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FOR IMMEDIATE RELEASE
OLDWICK - JULY 01, 2015 11:13 AM (EDT)
A.M. Best has upgraded the issuer credit ratings (ICR) to "bbb+" from "bbb" and affirmed the financial strength rating of B++ (Good) of Argus Insurance Company Limited (Argus Insurance) and Bermuda Life Insurance Company Limited (Bermuda Life), both of which are subsidiaries of Argus Group Holdings Limited (the Argus Group) [BSE:AGH.BH]. Concurrently, A.M. Best has upgraded the ICR to "bb+" from "bb" for the Argus Group. The outlook for all ratings is stable. All companies are domiciled in Hamilton, Bermuda.
The ratings upgrade reflects the Argus Group's consolidated premium and earnings growth, the strengthening of its capital metrics and improvement of its asset quality. On a consolidated basis, the Argus Group's underwriting and net income results improved over the past three years driven primarily by positive earnings in the health insurance segment. In addition, the Argus Group has been transitioning its investment portfolio to higher quality lower risk assets. As a result, asset valuation write-downs have been minimal, and the stabilization of the investment portfolio has resulted in stronger investment income. Furthermore, the transition of the investment portfolio also is achieving better asset-liability matching. The positive net income has allowed the organization to strengthen its capital level through retained earnings. Bermuda Life (the organization's domestic life, annuity, pension and health insurance subsidiary) reported strong net income results, which were driven primarily by a lower loss ratio for its health business achieved through various cost containment initiatives. The favorable earnings, as well as the amalgamation with Somers Isles Insurance Company in 2013, has strengthened Bermuda Life's capital level. Furthermore, in order to increase the quality of assets at Bermuda Life, the previously high level of intercompany receivables has been reduced substantially though dividends and asset transfer from an affiliate. Argus Insurance, the group's domestic property/casualty writer, continues to record favorable underwriting and overall results in non-catastrophe years and maintains more than adequate risk-adjusted capitalization.
Offsetting factors include a history of significant investment losses and capital volatility. In addition, Argus Insurance's fiscal year-end 2015 results were negatively impacted by losses incurred from Hurricanes Fay and Gonzalo in October 2014. Furthermore, although the Argus Group is gradually growing its European property/casualty operation, the geographic diversification of consolidated premium and earning remains low.
This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best's Ratings & Criteria Center.
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