Regulator: Blue Cross Blue Shield of Vermont’s reserves fell sharply in 2024; Michigan surplus note a temporary fix

Emily Brown, deputy commissioner of insurance at the Department of Financial Regulation, told the Finance Committee that Blue Cross Blue Shield of Vermont posted large underwriting losses in 2024 and that the insurer’s financial position deteriorated sharply over the last three years.

“Blue Cross Blue Shield of Vermont is a nonprofit hospital service corporation,” Brown said, and DFR provides financial oversight and conducts examinations of the company. She said the insurer reported roughly $58.4 million in surplus at year-end 2024, but $30 million of that came from a surplus note issued by Blue Cross Blue Shield of Michigan. Without that note, Brown said, the company’s surplus and its risk-based capital (RBC) ratio would be substantially lower.

The RBC ratio is a regulator metric that measures an insurer’s capital relative to its risk. Brown said the company’s RBC was about 213.8% at year-end 2024 and noted DFR’s 2019 guidance that recommended a target RBC range substantially higher than where the company now sits. The department required Blue Cross to file a remediation plan after its RBC fell below 200%, Brown said.

Ruth Green, treasurer and chief financial officer at Blue Cross Blue Shield of Vermont, told the committee the insurer recorded a net underwriting loss of about $62.1 million for 2024 and…