Argo Group International Holdings Ltd, the Bermudian-based specialty insurer, has entered into a definitive merger agreement with Brookfield Reinsurance that will see the company acquire Argo in an all-cash transaction valued at approximately $1.1 billion.

Thomas A Bradley, Argo’s executive chairman and chief executive , said: “This transaction brings a successful conclusion to Argo’s strategic alternatives review process and represents the best path forward for Argo, our employees and policyholders while also maximising value for our shareholders.

“By joining Brookfield Reinsurance, Argo will continue to serve our brokers with greater financial strength and opportunities to grow as a US-focused specialty insurer.”

Sachin Shah, the chief executive of Brookfield Reinsurance, said: “The acquisition of Argo represents another milestone in the continued expansion of our insurance solutions business.

“Argo’s leading US specialty platform adds a foundational piece to our expanding US P&C operations.

“We look forward to partnering with the Argo team to support the growth of its core businesses, build on its strong franchise and deliver value for policyholders.”

As part of the agreement, each issued and outstanding Argo common share will be converted into the right to receive $30 in cash at closing of the merger, funded by existing cash on hand and liquidity available to Brookfield Reinsurance.

The merger consideration per Argo common share represents a 6.7 per cent premium to Argo’s closing share price on Tuesday, and a 48.7 per cent premium over Argo’s closing share price on September 7, 2022, the last full trading day prior to Argo announcing the sale of Argo Underwriting Agency Limited and its Lloyd’s Syndicate 1200 and the continuation of its strategic alternatives review process.

The transaction is not subject to any financing condition or contingency.

Each of Brookfield Reinsurance’s and Argo’s boards of directors unanimously approved the merger agreement.

The merger is expected to close in the second half of 2023, subject to approval by Argo shareholders and other closing conditions customary for a transaction of this type, including receipt of insurance regulatory approvals in relevant jurisdictions and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

In connection with the execution of the merger agreement, Voce Capital Management LLC entered into a voting and support agreement whereby Voce agreed to vote all the common shares held by it in favour of the merger and take certain other actions, subject to the terms and conditions of the voting and support agreement.

Under the terms of the merger agreement, Argo has agreed to suspend the payment of dividends on its common shares through the closing of the transaction.

Brookfield Re, registered in Bermuda as an exempted company limited by shares since December 2020, operates a leading financial services business providing capital-based solutions to the insurance industry.

Through its operating subsidiaries, it offers a broad range of insurance products and services to individuals and institutions, including life insurance and annuities, health, and personal and commercial property and casualty insurance.

The company is part of Toronto-headquartered Brookfield Corporation, which has a perpetual capital base of approximately $125 billion generating $5 billion of free cash flow annually that is deployed across its three core pillars — asset management, insurance solutions and its operating businesses.

Brookfield Corporation is a global player, with 180,000 operating employees in 30 countries on five continents across its three core pillars.

Brookfield Asset Management is a global alternative asset manager with approximately $800 billion in assets under management.