Our corporate responsibility to clients, employees, shareholders and communities requires that we hold ourselves to the highest standards. We must be stewards of the environment. We must advance our societal impact. And we must promote investor confidence through corporate governance and transparency. At Argo Group, our mission is to help businesses stay in business. This report shows how we are taking steps to achieve this mission in a way that reflects our global responsibility and a commitment to future generations.
“We see the Argo Group Environmental, Social and Governance program as a journey. Publishing this report is a key step in providing transparency over our program. We are building our capability and working to articulate our sustainability strategy to our key stakeholders over time. A key constituency for us is our colleagues, both current and prospective. We see our commitment as a founding member of ClimateWise and signing up to the United Nations Principles for Responsible Investment as opportunities to demonstrate continuous improvement and continue to make Argo Group a great place to work.”
– Alex Hindson, Chief Risk Officer and ESG Lead
We are building our capability and working to articulate our sustainability strategy.
Environmental
We believe in business models that meet the needs of the present without compromising the ability of future generations to meet their own needs. We are a founding member of ClimateWise, and our robust climate modeling and risk analysis capability help us effectively manage the emerging risk of climate change.
ClimateWise
Impact
Clean Energy
Modeling
Social
We act with integrity and do what is right for our employees, customers and partners. As a signatory to the UN Principles for Responsible Investment, we incorporate environmental, social and governance factors into our investment decisions. Our policies promote a diverse workforce, an inclusive environment and a culture of learning and development.
responsible investment
talent management
women in insurance
policies
philanthropy
Governance
We hold ourselves and each other accountable for our decisions, performance and behavior. We operate to high governance and control standards, adopting best practices based on continuous improvement. We believe that transparency is more important than ever; we maintain internal policies with respect to compliance, risk management, financial crime, data privacy and information security protection.
policies
recognition
risk management
Looking Forward
We are proud of what Argo Group has achieved. Our vision for the future is one of constant improvement for the benefit of our clients, shareholders, employees and communities.
We will continue to improve talent management, with a focus on diversity and inclusion. We will maintain our leadership position in climate modeling and risk analysis. And we will hold ourselves to the highest standards for data privacy and information security protection.
As we move forward, we will share our environmental, social and governance actions and achievements with transparency on a regular basis.
“At Argo Group, Environmental, Social and Governance is a board-level issue. I am therefore delighted to support the publication of our first ESG report. It is a topic important to our stakeholders, including our investors, regulators, credit rating agencies and staff. We recognize the importance of ESG in managing our reputation. We see this as an opportunity to differentiate ourselves and reinforce our core mission, to help businesses stay in business.”
– Kate Nealon, Non-Executive Director and ESG Sponsor
As a founding member of ClimateWise, Argo stands with a global network of insurers and brokers who are committed to reducing the impact of climate change.
ClimateWise supports the insurance industry so that it can better communicate, disclose and respond to climate risk management issues. It also helps the industry act on the opportunities associated with the climate risk protection gap. ClimateWise was established in 2007 and is facilitated by the University of Cambridge Institute for Sustainability Leadership.
Argo Group Chief Risk Officer Alex Hindson serves on the organization’s Insurance Advisory Council. The group’s objective is to inform regulators, policymakers and other stakeholders on how to promote more systematic responses to climate change.
“Argo has determined that climate change is a key enterprise risk. We will therefore benefit from access to the Council to understand the direction of best practices and trends on climate governance in the insurance industry.”
– Alex Hindson, Chief Risk Officer, Argo Group
The ClimateWise Principles guide and assess members’ contributions to the transition to a low-carbon, climate-resilient economy. All member groups are measured against criteria that target meeting the recommendations made by the Task Force on Climate-Related Financial Disclosures. Argo scored above the Lloyd’s average in the 2019 review.
Additionally, Argo Group SVP, Research and Development, Federico Waisman, Ph.D., serves on the ClimateWise Managing Committee.
