Argo Re Ltd. and its subsidiaries have been affirmed the financial strength rating (FSR) of A (excellent) and issuer credit ratings (ICR) of "a" by AM Best Co.

Best also has affirmed the ICR of "bbb" and debt ratings of its parent holding company, Bermuda-based Argo Group International Holdings Ltd.

The outlook for all ratings is stable.

The ratings consider Argo Group's first quarter earnings announcement and took into account Argo Re's supportive capitalisation, experienced management team, product expertise in niche focus areas and the historical profitability at Argo Re's subsidiaries.

Best said that the US specialty operations were managed holistically with respect to capital, investment strategy and market presence.

Argo Re, as the lead insurer, also assumed risk via quota share reinsurance agreements with its subsidiaries.

The ratings further reflected Argo Group's diversified insurance and reinsurance platform, which includes a book of unaffiliated, third party reinsurance business and the addition of an international specialty segment written through Lloyds in May 2008.

Best said the ratings also considered Argo Group's first quarter 2010 conservative debt-to-capital ratio of 19 percent and strong interest coverage.

These positive rating factors were partially offset by the execution risk associated with the platform expansion in recent years, and the current obstacles presented by the prevailing competitive and economic conditions.

Despite these challenges, Best expects that Argo Re's operating performance and capitalisation will continue to support the ratings.