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Business Wire
01-07-2025
- Business
- Business Wire
AM Best Removes From Under Review With Developing Implications and Affirms Credit Ratings of Certain Members of Health Care Service Corp Medicare & Supplemental Group Members
BUSINESS WIRE)-- AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of 'a' (Excellent) of select members of Health Care Service Corp Medicare & Supplemental Group (HCSC Medicare & Supplemental Group) (Chicago, IL). At the same time, AM Best has removed from under review with developing implications and downgraded the Long-Term ICRs to 'a' (Excellent) from 'a+' (Excellent) and affirmed the FSRs of A (Excellent) of certain members of HCSC Medicare & Supplemental Group. The outlook assigned to all these Credit Ratings (ratings) is stable. (Please see below for a detailed listing of companies and ratings.) The rating actions follow the completion of the acquisition by the parent organization, Health Care Service Corporation, a Mutual Legal Reserve Company (HCSC), of all The Cigna Group's Medicare Advantage, Medicare Part D, Medicare Supplement and Care Allies businesses. The transaction closed earlier this year. As part of the transaction, HCSC is obtaining 30 legal entities, 13 of which are statutory legal insurance companies. These entities will be managed together under HCSC Medicare Holdings, a newly formed intermediate holding company. After discussions with company management regarding the planned operations, capitalization, projections and integration of these businesses, the financials of the rated legal entities in the group were consolidated under one uniform rating unit based on its combined financial strength assessments. The ratings reflect HCSC Medicare & Supplemental Group's balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile, appropriate enterprise risk management (ERM) and the financial and operational support of its parent, HCSC. While capitalization had been pressured at a few of the legal entities, capital levels were bolstered as part of the final capitalization at sale, in line with the terms of the transaction. Additionally, HCSC has committed to fund additional capital throughout the course of 2025 as needed to support growth and additional projected acquisition related costs and operating losses. The 2024 Best's Capital Adequacy Ratio (BCAR) is at the strongest level but is expected to decline for a period of time during 2025 based on a combination of premium growth related to novated business at closing and additional incremental growth. Based on discussions with management, AM Best projects that this will be offset by capital contribution from HCSC as needed, and that the BCAR should improve to strongest again by year-end 2025. The balance sheet strength also reflects the sound consolidated absolute capital position of the group at approximately $2.7 billion, as well as its relatively modest underwriting leverage at 3.5 times and strong liquidity measures. Invested assets are conservatively allocated, held largely in investment grade fixed-income securities, and it is anticipated that the allocation will be similar under management by the parent going forward. The HCSC Medicare & Supplemental Group will contribute to net premium growth in core target markets for the organization, driven by membership growth across its suite of product offerings. This should help the broader organization offset attrition in its Medicaid line of business, as growth in the Medicare-related business is expected to continue. AM Best notes that consolidated underwriting and net income trends have been very challenged by changes to Medicare reimbursement and higher-than-expected medical cost trend, both of which are expected to continue in 2025. Management is focused on its star ratings and risk payment, as well as cost and expense management and efficiencies across its various Medicare Advantage plans as a part of improving future performance. Investment income has been steady and has meaningfully contributed to net earnings. The group's core offerings are Medicare Advantage, Medicare Part D and Medicare Supplement products, which are offered across numerous states that are outside of the parent's core market. The group has exhibited consistent historical membership growth in its main markets driven by government business, primarily Medicare Advantage, Medicare supplement and Medicare Part D, and other supplemental accident & health (A&H) offerings, which should complement and bolster its diversification. While competition remains strong in all lines of business, the new entities should help the organization continue to compete well and lift its market position. Given the Blue Cross Blue Shield businesses provide a significant competitive advantage in network relationships and consumer outreach, this should further help the expansion of these business lines. The ERM program will be integrated and managed at the ultimate parent level at HCSC, and it is well developed with a comprehensive risk identification, monitoring, mitigation and oversight process. Finally, these entities benefit from rating enhancement as part of the HCSC organization. They will be managed with a consolidated cost structure that management expects to lead to improved profitability and economies of scale and will expand HCSC's geographic presence and diversification with the addition of business. The new membership base and revenues will aid in providing additional scale and capabilities to HCSC's Medicare Advantage and supplemental health segments. The overall organization will grow financially through future revenue and operationally though a broader national footprint with deeper product penetration. These entities will also immediately contribute to HCSC's Medicare Advantage growth and market share, which has been a goal over the past few years. The FSR of A (Excellent) and the Long-Term ICRs of 'a' (Excellent) have been removed from under review with developing implications and affirmed, with stable outlooks assigned for the following members of HCSC Medicare & Supplemental Group: HealthSpring Life & Health Insurance Company, Inc. Bravo Health Mid-Atlantic, Inc. Bravo Health Pennsylvania, Inc. HealthSpring of Florida, Inc. The Long-Term ICRs have removed from under review with developing implications and downgraded to 'a' (Excellent) from 'a+' (Excellent), and the FSR of A (Excellent) removed from under review with developing implications and affirmed, with stable outlooks assigned for the following members of HCSC Medicare & Supplemental Group: Cigna National Health Insurance Company Medco Containment Life Insurance Company Loyal American Life Insurance Company Provident American Life and Health Insurance Company American Retirement Life Insurance Company Medco Containment Insurance Company of New York Cigna HealthCare of Colorado, Inc. 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.
