Alison Hill
6 June 2023News

Bermuda insurer Argus buys $100m stake in rival

Bermuda domestic insurer Argus Group is to buy a 37 per cent stake in rival BF&M, the company announced today.

Argus said it was buying the 36.9 per cent shareholding from Lawrie (Bermuda), a subsidiary of UK investment company Camellia Plc for $100 million.

Argus’s CEO, Alison Hill said Argus bought the stake to prevent BF&M being absorbed by an overseas insurance group and intended BF&M to continue to operate as a standalone entity.

She said: "BF&M is an important business for our island.  Camellia’s stake in BF&M was up for sale.  It was important that we moved quickly to buy this stake to avoid BF&M being absorbed by an overseas insurance group.

"We believe that this stake is better in the hands of an accountable local community partner, rather than owned by a large overseas insurance group.

"We consider the investment to be an attractive proposition for our shareholders."

A statement from Argus said Camellia has been exiting its non-core investments to focus on its agricultural businesses and last year initiated a review of strategic alternatives to maximise shareholder value, potentially including the sale of the whole of BF&M.

In January 2023, BF&M confirmed that it had concluded that strategic review, and believed it was best suited to continue as a standalone company.

Argus said: " Following the conclusion of that company-led process, Camellia sought a purchaser for their stake directly."

Argus, through its subsidiary Bermuda Life Insurance Company,will purchase Lawrie’s shareholding in BF&M for an aggregate consideration of $100 million payable in cash, financed by a combination of $50 million of existing cash resources and a new $50 million debt facility.

The purchase is conditional on the satisfaction of certain conditions, including regulatory and tax approvals and notifications in a number of jurisdictions. The purchase is expected to complete in Autumn 2023.  Following completion, the shareholding will be held as an investment in an associate and accounted for using the equity method.

Argus added: "It is possible that taxes and/or fees may become payable in connection with the purchase and obtaining the necessary pre-closing approvals and notifications although such amount cannot be determined until the required applications have been submitted.

"If Argus’ share of such items exceeds agreed thresholds, then Argus has the ability to terminate should it so wish. The vendor has the same termination right in respect of its share of such costs."
Argus said it plans to retain its current dividend policy.