“If we think ahead to what climate scenarios will be in 2030 or 2040, it’s extremely complex – the frequency and severity of atmospheric-based risks varying by territory,” Waisman says. “Insurance companies must consider how to quantify climate scenarios in ways that are as dynamic as climate change itself.”
Argo Group’s offices around the world strive to operate with a minimal environmental footprint, and employees are provided with resources to help them work sustainably.
Argo’s Chicago office is a LEED Platinum-certified property with a water efficiency and conservation system in place, an active recycling program and 91% of building occupants who bike, walk or take public transportation for their daily commute to work.
The Denver office is LEED Gold-certified, as well as Energy Star certified by the Environmental Protection Agency (EPA). The location features bike storage and designated hybrid vehicle parking spaces for employees, as well as water reduction efforts such as composting, drip irrigation and xeriscaping.
In 2017, Argo Group relocated its New York office to a former warehouse space in the city’s Meatpacking District. The 31,000-square-foot site is working toward a LEED certification with an electrical conservation program in place, energy-saving HVAC systems, recycling efforts, employee bike storage and a green space on the rooftop.
Around the globe: reuse, reduce, recycle
Most Argo Group operations are conducted with paperless systems, and the company’s international teams receive reusable coffee cups and stainless steel water bottles to help reduce waste and pollution. In 2019, the London team moved to a new office, which features recycling stations in each team area.
These efforts greatly reduce the building’s non-recyclable waste; however, general waste that is produced is taken to a local energy-from-waste plant, which converts the trash into electricity.
The London team is also part of Cycle to Work, a U.K. government program that encourages citizens to commute via bicycle to reduce environmental pollution. Shower facilities and bike storage space make participation convenient for employees.
Additionally, Argo Group is creating a report that will measure its enterprise operations-related greenhouse gas emissions against ISO 14064-1 standards.
Other EPA Energy Star–certified locations are Argo’s offices in Alpharetta, Georgia; Addison, Texas; Irvine, California; and San Antonio.
Ongoing efforts in more U.S. locations include:
Peoria, Illinois – Solar panel installation, electrical conservation program, energy-efficient HVAC systems
Portland, Oregon – Electrical conservation program, energy-efficient HVAC systems, bike storage for employees
San Francisco – Bike storage, recycling program, native landscaping
Scottsdale, Arizona – Energy-efficient HVAC systems, hybrid parking, xeriscaping and irrigation control, electrical conservation program, recycling program
As a part of Argo Group, Ariel Re’s Clean Energy team works toward a greener future.
Providing insurance solutions via the Lloyd’s Syndicate 1910 platform, the team helps secure growth in a rapidly-changing market for businesses that use green technologies.
“Each situation has unique characteristics and needs and requires creative problem-solving to deliver value by not only understanding the technology risks but also listening to our clients’ stakeholders,” says George Schulz, vice president, Clean Energy, Ariel Re.
He cites two examples of the team’s work.
Bioconversion plant performance
One recent client is the developer of a U.S.-based manufacturing facility that uses new and existing technologies to convert woody biomass into liquid transportation fuels. The challenge was that previous commercial demonstration of the technology was limited – and not for woody biomass specifically. The developer needed financing to scale up the facility to meet performance, product quality and financial objectives.
Ariel Re’s Clean Energy team developed a customized risk-mitigation solution to insure the new-technology risk associated with the client’s manufacturing process. As a result, the client obtained favorable financing terms.
Photovoltaic solar plant performance
Another client is an investment group seeking to acquire a portfolio of operating assets in the form of photovoltaic solar plants. The long-term liabilities of production guarantees – tied to the operations and maintenance services provider assumed in the acquisition – presented
a challenge. In order for the transaction to go forward, the plants’ owners needed assurance that the new entity would receive the same performance guarantees.
Ariel Re’s Clean Energy team provided a portfolio risk solution that includes all the underlying performance guarantees and obligations. As a result, the client acquired the portfolio with the approval of the plant owners while mitigating outstanding liabilities for the new owner and protecting its equity investment.
Argo Group’s research and development (R&D) team creates state-of-the-art models to innovate new solutions to risk management challenges as they evolve in clients’ industries.
