Two units of Argus Group are upgraded by AM Best

08-12-2017

Two subsidiaries of Bermuda-based Argus Group Holdings have been upgraded by AM Best as a result of a combination of improved earnings diversification in recent years and the de-risking of the group’s balance sheet.

AM Best has upgraded the financial strength rating of Argus Insurance Company (Argus Insurance) and Bermuda Life Insurance Company (Bermuda Life) to A- (Excellent) from B++ (Good) and their long-term issuer credit ratings to ‘a-’ from ‘bbb+’.

Each is a subsidiary of Argus Group Holdings (Argus Group). Concurrently, AM Best has upgraded the long-term issuer credit rating of Argus Group to ‘bbb-’from ‘bb+’.

All companies are domiciled in Hamilton, Bermuda. The outlook for these credit ratings (ratings) has been revised to stable from positive.

AM Best said the ratings reflect Argus Group’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

It also said the rating upgrades reflect Argus Group’s improved balance sheet strength and consistent favorable operating performance. Over the past several years, the company successfully de-risked its balance sheet with an improved quality of invested assets achieved via reduced exposure to Bermuda-based equities, underperforming mortgages, as well as lower intercompany receivables at the insurance entities.

In addition, favorable earnings in health and property lines of business contribute to capital retention. As a result, the company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is very strong. The good capital position is somewhat lessened by ongoing shareholder’ dividends and occasional capital returned to the holding company.

AM Best added that Argus Insurance’s employee benefits segment adds diversification and favorably contributes to net operating earnings. While an increase in health claims experience may pressure earnings over the near-term, AM Best expects Argus Insurance’s results to remain profitable.

Argus Insurance garners strong market share in its health and property segments; however, the market for business in its primary market of Bermuda is limited and its competitors writing similar product lines all compete for the same eligible population. Its property business segment does have operations in the European Union, albeit a small percentage of business is derived from these operations.

Argus, AM Best, Ratings, Bermuda

Bermuda Re