A.M. Best Co. has removed from under review with negative
implications and affirmed the financial strength rating of B+ (Good) and
issuer credit rating of "bbb-" of AvMed, Inc. (AvMed)
(Gainesville, FL). The outlook assigned to both ratings is negative.
The ratings for AvMed were placed under review with negative
implications in December 2011 after the company reported a $43.6 million
net loss and a $54.1 million decline in its capital and surplus through
September. The net loss resulted from several one-time, non-recurring
costs including the costs of a legal settlement, elevated physician and
pharmacy cost trends, a Medicare premium rate freeze from CMS and the
adverse effects of Florida's recessionary economy on premium revenue
AvMed reported improved operating results through September 2012;
however, the company projects a modest net loss and a corresponding
decline in capital and surplus for 2012, due to the combination of a
projected net loss for the fourth quarter and the potentialaccrual of a
sizable premium deficiency reserve.
AvMed continues to take steps to improve its underwriting results. In
late 2012, the company hired a Chief Medical Officer and a Medicare
Chief Medical Officer to positively impact its medical cost trends. The
company also is recruiting a Vice President of Health Care Economics who
will focus on analyzing medical cost drivers, identifying opportunities
to lower medical cost trends and developing medical cost trend
projections. AvMed has engaged a management consulting firm to assist in
updating its strategic plan and to provide a strategy execution road map.
A.M. Best believes AvMed is well-positioned at its current ratings.
However, future negative rating actions are likely if underwriting
results fall below A.M. Best's expectations, claim reserves become
deficient and require strengthening, and/or if absolute or risk-adjusted
capital deteriorates further.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS
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