OLDWICK, N.J. - (Business Wire) A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and issuer credit rating of “a-” to Delta Dental Plan of Arkansas, Inc. (DDAR) (Sherwood, AR). The assigned outlook is stable. The ratings reflect the demonstrated steady growth that DDAR has experienced in its fully insured membership over the last five years. The growth was accompanied by pricing discipline, which led to steady underwriting margins of 9%-10% in 2006-2007. However, underwriting gains declined during 2008, as DDAR implemented a strategy of margins moderation. Additionally, positive operating results have allowed the company to build up and maintain strong capitalization. The company’s level of risk-based capitalization exceeded 650% as of year-end 2008 and is considered more than adequate for its ratings.
Offsetting factors include the fact that DDAR’s subscriber base is heavily concentrated within a single very large self-funded group, which accounts for a large percentage of total subscribers and claims. A.M. Best acknowledges that DDAR has a long-standing relationship with this client; however, A.M. Best remains concern that any significant changes in this contract may negatively affect DDAR’s cost structure and lead to deteriorated financial results.
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The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
A.M. Best Co.
Analysts:
Doniella Pliss, 908-439-2200, ext. 5104
doniella.pliss@ambest.com
or
Sally Rosen, 908-439-2200, ext. 5280
sally.rosen@ambest.com
or
Public Relations:
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com