These models help Argo Group develop a unique view of risk, which informs underwriting and management decisions.
“Models provide valuable insight into new lines of business, especially in markets where data was previously unavailable to private reinsurers.”
– Federico Waisman, Ph.D., SVP, Research and Development, Argo Group
Areas of focus
While cyber, clean energy and catastrophe (CAT) are areas that experience constant states of change, Argo specifically recognizes the lasting impact of climate change on the global community and the various ways it affects nearly every sector of business.
Climate change inspires the development and recalibration of many of the company’s risk models. It has also been the catalyst for predictive climatology models that suggest more frequent and more intense hurricanes, earthquakes, droughts, wildfires and floods.
Risk modeling shapes coverage
The models Argo Group develops are based in part on the models of third-party vendors; however, in cases where one does not exist or is not appropriate, the R&D team establishes proprietary models to suit clients’ needs, including:
North American wildfires
Marine
Political violence
In 2018, Argo Group partner Ariel Re hosted the first-ever comparison of U.S. flood models at Lloyd’s of London. The event, led by Federico Waisman, Ph.D., SVP, research and development, Argo Group, compared models from four leading vendors: AIR, CoreLogic, KatRisk and Impact Forecasting. The study revealed that more claims data and consistent definitions of events are necessary in order to improve the accuracy of U.S. inland flood risk modeling and to allow private reinsurers to underwrite flood hazards in a market no longer dominated by the government-funded National Flood Insurance Program (NFIP).
Argo Group’s commitment to continuous improvement extends to its approach to investment.
As a signatory of the United Nations-supported Principles for Responsible Investment (UN PRI), Argo Group demonstrates its commitment to a responsible investment policy by weaving environmental, social and governance (ESG) issues into decision-making processes.
Responsible investing is a key element of Argo’s overall sustainability strategy and underscores the company’s commitment to helping businesses stay in business.
As a signatory, Argo Group will report annually on the company’s responsible investment activity and follow a responsible investment policy that considers ESG issues regarding the majority of assets under its management. Argo Group also has designated its chief investment officer to be responsible for implementing the policy – with board-level oversight.
The purpose of the UN PRI
Developed by an international group of institutional investors in 2005, the UN PRI is intended to deepen understanding of the impact of sustainable investing and support the signatories who choose to embed ESG issues into their investing and other decision-making practices.
The six key principles of the UN PRI
We will incorporate ESG issues into investment analysis and decision-making processes.
We will be active owners and incorporate ESG issues into our ownership policies and practices.
We will seek appropriate disclosure on ESG issues by the entities in which we invest.
We will promote acceptance and implementation of the principles within the investment industry.
We will work together to enhance our effectiveness in implementing the principles.
We will each report on our activities and progress toward implementing the principles.
Argo Group recognizes that a business’ success is inextricably linked to the success of its employees and that the future of the industry depends on cultivating talent inside and outside of the company.
At the heart of Argo’s talent management process are commitments to ongoing employee development, hiring and retaining “best in class” candidates, and encouraging young professionals to consider careers in insurance.
Cultivating corporate culture
As the insurance industry continues to face a looming talent gap, Argo is focused on attracting and retaining a diverse workforce. The company recognizes employment priorities such as work–life balance, social issues and employer support for personal and professional development.
Argo has implemented policies to address these concerns:
A diversity and inclusion policy to ensure staff have the tools and support necessary to address systemic barriers, build a diverse workforce and maintain a positive work environment
A paid caregiver leave policy for U.S. employees, offering 12 weeks of paid leave for primary caregivers and four weeks for nonprimary caregivers within the first six months after they gain custody
A flexible workplace policy that helps employees achieve work–life balance by allowing them to apply to work remotely, take a sabbatical and work irregular hours during the summer months
Empowering employees through technology
Argo Academy’s Degreed digital learning platform gives employees more control over their career development – and has led to Argo’s learning and development program being ranked as one of the world’s best by Training magazine in 2018 and 2019.
