Fitch Publishes Credit Overview on Blue Cross Blue Shield Companies

Fri Mar 14, 2014 10:53am EDT

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(The following statement was released by the rating agency) CHICAGO, March 14 (Fitch) Fitch Ratings has published a special report providing a credit overview of Blue Cross and Blue Shield (BCBS) licensed health insurance and managed care companies. This report, which is updated and published annually by Fitch, discusses the BCBS companies' common credit strengths and weaknesses, key credit challenges, and formation and growth. The report also includes a comparison of company-specific size/scale characteristics and quantitative credit factors as they relate to Fitch's median sector credit factor (SCF) rating category guidelines. BCBS companies' common credit strengths cited in the report include strong provider networks that contribute to large market shares in chosen markets, robust capitalization metrics, modest liquidity needs, and consistently strong reserves as measured by development of the number of days in claims payable ratios. Common credit weaknesses include enrollment concentrations in a single or limited number of states resulting in heightened exposure to local competitive, economic, and political conditions. Additionally, rates of return on revenue and on capital are often lower and capital exposure to equity investment volatility is often comparatively high. In 2014 Fitch expects the government-sponsored health insurance exchanges to have a larger impact on the BCBS companies than on publicly-owned peer health insurers. The agency believes that adapting to the post-insurance exchange environment and the exchanges' uncertain profitability are key credit challenges faced by the BCBS companies. Other on-going credit challenges include funding pension plan obligations, reducing concentration risks and adding scale, and balancing strategies emanating from their nonprofit focus, with the need to generate the earnings and capital required to make adequate and efficient investments in their businesses. Fitch's special report, 'Blue Cross/Blue Shield Credit Overview' is available at www.fitchratings.com' or by clicking on the link. Contact: Mark Rouck Senior Director +1-312-368-2085 Fitch Ratings, Inc. 70 West Madison Street Chicago, IL 60603 Doug Baker Analyst +1-312-368-3207 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com. Additional information is available at 'www.fitchratings.com'. Applicable Criteria and Related Research: --'Insurance Rating Methodology' (Nov. 13, 2013) --Health Insurance and Managed Care (U.S.) Sector Credit Factors Special Report (Dec. 18, 2013). Applicable Criteria and Related Research: Blue Cross/Blue Shield Companies: Credit Overview here Insurance Rating Methodology here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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