Argo Group International Holdings, Ltd. (NYSE: ARGO), the Bermuda domiciled property/casualty insurer, produced results this week, giving an opportunity for observers to look at its’ hedge fund holdings. Argo Group has invested in hedge funds for more than eight years.
At the end of 2020 Argo Group had $111.2m committed to hedge funds out of total invested assets of $5.4bn. Over the course of last year Argo Group moved away from equities and hedge funds and switched into income-producing assets. The Group has used a strategy of reducing the capital weighting of assets in order to deploy more capital into underwriting opportunities. But allocations to Private Equity, a component of the “Alternatives” along with hedge funds have increased over the last year showing adverse selection for hedge funds. At the 31st of December 2021 the insurer had $58.6m invested in hedge funds (out of an asset base of $5.5bn).
In December of 2017 Argo Group had $163.3m invested in hedge funds out of total assets of $4.7bn. Ever since then active asset allocation decisions have only been in one direction, that is redeeming from hedge funds as an asset type and redeploying the capital elsewhere in alternatives and in the underwriting business.