A.M. Best Affirms Ratings of Argo Group International Holdings, Ltd. and Its Subsidiaries

  A.M. Best Affirms Ratings of Argo Group International Holdings, Ltd. and Its

Business Wire

OLDWICK, N.J. -- August 26, 2013

A.M. Best Co. has affirmed the financial strength rating (FSR) of A
(Excellent) and issuer credit ratings (ICR) of “a” of Argo Re Ltd. (Argo Re)
(Hamilton, Bermuda) and its subsidiaries. A.M. Best also has affirmed the ICR
and debt ratings of “bbb” of the parent holding company, Argo Group
International Holdings, Ltd. (Argo Group) (Hamilton, Bermuda) (NASDAQ:AGII).
Concurrently, A.M. Best has affirmed the ICR of “bbb” and the debt rating of
“bbb” on $143.75 million 6.5% senior unsecured notes due 2042 of Argo Group
US, Inc. (Argo US) (San Antonio, TX). These senior notes are fully and
unconditionally guaranteed by the Argo Group. The outlook for all ratings is
stable. (See below for a detailed listing of the companies and ratings.)

The rating affirmations reflect Argo Re’s solid overall capitalization,
management’s product expertise in niche focus areas, historically strong
operating performance and favorable reserve development. The ratings also
consider Argo Group's profitability in 2012 and in the first half of 2013, its
conservative financial leverage (total debt-to-total capital) and the
financial flexibility that Argo Re derives from Argo Group. Over the near
term, A.M. Best expects that Argo Re’s results should continue to be
positively influenced by actions management has undertaken to reduce its
worldwide property exposure and improve overall operational efficiencies.

Partially offsetting these positive rating factors is the execution risk
associated with Argo Group’s expansion into new territories such as Brazil.
A.M. Best recognizes that management has been addressing this risk and that
the integration of acquisitions and re-engineering of related businesses is
complete. Management’s ability to continue to execute on this strategy without
significantly disrupting its current operations will be considered in A.M.
Best’s future rating evaluations. Additional offsetting rating factors include
competitive pressures, low new money investment yields, the effects from weak
economic conditions and Argo Group’s elevated expense structure.

A.M. Best believes that Argo Re and its subsidiaries are well positioned at
their current rating levels. Key drivers that could lead to downward rating
movement include material deterioration in the organization’s underwriting
and/or operating performance, material adverse loss reserve development and/or
a material decline in risk-adjusted capital.

The FSR of A (Excellent) and ICRs of “a” have been affirmed for Argo Re Ltd.
and its following subsidiaries:

  *ArgoGlobal SE
  *Argonaut Great Central Insurance Company
  *Argonaut Insurance Company
  *Argonaut Limited Risk Insurance Company
  *Argonaut-Midwest Insurance Company
  *Argonaut-Southwest Insurance Company
  *Colony Insurance Company
  *Colony National Insurance Company
  *Colony Specialty Insurance Company
  *Rockwood Casualty Insurance Company
  *Select Markets Insurance Company
  *Somerset Casualty Insurance Company

The following indicative debt ratings available under various shelf
registrations have been affirmed:

Argo Group International Holdings, Ltd.—

-- “bbb” on senior unsecured debt

-- “bbb-” on subordinated debt

-- “bb+” on preferred stock

Argo Group US, Inc.—

-- “bbb” on senior unsecured debt

-- “bbb-” on subordinated debt

Argo Group Statutory Trust—

-- “bb+” on preferred stock

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at

A.M. Best Company is the world's oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.

       Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Co.
Joseph Roethel, 908-439-2200, ext. 5630
Assistant Vice President
Daniel J. Ryan, 908-439-2200, ext. 5325
Vice President
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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