Argo Leveraging Its Specialty Focus And Tech Investments

There’s still work to do, but Argo Group (ARGO) management has already started to deliver some of the promised benefits of the company’s multiyear tech investment program. The combination of Argo’s historically strong position in specialty insurance (particularly excess & surplus) and its improving customer service is boosting premium growth, while improved analytics and automation are starting to benefit underwriting and expenses.

Up about 20% from my last update, Argo has definitely exceeded my expectations, as the market has reacted strongly to an insurance story where pricing isn’t such a challenge (fellow E&S underwriter Kinsale (KNSL) has done well too) and where expense leverage is starting to drive visibility into much better earnings. The faster progress with earnings leverage has improved my valuation outlook for the shares, but it’s harder to see how the stock is substantially undervalued even if an adjustment process in the International segment is closer to the end than the beginning.

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Argo Leveraging Its Specialty Focus And Tech Investments