The Credit Ratings (ratings) reflect AultCare’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.
The outlook revisions to stable are based on a decline in overall risk-adjusted capitalization in 2018, as measured by Best’s Capital Adequacy Ratio (BCAR), although AM Best notes improvement through the first half of 2019. AultCare’s capital position was negatively affected by dividends to the parent company as a result of an asset transfer, an unfavorable change in non-admitted assets for increased pharmacy rebate receivables and equity market volatility at year-end 2018.
The affirmation of the ratings recognizes AultCare’s conservative investment portfolio and sound balance sheet liquidity that is driven by generally positive operating cash flow. Additionally, the ratings recognize AultCare’s profitable operating performance over the past five years. AultCare’s Medicare Advantage business continues to be a sizable contributor to premiums and operating earnings. As Medicare Advantage becomes a larger portion of its overall operations, total operating margin could moderate as this product typically produces lower margins.
This press release relates to Credit Ratings that have been published on AM 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 AM 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 AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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Source: AM Best