AM Best Downgrades Bermuda’s Argus Group
International ratings agency A.M. Best Co. today [March 1] downgraded the financial strength rating to B++ (Good) from A- (Excellent) and issuer credit ratings (ICR) to “bbb” from “a-” of Argus Insurance Company Limited, Somers Isles Insurance Company Limited and Bermuda Life Insurance Company Limited, all subsidiaries of Argus Group Holdings Limited.
Concurrently, A.M. Best has downgraded the ICR to “bb” from “bbb-”of Argus Group. The outlook for all ratings is stable. All companies are domiciled in Hamilton.
Best said the rating downgrades of the Argus Group and its subsidiaries reflect “the significant decline in the capital positions of Bermuda Life and Argus Group over the last two years due to asset valuation write-downs mainly on Bermuda-based equity investments and, to a lesser degree, impairments of domestic commercial mortgages.”
The ratings agency said with the Bermuda domestic capital market continuing to be pressured, a significant appreciation of the value of Bermuda Life’s investment is not expected in the near term.
“Although the operating performance of Bermuda Life has improved, margins continued to be pressured due to the decline in investment income related to the low rate of return on both equity and fixed income invested assets,” said Best. “Additionally, Somers Isles’ operating margins are being pressured due to an increase in the medical loss ratio as a result of higher utilisation and medical cost inflation.”
Best said within its property/casualty segment, Argus Insurance has recorded favourable underwriting and overall results in recent years and continues to maintain solid risk-adjusted capitalization.
Offsetting rating factors include the Argus Group’s long standing participation in the domestic Bermuda insurance market, solid market share and improved operating results on both a consolidated and individual insurance company level.
Alison Hill, Chief Executive Officer of the Argus Group, says: “Naturally we are disappointed by today’s news that our ratings agency, A.M. Best, has downgraded its financial strength and issuer credit ratings for Argus Group Holdings Limited and its subsidiaries. We are however pleased that A.M. Best recognise our strong operating performance and still considers our financial strength rating to be secure, at the same time upgrading us to stable outlook.
“Argus remains financially strong with core business units that are performing well and producing steady cash flow. At September 30, 2010, the company’s half-year, Shareholders’ Equity stood in excess of $107 million, substantially over and above the statutory capital required to conduct the Group’s various insurance businesses.
“The Argus Group is extremely well-established in the domestic insurance and pensions markets, having celebrated its 60th year of operations in 2010, and continues to offer a diverse and robust range of high quality products and services. I remain confident that the Argus Group is well-positioned to face the challenges ahead as we continue to build on decades of experience and a healthy capital base.”
Who cares about AMBest Ratings after watching the “Inside Job”^^
Does Argus have any loan exposure to Tucker’s Point?
What about their $50 million investment in Northstar. No mention in report or Argus financials.