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FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 17, 2018 08:42 AM (EDT)
A.M. Best has commented that the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of The Education Benevolent Society Incorporated (EBS) (New Zealand), remain unchanged following an announcement that it plans to enter into an arrangement with Union Medical Benefits Society Limited (UniMed) (New Zealand), under which UniMed will take over EBS’s insurance operations as of January 1, 2019. EBS subscribers were notified of the planned change during July 2018 and until the transaction is completed, A.M. Best expects EBS to continue to operate and service its policyholders in a business-as-usual manner.
The transaction is expected to result in a portfolio transfer of EBS’s existing insurance obligations to UniMed, as well as future medical insurance protection for EBS’s subscribers being underwritten by UniMed. The transaction has received preliminary approval from each companies’ board of directors; however, it remains subject to the finalization of a mutually acceptable agreement. The transaction also requires approval by the Reserve Bank of New Zealand and this application is expected to be submitted shortly.
EBS has cited limited growth opportunities, the cost and risks associated with necessary technology investments, and its high cost base as key drivers for the decision to change its business model. Upon completion of the proposed transaction, EBS will no longer operate as an insurance company and will become a marketing organization. Consequently, the company is expected to relinquish its insurance license.
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