ARGO - Argo Group selling Lloyd's of London Syndicate 1200 to Westfield for $125M

Westfield, a closely held U.S.-based property and casualty insurer, is expanding into the international specialty market by acquiring Lloyd's of London Syndicate 1200 from Argo Group International Holdings ( NYSE: ARGO ) for ~$125M, it said Thursday. ARGO shares have gained 5.7% in Thursday morning trading.

The acquisition, subject to regulatory approval, is expected to close in H1 2023. The transaction represents Westfield Specialty's entrance into the international market after a strong first year in the U.S. market, the company said.

Syndicate 1200 has an estimated $650M book of business, which is focused on various lines of specialty insurance. Lloyd's holds licenses around the world to underwrite property and casualty business with an "A+" S&P financial strength rating.

"We’ve had our sights set on the international specialty market since launching our specialty business a year ago, so this is Westfield executing on our original strategy,” said Westfield Specialty President Jack Kuhn. "We considered multiple pathways but acquiring Syndicate 1200 emerged as a unique opportunity because it gets us into the international specialty market quickly with an established platform while capitalizing on current market dynamics."

The international operation will be part of Westfield Specialty, which currently writes specialty business in the U.S. The team is targeted to write $250M of premium in 2022 during its first full year of operation.

For Argo Group ( ARGO ), the transaction will help simplify its corporate structure and increase its focus on its core U.S. businesses. The transaction and its loss portfolio transfer transaction ("LPT") with Enstar Group on Aug. 8 are a result of Argo's strategic review process . The board is continuing to explore a range of alternatives including a potential sale, merger, or other strategic transactions.

The LPT is expected to improve Argo's regulatory capital position and provide protection against reserve volatility. It's expected to close in H2 2022.

YTD, Argo Group ( ARGO ) stock has dropped 63% , steeper than the S&P 500's 17% decline during the same period.

On Aug. 31, SA's Quant system flagged Argo ( ARGO ) stock for high risk of performing poorly .

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