A.M. Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of "a" of Argo Re Ltd. (Argo Re) (Pembroke, Bermuda) and its subsidiaries. A.M. Best also has affirmed the Long-Term ICR of "bbb" and the Long-Term Issue Credit Ratings (Long-Term IR) of the parent holding company, Argo Group International Holdings, Ltd. (Argo Group) (Pembroke, Bermuda) [NASDAQ: AGII]. Concurrently, A.M. Best has affirmed the Long-Term ICR of "bbb" and the Long-Term IR of "bbb" on $143.75 million 6.5% senior unsecured notes due 2042 of Argo Group US, Inc. (Argo US) (headquartered in San Antonio, TX). These senior notes are fully and unconditionally guaranteed by Argo Group. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and ratings.)

The rating affirmations reflect Argo Re's solid capitalization, historically strong operating performance and an enterprise risk management program that is supportive of its risks. The ratings also reflect the diversified insurance and reinsurance platforms within the Argo group of companies and the financial flexibility afforded by its publicly traded parent, Argo Group. This rating also takes into consideration management's preliminary views that loss potential from Hurricanes Harvey and Irma should remain within Argo's risk tolerance. This view integrates consideration of Maybrooke Holdings Limited (Ariel Re), which the Argo Group acquired in February 2017.

Argo Re benefits from its demonstrated product expertise in niche focus areas and proven solid underwriting fundamentals that span numerous lines of business and territories. Argo Re also maintains a business profile with broad global reach that complements Argo's longstanding U.S. presence in the excess and surplus lines sector and specialty admitted markets. These are managed holistically with respect to capital, investment strategy and market presence. The acquisition of Ariel Re is another example of Argo's desire to broaden its business profile and enhance the group's presence in the Lloyd's and Bermuda markets.

These positive rating factors are offset partially by the potential earnings volatility inherent in the group's underwriting operations (via catastrophes exposure), competitive pressures in and outside of the United States and the effects from sluggish economic conditions worldwide. Argo's desire to grow through acquisitions is another concern. However, management's success thus far lessens this concern.

Key drivers that could lead to upward rating movement over the long term would be the ability to further enhance the underwriting and operating results of Argo Re with an accompanying increase in risk-adjusted capital.

Downward rating pressure or a revision of the rating outlooks to negative could result if there is material deterioration in the organization's underwriting performance due to a material adverse loss reserve development or outsized losses in relation to its peer group that result in a material decline in risk-adjusted capital.

The FSR of A (Excellent) and the Long-Term 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
  • ARIS Title Insurance Corporation
  • Colony Insurance Company
  • Peleus Insurance Company
  • Colony Specialty Insurance Company
  • Rockwood Casualty Insurance Company
  • Select Markets Insurance Company
  • Somerset Casualty Insurance Company

The following indicative Long-Term IRs 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 following Long-Term IR has been affirmed:

Argo Group US, Inc. -

— "bbb" on $143.75 million 6.5% senior unsecured notes, due 2042

This press release relates to Credit Ratings that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings . For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases .

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

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.

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