AM Best Downgrades Credit Ratings of Blue Cross and Blue Shield of Vermont and Its Subsidiary; Places Credit Ratings Under Review with Negative Implications
01 Agosto 2024 - 5:15PM
Business Wire
AM Best has downgraded the Financial Strength Rating
(FSR) to B (Fair) from B++ (Good) and the Long-Term Issuer Credit
Ratings (Long-Term ICRs) to “bb” (Fair) from “bbb+” (Good) of Blue
Cross and Blue Shield of Vermont (BCBSVT) and its subsidiary, The
Vermont Health Plan, LLC., collectively known as Blue Cross and
Blue Shield of VT Group (BCBSVT Group). Additionally, AM Best has
placed the FSR and the Long-Term ICRs under review with negative
implications. Both companies are domiciled in Berlin, VT.
These Credit Ratings (ratings) reflect BCBSVT Group’s balance
sheet strength, which AM Best assesses as adequate, as well as its
marginal operating performance, neutral business profile and
marginal enterprise risk management.
The downgrading of the ratings is attributed to a significant
decline in the level of risk-adjusted capitalization as measured by
Best’s Capital Adequacy Ratio (BCAR) through year-end 2023, with
further substantial deterioration expected through mid-2024. The
projected year-end BCAR for 2024 has deteriorated to a weak
assessment. The decline for 2024 is being driven by a
higher-than-projected net loss driven by continuing
higher-than-expected costs and utilization trends throughout the
second quarter, as well as several other one-time items. The
previous capital and surplus decline in 2023 was primarily due to
BCBSVT’s higher unrealized capital loss position. AM Best expects
that the continuation of underwriting and net losses could impact
the remainder of 2024, although the company is seeking sizable rate
increases as part of its corrective action plan. Additionally,
BCBSVT is currently evaluating potential options for capital
support to bolster its risk-adjusted capital for 2024.
The placement of the ratings under review with negative
implications reflects AM Best’s concerns about the uncertainty
regarding the extent of the improvement in BCBSVT’s risk-adjusted
capitalization, materially higher-than-expected net losses
projected at year-end 2024 and limited financial flexibility. The
ratings will remain under review while AM Best has further
discussions with management and monitors the status of the
organization’s operating performance and balance sheet strength
position as it implements corrective measures through the second
half of 2024.
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.
Copyright © 2024 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Jennifer Asamoah Senior Financial Analyst +1
908 882 1637 jennifer.asamoah@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Joseph Zazzera Director +1 908 882 2442
joseph.zazzera@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com