OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has downgraded the Financial Strength Rating to C (Weak) from C++ (Marginal) and the Long-Term Issuer Credit Rating to “ccc+” from “b+” of Colorado Choice Health Plans (Colorado Choice) (Alamosa, CO). A.M. Best also has maintained the under review status, while revising the implications to negative from developing.
Colorado Choice was acquired by Friday Health Plans in June 2017 and received several capital contributions in the form of surplus notes from its new parent. Higher capital and surplus was partially offset by larger than expected payments related to the Affordable Care Act’s risk-adjustment program. As a result, the company’s level of risk-adjusted capitalization remains below the statutory minimum requirements and A.M. Best’s expectations.
The company is actively working on securing additional external capital contributions, as well as pursuing reinsurance options including surplus relief. A.M. Best is concerned that Colorado Choice might be unable to meet its obligations to policyholders if the capital infusion is further delayed or is insufficient. The ratings will remain under review with negative implications pending the outcome of the company’s efforts to improve capitalization. A.M. Best will continue to monitor the financial condition of Colorado Choice and will maintain ongoing discussions with company management.
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