The platform uses artificial intelligence to customize and curate thousands of resources to personalize learning pathways. In its first year, more than 1,000 employees became regular users. Today, that number has increased by 50%.
In 2020, the company launched Argo Innovates, a digital platform that provides employees with the opportunity to suggest, comment on and rate ideas that improve processes, grow business and transform how Argo operates.
Building insurance careers
Argo believes that sharing institutional knowledge and best practices elevates the company, helps new professionals establish their careers and enhances the industry as a whole.
To build and strengthen relationships with early-career producers, the company launched Ascend With Argo in 2018. The webinar and event series provides education, insights and support to recent graduates and seasoned professionals who are new to the industry.
Subjects discussed in these webinars include getting underwriters’ attention, delivering tough messages and running effective meetings. Additionally, a shadow-day program offers hands-on learning and engagement between brokers and underwriters.
Argo Group seeks to develop and promote leaders with a proven track record of helping its clients succeed. Women comprise a growing percentage of leaders within the company, all over the world.
Women comprise a growing percentage of leaders within the company, all over the world.
Lina Hantas, senior executive officer for ArgoGlobal Dubai, says she has been able to build a successful career because her skills and abilities have been recognized and appreciated.
“I see more women leading on the front lines, and this is great for the inclusion and diversity of our businesses.”
— Lina Hantas, SEO, ArgoGlobal Dubai
Argo created the “Sea Change” Scholarship for Women in Insurance to recognize women’s leadership and personal courage, awarding the inaugural $10,000 scholarship in 2019 to a student at St. John’s University’s School of Risk Management, Insurance and Actuarial Science.
“At Argo, we are committed to encouraging diversity in the workplace and opening doors for women looking to pursue insurance,” says Gary Grose, executive vice president, Americas.
Argo’s commitment to employee development is not new. The company provided financial assistance to Lauren Welch, now assistant vice president, head of U.S. segment accounting, to earn her MBA just three years into her career with Argo. “I have been able to use that education and experience,” she says. “I kind of grew up here in this company. Insurance is where I started and where I stayed.”
Ann Holden, vice president, energy insurance underwriter for Argo Insurance, has worked in the industry for 25 years. Early in her career, some brokers were unwilling to work with her because of her gender. “Today there are more women in the client, broking and underwriting arenas, which is a reflection of the industry evolving and improving,” she says.
Women recognize the enormous role of data in the industry’s future and are engaged in harnessing its power to make an impact, including Senior Vice President and U.S. General Counsel Susan Comparato – who shared her perspective with Modern Counsel – and Farah Gasmi, Argo’s director of AI products. “There is a significant potential in terms of the types of problems you could be solving within insurance, and that is what was really attractive to me,” Gasmi says.
Argo Group is committed to creating and enforcing policies that celebrate diversity, safety, dignity and security.
Argo Group recognizes that our knowledge-based economy is enriched by diversity of thought and backgrounds. In line with its diversity and inclusion policy, Argo Group also seeks to embrace and encourage diversity of employees in many aspects, including but not limited to age, ancestry, gender, gender identity, national origin, religious creed, race, sex, sexual orientation or other status protected by federal, state and/or local laws. Argo Group will not tolerate any form of harassment, as underscored by the company’s Code of Conduct and Business Ethics.
Occupational health and safety
Believing in the right of employees to feel safe at work and committed to preventing workplace injury to its employees, visitors and other members of the public, Argo Group follows and monitors compliance with all local legal and regulatory health and safety requirements.
Argo’s chief focus is minimizing occupational accidents and illnesses – with the ultimate goal of achieving accident-free workplaces and activities.
Human rights, supply chain and vendor assurance
Respecting and advancing human rights is the responsibility of business. To that end, Argo Group supports freedom of association and collective bargaining, as well as workplaces free from discrimination, harassment and child labor. Argo Group seeks to minimize occurrences of human rights infringement in the company’s operations and those managed by third parties.
Data and privacy
Argo Group aims to comply with all data privacy requirements – including the California Consumer Privacy Act (CCPA) and the EU’s General Data Protection Regulation (GDPR) – and follows security measures to protect against loss, misuse and alteration of information under its control.
