AM Best On Credit Ratings Of Argus & BF&M
AM Best has commented following the news that BF&M and Argus Group “have signed a definitive amalgamation agreement, pursuant to which BF&M and Argus will combine in an all-stock transaction.”
A statement from the ratings agency said, “AM Best has revised the implications of the under review status to positive from developing for the Financial Strength Rating of A- [Excellent] and the Long-Term Issuer Credit Ratings [Long-Term ICR] of “a-” [Excellent] of Argus Insurance Company Limited and Bermuda Life Insurance Company Limited. Both companies are subsidiaries of Argus Group Holdings Limited [Argus Group] [BSX: AGH.BH]. Concurrently, AM Best has revised the under review status to positive from developing for the Long-Term ICR of “bbb-” [Good] of Argus Group. All companies are domiciled in Hamilton, Bermuda.
“The Credit Ratings [ratings] reflect Argus Group’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
“The under review rating action on these credit ratings follows Argus Group’s and BF&M Limited’s [BF&M] joint announcement on June 28, 2024, that the two companies have signed a definitive agreement in which BF&M and Argus Group will combine in an all-stock transaction. Should this transaction close as announced, Argus Group likely would benefit from the combined financial strength and improved product and market diversification of the combined entity.
“Prior to completion of the merger, Argus Group, though a subsidiary, intends to complete its acquisition of a 36.9% stake in BF&M from Camellia Plc [Camellia] in accord with a previous binding agreement. AM Best’s initial expectation is that the combined entity’s balance sheet strength assessment will be strongest — the assessed level currently given to Argus Group and BF&M individually — despite the issuance of debt to facilitate the acquisition of BF&M shares from Camellia.
“The ratings will remain under review with positive implications pending regulatory approvals from the Bermuda Monetary Authority and the purchase of BF&M shares by Argus Group. This is expected to occur late in the fourth quarter of 2024.”
In a separate statement, they 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 ICR] of “a” [Excellent] of BF&M Life Insurance Company Limited, BF&M General Insurance Company Limited and Island Heritage Insurance Company, Ltd. [Island Heritage] [Cayman Islands]. AM Best has also placed under review with developing implications the Long-Term ICR of “bbb” [Good] of the parent company, BF&M Limited [BF&M]. All companies are domiciled in Hamilton, Bermuda, unless otherwise stated.
“The Credit Ratings [ratings] reflect BF&M’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
“The ratings have been placed under review following BF&M’s and Argus Group Holdings Limited’s [Argus Group] joint announcement on June 28, 2024, that the two companies have signed a definitive agreement in which BF&M and Argus Group will combine in an all-stock transaction. Should this transaction close as announced, AM Best expects BF&M to maintain its current financial strength and operating performance as part of a combined BF&M-Argus Group entity and likely benefit from improved geographic and product diversification, as well as a more-favorable market position. It is currently presumed that the combined organization would provide credit enhancement to the debt expected to be issued by Bermuda Life Insurance Company Limited, a subsidiary of Argus Group, to finance the purchase of BF&M shares from Camellia Plc. This additional leverage is included in AM Best’s expectation of continued balance sheet strength.
“The ratings will remain under review with developing implications pending regulatory approvals from the Bermuda Monetary Authority, which is expected in late 2024.”
