Insurer Core Specialty and its subsidiaries have entered into a series of transactions with certain subsidiaries of Argo Group International Holdings to acquire the renewal rights and related unearned premium reserves for a significant portion of Argo’s professional lines business, Argo Pro.
The Argo Pro business provides professional lines insurance products with primary and excess options on admitted and non-admitted bases to several segmented organisations.
As part of the transaction, Core Specialty has agreed to enter into an Unearned Premium Quota Share Reinsurance Agreement.
Under this agreement, the company will reinsure a portion of the unearned premium reserve applicable to Argo Pro’s lines of business as of January 1, 2025, net of applicable reinsurance, with a ceding commission equal to the unamortized DAC balance as of that date.
Additionally, the insurer will execute a Business Transfer Agreement, which provides for the payment of a Renewal Rights Commission to Argo for the in-force policies as of January 1, 2025, that Core Specialty renews.
Through this transaction, Argo Pro will complement two of Core Specialty’s divisions: Directors & Officers Management Professional Liability, led by Stephen Moore as President, and Errors & Omissions Professional Liability, led by Jeff Jacobs, also as President.
Management Liability, Architects and Engineers Professional Liability, Accountants Professional Liability, and Miscellaneous Professional Liability, and Lawyers Professional Liability are included in the renewal rights transaction.
The entire Management Liability – Private, Financial Institutions and Management Liability – Public segment will be renewed into Core Specialty’s Directors & Officers Management Professional Liability Division. Architects and Engineers Professional Liability, Accountants Professional Liability, and Miscellaneous Professional Liability will be renewed into Core Specialty’s Errors & Omissions Professional Liability Division.
Lawyers Professional Liability will be integrated into Core Specialty’s Errors & Omissions Professional Liability Division upon renewal.
Core Specialty confirms that it will offer renewal policies for all three product lines originated by wholesale brokers, including both admitted and non-admitted policies. Additionally, it will provide renewal policies for this product line originated by retail brokers, also encompassing admitted and non-admitted policies.
The company will not acquire any insurance company entities, and the transaction does not include loss reserves associated with Argo Pro, which will remain with Argo.
The two companies will collaborate to ensure uninterrupted service for all policyholders and to align operations in the best interests of customers, agents, brokers, and employees. As part of the agreement, designated employees currently servicing Argo Pro have been offered employment with Core Specialty.
Core Specialty anticipates that the transaction will enhance its earnings per share and return on equity this year.
Jeff Consolino, Founder, President, and Chief Executive Officer, Core Specialty, commented, “Core Specialty’s underwriting appetite, ratings, financial strength, and capital resources are well aligned to provide continuity to Argo Pro’s insureds and brokers.
“In a period of change in the D&O and E&O markets, Core Specialty is seeking to distinguish itself through our ‘bring it on’ attitude, quick action with intent, problem-solving with expertise and personal accountability. I would like to welcome our new colleagues to Core Specialty.”
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