Johannesburg, 09 May 2013 — Global Credit Ratings has today affirmed the national scale claims paying ability rating assigned to Bankmed of AA+(ZA); with the outlook accorded as Stable.
Global Credit Ratings has accorded the above credit rating(s) on Bankmed based on the following key criteria:
Bankmed is the third largest restricted membership scheme operating in South Africa, and provides healthcare funding to more than 60 financial institutions including three of the four largest banking groups. The scheme is administered by Metropolitan Health Group.
On the back of sustained robust net surpluses, accumulated funds have consistently increased over the review period, to a high of R1.5bn at FYE12. This has underpinned sound and stable solvency measures. Statutory solvency is expected to gradually reduce to a minimum of 42% by 2016 , albeit deemed comfortable. Further comfort was derived from the substantial balance sheet and conservative investment portfolio, supportive of sound liquidity metrics. Bankmed’s large and relatively captive membership base, complemented by management’s in-depth knowledge and control of the underlying risk factors relating to the scheme’s financial performance, was also favourably considered.
In view of the industry risk characteristics embodied within the medical schemes operating environment, the industry rating ceiling has been capped at AA+. This is the highest rating that an open or closed medical scheme in South Africa can be accorded. Negative rating action could follow a sharp deterioration in statutory solvency below the minimum medium term forecast level of 42%. Government’s longer-term objective of introducing an NHI framework in South Africa, to which the associated effect on the medical schemes industry remains uncertain, is also deemed a possible risk to the rating.
NATIONAL SCALE RATINGS HISTORY
Initial rating (Oct/2000)
Claims paying ability: AA-(ZA)
Last rating (Jun/2012)
Claims paying ability: AA+(ZA)
Sector Head: Insurance
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Regional Sector Head: Insurance
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APPLICABLE METHODOLOGIES AND RELATED RESEARCH
GCR’s Criteria for Rating South African Medical Schemes
The ratings above were solicited by, or on behalf of, the rated client, and therefore, GCR has been compensated for the provision of the ratings.
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GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the
rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial
instrument; and d.) the validity of the rating is for a maximum of 12 months, or earlier as indicated by the applicable credit rating document.
Bankmed participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of info
received was considered adequate and has been independently verified were possible.
The credit rating/s has been disclosed to Bankmed with no contestation of the rating.
The information received from Bankmed and other reliable third parties to accord the credit rating included the latest audited annual financial statements (plus four
years of comparative numbers), latest internal and/or external report to management, full year detailed budgeted financial statements, most recent year to date
management accounts, reserving methodologies, capital management policy. In addition, information specific to the rated entity and/or industry was also received.
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