CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MARCH 12, 2003 12:00 AM (EST)
Today, A.M. Best Co. announced the current financial strength ratings of the insurance subsidiaries of Argonaut Group, Inc. [NASDAQ: AGII] (San Antonio, TX) remain unchanged following the company's delayed fourth quarter 2002 earnings announcement.
On January 20, 2003, A.M. Best affirmed the financial strength ratings of A (Excellent) of Argonaut Insurance Group (San Antonio, TX) with a negative outlook. Simultaneously, the financial strength ratings of A (Excellent) of Colony Insurance Group (Richmond, VA) and Rockwood Casualty Group (Rockwood, PA) were affirmed, with stable outlooks. Also, the financial strength rating of A- (Excellent) of Argonaut Great Central Insurance Company (Peoria, IL) was affirmed with a stable outlook.
While Argonaut Group suffered a large net loss and shareholders' equity declined considerably in 2002, the results fell within the expectations A.M. Best contemplated when affirming the ratings in January. Despite significant erosion due to unrealized capital losses, statutory surplus remains supportive of the current financial strength ratings at year-end 2002. Additionally, operating profitability on ongoing business continues to improve.
Given Argonaut Group's high equity leverage and the current financial market conditions, A.M. Best remains concerned that unrealized capital losses may continue to erode surplus and jeopardize the capitalization of the insurance subsidiaries. In light of this, management is currently exploring several alternatives to address its capitalization requirements in order to support its operations through 2003. However, until A.M. Best's capitalization concerns are alleviated, the rating outlook for Argonaut Insurance Group remains negative.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.