Sign in Subscribe
Insurance industry

A.M. Best Affirms Financial Strength Rating of A+ for Health Care Service Corporation

Strategic Insights

— 1 min read

A.M. Best, a leading insurance rating agency, has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit rating (ICR) of "aa-" for Health Care Service Corporation (HCSC), a leading health insurance company operating in several states. The rating reflects HCSC's established market presence, sound financial and operating discipline, market and product diversity, and solid capitalization. Despite some challenges, particularly in the New Mexico and Texas markets, HCSC's strong earnings and consistent surplus growth have contributed to its favorable capital adequacy.

Key Takeaways:

  • A.M. Best has affirmed the FSR of A+ (Superior) and ICR of "aa-" for HCSC, reflecting the company's established market presence, sound financial discipline, and solid capitalization.
  • HCSC has a diverse product portfolio, offering a range of health insurance products to individuals and employer groups, contributing to its strong market share.
  • Operating results have more than doubled, and net income has tripled in the past three years, with net income exceeding $300 million for the past four years, excluding a one-time charge in 2002.
  • HCSC is well-capitalized, with a debt-to-capital ratio under 15% at year-end 2004 and debt service coverage of more than 30 times at year-end 2004.
  • Challenges persist in the New Mexico and Texas markets, with low enrollment growth in New Mexico and underwriting losses at the Texas HMO.
  • However, A.M. Best recognizes that these markets represent a small portion of HCSC's total business, and the company's overall financial performance remains strong.

Statistics:

  • HCSC's debt to capital ratio was under 15% at year-end 2004.
  • Debt service coverage was strong at over 30 times at year-end 2004.
  • Operating results more than doubled in the past three years.
  • Net income tripled in the past three years, exceeding $300 million for the past four years (excluding a one-time charge in 2002).

Sources:

  • A.M. Best Co., "A.M. Best Affirms Ratings of Health Care Service Corporation and Subsidiaries"
  • A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.

www.ambest.com

Read more