A.M. Best Changes Outlook to Stable for Ratings of AvMed

Proquest LLC

A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of AvMed, Inc. (Miami, FL).

In a release on December 13, A.M. Best noted that the revised outlook reflects AvMed's restoration of profitability and its much improved risk-adjusted capital level in 2012, as well as continued favorable operating and capitalization trends reported through late 2013, following a significant net loss and associated decline in capital several years ago. The prior loss resulted from a combination of several one-time, non-recurring items as well as elevated physician and pharmacy cost trends, a Medicare premium rate freeze from Centers for Medicare & Medicaid Services and the adverse effects of Florida's recessionary economy on premium revenue growth.

AvMed has since improved operating results and has materially higher risk-adjusted capital in 2012 and 2013. This was driven by a number of strategic actions taken as part of its corrective action plan, which include premium rate increases, revised benefit plan designs, changes in pricing strategies, Medicare revenue maximization initiatives, cost savings from changing disease management and pharmacy vendors, higher negotiated pharmacy discounts and provider and vendor contract rate reductions.

Future positive rating actions may occur if AvMed improves its profitability, continues to build its risk-adjusted capital and grows premium revenue. Future negative rating actions could occur if operating results, risk-adjusted capital and/or premium revenue materially deteriorate or the company loses one or more of its largest employer group customers.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides an explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process.

A.M. Best Company is an insurance rating and information source.