AM Best Affirms Credit Ratings of GuideWell Mutual Holding Corporation and Most of Its Operating Subsidiaries; Downgrades Credit Ratings of Triple-S Advantage, Inc.

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) of Blue Cross and Blue Shield of Florida, Inc. d/b/a Florida Blue, and its affiliates, Health Options, Inc., Capital Health Plan, Inc. (Tallahassee, FL) and Florida Health Care Plan, Inc. (Holly Hill, FL). These companies collectively are referred to as Blue Cross and Blue Shield of Florida Group. AM Best also has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of Florida Combined Life Insurance Company, Inc. In addition, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) of GuideWell Mutual Holding Corporation (GuideWell). All of the aforementioned companies are domiciled in Jacksonville, FL, unless otherwise specified. The outlook of these Credit Ratings (ratings) is stable.

Concurrently, AM Best has downgraded the FSR to B++ (Good) from A- (Excellent) and the Long-Term ICR to “bbb+” (Good) from “a-” (Excellent) for Triple-S Advantage, Inc. (TSA). The outlook of the FSR is stable, while the outlook of the Long-Term ICR is negative. Furthermore, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) of Triple-S Salud, Inc. (TSS) and Triple-S Vida, Inc. (TSV). TSS and TSV together are referred to as Triple-S Management Group. The outlook of the ratings for TSS and TSV are stable. All of the Triple-S companies are domiciled in San Juan, PR.

The ratings of Blue Cross and Blue Shield of Florida Group reflect the group’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The rating affirmations of Blue Cross and Blue Shield of Florida Group reflect the strong brand name recognition, as well as access to its large membership base, diversified distribution and strong operating performance. The group’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), was very strong at year-end 2022, which was an improvement from 2021, aided by favorable earnings and a material capital contribution from its parent organization, GuideWell. The group’s risk-adjusted capitalization remains more than sufficient to support the organization’s underwriting and investment risks. The group has maintained favorable overall liquidity and has access to additional sources of operating liquidity. GuideWell maintains ample liquidity, with access to a revolving credit facility.

Furthermore, Blue Cross and Blue Shield of Florida Group continues to maintain a dominant market position in Florida with strong brand recognition, strategic relationships with a diverse group of provider networks and a balanced product portfolio. Blue Cross and Blue Shield of Florida Group’s net premium written (NPW) have trended upward in recent years, mostly as a result of its diversified product offerings, as well as a combination of member growth and premium rates. The group has generated positive operating earnings over the past five years, despite new business strain. Profitability improved in 2022 with lower-than-expected utilization, and strong operating results have been characterized by a five-year return on equity (ROE) of 13.4%. In addition, AM Best expects statutory earnings to trend positively over the near to medium term.

Blue Cross and Blue Shield of Florida Group’s ERM program is managed at the ultimate parent level, but it has local functionality throughout the GuideWell organization. The group’s ERM program is supported by a well-established governance structure, with culture and risk management controls. Furthermore, the ERM program is incorporated into the corporate strategic planning. GuideWell’s ERM is considered appropriate for its risk profile.

The ratings of Triple-S Management Group reflect the group’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate ERM. The ratings also reflect the explicit support from the GuideWell organization to Triple-S Management Group.

The rating affirmations reflect Triple-S Management Group’s risk-adjusted capitalization, as measured by BCAR, which declined to weak in 2022 following the recent decrease in capital driven by operating losses. However, AM Best expects capital contributions from the parent organization, GuideWell, and lower losses should result in an improvement in the group’s risk-adjusted capitalization in 2023. Triple-S Management Group manages the largest provider network in Puerto Rico and markets a broad array of managed care products; however, operating in a single market, which has been depressed for a prolonged period of time, and exposes the group to geographic limitations. The group reported underwriting and net losses in 2022 after several years of profitability. While earnings are projected to remain negative in 2023, AM Best expects the losses to moderate. AM Best acknowledges the group’s ERM program is integrated into the parent organization and is a formalized process with risk identification, management and mitigation.

The ratings of TSA reflect the company’s balance sheet strength, which AM Best assesses as weak, as well as its adequate operating performance, limited business profile, appropriate ERM. TSA is strategically important to the GuideWell organization, which is also reflected in the rating.

The ratings downgrade reflects the deterioration in TSA’s operating results as the company reported a sizeable loss in 2022 after a trend of favorable operating performance. Additionally, TSA reported steady growth in NPW; however, this declined slightly in 2022 due to lower membership. The impact of the losses resulted in a deterioration of TSA’s BCAR to very weak for 2022; however, AM Best expects improvement in 2023 with support from the parent, GuideWell. The negative outlook of the Long-Term ICR reflects AM Best’s concerns of further weakening in TSA’s risk-adjusted capitalization.

The ratings of Florida Combined Life Insurance Company, Inc. reflect the company’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile, appropriate ERM. The ratings also reflect its strategic importance to Blue Cross and Blue Shield of Florida Group.

The rating affirmations consider Florida Combined Life Insurance Company, Inc.’s strongest level of risk-adjusted capitalization, as measured by BCAR. The company reported a year-over-year capital growth over a five-year period primarily driven by earnings. Further, the company continues to report strong operating results, characterized by a five-year return on revenue of 9.3% and ROE of 15%. Additionally, the company sells Blue Cross Blue Shield-branded dental, life and disability insurance products providing the organization with supplemental products.

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