AM Best has placed the financial strength rating of Argo Re under review with negative implications, following the sudden departure of its CEO and the recent attention of the Securities and Exchange Commission (SEC).
Argo Re has a rating of A (excellent).
“These actions take into consideration the sudden departure of Mark Watson, Argo's CEO, but more importantly, concerns related to a recent subpoena issued by the SEC as it relates to the non-disclosure of certain compensation-related perquisites involving Argo and its departed CEO,” AM Best said.
AM Best affirmed Argo Group's ratings on Oct. 9, but said it was unaware that the SEC subpoena had been issued to Argo some time before this date. “Once discovered, Argo management portrayed this inquiry to AM Best as non-material, and as a formal request for additional documentation,” AM Best added.
AM Best also pointed to the potential for further shareholder discontent, which it warned could result in management and board distraction, and the emergence of class action lawsuits and renewed shareholder activist activity.
AM Best, Argo Re, Mark Watson