A.M. Best Co. has assigned an issuer credit rating of “bbb”, a debt rating of “bbb” to the $143.75 million 6.5% senior unsecured notes (including the underwriters’ over-allotment option) due September 15, 2042 and indicative ratings of “bbb” on senior unsecured debt and “bbb-” on subordinated debt of the recently filed shelf registration of Argo Group US, Inc. (Argo US) (San Antonio, TX). The outlook assigned to these ratings is stable.

The senior notes are fully and unconditionally guaranteed by Argo Group International Holdings, Ltd. (Argo Group) (Bermuda) [NASDAQ: AGII] and are redeemable on or after September 15, 2017 at 100% of their principal amount plus accrued and unpaid interest at the redemption date.

Argo Group intends to use the net proceeds from the offering for the repurchase of outstanding trust preferred securities, but such proceeds also may be used for general corporate purposes, including the repayment of indebtedness. Argo Group’s total debt-to-capital ratio (excluding accumulated other comprehensive gains) at June 30, 2012 measured approximately 22%, increasing to 26% when debt is measured relative to adjusted tangible capital. Financial leverage ratios will increase following the issuance of the senior notes to approximately 28% of total debt-to-capital and 32% of debt-to-tangible capital. After repayment of the trust preferred securities, Argo Group’s total debt-to-capital is expected to decline to approximately 23%, and its debt-to-tangible capital is expected to be approximately 26%. Argo Group’s interest coverage is projected to be in excess of 4 times.

Argo Group’s financial leverage and coverage ratios remain within A.M. Best’s guidelines for its debt ratings, and A.M. Best expects these ratios to remain so over the near term. If there is any material deviation from A.M. Best’s expectations, the ratings could be downgraded.

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 www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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