At Argo Group, we’re motivated by tomorrow.

We’re motivated by the challenges, growth and changes tomorrow will bring.

We’re motivated by the opportunities we’ll have to secure success for our clients, employees, shareholders and communities.

Our strong 2015 financial results were born of our unwavering focus on success to these stakeholders.

We’re innovating, simplifying how we work and leveraging more technology to ensure tomorrow is even better than today.

Annual Report 2015

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Mark Watson Portrait

Message to Shareholders

“Our purpose all along has been to help businesses stay in business. We do that by mitigating the risks inherent in what they do.”

— Mark E. Watson III, Chief Executive Officer

Working At Argo

Argo’s success is directly linked to the intellect, commitment and enthusiasm of our team members. We take the time to hire high-potential individuals, and we invest substantially in their ideas and ambitions.

How Argo Innovates

Our ability to create value for stakeholders is rooted in a spirit of entrepreneurship and a passion for redefining what’s possible.

What Our Partners Say

We work with agents and brokerage partners in markets worldwide. Of course, we’re humbled to hear them describe the experience.

2015 At a Glance

Argo Group achieved another record year of performance in 2015.

Gross Written Premiums (in billions)

Argo Group gross written premiums grew to more than $2 billion in 2015, a record for the company.








increase in underwriting income in 2015

Total Assets (in billions)

Combined Ratio

Book Value per Share

“We’re optimizing and improving our existing businesses with real, demonstrable results at the bottom line. I’m optimistic about each and every one of our businesses.”

—Jay Bullock,
Executive Vice President and Chief Financial Officer

Business Segment Performance

In a highly competitive environment, Argo Group’s portfolio of brands continues to create tremendous value for clients and policyholders.

Excess & Surplus Lines

Our Excess & Surplus Lines segment insures risks typically not underwritten by the standard market. Colony Specialty underwrites property and casualty risks. Argo Pro underwrites small- to medium-size professional liability risks.

Client Profile: Partners Specialty Group

Stamford, Connecticut

“The team at Argo Group makes us look good because of their responsiveness, good communication and good product.”

Maureen Caviston


Fast, smart, eager. These fundamental tenets of Argo Group’s business philosophy were on prominent display in our Excess & Surplus Lines segment in 2015. Colony Specialty’s casualty line and Argo Pro’s professional liability lines turned in particularly strong performances.

Casualty, our most profitable Excess & Surplus Lines division and also one of our fastest-growing lines, saw gross written premiums jump 22%. Gaining access to new business has never been an issue in the hypercompetitive casualty market. Instead, our challenge has been to find the best business from the wealth of possibilities — without simply throwing more staff at the task. Today we’re doing a much better job of that thanks to improvements in our business processes and the maturation of our underwriting system, Argo Edge.

Launched in 2013, Argo Edge enables us to more quickly and accurately identify the most attractive pieces of business and then make faster, smarter underwriting decisions. We anticipate further efficiency improvements from this system as we continue to reinvest in and refine the underlying technology.

Argo Pro, another of our faster-growing lines of business, saw gross written premiums increase thanks both to organic growth and the acquisition of OneBeacon Insurance Group’s Lawyers’ Professional Liability book of business in December 2014.

We recorded a smaller but notable success story in our transportation business, which shrank significantly in 2015 following our exit from the bulk of that market in 2014. However, the business we retained was, on average, more profitable. Today our transportation business is focused on the garage market, where in 2015 we saw increases in gross written premiums, earned premiums and underwriting income.

Overall, our Excess & Surplus Lines segment enjoyed an 11.9% increase in gross written premiums in 2015. Gains in our casualty and Argo Pro businesses were offset in part by reduced writings in Colony Specialty’s transportation, contract and property lines.

(dollar amounts in millions) Excess & Surplus Lines performance in detail

“Growth in our casualty division is the big story in Excess & Surplus, particularly in terms of our embrace of technology and innovation.”

