EX-99.1 2 dex991.htm PRESENTATION TO INVESTORS Presentation to Investors
Presentation to Investors
April 11, 2008
Exhibit 99.1

Presentation to Investors
April 11, 2008
2.
Forward-Looking Statements
This presentation contains “forward-looking statements”
which are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The forward-
looking statements are based on the Company's current expectations and beliefs concerning
future developments and their potential effects on the Company. There can be no assurance
that actual developments will be those anticipated by the Company. Actual results may differ
materially from those projected as a result of significant risks
and uncertainties, including
non-receipt of the expected payments, changes in interest rates, effect of the performance of
financial markets on investment income and fair values of investments, development of
claims and the effect on loss reserves, accuracy in projecting loss reserves, the impact of
competition and pricing environments, changes in the demand for the Company's products,
the effect of general economic conditions, adverse state and federal legislation, regulations
and regulatory investigations into industry practices,  developments relating to existing
agreements, heightened competition, changes in pricing  environments, and changes in
asset valuations.  The Company undertakes no obligation to publicly update any forward-
looking statements as a result of events or developments subsequent to the presentation.

Presentation to Investors
April 11, 2008
3.
Argo Group Today
Headquarters
Major business
segment locations
•
Specialty underwriter in attractive niche areas of
property, casualty insurance and reinsurance
•
Headquarters:  Bermuda
–
operates in 50 states and internationally
•
Market Cap over $1B
•
Three ongoing business segments
–
Excess and Surplus Lines (E&S)
–
Select Markets
–
International Specialty

Presentation to Investors
April 11, 2008
4.
Solid Record of Disciplined Growth
2007 Revenues
90%+
90%+
Business Development Activity
Public Entity
Argonaut Specialty
Interstate
Grocers
Coregis
Fulcrum
Assets acquired:
New businesses launched:
Organic Growth Strategies
Cross Selling
Increased Product Offerings
Businesses acquired:
PXRE
Rockwood
Colony
Peleus
Massamont

Presentation to Investors
April 11, 2008
5.
An Impressive Growth Track Record
Total Assets
18%
CAGR
$1.2B
$186M
2000
2007
Gross Written Premiums
31%
CAGR
5
$1.6B
$5.1B
2000
2007

Presentation to Investors
April 11, 2008
6.
Heritage Transaction Overview
Transaction Structure
Terms of Offer
•
All cash tender offer
•
Acquire entire issued and to be issued ordinary share capital of
Heritage Underwriting Agency plc (“Heritage”)
•
Acquisition vehicle: Argo Acquisition, Limited (wholly owned indirect
subsidiary of Argo Group International Holdings, Ltd (“Argo”)
•
Heritage shareholders would receive 154 pence / share in cash
(ex-dividend basis)
•
Shareholders on the register at the close of business on
28 March 2008 would remain entitled to receive Final Dividend of
6.0 pence per Heritage share
•
Offer value (fully diluted): £136 million ($272m) (on an ex-dividend
basis)
Valuation
•
Consideration to be funded using Argo’s existing resources
Financing
•
Transaction
Price
Per
Share
Consideration
–
154.0p
•
Premium / (Discount) vs. Book Value @ 12/31/2007
Book
Value
adjusted
for
6p
final
dividend
–
90.1p
Premium
to
Book
Value
–
1.71x

Presentation to Investors
April 11, 2008
7.
Transaction Overview (cont.)
Ratings
•
A.M. Best Co. credit ratings and debt ratings of Argo Group and its
insurance subsidiaries are unchanged
•
S&P affirmed its credit rating on Argonaut Group, Inc, a wholly
owned unit of Argo Group
Rationale
•
Combination of Argo Group and Heritage would create a broader
underwriting platform as well as an extended geographic capability
and distribution network for Argo Group
Approvals Required
•
Competition and regulatory approvals (FSA, Council of Lloyd’s
etc.)
•
Customary closing conditions
Irrevocable undertakings
•
Argo Group received irrevocable undertakings to accept
the Offer in respect of 64.0% of Heritage’s existing share
capital
Share purchases
•
Argo Group has acquired 9.9% of Heritage’s share
capital via share purchases at a maximum price of 154
pence per share

Presentation to Investors
April 11, 2008
8.
Strategic Rationale
•
Given Heritage’s position in the Lloyd’s market and the limited
duplication of business written by Heritage and Argo Group, the
combination would:
–
Fulfill a strategic objective of Argo Group to diversify into additional
product areas and new geographic markets, improving earnings per
share
and return on equity
–
Extend Argo Group’s reach by supplementing its distribution network with
that of Heritage
–
Provide a greater scale and breadth of underwriting skills base which is
expected to provide the enlarged Argo Group with more flexibility to take
advantage of opportunities in specific classes throughout the insurance
cycle as they arise

Presentation to Investors
April 11, 2008
9.
Transaction Rationale for Argo Group
•
Expected to enhance Argo Group’s EPS in 2008 (on an
annualized basis) by approx. 15%
•
2008 ROE is expected to increase by 1.2 to 1.5 percentage
points
•
Combination provides additional capital for strategic
development within the Lloyd’s business lines
•
Additional capital could also present new opportunities for
business to be written
•
Limited duplication of business written by Heritage and Argo
Group would allow Argo to diversify into additional product
areas and new geographic markets
•
Extend Argo’s reach by supplementing its distribution network
(1) Nothing in these statements should be interpreted to mean that Argo Group’s earnings per share or ROE in 2008 will be greater than in 2007
Financial
Considerations
(1)
Leverage Lloyd’s
platform
Diversification

Presentation to Investors
April 11, 2008
10.
Snapshot of Companies
AIM (London Stock Exchange)
NasdaqGS
Exchange
$350 million
$1.2 billion
FY 2007 GWP
Worldwide
US, Bermuda and Continental
Europe
Geographic Footprint
Specialist Lloyd’s insurer
Specialty underwriter in attractive
niche areas of property and
casualty market
Business
London, United Kingdom
Bermuda
Headquarters

Presentation to Investors
April 11, 2008
11.
Combined Business Mix
Argo Group:  Specialty Insurance
Excess & Surplus
Select Markets
International Specialty
Heritage: Specialty Insurance
Worldwide property
•
Direct & Facultative
•
North American and International binding authority
Non-US liability
•
Professional Indemnity

Presentation to Investors
April 11, 2008
12.
Transaction Rationale for Heritage
•
Combining Heritage with Argo Group provides Heritage with
access to a Bermudian underwriting platform and additional
capital for strategic development within the Lloyd's business
lines
•
Additional capital within the enlarged Argo Group could also
present new opportunities for business to be written by the
Heritage underwriting team

Presentation to Investors
April 11, 2008
13.
Path to Completion
•
Competition and regulatory approvals necessary
–
Financial Services Authority
–
Council of Lloyd’s
•
Transaction expected to close in 2Q08

Presentation to Investors
April 11, 2008
14.
Summary
Transaction would:
•
Enhance earnings per share and return on equity
•
Fulfill Argo Group’s strategic objective to diversify into additional
product areas and new geographic markets
•
Allow Argo Group to enter additional markets through Lloyd’s platform,
further diversifying its business mix
•
Extend Argo Group’s reach by supplementing its distribution network
with that of Heritage
•
Provide an enlarged group with more flexibility to take advantage of
opportunities
in
specific
classes
throughout
the
insurance
cycle
as they
arise

Thank You.