Argonaut Closes Sale of Additional Shares

San Antonio-based Argonaut Group Inc. reported it closed the sale of an additional 568,000 shares of its common stock at a public offering price of $15.80 per share in connection with the exercise of the over-allotment option granted to the underwriters of Argonaut Group’s recent offering of 4,800,000 shares of common stock that closed on Nov. 3, 2003.

The net proceeds to Argonaut Group were $14.93 per share. Argonaut Group intends to contribute substantially all of the net proceeds from the offering to support the continued growth of its business, improve its regulatory capital adequacy ratios and maintain strong financial strength ratings. Argonaut will use the remaining net proceeds for general corporate purposes.

Concurrent with the closing of the underwriters’ over-allotment option, HCC Insurance Holdings Inc. converted $0.9 million of a note payable into additional shares of Argonaut Group common stock at a conversion price equal to $14.93 per share (the price to the public less the underwriting discount).

Concurrent with the closing of the recent 4,800,000 share offering, HCC converted $7.9 million of this $12.0 million note payable into shares of Argonaut Group common stock at $14.93 per share. HCC’s ownership in Argonaut Group’s outstanding common stock on a fully diluted basis remains below 10 percent.

With the recent common stock offering and exercise of the over-allotment option, Argonaut Group has approximately 27.6 million shares of common stock outstanding. Argonaut Group’s common stock trades on Nasdaq National Market System under the symbol AGII and closed at a price of $15.84 per share on Dec. 3.

Raymond James acted as the sole book-running manager for the public offering including the over-allotment option. Copies of the prospectus relating to this offering may be obtained from the offices of Raymond James & Associates Inc., 880 Carillon Parkway, St. Petersburg, Fla. 33716.