AM Best Affirms Credit Ratings of Elevance Health, Inc. and Its Subsidiaries
In addition, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of the members of WellPoint Life & Health Group (WellPoint), a subsidiary of Elevance.
Lastly, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of WellPoint Insurance Services, Inc. (WISI) (
The ratings of Anthem Health reflect the group’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).
Anthem Health’s rating affirmations reflect its very strong balance sheet strength, which has been driven by the group’s favorable operating performance and strong cash flow trends. The group’s risk-adjusted capitalization is considered very strong, as measured by Best’s Capital Adequacy Ratio (BCAR). Furthermore, Anthem Health has continued to report consistent capital and surplus growth, driven by favorable net earnings, which has outpaced premium growth consistently and led to increased absolute and risk-adjusted capitalization. The group’s five-year compounded annual capital and surplus growth rate was close to
AM Best recognizes that Anthem Health's current level of liquidity was sound through 2024. The group has access through its holding company to a
Anthem Health’s financial leverage at Elevance increased to approximately
Anthem Health’s operating performance is considered strong, with the company reporting consistent premium growth and solid earnings, although some lines of business will remain challenged for the remainder of 2024 and throughout 2025. Premium growth has been driven by enrollment gains in most of its lines of business. The company’s operating earnings benefit from its sizeable overall membership and the related economies of scale, which benefits its medical expenditures and administrative expenses metrics. However, the company’s Medicaid membership has declined with the advent of state redeterminations of eligibility commencing in 2023 and continuing into 2024, driving declines that have offset growth from new contracts. Although investment income is positive, it contributes modestly to overall net earnings. Profitability ratios remain strong, as measured by its return-on-revenue and return-on-equity metrics through 2024.
Anthem Health’s vast and diversified product offerings remain the basis for its favorable business profile. The group has good geographic diversity, as Elevance operates BCBS plans in 14 states, as well as its non-Blue branded with CareMore, AMERIGROUP and WellPoint entities. Anthem Group continues to benefit from strong brand name recognition and a leading market share in the majority of these BCBS states. Additionally, the Elevance companies have a strong presence in the national account/BlueCard market segment and there has been a significant expansion of individual exchange product offerings over the past few years. AMERIGROUP entities operate in an additional 12 states in the Managed Care Medicaid segment, further expanding Anthem Health’s footprint. In addition, various nonregulated business in the Anthem organization, including pharmacy benefit management, complex and home care management and behavioral health administration, add a competitive advantage in all lines of business and allow for cost efficiencies.
Moreover, Anthem Health’s ERM is managed at the ultimate parent level, but it has local functionality as well. The ERM program is well-established and is coordinated at the corporate level. Elevance’s ERM is considered appropriate for its risk profile but has a lower level of sophistication when compared with some of its peers. Risk identification and reporting are completed on a regular basis, and ERM is incorporated into the corporate strategic planning. There is established oversight and monitoring of the ERM program.
The ratings of WellPoint reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate ERM. The ratings also factor in the support of its parent. Over the years, WellPoint entities have been assuming a large volume of Medicaid premium from various Elevance affiliates. Most recently, WellPoint terminated a couple of contacts, which is expected to have some impact on its overall operations in the near term.
Furthermore, the ratings of WISI reflect its balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate ERM. In addition, the ratings also factor in WISI’s strategic importance to the parent.
WISI’s rating affirmations reflect its risk-adjusted capitalization at the strongest level at year-end 2023, as measured by BCAR, driven mainly by an improved capital position. WISI’s capital growth was supported by its consistent positive earnings and no dividends to the parent company through third-quarter 2024. Elevance has demonstrated explicit and implicit support of WISI in past years. WISI benefits from the parent’s operational resources and expertise. WISI’s importance to the parent has increased in recent years as the volume of business in the core and the cell has expanded.
WISI is a
A complete listing of Elevance Health, Inc.’s FSRs, Long-Term ICRs and Long-Term IRs also is available.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in
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Jennifer Asamoah
Senior Financial Analyst
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Director
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Source: AM Best