Press Release - OCTOBER 26, 2017
A.M. Best Affirms Credit Ratings of SilverScript Insurance Company
FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 26, 2017
The ratings reflect SilverScript’s strong risk-adjusted capital levels over the past several years, supported by 100% retention of net income and an absence of dividends. In addition, the ratings benefit from the financial and operating resources of the ultimate parent, CVS Health Corporation (CVS Health). SilverScript has developed a long-term trend of strong favorable earnings; however, net results have been uneven over the past several years due to the impact of one-time items. Furthermore, SilverScript is the market leader in stand-alone prescription drug plan enrollment and is strategically important to CVS Health’s planned participation in the federal government’s Medicare prescription drug program.
Offsetting rating factors include SilverScript’s concentration in a single line of business that is highly regulated and that could negatively impact future earnings; however, the company continues to report favorable earnings. Membership is driven primarily by low-income cost sharing subsidized members who were auto-assigned by the Centers for Medicare & Medicaid Services (CMS) and comprise 53% of SilverScript’s members, making the company heavily weighted toward this segment. Additionally, there are potential liquidity concerns resulting from a high dependency on large program receivable balances due to the CMS’ reconciliation process and timing of payments. Although there is low risk of payment default by the U.S. government program, there is a feasible risk of a delay in payment from CMS. This is mitigated through SilverScript’s 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. 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.
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