Argonaut Group Affirmed, Outlook Stable

S&P affirmed its ratings on Argonaut Group Inc. and its insurance company affiliates, including its “BBB+” counterparty credit and financial strength ratings on the affiliates, and revised the outlook on all ratings to stable from negative.

The rating actions reflect Argonaut’s substantially improved capital position as of year-end 2003 following a common stock issue that raised $79.9 million. Argonaut’s surplus benefited from improved underwriting results and a large increase in realized capital gains.

S&P expects underwriting results will continue to improve in 2004, driven by strong results in excess and surplus lines and a decrease in the earnings drag from legacy issues related to Argonaut’s poorly performing workers’ compensation book. Despite the strain of new business volume, capital adequacy is expected to improve further in 2004.

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