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FOR IMMEDIATE RELEASE
OLDWICK - APRIL 04, 2018 01:47 PM (EDT)
A.M. Best has removed from under review with negative implications and downgraded the Financial Strength Rating to C+ (Marginal) from B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “b-” from “bb” of AvMed, Inc (AvMed) (Miami, FL). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings were placed under review with negative implications on Oct. 13, 2017, following the release of the updated Best’s Credit Rating Methodology (BCRM). These rating actions follow the completion of A.M. Best’s analysis of AvMed under the updated BCRM. In addition, AvMed’s earnings and capitalization deteriorated during the fourth quarter of 2017, leading to year-end results below company’s prior projections and A.M. Best expectations.
The ratings reflect AvMed’s balance sheet strength, which A.M. Best categorizes as very weak, as well as its marginal operating performance, neutral business profile and marginal enterprise risk management.
AvMed has experienced a continuous decline in its absolute and risk-adjusted capitalization for the past four years, driven by operating losses combined with premium growth. Furthermore, AvMed lacks access to additional sources of capital, as its parent organization, SantaFe HealthCare, Inc., has a very limited financial flexibility due to a high financial leverage. AvMed posted net losses for the past four years, including 2017, primarily driven by margin compression resulted from challenges and high utilization in its Individual & Family Plan (IFP) (an off-exchange product) and Medicare Advantage segment, as well as the impact of significant planned strategic investments to strengthen its technology platform and data capabilities.
AvMed’s management is implementing corrective actions to improve the company’s operating performance, including approved rate increases primarily for IFP, changes in the metallic plan offering, strategic market exits and investments in information technology. Additionally, AvMed maintains a solid market niche in the Miami-Dade and Broward counties in Florida.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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