According to a recent study, Blue Cross Blue Shield companies, as a whole, showed a net income decline of 40.9 percent in 2008 as a result of drops in both underwriting and investment income as well as realized losses.
The A.M. Best Co. study found underwriting earnings declined for the third year in a row, although the 5.5 percent decrease in 2008 was much less than the 24.6 percent and 8.5 percent declines in 2007 and 2006, respectively.
Data also indicates a 6.6 percent increase in net premiums written (NPW), and the 2008 NPW growth rate was slightly higher than that of 2007, at 5.9 percent, but lower than 2006's 9.1 percent rise.
Other findings include:
- The healthcare expense ratio improved 20 basis points to 85.9 percent.
- A 10.3 percent decline in capital and surplus – to $41.6 billion – was reported, bringing that key measure back down to a level not seen since 2005.
- There was a 30 basis points decline in the sales, general and administrative expense ratio in 2008, after remaining flat in 2007.
- Given the 2008 financial market turmoil combined with the low interest rate environment, investment income declined by 19 percent.