AM Best On Argus & BF&M’s Credit Ratings

June 12, 2023 | 0 Comments

AM Best has commented on the credit ratings both BF&M and Argus Group following the news that an Argus subsidiary has entered into an agreement to purchase 36.9% of BF&M for $100 million.

BF&M Limited 

A statement from the ratings agency said, “AM Best has commented that the Credit Ratings of BF&M Limited [BF&M] and its insurance subsidiaries, BF&M Life Insurance Company Limited, BF&M General Insurance Company Limited and Island Heritage Insurance Company, Ltd. [Cayman Islands] remain unchanged following Argus Group Holdings Limited’s announcement of a share purchase agreement for a large minority interest in BF&M currently owned by Camellia Plc [Camellia]. All companies are domiciled in Hamilton, Bermuda, unless otherwise stated.

“On June 6, 2023, Argus Group Holding Limited announced that its subsidiary, Bermuda Life Insurance Company, entered into a share purchase agreement to acquire the 36.9% shareholding in BF&M currently held by a subsidiary of Camellia, an international group focused on agricultural business. 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. The share purchase requires regulatory and tax approvals and is expected to close in late third-quarter 2023 to fourth-quarter 2023. AM Best expects BF&M to continue its normal course of business operations and financial position remaining unaffected by this share purchase agreement.”

Argus Group Holdings 

A statement from the ratings agency said, “AM Best has placed under review with developing implications the Financial Strength Rating of A- [Excellent] and the Long-Term Issuer Credit Ratings [Long-Term ICRs] of “a-” [Excellent] of Argus Insurance Company Limited [Argus Insurance] and Bermuda Life Insurance Company Limited [Bermuda Life]. Both companies are subsidiaries of Argus Group Holdings Limited [Argus Group] [BSX: AGH.BH]. Concurrently, AM Best has placed under review with developing implications the Long-Term ICR of “bbb-” [Good] of Argus Group. All companies are domiciled in Hamilton, Bermuda.

“The action on these Credit Ratings [ratings] follows Argus’ June 6, 2023, announcement that the company intends to buy a large minority interest in another Bermuda-domiciled insurance company, BF&M Limited [BF&M]. 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 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.”

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