Ratings agency AM Best has placed specialty re/insurer Argo under review with negative implications due to “diminished credibility” among shareholders.
In particular, AM Best questions the decision to keep an SEC inquiry confidential while undergoing an extensive internal investigation on compensation governance matters.
Another concern for AM Best are the pending conclusions of the SEC investigation and the potential for the inquiry to extend beyond Argo’s departed Chief Executive Officer Mark E. Watson III.
AM Best also factors in the potential for further shareholder discontent, which could lend itself to management and board distraction, the emergence of class action lawsuits and renewed shareholder activist activity.
Specifically, AM Best placed under review with negative implications the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of Argo Re Ltd. (Argo Re) (Pembroke, Bermuda) and its subsidiaries.
AM Best also has placed under review with negative implications the Long-Term ICR of “bbb” and the Long-Term Issue Credit Ratings (Long-Term IR) of the parent, Argo Group International Holdings, Ltd.
Additionally, AM Best has placed under review with negative implications the Long-Term ICR of “bbb” and the Long-Term IR of Argo Group US.
The ratings, AM Best adds, are likely to remain under review pending follow up discussions with management and the conclusion of the SEC inquiry and its findings.