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Profmed has reported fairly healthy and consistent membership growth over the review period, although the scheme remains small, with a share of about 2% of total closed schemes’ contributions. The membership profile has also been stable, but comparatively risky with a pensioner ratio of 18% and average beneficiary age of 40 years. We nevertheless positively consider the very high membership diversification, with the majority of the membership base being individuals and no material exposure to employer groups. While the scheme has shown some success in stabilising members’ aging as it grows, we expect that improvements in the risk profile will be gradual and over a long timeframe.
The Stable Outlook reflects expectations that Profmed’s capitalisation will stabilise within a rating adequate band despite potential near term reduction, and earnings will align with historical levels in a more normalised claims environment. Liquidity metrics show sufficient buffers to absorb an increase in operational cash flow requirements. The rating could be downgraded if the solvency margin reduces on a sustained basis, especially if this is towards the lower end of management’s target range.