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AM Best Revises Issuer Credit Rating Outlook to Stable for Blue Cross and Blue Shield of Vermont and Its Subsidiary
[July 01, 2020]

AM Best Revises Issuer Credit Rating Outlook to Stable for Blue Cross and Blue Shield of Vermont and Its Subsidiary

AM Best has revised the outlook to stable from negative for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of "bbb+" of Blue Cross and Blue Shield of Vermont and its wholly owned subsidiary, The Vermont Health Plan, LLC. The outlook of the FSR is stable. These companies are collectively known as BCBSVT Group. Both companies are domiciled in Berlin, VT.

The Credit Ratings (ratings) reflect BCBSVT Group's balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.

The revision of the Long-Term ICR outlook to stable reflects a material improvement in BCBSVT Group's risk-adjusted capital for 2019, as measured by Best Capital Adequacy Ratio (BCAR). The increase in BCBSVT Group's BCAR was driven predominately by the receipt of an alternative minimum tax (AMT (News - Alert)) credit by BCBSVT Group, as the companies continue to report underwriting and net losses. An additional AMT credit is expected to be received in 2020, which is anticipated to be larger than previously expected. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the payment of the AMT credit is being accelerated, and all remaining credits are to be paid in 2020.

BCBSVT Group has reported a trend of underwriting losses for a four-year period through 2019. This has been due mainly to BCBSVT Group being unable to achieve adequate rate increases through Vermont's rate review process for its exchange business. Current year results have shown significant fluctuations due to COVID-19, and the final impact to 2020 is still unknown as there remains a high degree of uncertainty around medical expendituresand investment portfolio impact. However, the strengthening of BCBSVT Group's risk-adjusted capital from the AMT receipts should provide an offset for any potential unfavorable operating results or non-operating adjustments to capital over the near to medium term.

BCBSVT Group maintains a high market share and good brand awareness in its primary market. The company remains flexible and has introduced new and innovative products and services to address the needs of its employer groups and members. The company is working currently on the introduction of Medicare Advantage products, which will diversify its enrollment base further.

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.

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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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