S&P Keeps Argonaut On CreditWatch
NU Online News Service, March 14, 4:10 p.m. EST?Standard & Poor's Ratings Services in New York said Argonaut Group Inc.'s property-casualty insurance subsidiaries will be kept on CreditWatch with negative implications.
The rating firm gives Argonaut a "triple-B-plus" counterparty credit and financial strength rating.
S&P said its decision, to keep the firm on watch, came after Argonaut reported a $105.3 million net loss for its last quarter and announced a number of strategic initiatives and reorganizations, including cutting its workforce by 15 percent, or up to 70 jobs.
The San Antonio, Texas-based insurer also said it signed an agreement with Houston-based HCC Insurance Holdings Inc., in which HCC will invest $58 million in Argonaut in the form of convertible stock.
Argonaut said this transaction, expected to close this month, would enable the company to increase the statutory surplus of its subsidiaries and risk-based capital.
S&P had already downgraded its counterparty credit and financial strength ratings on Argonaut to "triple-B-plus" from "A" in early February when the company said it would delay its earnings announcement to wait for the completion of an asbestos exposure study.
"The substantial loss reported by the company for the fourth quarter of 2002 and full-year 2002–along with the resulting impact on capital adequacy–were taken into account at the time of that rating action," said S&P credit analyst John Iten.
The rating agency said ratings will likely remain on CreditWatch pending completion of Argonaut's capital-raising initiatives and a full review of year-end results and management's business plan for the current year.
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