Hans India
26-06-2025
- Health
- Hans India
H-NEW holds anti-drug awareness programme
Hyderabad: The Hyderabad Narcotics Enforcement Wing (H-NEW) organised an Anti-Drug Awareness Programme at the Keshav Memorial Educational Society in Narayanaguda on Wednesday. During the event, H-NEW DCP YVS Sudheendra enlightened students about the detrimental effects of drug abuse and strategies to resist such influences within educational settings. The awareness programme was specifically designed to educate students on the dangers posed by narcotic substances and to champion a drug-free lifestyle. During the session, the DCP elaborated on how drug abuse can ruin students' promising futures and underscored the severe legal ramifications they might encounter. Additionally, the DCP urged students not to succumb to drug addiction and to steer clear of friendships that encourage substance abuse. The college Principal commended the initiative by H-NEW and HCSC, stating that such programmes are vital in empowering students to make informed choices, comprehend the consequences of drug abuse, and cultivate healthy lifestyles. Both the Hyderabad Narcotics Enforcement Wing (H-NEW) and the Anti Narcotics Forum of HCSC reiterated their dedication to conducting regular awareness campaigns in educational institutions. Their aim is to safeguard youth from the menace of drugs and contribute towards making Hyderabad a drug-free city. C Venkata Ramulu, Sub-Inspector of Police, Hyderabad Narcotics Enforcement Wing (H-NEW) and his team, along with KGSS Srikanth, Joint Secretary, Anti-Narcotic Forum, HCSC, and G Satyanarayana, Project Manager of HCSC, were also present at the programme.
Yahoo
21-03-2025
- Business
- Yahoo
Cigna closes $3.7B sale of Medicare business to HCSC
This story was originally published on Healthcare Dive. To receive daily news and insights, subscribe to our free daily Healthcare Dive newsletter. Cigna has completed the sale of its Medicare businesses to Health Care Service Corporation for a combined transaction value of $3.7 billion, the health insurers announced Wednesday. The deal gives HCSC Cigna's Medicare Advantage, Medicare prescription drug and Medigap plans, along with CareAllies, a business that helps providers transition to value-based care. In total, it expands HCSC's patients served from 22 million to 26.5 million, according to the company. As for Cigna, the deal allows the insurer to fully exit a business that's borne the brunt of rising costs and refocus on its core employer-sponsored coverage. Cigna plans to use proceeds from the deal to repurchase shares and invest in its health services and health benefits businesses. Cigna entered a definitive agreement to sell its Medicare businesses to HCSC in January 2024 for $3.3 billion in cash and $400 million in capital Cigna expected to be freed. The deal received some criticism for undervaluing Cigna's Medicare lives. The collective $3.7 billion price tag is a decade-plus low water mark for a Medicare book of its size, even if it is currently losing money, TD Cowen analyst Gary Taylor wrote in a note on the deal when it was announced. Though the Connecticut-based insurer said in a recent securities filing that the initial $3.3 billion purchase price might increase at closing, given the Medicare businesses' assets had grown over their liabilities, that doesn't appear to have been the case. Cigna's announcement on the deal close shared no new terms, and a spokesperson did not respond to a request for comment. However, Cigna executives have said they're creating a leaner and more focused organization by offloading Medicare, a division that was failing to reach long-term target margins. Through the divestiture, Cigna is also removing itself from a notably turbulent market, with MA experiencing shifting regulations, lowering payment rates and rising medical costs that have pressured earnings for major carriers. Cigna was also a relatively minor player in MA, holding about 2% market share with 697,000 members as of February. And though Cigna will no longer offer Medicare coverage, the insurer has stressed that it's not getting out of the market entirely. Cigna's health services division Evernorth will continue to provide services like pharmacy benefits to other Medicare organizations, according to executives. The deal is a significant step up for Chicago-based HCSC, a Blue Cross Blue Shield licensee that sells coverage in Illinois, Montana, New Mexico, Oklahoma and Texas. Onboarding Cigna's assets quadruples HCSC's MA membership and gives it access to plans in 25 additional states and Washington, D.C. — not to mention the Medicare Part D market nationwide, and the Medigap market in all but two states. Cigna reportedly began shopping around for a buyer for its Medicare business late 2023, with HCSC emerging as the frontrunner in early 2024 after Cigna's plans for a potential merger with rival insurer Humana fell through. Cigna expects the deal to be accretive to its earnings this year. Recommended Reading Cigna reshuffles C-suite amid rising costs
