A.M. Best Removes from Under Review with Developing Implications and Affirms Credit Ratings of QCA Health Plan, Inc.

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has removed from under review with developing implications and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb-” of QCA Health Plan, Inc. (QCA) (Little Rock, AR). The outlook assigned to the Credit Ratings (ratings) is stable.

The ratings reflect QCA’s balance sheet strength, which A.M. Best categorizes as adequate, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management. Furthermore, the ratings take into account the capital contributions and comprehensive operational support provided by the ultimate parent, Catholic Health Initiatives (CHI).

The ratings also consider QCA’s improved earnings in 2017, which were a result of rate increases and a strategic exit from three service regions where the company incurred substantial losses in 2016 due to high utilization rates, primarily in its Medicaid program, “Arkansas Works.” QCA expects earnings to remain positive in 2018.

Offsetting rating factors include a history of financial losses, high concentration within exchange and “Arkansas Works” products, as well as limited market expansion efforts.

The ratings were placed under review following CHI’s announcement in 2016 of the intention to sell all of its insurance business, including QCA. While CHI’s plans regarding its insurance business remain unchanged, CHI continues to evaluate various options and no purchase agreement has yet materialized. In the interim, CHI has not scaled down its commitment to support QCA and has contributed capital since the announcement to sell the insurance operations was made. A.M. Best will revisit the rating if and when a buyer for QCA is announced.

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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A.M. Best

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Financial Analyst

saurin.parikh@ambest.com

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

Associate Director

doniella.pliss@ambest.com

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

Director, Public Relations

james.peavy@ambest.com

Source: A.M. Best