AM Best has affirmed the financial strength rating of A- (excellent) and assigned an issuer credit rating of a- to Amedex Insurance Company.

It has also downgraded the FSR to B++ (good) from A- (excellent) and assigned an ICR of bbb to Amedex Insurance Company (Bermuda) Limited.

The outlook for Amedex-US' FSR is being revised to negative from stable. The outlook for Amedex-Bermuda's FSR is negative, and the outlook assigned to the ICRs is negative.

The ratings of Amedex-US recognise its volatile operating results, including a significant statutory loss in 2006 and the reduced level of capitalisation on an absolute and risk-adjusted basis.

The operating loss primarily resulted from reserve strengthening, following a formal management review of claims per policy from its new parent company, British United Provident Association, especially in regions that had been experiencing rapid growth.

Rate increases have been implemented based on regional results; however; Amedex-US' financial results continue to fluctuate in 2007.

The ratings also acknowledge Amedex-US' favorable liquidity, niche in the Latin American and Caribbean major medical markets and the improved financial discipline from its parent company. AM Best believes Amedex-US will continue to face execution risk in profitably as it grows in the Latin American and Caribbean major medical markets.

The downgrading of Amedex-Bermuda's rating reflects AM Best's concerns with its modest risk-adjusted capital position and the significant loss it posted in 2006. The weak capitalisation - relative to its ratings - recognises the continued increase in the level of intangible assets relative to capital and will require capital injection in addition to the capital contribution of $3.5 million from the parent during 2006.

The negative outlook on the ratings reflects AM Best's expectation that Amedex-Bermuda's capitalisation will remain low, given the level of expected business growth.