AM Best revises outlook to positive of Argus Group

AM Best has revised the outlooks to positive from stable and affirmed the financial strength Rating of B++ (Good) and the long-term issuer credit Ratings (Long-Term ICR) of “bbb+” of Argus Insurance Company and Bermuda Life Insurance Company. Each company is a subsidiary of Argus Group Holdings.

Concurrently, AM Best has revised the outlook to positive from stable and affirmed the Long-Term ICR of “bb+” of the Argus Group. All companies are domiciled in Hamilton, Bermuda.

According to AM Best, the outlook revisions and credit ratings (ratings) of Bermuda Life are based on the company’s long-standing, solid position within Bermuda’s life/health insurance market, favorable operating results, improved balance sheet quality and senior leadership’s emphasis on risk management.

Bermuda Life has been operating in the domestic health, life and pension insurance markets for over 50 years, where it has a leading share of the health market.

“The trend of stable net operating earnings has been driven by strong results in the employee benefits segment, and within that segment, its health insurance line of business, which has benefited from consistent premium growth and moderated medical expenses,” the rating agency said.

“Furthermore, net income was enhanced further by Bermuda Life’s favorable performance of its life, annuity and pension operations. Bermuda Life has improved its investment portfolio quality through a series of write-downs and divestitures of its Bermuda-domiciled companies’ equity positions.

“The company has reduced its exposure to Bermuda equities from approximately 50 percent prior to 2013 to less than 3 percent in the second half of 2016. Stronger financial results and lack of significant impairments have led to capital growth and improved risk-adjusted capitalisation.”

AM Best said that the ratings and outlooks also reflect the company’s strategic role within the Argus Group organisation and the synergies it derives from common ownership, management, operations and brand name recognition with its life/health sister company.

These positive rating factors are partially offset by Argus Insurance’s concentration of underwriting risk in Bermuda. This subjects the company to a higher potential for influence from changes in the regulatory, economic, legal and competitive environments, especially during this period of soft pricing and weak interest rates.

In addition, the company has significant exposure in Bermuda to loss from catastrophic weather events, which is materially mitigated by a comprehensive reinsurance programme backed by quality reinsurers.