Bermuda-based Argo Group International Holdings Ltd. said it hascreated a bond insurance unit with Robert F. Thomas aspresident.

The company said its new Argo Surety operation will be based inHouston and be part of Argo Group's existing Commercial Specialtysegment.

Argo Group, which underwrites specialty insurance andreinsurance products in niche areas of the property-casualtymarket, said it plans Argo Surety branches in California and on theEast Coast by 2009.

Mark E. Watson III, president and chief executive officer ofArgo Group, said that “with the dislocations in the credit andfinancial markets, we see an opportunity for surety to immediatelycontribute to Argo Group's expansion and growth plans of ourspecialty products,” adding that the firm is excited aboutexpanding into this class of business led by Mr. Thomas.

Mike Arledge, president of Argo Group's Commercial Specialtysegment, to whom Mr. Thomas will report, said the firm has“confidence that under his guidance, our new surety business unitwill realize not only top line growth, but more importantly,contribute to the Group's bottom line.”

Argo Group said Mr. Thomas has 21 years of experience in boththe insurance and reinsurance markets, and before taking his newpost held several executive level positions simultaneously at HCCInsurance Holdings.

At Houston-based specialty carrier HCC Insurance Mr. Thomasserved as president and CEO of its Surety Group, CEO of its CreditGroup and president of HCC Risk Management, the organization'sceded reinsurance administration arm.

Prior to his work with HCC Insurance Holdings, Mr. Thomas heldthe position of president and CEO of American Contractors IndemnityCompany, a California mono-line surety that was acquired by HCC in2004.

“We see real growth potential for Argo Group in the suretybusiness,” said Mr. Watson. “Despite a downturn in housing andcommercial construction, our focus for contract surety will beopportunistic undertakings that are fairly robust yet considerablyless vulnerable than the general marketplace,” he said.

“Surety bonds are always going to be a necessity for completionof commercial projects, such as construction of schools, hospitals,community roads and other types of infrastructure.”

He added that Argo Surety would pursue “a diverse commercialsurety portfolio serving many industries and forms of businesscommerce.”

Argo Group is the combined international holding companyresulting from the Aug. 7, 2007 merger of Argonaut Group Inc. andPXRE Group, Ltd.