AM Best Affirms Credit Ratings of Argus Group Holdings Limited and Its Subsidiaries
OLDWICK, N.J.–(BUSINESS WIRE)–#insurance—AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) 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 affirmed the Long-Term ICR of “bbb-” (Good) of Argus Group. All companies are domiciled in Hamilton, Bermuda. The outlook of these Credit Ratings (ratings) is stable.
The 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.
Argus Group’s risk-adjusted capitalization is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), as of fiscal year-end 2021. This is in line with fiscal-year 2020, and was driven primarily by its earnings retention net of dividends and share repurchases. For several years, the group has made significant progress on reducing its exposure to illiquid assets and redeploying capital into high quality and marketable securities to increase liquidity and add financial flexibility. This transition is mostly complete as the vast majority of the portfolio is allocated to investment grade fixed income and cash and short-term investments. Exposures to Bermudian equities and property investments are minimal with the sale of a large Bermudian property holding in 2021. AM Best anticipates that the Argus Group will continue to prudently manage its catastrophe risk exposure through its comprehensive reinsurance program to maintain the balance sheet strength assessment of strongest over the medium term.
Reported operating gains in 2021 were favorable, albeit down slightly year over year, and through the period that ended Sept. 30, 2021, results exceeded projections. Favorable performance through the first six months of fiscal-year 2022 was due to better-than-expected premium growth in the employee benefits segment and favorable operating expenses enterprise-wide. A challenge for the company continues to be premium development within Bermuda due to health reform measures and extending its reach into other markets. Argus Group’s management also has been positioning itself to actively grow its fee business in the wake of Bermuda’s health reform measures, which were enacted in mid-2019. The acquisition of two primary care physician practices in 2020 hedges risks to Argus Group’s health insurance business from Bermuda’s health reform and further diversifies the group’s revenue. This vertical market strategy demonstrates Argus Group’s adaptability to manage change in the market. The growing fee revenue streams from health providers, pension management and brokerage have grown significantly over the past number of years and now represent a material portion of enterprise revenue.
Health reform policy changes were squarely at the center of the Bermuda government’s agenda in 2019; however, the second phase of this health reform has been tabled without any clear indication of movement toward a national plan. The government has focused on management of the pandemic and its economy amid a tourism industry shut-down in 2020, with intermittent impacts during 2021. A complete change to the national health plan could place pressure on the company’s ratings; however, Argus still maintains its strong position as a provider of employee benefits and operates as a leading provider of property, auto and employer’s liability insurance. AM Best acknowledges Argus Group’s drive to expand and diversify premium and earnings. Over the last several years, geographic diversification has increased through its property/casualty segment’s growing presence in Malta and Gibraltar, as well as from the acquisition of the provider practices.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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