AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a+” (Excellent) of Priority Health (Grand Rapids, MI). The outlook of these Credit Ratings (ratings) is stable. In addition, AM Best has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Physicians Health Plan of Northern Indiana, Inc. (PHP) (Fort Wayne, IN). The outlook of these ratings has been revised to stable from positive. Concurrently, AM Best has withdrawn the ratings of PHP as the company has requested to no longer participate in AM Best’s interactive rating process.

The ratings of Priority Health reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). In addition, the ratings consider the implicit financial support provided to the organization from its parent, Corewell Health. The company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), declined modestly to the very strong level at year-end 2024 from the strongest level in the prior year. However, AM Best expects Priority Health’s risk-adjustment capitalization to return to the strongest level in the short term. Priority Health has grown net premiums written and reported varying net income annually over the last five years. While the company operates in moderately competitive markets and is challenged by a highly regulated environment, its business is diversified among commercial groups, Medicare, Medicaid and the individual Affordable Care Act (ACA) exchanges, as well as other smaller segments, with good market shares maintained in its primary operating regions. In addition, the organization has expanded its geographic reach over the last two years beyond Michigan to Indiana and Ohio via its acquisition of PHP.

The ratings of PHP reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate ERM. In addition, the ratings consider the financial and operational support provided to the organization by its immediate parent, Priority Health, as PHP plays an integral role in Priority Health’s geographic expansion.

The capital levels of PHP declined at year-end 2024 but have partially rebounded as of mid-2025. Additionally, Priority Health has committed to infuse additional capital by year-end 2025 to further replenish PHP’s capitalization. Operating losses in 2024 led to a decline in capital and surplus, and was due to elevated claims in the second half of the year driven by very high utilization, a 20% increase in pharmacy costs and a one-time transaction related to legal expenses. While PHP has reported net losses in four of the last five years due mainly to a lack of premium scale, its operating performance has improved through late 2025. In addition, the company expects to gain scale and realize administrative expense synergies in the near term under new parent Priority Health. Business remains concentrated within group medical in northern Indiana and six counties in northwestern Ohio, where it operates in a highly competitive group medical market dominated by larger carriers.

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