AM Best confirms credit ratings of Health Care Service Corporation and its subsidiaries

OLDWICK, NJ–(BUSINESS WIRE)–AM Best has affirmed Health Care Service Corporation’s Financial Strength Rating (FSR) of A (Excellent) and Issuer Long-Term Credit Rating (Long-Term ICR) of “a+” (Excellent) , a Mutual Legal Reserve Company (d/b/a Blue Cross Blue Shield of Illinois/Texas/New Mexico/Oklahoma/Montana) (HCSC) (headquarters in Chicago, IL) and its subsidiaries. The outlook for these Credit Ratings (ratings) is stable.

HCSC’s ratings reflect the strength of its balance sheet, which AM Best rates as the strongest, as well as its adequate operating performance, neutral business profile and appropriate management of business risks. The stable outlook reflects HCSC’s favorable capitalization, operating performance trends and ability to execute the strategic plan under the direction of its new management team.

Rating affirmations are based on HCSC maintaining the highest level of risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR). The group has recorded strong capital and surplus growth over the past few years, thanks to a profitable operating performance, as well as favorable claims experience related to the postponement of care due to COVID-19 and several other one-off items. The increase in capital and surplus was allocated to certain investments throughout the company. Additionally, the organization maintains favorable financial flexibility through access to advances from the Federal Home Loan Bank (FHLB) of Chicago, bank lines of credit, and available cash. HCSC recently issued $2 billion in privately placed bonds and has a five-year $1 billion senior unsecured revolving credit facility with a consortium of banks. In addition, thanks to the FHLB, the company has an additional borrowing capacity of 1.7 billion dollars. HCSC is expected to make additional drawdowns from the FHLB in the second half of the year for general corporate purposes, including working capital requirements. Therefore, HCSC’s debt ratio should increase slightly, but leverage should remain within an acceptable range. In addition, HCSC’s earnings before interest and tax (EBIT) interest coverage ratio is also expected to remain high at more than 10 times.

HCSC’s premium income has shown good growth over the past few years and through to the end of 2022. This growth is attributed to a combination of rate increases and premium expansion through related membership growth in its various main segments. AM Best notes that profitability declined from prior year results as 2020 operating income was impacted by the receipt of Risk Corridor payments due under the Affordable Care Act. previous years. During the first half of 2022, HCSC experienced lower than expected COVID-19 related healthcare utilization for testing, treatment and hospitalization costs. These favorable operating trends, along with the benefit of favorable depletion of claims reserves from prior years, have been offset by an increase in pharmaceutical claims, and these trends are expected to continue in the second half of the year. The operational performance of HCSC, which is currently assessed as adequate, has shown positive trends over the past few years.

AM Best also notes that HCSC operates in highly competitive markets, but maintains a leadership position in all of its major territories, which has been maintained through brand recognition, strategic supplier relationships and a diverse product portfolio. . The company’s business is quite diverse geographically, but operations in Illinois and Texas are a major driver of the group’s overall revenue, earnings and bottom line. HCSC offers a comprehensive portfolio of basic and complementary health products and operates in many market segments, including on and off the health insurance exchanges. Additionally, collective business activities remain an important market segment for HCSC, generating a large portion of premiums and enrollment volume. Government businesses, including Medicare Advantage and related senior products and Medicaid offerings, have shown solid growth over the past year and the segments account for a growing share of overall group enrollment and premiums.

The FSR of A (Excellent) and the long-term KPIs of “a+” (Excellent) have been confirmed with a stable outlook for Health Care Service Corporation, a mutual legal reserve company and its following subsidiaries:

  • Dearborn Life Insurance Company

  • Dearborn National Life Insurance Company of New York

  • GHS Health Maintenance Organization, Inc.

  • GHS insurance company

  • HCSC Insurance Services Company

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 relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Assessment Activity Web page. For more information on the use and limitations of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s Credit Scores, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see Guide to Proper Use of Best’s Ratings and Reviews.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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