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Press release from Business Wire

A.M. Best Affirms Ratings of Argo Group International Holdings, Ltd. and Its Subsidiaries

Monday, August 26, 2013

A.M. Best Affirms Ratings of Argo Group International Holdings, Ltd. and Its Subsidiaries

15:59 EDT Monday, August 26, 2013

OLDWICK, N.J. (Business Wire) -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a” of Argo Re Ltd. (Argo Re) (Hamilton, Bermuda) and its subsidiaries. A.M. Best also has affirmed the ICR and debt ratings of “bbb” of the parent holding company, Argo Group International Holdings, Ltd. (Argo Group) (Hamilton, Bermuda) (NASDAQ:AGII). Concurrently, A.M. Best has affirmed the ICR of “bbb” and the debt rating of “bbb” on $143.75 million 6.5% senior unsecured notes due 2042 of Argo Group US, Inc. (Argo US) (San Antonio, TX). These senior notes are fully and unconditionally guaranteed by the Argo Group. The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)

The rating affirmations reflect Argo Re's solid overall capitalization, management's product expertise in niche focus areas, historically strong operating performance and favorable reserve development. The ratings also consider Argo Group's profitability in 2012 and in the first half of 2013, its conservative financial leverage (total debt-to-total capital) and the financial flexibility that Argo Re derives from Argo Group. Over the near term, A.M. Best expects that Argo Re's results should continue to be positively influenced by actions management has undertaken to reduce its worldwide property exposure and improve overall operational efficiencies.

Partially offsetting these positive rating factors is the execution risk associated with Argo Group's expansion into new territories such as Brazil. A.M. Best recognizes that management has been addressing this risk and that the integration of acquisitions and re-engineering of related businesses is complete. Management's ability to continue to execute on this strategy without significantly disrupting its current operations will be considered in A.M. Best's future rating evaluations. Additional offsetting rating factors include competitive pressures, low new money investment yields, the effects from weak economic conditions and Argo Group's elevated expense structure.

A.M. Best believes that Argo Re and its subsidiaries are well positioned at their current rating levels. Key drivers that could lead to downward rating movement include material deterioration in the organization's underwriting and/or operating performance, material adverse loss reserve development and/or a material decline in risk-adjusted capital.

The FSR of A (Excellent) and 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
  • Colony Insurance Company
  • Colony National Insurance Company
  • Colony Specialty Insurance Company
  • Rockwood Casualty Insurance Company
  • Select Markets Insurance Company
  • Somerset Casualty Insurance Company

The following indicative debt ratings 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 methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit

Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Co.
Joseph Roethel, 908-439-2200, ext. 5630
Assistant Vice President
Daniel J. Ryan, 908-439-2200, ext. 5325
Vice President
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations

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