Argo Group has acquired Ariel Re, an underwriter of insurance and reinsurance business, for around $235 million.
The transaction is expected to close during Q1 2017, subject to regulatory approval.
The acquisition will add new capabilities to the company, including Ariel Re’s modelling and risk analysis tool, which will enhance Argo’s underwriting analytics.
Heading up the combined business will be Jose Hernandez, head of Argo Group’s international business.
Mark Watson, CEO of Argo Group, commented: “Ariel Re is a terrific fit for Argo Group—operationally and culturally. This transaction enables us to build upon the successes realised individually by Argo Group and Ariel Re, utilising our combined strength to deploy capital in selected areas to produce maximum return and continued growth.”
“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.”
S&P Global Ratings has revealed that Argo Group's long-term ratings and its financial strength ratings will remain unaffected by the acquisition.
The ratings company said: “We believe the acquisition's size is relatively small on a net basis.
While financial leverage, on a pro forma basis, will increase to around 26 percent, we expect
prospective capitalisation to remain very strong.”
Argo Group’s financial advisor for the transaction is Aon Securities and its legal counsel is Willkie Farr & Gallagher LLP.
As part of the transaction, Skadden advised Banco BTG Pactual, part owners of the Ariel Re with Abu Dhabi Investment Council.
