AM Best Affirms Credit Ratings of BCBSM, Inc. and Its Subsidiary

AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of BCBSM, Inc., d/b/a Blue Cross Blue Shield of Minnesota (BCBSMN), and its subsidiary, HMO Minnesota, d/b/a Blue Plus. In addition, AM Best has affirmed the Long-Term Issue Credit Rating of “bbb+” (Good) of the $250 million, 3.79% senior unsecured notes due 2025 issued by BCBSMN. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect BCBSMN’s balance sheet strength, which AM Best assesses as strong as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The rating affirmations of BCBSMN are driven by its strong balance sheet strength. The company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), improved at year-end 2023, driven by increased capital and surplus primarily due to favorable operating earnings and unrealized gains on invested assets. AM Best anticipates the company’s BCAR assessment to remain stable over the near term supported by favorable operating earnings. The organization benefits from favorable financial flexibility through access to Federal Home Loan Bank borrowing, funding facilities and cash available at the parent company.

BCBSMN has reported premium growth in four out of the past five years, mainly because of growth of the group’s government business. Premiums growth can be attributed to membership gains and rate actions. The company’s profitability over the past year was driven largely by its Medicaid and commercial lines of business.

Partially offsetting gains was an underwriting loss in the Medicare Advantage segment from heightened competition and higher medical expenditures. The Medicaid redeterminations will likely have a negative impact on enrollment and underwriting income for this segment through the end of 2024. However, overall earnings are expected to remain positive for the year.

BCBSMN continues to maintain a strong market position in Minnesota through its brand recognition, strategic relationships with providers and a diversified product portfolio. However, the company operates in a very competitive market and has some geographic limitations to its business as a licensee of the Blue Cross Blue Shield Association. The company benefits from a well-developed and formal ERM program, which is managed at the organization’s parent level.

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.

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 over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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