OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlooks to stable from positive and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” of Bupa Insurance Company (Palmetto Bay, FL).
The Credit Ratings (ratings) reflect Bupa Insurance Company’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.
The revision of the outlooks reflect continued volatility in operating performance as a result of Bupa Insurance Company’s evolving business model. Operating performance has fluctuated over the years, and underwriting losses have been reported in 2017 and through mid-2018. Underwriting results have been impacted negatively by higher utilization, higher cost claims and expenses, as well as lower-than-expected premium revenue. In addition, there has been a negative impact from the recent currency exchange rates fluctuations, especially as it relates to the Mexican peso where the majority of the premium is generated. Recent financial results were below the company’s expectations, and five-year average operating ratios also compare unfavorably with its peer composite. The limited business profile reflects Bupa Insurance Company’s membership decline, which has resulted from strategic changes in the business model and its impact on the overall operations.
The ratings affirmations recognize balance sheet strength derived from risk-adjusted capitalization at the strongest level, which benefits from a high quality investment portfolio. Bupa Insurance Company continues to maintain solid liquidity measures and strong financial flexibility. In addition, the company benefits from the operational and financial flexibility of its ultimate parent, The British United Provident Association Limited (BUPA), a global health and care company. BUPA has moderate financial leverage, and has access to public debt markets. The ratings takes into consideration the parent’s creditworthiness, and access to BUPA’s well-established network and strong operational capabilities, which further enhances Bupa Insurance Company’s competitive advantage.
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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