AM Best


AM Best Upgrades Credit Ratings of AvMed, Inc.


CONTACTS:

David Mitchell
Senior Financial Analyst
+1 908 439 2200, ext. 5556
david.mitchell@ambest.com

Doniella Pliss
Director
+1 908 439 2200, ext. 5104
doniella.pliss@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - JUNE 21, 2019 11:23 AM (EDT)
AM Best has upgraded the Financial Strength Rating to C++ (Marginal) from C+ (Marginal) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “b” from “b-” of AvMed, Inc. (AvMed) (Miami, FL). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect AvMed’s balance sheet strength, which AM Best categorizes as weak, as well as its marginal operating performance, limited business profile and marginal enterprise risk management.

The rating upgrades reflect the improvement in risk-adjusted capitalization to weak from very weak, as measured by Best Capital Adequacy Ratio (BCAR). Substantial strengthening of underwriting and net earnings led to growth in capital and surplus in 2018. Concurrently, total premium declined due to AvMed’s focus on profitability in the individual and group segments. Higher capital and lower premium resulted in a stronger level of risk-adjusted capitalization. The company expects this trend to continue with earnings moderating in 2019, pressured by investment in the business and premium decreasing further as AvMed reduces its footprint.

Despite the recent improvements, AvMed’s capital and surplus remains below historical levels, as the organization incurred significant financial losses over the past five years, primarily related to its individual and small group products. AvMed implemented various turn-around measures, including multi-year rate increases, enhanced medical management, changes to the benefits structure and some modifications of provider contracts. In addition, the organization outsourced its information technology infrastructure with a goal of achieving more efficiency. AM Best is concerned that AvMed may experience continued earnings volatility as the membership continues to drop and the administrative expense burden grows. In addition, AvMed operates in a limited geographic area with a high level of competition and pricing pressures.

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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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AMB# Company Name
064074 AvMed, Inc.