Egan-Jones Ratings No Longer Recognized by Bermuda Regulator

Egan-Jones Ratings Co. has been removed from the Bermuda Monetary Authority’s list of recognized credit ratings providers, according to recent guidance from the watchdog.

The regulator is no longer listing Egan-Jones among the ratings providers that can inform an insurer’s solvency capital requirements in the region, something it had done for several years beforehand. Egan-Jones had been listed alongside others such as Standard & Poor’s, Moody’s and KBRA.

“We are looking into this issue as it has just come to our attention,” an Egan-Jones spokesperson said in an emailed statement. “Our performance and compliance remain superb and we are confident we can resolve this issue and address any concerns.”

The spokesperson said Egan-Jones has no clients headquartered in Bermuda at this time. The BMA did not respond to requests for comment.

Egan-Jones has been facing scrutiny over the past year as regulators seek to better understand the risks of insurers’ increasing exposure to private capital markets. Around a third of the $6 trillion invested by US life insurers was allocated to various forms of private credit, Moody’s Ratings has said.

The role that credit ratings have played in the industry’s boom has been in the spotlight over the past year. Bank of England Governor Andrew Bailey recently told UK lawmakers he’d had conversations with industry figures who assured him that “everything was fine in their world, apart from the role of the rating agencies.” Soon after, UBS Group AG Chairman Colm Kelleher said he’s beginning to “see huge rating agency arbitrage in the insurance business.”

Meanwhile, the US Securities and Exchange Commission has been probing Egan-Jones’ business practices, with SEC enforcement attorneys looking into whether the firm and some of its senior executives exerted improper commercial influence on its ratings procedures, Bloomberg previously reported.

An Egan-Jones representative said at the time that the firm takes compliance “very seriously and remains in good standing with our regulator.” He added that the business “remains dedicated to serving our clients and the global capital markets.”

Egan-Jones built a dominant position early in the rapidly expanding private credit market as bigger ratings agencies focused on serving the larger public sectors. The firm has touted itself as one of the key raters in private credit, and in 2024 rated more than 3,000 private credit investments with about 20 analysts.

In the BMA’s latest capital and solvency handbook for insurers, issued last month, the regulator names the recognized credit ratings firms as S&P, Moody’s, Fitch, AM Best, DBRS, Japan Credit Rating Agency and KBRA. The previous year, and the year before that, it had also named Egan-Jones alongside these firms.

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