A.M. Best Special Report: Provider-Owned and Affiliated Managed Care Companies Maintain Conservative Investments.OLDWICK, N.J. -- Provider-owned and affiliated managed care companies continue to maintain conservative invested asset portfolios, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a special report by the A.M. Best Co. The majority of these companies' invested assets were in cash and short-term investments during 2005. Of the 109 companies included in the study, the average allocation to this investment class was 46%. Asset allocations Asset Allocation The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio. to fixed-income securities Fixed-income securities Investments that have specific interest rates, such as bonds. averaged 36%, while common stocks (affiliated and unaffiliated) averaged 10% of total invested assets. The remaining average asset allocations were 6% in real estate and 2% in Schedule BA Assets. A.M. Best expects this investment conservatism, given the short-tailed nature of health claim liabilities, and does not anticipate any significant shifts among asset classes for this segment during the medium term. However, A.M. Best believes health-care systems with strong creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. at both the system and health plan levels could allocate modest amounts of excess capital at a health plan from conservative investments to higher-risk, higher-yielding assets to offset the underwriting impact from pricing competition. A.M. Best would view a measured asset shift favorably for the stronger credits with excess capital measured using Best's Capital Adequacy Ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. (BCAR BCAR Brunswick County Association of Realtors BCAR British Civil Airworthiness Requirements BCAR Bullitt County Animal Rescue (Shepherdsville, KY) BCAR Business Case Analysis Report BCAR Beaver Creek Array BCAR Buffalo Civic Auto Ramps, Inc. ), but negatively for weaker credits with lower BCAR scores that could sacrifice needed liquidity to seek higher-risk returns. BestWeek subscribers can download a PDF (Portable Document Format) The de facto standard for document publishing from Adobe. On the Web, there are countless brochures, data sheets, white papers and technical manuals in the PDF format. copy of all full special reports at no additional cost or a combination of the PDF copies plus all related spreadsheet files of the report data at no additional cost from our Web site at www.bestweek.com. Nonsubscribers can download a PDF copy of the full special report (8 pages) for $55 or a combination of the PDF copy plus the spreadsheet file of the report data for $140 from our Web site at www.bestweek.com. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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