Global Credit Ratings (GCR) has upgraded Bonitas Medical Fund’s (“Bonitas”) national currency claims paying ability rating to AA-(ZA) from the previous rating of A+(ZA), with a stable rating outlook.
According to Sheri Few, sector head of medical scheme ratings at GCR, the placement of Bonitas under curatorship (as from May 2011) has served to strengthen the governance and transparency of the scheme, ensuring focus is placed solely on its core operating mandate.
“Bonitas continues to solidify its position as the second largest open scheme in the industry, achieved via successive growth in new membership since F06 (with the exception of F10). This growth has also assisted the scheme in maintaining a favorable membership age profile,” said Few.
Further, GCR notes that Bonitas has shown a demonstrated ability to post robust net surpluses over the last nine years, barring F09. “As a result, Bonitas continues to register comfortable solvency ratios, with this trend expected to continue into F12. The low delivery cost ratio has also consistently outperformed the industry benchmark over the review period.”
“The scheme is expected to continue experiencing high persal member attrition going forward, whilst potential mergers of sizeable scale may increase the complexity of accurately pricing and managing the different membership profiles.”
Factors that could trigger a further rating upgrade include the consistent generation of robust net surpluses (driven by the scheme’s focus on underwriting discipline) and maintenance of strong solvency ratios. The scheme’s financial metrics should also continue to measure favourably against its peers.
Conversely, a sustained adverse net performance, due to significant claims or investment losses, which could cause the level of capitalisation to decline materially could impact negatively on the scheme’s rating status. Further, government’s longer-term objective to introduce an NHI framework in South Africa, to which the associated effect on the medical schemes industry remains uncertain, could bear potential downside risk to the rating.
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