ARGO - Argo Group Has To Rebuild Confidence After Renewed Concerns About Underwriting And Reserves

• Sizable adverse reserve developments in the fourth quarter not only hit reported results but seriously damaged investor confidence in the turnaround story.
• A significant portion of the developments was tied to discontinued or rehabilitated business lines, but underwriting problems are seldom a one-off event and it will take time to rebuild confidence.
• Management continues to execute on a cogent turnaround plan, with real progress on the expense side, but the end-markets are likely to get less accommodating.
• If Argo can generate long-term core earnings growth in the high-single digits, without further significant adverse developments, the shares offer solid upside, but it's going to take time.

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