Argo Group International Holdings, Ltd.

A securities class action has been filed against Argo Group International Holdings, Ltd. (ARGO) on behalf of investors that purchased or otherwise acquired Argo common stock between February 13, 2018 through August 9, 2022.  This case has been filed in the USDC – S.D.N.Y.

Argo underwrites international specialty insurance products in the property and casualty markets. Specifically, the Company claims to target “niche” markets in order to develop a  leadership  position and generate “superior  underwriting  profits.”  Argo operates  under two reporting segments, a U.S. segment and an International segment. The segment operating in the U.S. was historically considered Argo’s “crown jewel.”

In the U.S., Argo purports to be a leader in the Excess and Surplus lines (“E&S”) focusing  on risks  that the standard market  is  unwilling or unable to underwrite.  Due to the inherently risky nature of its specialty insurance business, investors valued the Company’s ability to properly reserve for losses. Therefore, any statements about Argo’s underwriting and reserve policies were highly material to investors.

During the Class  Period,  Defendants  assured  investors  that they had  closely monitored Argo’s policies and could set appropriate reserves. Defendants cultivated a narrative that Argo had a long history of successfully managing its reserves and the Company had a “prudent reserving philosophy.”

For example, Defendant Mark E. Watson, III, who was Argo’s CEO from 2000 until November 5, 2019, touted Argo’s  long-term  favorable  reserve development  during the Company’s earnings conference call for the fourth quarter of 2017 (“4Q17”), stating that “you can see that for the 13th year in a row we’ve had reserve redundancies on our balance sheet and I believe that this is also true for the last 14 out of 15 years.”  This statement was echoed throughout the Class Period in repeated assurances about the Company’s reserves.

However, this statement, and other similar ones, were false and misleading because: (1) Argo’s reserves were wholly inadequate and its underwriting standards were not prudent as was represented; (ii) Argo had dramatically changed its underwriting policies on certain U.S. construction contracts  as far back as 2018; and (iii) these policies were underwritten outside of the Company’s “core” business including in certain states and for certain exposures that were far riskier than investors understood and that the Company no longer would service moving forward.

Ultimately,  the effects  of the changes in policies,  all  of which were known to Defendants  during the Class  Period,  led  to massive  and  belatedly-disclosed  adverse  reserve developments.

Between February 2022, when Argo announce that its results for the fourth quarter of 2021 would be negatively impacted by $130 to $140 million worth of adverse prior year reserve development and non-operating charges, and August 2022, when Defendants announced further bad news  regarding  the Company’s  U.S. casualty  reserves,  Argo’s  share  price  declined precipitously, losing more than 60% in value to date in 2022.

As a result of Defendant’s wrongful acts, and the precipitous decline in the market value of the Company’s securities, the class of investors Plaintiff seeks to represent has suffered significant losses and damages.