Standard & Poor’s has affirmed its ‘A’ counterparty credit and financial
strength ratings on Louisiana Health Service & Indemnity Co., which does business as Blue Cross and Blue Shield of Louisiana (BCBSLA). The outlook remains negative.
“While Standard & Poor’s notes the significant improvement in BCBSLA’s risk-adjusted capitalization and five-year earnings trend through Dec. 31, 2001, the outlook remains negative because the company has indicated that it plans significant capital expenditures during 2003 and 2004 that will reduce risk-adjusted capitalization,” Standard & Poor’s credit analyst Neal Freedman said.
BCBSLA is currently in the process of exploring various financing
alternatives to mitigate the impact of this expense on risk-adjusted
capitalization and is expecting to finalize its financing by mid-2003. When this financing is finalized, Standard & Poor’s will review the outlook.
Standard & Poor’s expects membership to increase about 100,000 members to about 960,000 members at year-end 2002 and increase an additional 4 percent to about 1 million members in 2003. Consolidated GAAP pretax income is expected to be $55 million-$60 million for 2002 and $35 million-$40 million for 2003.
Capital adequacy is expected to be about 155%-160% in 2002 and then decrease to about 135 percent-140 percent in 2003 as a result of significant planned capital expenditures.