|[December 19, 2012]
A.M. Best Affirms Ratings of Health Care Service Corporation and Its Affiliates
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating (FSR) of
A+ (Superior) and issuer credit ratings (ICR) of "aa-" of Health Care
Service Corporation, a Mutual Legal Reserve Company (d/b/a Blue Cross
Blue Shield of Illinois/Texas/New Mexico/Oklahoma) (HCSC), its
affiliates, Health Care Service Corporation-Texas HMO Line of
Business, Health Care Service Corporation-Illinois HMO Line of Business,
HCSC Insurance Services Company and GHS Health Maintenance
Organization (GHS HMO) (Tulsa, OK). Concurrently, A.M. Best
has affirmed the debt rating of "a+" on $500 million 4.70% senior
unsecured notes due 2021 issued by HCSC.
A.M. Best also has revised the outlook to stable from negative and
affirmed the FSR of A+ (Superior) and ICR of "aa-" of Dearborn
National Life Insurance Company (DNL) (Downers Grove, IL) and its
subsidiary, Dearborn National Life Insurance Company of New York
(formerly Fort Dearborn Life Insurance Company of New York) (Pittsford,
Additionally, A.M. Best has affirmed the FSR of A (Excellent) and ICR of
"a" of Colorado Bankers Life Insurance Company (CBL) (Greenwood
Village, CO), a subsidiary of DNL. The outlook for the above
ratings is stable.
The ratings of HCSC and its affiliates reflect their continued trend of
favorable earnings and strong net income, their well-established market
presence in their respective markets, as well as leading market shares,
well-diversified core and complementary product offerings and a high
level of risk-adjusted capital. HCSC's business is well diersified
regionally operating as the Blue Cross Blue Shield plan in four states.
Additionally, in 2012, HCSC announced its intent to affiliate with Blue
Cross and Blue Shield of Montana, which could further diversify its
business geographically if the partnership is consummated as planned.
HCSC's favorable underwriting earnings have remained very strong and
have contributed to consistent surplus growth and strong capital levels
on an absolute and risk-adjusted basis.
HCSC may be challenged to grow its business organically in the near term
under current economic conditions. Unemployment, although improving,
remains high and employer groups continue to be pressured to contain
cost, resulting in a low level of hiring and pressure on funding of
employee benefits. Moreover, HCSC operates in competitive markets, where
strong national competitors compete for large national employer groups.
These factors may limit enrollment growth opportunities for HCSC.
Additionally, regulatory changes continue to impact the operating
environment for HCSC's core health insurance business due to the
continued implementation of all aspects of the Patient Protection &
Affordable Care Act (PPACA). HCSC is making significant investments to
adjust its operations to meet the emerging market needs and requirements
The revised outlook from negative to stable for Dearborn National
reflects its strategic role to provide life and ancillary products to
complement the health products offered by HCSC in order to offer a
comprehensive product portfolio to employer groups and individuals.
Positive rating movement on HCSC's ratings could occur if it continues
to maintain its favorable earnings trends across all of its business
lines and grows its market presence while continuing to grow its already
strong capital levels. Conversely, negative rating movement could occur
if the organization is negatively affected by PPACA, if it attempts to
aggressively grow in any non-core business lines or is unfavorably
affected by regulatory changes in its primary states.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS
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