A.M. Best Revises Outlooks to Stable for Cambia Health Solutions, Inc. Affiliates

A.M. Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” of Regence BlueShield (Seattle, WA), Regence BlueCross BlueShield of Oregon (Regence BCBSO) (Portland, OR), Regence BlueCross BlueShield of Utah (Salt Lake City, UT), Asuris Northwest Health and Commencement Bay Risk Management Insurance Company (both domiciled in Seattle, WA). A.M. Best also has revised the outlooks to stable from negative and affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of LifeMap Assurance Company (LifeMap) (Portland, OR). All companies are affiliated through Cambia Health Solutions, Inc. (Cambia), a non-profit, non-insurer holding company.

The rating affirmations reflect significant market share in Washington, Oregon and Utah as Regence plans, which are market leaders in their respective states, with total combined enrollment of almost 1.6 million members. The companies have significant brand strength as Blue-branded plans, as well as under the Regence name. Underwriting and net results have improved substantially, largely due to a turn-around of the plans’ Medicare Advantage business. On a combined basis, the plans’ underwriting results for this line of business improved by almost $100 million in 2016 and have turned positive through the first half of 2017. The consistently positive net earnings in combination with a trend of declining premiums have contributed to a high level of risk-adjusted capital. The revised outlooks reflect the substantial improvement in underwriting results for the Regence plans, which is projected to be sustained.

Overall enrollment at the Regence companies has fluctuated over the past five years. The largest changes were due to the decline in individual membership and the shift from insured to self-funded group business, which was the result of its strategy to reduce exposure to more volatile and regulatory-dependent segments. Additionally, Medicare Advantage enrollment has declined over the last year as the company worked to improve the underwriting results for this segment. Overall membership has grown during the first half of 2017. Given the material changes in enrollment, premium revenue trends have been uneven. The Regence plans have experienced substantial fluctuation in their underwriting and operating results over the last five years. Medicare Advantage was the predominant contributor to the swing in underwriting results over the last two years. However, underwriting and net income are trending favorable to plan and are positive through the first half of 2017. Investment income remains a strong contributor to overall earnings, but this is in part due to a high allocation to equity investments. Investment income and realized gains have seen large spikes in certain years due to substantial gains on the sales of assets, as well as dividends from subsidiaries

The rating affirmations of LifeMap reflect its good level of risk-adjusted capital, premium growth trend and strategic role in offering ancillary products for the organization, as well as financial support of its minority owner, Regence BCBSO, through a full guarantee. The revision of the outlook to stable from negative reflects the explicit capital support by its affiliated Regence owners.

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