A.M. Best Co. Affirms Argonaut Insurance and Argonaut Great Central Ratings, Raises Ratings for Colony and Rockwood Groups

Business Wire, Nov 26, 2001

Business Editors

SAN ANTONIO--(BUSINESS WIRE)--Nov. 26, 2001

Argonaut Group, Inc. (Nasdaq:AGII) announced today that A.M. Best Co. has affirmed its rating of A (Excellent) for the five-company Argonaut Insurance intercompany pool, and its rating of A- (Excellent) for Argonaut Great Central Insurance Company. A.M. Best also raised the ratings of Colony Insurance Group and Rockwood Casualty Group, both recently acquired by Argonaut, from A- to A (Excellent).

In discussing its rationale as to Argonaut, A.M. Best said, "The rating reflects Argonaut's strong capitalization and favorable market position as a national specialty underwriter." The rating agency noted that through the addition of the Colony and Rockwood groups in August 2001, Argonaut "broadened its product offerings," "diversified its earnings stream" and "effectively utilized its excess capital," while at the same time further reducing its workers' compensation exposure. A.M. Best went on to state that "Argonaut maintains strong relationships with its primary distribution force, regional and national brokers, and will benefit from the synergy" of the Colony and Rockwood distribution channels.

A.M. Best stated that the upgraded ratings of the Colony and Rockwood groups from A- to A (Excellent) were based in part on the "enhanced operational benefits" associated with being a member of Argonaut Group, Inc. and Argonaut's intent to "bolster the capitalization of its operating subsidiaries to allow for growth in firming market conditions." The ratings of the Argonaut intercompany pool and its other independently rated subsidiaries were also influenced by "the financial strength and flexibility of the publicly traded parent, Argonaut Group, Inc., with over $1.9 billion in assets and no outstanding debt."

Commenting on the Colony rating, A.M. Best said, "This rating reflects the group's favorable operating profitability, strong capitalization, and secure balance sheet. With its focus on underwriting profit and consistency, Colony maintains a loss ratio advantage over its peer surplus lines writers." Discussing the Rockwood rating, A.M. Best noted the group's "historically strong operating returns, conservative loss reserve position, and solid capitalization," as well as the group's "niche expertise and market leadership in underwriting workers' compensation coverage for both underground and surface coal mining operations in the Commonwealth of Pennsylvania." A more complete discussion of the factors considered by A.M. Best as part of its rating process for Argonaut and its subsidiaries can be obtained through its website at www.ambest.com.

This news release contains "forward-looking statements" which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on the Company's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that actual developments will be those anticipated by the Company. Actual results may differ materially from those projected as a result of significant risks and uncertainties, including non-receipt of the expected payments, changes in interest rates, effect of the performance of financial markets on investment income and fair values of investments, development of claims and the effect on loss reserves, accuracy in projecting loss reserves, the impact of competition and pricing environments, changes in the demand for the Company's products, the effect of general economic conditions, adverse state and federal legislation and regulations, developments relating to existing agreements, heightened competition, changes in pricing environments, and changes in asset valuations. For a more detailed discussion of risks and uncertainties, see the Company's public filings made with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update any forward-looking statements.

Argonaut Group, Inc. is a national provider of specialty insurance products focused on high-quality customer service for specific niches of property-casualty insurance. More information can be found on the company's website at www.argonautgroup.com.