OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlook for the issuer credit rating (ICR) to negative from stable and affirmed the financial strength rating (FSR) of B (Fair) and the ICR of “bb+” of AvMed, Inc. (AvMed) (Miami, FL). The outlook for the FSR remains stable.
The revised outlook reflects further deterioration in AvMed’s absolute capital and a corresponding decrease in its risk-adjusted capital for year-end 2015. These reductions were driven by a $6 million net loss from growth and higher utilization of Individual & Family Plan membership (off-Exchange), which selected the richest (low cost sharing) platinum and gold plans, in addition to a decrease in unrealized capital gains due to the downturn in the energy investment sector, and an increase in non-admitted assets due to planned technology enhancements. Additionally, the company expects a continued operating loss and a decline in absolute capital for 2016.
AvMed’s management is currently implementing several initiatives to restore profitability, including: filed premium rate increases for its Individual & Family Plan and small group businesses for 2017; an action plan to reduce its operating cost structure; revenue maximization steps for the ACA Risk Adjustment and Medicare Advantage programs; a shift toward value-based provider contracts; and a continued emphasis on managing those members driving the majority of its medical costs.
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 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 see A.M. Best’s Recent Rating Activity web page.
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