Argo CEO says re/insurer has right size

Argo CEO Mark Watson III believes that the Bermuda-based re/insurer has the right size, enabling it to innovate and use technology to thrive in the future.

The comments come as Bermuda competitors are being snapped up by larger entities.

“Those who win in the future will be focused on innovation, using technology to solve their clients’ problems and deeply improving the customer experience. We believe the key to doing these things well lies in using our size advantageously,” Watson III said in a letter to shareholders.

“We also think the time is right to be precisely our size, because we are both financially stable and operationally nimble. Our size allows us to go in and out of markets, for the benefit of our shareholders, and also to take our available capital and put it quickly into opportunities as they show up,” he added.

The comments follow a number of acquisitions in Bermuda. Validus was for example acquired by AIG, XL Group is being purchased by AXA and Aspen Insurance is being taken over by Apollo.

Some Bermuda-players have been hit hard by the 2017 catastrophe events including hurricanes Harvey, Irma and Maria, while a tax reform in the US is reducing the competitive advantage of re/insurers based in Bermuda.

But Watson III is convinced of Argo’s strategy which focusing on specialty and that the firm is on the right track. “I believe that our results in the first half of this year are beginning to prove the merit of that thinking.”

In the first six months of 2018, Argo booked gross written premiums of $1.41 billion, up 9.9 percent compared to the same period of 2017. In the second quarter of 2018 the company grew its US operations by 12.3 percent year on year to $410.0 million.

The combined ratio was 96.1 percent in the first half of 2018, or 1.7 points better than in the same period last year.