A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and issuer credit rating of “a-” to Arizona Dental Insurance Service, Inc. d/b/a Delta Dental of Arizona (DDAZ)(Glendale AZ). The assigned outlook is stable.
The ratings reflect DDAZ’s position as a leading competitor in the Arizona insurance market. The company is strongly capi talized as a result of the accumulation of a consistently favorable operatingearnings stream, which is demonstrated through strong risk-basedcapital scores.
Additionally, DDAZ has no outstanding debt. The organization is focused on pricing moderation in order to temper competitive pressure. Consequently, the company’s memberretention rates are high, and brand identification and product loyalty have increased over the past five years.
Conversely, the majority of DDAZ’s subscribers is concentrated in Arizona and comprises well over 90% of overall membership. Though favorable, the company’s earnings trend decreased over the past year and is expected to remain at the reduced level in the near to intermediate term. Arizona is mostly rural and is earmarked as a preferred destination for retirees. As a result, DDAZ must work to ensure adequate distribution of dentists within its state-wide provider network and is working to build market share more quickly than its civilian labor workforce increases.
Rated October 1, 2009.
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