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FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 16, 2017 01:57 PM (EDT)
A.M. Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Premera Blue Cross (Premera) and its subsidiaries, LifeWise Assurance Company and LifeWise Health Plan of Washington (all companies are domiciled in Mountlake Terrace, WA). The outlook of these Credit Ratings (ratings) is stable.
A.M. Best also has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb” of LifeWise Health Plan of Oregon, Inc. (LifeWise OR) (Portland, OR), a subsidiary of Premera. The outlook of these ratings is negative. Concurrently, A.M. Best has withdrawn the ratings of LifeWise OR as its parent, Premera, has requested that LifeWise OR no longer participate in A.M. Best’s interactive rating process.
The affirmation of the ratings reflects Premera’s solid market share in its primary markets, operating as Premera Blue Cross statewide and Premera Blue Cross Blue Shield in Eastern Washington and Alaska. The organization continues to have a strong membership base across diversified product lines. The company historically has reported premium growth, further supplemented by its growing ancillary business. Operating results in 2016 and early 2017 improved materially, driven primarily by a lower consolidated medical loss ratio, as well as rate increases for the individual market in Alaska. Premera has maintained very strong risk-adjusted capitalization and liquidity position over the past few years. Consolidated capital and surplus exhibited growth in 2016 due to the accretion of earnings and unrealized gains.
Offsetting rating factors include market contraction with Premera’s exit of the Oregon market in 2017. In addition, Premera’s premiums are declining in 2017 due to enrollment losses, primarily in its individual and Oregon insured segments. Premera’s individual enrollment has declined significantly in Washington, based on the company’s pricing actions and select market exits. Competition remains high for group business and Premera competes with another Blue plan, along with multiple carriers in Washington. Additionally, there is a trend of employer consolidation in Premera’s primary markets, which can further pressure group enrollment.
LifeWise OR had been instrumental in Premera’s expansion into Oregon. The company established a good niche position in the individual and group businesses in certain areas of the state; however, LifeWise OR has continued to report net losses over the past few years. LifeWise OR’s operations are currently in runoff, with no in-force premiums expected at the end of 2017.
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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