Argo sells contract binding P&C renewal rights to Selective’s E&S unit
Argo Group International Holdings has continued the refocus of its business with a deal to sell the renewal rights of its contract binding P&C business to Mesa Underwriters Specialty Insurance Company (Music), the E&S subsidiary of Selective Insurance Group.
As a part of the transaction, the Argo contract binding team will have the option to join Music and continue to serve the market. The Bermudian (re)insurer will continue to honour and service all policies currently in force.
“This transaction supports the company’s strategy to simplify the business,” said Marsh Duncan, Argo’s E&S president. “We are pleased to have reached an agreement that provides a smooth transition for our brokers and insureds.”
Duncan took on his present role earlier this month, which was announced along with a series of other appointments as well as the departures of chief underwriting officer Tim Carter and head of international Matt Harris. Duncan was previously overseeing a smaller portfolio of Argo businesses.
The terms of the renewal rights sale to Music were not disclosed. Music executive vice president Jeff Kamrowski said expanding its contract binding book of business “is a natural evolution of our growth strategy”.
Selective acquired Music from Montpelier Re in 2011, in a deal valued at $55mn at the time.
The contract binding renewal rights deal follows a number of divestments that Argo has made under CEO Kevin Rehnberg. The Bermudian (re)insurer has been focused on reducing unprofitable businesses and growing its US specialty franchise.
It sold Ariel Re in November 2020, a deal that followed the sale of the Trident Public Risk Solutions brand and underwriting platform to Paragon Insurance Holdings earlier that year.
This year it has announced exits in Italy, Malta and the US grocery business.
The company has previously identified the contract binding business as a problem area.
On a first quarter earnings call in May, Rehnberg commented: “During the first quarter, we aggressively reduced the size of our US property and contract binding books. In recent quarters, these two business units have contributed a significant portion of our catastrophe losses in the quarter.”
In March AM Best changed the outlook on the (re)insurer’s A- (Excellent) ratings to stable from negative because of “positive actions” to address an SEC inquiry into perquisites and the “sweeping” board changes that have been made by the carrier.