The financial strength rating on Highmark Inc. d/b/a Highmark BCBS&Highmark Blue Shield is based on the company's strong competitive position in its core markets, very strong balance sheet characteristics, very strong liquidity, strong operating performance, and good business and earnings diversity through the specialty products unit. Highmark's geographic concentration, the continued unprofitability of its Direct Pay (state-sponsored and guaranteed issue) products, slightly unfavorable regulations, and its status as insurer of last resort in western and central Pennsylvania slightly offset its strengths. Earnings continue to be strong as the company has benefited from lower-than-expected medical cost trends, in line with the industry, but its performance demonstrates that it has sufficient strategic flexibility and earnings diversification to protect its financial
