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S&P Worries About State Attack On N.C. Blue Capital

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NU Online News Service, July 15, 2004, 2:03 p.m. EDT

North Carolina lawmakers might make a serious effort to limit profits at Blue Cross and Blue Shield of North Carolina, Chapel Hill, N.C., in 2005.[@@]

Standard & Poor’s Ratings Services, New York, says it is changing its outlook for N.C. Blue to negative, from stable, because of worries about lawmakers’ intentions.

S&P has assigned A plus credit and insurance financial strength ratings to the nonprofit health insurer.

Some N.C. lawmakers argue that N.C. Blue has accumulated too much capital by charging customers rates that are too high. Lawmakers probably will introduce some kind of bill addressing those concerns in early 2005, according to S&P analyst Tom Taillon.

One proposal calls for limits on the amount of capital that N.C. Blue can accumulate. If N.C. Blue accumulated more capital, it would have to return some of its surplus to consumers.

“If Standard & Poor’s determines that the legislation would result in capital and earnings that are not supportive of an A plus rating, then the rating will likely be lowered,” S&P warns.