AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to “a” (Excellent) from “a-” (Excellent) of Delta Dental of Iowa (DDIA) (Johnston, IA). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect DDIA’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The driver of the upgraded ratings is DDIA’s diversified business profile. DDIA generates its premiums/revenues from multiple payers that include employer groups, including administrative services only, as well as individual and Medicaid, all of which aids in offsetting the organization’s focus on dental products in Iowa.
Furthermore, DDIA maintains a significant share of the dental market in Iowa, enhanced by brand recognition as a member of the Delta Dental Plans Association.
DDIA maintains the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Investment portfolio risk for DDIA is moderately elevated, but the organization’s significant capitalization level is deemed sufficient to absorb the impact of adverse investment market conditions.
The organization has shown the ability to grow capital and surplus regularly, driven by consistently favorable net earnings.
While underwriting metrics have been positive, there has been a modest level of volatility, which has been offset partially by stable net investment income. Additionally, underwriting income grew significantly in 2020 and 2021, driven in part by a lower claims trend stemming from the COVID-19 pandemic.
However, AM Best expects underwriting income to temper in the near to medium term as utilization patterns return to normal levels.
For all rating information relating to this upgrade and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page.
For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings.
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