AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of Highmark Inc. (Highmark) (Camp Hill, PA) and its life/health (L/H) subsidiaries, collectively known as Highmark Inc. Group. Concurrently, AM Best has affirmed the FSRs of A (Excellent) and the Long-Term ICRs of “a” of Highmark’s dental subsidiaries, which operate under the United Concordia brand name. Additionally, AM Best has upgraded the FSR to A (Excellent) from A- (Excellent) and the Long-Term ICR to “a” from “a-” of Highmark Casualty Insurance Company (Highmark Casualty) (Pittsburgh, PA). Lastly, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of “a-” on Highmark’s existing senior unsecured notes. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and the Long-Term IRs).
The ratings of Highmark Inc. Group reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Highmark continues to maintain the strongest level of risk-adjusted capital based on contributions from its favorable operating results over the past three years. Highmark’s operating results are driven by good underwriting results in its commercial and Medicare Advantage business segments, as well as stable earnings from its medical stop loss business written mainly by HM Life Insurance Company and favorable investment income. Overall operating results over the past several years were enhanced by the proceeds from the sale of its subsidiaries, Davis Vision in 2017 and Visionworks in 2019. Premium development has been challenging for the group due to competitive and economic pressure in its primary markets. Highmark is one of the largest Blue Cross Blue Shield plans in the nation, offering health products and services in service areas across three states. Highmark has good business diversification through its medical stop loss business, national dental operations and technology platform services. Highmark also is part of an integrated delivery system with its affiliate, Allegheny Health Network, in its Pennsylvania service area, offering coordinated and high-quality cost-effective care and health insurance products. Highmark also has a well-developed and comprehensive ERM program, which is incorporated into business operations and strategic planning.
The ratings of United Concordia reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.
United Concordia’s risk-adjusted capitalization has declined modestly over the past two years, as the dividends to its parent have exceeded net earnings due to the planned return of certain excess capital to its parent. Nevertheless, risk-adjusted capital presently remains at the very strong level. AM Best will continue to monitor the capitalization of the dental entities, with the expectation that they will be supported by the parent organization as needed. Finally, premium growth and operating earnings have been especially strong, driven in part by the company’s government contracts including the Federal Employees Dental and Visions Insurance Program and TRICARE Dental Plan. United Concordia has a large membership base, with almost 9 million individuals and a large national dental network with over 127,000 dentists.
The ratings of Highmark Casualty reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate ERM.
The rating upgrades of Highmark Casualty reflect rating enhancement received based on its strategic
importance and dependence on its affiliate, HM Life Insurance Company, from which it derives the majority of its premiums through a quota share arrangement for medical stop loss business.
The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed, with stable outlooks for Highmark Inc. and its following L/H subsidiaries:
HM Health Insurance Company
HM Life Insurance Company
HM Life Insurance Company of New York
Highmark Choice Company
Highmark West Virginia Inc.
The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed, with stable outlooks 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 FSR has been upgraded to A (Excellent) from A- (Excellent) and the Long-Term ICR to “a” from “a-“, with a stable outlook for Highmark Casualty Insurance Company, an insurance subsidiary of Highmark Inc.:
The following Long-Term IRs have been affirmed, with stable outlooks:
–“a-” on $350 million 4.75% senior unsecured notes, due 2021
–“a-” on $250 million 6.125% senior unsecured notes, due 2041
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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