Vision Service Plan ratings affirmed by Fitch, outlook remains stable

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VSP ratings affirmed by Fitch

Highlights

Fitch affirmed the 'A+' Insurer Financial Strength rating for Vision Service Plan and subsidiaries, maintaining stable outlooks due to strong capitalization and operating performance.
VSP's financial leverage ratio is estimated at about 45% and debt to EBITDA at 2.5x as of June 30, 2026, but risk-adjusted capitalization remains very strong.
VSP reported $2.9 billion in cash and marketable securities as of June 30, 2026, with EBITDA margins of 14–15% and average return on capital of 8–9%.

Ratings action and credit drivers

As reported by Fitch Ratings, the agency has affirmed the 'A+' Insurer Financial Strength rating of Vision Service Plan and several primary insurance operating companies, including Eastern Vision Service Plan, Inc., VSP Vision Care, Inc., Vision Service Plan Insurance Company (MO), Vision Service Plan Insurance Company (OH), and Vision Service Plan of Illinois, NFP. Fitch also affirmed the 'A' Issuer Default Rating of VSP Optical Group, Inc. and the 'A' rating on its senior unsecured notes, while maintaining stable outlooks.

Fitch says the affirmations reflect VSP's favorable company profile, strong operating company capitalization and continued strong operating performance. Those strengths are balanced against what the agency describes as somewhat high financial leverage.

The rating agency views VSP's market position favorably relative to other U.S. health insurers, citing its leading presence in vision insurance, large operating scale, integrated business model and broad geographic footprint. Fitch also says the company's business risk profile and diversification support the overall assessment.

On leverage, Fitch estimates VSP's financial leverage ratio at about 45% as of June 30, 2026, with debt to EBITDA at about 2.5x. Even so, the agency says risk-adjusted capitalization of the insurance operations is very strong relative to the wider health insurance sector.

Profitability and liquidity support outlook

Fitch says VSP's earnings profile remains a key support for the ratings. The company has steadily increased top-line revenue in recent years and consistently generates operating EBITDA margins of 14% to 15%, which the agency views as very high for the broader health insurance sector.

Although return on capital is weaker than operating margins, Fitch says it still supports the ratings, with VSP reporting average return on capital of about 8% to 9% in recent years. The agency also points to favorable treatment of VSP Optical's senior unsecured notes, which benefit from sizable nonregulated cash flows from the group's eye care and eyewear businesses and support an average recovery assumption under Fitch criteria.

Liquidity and investment quality also remain a credit strength, according to Fitch. The agency cites a very low risky assets ratio, reported cash and marketable securities of $2.9 billion at June 30, 2026, no investment in below-investment-grade fixed-income securities, and support from operating cash flow, investment-generated cash and access to a bank credit facility.

Previously, we outlined the main factors behind Fubon Vietnam ratings being affirmed by AM Best with a stable outlook.

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