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FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 20, 2016 01:43 PM (EDT)
A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of SilverScript Insurance Company (SilverScript) (Nashville, TN). The outlook of these Credit Ratings (ratings) remains stable.
The ratings are based on SilverScript’s ability to maintain more than adequate risk-adjusted capital levels over the past several years. The company’s capital growth is due primarily to a history of retained earnings, as well as an absence of dividends. Earnings have varied, but remained favorable due to a trend of decreasing loss ratios resulting in underwriting gains. Furthermore, SilverScript is strategically important to ultimate parent CVS Health Corporation’s (CVS Health) planned participation in the federal government’s Medicare prescription drug program.
Offsetting rating factors include SilverScript’s lack of product diversification as it only offers Medicare Part D (PDP) products to individuals and employer groups. The lack of product diversity subjects the company to increased regulatory risk. This increased regulatory risk could negatively impact future earnings; however, the company continues to report favorable earnings. Moreover, the PDP program results in large receivables that are settled by the Centers for Medicare and Medicaid Services (CMS) in the following year. Although there is less risk of payment default by the U.S. government program, A.M. Best identifies this as a potential concern for liquidity given SilverScript’s high reliance on large program receivables and timing of settlement payments should there be a delay in payment from CMS. This is mitigated through its ceded reinsurance agreements and the support from its ultimate parent, CVS Health, if necessary.
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.
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