Core Specialty acquires Professional Lines business renewal rights from Argo
Core Specialty Insurance announced that Core Specialty and its subsidiaries have entered into a series of transactions with certain subsidiaries of Argo Group for the purchase of renewal rights and related unearned premium reserve for a substantial portion of Argo’s professional lines businesses (“Argo Pro”). Argo Pro provides professional lines insurance products with primary and excess options on admitted and non-admitted bases to a variety of segmented organizations. The business will complement two of Core Specialty’s divisions: Directors & Officers Management Professional Liability, led by Stephen Moore (President) and Errors & Omissions Professional Liability, led by Jeff Jacobs (President).
As part of the transaction, Core Specialty has agreed to (1) enter into an Unearned Premium Quota Share Reinsurance Agreement whereby Core Specialty will reinsure a portion of the unearned premium reserve applicable to Argo Pro’s lines of business, as of January 1, 2025, net of applicable reinsurance, with a ceding commission equal to the unamortized DAC balance as of that date; and (2) enter into a Business Transfer Agreement providing for the payment of a Renewal Rights Commission by Core Specialty to Argo for the in-force policies as of January 1, 2025 that Core Specialty renews.
The following lines of business are included in the Renewal Rights transaction:
- Management Liability – Private, Financial Institutions and Management Liability – Public all of which will be renewed into Core Specialty’s Directors & Officers Management Professional Liability Division. Core Specialty will offer renewal policies for these product lines originated by wholesale brokers including admitted and non-admitted policies and for these product lines originated by retail brokers including non-admitted policies.
- Architects and Engineers Professional Liability, Accountants Professional Liability, and Miscellaneous Professional Liability all of which will be renewed into Core Specialty’s Errors & Omissions Professional Liability Division. Core Specialty will offer renewal policies for these product lines originated by wholesale brokers including admitted and non-admitted policies and for these product lines originated by retail brokers including non-admitted policies.
- Lawyers Professional Liability which will be renewed into Core Specialty’s Errors & Omissions Professional Liability Division. Core Specialty will offer renewal policies for this product line originated by wholesale brokers including admitted and non-admitted policies and for this product line originated by retail brokers including admitted and non-admitted policies.
Core Specialty will not acquire any insurance company entities, and the transaction does not include loss reserves associated with Argo Pro which will be retained by Argo. Core Specialty and Argo will work together to ensure all policyholders continue to receive industry leading products and services, and to align the operations in the best interests of customers, agents, brokers, and employees. Designated employees currently servicing Argo Pro have been offered employment with Core Specialty as part of the transaction.
Core Specialty expects the transaction to be accretive to its earnings per share and return on equity in 2025.
“Core Specialty’s underwriting appetite, ratings, financial strength, and capital resources are well aligned to provide continuity to Argo Pro’s insureds and brokers. In a period of change in the D&O and E&O markets, Core Specialty is seeking to distinguish itself through our ‘bring it on’ attitude, quick action with intent, problem solving with expertise and personal accountability. I would like to welcome our new colleagues to Core Specialty.” – Jeff Consolino, Core Specialty’s Founder, President, and Chief Executive Officer.
