PROVIDENCE, R.I. (WPRI) – Blue Cross & Blue Shield of Rhode Island has lost tens of millions of dollars so far this year, shrinking the insurer’s reserves as new executives take over, according to regulatory filings reviewed by WPRI.com.
The state’s largest health insurer reported a net loss of $52 million for the six months ended June 30, following a net loss of $126 million during 2015. The company’s net reserves – a key measure of solvency – shrank from $294 million to $231 million between Jan. 1 and June 30, a drop of 22%.
A spokeswoman for Blue Cross said no one was available to comment Monday.
Blue Cross executives had downplayed last year’s net loss as largely an accounting quirk, noting that its reserves grew despite the red ink on paper and pointing to its $22 million profit from insurance underwriting for the year.
During the first half of 2016, however, the picture changed significantly: Blue Cross lost $40 million on underwriting, compared with an underwriting loss of less than $2 million during the same period of 2015.
The challenging financial results come as Blue Cross is experiencing significant turnover in its top leadership.
Michael Hudson, the insurer’s chief financial officer since 2012, recently left the company without fanfare and was replaced by Mark Stewart, a spokeswoman confirmed. Hudson’s departure became official this month, according to his LinkedIn profile.
In an interview last March, Hudson said the key metric to watch in judging the insurer’s financial stability was its net reserves, calling them the “gold standard – is our financial health trending good or is our financial health trending poorly? And if our reserves are good, that would be indicative of a good financial performance.”
Meanwhile, Kim Keck, formerly a senior vice president at Aetna, officially succeeded Peter Andruszkiewicz as Blue Cross’s new president and CEO in June.
The third of the company’s top executives, executive vice president and general counsel Michele Lederberg, has held that position since 2009 and remains in the job.Ted Nesi (firstname.lastname@example.org) covers politics and the economy for WPRI.com. He writes The Saturday Morning Post and hosts Executive Suite. Follow him on Twitter, Facebook and Instagram