The following is a discussion and analysis of our results of operations for the
three months ended March 31, 2023 compared with the three months ended March 31,
2022, and a discussion of our financial condition as of March 31, 2023. This
discussion and analysis should be read in conjunction with the attached
unaudited interim Condensed Consolidated Financial Statements and notes thereto
and Argo Group's 2022 Form 10-K, including the audited Consolidated Financial
Statements and notes thereto.
Certain reclassifications have been made to financial information presented for
prior years to conform to the current year's presentation.
Forward-Looking Statements
This report includes forward-looking statements that reflect our current views
with respect to future events and financial performance. Forward-looking
statements include all statements that do not relate solely to historical or
current facts, and can be identified by the use of words such as "expect,"
"intend," "plan," "believe," "do not believe," "aim," "project," "anticipate,"
"seek," "will," "likely," "assume," "estimate," "may," "continue," "guidance,"
"growth," "objective," "remain optimistic," "improve," "progress," "path
toward," "outlook," "trends," "future," "could," "would," "should," "target,"
"on track" and similar expressions of a future or forward-looking nature.
Such statements are subject to certain risks and uncertainties that could cause
actual events or results to differ materially including, but not limited to,
recent changes in interest rates and inflation, our ability to complete and
realize the anticipated benefits of the merger with Brookfield Reinsurance Ltd.,
the adequacy of our projected loss reserves, employee retention and changes in
key personnel, the ability of our insurance subsidiaries to meet risk-based
capital and solvency requirements, the outcome of legal and regulatory
proceedings, investigations, inquiries, claims and litigation and other risks
and uncertainties discussed in our filings with the SEC. For a more detailed
discussion of such risks and uncertainties, see Part II, Item 1A. "Risk Factors"
herein and Part I, Item 1A, "Risk Factors" in Argo Group's Form 10-K and Form
10-K/A for the fiscal year ended December 31, 2022. The inclusion of a
forward-looking statement herein should not be regarded as a representation by
Argo Group that Argo Group's objectives will be achieved. Argo Group undertakes
no obligation to publicly update forward-looking statements, whether as a result
of new information, future events or otherwise. You should not place undue
reliance on any such statements.
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Table of Contents
Recent Developments
Merger
On February 8, 2023, we entered into an Agreement and Plan of Merger (the
"Merger Agreement"), with Brookfield Reinsurance Ltd. ("Brookfield Reinsurance")
and BNRE Bermuda Merger Sub Ltd. ("Merger Sub"), a wholly owned subsidiary of
Brookfield Reinsurance. The Merger Agreement provides for the merger of the
Merger Sub with and into us, which we refer to as the "Merger," with us
surviving the Merger as a wholly owned subsidiary of Brookfield Reinsurance.
Completion of the Merger is subject to satisfaction or waiver of customary
closing conditions, including approval of the Merger by Argo's shareholders,
expiration or early termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and receipt of the regulatory approvals specified in the Merger Agreement
and the absence of any injunction, judgment or ruling restraining the Merger. In
addition, the obligation of each party to consummate the Merger is conditioned
upon, among other things, the accuracy of the representations and warranties of
the other party (subject to certain materiality exceptions), and material
compliance by the other party with its covenants under the Merger Agreement.
On April 19, 2023, Argo shareholders approved the Merger and the Merger
Agreement.
On March 8, 2023, Argo and Brookfield Reinsurance filed the required
notifications for antitrust clearance under the HSR Act. The waiting period
under the HSR Act expired on April 7, 2023.
Because the required shareholder approval for the Merger has been obtained and
the HSR Act waiting period has expired, the only remaining significant closing
condition is the receipt of the required regulatory approvals from the insurance
authorities specified in the Merger Agreement. As of the date of this filing,
Brookfield Reinsurance has submitted or caused to be submitted the required
regulatory filings and those regulators are reviewing the filings. The Merger is
expected to close in the second half of 2023.
In addition, if the Merger is not completed by November 8, 2023 (which date may
be extended until February 8, 2024 if all conditions to the Merger are satisfied
or waived other than obtaining required regulatory approvals), either we or
Brookfield Reinsurance may choose to terminate the Merger Agreement. Either
party may also elect to terminate the Merger Agreement in certain other
circumstances, including by mutual written consent of both parties.
The foregoing description of the Merger Agreement and the transactions
contemplated thereby does not purport to be complete and is subject to and
qualified in its entirety by reference to the Merger Agreement, a copy of which
is filed as Exhibit 2.1 to the Annual Report on Form 10-K for the fiscal year
ended December 31, 2022.
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