TMCnet News

A.M. Best Assigns Ratings to SilverScript Insurance Company
[October 22, 2014]

A.M. Best Assigns Ratings to SilverScript Insurance Company


OLDWICK, N.J. --(Business Wire)--

A.M. Best has assigned a financial strength rating of A (Excellent) and an issuer credit rating of "a" to SilverScript Insurance Company (SilverScript) (Nashville, TN). The outlook assigned to both ratings is stable.

The ratings of SilverScript are based on the strong operating results and the strategic importance to the ultimate parent company, CVS Health Corporation (CVS Health) [NYSE:CVS], in delivering pharmacy drug services to the Medicare population. Net earnings have trended favorably over the long term; however, there have been some uneven results over the past five years. SilverScript's growth in underwriting and net gains is partially attributed to the consolidation of two other prescription drug plans into SilverScript: Accendo Insurance Company in 2012 and Pennsylvania Life Insurance Company in 2013, as each company novated its contract with The Centers for Medicare and Medicaid Services. This consolidation of plans has garnered SilverScript scale and its operating results reflect this strength. A.M. Best believes SilverScript's capitalization is currently adequate for its business risks, and expects its capitalization to improve over the next 12-24 months. Additionally, SilverScript had received capital support from CVS Health in the past; however, this was due to the infancy ofthe program. Moreover, SilverScript is strategically important to CVS Health's plan to compete in the federal government's Medicare Part D prescription drug program.



Offsetting rating factors include its concentration in a single product line and near-term membership decline. SilverScript solely offers Medicare Part D products to individuals and employer groups. However, the company's product portfolio has very little diversification and consists of only Medicare Part D products that target the senior population. Over the long term, A.M. Best expects all revenues to be derived from Medicare Part D products. A.M. Best anticipates a reversal to more favorable premium growth trends over the near to medium term.

A.M. Best believes that a positive rating action for SilverScript is unlikely over the near to medium term. Negative movement in the ratings may occur if the company reports a trend of losses; any adverse regulatory impact from changes in the Medicare Part D program; capital deterioration beyond A.M. Best's expectations or if the company becomes less strategically important to the parent.


The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

  • Evaluating Non-Insurance Ultimate Parents
  • Rating Members of Insurance Groups
  • Risk Management and the Rating Process for Insurance Companies
  • Understanding BCAR for U.S. and Canadian Life/Health Insurers

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


[ Back To TMCnet.com's Homepage ]