BCBS Companies Took Loss in 2008

Blue Cross Blue Shield 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 Blue Cross Blue Shield plans found:

• 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.


• The healthcare expense ratio improved 20 basis points to 85.9%.


• 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.


• 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.


• 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.