Strong Investment Earnings and Significant Membership Gains Highlight Blue Cross Blue Shield of Michigan’s 2014 Financial Performance


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Blue Cross Blue Shield of Michigan will report consolidated net income of $272 million for 2014, which represents a one percent margin on consolidated revenue totaling $23.1 billion. Careful management of its investment portfolio and solid performance by BCBSM subsidiaries contributed to consolidated results. BCBSM posted an underwriting gain of $83.3 million on its core insurance business. Investment gains totaled $290 million on a consolidated basis. The results, reported under Generally Accepted Accounting Principles (GAAP), will be published April 2015 in BCBSM’s annual report. Blue Cross continued to be the top choice of Michigan health insurance purchasers in 2014, posting its fourth straight year of membership growth—an increase of 115,376 members overall, including more than 80,000 new members residing in Michigan. BCBSM and its HMO subsidiary, Blue Care Network of Michigan, had a combined total membership of 4.53 million at year-end 2014. Risk Based Capital (RBC), a measure the State of Michigan and the National Association of Insurance Commissioners use to gauge BCBSM’s financial stability, decreased slightly – by 42 points over the past year — to 677 percent RBC. The change was driven by a larger component of fully insured business which carries a higher risk charge. “I am very pleased with our performance in 2014,” said Daniel J. Loepp, BCBSM president and CEO. “In our first year as a nonprofit mutual insurer, Blue Cross grew our membership significantly, competed successfully on the new Health Insurance Marketplace, and continued to expand value-based health care delivery in Michigan.” “Our financial performance reflects that of a nonprofit company that is true to its purpose,” Loepp said. “Our model is to have strong investment and subsidiary performance that helps offset low margins on health insurance. Blue Cross delivered this in 2014.” Because of its financial strength, BCBSM is positioned to make a $50 million contribution in 2015 to the Michigan Health Endowment Fund. Created by the 2013 state law that enabled BCBSM to transition to become a nonprofit mutual insurer, the independent Endowment Fund will receive $1.56 billion from BCBSM over nearly two decades to support programs aimed at improving the health of Michigan’s people and protecting the vulnerable. This represents a sustaining commitment by BCBSM to its longstanding nonprofit social mission. “The strongest companies seek to strengthen the communities where they do business,” Loepp said. “Through our contributions to the state’s Endowment Fund – along with our company’s efforts to financially support nonprofit clinics, combat health disparities and improve the health of children in Michigan – Blue Cross remains mission-focused on building a healthier Michigan.” Statutory Financial Reporting Information BCBSM also will file its financial statement with the State of Michigan. The state report is based on a different accounting standard – Statutory Accounting Principles (SAP). This standard is required by state regulators, but does not represent a comprehensive view of BCBSM’s enterprise financial performance as a nonprofit mutual. Under SAP accounting, BCBSM experienced a health insurance underwriting gain of $98 million. Net investment earnings on a SAP basis in 2014 were $208 million. The company posted a statutory net gain of $295 million, including accrual onetime favorable accounting adjustments of $240 million, on revenue of $7.4 billion. Blue Cross Blue Shield of Michigan, a nonprofit mutual insurance company, is an independent licensee of the Blue Cross and Blue Shield Association. BCBSM provides and administers health benefits to more than 4.5 million members residing in Michigan in addition to employees of Michigan-headquartered companies who reside outside the state. For more company information, visit and
MI Blues Perspectives is sponsored by Blue Cross Blue Shield of Michigan, a nonprofit, independent licensee of the Blue Cross Blue Shield Association