Restructurings take time, but Argo Group (ARGO) is off to a good start, as this specialty insurance underwriter rebuilds itself around a strong core of U.S. markets like professional and product liability and surety. It certainly doesn’t hurt that Argo gets to restructure itself during an exceptionally hard market, where rates are quite healthy for a range of insurance types and comfortably cover likely losses.
Since my last update on Argo, the shares have done alright – appreciating around 8% and outperforming the likes of Everest Re (RE), James River (JRVR), Kinsale (KNSL), and W.R. Berkley (WRB), and even managing to almost keep pace with Arch Capital (ACGL). Rome wasn’t rebuilt in a day, though, and it’s going to take more time for Argo to get back to 10% and better ROEs, the point where I think a lot more investors will be willing to seriously consider the name. I see fair value above $60/share today, and double-digit annualized longer-term return potential beyond that, but whether that is sufficient reward is for each investor to decide.
Read more here:
Argo Group: Strategic Repositioning Coming Along, Shares Still Undervalued
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