and A.M. Best groups, please visit http://www.ambest.com/lh. 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 http://www.ambest.com. |
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