A.M. Best Affirms Ratings of Delta Dental Plan of Michigan, Inc.

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings of “a” of Delta Dental Plan of Michigan, Inc. (DDMI) (Okemos, MI) and its affiliated group of Delta Dental plans, Delta Dental Plan of Ohio, Inc. (DDOH) (Dublin, OH) and Delta Dental Plan of Indiana, Inc. (DDIN) (Indianapolis, IN).

Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of “a” for Renaissance Life & Health Insurance Company of America (RLHICA) (Indianapolis, IN), a wholly owned subsidiary of Renaissance Holding Company (RHC), a Michigan-based for-profit company.

A.M. Best also has affirmed the FSR of A- (Excellent) and the ICR of “a-” for Delta Dental of Kentucky, Inc. (DDKY) (Louisville, KY) and Delta Dental Plan of New Mexico, Inc. (DDNM) (Albuquerque, NM). The outlook for each rating is stable.

The rating affirmations for DDMI and its affiliates reflect significant and persistent enrollment gains, forward-looking operational efficiencies and strong capitalization. The DDMI group exhibited strong membership development over the last five years for risk-based business and administrative services only (ASO) business. The companies within the Michigan affiliation and the broader affiliations of the Renaissance Health Service Corporation all operate on a common information technology platform. A common technology platform adds a high degree of operational competency through better coordination and lower administrative expenses. It also provides the opportunity to collectively pool contributions and investments, and improves and secures the group’s technological infrastructure. The group’s higher capital balances ensure that infrastructure development can be completed, that operational risks can be mitigated and provider network capacity is available for business expansion objectives, securing the organization’s significant market leadership position.

Partially offsetting these positive rating factors is the competitive business environment, which includes a number of medical insurers with nationally scaled operations as well as a number of regional niche dental market participants that offer low cost, high touch, specialized services. In order to compete in those markets the organization has had to align itself with small to medium medical insurers that also need an established dental operation with which to bundle their medical insurance products. In addition, the overall high percentage of equities in the organization’s investment portfolio is considered aggressive, and has been sustained over the last five years. After pursuing and completing a number of recent acquisitions, the organization’s affiliated equity position increased sharply.

The ratings of DDKY reflect progressive revenue development, strong market share and improved balance sheet strength. Partially offsetting these strengths are new market risks, limited scope of operation and competitive business environment.

The ratings of DDNM reflect strong capital development, high brand recognition and an improved technology platform. Partially offsetting these strengths are limited geographic scope of operations and moderate reduction in the value of equities.

The ratings of RLHICA reflect its strong capitalization, recognition as being integral to the overall organization’s business expansion strategy and strong earnings. Partially offsetting these strength are a highly competitive business environment and risk associated with entry into multiple markets.

A.M. Best deviated from its “Rating Members of Insurance Groups” critera report because full rating enhancement was afforded to DDOH despite the lack of ownership between DDMI and DDOH. However, DDMI provides DDOH with operational and distribution support. Additionally, the companies share common management. DDOH’s role in the group is to provide rate flexibility. As a result, A.M. Best expects that the boards of directors would act to support both entities within the group.

This press release relates to rating(s) 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.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

David Mitchell, +1 908-439-2200, ext. 5556

Senior Financial Analyst

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Christopher Sharkey, +1 908-439-2200, ext. 5159

Manager, Public Relations

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Doniella Pliss, +1 908-439-2200, ext. 5104

Managing Senior Financial Analyst

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Jim Peavy, +1 908-439-2200, ext. 5644

Assistant Vice President, Public Relations

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Source: A.M. Best