AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a-” (Excellent) of Vision Service Plan (Rancho Cordova, CA) and its subsidiaries, collectively known as VSP Vision. The outlook assigned to these Credit Ratings (ratings) is stable. (See below for a detailed listing of the subsidiaries.)

The ratings reflect VSP Vision’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The ratings of VSP Vision and its subsidiaries were placed under review with developing implications following the announcement that the company entered into a definitive agreement to acquire Eyemart Express, a national optical retailer. The Eyemart Express acquisition is expected to broaden the organization’s footprint through its more than 250 locations. Eyemart Express locations are generally in smaller cities and towns as compared with the company’s Visionworks, Inc. (Visionworks) retail locations, which are more concentrated in larger cities.

AM Best assesses the group’s balance sheet strength as adequate. Historically, the organization's balance sheet strength has been pressured by large acquisitions, including Visionworks and iCare Health Solutions. Additionally, financial flexibility is viewed as relatively limited due to a high level of financial leverage; however, VSP Vision does benefit from favorable cash flow and liquidity metrics. The group’s balance sheet strength is further aided by its very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which has been driven by the continued growth of capital and surplus and supported by consistent operating earnings.

VSP Vision continues to benefit from its favorable business profile assessment, as the group maintains a leading market share in the vision care benefit marketplace, with a well-established network of providers and strong brand recognition. The addition of Eyemart Express enhances the organization’s already substantial network of retail vision care locations and improves VSP Vision’s competitive advantage in the integrated vision care space. The group does face competition from a wide variety of companies, including traditional and non-traditional vision service providers and insurance carriers. However, as the vision landscape has evolved, the group has adequately innovated to remain a market leader.

The ratings also reflect VSP Vision’s appropriate ERM assessment. The organization has maintained a developed ERM framework, with clear risk appetite and tolerance levels in place. VSP Vision balances risk and opportunity while ensuring risks are managed within the group's risk tolerance and portfolio risk appetite.

The FSR of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) have been removed from under review with developing implications, affirmed and assigned stable outlooks for the following subsidiaries of VSP Vision:

• Eastern Vision Service Plan, Inc.
• VSP Vision Care, Inc.
• Vision Service Plan Insurance Company (OH)
• Vision Service Plan of Illinois, NFP
• Vision Service Plan Insurance Company (MO)
• Vision Service Plan (CA)

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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