Blue Cross Blue Shield of North Dakota

The stable outlook reflects our expectation that the company's revenue will increase by about 35% to $1.5 billion, to $1.6 billion in 2022, based on increasing premium rates and growing membership by 8%-10%. We expect adjusted EBIT will decrease to $12.5 million-$17.5 million in 2022 (ROR of about 1%), largely resulting from the Medicaid contract, which will drive a higher medical loss ratio (MLR) of 88%-89%. We expect BCBSND will maintain a regulatory RBC ratio of 650%-670% in 2022-2023, and a 'AAA' capital redundancy. We could lower our rating, or revise the outlook to negative, in 2022-2023 if the company's competitive position weakens based on membership losses or weaker than expected operating performance. This could lead to our selection of

...Blue Cross Blue Shield of North Dakota's (BCBSND) leading market position is a key rating strength. The rating on BCBSND is attributed to the company's no. 1 market share of about 55%-60% in the North Dakota health insurance market. BCBSND's expansion into Medicare Advantage (MA), through a joint venture, and Medicaid, through a 2022 contract award with the state, will improve its business diversity and long-term competitive position. Offsetting these strengths, the rating is constrained by BCBSND's commercial membership concentration (about 80% of medical membership), single-state concentration in a relatively small market, and membership losses owing to competitive and economic pressures in recent years. BCBSND's relatively modest run-rate adjusted EBIT margin of 1%-2% is also a rating constraint. Operating performance improved in 2020-2021, following strategic investment costs that dampened 2018-2019 results. In 2021, BCBSND's statutory revenue (including investment income) was relatively...

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