S&P Announces: Dental Service of Massachusetts Inc. Ratings Affirmed; Outlook Stable.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- On Aug. 24, 2004, Standard & Poor's Ratings Services Ratings Service A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. affirmed its 'A+' counterparty credit and financial strength ratings on Dental Service of Massachusetts Inc. (DSM 1. DSM - Data Structure Manager. An object-oriented language by J.E. Rumbaugh and M.E. Loomis of GE, similar to C++. It is used in implementation of CAD/CAE software. DSM is written in DSM and C and produces C as output. ), which does business as Delta Dental Plan Delta Dental Plan, n.pr an active member organization of the Delta Dental Plans Association (a not-for-profit organization), formed and guided by state dental societies to provide prepaid dental care to the public on a group basis. of Massachusetts. The outlook is stable. The ratings reflect DSM's strong competitive position, very strong capitalization and operating performance, and extremely strong liquidity. Offsetting these positive factors is an active acquisition-based growth strategy that has improved DSM's business and geographic diversification, but has also increased the company's overall financial risk profile. DSM's acquisition strategy is being carried out through its majority-owned for-profit subsidiary DentaQuest Ventures Inc. (DQV DQV Data Quality Verification ). DSM's overall financial risk profile is less conservative based on DQV's highly levered balance sheet and capital-intensive acquisition strategy. As of June 30, 2004, DQV had an aggressive debt-to-capital ratio of 69% and a goodwill & intangibles-to-capital ratio of 85%. However, this debt-to-capital ratio is much lower on a consolidated basis, including DSM, at 27%, and is well supported by DQV's very strong projected interest coverage of about 10x for 2004 and 2005. The stable outlook reflects the expectation that DSM will maintain its market leader position in Massachusetts, based on its significant brand strength, high-quality customer service, extensive provider network, and simple, but diverse product portfolio. In addition, DSM's capitalization and operating performance are expected to remain very strong. Offsetting these factors are the potential integration risks associated with recent and prospective acquisitions, and the difficult competitive and economic environment in Massachusetts. Price competition is expected to exert downward pressure on operating margins, while a weak employment market is expected to stagnate stag·nate intr.v. stag·nat·ed, stag·nat·ing, stag·nates To be or become stagnant. [Latin st enrollment growth. DSM, which does business as Delta Dental Plan of Massachusetts, is the largest provider of group dental benefits in Massachusetts. Headquartered in Boston, Mass., DSM is a member of the national Delta Dental Plans Assoc., the nation's largest provider of group dental benefits. Outlook Standard & Poor's expects DSM's capital adequacy ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. to stabilize at about 490% in 2004 and 2005. Earnings are expected to remain consistent with recent years' earnings, with consolidated GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income of about $20 million for 2004 and 2005. Modest enrollment growth of 2%-3% is expected in 2004. Ratings List Dental Service of Massachusetts Inc. (d/b/a Delta Dental of Massachusetts) Counterparty credit rating A+/Stable/-- Financial strength rating A+/Stable |
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