Press Release - DECEMBER 21, 2017

A.M. Best Revises Outlooks to Stable for Oregon Dental Service; Affirms Credit Ratings of Moda Health Plan, Inc.


CONTACTS:
 Wayne Kaminski
Senior Financial Analyst
+1 908 439 2200, ext. 5061
wayne.kaminski@ambest.com

Sally Rosen
Senior Director
+1 908 439 2200, ext. 5280
sally.rosen@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - DECEMBER 21, 2017
A.M. Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR)of “bb” of Oregon Dental Service (ODS). A.M. Best also has affirmed the FSR of B- (Fair) and the Long-Term ICR of “bb-” of Moda Health Plan, Inc. (Moda Health). The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in Portland, OR.

The ratings of ODS reflect its balance sheet strength, which A.M. Best categorizes as weak, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The revision of the outlook to stable reflects the improvement in earnings and the capital support.

The balance sheet strength of ODS has been negatively impacted by the material capital strain at its subsidiary, Moda Health. The consolidated group has sold certain assets and secured additional capital in the form of surplus notes from external sources to support Moda Health. As a result of the capital needs, the organization is highly leveraged.

The ratings of Moda Health reflect its balance sheet strength, which A.M. Best categorizes as very weak, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. Moda Health’s balance sheet weakness is attributed to the high leverage from surplus notes and decreased levels of absolute capital balances driven by losses in prior years, in addition to the non-admittance of the risk corridor receivables. The company has limited financial flexibility and its risk-adjusted capitalization measures are low.

Offsetting rating factors for Moda Health include its strategic role within the ODS organization and the capital support from ODS. Moda Health’s operations provide ODS with business diversification beyond its dental business. The operating performance of Moda Health has improved and near-term results have shown favorable earnings trends, which has been driven by rate increases, better contracting rates with its provider community and exit from the unprofitable individual segment in Alaska.

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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Related Companies

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AMB# Company Name
011437 Moda Health Plan Inc
070995 ODS Group
064364 Oregon Dental Service