Ratings agency A.M. Best has maintained its positive ratings for insurance firm Union Medical Benefits Society (UniMed), amid the firm’s “very strong” balance sheet and strong operating performance. 

UniMed saw its financial strength rating affirmed at ‘A’ or ‘excellent’, and its long-term issuer credit rating at ‘a’. A.M. Best said the outlook for these ratings is stable.

The ratings also reflect the firm’s track record of favorable earnings, with a five-year average operating ratio of approximately 90%. A.M. Best said the company has a competitive expense ratio of 13% due to its distribution model, which relies more on the direct channel with lower acquisition expenses than on intermediaries, as well as lower administrative costs for group business.

The ratings agency expects the company to continue delivering favorable earnings with moderate volatility, supported by steady revenue growth, adequate product pricing and investment income.

However, A.M. Best also warned that the insurer has premium concentration risk among a few large group accounts, which could make its underwriting performance relatively more vulnerable to competitive pressure.  

“The company has demonstrated an overall satisfactory ability to address most of its risks, primarily through adequate pricing. Therefore, A.M. Best considers UniMed’s risk management capabilities to be aligned appropriately with its risk profile,” the ratings agency added. It said negative rating actions may occur if there is a major underwriting deficit or significant deterioration in risk-adjusted capitalization.

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