— Kevin Rehnberg,
President, U.S. Operations

Commercial Specialty

Commercial Specialty serves niche industries and businesses through six risk-bearing divisions: Argo Insurance, Argo Surety, ARIS, Commercial Programs, Rockwood and Trident. In addition, our Alteris division operates non-risk-bearing agency and brokerage businesses.

Client Profile: TRX Insurance Services, Inc.

Valley Forge, Pennsylvania

“Argo Group solved an issue not only for us, but for an entire class of business.”

Rick Metz


The Commercial Specialty segment turned in another strong performance in 2015, highlighted by the ongoing turnaround of our Trident public entity business and the continued growth and profitability of our Argo Surety division.

Trident returned to profitability following two years of extensive structural and managerial changes within the division. These changes included strengthening the division’s talent base across all disciplines and upgrading the analytical tools available to the team. The results can be seen in Trident’s improved retention rates and profitability. In 2015, Trident booked more than $100 million in gross written premiums, while reducing its combined ratio. We anticipate continued improvements in this division in 2016.

Built from scratch beginning in 2008, Argo Surety is a testament to Argo Group’s ability to achieve organic growth by identifying and exploiting new business opportunities. In 2015, Argo Surety’s new Hamilton, New Jersey, office became fully operational, and the division is now contributing in a meaningful way to the company’s bottom line. Gross written premiums grew and underwriting profit increased. The division’s combined ratio also improved.

Overall, gross written premiums for the Commercial Specialty segment increased 5.8% in 2015. Gains in the commercial and surety lines were offset in part by declines in the grocery and retail units and in the segment’s mining unit, where customers and potential customers continued to be pressured by a persistent slump in commodities prices.

Earned premiums ticked modestly lower in 2015, falling less than a percentage point. However, a reduction in losses and loss adjustment expenses, plus lower underwriting, acquisition and insurance expenses, led to a sharply improved combined ratio of 93.8% versus 100.2% a year earlier. The decline in expenses was attributable primarily to an increase in the fronting fees we received, coupled with reduced accruals for premiums taxes and other assessments as the result of a revised accounting estimate.

(dollar amounts in millions) Commercial Specialty performance in detail

“We’ve changed the way our commercial business is structured and the risks we’re in. In 2015, we began to see meaningful results from the changes, and I expect that will continue in 2016.”

— Kevin Rehnberg,
President, U.S. Operations

International Specialty

International Specialty underwrites property catastrophe reinsurance and other risks worldwide from offices in Bermuda, Dubai and Malta. Argo Seguros underwrites cargo and marine, property and engineering, and financial lines in Brazil and other Latin American markets.

Client Profile: MDS Insure

São Paulo, Brazil

“If I need something, I know that, as quickly as possible, Argo Group will get it done.”

Jacques Goldenberg

International Director

The International Specialty segment continues to explore new technologies that can help identify and capitalize on underwriting opportunities more quickly and easily.

In 2015, we created an online digital platform in Europe — ArgoGlobal Business Connect — for our directors and officers liability insurance product. The platform makes it easier for customers, especially small- to medium-size enterprise customers, to do business with us. ArgoGlobal Business Connect will be available in Germany in mid-2016.

Meanwhile, we already operate a similar online platform — Protector — in Brazil. It gained additional traction in the marketplace last year, although our results in that country were pressured by the unsettled economic climate there and the subsequent deterioration in the value of the Brazilian currency, which had a negative impact on our results when translated to U.S. dollars. In response, we have made select changes to our business there and are beginning to see positive results.

Our Bermuda-based casualty and professional insurance team, established in 2009, increased net earned premium by 18% in 2015. Gross written premiums remained flat due to rate reduction and changes to the mix of business. The results were primarily achieved through collaborating with clients on product development and continued marketing initiatives.

Elsewhere, to further boost production in our International Specialty segment, we will transition our Argo Re operation in Dubai to our Syndicate 1200 segment in 2016. This will allow the Dubai operations to take advantage of the licensing and platform efficiencies available through the Lloyd’s of London market.

