Watson joined Argonaut’s board in 1999 and in 2000 he became CEO. That year, Argonaut lost $83 million on $209.9 million in revenue. Last year, it posted a profit of $146.7 million, or $4.75 a share, on almost $1.6 billion in revenue.
With Watson at the helm, Argonaut zeroed in on the specialty insurance market. He figured there wasn’t much competition and it’d be easier to generate profits.
Among Watson’s first big decisions was to move the company’s headquarters to San Antonio, where he was born. He didn’t want to duke it out with Silicon Valley tech companies for workers.
Under Watson’s command, the company has grown through acquisitions and a merger. A 2000 purchase gave it a foothold in offering casualty insurance to cities, counties and other public jurisdictions. A year later, it bought another company selling excess and surplus lines of insurance, which provides coverage to consumers for risks traditional underwriters won’t insure.
Argo became an international insurance business in 2007 when it merged operations with Bermuda-based PXRE Group. The combined businesses became known as Argo Group International Holdings because there already was an insurer named Argonaut in Bermuda.
Argo made Bermuda, where property and casualty insurance companies don’t have to pay U.S. federal taxes, its headquarters. But the deal had more to do with establishing a trading platform in Bermuda than saving on taxes, Watson said. He travels constantly and splits his personal life between Bermuda and San Antonio.
In 2008, Argo expanded its international presence when it acquired a London-based Lloyd’s insurer. Lloyd’s is a marketplace in London’s financial district where agents buy insurance for clients. Argo added another Lloyd’s insurer and reinsurer in February when it bought Ariel Re. Argo expects to crack the top 10 in that market next year.
“They’re a pretty innovative company,” said Dan Glaser, CEO and president of Marsh & McLennan Cos., a giant insurance broker based in New York. “They’re working on strategies like digital and improving the client experience.”
Gregory Case, CEO and president of Aon plc, a giant London-based risk adviser and insurance broker that does business with Argo, called Watson a “world-class specialty insurance strategist.” Case has known Watson for 12 years.
“This is a guy who … can kind of see ahead and recognize value before others do and he invests ahead of the market,” Case said. “He’s done that a few times and really built a platform that I think is very differentiating.”
Argo reported Watson received about $4 million in total compensation last year. He owns almost 996,000 Argo shares — or almost 3.3 percent of the company, a stake valued at about $61.3 million on Thursday.
Argo’s growth has allowed it to build up its management team by attracting senior executives from some big insurers,” Marsh & McLennan’s Glaser said.
“So from that standpoint, they punch well above their weight,” he added.