A.M. Best Downgrades Ratings of AvMed, Inc.

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has downgraded the financial strength rating to B (Fair) from B+ (Good) and the issuer credit rating to “bb+” from “bbb-” of AvMed, Inc. (AvMed) (Miami, FL). The outlook for both ratings is stable.

The rating actions reflect a significant deterioration in AvMed’s absolute capital and a corresponding decline in its risk-adjusted capital for year-end 2014, which were beyond A.M. Best’s expectations. These reductions were driven by a $48.5 million net loss resulting from unfavorable operating results, primarily in its Medicare Advantage segment caused by the cumulative effect of reductions in Centers for Medicare and Medicaid Services (CMS) reimbursement. Additionally, the company projects continued operating losses and only a slight increase in absolute capital for 2015. However, this increase is contingent on certain one-time strategic initiatives. Although AvMed currently maintains an adequate level of risk-adjusted capital, as measured by Best’s Capital Adequacy Ratio (BCAR), A.M. Best believes its risk-adjusted capital may be subject to volatility in the near term as the company pursues its capital bolstering initiatives, while at the same time incurring expenses pertaining to strategic initiatives aimed at returning the company to profitability.

AvMed’s management is currently implementing initiatives to restore profitability, including a Medicare Advantage performance improvement action plan and actions to lower its operating cost structure.

A future positive rating action may occur if AvMed restores and sustains profitability, exhibits premium and administrative services only (ASO) fee revenue growth and rebuilds absolute and risk-adjusted capital. Future negative rating actions could occur if operating results, risk-adjusted capital or revenues continue to decline, or if the company loses one or both of its two large employer group customers.

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.

Key insurance criteria reports utilized:

• Evaluating Non-Insurance Ultimate Parents
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding BCAR for U.S. and Canadian Life/Health Insurers

This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.

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 © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150612005845/en/

Brian Virostek, (908) 439-2200, ext. 5531
Financial Analyst
[email protected]
or
Christopher Sharkey, (908) 439-2200, ext. 5159
Manager, Public Relations
[email protected]
or
Joseph Zazzera, MBA, (908) 439-2200, ext. 5797
Assistant Vice President
[email protected]
or
Jim Peavy, (908) 439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best

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