A.M. Best Affirms Credit Ratings of Argo Group International Holdings, Ltd. and Subsidiaries
November 16 2016 - 4:37PM
Business Wire
A.M. Best has affirmed the Financial Strength Rating
(FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings
(Long-Term ICRs) of “a” of Argo Re Ltd. (Argo Re) (Pembroke,
Bermuda) and its subsidiaries. A.M. Best also has affirmed the
Long-Term ICR of “bbb” and the Long-Term Issue Credit Ratings
(Long-Term IR) of the parent holding company, Argo Group
International Holdings, Ltd. (Argo Group) (Pembroke, Bermuda)
[NASDAQ:AGII]. Concurrently, A.M. Best has affirmed the Long-Term
ICR of “bbb” and the Long-Term IR of “bbb” on $143.75 million 6.5%
senior unsecured notes due 2042 of Argo Group US, Inc. (Argo
US) (headquartered in San Antonio, TX). These senior notes are
fully and unconditionally guaranteed by Argo Group. The outlook of
these Credit Ratings (ratings) is stable. (See below for a detailed
listing of the companies and ratings.)
The rating affirmations reflect Argo Re’s solid capitalization,
historically strong operating performance and robust enterprise
risk management program. The ratings also reflect the diversified
insurance and reinsurance platforms within the Argo group of
companies and the financial flexibility afforded by its publicly
traded parent, Argo Group.
Argo Group announced its acquisition of Ariel Re (Holdings)
Limited (Ariel Re) on Nov. 13, 2016, for $235 million in cash. The
transaction is expected to close in the first quarter of 2017. The
potential effect of the transaction and the related integration
plans were considered in the rating decision.
These positive rating factors are partially offset by execution
risk related to international expansion, and in particular, the
future integration of Ariel Re. Also partially offsetting the
rating strengths is potential volatility in the group’s
underwriting results due to weather-related losses, as well as
competitive pressures and the effects from sluggish economic
conditions, which includes low investment yields.
Argo Re utilizes demonstrated product expertise in niche focus
areas, proven solid underwriting fundamentals across numerous lines
of coverage and a strong business profile focused on writing
surplus lines and specialty commercial business. These are managed
holistically with respect to capital, investment strategy and
market presence. The acquisition of Ariel Re is expected to enhance
the group’s presence in the Lloyd’s market.
Key drivers that could lead to upward movement in the ratings
over the long term would be the ability to further enhance the
underwriting and operating results of Argo Re with an accompanying
increase in risk-adjusted capital.
Downward pressure on the ratings or a revision of the rating
outlooks to negative could result if there is material
deterioration in the organization’s underwriting performance due to
material adverse loss reserve development or outsized losses in
relation to its peer group that results in a material decline in
risk-adjusted capital.
The FSR of A (Excellent) and the Long-Term ICRs of “a” have been
affirmed for Argo Re Ltd. and its following
subsidiaries:
- ArgoGlobal SE
- Argonaut Great Central Insurance
Company
- Argonaut Insurance Company
- Argonaut Limited Risk Insurance
Company
- Argonaut-Midwest Insurance
Company
- Argonaut-Southwest Insurance
Company
- ARIS Title Insurance
Corporation
- Colony Insurance Company
- Peleus Insurance Company
- Colony Specialty Insurance
Company
- Rockwood Casualty Insurance
Company
- Select Markets Insurance
Company
- Somerset Casualty Insurance
Company
The following indicative Long-Term IRs available under various
shelf registrations have been affirmed:
Argo Group International Holdings. Ltd. –-- “bbb” on
senior unsecured debt-- “bbb-” on subordinated debt-- “bb+” on
preferred stock
Argo Group US, Inc. –-- “bbb” on senior unsecured debt--
“bbb-” on subordinated debt
Argo Group Statutory Trust –-- “bb+” on preferred
stock
The following Long-Term IR has been affirmed:
Argo Group US, Inc. –-- “bbb” on $143.75 million 6.5%
senior unsecured notes, due 2042
This press release relates to Credit Ratings that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please see A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20161116006620/en/
A.M. BestSusan Molineux, +1-908-439-2200, ext.
5829Senior Financial
Analystsusan.molineux@ambest.comorChristopher Sharkey,
+1-908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJennifer Marshall,
+1-908-439-2200, ext.
5327Directorjennifer.marshall@ambest.comorJim Peavy,
+1-908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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