Insurance companies file lawsuit against rating agency for risk associated with bidder 777 for Everton acquisition

Two US insurers, Atlantic Coast Life Insurance and Sentinel Security Life Insurance, have taken legal action against rating agency AM Best in an attempt to prevent a downgrade of their financial strength rating. The dispute stems from their exposure to 777 Partners, the bidder for Everton football club.

The insurers, both part of US insurance group A-Cap, filed a lawsuit in New Jersey last week to halt AM Best from issuing the planned downgrade from B++ to B-. They accused the rating agency of being fixated on 777 Re, the Bermuda reinsurer linked to the Miami investment group.

A-Cap has been working to reclaim assets previously transferred to 777 Re through reinsurance transactions, following concerns raised by regulators and AM Best about the quality of assets held by the reinsurer. The insurers argued that the downgrade could jeopardize their business and accused AM Best of using flawed methods and false data in their assessment.

The scrutiny on 777 Re has also impacted 777 Partners, which has investments in football clubs around the world, including Everton. The Premier League has yet to approve 777 Partners’ takeover of the club, citing conditions such as the repayment of £158mn in debt related to a new stadium.

Despite the challenges, 777 Partners has provided financial support to Everton to meet working capital requirements. The ongoing legal battle between the insurers and AM Best highlights the complexities of financial assessments in the insurance industry and the broader implications for businesses involved in high-profile transactions like the Everton takeover.