AM Best has revised the outlooks to stable from negative and affirmed the financial strength rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Argo Re and its subsidiaries.
The rating agency has also revised the outlooks to stable from negative and affirmed the Long-Term ICR of “bbb-” and the Long-Term Issue Credit Ratings (Long-Term IR) of the parent, Argo Group International Holdings.
Additionally, AM Best has revised the outlooks to stable from negative and affirmed the Long-Term ICR of “bbb-” and the Long-Term IR of Argo Group US.
The ratings reflect Argo Re’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management.
The rating actions consider Argo’s improved balance sheet strength and risk-adjusted capital adequacy from replacing short-term loans with more permanent forms of hybrid capital, as well as the alleviating of some concerns around potential reserve development from Syndicate 1200 through its recent reinsurance-to-close (RITC) transaction covering Argo’s net technical provisions in 2017 and prior years.
The ratings also acknowledge Argo’s fourth-quarter 2020 results, highlighted by its improved underwriting margin compared with the previous year despite incurring higher losses from catastrophe events and COVID-19.
AM Best also expects continued improvement following Argo’s recently completed strategic initiatives to exit some of its non-profitable, non-strategic businesses. Going forward, AM Best expects Argo to maintain its strongest level of balance sheet strength, adequate operating performance and neutral business profile.