Local insurance company the Argus Group has had its financial strength rating of A affirmed by ratings agency A.M. Best Co., which also said the outlook for the rating is stable.

Best said the affirmation recognised Argus' consistently strong operating performance, excellent capitalisation, experienced and focused management team and its leading market share in the Bermudian health care market.

"The group benefits from the favourable regulatory environment where health care coverages must be provided to all employed persons by Bermuda companies, and litigation risk is significantly mitigated as the Bermuda legal system is based on British law," Best said. "Additionally, the effects of reserving and pricing fluctuations are limited due to the Bermudian government's mandate that health care service providers are restricted to annual rate changes only." Best also noted that the high level of reinsurance Argus carries against hurricane risk reduced the insurer's exposure, as evidenced by minimal net losses from Hurricane Fabian in September 2003 and again in September 2006 from Hurricane Florence.

Best also welcomed Argus's purchase in 2004 of all the shares of Norwich Union International Insurance Limited (NUIIL), saying the move both greatly increased the group's property/casualty net premium volume and diversified its exposure to hurricanes.

"These advantages are partially offset by Argus' continued dependence upon the insular and mature Bermudian economy, which limits the prospects for growth of the domestic insurance market," Best said. "Ultimately, many factors related to the issue of economic scarcity are inherent in Bermuda's economy and lead to high expense loads across all lines of business. Argus also remains highly susceptible to catastrophe events because of Bermuda's geographic location."