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A.M. Best Removes from Under Review with Negative Implications and Downgrades Credit Ratings of Friday Health Plans of Colorado, Inc.

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A.M. Best Removes from Under Review with Negative Implications and Downgrades Credit Ratings of Friday Health Plans of Colorado, Inc.

A.M. Best has removed from under review with negative implications and downgraded the Financial Strength Rating (FSR) to C- (Weak) from C (Weak) and the Long-Term Issuer Credit Rating (Long-Term ICR) to "cc" from "ccc+" of Friday Health Plans of Colorado Inc. (Friday Health) (Alamosa, CO). The outlook assigned to the ratings is negative.

The ratings reflect Friday Health's balance sheet strength, which A.M. Best categorizes as very weak, as well as its marginal operating performance, limited business profile and weak enterprise risk management.

Friday Health received capital contributions through surplus notes, as well as a capital infusion from the parent in 2017. Despite this capital support, the level of risk-adjusted capitalization remains below the statutory minimum requirements and A.M. Best's expectations. As of year-end 2017, almost the entire capital at Friday Health was comprised of surplus notes, which A.M. Best considers negative. The company did not secure sufficient capital contributions that it had anticipated, and efforts for surplus relief through a reinsurance agreement did not gain any traction. Currently, the organization plans to replenish the capital through retained earnings in 2018.

Source: A.M. Best Ratings Services, Inc. Used under license.