OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of Delta Dental of California (DDC) (San Francisco, CA) and its affiliates, Delta Dental Insurance Company (DDIC) (Wilmington, DE), Delta Dental of Pennsylvania (DDP) (Mechanicsburg, PA) and Delta Dental of New York, Inc. (DDNY) (New York, NY). These companies are collectively known as Delta Dental of California Group. The outlook of the Credit Ratings (rating) is stable.
The ratings reflect Delta Dental of California Group’s balance sheet strength assessment, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Delta Dental of California Group has the strongest level of risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR). The organization reported a double-digit, five-year compound annual growth rate of capital (2015-2019), primarily driven by earnings and unrealized gains. In addition, the group of companies has maintained favorable overall liquidity and has access to additional sources of operating liquidity.
Delta Dental of California Group has reported continued strong operating results. The historical high level of earnings was driven by favorable underwriting income combined with increasing investment income. The organization has maintained favorable enrollment growth over the past several years, which is primarily composed of fully insured dental business. However, in recent years, premium levels have decreased somewhat primarily due to the conversion of some larger accounts to self-funding or a new federal contract.
Dentegra Group, Inc. (Dentegra) is a non-profit Delaware holding company formed by DDC and DDP to oversee and coordinate the strategic activities of both entities and their affiliates. Dentegra is one of the largest dental plan administrators in the United States and offers dental plans that are provided on both a fully insured and an employer self-funded basis. DDC is the largest member company of the Delta Dental Plans Association, a trade organization for Delta Dental member companies operating in all 50 U.S. states, the District of Columbia, U.S. Virgin Islands and Puerto Rico. The Delta Dental of California group includes DDC, DDP, DDIC and DDNY, together with their affiliate companies, and provides coverage to approximately 36 million people. The companies are active participants in numerous state exchanges for small groups and individuals, as stand-alone dental policies or through medical partnerships. Additionally, dental coverage is provided to Medicaid recipients in a number of states. DDC holds a minority ownership in Moda Partners Inc. under a strategic partnership. Moda Partners Inc. wholly owns Moda Health Plan Inc., which provides services under various health related lines of business, including medical and pharmacy. The investment in Moda Partners Inc. allows DDC and enterprise companies to ultimately expand its operations beyond stand-alone dental products.
The ERM program is supported by a well-established governance structure, with culture and risk management controls. In addition, it utilizes the three lines of defense strategy. The top risk scenarios are stress tested to ascertain if the capital position exceeds minimum levels, and whether solvency was maintained to meet management’s business plan. The organization continues to invest in cyber security infrastructure and maintains cyber liability insurance coverage. AM Best will continue to monitor the organization’s ERM practices.
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