Argonaut Group Raised

S&P raised its counterparty credit rating on Argonaut Group Inc. to “BBB-” from “BB+.” At the same time, S&P raised its counterparty credit and financial strength ratings on Argonaut Group Inc.’s operating insurance companies to “A-” from “BBB+.” S&P also raised its preferred stock rating on Argonaut by two notches to “BB” from “B+.”
The notching between the preferred stock rating and holding company counterparty credit rating was narrowed to two notches in accordance with our criteria for investment-grade ratings. The outlook on Argonaut and its subsidiaries is stable.

The upgrade reflects Argonaut’s improved and strong capitalization as of year-end 2004, improved earnings, improved competitive position, successful execution of its strategic focus on niche markets where it can excel, and a level of financial leverage supportive of the rating, according to S&P.

Partially offsetting these strengths are capital considerations and underwriting results that, while profitable, are not yet as strong as some of its competitors. S&P expects underwriting results to continue improving in 2005 with a combined ratio of 95-96 percent, driven by strong results in excess and surplus lines, lower expected catastrophe losses, and continued consistent underwriting profits from the Select Markets and Public Entity segments.