BESTmed’s AA- rating maintained
International rating agency, Global Credit Ratings (“GCR”), has reaffirmed BESTmed Medical Scheme’s (“BESTmed”) domestic ZAR currency claims paying ability rating at AA- (double A minus). The rating is reflective of the scheme’s high claims paying ability.
Ultimately, the competitiveness of a scheme depends largely on the profile and size of its membership base and in recent years, given industry changes, achieving sustainable membership growth has become increasingly difficult. In light of this, BESTmed’s demonstrated ability to grow its membership base in each year over the review period was favourably viewed. Moreover, the scheme’s recently concluded transaction with Sanlam (the sale of its administration and managed care operations) will provide BESTmed with access to the company’s vast distribution network and brand benefits, which bodes well for future growth and membership diversification. GCR analyst Sheri Few also stated that despite the scheme posting its first operating deficit in 6 years in F07 (on the back of a deterioration in relative claims), a large net surplus continued to be recorded. This in turn served to bolster reserves and solvency levels to review period highs.
The scheme has historically exhibited a low delivery costs to GPI ratio relative to the industry norm. Notwithstanding the expected increase going forward (due to the outsourcing of the administration and managed care operations), longer term efficiency benefits are anticipated. BESTmed has also maintained a large and relatively liquid investment portfolio (62% in cash holdings), supporting comfortable liquidity measures. Cognisance is, however, taken of the current volatile equity markets, which heightens investment risk.
