Other Indebtedness

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Other Indebtedness

Other Indebtedness

Our consolidated balance sheets include various long-term debt instruments under the caption “other indebtedness,” as detailed in the table below. Information regarding the terms and principal amounts of each of these debt instruments is also provided.

(in millions)	December 31,
Debt Type	2019		2018
Floating rate loan stock	$	56.3	$	57.8
Term loan	125.0		125.0
Other debt	—		0.6
Total other indebtedness	$	181.3	$	183.4

Floating Rate Loan Stock

This unsecured debt was assumed through the acquisition of Argo Underwriting Agency, Ltd. At December 31, 2019 and 2018, all notes were eligible for redemption subject to certain terms and conditions at a price equal to 100% of the principal plus accrued and unpaid interest. Interest on the U.S. dollar and euro notes is due semiannually and quarterly, respectively. A summary of the notes outstanding at December 31, 2019 and 2018 is presented below:

December 31, 2019 

(in millions)
Currency	Issue Date	Maturity	Rate Structure	Interest Rate at December 31, 2019	Amount
U.S. Dollar	12/8/2004	11/15/2034	6 month LIBOR + 4.2%	6.41%	$	6.5
U.S. Dollar	10/31/2006	1/15/2036	6 month LIBOR + 4.0%	6.21%	10.0
Total U.S. Dollar notes					16.5
Euro	9/6/2005	8/22/2035	3 month LIBOR + 4.0%	3.58%	13.3
Euro	10/31/2006	11/22/2036	3 month LIBOR + 4.0%	3.58%	11.6
Euro	6/8/2007	9/15/2037	3 month LIBOR + 3.9%	3.47%	14.9
Total Euro notes					39.8
Total notes outstanding					$	56.3

December 31, 2018

(in millions)
Currency	Issue Date	Maturity	Rate Structure	Interest Rate at December 31, 2018	Amount
U.S. Dollar	12/8/2004	11/15/2034	6 month LIBOR + 4.2%	6.72%	$	6.5
U.S. Dollar	10/31/2006	1/15/2036	6 month LIBOR + 4.0%	6.52%	10.0
Total U.S. Dollar notes					16.5
Euro	9/6/2005	8/22/2035	3 month LIBOR + 4.0%	3.68%	13.8
Euro	10/31/2006	11/22/2036	3 month LIBOR + 4.0%	3.68%	12.0
Euro	6/8/2007	9/15/2037	3 month LIBOR + 3.9%	3.59%	15.5
Total Euro notes					41.3
Total notes outstanding					$	57.8

No principal payments have been made since the acquisition of Argo Underwriting Agency, Ltd. The floating rate loan stock denominated in euros fluctuates due to foreign currency translation. The outstanding balance on these loans was $39.8 million and $41.3 million as of December 31, 2019 and 2018, respectively. The foreign currency translation adjustment is recorded in our consolidated statements of income (loss).

Borrowing Under Revolving Credit Facility

On November 2, 2018, each of Argo Group, Argo Group U.S., Inc., Argo International Holdings Limited, and Argo Underwriting Agency Limited (the “Borrowers”) entered into a new $325 million credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent. The Credit Agreement replaced the prior $325 million Credit Agreement (the “Prior Agreement”), dated as of March 3, 2017. In connection with the consummation of the Credit Agreement, Argo Group borrowed $125 million as a term loan due on November 2, 2021, which amount was used on November 2, 2018 to pay off in its entirety the $125 million of borrowings previously outstanding under the Prior Agreement. In addition, the Credit Agreement provides for a $200 million revolving credit facility, and the commitments thereunder shall expire on November 2, 2023 unless extended in accordance with the terms of the Credit Agreement. Interest accrues based on a variable rate, which resets and is payable based on reset options selected by Argo Group pursuant to the terms of the Credit Agreement.

A summary of the terms of the outstanding balance at December 31, 2019 and December 31, 2018 is presented below: 

December 31, 2019

(in millions)
Issue Date	Maturity	Rate Structure	Interest Rate at December 31, 2019	Amount
11/2/2018	11/2/2021	3 month LIBOR + 1.25%	3.18%	$	125.0

December 31, 2018

(in millions)
Issue Date	Maturity	Rate Structure	Interest Rate at December 31, 2018	Amount
11/2/2018	11/2/2021	3 month LIBOR + 1.25%	3.86%	$	125.0

Borrowings under the Credit Agreement may be used for general corporate purposes, including working capital, permitted acquisitions and letters of credit, and each of the Borrowers has agreed to be jointly and severally liable for the obligations of the other Borrowers under the Credit Agreement.

The Credit Agreement contains customary events of default. If an event of default occurs and is continuing, the Borrowers could be required immediately to repay all amounts outstanding under the Credit Agreement. Lenders holding at least a majority of the loans and commitments under the Credit Agreement could elect to accelerate the maturity of the loans and/or terminate the commitments under the Credit Agreement upon the occurrence and during the continuation of an event of default.

Included in the Credit Agreement is a provision that allows up to $200.0 million of the revolving credit facility to be used for LOCs, subject to availability. At December 31, 2019 and 2018, there were no borrowings outstanding and $70.5 million and $0.5 million of LOCs, respectively, issued against the Credit Facility.

Other Debt

Argo Re has entered into two secured, bilateral committed letter of credit facilities with commercial banks to issue LOCs in support of its non-admitted reinsurance obligations. These facilities have a term of one year and include customary conditions and event of default provisions. The availability of letters of credit under these secured facilities are subject to a borrowing base requirement, determined on the basis of specified percentages of the market value of eligible categories of securities pledged to the lender. Argo Re has also used LOCs issued from commercial banks on a secured, uncommitted basis in order to satisfy these requirements.

Effective December 31, 2019, reinsurance LOCs totaling $139.9 million were outstanding, of which $121.1 million were issued against the secured bilateral LOC facilities and $18.8 million were issued by a commercial bank on an uncommitted basis. Collateral with a market value of $169.9 million was pledged to these banks as security against these LOCs. See Note 2, “Investments,” for additional information.

Argo Group has entered into a LOC facility with a commercial bank to issue LOCs in favor of Lloyd’s to support its Funds at Lloyd’s requirements. This facility has a term of one year, is unsecured, and includes customary conditions and event of default provisions. At December 31, 2019 and December 31, 2018, an LOC in the amount of £23.3 million was issued in favor of Lloyd’s, which allowed the Company to reduce its other collateral pledged to Lloyd’s by a comparable amount. See Note 2, “Investments,” for additional information.

As part of the ARIS Title Insurance Corporation (“ARIS”) acquisition, we assumed a note payable with a variable interest rate of 2.00% above 30-day LIBOR, with quarterly resets and subject to certain interest rate ceilings. The note payable matured on April 1, 2019 and was paid in full.