These measures include:
Regular audits of security systems
Enhancements to ensure the company’s website and users are safe
Comprehensive employee engagement and training programs and testing to help guard against phishing and other malicious attacks
Argo Group’s Privacy Policy provides details of the company’s approach to privacy.
Argo Group is proud to be a company that gives back to the community by encouraging employees to support charitable, educational and cultural organizations in the areas where they live and work. In fact, Argo’s matching gifts program benefits over 1,500 organizations each year.
Employee-led community outreach committees in Texas, London and Bermuda have long established Argo’s presence as sponsors and participants in local philanthropic events. Additional committees in New York, Brazil and Richmond, Virginia, have been organized to do the same.
Helping people pursue their dreams
From supporting art education in San Antonio to sponsoring litters of future service dogs in both Texas and London, Argo supports endeavors that help people pursue their dreams.
Nobody embodies this more than Brazilian paracyclist David Sousa. After surviving an accident that severed his right arm while making deliveries on his bike, Sousa decided to pursue his dream of being a full-time professional athlete.
The Argo Seguros team provided an insurance policy for Sousa’s bike, third-party insurance coverage and financial assistance with his living expenses. The team also found additional partners to cover the costs of bike maintenance, nutrition and training.
Lending support in times of need
ArgoGlobal sponsored the 2019 Italian Job, a cross-country motoring event. A team of employees and broker clients raised nearly €200,000 for Buttle UK, a charity that provides financial grants to children in times of crisis. London employees also hold fundraisers and participate in rugby tournaments to raise thousands of pounds for The Sick Children’s Trust, which provides accommodations for families while their seriously ill children receive care.
“One of the greatest fulfillments for me and our team is the opportunities that our work affords us to give back to others. When we are able to serve others as a team, this further drives our appreciation for the work we are doing.”
– Joshua C. Betz, President, Argo Surety
In San Antonio, more than 600 filled backpacks were distributed to disadvantaged students in 2019. And, during the past 12 holiday seasons, employees have held an annual turkey drive, which has provided more than 3,000 Thanksgiving dinners to South Texas families in need.
Similarly, in 2019 the Argo Seguros team donated more than 3,400 pounds of groceries to an organization that helps the homeless in São Paulo.
The team in New York City pulled weeds, leveled soil and laid new sod in Chelsea Park, while San Antonio volunteers helped rehabilitate a garden at the Children’s Bereavement Center of South Texas.
Argo Group is committed to earning investor confidence by upholding the highest standards of corporate governance.
Corporate governance and compensation practices
Argo values ethical conduct, and its board of directors seeks ways to improve the company’s strong corporate governance practices. The company’s Code of Conduct and Business Ethics defines specific responsibilities for company leaders that address:
Promoting employee awareness of the Code
Procedures for ongoing Code compliance
Reporting suspected and actual Code breaches, providing accurate and timely information, and referring code-related questions to the proper personnel
Argo Group strives to ensure its executive compensation policies are in line with stakeholder expectations and applicable best practice standards.
Argo Group extensively reviewed its governance controls related to its perquisite program. The resulting changes include enhancements to the company’s internal controls and development of new policies and revisions to existing policies that are applicable to the perquisite program, airplane use and corporate charitable contributions.
Other executive compensation changes include:
Lengthening the performance period for the company’s long-term incentive program from one to three years
Eliminating the individual performance modifier
Increasing executive stock ownership guidelines
Argo conducted a risk assessment of its compensation program in 2019 that included threats and opportunities presented by proposed changes to the program in 2020. An independent consultant found the risk assessment to be comprehensive and the resulting findings to be appropriate.
Integrity and transparency
Argo Group operates its accounting and reporting systems with integrity to ensure that financial results are accurate and fair. Argo is committed to providing objective, transparent and timely financial information, which is essential to secure and maintain the trust of shareholders, customers, employees and business partners.
