Blue Cross Blue Shield of North Dakota

The stable outlook reflects S&P Global Ratings' expectation that BCBSND will maintain its leading market position and operating performance in line with similarly rated peers. In 2025-2026, we expect an MLR of 87%-89% and adjusted EBIT return on revenue (ROR) of 1.5%-2.0%. Moreover, we expect the company to maintain its capital redundancy at the 99.99% confidence level of our capital model. We could lower our rating or revise the outlook to negative in 2025-2026 if the company's competitive position weakens based on membership losses or weaker-than-expected operating performance. This could lead us to revise down the anchor to the lower of the 'a-/bbb+' split anchor. We could also lower our rating if the company's capital adequacy falls and stays below

...Blue Cross Blue Shield of North Dakota's operating performance was weak in 2024 amid unfavorable market dynamics. In alignment with industry trends, heightened medical and pharmacy utilization hurt the company's underwriting. The medical loss ratio (MLR) rose to 90.3% in 2024 from 88% in 2023, contributing to an adjusted EBIT loss of $25.3 million and a return on revenue of -1.5%. Our base-case forecast anticipates the company will implement pricing strategies and enhance operational efficiency to achieve profitability in 2025. Blue Cross Blue Shield of North Dakota (BCBSND) remains a leader in the state's health insurance market. Its market share of above 60% in 2024 is 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, have improved the company's business diversity. Offsetting these strengths are its business concentration in a relatively small market and its susceptibility...

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