GCR has upgraded the national scale claims paying ability rating for Profmed to AA-(ZA) (double A minus). Profmed is a restricted medical scheme catering exclusively for professionals holding at least a 4-year or post-graduate degree.
Primary factors supporting the rating include the scheme’s demonstrated track record with regards to achieving a net healthcare surplus between F04 and F11 (with the exception of F09). This has resulted in Profmed’s level of reserves increasing by a compound annual growth rate of 21% over the corresponding seven years. This has, in turn, supported strong solvency measures over the corresponding period, with statutory solvency equating to 49% in F11. Going forward, key solvency measures are anticipated to remain robust. In addition, Profmed’s management display’s a comprehensive understanding of the scheme’s underlying membership profile, which enhances control over risk management practices. Positively, the scheme’s claims ratio has trended below the industry norm over the last two years.
In light of management’s strategic decision to increase participation towards riskier assets, key liquidity measures have weakened compared to historical levels (and are considered a minimum for the current rating band). With the listed equity portfolio representing 53% of total reserves as at April F12, investment risk is heightened. Further, whilst the scheme remains well diversified in terms of intermediaries and employee groups, the relatively mature age profile of Profmed’s membership base is noted, with meaningful growth of younger aged members required to address this.
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