2022 Annual Report: A Message from Our Chief Financial Officer

Paul Mozak

| 3 min read

Paul Mozak is executive vice president and chief financial officer at Blue Cross Blue Shield of Michigan.

Paul Mozak is executive vice president and chief financial officer at Blue Cross Blue Shield of Michigan.
As we entered the third year of the COVID-19 pandemic, our monitoring of the economic and financial market trends made clear that 2022 was going to be a challenging year to manage the financial performance of our $32.8 billion enterprise. The lingering impacts of the pandemic had left financial markets uneasy – and like many businesses, our enterprise experienced significant headwinds.
This volatility was influential on our bottom line. In 2022, we experienced a net loss of $777 million – a 2.3% loss on our consolidated revenue of $32.8 billion. As a nonprofit mutual, Blue Cross Blue Shield of Michigan strives to manage our operating margin close to break-even. From 2013 through 2023, in fact, our operating margin has been less than one percent. This includes five years of negative margins and five years of positive margins.
Our 2022 financial performance was due to several factors, including decline in investment portfolio values as equity markets fell and interest rates rose. Investments are a critical piece of the financial equation at Blue Cross – the more we earn from that portfolio, the less we need to earn from health insurance. We shouldered a one-time $314 million charge related to disposition of under-performing service entities. Additionally, pricing pressures experienced in the Medicare Advantage market led to lower revenue in that segment. And there were ongoing costs with COVID-19
Our diversified business model helped us manage this turbulent year. Our losses were offset by gains in other areas of our diverse enterprise portfolio. For example, our wholly owned workers compensation and specialty insurance subsidiary, AF Group, contributed $64 million to enterprise results.
Importantly, even during disruption and uncertainty, we maintained a strong and stable credit rating. Blue Cross and AF Group maintained an A (Excellent) rating with a “stable” outlook from AM Best, a nationally recognized ratings agency. This is the fourth consecutive year that Blue Cross has received an “A” (Excellent) rating. This is good news for our customers and other stakeholders, as it points to a well-managed nonprofit mutual that is successfully weathering economic and financial pressures.
We continued to support the state’s health care ecosystem as Blue Cross and our subsidiaries paid an average of $80 million per day to support care and benefits for insured members. And we remained dedicated to the health of all Michiganders: Blue Cross paid $100 million to the Michigan Health Endowment Fund in April – bringing our total payments to $810 million. The Health Fund backs programs that protect the state’s most vulnerable residents.
Despite the challenges of 2022, Blue Cross Blue Shield of Michigan remained a financially strong and stable corporate enterprise – ready to help our members, customers, providers and communities.
Paul Mozak is executive vice president and chief financial officer at Blue Cross Blue Shield of Michigan.

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