Discovery Health Medical Scheme proposed amalgamation with Quantum Medical Aid Society viewed to be credit neutral
Johannesburg, 18 February 2021 – GCR Ratings (“GCR”) views the recently announced proposed amalgamation between Discovery Health Medical Scheme (“DHMS”) and Quantum Medical Aid Society (“QMAS”) to be credit neutral.
On 1st February 2021, the Council for Medical Schemes published the proposed amalgamation between DHMS and QMAS. We do not expect this transaction to have a material impact on DHMS’s credit profile, given the relatively small size of QMAS. DHMS registered 1 326 639 open scheme principal members in 9M FY20, whilst QMAS registered only 3 273 closed scheme principal members. Furthermore, GCR expects a smooth integration of QMAS members into DHMS, given the high similarity between QMAS’s options and the equivalent DHMS options, with QMAS also transferring to DHMS reserves more than enough to cater for its relatively high risk base. The amalgamation is expected to be effective from 1st April 2021 subject to meeting all regulatory requirements.
GCR currently rates DHMS at AAA(ZA), with a Stable Outlook, reflecting the scheme’s very strong membership profile evidenced by its open scheme market leader position, coupled with a strong financial profile.
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