OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of Delta Dental of California (DDC) (San Francisco, CA) and its affiliates, Delta Dental Insurance Company (DDIC) (Wilmington, DE), Delta Dental of Pennsylvania (DDP) (Mechanicsburg, PA) and Delta Dental of New York, Inc. (DDNY) (New York, NY). These companies are collectively known as Delta Dental of California Group. The outlook of the Credit Ratings (rating) is stable.
The ratings reflect Delta Dental of California Group’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also reflect the group’s strongest level of risk-adjusted capital on a consolidated basis, as measured by Best’s Capital Adequacy Ratio (BCAR), continued capital growth driven primarily by strong earnings, favorable liquidity and access to additional sources of contingent liquidity. However, DDC and DDP provide capital support to their subsidiaries and affiliates through surplus notes rather than contributed capital.
The group has reported strong operating results due to favorable underwriting income combined with increasing investment income, resulting in a high level of earnings. Favorable enrollment growth over the past several years primarily is composed of its fully insured dental lines. Premiums have declined from the prior year, which was primarily due to a larger government contract converting to self-funding.
The Dentegra Group, Inc. (Dentegra) is a non-profit Delaware holding company formed by DDC and DDP to oversee and coordinate the strategic activities of both entities and their affiliates. DDC is the largest member company of the Delta Dental Plans Association, a trade organization for Delta Dental member companies operating in all 50 U.S. states, the District of Columbia, U.S. Virgin Islands and Puerto Rico. DDC, DDP, DDIC and DDNY, together with their affiliate companies, is one of the largest providers of dental benefits in the nation with coverage extended to more than 36 million people. The companies are active participants in numerous state exchanges for small groups and individuals, as stand-alone dental policies or through medical partnerships.
In addition, the organization provides dental coverage to Medicaid recipients in a number of states. AM Best notes that in late 2018, following the departure of its chief executive officer, Dentegra completed a reorganization of its top management team, and more recently, hired a new chief operations officer. This has resulted in a smaller leadership team while maintaining continuity.
The ERM program is supported by a well-established governance structure, with culture and risk management controls. The organization utilizes the Committee of Sponsoring Organizations of the Treadway Commission (COSO) ERM framework as its guiding principles for its ERM efforts. The top risk scenarios are stress tested to ascertain if the capital position exceeds minimum levels, and solvency was maintained to meet management’s business plan. AM Best will continue to monitor its practices for future improvements.
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