OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of C- (Weak) and the Long-Term Issuer Credit Rating of “ccc-” of Friday Health Plans of Colorado, Inc. (Friday Health of Colorado) (Alamosa, CO).
These Credit Ratings (ratings) reflect Friday Health of Colorado’s balance sheet strength, which AM Best categorizes as very weak, as well as its marginal operating performance, limited business profile and weak enterprise risk management (ERM).
The revision of the outlooks to positive is based on AM Best’s expectation of a continued trend of improvement of the balance sheet strength assessment. While capital and surplus was modest in 2019, Friday Health of Colorado’s parent has received capital commitments totaling $50 million in 2020, which are expected to be deployed to support Friday Health of Colorado’s business expansion and improve risk-adjusted capitalization. Furthermore, Friday Health of Colorado has entered into a three-year quota share reinsurance agreement with AXA, which will provide capital relief and for its current business, as well as for new business development.
Friday Health of Colorado has grown its business through a reinsurance agreement to assume business from New Mexico Health Connections effective Jan. 1, 2020, as well as from increased enrollment from its exchange business. However, underwriting results have fluctuated as the company struggles to gain scale and from investments in its operations. Friday Health of Colorado current business is mainly derived from individual exchange business in select geographies in Colorado and New Mexico. The company is working on market evaluations and licensing for geographic expansion of its business. While there have been improvement in operational and financial controls, the company’s ERM practices still are not developed and lag industry norms.
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