AM Best has affirmed the financial strength rating of WellPoint Insurance Services (WISI) as A- (Excellent), with the company’s long-term issuer credit rating labelled as a- (Excellent).
The outlook of these credit ratings is stable.
WISI’s balance sheet, operating performance and limited business profile were assessed as ‘adequate’ by AM Best, with enterprise risk management labelled as appropriate.
The company’s risk-adjusted capitalisation improved to ‘very strong’ by the end of 2021, but is expected to decline in 2022 on the Best Capital Adequacy Ratio as a result of capital contraction. This is due to reserve strengthening for core business lines and unrealised loss in the fixed income portfolio.
AM Best’s ratings take into account the support of Elevance Health, WISI’s parent. The company has “more-than-sufficient financial strength” to support WISI, along with operational resources and expertise.
Revenue is continually being generated from WISI’s federal employees health benefits programme, with premiums gathered from Elevance Health’s health insurance affiliates.
WISI’s core corporate insurance lines of business, workers’ compensation and excess managed care errors and omission, have produced variable operating results over the past three years. As a result, reserve strengthening was required, particularly over the course of 2022.
In 2023, WISI predicts that its consolidated financial performance will be stable. Capital growth is expected to come from positive earnings and no dividends to the parent company, it says.
