Johannesburg, 30 May 2014 — 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.
SUMMARY RATING RATIONALE
Global Credit Ratings (“GCR”) has accorded the above credit rating(s) to Bankmed based on the following key criteria:
Bankmed’s rating benefits from the entity’s very well established market presence, and its strong position as one of the largest closed medical schemes in the industry. Membership levels have been maintained within a well contained range throughout the review period, and this trend is expected to persist going forward. The membership base reflects a favourable risk profile, by way of a comparatively low average age, and well understood claiming patterns. This has facilitated relative claims predictability, and enhanced the utilisation of efficient risk management practices.
Bankmed reflects a strong financial profile, buoyed by consistent net surpluses and a review period average net margin of 3%. Net healthcare results have been largely in line with budgets, echoing the degree of control and stability exerted over the healthcare account. This pattern has also been positively impacted by the scheme’s well contained delivery cost ratio.
Underpinned by sustained robust net surpluses, accumulated funds have trended upwards to a review period high of R1.7bn at FYE13 (FYE12: R1.5bn). Accordingly, stable solvency measures have been evidenced, well above regulatory levels. Going forward, the Board’s capital management policy is expected to see statutory solvency gradually reduce to a minimum of 42% by 2016. GCR views this floor as conservative, and as such is expected to remain supportive of the rating over the medium term. Bankmed displays a large, relatively low risk investment portfolio, with liquid assets contributing a higher 61% of total investments (F12: 55%). Bankmed does, however, exhibit a high concentration to the banking and financial services industry, exposing the scheme to any restructuring or pronounced negative developments occurring within these sectors.
For a detailed glossary of terms utilised in this announcement please click here
NATIONAL SCALE RATINGS HISTORY
Initial rating (Oct/2000)
Claims paying ability: AA-(ZA);
Last rating (May/2013)
Claims paying ability: AA+(ZA);
|Primary Analyst||Secondary Analyst|
|Marc Chadwick||Thato Modungoa|
|Sector Head: Insurance||Junior Analyst|
|(011) 784-1771||(011) 784-1771|
Sector Head: Corporate & Public Sector Debt Ratings
APPLICABLE METHODOLOGIES AND RELATED RESEARCH
Criteria for Rating South African Medical Schemes (April 2014)
Bankmed rating reports, 2000-2013
RATING LIMITATIONS AND DISCLAIMERS
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SALIENT FEATURES OF ACCORDED RATINGS
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 information received was considered adequate and has been independently verified where 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(s) included the 2013 audited annual financial statements (plus four years of comparative numbers), latest internal and/or external report to management, full year detailed budgeted financial statements for 2014, unaudited year-to-date management accounts to March 2014, reserving methodologies and members’ surplus policies, and other documentation related to the rating exercise.
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.