Argo Group Wraps Up Heritage Deal

Bermuda-based Argo Group International Holdings, Ltd. said it has “effectively completed” its deal to acquire Heritage Underwriting Agency plc, after meeting all the conditions of a transaction first announced in early April.

Argo said today that all conditions have been satisfied or waived.

Specifically, Argo said it has received valid acceptances of the offer with respect to 62,960,189 Heritage shares and that Argo has acquired 7,691,703 Heritage shares. In the aggregate, these share totals together represent roughly 90 percent of the existing issued ordinary share capital of Heritage.

“We are very pleased to have concluded this transaction in such a timely manner,” said Mark Watson, Argo Group president and chief executive officer.

He said in a statement, “The acquisition of Heritage is an important step in our evolution as a leading international specialty underwriter, and one that brings with it increased opportunities for product and market growth and development and profitable returns for our shareholders, clients and employees.”

During a conference call last month, Mr. Watson noted that the “more international approach” of his company got a jumpstart from Argo's merger with property-catastrophe reinsurer PXRE Group last year. The merger established an international reinsurance operation, now named Peleus Re, in Bermuda.

Commenting on the offer for Heritage, Mr. Watson said the Lloyd's operation and Argo are similar in that both target small-account business. He noted, however, that Argo's U.S. specialty insurance operations, Argonaut Specialty and Colony Insurance, focus on casualty risks, while Heritage has a book that is predominately property.

In addition to a worldwide property unit focusing on commercial accounts, he noted that Heritage does write some liability risks, but that these are non-U.S. liability risks, making the operations complementary to Argo's U.S. operations.

In a press statement today, Heritage CEO Richard Pexton also highlighted the synergies. “Our complementary books of business, shared commitment to disciplined underwriting and client service, and desire to lead in the international specialty market make Argo Group's acquisition of Heritage a unique and compelling development for both companies,” he said.

According to Argo, Heritage managed total premium capacity of ?315m ($630 million) in 2007, and capacity is similar for 2008.

Gross premiums for Argo Group were nearly $1.2 billion in 2007.

Argo Group's offer, which remains subject to the terms set out in the offer document distributed to Heritage shareholders on April 17, 2008, will remain open for acceptance until further notice, Argo said.