The insurer financial strength rating on Highmark Inc., which does business as Highmark Blue Cross Blue Shield and Highmark Blue Shield, is based on the company's strong competitive position in its core Pennsylvania market, very strong risk-based capitalization based on Standard&Poor's model, ample liquidity supported by operating cash flow and a high-quality investment portfolio, favorable earnings diversification through its higher-margin specialty products business, and strong financial flexibility, with modest debt leverage. These positive factors are offset slightly by Highmark's marginally adequate earnings profile for an 'A'-rated health insurer, the continued operating margin strains in key market segments, a slightly unfavorable regulatory environment, and the company's status as an "insurer of last resort" in western and central Pennsylvania. On
