Argo International Holdings has struck a $235 million deal to buy Ariel Re in an all-Bermuda insurance combination.

And it appears that job cuts on the island are not high on the agenda for the merged company.

A spokesman for Argo said: “Cost savings were not a major driver in the rationale for the acquisition of Ariel Re, rather we are excited about bringing two significantly complementary businesses together.

“Both teams will have a significant role to play in bringing our platforms together for the benefit of our customers.”

Ariel Re employs around 100 people and has offices in Victoria Place, Hamilton.

Argo, whose headquarters is on Pitts Bay Road, said the deal, which will see Argo’s reinsurance arm combine with Ariel Re, was expected to close in the first quarter of next year, subject to regulatory approvals.

Mark Watson, CEO of Argo, said: “Ariel Re is a terrific fit for Argo Group — operationally and culturally.

“We remain focused on delivering enhanced shareholder value. This transaction enables us to build on the successes realised individually by Argo Group and Ariel Re, utilising our combined strength to deploy capital in selected areas to produce maximum return and continued growth.”

Mr Watson added: “Under the leadership of Jose Hernandez, head of Argo Group’s international business, the combination of Ariel Re and Argo Re will result in a market-leading business and will make a meaningful and immediate contribution to earnings and return on equity.”

He said that the acquisition was part of Argo Group’s bid to build scale in its London and Bermuda-based platforms by adding complementary lines of special business.

Mr Watson added that, after the deal goes through, Argo Group will have “a well-balanced portfolio mix” of about 88 per insurance and 12 per cent reinsurance.

The transaction is claimed to provide Argo with added diversification, which will help to improve its ability to manage through changing market cycles.

And the company said that other benefits, like Ariel Re’s “unique modelling and risk analysis tools”, would enhance Argo’s underwriting analytics.

Mr Hernandez said: “Ariel Re is a group of proven insurance experts who rely on deep domain expertise, rigorous research and development and innovative thinking — values and capabilities that align with those of Argo Group.”

Ryan Mather, CEO of Ariel Re, said: “Argo Group have long been supporters of Ariel Re and we are delighted to take this relationship forward by bringing Ariel Re under the Argo banner.

“There is great synergy between the teams from both companies and we are looking forward to working together to strengthen the offering for our clients.”

Ariel Re is jointly owned by Banco BTG Pactual and the Abu Dhabi Investment Council and underwrites a global portfolio of insurance and reinsurance business through Lloyd’s Syndicate 1910.

The company said it’s business is well-diversified by distribution, regional exposure and peril and that it had achieved “superior returns by sourcing low-frequency/higher severity high margin business”.

Ratings agency Standard & Poors said that the US long-term ratings of Argo were unaffected by the move.

The firm said: “SWE believe the acquisition’s size is relatively small on a net basis.

“While financial leverage, on a pro forma basis, will increase to around 26 per cent, we expect prospective capitalisation to remain very strong, leverage to decline in part through accrued earnings and fixed charge coverage to remain above four times, which is consistent with our assessment of a strong financial risk profile.”