Discovery Health Medical Scheme maintains highest rating

International rating agency, Global Credit Ratings ("GCR"), has reaffirmed Discovery Health Medical Schemes ("DHMS") domestic ZAR currency claims paying ability rating of AA (double A). The rating is in line with the open medical schemes industry ceiling, reinforcing DHMS's position as the highest rated open medical scheme in South Africa.

According to Susan Andrews, analyst at GCR, the rating took cognisance of the scheme's substantial and well-diversified membership base (making it the largest open scheme in South Africa by a significant margin), with an age profile that compares favourably with industry norms. Furthermore, the decrease in the operating deficit in F06, on the back of improved relative claims and delivery costs, was noted. This assisted the scheme in reverting to a positive net result of R52m in F06 (F05: R109m deficit) excluding unrealised gains of R117m in F06 (F05: R2m). Moreover, key liquidity measures were considered to be adequate compared to industry norms. DHMS's solvency has in part been constrained by robust membership and premium growth, with the statutory funding ratio remaining below the Acts stipulated minimum level in F06, although this is forecast to improve in F07.

The apparent deterioration in industry claiming patterns could continue to place pressure on industry operating performance in the absence of appropriate controls. In this regard, DHMS's leading market position ensures that the scheme is well placed to benefit from enhanced purchasing power and scale economies, providing a degree of support to its operating result.