AM Best Revises Outlooks to Negative for BCBSM, Inc. and Its Subsidiary

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of BCBSM, Inc., d/b/a Blue Cross Blue Shield of Minnesota (BCBSMN), and its subsidiary, HMO Minnesota, d/b/a Blue Plus. Both companies are domiciled in Eagan, MN.

The Credit Ratings (ratings) of BCBSMN reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The negative outlooks reflect AM Best’s concern regarding the recent deterioration in the group’s balance sheet strength metrics driven by operating losses and the establishment of a premium deficiency reserve. The decline in underwriting performance was driven by higher claims utilization across its government programs. In addition, the group’s risk-adjusted capitalization is adequate, as measured by Best’s Capital Adequacy Ratio (BCAR), has deteriorated due to the recent losses and AM Best is concerned that any further losses beyond expectations may place additional pressure on its current level of capitalization.

AM Best noted that the group’s capitalization improved through second-quarter 2026, due to a combination of material improvement in earnings and capital contribution from the parent company, Aware Integrated, Inc. (Aware). BCBSMN’s financial leverage, as calculated by AM Best, was 17.4% at year-end 2025, and its interest coverage was weak due to operating losses. The organization benefits from financial flexibility through access to borrowing from Federal Home Loan Bank, funding facilities and capital available at Aware. Moreover, Aware demonstrated explicit support by contributing capital in early 2026, to offset the insurance operations losses.

BCBSMN has taken numerous significant steps to improve its underwriting performance. Furthermore, underwriting results, which improved through second-quarter 2026, are attributed to strategic pricing and improved utilization trends. However, underwriting losses at year-end 2025, were primarily driven by a combination of increasing cost, utilization of specialty medications and an increase in hospital inpatient services. AM Best noted that the group reported an increase in Medicare Advantage enrollment where reimbursement levels haven’t kept pace with rising cost and higher utilization trends. Similarly, the Medicaid program contributed to the losses in 2025, as the state’s prepaid medical assistance program experienced higher cost trends.

The ratings of BCBSMN and its subsidiary, Blue Plus, also reflect its dominant market position in Minnesota. BCBSMN is the oldest and largest health insurer in the state and controls more than one-third of the state’s market, which includes a high share of the national accounts sector in Minnesota. As a Blue Cross Blue Shield plan, the company enjoys strong brand name recognition, strategic relationships with a diverse group of provider networks and a diversified product portfolio. However, the company operates in a very competitive market and has some geographic limitations to its business as a licensee of the Blue Cross Blue Shield Association. In addition, BCBSMN has reported premium growth over the last five-year period and through second-quarter 2026, mainly driven by the growth of its government business. Premium growth can be attributed to membership gains and rate actions.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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