Argo Group (AGII) to Acquire Ariel Re in $235M Deal

November 14, 2016 7:22 AM EST

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Argo Group International Holdings, Ltd. (Nasdaq: AGII) announced it has entered into an agreement to acquire Ariel Re, a global underwriter of insurance and reinsurance business for approximately $235 million cash. The acquisition, which is expected to be complete during the first quarter of 2017, is subject to relevant regulatory approvals.

“Ariel Re is a terrific fit for Argo Group - operationally and culturally,” says Argo Group CEO Mark E. Watson III. “We remain focused on delivering enhanced shareholder value. This transaction enables us to build upon the successes realized individually by Argo Group and Ariel Re, utilizing our combined strength to deploy capital in selected areas to produce maximum return and continued growth.

“Under the leadership of Jose A. Hernandez, head of Argo Group’s International Business, the combination of Ariel Re and Argo Re will result in a market-leading business and will make a meaningful and immediate contribution to earnings and return on equity.

“This acquisition is part of Argo Group’s strategic initiative to build scale in its London- and Bermuda-based platforms by adding complementary lines of specialty business. After the acquisition, Argo Group will have a well-balanced portfolio mix of approximately 88 percent insurance and 12 percent reinsurance,” adds Watson.

This transaction provides Argo Group with added diversification, which improves the company’s ability to manage through changing market cycles. It also adds new capabilities that can be leveraged throughout the entire organization, including Ariel Re’s unique modeling and risk analysis tools, which will enhance Argo’s already robust underwriting analytics.

“Ariel Re is a group of proven insurance experts who rely on deep domain expertise, rigorous research and development, and innovative thinking - values and capabilities that align with those of Argo Group,” says Hernandez.

Ariel Re is jointly owned by Banco BTG Pactual S.A. and the Abu Dhabi Investment Council and underwrites a global portfolio of insurance and reinsurance business through Lloyd’s Syndicate 1910. Ariel Re’s book of business is well diversified by distribution, regional exposure and peril. The company has achieved superior returns by sourcing low-frequency/higher-severity, high-margin business.

“Argo Group have long been supporters of Ariel Re and we are delighted to take this relationship forward by bringing Ariel Re under the Argo banner,” says Ryan Mather, Ariel Re CEO. “There is great synergy between the teams from both companies and we are looking forward to working together to strengthen the offering for our clients.”

Argo Group’s financial advisor in connection with the transaction is Aon Securities. Its legal counsel is Willkie Farr & Gallagher LLP.

Investor Conference Call to Discuss Acquisition

Argo Group management will conduct a special investor conference call to discuss the recent agreement to acquire Ariel Re. Company management will conduct this call starting at 8:30 a.m. ET on Monday, Nov. 14, 2016.

Joining the Conference Call

A live webcast of the conference call can be accessed by visiting http://services.choruscall.com/links/agii161114.html. Participants inside the U.S. can access the call by phone by dialing 877-291-5203. Callers dialing from outside the U.S. can access the call by dialing 412-902-6610. Please ask the operator to be connected to the Argo Group conference call.

For those unable to attend the live conference, Argo Group will post a webcast replay of the call on its investor relations website, or at the following link: https://services.choruscall.com/ccforms/replay.html. In addition, a telephone replay of the call will be available through Nov. 21, 2016, to callers from inside the U.S. by dialing 877-344-7529 (conference #10096859). Callers dialing from outside the U.S. can access the telephone replay by dialing 412-317-0088 (conference #10096859).



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