Argo Group ratings affirmed
Argo Group, which was bought by Bermuda-based Brookfield Re last year, has had it’s A- financial strength rating affirmed by AM Best. The outlook is positive.
Argo, which was founded in Bermuda and has a substantial insurance operations on the island. Was placed under review with developing implications following the purchase by Brookfield Re last year.
AM Best said the ratings reflected Argo Group’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.
“The ERM assessment reflects Argo Group’s improved risk management practices, governance and culture and fully remediated financial reporting concerns,” AM Best said. “The revision of the operating performance assessment to marginal reflects challenges tied to operating profitability reported as Argo Group works through various underwriting actions and works to reduce volatility across core lines of business.
“Despite these challenges, Argo Group is committed to implementing additional controls and is taking a disciplined approach to writing new business. “
The ratings agency said the underwriting revisions had “tempered premiums written”, but should lead to a return to profitability and ensure future capital growth.
“The positive outlooks reflect the belief that these operating results should improve within the intermediate term,” AM Best said. “Furthermore, the balance sheet and holding company assessments are supported by the strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and appropriate leverage and coverage ratios.”
AM Best said the ratings were initially placed under review with developing implications last February and said it intended to meet with Argo Group’s management shortly.
“These ratings were reviewed in response to the recently announced completion of the acquisition of Argo Group and its subsidiaries by Brookfield Reinsurance,” said. “AM Best expects to meet with management in the near term to complete its assessment of Argo Group’s post-acquisition rating fundamentals.”
Brookfield Re completed its $1.1 billion all cash purchase of Argo on November 16. At the same time, it announced it had appointed Jessica Snyder as chief executive officer, succeeding chairman and CEO Thomas Bradley.
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