The segment’s property catastrophe reinsurance business continues to be pressured by fierce competition, not only from established players but also from new players outside the insurance industry, primarily hedge funds. In negotiating this rapidly shifting landscape, Argo Re’s relatively small size has allowed us to operate nimbly, moving quickly into the market as attractive opportunities present themselves and pulling back when pricing becomes unattractive.

Despite the downturn in gross written premiums in 2015, earned premiums increased slightly. The improvement was attributable primarily to a reduction in the segment’s ceding percentages, coupled with modest changes in our business mix, including a tactical pullback in the surety sector.

Losses and loss adjustment expenses also fell in 2015, highlighted by a reduction in loss reserves due to favorable developments on prior-year business. The segment also sustained slightly lower catastrophe losses.

Owing to the improvement in losses and to roughly flat expenses, International Specialty’s combined ratio improved to 84.9% in 2015, down from 89.2% in 2014.

(dollar amounts in millions) International Specialty performance in detail

“The international market climate is very competitive. We benefit from being nimble and positioning ourselves to act on advantageous market opportunities.”

— Nigel Mortimer,
Managing Director, International Specialty Insurance

Syndicate 1200

Syndicate 1200 underwrites worldwide property, specialty and non-U.S. liability insurance within the Lloyd’s of London global franchise. It operates through five divisions: property, liability, marine and energy, aerospace, and specialty.

Client Profile: Arthur J. Gallagher & Co.

London, England

“ArgoGlobal is always ahead of the game.”

Darren Rowe

Clients and Markets Director

In line with Argo Group’s commitment to continuous improvement, Syndicate 1200 focused its activities in seven key areas in 2015.

We worked to expand our profitable lines of business while also establishing new products in areas where we believe our strengths will serve us well.

We sought to strengthen and broaden our already strong relationships with London brokers and to support the Lloyd’s platform in London and outposts around the world.

We continued to pursue capital from other members of the Lloyd’s market. We partnered with colleagues in other Argo Group business segments to meet customer needs. We worked diligently to attract new talent. We also continued development of a data warehouse that will allow us to meet the reporting requirements of the European Union’s Solvency II Directive.

We are pleased to report progress in all of these key areas. Operating in one of the insurance industry’s most competitive markets, four of Syndicate 1200’s five divisions wrote more premiums in 2015 than they did in 2014. In just its eighth year as a member of Argo Group, Syndicate 1200 solidified its position as a core contributor to Argo Group’s results.

The bulk of the segment’s growth in 2015 was driven by its North American binder business; by new classes of risk added in recent years, such as international casualty; and by the launch of the segment’s platform in Asia. The only division to post lower gross premiums was marine and energy, operating in a sector where results were pressured industrywide by a continued dramatic slide in oil prices.

Looking ahead, we see additional opportunities for Syndicate 1200 to grow, in part by collaborating with other Argo Group business segments to deliver solutions that would be difficult to provide independently. These efforts will be overseen by a largely new leadership team, including David Lang, who in 2015 was named Chief Operating Officer of Syndicate 1200.

Overall, Syndicate 1200’s gross written premiums grew 3.8% for the year. Earned premiums fell modestly — by just less than 1% — largely because the segment reduced its participation percentage in its Lloyd’s syndicate to 68%, down from 75% in 2014. This had the offsetting effect of boosting fee income. Underwriting income declined 32.1%, due in part to increased catastrophe losses, including $3.5 million attributable to the port explosion in Tianjin, China, in August. Nonetheless, Syndicate 1200 was able to post a combined ratio of 94.1%, in part by shrinking fixed expenses to offset increased commission and broker expenses.

(dollar amounts in millions) Syndicate 1200 performance in detail

“Wherever there’s a Lloyd’s platform, we have supported it physically and with capacity.”

— David Harris,
Managing Director, Syndicate 1200

Our Local Community Involvement

Team Argo was out in force again in 2015. Our employees proudly volunteered hundreds of hours to secure the future of the communities where we live and work. Employees also made financial contributions, which the company matched at 150%, to more than 175 nonprofit organizations.