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| [February 28, 2013] |
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Fitch Publishes Credit Overview on Blue Cross Blue Shield Companies
CHICAGO --(Business Wire)--
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. The report discusses the BCBS system's formation
and growth and BCBS companies' common credit strengths and weaknesses,
as well as key credit challenges. The report also includes a comparison
of company-specific size/scale characteristics and quantitative credit
factors as they relate to Fitch's median rating category guidelines.
Fitch estimates the health business enrollment of these companies at
roughly 67 million and views the companies' rights to use Blue Cross and
or Blue Shield trademarks and copyrights as significant competitive
advantages.
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.
Fitch sees the BCBS companies' key challenges as balancing strategies
arising from their nonprofit status and/or private ownership with the
need to generate earnings and capital required to make adequate and
efficient investments in their businesses.
Other challenges include reducing concentration risks and adding scale
and funding pension plan liabilities in the current low interest rate
environment. Finally, the agency believes that adapting to a
post-healthcare reform insurance exchange environmet poses unique
challenges for the BCBS Companies.
Fitch's special report, 'Blue Cross/Blue Shield Credit Overview' is
available at www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Insurance Rating Methodology' (Jan. 11, 2013)
--Health Insurance and Managed Care (U.S.) Sector Credit Factors Special
Report (Jan. 29, 2013).
Methodology' (Jan. 11, 2013)
--Health Insurance and Managed Care (U.S.) Sector Credit Factors Special
Report (Jan. 29, 2013).
Applicable Criteria and Related Research Blue Cross/Blue Shield
Companies: Credit Overview
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm rpt_id=701552
Insurance Rating Methodology - Amended
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm rpt_id=698731
Health Insurance and Managed Care (U.S.)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm rpt_id=699758
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON (News - Alert) 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.
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