Credit Company Downgrades ODS
Vice president Dave Evans calls the negative rating a “non-event.”
“The issuer credit rating more has to do with if you have debt securities,” Evans said. “Really the thing to focus on for an insurer is the financial strength rating, the FSR, which has remained constant.”
The credit rating company, A.M. Best, at the same time affirmed the financial strength rating of B+ (good) for ODS Health Plan.
Compared to other health plans in Oregon, Health Net of Oregon also carries a B+ rating, while Regence, Providence and LifeWise each rank A- or A.
The financial strength of ODS has come under question after suffering $38 million in losses, from the first year of administering plans for the Oregon Educators’ Benefits Board.
Evans said OEBB losses last year weren’t entirely that amount. “Most of our underwriting loss in 2009 was driven by increased utilization across all lines of business,” he said.
In terms of capital and surplus requirements, a measure state regulators use to consider financial strength, ODS fares well, said Cheryl Martinis, spokeswoman for the Oregon Insurance Division.
“ODS meets our minimum capital and surplus requirements to sell insurance in Oregon and is not a solvency concern,” Martinis said.
In a press release following the downgrading of ODS issuer credit rating, A.M. Best explained why:
“The negative outlook for ODS reflects A.M. Best’s concern that continued underwriting losses, if any, or substantial growth could result in additional capital requirements for ODSHP, which would have to be obtained either internally or externally, and at some point in the future could place pressure on the organization.
“The downgrading of the ICR of ODS reflects the declined level of capital and surplus, when surplus notes issued by ODS’s subsidiary, ODSHP, are excluded. ODSHP issued $23 million of short-term surplus notes in December 2009 and received a capital contribution from Health Services Group Inc., a subsidiary of ODS to improve its capital positions following significant underwriting losses.
“The negative outlook for ODSHP reflects underwriting losses and a reliance on external surplus notes to help strengthen capital. Although the financial results at ODSHP have improved during the first quarter of 2010, he high level of membership concentration and predominance of Administrative Service Only and minimum premium business may limit organic growth in the near to medium term.”
Bookmark/Search this post with
Printer-friendly version
Comments
Great blog! I appreciate the hard work every body is putting in to maintain the website and all the visitors to it, the webmasters are doing great job, thanks again to all the good people.
Post new comment