Argo Group’s planned $235 million acquisition of Ariel Re is drawing the market equivalent of a shrug from Standard & Poor’s.

S&P said that its long-term ratings for Argo and its related subsidiaries remain unchanged. That means Standard & Poor’s long-term ratings on Argo Group U.S. (a wholly-owned subsidiary of Argo Group International Holdings Ltd.) remained at “BBB-” with a stable outlook. Also, its financial strength ratings for Argo’s operating subsidiaries are still “A-,” also with a stable outlook.

Argo plans to finance the acquisition—its first in eight years—with cash and debt securities. Standard & Poor’s said the acquisition’s size is relatively small “on a net basis.” Though its financial leverage will jump to 26 percent on a pro forma basis, Standard & Poor’s noted it expects “prospective capitalization to remain very strong, leverage to decline in part through accrued earnings, and fixed charge coverage to remain…consistent with our assessment of a strong financial risk profile.”

The deal could make Argo a top 10 market at Lloyd’s. Both companies are international underwriters of specialty insurance and reinsurance products. Argo, however, has roots as a U.S. specialty company, expanding to Bermuda when it acquired property/casualty reinsurer PXRE in 2007 and into Lloyd’s when it bought Heritage in 2008.

Plans call for completing the deal in the 2017 first quarter, pending regulatory approvals.

Source: Standard & Poor’s