Argo Group Expecting Losses From February, BGB Maintains Buy Rating

BGB Securities has published a research report on Argo Group International Holdings AGII after the company announced that it expects losses to be reported from its February earthquake in New Zealand. In the report, BGB writes "AGII expects losses from the February 2011 earthquake in Christchurch, New Zealand to be $35M to $45M. This range is based on expected industry losses of $3.5B to $8B. The February 2011 earthquake was the second major earthquake to hit Christchurch in the past six months. In September of 2010, Christchurch was struck with an earthquake that is expected to cost insurers $2B to $4.5B. Prior to releasing 4Q10 earnings, AGII raised its loss estimate for the September Christchurch earthquake from $12M to $23.3M. Based on estimates for the February quake, it is little surprise that the top end of AGII's recent loss estimate is nearly double the prior estimate. Our new price target of $37 accounts for the recently disclosed Christchurch earthquake as well as undisclosed losses related to the Japanese earthquake. We believe our price target would have support even if the company incurred and additional $200M of CAT losses through the remainder of 2011." BGB Securities maintains its Buy rating and $37 price target. Argo Group closed Friday at $31.58.