Best Affirms BF&M Limited and Affiliates ‘A’ Rating

April 5, 2006

A.M. Best Co. announced that it has affirmed the financial strength rating (FSR) of “A” (Excellent) to Bermuda-based BF&M Limited and its operating affiliates with a stable outlook.

“These rating actions recognize BF&M’s consistently strong operating performance, excellent capitalization, experienced and focused management and its substantial market share in the Bermudan healthcare market,” said Best. “The group benefits from the favorable regulatory environment where healthcare coverages must be provided by Bermuda companies. Healthcare service providers are limited to annual rate changes.

“Additionally,” Best noted, “BF&M is the largest property/casualty writer in Bermuda on a gross premiums written basis. This business is significantly reinsured to alleviate catastrophic risk, which was evidenced by minimal net losses from Hurricane Fabian in September 2003. The Bermuda legal system significantly mitigates litigation risk.

“In 2005, BF&M expanded its property/casualty market through the purchase of over 51 percent of the shares of the Insurance Corporation of Barbados Limited (ICBL). This action not only greatly increases the group’s premium volume, but also simultaneously diversifies its exposure to hurricanes. Simultaneously, Bermuda International Insurance Services Limited was created to market life insurance solutions to affluent individuals on a global basis, thus broadening the group’s life insurance base.”

However Best also indicated that these “advantages are partially offset by BF&M’s dependence upon the insular and mature Bermudan economy, which limits the prospects for growth of the domestic insurance market. 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. BF&M also remains highly susceptible to catastrophe events because of Bermuda’s geographic location.”

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