Argonaut, PXRE Complete Merger; Officers Named; Financial Statement

August 8, 2007

The newly-formed Argo Group International Holdings, Ltd. announced the completion of its merger between Argonaut Group, Inc. and a wholly owned subsidiary of PXRE Group, Ltd. concluding the deal made earlier this year (See IJ web site March 15).

The combined entity will do business as Argo Group International Holdings, Ltd., which becomes the Bermuda holding company for Argo Group’s existing insurance subsidiaries, Argonaut Group’s U.S. operations, and Peleus Reinsurance Ltd., Argo Group’s Bermuda-based platform.

The Group’s shares will trade on the NASDAQ Global Select Market under Argonaut Group’s former ticker symbol “AGII”. A fifth character “D” will be appended to the “AGII” symbol for the first 20 trading days to reflect the reverse share split undertaken in connection with the merger. Beginning on September 5, 2007, Argo Group will trade under its permanent four-letter ticker symbol of AGII.

Argo Group’s President and CEO Mark E. Watson III expressed his confidence in the new entity and in its ability to “deliver enhanced shareholder value.” He cited the “potential to be a leader in the international specialty insurance marketplace,” and indicated that he believes “the combination of resources this merger provided positions us well to achieve that end.”

In a separate announcement Argo Group said “Andrew Carrier will be joining the organization later this year as President of Peleus Reinsurance Ltd., the new Bermuda-based reinsurance operation licensed in March of this year.” He has been the Active Underwriter for the Kiln Group’s Catastrophe Syndicate 557 at Lloyd’s for the past seven years, and the bulletin noted “is a widely respected member of the international insurance sector and was Chairman of Lloyd’s International Reinsurance Committee.”

The Group also announced that Barbara Bufkin will move to the position of Senior Vice President, Corporate Business Development. She is also responsible for group-wide ceded reinsurance, and “will continue to maximize Argo Group’s relationship with its distribution partners and explore opportunities for joint ventures and strategic partnerships in the ongoing development of Argo Group as an international specialty underwriter,” said the bulletin.

Watson expressed his delight that Carrier will join the Group, nothing that he “brings a wealth of international experience and perspective to our management team,” particularly his “understanding of global markets in general and the London and Bermuda markets in particular.” Watson also stated he was “pleased to have Barbara back on my executive team and want to thank her for all that she has done to establish a solid foundation at Peleus Re upon which to develop our reinsurance operations.”

PXRE issued its second quarter earnings report just prior to the merger completion announcement. The Company, which went into virtual run-off following heavy losses caused by the 2005 hurricanes (See IJ web site Sept. 20, 2005, May 11, Feb. 20 & Feb.17, 2006), noted that “virtually all of the policies written by the Company in 2006 expired as of December 31, 2006.” PXRE said it “has written only a limited number of new property catastrophe reinsurance contracts during the second quarter of 2007 through its newly formed Bermuda subsidiary Peleus Reinsurance Ltd.”

As a consequence it posted net loss before convertible preferred share dividends of $11.6 million for the period, compared to net income before convertible preferred share dividends of $2.1 million for the second quarter of 2006. The bulletin also noted that,”on a fully diluted basis, book value per share decreased during the first six months of 2007 by $0.29 to $6.12 at June 30, 2007 — Net loss before convertible preferred share dividends was $18.8 million for the first six months of 2007 compared to net income before convertible preferred share dividends of $43.8 million for the first six months of 2006.”

The full report is available on the Company’s web site at:, as well as a replay of the earnings conference call. The replay is also available by telephone at (888) 203-1112, passcode 6741562. International callers can access the conference call replay by dialing (719) 457-0820, passcode 6741562.

The bulletin also noted the imminent closing of the merger between PXRE and Argonaut. Except for the business still in run-off, PXRE is now part of the Argo Group. Jeff Radke, PXRE Group’s former president and CEO, will serve as a consultant to Argo Group.

Source: Argo Group –

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