Argo Files Investor Presentation Highlighting Transformation into a Leading U.S. Specialty Insurer and Comprehensive, Ongoing Strategic Alternatives Process
Argo Group International Holdings (NYSE: ARGO) reported on its ongoing strategic review process aimed at maximizing shareholder value, particularly following the sale of its Lloyd’s Syndicate 1200. The Board, reinforced by its largest shareholder, J. Daniel Plants, is focused on evaluating potential strategic options while urging shareholders to support its nominees at the upcoming Annual Meeting on December 15, 2022. The company has successfully transformed into a diversified U.S. specialty insurer, achieving a combined ratio of 92.5% for ongoing business and pursuing credible proposals from over 80 parties.
- Successfully transformed into a leading U.S. specialty insurer.
- Achieved a combined ratio of 92.5% for ongoing business.
- Completed strategic repositioning, enhancing focus on niche products.
- Received approximately $746 million for casualty reserves through a Loss Portfolio Transfer transaction.
- Maintained strong capital position with investment-grade ratings.
- Proxy contest initiated by Capital Returns Master, impacting Board composition.
- Concerns over potential loss of talent and experience if Capital Returns' nominees are elected.
Strategic Repositioning that Began in Late 2019 Has Created Stronger Growth Platform and Optimized Business Mix
Refreshed Board, Which Includes Company’s Largest Shareholder, Has Right Skills and Experience to Oversee Ongoing Strategic Review Process
Appointing Either of Capital Returns’ Nominees Would Result in Loss of Superior Talent and Experience at Critical Juncture for Company
Urges Stockholders to Vote the BLUE Proxy Card “FOR” ALL Seven of Argo’s Highly Qualified Nominees
The Company issued the following statement:
Over the past three years, Argo has successfully transformed the Company into a leading
This effort has been further advanced by the Board’s ongoing strategic review process to evaluate a range of alternatives, including a potential sale of the whole Company. The process is being overseen by a Strategic Review Committee, which is composed of seasoned directors who collectively have strong M&A, capital markets and regulatory experience, and are well-suited to make recommendations to the entire Board. To ensure shareholder alignment, the Board appointed
Unfortunately, despite the recent actions to position Argo for success, one of our shareholders,
We believe the ongoing strategic review process is best overseen by the current Argo Board of Directors and its Strategic Review Committee, not Capital Returns’ nominees. It is our strong view that appointing either of Capital Returns’ nominees would result in a loss of superior talent and experience, a degradation in the quality of Board dialogue and could delay or hinder the strategic review just as it enters its most critical phase.
Highlights of the presentation include:
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Argo has substantially completed its business repositioning to become a diversified, P&C insurer with access to attractive, niche business segments.
- Management has undertaken a strategic repositioning since late 2019, including product reviews, refined geographic focus and executive hires
- Announced 10 business closures or divestitures to exit international businesses and focus on most attractive business lines, in addition to two major risk transfer transactions
- Shifted away from volatile, catastrophe-exposed lines of businesses through strategic portfolio reshaping actions
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Focused on its core strength in the
U.S. business lines and an offering of niche products or businesses that require specialized or hard-to-place coverage -
Following completion of sale of
Argo Underwriting Agency Limited and its Lloyd’s Syndicate 1200 toWestfield Ltd. , approximately99% of ongoing business will beU.S. -based risk1
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Board-led actions are creating a stronger platform for future growth and value creation.
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Significant re-underwriting actions led to an average combined ratio for ongoing business of
92.5% 1 and provide a clear path for improved margins and return on equity -
Business transformation has positioned Argo for growth and strong returns – evidenced by catastrophe loss results in 20212 of
for ongoing businesses compared to$23 million in exited businesses$69 million -
On track to achieve target expense ratio of
36% in 2022 due to successful implementation of cost-saving initiatives, compared to36.8% in 2021 - Well-positioned with strong balance sheet and investment grade ratings with AM Best and S&P of A - / A - respectively
- Assembled highly experienced, industry-respected management team leading a deep bench of underwriting talent, including five key C-suite executive appointments in the last four years
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Significant re-underwriting actions led to an average combined ratio for ongoing business of
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Argo’s Board is overseeing a thorough strategic review process that remains ongoing.
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The strategic review process, which is overseen by the Strategic Review Committee of the Board, has yielded two major strategic transactions:
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Loss Portfolio Transfer (LPT) transaction with Enstar Group Limited for approximately
of$746 million U.S. casualty reserves for accident years 2011 to 2019; transaction closed onNovember 9, 2022 -
Agreement to sell
Argo Underwriting Agency Limited and its Lloyd’s Syndicate 1200 toWestfield Ltd. for total cash proceeds of approximately , subject to closing-related adjustments$125 million
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Loss Portfolio Transfer (LPT) transaction with Enstar Group Limited for approximately
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Transactions have simplified corporate structure, enhanced fundamentals of Argo’s core
U.S. specialty businesses, strengthened capital and reduced reserve volatility -
Argo’s independent financial advisor,
Goldman Sachs & Co. LLC , has conducted exhaustive outreach to more than 80 parties, including a balanced mix of potential strategic buyers and financial sponsors, to solicit proposals for additional transactions to maximize shareholder value, including a potential sale of the whole Company -
The group of contacted parties has also included select international companies with an interest in expanding their
U.S. platforms - Select bidders that have put forward preliminary, non-binding proposals have been given access to a data room containing over 60,000 pages of documents, and they and their representatives are conducting due diligence meetings with management
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The strategic review process, which is overseen by the Strategic Review Committee of the Board, has yielded two major strategic transactions:
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Argo has a highly qualified, fully engaged and significantly refreshed Board to oversee the execution of the Company’s strategy and strategic review process.
