A.M. Best Upgrades and Assigns Ratings to Providence Health Plan; Revises Outlook to Stable.

OLDWICK, N.J. -- A.M. Best Co. has upgraded the financial strength rating (FSR) to A (Excellent) from A- (Excellent) and assigned an issuer credit rating (ICR) of "a" to Providence Health Plan (PHP) (Beaverton, OR). The outlook for the FSR has been revised to stable from positive, while the outlook assigned to the ICR is stable.

The upgrade of the FSR reflects PHP's historical trend of successful underwriting performance, exemplified by earnings in all major lines of business. Over the past several years, PHP has experienced consistent membership growth, especially in its commercial line of business, while adhering to successful underwriting guidelines despite a competitive environment in the Portland-Metro service area in Oregon. Profitability is further enhanced by a reasonably low administrative cost ratio due to PHP's recurrent investments in underwriting and claims processing technology.

PHP has excellent capital strength that has been built almost entirely with retained earnings accumulated through several years of operating profitability. The current level of capital exceeds the threshold for the current ratings based on Best's Capital Adequacy Ratio (BCAR). A.M. Best believes the capital strength will support future membership growth for PHP through either geographical or product line expansion.

The upgrade also reflects continued support by the parent, Providence Health System-Oregon, a financially strong, not-for-profit health delivery organization through which PHP has a strategic role as its managed care affiliate.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.