A.M. Best Upgrades Rating to Vision Service Plan Insurance; Assigns Initial Rating to Vision...

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--June 26, 2001

A.M. Best Co. has upgraded the financial strength rating of B++ (Very Good) to A- (Excellent) for Vision Service Plan Insurance Company (VSPIC) and assigned an initial rating of A- (Excellent) to the parent company

This rating reflects VSP's strong presence and dominant market position in its niche market, consistently strong operating performance, good level of capital and a conservative investment portfolio. These strengths are offset by its limited product profile and an ongoing examination by the Internal Revenue Service which could result in additional tax liability and the loss of its non-profit status.

A focused and effective business strategy combined with committed business and financial support from a well established organization have allowed all subsidiaries to attain and maintain a dominant position in the market niche of limited benefit, prepaid group vision products. VSP serves approximately 36 million members throughout the nation and is one of the largest providers of vision benefits in the country, with more than one in ten people in the United States obtaining eye care health coverage. By expanding its geographic coverage across the country, the company continues to strengthen its dominance. Over the past five years, VSP has generated consistently high annual growth rates; along with growth in underwriting gains in its core product line. This operating profitability has been well supported by its investment portfolio, which encompasses a conservative investment approach and generated consistent positive contributions. With strong emphasis on liquidity the portfolio also provides effective coverage of the predominantly short-term liability structure. Consequently, this is favorable to the level of capital with growth directly correlated with net income.

Nevertheless, VSP's mono-line focus constrains overall diversity potential to within its current market niche and status as a dedicated insurance of a highly specialized product. However, VSP does have other sources of income that are non-insurance related.

The following are the subsidiaries of VSP: Alaska Vision Services, Inc., Colorado Vision Service, Inc., Eastern Vision Service Plan, Indiana Vision Services, Massachusetts Vision Service Plan, Mid-Atlantic Vision Service Plan, Vision Service Plan, Inc. Nevada, Vision Care of Oregon, Vision Service Plan of Washington, Vision Service Plan of Ohio, Vision Service Plan of Idaho, Vision Service Plan, Inc., Oklahoma, Wisconsin Vision Service Plan and Vision Service Plan of Missouri. The initial rating considers VSP's role as a strategic Vision Care provider that has exhibited strong operating performance and increased equity composition.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.