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BCBSA companies took loss in 2008

Blue Cross Blue Shield Association (BCBSA) companies posted an aggregate 40.9% year-over-year decline in income in 2008 because of realized losses and declines in underwriting and investment income, a new analysis by the credit rating firm A.M. Best Co. shows.

Best’s analysis of BCBSA plans found that:

  • A 6.6% increase in net premiums written (NPW) was reported. The 2008 NPW growth rate was slightly higher than that of 2007 (5.9%) but lower than 2006’s 9.1% rise.
  • Underwriting earnings declined for the third year in a row, although the 5.5% decrease in 2008 was much less than the 24.6% and 8.5% declines in 2007 and 2006, respectively.
  • A 10.3% decline in capital and surplus—to $41.6 billion—was reported, bringing that key measure back down to a level not seen since 2005.
  • There was a 30 basis points decline in the sales, general, and administrative expense ratio in 2008, after remaining flat in 2007.
  • The healthcare expense ratio improved 20 basis points to 85.9%.
  • Given the 2008 financial market turmoil combined with the low interest rate environment, investment income declined by 19%.
  • An unrealized loss of $3.1 billion was reported for 2008, compared with gains of $285.5 million in 2007 and $1.9 billion in 2006.