Financial services firm Brookfield Reinsurance announced it has entered a definitive agreement to acquire Argo Group International Holdings in an all-cash transaction valued at approximately $1.1 billion.

As part of the agreement, Argo shareholders will receive $30.00 per share in cash, representing a 6.7 percent premium to Argo’s closing share price on Feb. 7, 2023, Brookfield Reinsurance said. The deal will take Argo private.

The deal is expected to close in the second half of 2023, subject to approval by Argo shareholders and other closing conditions, including receipt of insurance regulatory approvals in relevant jurisdictions.

This deal comes on the heels of Westfield’s acquisition of Argo Underwriting Agency and its Lloyd’s Syndicate 1200.

In April 2022, Bermuda-based Argo announced its board of directors had initiated an exploration of “strategic alternatives,” which would include “a potential sale, merger or other strategic transaction.” The insurer had experienced several years of turmoil, including losses and a probe by the Securities and Exchange Commission over excessive corporate expenses, as well as disgruntled shareholders, and management turmoil (including the resignation of former CEO Mark E. Watson III and his successor Kevin J. Rehnberg who stepped down in March 2022 due to health problems).

For full-year 2021 (the most recent FY results), Argo reported a net loss attributable to common shareholders of $4.7 million compared to a net loss attributable to common shareholders of $58.7 million in 2020.

“This transaction brings a successful conclusion to Argo’s strategic alternatives review process and represents the best path forward for Argo, our employees and policyholders while also maximizing value for our shareholders,” according to Thomas A. Bradley, Argo’s executive chairman and chief executive officer.

“By joining Brookfield Reinsurance, Argo will continue to serve our brokers with greater financial strength and opportunities to grow as a U.S.-focused specialty insurer,” he said.

“The acquisition of Argo represents another milestone in the continued expansion of our insurance solutions business. Argo’s leading U.S. specialty platform adds a foundational piece to our expanding U.S. P&C operations,” commented Sachin Shah, chief executive officer of Brookfield Reinsurance, in a statement. (A subsidiary of Canada’s Brookfield Asset Management, Brookfield Reinsurance is a publicly traded insurance holding company that owns and operates a global re/insurance platform).

“We look forward to partnering with the Argo team to support the growth of its core businesses, build on its strong franchise and deliver value for policyholders,” Shah added.

The boards of directors of Brookfield Reinsurance and Argo unanimously approved the merger agreement. In connection with the execution of the merger agreement, Argo’s largest shareholder, Voce Capital Management LLC, agreed to vote in favor of the merger.

Brookfield Reinsurance purchased insurer American National Group Inc. for about $5.1 billion in an all-cash deal in 2021.

Debevoise & Plimpton LLP is serving as legal adviser to Brookfield Reinsurance on this transaction, while Goldman Sachs & Co. LLC is serving as Argo’s financial adviser and Skadden, Arps, Slate, Meagher & Flom LLP is serving as its legal adviser in this transaction.

Source: Brookfield Reinsurance and Argo Group International Holdings