Best places Argus under review after purchase of stake in rival BF&M

AM Best has placed under review with developing implications the financial strength rating of A- (Excellent) of Argus Insurance Company Limited and Bermuda Life Insurance Company.

Best said the action followed Argus' announcement last week that the company intends to buy a 37% stake in Bermuda-domiciled insurance rival BF&M Limited (BF&M) for $100 million.

Best said: "While the balance sheet strength assessment is expected to remain supportive of the current ratings, the new equity investment, financed partially through a debt facility, is projected by AM Best to have a moderate impact on risk-adjusted capital. Operating results at either Argus or BF&M between the signing of the share purchase agreement and the close of the transaction could impact this assessment."

The ratings agency added: "The ratings will remain under review with developing implications pending regulatory approvals from the Bermuda Monetary Authority and purchase of shares by Argus. This is expected to occur late in the third quarter of 2023 or in early fourth quarter."

AM Best also said that financial strength rating for BF&M and its insurance subsidiaries remain unchanged following Argus' announcement.

Best noted that shareholder Camellia’s desire to divest its shareholding prompted BF&M to conduct a review of strategic alternatives in the second half of 2022, which included the possible sale of the company. Upon conclusion of the review, BF&M announced its intent to continue to operate on a standalone basis.

AM Best said it expects BF&M to continue its normal course of business operations and financial position remaining unaffected by this share purchase agreement.

Last week, BF&M chief executive officer Abigail Clifford (pictured) reassured investors and customers that the company "remains financially strong and resolute in our commitment to meeting your needs".

"We are proud to hold an AM Best rating of ‘A’ Excellent, which reflects our financial stability and ability to fulfill our obligations to policyholders," she said. "Our daily operations will continue without interruption, ensuring that your policies, claims, and ongoing transactions are unaffected."

She added: "We must emphasise that this transaction has not been finalised and is subject to certain conditions, including the necessary regulatory and tax approvals.