Reinsurance News

Argo exploring options including sale and merger

28th April 2022 - Author: Pete Carvill

Argo has said its board of directors has begun to explore ‘strategic alternatives’ including a potential sale, merger, or other strategic transaction.

argo globalThe board also announced the postponement of Argo’s 2022 annual general meeting of shareholders until the second half of this year. The board believes it is in the best interests of all shareholders for the company to conduct a strategic review process prior to holding the annual meeting.

Thomas Bradley, chairman of the board of directors, said: “Over the last year, Argo’s board of directors and executive leadership team have taken decisive actions to strengthen the company by pursuing profitable growth, reducing volatility and employing disciplined expense management. The board believes now is an opportune time to explore a range of potential strategic alternatives to maximize shareholder value.”

This announcement comes just over two weeks after AM Best revised down its assessment of the group’s balance sheet, which it said reflected a lower Best Capital Adequacy Ratio (BCAR) score on the back of adverse reserve development.

On February 9th, 2022, Argo pre-announced that up to $140m of net adverse prior year reserve development, as well as some non-operating charges, would be included in its fourth-quarter 2021 results.

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The reserve development had a negative impact on the group’s risk-adjusted capitalisation, as measured by AM Best’s BCAR, resulting in a lower BCAR score, which no longer supports an assessment level of strongest.

In late February, Argo reported a net loss of almost $119m for the fourth quarter of 2021, as its combined ratio weakened on the back of adverse prior year reserve development and non-operating charges.

Argo also made headlines on this site in recent weeks when CEO Kevin Rehnberg stepped down due to health reasons and was replaced by Bradley.

Argo has retained Goldman Sachs as its financial advisor and Skadden, Arps, Slate, Meagher, & Flom as its legal counsel to assist in the review process.

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