AM Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to “bbb-” (Good) from “bbb” (Good) of The Group Insurance Trust of the California Society of Certified Public Accountants (CalCPA Health) (San Mateo, CA). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CalCPA Health’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, very limited business profile and appropriate enterprise risk management (ERM).

The rating downgrades reflect weakening in CalCPA Health’s balance sheet strength metrics and material deterioration in its equity position due to operating losses through 2025. This trend is expected to cause year-end 2025 operating results to be significantly lower than expected. AM Best expects it will take a longer period for the company to stabilize earnings, further improving its risk-adjusted capital position. In addition, operating performance is assessed as marginal, primarily due to elevated medical loss ratio and pharmacy trends that contributed to sizable losses at year-end 2024, and through the first half of 2025. CalCPA Health has taken steps to mitigate these elevated trends through strategic rate initiatives through 2026.

However, the stable outlooks reflect AM Best's expectation that CalCPA Health will continue to maintain its very strong balance sheet strength supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Furthermore, the company’s liquidity metrics have remained strong over the last five years, a trend that is expected to continue through year-end 2025.

CalCPA Health’s business profile remains very limited due to its strategy of marketing to a specific professional organization. The company sells to firms that are members of the California Society of Certified Public Accountants, which creates geographic and business concentration risks. Additionally, the vast majority of revenue is generated from its self-funded medical line. CalCPA Health provides core employee benefit services, including medical, dental, vision care and pharmacy. Moreover, the organization also provides life insurance and long-term disability through arrangements with other carriers. CalCPA Health’s ERM are appropriate, supported by a comprehensive risk management framework.

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.

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