Blue Cross Blue Shield of North Dakota

The stable outlook reflects our expectation that BCBSND will maintain its leading market position and operating performance in line with similarly rated peers. In 2023-2024, we expect a medical loss ratio (MLR) of 87%-88% and adjusted EBIT ROR between 2.0%-2.5%. Moreover, we expect the company to manage its capital redundancy at 'AAA' confidence level of our capital model. We could lower our rating, or revise the outlook to negative, in 2023-2024 if the company's competitive position weakens based on membership losses or weaker than expected operating performance. This could lead to our selection of the lower of the split anchor of 'a-/bbb+' in our rating assessment. We could also lower our rating if the company's capital adequacy falls and stays

...Blue Cross Blue Shield of North Dakota (BCBSND) remains a leader in the state's health insurance market. BCBSND continued to dominate the North Dakota health insurance market in 2022, with a market share of about 60% as its key competitive strength. BCBSND's expansion into Medicare Advantage (MA), through a joint venture, and Medicaid, through a 2022 contract award with the state, improved the company's business diversity. Offsetting these strengths is BCBSND's business concentration in a relatively small market and its susceptibility to adverse changes in local operations. Significant capital redundancy cushions the impact of tough macroeconomic conditions, but is offset by its small capital base. BCBSND had a '###' capital redundancy based on our model for year-end 2022, which we expect it to maintain through 2025. The company's regulatory risk-based capital (RBC) ratio as of year-end 2022 was 664%, which was lower than 817% as of year-end 2021. The decrease was largely a result of the...

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