Mark E. Watson III, Chief Executive Officer (CEO) of Argo Group International Holdings, Ltd. has claimed that current market conditions and the pace of technological change in the re/insurance industry are conducive to mid-sized companies such as Argo.
In a Letter to Shareholders, Watson said that he believed the industry was changing radically and forever, with future success dependent on technological innovation and integration.
“We believe the key to doing these things well lies in using our size advantageously,” Watson stated. “We also think the time is right to be precisely our size, because we are both financially stable and operationally nimble.”
Watson’s comments came alongside Argo’s mid-year 2018 results, which saw the company grow its gross written premiums by 9.9% to $1.41 billion, up from $1.28 billion for the same period last year.
Argo’s net earned premium for H1 2018 was also up 6.9% at $832.4 million, while its combined ratio of 96.1% represented a 1.7 percentage point improvement, resulting in a net income of $66.6 million.
“Our size allows us to go in and out of markets,” Watson continued, “for the benefit of our shareholders, and also to take our available capital and put it quickly into opportunities as they show up. I believe that our results in the first half of this year are beginning to prove the merit of that thinking.”
Watson’s comments contrast with the trend of large M&A deals seen so far over 2018, such as AXA’s $15.3 billion acquisition of XL Group and AIG’s $5.6 billion acquisition of Validus, as well as the views of analysts at agencies such as Fitch Ratings and S&P Global.
In the Letter to Shareholders, Watson also claimed that data and user connection will form key components of the industry’s innovative development, and said that Argo was striving to better harness both internal and external data to support its underwriting decisions.
Additionally, a recent survey of brokers conducted by Argo indicated that the re/insurance industry may face a talent crisis in the coming years due to a lack of trained replacements for retiring industry veterans.
Watson said that initiatives like the company’s ‘Ascend With Argo’ program will aim to overcome this challenge and position Argo for future success by providing ongoing educational opportunities that help early-career producers thrive in their careers and build partnerships.
