Argus Subsidiary To Purchase 36.9% Of BF&M

June 6, 2023 | 10 Comments

[Updated] An Argus subsidiary has entered into an agreement  to purchase a 36.9% shareholding in the BF&M insurance company for $100 million, with Argus noting that “we would not expect this transaction to result in BF&M changing its service, contracts or personnel.”

In a filing with the Bermuda Stock Exchange, Argus Group Holdings Limited said it is “pleased to announce that its subsidiary, Bermuda Life Insurance Company Limited [BLIC], has entered into a share purchase agreement with Lawrie [Bermuda] Limited a wholly-owned subsidiary of Camellia Plc to purchase Camellia’s 36.9% shareholding in BF&M Limited a Bermuda-based insurance business.”

Argus’s CEO, Alison Hill commented: “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.

“Following completion of the purchase, BF&M will be able to operate its day-to-day business independently of Argus. And we would not expect this transaction to result in BF&M changing its service, contracts or personnel.”

The filing stated, “The shareholding in BF&M is being sold by Camellia, a substantial London-listed international group. Camellia is focused on agricultural businesses and has in recent years exited non-core investments in other sectors.

“On June 29, 2022, BF&M announced that it had 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, without completing a sale of the company.

“Following the conclusion of that company-led process, Camellia sought a purchaser for their stake directly.

“Subject to the terms of the share purchase agreement, BLIC will purchase Lawrie’s shareholding in BF&M for an aggregate consideration of US$100m 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.

“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’s 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’s current dividend policy will not change as a result of the purchase.”

Update 1.05pm: A BF&M spokesperson said, “The Board understands that Camellia is resolute in its intention to divest its ownership interest in BF&M. However, we are disappointed that Camellia has decided to divest their stake in BF&M to Argus – a transaction with a direct BF&M competitor.”

“Our Board will continue to assess all potential impacts from this transaction. As ever, our focus remains squarely on providing best-in-class support to all our stakeholders including our clients as they continue to navigate a challenging and dynamic risk landscape, and we remain singularly focused on executing our strategy.”

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Comments (10)

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  1. Platinum says:

    Oh dear, this is not good.

    • Interestedobserver says:

      We are surely much better served with a Bermuda company with a demonstrated interest in reducing healthcare costs for Bermudians holding a significant interest in BF&M. Furthermore if economies of scale can be achieved by combining interests at some point, then I can only see this as being of benefit to the Bermuda public. It is defeatist to assume that dominance in an industry will lead to abusing the position rather than using the position to reduce costs and benefit customers. How about we wait and see?

      • iyiyi says:

        Sounds good , however can you can give one example of any monopoly here in Bermuda that has actually reduced costs ?
        Normally it WILL lead to abusing the position .

      • Joan says:

        If you are for this deal you are either an Argus shareholder, part of their Management or have blinders on. Monopolies are bad for customers. You talk about “economies of scale.” That means scores of job losses. That is bad news for the Bermudian economy. Aren’t we trying to create jobs?
        There would be lack of competition in the market. For health care rates, take whatever rate is given because there is limited competition. In other countries, regulators pass antitrust laws to protect the consumer. Can we expect any consumer protection here?

        • Joe Bloggs says:

          “Monopolies are bad for customers”

          Please will you explain how Argus acquiring a 36.9% shareholding in BF&M Insurance Company amounts to a monopoly.

  2. Bill says:

    Platinum ….ok…it is basically unlawful under current legislation and law pertinent, let me explain , subsidiary is the same company basically and the health of our company…Bermuda Inc. requires diversity not MONOPOLY.

    • Joe Bloggs says:

      “subsidiary is the same company basically”

      No, that is not correct.

      “requires diversity not MONOPOLY”

      Ok, but where is the monopoly?

  3. Selection is of utmost import…it is choice and lower cost to us the soon to be disenfranchised…insurance is being done the same to with choice of practitioner or venue thereof I say no…you do not choose for me your choice is yours not theirs . It is your choice and that is why the legislation is there…they want to tell you subsidiary of is not the same…you can say that but it is not so.

  4. Mr. Speaker says:

    Get crackin…

  5. Joe Bloggs says:

    It appears from the comments above that the PLP Government’s idea of making Bermuda a a socialist state and abandoning concepts of free enterprise are shared.

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