Independence Blue Cross Announces Positive Financial Results for 2010
Philadelphia, PA - May 26, 2011 - Independence Blue Cross today reported positive financial results in 2010 with a modest profit margin of 2.2 percent and net income of $211.2 million.
IBC's President and CEO Daniel J. Hilferty said that in 2010, the organization successfully managed through a period of significant change in the economy and the health care industry.
"Our mission is enhancing the health and wellness of the people and communities we serve, and to keep our customers healthy, our company needs to be healthy, too, and I am proud to say that we are," Hilferty said. "Last year, we took decisive steps to keep our company sound and to keep health care within our customers' reach, while we continued to meet their health care needs and implemented health care reform."
Alan Krigstein, IBC's executive vice president and chief financial officer, said that in 2010, "we strengthened performance in our core health insurance business and subsidiaries, exercised continued financial discipline, and solidified our financial foundation." He said the company also "introduced cost-effective health plans and services and continued to offer our customers high quality and strong value, while working with doctors and hospitals to improve health care quality and cost."
Also contributing to IBC's favorable 2010 financial results were improved investment income and an industry-wide trend of lower-than-expected increases in the cost of health care, largely attributed to the difficult economy and job losses.
Total 2010 revenues were $9.3 billion, compared to $10.1 billion in 2009. IBC recorded a net operating income of $269.7 million in 2010, compared to a net operating loss of $124.2 million in 2009. Investment and other income was $127.4 million in 2010, compared to investment and other income of $111.3 million in 2009. Net income in 2010 was $211.2 million compared to a 2009 net loss of $63.7 million.
Because of the challenging economic climate and continued job losses in the Philadelphia region and nationally, IBC and its affiliated companies had 3.1 million members at the end of 2010, compared to 3.3 million at the end of 2009.
In 2010, IBC paid $168.7 million in federal, state, and local nonpayroll taxes, including $52.4 million in premium taxes.
IBC contributed $83.6 million in 2010 towards the health and wellbeing of the community, including tens of millions for programs to help hold down the cost of individual health insurance programs. The company supported hundreds of health and human services programs in southeastern Pennsylvania, including funding 36 private, nonprofit clinics that provided 118,000 uninsured and underinsured residents high-quality preventive care. IBC also sponsored nursing scholarships to build the ranks of qualified nurses in the region.
IBC is a nonprofit organization, Krigstein pointed out, which means that the income IBC earns is used to support and improve its products and services, rather than to reward stockholders.
IBC's surplus in 2010 was $1.8 billion. Under the Pennsylvania Insurance Department's guidelines, this level of surplus is in the "sufficient" range. That means that IBC maintains a surplus level that is appropriate to ensure its long-term stability, but is not excessive.
The financial stability of an insurance company is measured by its level of surplus, said Krigstein. A surplus represents the difference between an insurer's total assets and its total liabilities - in other words, its "net worth," he said, adding that IBC must have adequate surplus so that the company can weather serious financial downturns, such as the 2008 collapse in the financial markets, and can pay an unusual spike in physician and hospital bills, which could be caused by a health epidemic or natural disaster.
Also, as a nonprofit company, Krigstein pointed out, IBC does not have the ability to raise capital in the investment markets, so its surplus provides funds to invest in new capabilities needed to stay competitive, new services demanded by the market, and making changes in health plans required by state or federal laws.
About Independence Blue Cross
Independence Blue Cross is a leading health insurer in Southeastern Pennsylvania. IBC and its affiliates provide coverage to nearly 3.1 million people. For 73 years, Independence Blue Cross has offered high-quality health care coverage tailored to meet the changing needs of members, employers, and health care professionals. Independence Blue Cross is an independent licensee of the Blue Cross Blue Shield Association, an association of independent Blue Cross and Blue Shield plans.