S&P Asgns AA- CPA Rtg to Blue Cross &Blue Shield of SC.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/25/97 --Standard & Poor's today assigned its double-'A'-minus claims-paying ability and counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit ratings to 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 South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. Inc. The ratings are based on the following major rating factors: -- Excellent managed care capabilities. The Blue Cross & Blue Shield of South Carolina plan controls approximately 35% of the private health insurance market in the state and offers a wide variety of managed care products -- both preferred provider organization pre·ferred provider organization n. Abbr. PPO A medical insurance plan in which members receive more coverage if they choose health care providers approved by or affiliated with the plan. (PPO PPO abbr. preferred provider organization PPO Managed care Preferred provider organization, see there Infectious disease Pleuropneumonia-like organism, see there ) and health maintenance organization (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, ). The plan (including its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. Companion HealthCare and majority owned Preferred Health Systems Inc.) is the largest managed care provider in the state. The plan is the largest processor of CHAMPUS CHAMPUS Civilian Health & Medical Program for Uniformed Services A health care plan for military dependents and retirees operated by the DoD Types of service HMO, PPO, and fee-for-service, through a single health plan known as TriCare claims in the country. Blue Cross & Blue Shield of South Carolina's HMO products are offered through its wholly owned subsidiaries Companion HealthCare Corp. and Preferred Health Systems Inc. Total managed care enrollment was approximately 825,000 members in 1997 (HMO and PPO) or 85% of total enrollment. -- Excellent enrollment growth. The plan's total enrollment has grown significantly during the past five years. Total enrollment as of year-end 1996 was approximately 972,000 compared to 938,000 members in 1995 and compared to 888,000 at December 1994. Much of the growth has come from the plan's HMO subsidiaries whose membership has grown to 119,000 at Dec. 31, 1996, up from 92,000 members in 1995, and 58,000 in 1994. This is reflective of a conscious effort by the plan to grow and expand its managed care capabilities. Total enrollment growth has increased membership to 1.08 million as of June 1997. -- Strong diversification strategy. Blue Cross & Blue Shield of South Carolina's corporate strategy has focused on developing its South Carolina business profile primarily, and then leveraging these core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
-- Excellent operating performance. Blue Cross & Blue Shield of South Carolina's financial performance has been excellent for the past five years. This has been possible due to continued strong benefit management, excellent provider contracting, benefits derived from its strong market position, and the large proportion of expense based business that contributes significantly to reducing overhead. Pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. in 1996 was $57.6 million (consolidated basis) compared to $46.2 million in 1995, $36.6 million in 1994, and $32.0 million in 1993. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern earnings for 1997 are projected to be approximately $44 million-$48 million. -- Strong capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. . Blue Cross & Blue Shield of South Carolina's capitalization has shown continued growth during the past five years and is currently at an excellent level. Total statutory capital in 1996 was approximately $191.3 million, up from $166 million in 1995 and $126.8 million in 1994. Total capital (statutory) was approximately $211 million as of June 30, 1997. Capital adequacy on the Standard & Poor's model was approximately 165% in 1996. Prospectively, Standard & Poor's expects the plan's capitalization to be in the range of 160%-170% by year-end 1997. -- Investments. Blue Cross & Blue Shield of South Carolina has good quality investments with adequate liquidity but Standard & Poor's views its portfolio to be fairly aggressive based on the proportion of affiliate investments as a percentage of total invested assets. Total invested assets at Dec. 31, 1996 were approximately $222 million. The bond portfolio was approximately $33 million (15%), equity investments were $109.6 million (or 49.0%) including $92.5 million (42.0%) of investments in wholly owned subsidiaries (primarily two HMOs, a life insurance subsidiary, and a property/casualty subsidiary), cash and short-term investments were $29 million (13%), and real estate was $28 million (13%). OUTLOOK: STABLE EXPECTATIONS: Standard & Poor's expects Blue Cross & Blue Shield of South Carolina to continue to have enrollment gains in the range of 2%-3% in 1997-1998. Additionally, Standard & Poor's expects Blue Cross & Blue Shield of South Carolina's consolidated pretax earnings to be in the range of $44 million-$48 million and capitalization to be in the range of 160%-170%. -- CreditWire CONTACT: Arun N Kumar, 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 (1) 212-208-8453 For more information on criteria or subscriptions: http://www.ratings.standardpoor.com |
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