OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has upgraded the Financial Strength Ratings (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a” from “a-” of Highmark Inc. (Highmark) (Camp Hill, PA), Highmark Choice Company, HM Health Insurance Company and Highmark West Virginia Inc. (Parkersburg, WV). Concurrently, A.M. Best has upgraded the Long-Term Issue Credit Ratings (Long-Term IR) to “a-” from “bbb+” on Highmark’s existing senior notes. Additionally, A.M. Best has upgraded the FSRs to A (Excellent) from A- (Excellent) and the Long-Term ICRs to “a” from “a-” of Highmark’s life/health subsidiaries, which include HM Life Insurance Company (HM Life) and HM Life Insurance Company of New York (HM Life New York) (New York, NY), as well as Highmark’s dental subsidiaries, which operate under the United Concordia brand name. A.M. Best also has affirmed the FSR of A- (Excellent) and Long-Term ICR of “a-” of Highmark Casualty Insurance Company (Highmark Casualty). The outlook for all Credit Ratings (ratings) remains stable. The above companies are domiciled in Pittsburgh, PA, unless otherwise specified. (See below for a detailed listing of the Long-Term IRs and dental companies’ ratings).
The ratings reflect the Highmark Group’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The rating upgrades are based on the strengthening of Highmark’s consolidated risk-adjusted capitalization and improved results at the integrated health system. Highmark has continued to report its trend of increasing net operating gains, driven by solid commercial market and individual exchange business results, which has strengthened risk-adjusted capital at Highmark Inc., the lead operating entity. Operating gains were significantly higher through year-end 2017, driven in part by the sale of Davis Vision to a private equity firm, as well as strong health care margins in nearly all sectors compared with prior year results. Concurrently, the improved results from Highmark Health’s integrated health delivery system — Allegheny Health Network (AHN), has impacted the organization favorably, where there is less pressure on the health insurance businesses to support its health delivery cohort. A.M. Best will continue to monitor AHN’s financial performance and market developments closely.
HM Life’s rating upgrades are based on a combination of its risk-adjusted capitalization being measured at the strongest level and the long-term strategy of its parent, HM Insurance Group, Inc., to grow its stop-loss business following its workers’ compensation business divestiture in 2016 and its strategic importance to cross-sell stop loss coverage to Highmark, Inc.’s large Administrative Services Only groups. Near-term losses reported in 2017 were reflective primarily of its smaller block of medical reinsurance products, with these losses driven by an increased claims experience in early 2017. The company had garnered the rate actions necessary to reverse the adverse earnings pressure favorably and near-term results also are tracking favorably.
Highmark Casualty previously wrote Pennsylvania stop-loss coverage, which is now directly written by HM Life. A.M. Best expects Highmark to review its strategic use of this entity going forward.
United Concordia Companies’ (UCC) rating upgrades were driven by its strengthened balance sheet and solid operating results. The dental business reported strong operating gains, primarily driven by its inclusion of the TRICARE Dental Program contract, which it began servicing in May 2017. UCC also has heavily invested in its business to build out its capabilities to handle its expanded population.
The FSRs were upgraded to A (Excellent) from A- (Excellent) and the Long-Term ICRs to “a” from “a-” with a stable outlook for the following dental subsidiaries of Highmark, Inc.:
- United Concordia Companies Inc.
- United Concordia Insurance Company
- United Concordia Insurance Company of New York
- United Concordia Dental Plans of California, Inc.
- United Concordia Dental Plans of Pennsylvania, Inc.
- United Concordia Dental Plans, Inc.
The following Long-Term IRs have been upgraded to “a-” from “bbb+” with a stable outlook:
-- $350 million 4.75% senior unsecured notes, due 2021
-- $250 million 6.125% senior unsecured notes, due 2041
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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