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A.M. Best Removes from Under Review with Negative Implications and Downgrades Credit Ratings of Friday Health Plans of Colorado, Inc.
[May 25, 2018]

A.M. Best Removes from Under Review with Negative Implications and Downgrades Credit Ratings of Friday Health Plans of Colorado, Inc.

A.M. Best has removed from under review with negative implications and downgraded the Financial Strength Rating (FSR) to C- (Weak) from C (Weak) and the Long-Term Issuer Credit Rating (Long-Term ICR) to "cc" from "ccc+" of Friday Health Plans of Colorado, Inc. (Friday Health) (Alamosa, CO). The outlook assigned to the ratings is negative.

The ratings reflect Friday Health's balance sheet strength, which A.M. Best categorizes as very weak, as well as its marginal operating performance, limited business profile and weak enterprise risk management.

Friday Health received capital contributions through surplus notes, as well as a capital infusion from the parent in 2017. Despite this capital support, the level of risk-adjusted capitalization remains below the statutory minimum requirements and A.M. Best's expectations. As of year-end 2017, almost the entire capital at Friday Health was comprised of surplus notes, which A.M. Best considers negative. The company did not secure sufficient capital contributions that it had anticipated, and efforts for surplus relief through a reinsurance agreement did not gain any traction. Currently, the organization plans to replenish the capital through retained earnings in 2018.

Following three years of net losses, Friday Health expects earnings to improve in 2018 driven by corrective actions, such as rate increases, service area expansion, investments in technology, improved medical expense management and product redesign. In addition, during 2018, the company expects a sizable receivable from the Afforable Care Act's risk-adjustment program.

The negative outlook reflects A.M. Best's concern that the capitalization may deteriorate further if the operating results fall short of company's expectations. Furthermore, given the insufficient level of capital support from the parent, Friday Health may be unable to meet its obligations to policyholders. A.M. Best will continue to monitor the financial condition of Friday Health and have periodic discussions with company management.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit

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