AM Best Places Credit Ratings of Blue Shield of California Group Members Under Review With Developing Implications

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best has placed under review with developing implications the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” (Excellent) of California Physicians’ Service (d/b/a Blue Shield of California) and Blue Shield of California Life & Health Insurance Company (Blue Shield Life) (both companies are domiciled in Oakland, CA).

These Credit Rating (rating) actions follow several consecutive quarters of reported operating losses and related declines in capitalization during fourth-quarter 2022. The operating losses were driven largely by COVID-19-related costs and risk-adjustment results related to the group’s exchange business. Rapid premium growth in 2022 put further pressure on the group’s risk-adjusted capitalization. In addition, the group’s absolute capital was negatively impacted by unrealized losses on the investment portfolio. As a result, AM Best anticipates that 2022 year-end capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), will be below 2021’s level and lower when compared to AM Best’s expectation. The “under review with developing implications” status reflects the need for AM Best to assess fully the significant deterioration in financial results and its impact on BCAR. The ratings for the group will remain under review with developing implications, pending the filing and review of its year-end results, and while AM Best conducts discussions with management regarding projections for 2023 profitability and capital levels.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.