AM Best assigns a Financial Strength Rating of ‘A-’ (Excellent) and a Long-Term Issuer Credit Rating of ‘a-’ (Excellent) to CareSource Reinsurance LLC (CareSource Re), based in Helena, Montana. The outlook assigned to these credit ratings is ‘stable’. The ratings reflect the captive’s balance sheet strength, which the rating agency assesses as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). CareSource Re is a captive subsidiary of CareSource, a not-for-profit managed care organisation headquartered in Dayton, Ohio. Created in 2012, the captive provides medical stop-loss reinsurance for affiliated health plans. Under the current reinsurance agreement, CareSource Re serves as a direct reinsurer to PartnerRe, which provides coverage to CareSource’s affiliated plans and cedes a portion of the risk to the captive. The captive’s balance sheet strength is supported by its risk-adjusted capitalisation, which is at the strongest level as measured by Best’s Capital Adequacy Ratio (BCAR). The company has consistently reported solid capital levels over recent years, with growth driven by retained earnings. AM Best notes that invested assets are conservative and highly liquid, consisting primarily of fixed income securities and cash. CareSource Re has reported positive operating performance with a five-year average return on equity of nearly 58 per cent. While volatility is expected due to claims volume and severity, AM Best expects operating profitability to remain favourable over the medium to long term. The company’s ERM is managed at the parent level with local functionality and is considered appropriate for its risk profile. Risk identification and reporting are completed on a regular basis, and ERM is incorporated into corporate strategic planning.
