BF&M has cancelled its poison pill, just days after agreeing to a strategic partnership that could turn the table on Argus.

In an announcement to the Bermuda Stock Exchange, BF&M said: “Following careful evaluation and with the company’s strategic initiatives in mind, the board has determined that it is in the best interests of the company and all stakeholders for the plan to expire effective October 13, 2023.”

The insurer adopted the shareholder rights plans on July 20.

Under the terms of the plan, if any party buys more than 15 per cent of the company each shareholder – other than the acquirer – can purchase another share per share owned at a discount, or the board can simply give them a share of common stock.

This would dilute the ownership stake of the acquirer and reduce the level of control the acquirer can achieve, making a deal far less attractive, potentially scuttling it.

The plan was put into effect after Argus, a competing insurer, agreed to buy more than a third of the insurer but before the purchase of the shares was finalised.

BF&M has now signed a strategic partnership with Equilibria, the largest shareholder of Argus. Under the terms of the deal, BF&M gets the right but does not have the obligation to buy 13.7 per cent stake of Argus and agrees to invest in a fund that owns 16.3 per cent of Argus.

In additions, Equilibria is acquiring BF&M’s headquarters building.

The agreement opens the possibility of BF&M owning a significant percentage of Argus.

Following the announcement of the deal, AM Best reaffirmed BF&M’s credit rating but noted that it was closely watching the situation for possible corporate governance issues.

The ratings agency wrote: “The recent announcement by BF&M regarding its strategic partnership with Equilibria Capital Management to engage in a merger defence strategy, in addition to the board’s adoption of a shareholder rights plan in response to Argus’s pending acquisition of a large minority stake in BF&M, continues to imply less-than-full alignment between the board and other key stakeholders.

“AM Best will continue to monitor the status of this transaction and may take rating action if the exercise of BF&M’s exclusive option to purchase an additional 13.7 per cent of Argus is determined to be material to its business strategy, corporate governance or balance sheet strength.”