AM Best Affirms Credit Ratings Of Argo Group

October 12, 2019

AM 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. and its subsidiaries.

AM 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].

Concurrently, AM 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.

A statement from the ratings agency said, “The ratings reflect Argo Group’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management [ERM].

“Argo Group’s balance sheet strength reflects its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio [BCAR], at each of the various value at risk levels.

“This also takes into consideration the effective use of third-party capital and enhanced financial flexibility as a publicly traded company listed on the New York Stock Exchange, with ready access to global capital markets, and the strength of Argo’s loss reserves as reflected in its long history of favorable reserve development, although there was some volatility in the first half of 2019 from its international segment.

“The group’s operating performance is generally in line with its peers when considering its specialty U.S. insurance operations and international platforms. This is tempered somewhat by the group’s expense ratio, which, although improving, is consistently higher than peers.

“The ratings also consider the group’s diversified operations around the globe, its multiple product offerings and multi-prong distribution strategy, as well as its investment in technology and initiatives to innovate and optimize efficiency. The ratings also acknowledge the breadth and maturity of Argo Group’s ERM programs, which is comprehensive and well-embedded in its operation, and have been used to manage risk and setting business strategy.”

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