WEISS RATINGSBlue Cross Blue Shield Plans Reverse Losses
With Return To Profits in Core Business
PALM BEACH GARDENS, Fla., September 20, 2000 — The nation's 53 Blue Cross Blue Shield plans posted 1999 earnings of $171.8 million on their core business of underwriting, according to a study by Weiss Ratings, Inc., the nation's only provider of ratings and analyses for all U.S. Blue Cross Blue Shield plans. This reversed a pattern of widespread underwriting losses ($788.3 million) that plagued the industry in 1998.
In 1999, the Blues reported overall profits of $1.6 billion, realized in part through $457.6 million in capital gains. This represented a dramatic departure from 1998, when the industry relied heavily on sales of profitable investments to offset underwriting losses. During that year, the Blues realized $818.7 million in capital gains and reported profits of $1.4 billion.
"We are encouraged to see that the Blues are not relying as heavily on their financial market profits as they were in 1998," commented Martin D. Weiss, chairman of Weiss Ratings, Inc. "To rely more on core operations is healthier."
Plans showing some of the most significant improvement in underwriting income from 1998 to 1999 include:
|Empire Blue Cross & Blue Shield (N.Y.)||61.7||-23.7|
|Anthem Insurance Companies Inc. (Ind.)||31.6||-20.9|
|Health Care Service Corp. (Ill.)||75.7||-77.6|
Among the 36 Blues plans that report data on individual lines of business, many showed an improvement in their comprehensive and medical lines. Even though they still lost money in the aggregate ($84.3 million) in these lines, it represented a reduction in the 1998 losses of $425.5 million.
Similarly, in their Medicare supplement business (Medigap), these 36 plans reported $98.3 million in profits in 1999, representing a complete reversal from the $70.3 million loss reported a year earlier.
Weiss Ratings' Upgrades and Downgrades
Weiss upgraded six Blues plans and downgraded two based on an analysis of the year-end 1999 data.
|The upgrades were:|
|• Blue Cross Blue Shield of Tennessee||from B to B+|
|• Empire Blue Cross & Blue Shield (NY)||from D+ to C-|
|• Healthnow NY Inc.||from D+ to C-|
|• Mountain State Blue Cross & Blue Shield (WV)||from D to C-|
|• Premera Blue Cross (WA)||from C to C+|
|• Regence Blue Cross & Blue Shield of Utah||from C to C+|
|Notable downgrades include:|
|• Blue Cross Blue Shield United of Wisconsin||from C to C-|
|• Northwest Washington Medical Bureau||from C to D+|
The Weiss ratings of the Blues are based on an analysis of a company's risk-adjusted capital, five-year historical profitability, quality of investments, liquidity, and stability. The latter category combines a series of factors including asset growth, premium growth, strength of affiliate companies, and risk diversification.
Weiss has issued safety ratings on Blue Cross Blue Shield plans since 1992. In addition, the company analyzes more than 16,000 financial institutions, including HMOs, life and health insurers, property and casualty insurers, banks and brokers. Weiss also rates the risk-adjusted performance of more than 10,000 mutual funds. It is the only major rating agency that receives no compensation from the companies it rates. Revenues are derived strictly from sales of its products to consumers, businesses and libraries.
Consumers needing more information on the financial safety of a specific company may purchase a rating or analysis directly from Weiss for as little as $15 by calling 1-800-289-9222.
15430 Endeavour Drive, Jupiter, FL 33478 · (561) 627-3300 · www.weissratings.com