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TMCNet:  A.M. Best Removes Ratings of AvMed, Inc. From Under Review

[December 05, 2012]

A.M. Best Removes Ratings of AvMed, Inc. From Under Review

OLDWICK, N.J. --(Business Wire)--

A.M. Best Co. has removed from under review with negative implications and affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of AvMed, Inc. (AvMed) (Gainesville, FL). The outlook assigned to both ratings is negative.

The ratings for AvMed were placed under review with negative implications in December 2011 after the company reported a $43.6 million net loss and a $54.1 million decline in its capital and surplus through September. The net loss resulted from several one-time, non-recurring costs including the costs of a legal settlement, elevated physician and pharmacy cost trends, a Medicare premium rate freeze from CMS and the adverse effects of Florida's recessionary economy on premium revenue growth.

AvMed reported improved operating results through September 2012; however, the company projects a modest net loss and a corresponding decline in capital and surplus for 2012, due to the combination of a projected net loss for the fourth quarter and the potentialaccrual of a sizable premium deficiency reserve.

AvMed continues to take steps to improve its underwriting results. In late 2012, the company hired a Chief Medical Officer and a Medicare Chief Medical Officer to positively impact its medical cost trends. The company also is recruiting a Vice President of Health Care Economics who will focus on analyzing medical cost drivers, identifying opportunities to lower medical cost trends and developing medical cost trend projections. AvMed has engaged a management consulting firm to assist in updating its strategic plan and to provide a strategy execution road map.

A.M. Best believes AvMed is well-positioned at its current ratings. However, future negative rating actions are likely if underwriting results fall below A.M. Best's expectations, claim reserves become deficient and require strengthening, and/or if absolute or risk-adjusted capital deteriorates further.

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

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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