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ARGO.US
id: 418
S.D. New York
CourtOn August 8, 2022, Argo (ARGO) announced that it had entered into a Loss Portfolio Transfer agreement with a wholly owned subsidiary of Enstar Group Limited covering a majority of the company’s U.S. casualty insurance reserves.
Enstar’s subsidiary agreed to provide ground-up cover of $746 million of reserves, and an additional $275 million of cover in excess of $821 million, up to a policy limit of $1.1 billion. Argo, however, retains a loss corridor of $75 million up to $821 million. Furthermore, Argo announced that it anticipated recognizing an after-tax charge of approximately $100 million in connection with the transaction in the Q3 of 2022.
The next day, on August 9, 2022, Argo held its earnings conference call reinsuring direct U.S. casualty insurance portfolios, including construction, having consistently represented that reserves were adequate and that its U.S. Operations were strong
However, taking all statements and actual results into account, shareholders have reasons to believe that the Company and its Leaders mislead them because:
- Argo’s reserves were wholly inadequate and its underwriting standards were not prudent as was represented;
- Argo had dramatically changed its underwriting policies on certain U.S. construction contracts as far back as 2018;
- 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.
AGRO's share price plunged, losing more than 55% in 2022.
Case Status
Attorney Investigation
Alleged Offence
Misleading Statements,
Financial Misrepresentation,
Failure to Disclose,
Negligence,
Omissions
Suspected Party
Directors,
Management,
Shareholder,
Service Provider
Security Type
Stocks
Trade Direction
Long
Shock Event Date
09 August 2022