- Six of Argo’s current nine directors joined the Board since the Company undertook its repositioning, and 10 directors have rotated off the Board in the last three years, including two at this year’s upcoming Annual Meeting
- The Company’s average director tenure is now only three years
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Argo’s recent appointment of
Mr. Plants , Chief Investment Officer ofVoce Capital , Argo’s largest shareholder with approximately9.5% of the Company’s shares, ensures investor views are well-represented in the boardroom - Argo’s Board is highly engaged – the Board has met more than 60 times in 2022 and more than 30 times since publicly announcing our strategic review process
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The directors targeted by Capital Returns –
Mr. Bailey andMr. Ramji – bring expertise important to the Company’s business, including significant operational M&A experience, and have been instrumental in overseeing the execution of the Company’s transformation, recruiting new management and refreshing the Board-
Mr. Bailey , the Board’s Lead Independent Director, brings extensive prior public board and CEO experience; he is a recognized national expert in corporate governance and an integral member of the Strategic Review Committee -
Mr. Ramji , as the Chair of theRisk and Capital Committee , has played a critical role in the reduction of the Company’s catastrophe risk exposures and overall reduction of volatility through lowering of its probable maximum losses (PMLs)
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Election of Capital Returns’ nominees would remove superior talent and critical skills from the Board and reduce Argo’s director diversity by half.
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Argo’s
Nominating and Corporate Governance Committee formally interviewed bothMr. Bobman andMr. Michelson and determined that adding Capital Returns’ nominees would diminish the level of expertise and diversity on the Board and would potentially disrupt or hinder the strategic review process -
Mr. Bobman has no public company board experience, and any insurance background he may possess is already well-represented on the Board -
Mr. Michelson serves as an advisor or director of at least six other companies. During his tenure as a director atFedNat Insurance , the company has suffered an approximately98% stock price decline, been delisted from Nasdaq, triggered a default on over of senior notes and had one of its insurance subsidiaries placed into receivership by the$120 million Florida Department of Financial Services
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Argo’s
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Mr. Bobman has made numerous naïve, and in some cases factually false, criticisms that do not reflect the reality of Argo’s actions.-
While Capital Returns would like to portray Argo as shunning its “help,” the reality is that
Mr. Bobman , after repeated interaction with management and directors, demonstrated that he could offer no real insight or assistance in the form of original ideas or concrete action - Many of Capital Returns’ assertions, conveyed in prior press releases and media interviews, about the likely outcomes of a strategic review have been belied by the process learnings to date
- Citing Mr. Bradley’s appointment as CEO as an example of a lack of succession planning is misleading given the Board had that succession plan in place long before its previous CEO departed Argo for health reasons
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Capital Returns falsely claimed that
Mr. Bailey had never purchased any Argo shares in the open market whenSEC filings show that he invested almost of his own capital in open market purchases at the time he joined the Board. Unlike Capital Returns,$100,000 Mr. Bailey has never sold a single Argo share - What Capital Returns would attempt to portray as “piecemeal” asset sales is actually a direct result of a thorough and probing review process where Argo listened carefully to bidders and its advisors; the result of those transactions allowed Argo to restart a more robust strategic review process in September, which is ongoing
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Capital Returns’ claim that the Board dallied rather than immediately accede to its public demand for a sale process ignores the fact that the Board was engaged in dialogue with several long-term shareholders during this period (including but not limited to
Voce Capital ), before taking the significant step of launching a public review of strategic alternatives -
Argo set its Annual Meeting date for later in the year to focus on the very issue which
Mr. Bobman wanted the Board and management team to address – undertaking a thorough and comprehensive strategic review
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While Capital Returns would like to portray Argo as shunning its “help,” the reality is that
The Argo Board has been and will continue to be unwavering in its commitment to maximize value for Argo shareholders and recommends that shareholders vote the BLUE proxy card “FOR” ALL of Argo’s seven highly qualified director nominees.
YOUR VOTE IS IMPORTANT!
If you have any questions, or need assistance in voting
your shares on the BLUE proxy card,
please call our proxy solicitor:
INNISFREE M&A INCORPORATED
Shareholders in the
Banks and Brokers Call Collect at +1 (212) 750-5833
About
Forward-Looking Statements
This press release and any related oral statements may include forward-looking statements that reflect our current views with respect to future events and financial and operational performance. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as “positioning,” “expect,” “intend,” “plan,” “believe,” “do not believe,” “aim,” “project,” “anticipate,” “confident,” “seek,” “will,” “likely,” “assume,” “estimate,” “may,” “continue,” “create,” “maximize,” “guidance,” “objective,” “outcome,” remain optimistic,” “outlook,” “trends,” “future,” “could,” “would,” “should,” “target,” “on track,” “simplifies” and similar expressions of a future or forward-looking nature. Such statements are subject to certain risks and uncertainties that could cause actual events or results to differ materially. For a more detailed discussion of such risks and uncertainties, see Item 1A, “Risk Factors” in Argo’s Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended
1 2022 LTM Ongoing GWP:
2 Excluding PYD and catastrophe losses.
3 Includes losses related to COVID 19 of
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Investors:
Head of Investor Relations
860-970-5845
andrew.hersom@argogroupus.com
AVP, Investor Relations and Corporate Finance
978-387-4150
gregory.charpentier@argogroupus.com
Media:
Senior Vice President, Group Communications
210-321-2104
david.snowden@argogroupus.com
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