Argonaut Group Increases Capital by $87 Million-Plus
San Antonio-based Argonaut Group Inc., a national specialty underwriter, announced it has closed various transactions providing the company with $87.4 million in capital to support current operations and the opportunities presented by favorable market conditions for its four operating business segments.
The funds include the private placement of $35.4 million in mandatory convertible preferred stock led by HCC Insurance Holdings Inc. . The preferred stock is convertible into shares of Argonaut Group, Inc.’s common stock at any time by the holder. Conversion is mandatory after 10 years at a price of $12.00 per share.
Additionally Argonaut Group reported it has obtained from HCC an $18 million, three-year loan at 12 percent interest, pre-payable at Argonaut’s option at any time. Funding of the preferred stock will repay $6 million of this loan with the balance likely payable from future financing by the Company.
The company also completed the sale of certain real state holdings in California totaling $52 million.
“Through these transactions we were able to minimize dilution for shareholders by reducing the size of our preferred stock offering, while achieving our statutory surplus goals,” stated Mark E. Watson III, president and chief executive officer of Argonaut Group Inc. “The capital provided will enable us to continue the transformation of Argonaut Group to a national specialty underwriter and support our strategic business plan.”
With the completion of these transactions, the company expects its risk based capital level to be above the “Company Action Level”, as described in its most recent Form 8-K filing with the Securities and Exchange Commission, as of March 31.