Argo Group International Holdings plans to sell Ariel Re to two private equity investors.
Pelican Ventures and J.C. Flowers & Companies are the buyers, and the transaction is expected to close in 2020, pending regulatory approval. Argo, a Bermuda-based specialty insurer and reinsurer, billed both as having “significant insurance experience.”
Neither side disclosed financial details.
Argo Group CEO Kevin Rehnberg said the sale is part of an ongoing effort to streamline and simplify.
“Argo Group will continue to focus on specialty insurance lines of business that we expect will result in profitable growth and improved shareholder value,” Rehnberg said in prepared remarks. “This transaction aligns with our strategy to simplify the business and streamline operations.”
He noted that Ariel Re is “well known in the reinsurance market, and said the business should do well “as part of Pelican Ventures.” Ariel Re is a global underwriter of property and casualty reinsurance operating through Lloyd’s Syndicate 1910. Argo purchased Ariel Re in February 2017 for $235 million.
Under the terms of the agreement, the buying group’s corporate member will provide Ariel Re’s capital for the 2021 year of account, and Argo Group has agreed to retain historical reserves, Argo said.
Argo Group recently has taken a series of steps to restructure its business after some poor results and a leadership change. In a September 2020 presentation for investors, the company indicated units with $500 million or more in premiums are under review. Last fall the company exited Asia’s insurance market and global hull business and earlier this year it sold its Trident Pubic Risk Solutions unit to Paragon MGA. Argo’s Lloyd’s insurer, ArgoGlobal, announced in October a reinsurance-to-close (RITC) transaction with legacy specialist RiverStone Holdings for Syndicate 1200 for 2017 and prior years. Last week, Argo announced it was putting its grocery and retail lines of business into run-off.
As part of the Ariel Re deal, Pelican Ventures and J.C. Flowers also announced that they have agreed on terms for an operational partnership with Apollo Syndicate Management Ltd. to further develop SPA 6133, a Lloyd’s special purpose arrangement (SPA) focused on property catastrophe reinsurance. Under the partnership, Pelican Ventures and J.C. Flowers will provide additional capital, operational support and distribution.
Morgan Stanley; Paul, Weiss, Rifkind, Wharton & Garrison LLP; and Clyde & Co LLP served as advisers on the transaction.
Source: Argo Group
*Material from a related Insurance Journal story was used for this writeup.