Argo
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Slipstream will be available to marine, cargo and logistics UK clients.
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Current CEO Thomas Bradley, who announced his intention to retire on the closure of the deal, will receive a one-time cash bonus of $1.2mn.
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The appointment follows that of Williams and Drakontaidis as head of contract surety and head of commercial surety respectively.
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The US operations drove the net adverse development with a $25.4mn hit, up from $6.7mn in Q2 2022, attributable to business lines the company has exited.
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Argo has also hired former RLI surety head Greg Chilson as an adviser.
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The charge was related to a reassessment of potential claims in professional lines, mostly from accident years 2019 and prior, and to losses from businesses Argo has exited.
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The companies expect to complete the transaction in the second half of the year, subject to regulatory approvals and customary closing conditions.
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Argo’s first bids included an implied firm value of $49.71 per Argo common share and $40 per share in cash, among others.
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The firm’s US unit recorded $36.6mn of net unfavorable development in Q4 2022, compared with a $121.6mn charge in Q4 2021.
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S&P said the change reflected uncertainty around Argo’s risk appetite following its $1.1bn acquisition by Brookfield Reinsurance.
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The member joined the board in August 2022, two and a half years after ending his activist campaign against the carrier’s management.
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The ratings agency has placed under review with developing implications Argo’s A- financial strength ratings, as well as its credit ratings.
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The reinsurer said in its Q4 earnings call that Argo’s takeover further diversifies its operations and adds a foundational piece to its expanding P&C activity in the US.
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The consideration represents a 48.7% premium to Argo’s share price before the sale of its Lloyd’s business.
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The New York-listed carrier has completed its $125mn deal.
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Enstar is conducting due diligence around taking on the rest of the Argo back book.
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Activist investor Capital Returns had nominated Ron Bobman and David Michelson, but withdrew the nominations on Monday.
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The carrier has called this month’s vote ‘a critical moment in Argo’s history’.
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The activist investor’s statement comes as a reaction to Argo’s message to investors last Friday ahead of the carrier’s annual shareholder meeting.
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The carrier is urging shareholders to appoint all seven of its nominees to the board in an annual meeting next month, amid activist investor pressure.
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The Bermudian claimed Ron Bobman and David Michelson’s directorship would ‘diminish’ the board’s capabilities and expertise.
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Argo has recognized $37.7mn of prior year development (PYD) in the first nine months of 2022, which falls within the retained loss corridor of $75mn in the loss portfolio transfer (LPT) deal the specialty insurer struck with Enstar in Q2 for its US insurance back-book.
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The specialty insurer booked an $11.9mn overall net adverse reserve development, up from $6.2mn last year, fueled by a $16.2mn charge in the US business.
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The activist investor has been trying to join the board of the struggling firm and has been interviewed by Argo.
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The company said the resignation was due to “professional and personal commitments”.
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Argo Group has been sued by investors, who claim the company has engaged in inadequate underwriting and misrepresentation of facts which resulted in a 60% drop in the specialty carrier’s common stock value this year.
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Bobman said the board of directors “demonstrated poor judgment” by approving the recruitment of Jessica Snyder as president of Argo’s US insurance division.
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Capital Returns Master has proposed its president Ronald Bobman and David Michelson, president of DWM Consulting, as two new Argo board members.
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A broader approach to deal structure leaves room open for a private firm to reverse into the company to go public.
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Insurance Insider selects 10 exclusive news stories reported by our team on the frontline at Monte Carlo Rendez-Vous.
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Westfield will take on 2021 and 2022 as part of the agreement, but it is not yet clear if 2020 will be included in a legacy deal Argo struck this year for 2018 and 2019 in the run-up to sale.
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Goldman Sachs has reapproached potential bidders as the Bermudian moves rapidly following the recent legacy deal and divestiture.
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The deal price represents 1.16x tangible book value.
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A signed deal would end a roughly three-year hiatus for significant strategic balance sheet M&A at Lloyd’s.
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Plus the latest people moves and all the top news from this week.
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A sale of the managing agency and Syndicate 1200 would represent tangible progress in Argo’s strategic process.
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