S&P downgrades Noridian

Standard & Poor's said it lowered the long-term financial strength and counterparty credit ratings on Noridian Mutual Insurance Co., which does business as Blue Cross Blue Shield of North Dakota, to BBB+ from A-.

The ratings also remain on CreditWatch negative, where they were placed initially in December 2013, S&P said.

Noridian Healthcare Solutions LLC, a wholly owned subsidiary of Noridian, was the lead contractor for the Maryland State Health Insurance Exchange, the agency said.

As it has been reported in the press, the exchange has suffered a number of operational problems since its inception, S&P said. On Feb. 24, the Maryland Health Exchange Board voted to remove Noridian Healthcare as the main contractor, the agency said.

The agency said it believes that Noridian Healthcare will incur a sizable loss in connection with this venture.

S&P also said it believes that the market perception of the company has been tarnished. The risk of future litigation is another consideration, the agency said.

But, Noridian's core health insurance business continues to benefit from a dominant market share of about 89%, which is facilitated by the company's broad provider network, strong Blue Cross Blue Shield brand equity and high customer-retention rates that demonstrate its local market expertise and service.

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