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FOR IMMEDIATE RELEASE
OLDWICK - JUNE 22, 2017 11:12 AM (EDT)
A.M. Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb” from “bb+” and affirmed the Financial Strength Rating (FSR) of B (Fair) of AvMed, Inc. (AvMed) (Miami, FL). The outlook for the FSR has been revised to negative from stable, while the outlook for the Long-Term ICR remains negative.
The rating action reflects the continued decline in AvMed’s absolute capital and a corresponding decrease in its risk-adjusted capital for year-end 2016. The $15 million net loss reported in 2016 deteriorated compared to the prior year and resulted primarily from growing membership selecting the richest platinum and gold plans, which generated higher utilization in its Individual & Family Plan (IFP) off-Exchange product. Additionally, AvMed’s financial losses were partially attributed to its planned investments in information technology capabilities.
AvMed’s management is in the process of executing an operating performance improvement plan, including initiatives focused on developing a more cost efficient operating model. Furthermore, the Florida Office of Insurance Regulation (OIR) approved an IFP premium rate increase effective Jan. 1, 2017. Management also has recently filed with the OIR its proposed premium rate increases for 2018. However, the level of risk-adjusted capitalization is projected to increase only marginally during 2017. A.M. Best is concerned that potential unexpected premium growth or medical cost increases may put further pressure on already weak capitalization.
Future positive rating action may occur if AvMed reports a sustained trend of profitable operating results and a trend of improved risk-adjusted capital. Future negative rating actions could occur if operating losses continue or risk-adjusted capital declines further.
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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