The ratings reflect BCBS MI’s balance sheet strength, which
The revised outlooks reflect favorable earnings development in 2017 and through the first half of 2018 and A.M. Best’s expectation that this trend will be sustained. The improved underwriting results were driven by the Medicare Supplement (Medigap), individual and Medicare Advantage lines of business. In 2017, BCBS MI implemented rate increases and modernized pricing for its Medigap business after a five-year rate freeze on this product, which was part of the conversion to a non-profit mutual insurer. The conversion also ended a direct subsidy program that had been in effect since 1980. Results in the individual, Affordable Care Act exchange product line were driven by several factors, including multiple years of rate increases, and benefit and network modifications. Increased earnings in Medicare Advantage were driven by growth in revenue, including risk adjustment payments, as well as improved and enhanced pharmacy management leading to additional favorable claims experience.
BCBS MI maintains strongest level of risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR). Furthermore, BCBS MI reported an increase in capital and surplus primarily driven by the Tax Cuts and Jobs Act, which translated to more than
Offsetting rating factors include BCBS MI’s history of statutory underwriting losses largely driven by the Medigap and individual lines of business. Furthermore, the group’s higher exposure to risky assets is driven by its elevated investment to equities and Schedule BA assets, as well as its high, although declining, statutory operating leverage level due to its borrowing activity used for arbitrage.
The ratings of
The FSR of A- (Excellent) and the Long-Term ICRs of “a-” have been affirmed, each with a positive outlook, for the following members of
Accident Fund Insurance Company of America
CompWest Insurance Company
Accident Fund General Insurance Company
Accident Fund National Insurance Company
Third Coast Insurance Company
United Wisconsin Insurance Company
The positive outlooks reflect the consolidated AF Group’s improved operating performance, driven by increasingly profitable underwriting results and demonstrated expertise within the workers’ compensation marketplace. The outlooks of the members of
Factors that could lead to positive rating action for the members of
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