Report Says Bermuda's Mutual Risk Close To Acquiring Financial Services Provider Valmet

Royal Gazette

03 January 2001

This story is reproduced by kind permission of the Royal Gazette at http://www.accessbda.bm

Bermuda-registered Mutual Risk Management Ltd. is close to clinching a deal for financial services provider Valmet Group, according to an offshore finance newsletter.

A news bulletin from Offshore Alert on Friday said Mutual Risk is expected to complete the purchase by January 2.

Valmet offers corporate and trust services, tax planning and company management services in eight different jurisdictions, Offshore Alert said.

In the meantime, A.M. Best & Co. has lowered the financial strength rating of the three members of the Legion Insurance Group - Legion Insurance Co., Legion Indemnity Co. and Villanova Insurance Co. - to A- (Excellent) from A (Excellent).

This rating action also applies to the five members of the IPC Group. Legion Insurance Group and I.P.C. Group are core insurance subsidiaries of Mutual Risk Management, Ltd., providing policy issuance and rent-a-captive facilities, respectively, to mid-sized US corporations and associations.

AM Best said it has "long-term concerns regarding Legion's exposure to a high level of reinsurance recoverables, operational strain caused by rapid growth in programme business over the past few years, the ongoing need to augment capital in support of rapid growth and reduced cash flow stemming from disputed reinsurance recoverables".

Best said that over the past few years, Mutual Risk Management has significantly changed its business mix towards programme business in order to offset decline in its core Corporate Account programmes. The rapid growth in programme business has resulted in significant reinsurance recoverables requiring additional capital and an increase in reinsurance disputes, which negatively affect cash flow.

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