AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a+” (Excellent) of Highmark Inc. (Highmark) (headquartered in Pittsburgh, PA) and its life/health (L/H) subsidiaries, collectively known as Highmark Inc. Group. Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) of Highmark’s dental subsidiaries, which operate under the United Concordia brand name. Lastly, AM Best has affirmed the Long-Term Issue Credit Rating (Long-Term IR) of “a” (Excellent) of Highmark’s existing senior unsecured notes. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and the Long-Term IR.)

The ratings of Highmark reflect the group’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

Highmark Inc. Group maintains the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The group maintains a diversified and liquid investment portfolio, which is held predominantly in fixed income followed by equities, schedule BA assets and cash and short-term investments. The investment allocations have remained consistent over the past five years. The fixed-income portfolio is composed largely of investment grade holdings. Highmark has moderate financial leverage and good financial flexibility, with borrowing capacity from the Federal Home Loan Bank and from bank-syndicated Line of Credit structures, if needed. To deploy capital throughout the organization effectively, Highmark completes scenario stress testing and economic capital modeling.

Historically, Highmark has had a trend of favorable underwriting and net income. However, earnings were impacted adversely in 2024 by industry-wide medical and pharmacy utilization trends. Highmark has seen steady growth in direct premiums over the past few years, which reported growth of approximately 8% in 2024. However, net premiums written declined by 3% in 2024 driven by the implementation of a reinsurance agreement to cede 40% of direct and assumed comprehensive hospital and medical premium from the Pennsylvania entities and 80% of certain stop-loss policies.

Highmark has good geographic and product diversification with its core Blue Cross Blue Shield-branded products and non-branded stop-loss and dental products that are distributed nationally. Highmark offers Blue Cross Blue Shield and/or Blue Shield-branded products in a four-state region: Pennsylvania, West Virginia and Delaware, as well as western and northeastern New York. HMIG, composed of HM Life Insurance Company, HM Life Insurance Company of New York, and Bridge City, provide medical stop-loss products and dental coverage is offered through United Concordia. Furthermore, Highmark offers technology services and support to other insurance companies via its enGen platform. Highmark is part of an integrated delivery system with its affiliate, Allegheny Health Network, in its Western Pennsylvania market.

The Highmark organization has a well-developed and comprehensive ERM program, which is incorporated into business operations and strategic planning. Highmark performs stress testing and economic capital modeling to provide comprehensive risk implications and make strategic decisions regarding capital management and business continuity.

Highmark’s parent, Highmark Health, is a diversified organization composed of the insurance operations under Highmark and a large provider system in Western Pennsylvania, Allegheny Health Network. The Highmark Health organization reported $29.4 billion in revenues in 2024, of which more than 80% is derived from insurance operations.

The ratings of United Concordia reflect the company’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. The company’s ratings also reflect the strategic importance to its parent, Highmark Inc.

United Concordia’s risk-adjusted capitalization is assessed as strongest, as measured by BCAR. While earnings have been accretive to capital, growth in capital and surplus has been constrained somewhat by dividends to the parent. While United Concordia’s earnings have tempered in recent years, return on revenue has remained at 5% or greater and return-on-equity metrics have been consistently above 20%. United Concordia has reported growth in net premiums written for the past three years driven by increased sales, and total revenues have continued to increase driven by a larger number of administrative services contracts, government contracts and network leasing. United Concordia provides dental coverage to more than 10 million members via its large nationwide dental network. United Concordia services the TRICARE Dental Program and the Active-Duty dental program, which combined provide dental coverage to more than 3 million individuals. United Concordia is strategically important to its parent, Highmark, as it provides revenue and geographic diversification.

AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) with stable outlooks for Highmark Inc. and its following L/H subsidiaries:

• HM Health Insurance Company
• HM Life Insurance Company
• HM Life Insurance Company of New York
• Highmark Choice Company
• Highmark West Virginia Inc.
• Bridge City Insurance Company

AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) with stable outlooks for the following dental subsidiaries of Highmark Inc.:

• United Concordia Companies, Inc.
• United Concordia Insurance Company
• United Concordia Insurance Company of New York
• United Concordia Dental Plans of California, Inc.
• United Concordia Dental Plans of Pennsylvania, Inc.
• United Concordia Dental Plans, Inc.

The following Long-Term IR has been affirmed with a stable outlook:

Highmark Inc. —

-- “a” (Excellent) on $250 million 6.125% senior unsecured notes, due 2041

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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