For operations outside of the U.S., ArgoGlobal’s tax policy is based on the principle of transparency, and ArgoGlobal is committed to full compliance with all statutory obligations and to full disclosure to and cooperation with tax authorities in all jurisdictions. Argo Group complies with the Bermudian Economic Substance regulations, which are aligned to the European Union’s requirements for cooperative jurisdictions based on implementing tax good governance principles.
Whistleblower policy
Argo’s whistleblower policy is intended to encourage employees to confidentially and anonymously report, without fear of retaliation, any suspected or actual financial, ethical or legal impropriety by their colleagues, management, customers and other market practitioners. The policy requires the company to follow an annually reviewed procedure for managing whistleblowing activity and investigating reports and to offer an ethics helpline to allow key functionaries, employees and management to report any activity or business practice that they suspect or consider to be unethical or illegal.
Argo Group was recently recognized by InsuranceERM for the transformation of its risk team into a strategic business unit and for implementing a process review that determines how new technology could disrupt its product portfolio.
2020 Risk Team of the Year
“We really wanted to drive the capital allocation and make the capital model more powerful for business users in making decisions.”
— Alex Hindson, Chief Risk Officer
In 2019, Argo’s risk team identified an opportunity to derive greater value from its capital modeling function by repositioning it within the business and strategic planning process. The team defined a new mission statement and strategic plan aligned to Argo’s overall enterprise risk management framework.
Key objectives for the strategy include
Raising visibility for the economic capital model
Enhancing allocation of capital to track business unit performance
Evaluating strategic initiatives such as new business opportunities, reinsurance protections and M&A opportunities
With the strategy in place, the team delivered projects associated with how the capital allocation process is implemented and re-evaluated its use of economic scenario generators to model investment risk.
2020 Risk Innovation of the Year by a Re-/Insurer
“Rather than simply listing emerging risks, we are trying to focus on taking action and identifying opportunities to embrace new products and solutions.”
– Alex Hindson
The exponential rate of technological change will greatly disrupt the traditional insurance model. To manage this disruption, Argo evolved its emerging risk strategy in order to provide a structured approach to analyzing and quantifying drivers of environmental, social and technological change. The company incorporated long-term mitigation strategies into its strategic planning cycle and identified areas to expand on its existing product portfolio to meet clients’ coverage demands.
Argo Group enables its employees’ continued business success by giving them the tools, processes and training to make well-informed risk-based decisions.
Accordingly, Argo Group adheres to its enterprise risk management framework to bring to life its vision for risk management.
“Risk intelligence enables Argo to achieve its strategic objectives by taking appropriate risks and exploiting opportunities.”
– Argo’s Vision for Risk Management
ERM Framework
Argo has a board-approved risk management policy. The ERM framework, which is supported at all levels of the company, informs Argo’s risk-reward choices and is implemented in accordance with International Standard ISO 31000 (2018). Through its ERM framework, Argo is committed to following these principles:
Identifying the risks
Understanding and discussion of risks
Owning the risks
Taking appropriate action
Learning from risk-taking
This approach has gained positive attention from leading organizations in the industry.
InsuranceERM recognized Argo with the 2020 Risk Innovation of the Year by a Re/Insurer award – for Argo’s ability to integrate emerging risk management processes and include product disruption analysis with its innovation program – and also with the 2020 Risk Team of the Year award – for the Capital Modeling team’s work to center business planning and decision-making around the internal capital model.
Managing emerging threats and embracing opportunities
The overall ESG environment is among the material threats and opportunities tracked by the Sustainability Working Group, which receives a detailed threat and opportunity analysis of major sustainability risks every six months. Key issues are escalated to the ERM Steering Committee, and the Chief Risk Officer is required to report material sustainability-related issues to the Board Risk & Capital Committee each quarter.
Operational resilience
Argo Group maintains a robust business continuity plan to ensure the company’s operations continue in the event of a major disruptive crisis. The plan also includes the operations of key outsourcing partners. It is managed by the Operations department and is regularly tested, as are the supporting processes associated with incident response and information technology disaster recovery.
Argo is committed to delivering service to customers and partners amid challenging circumstances. Appropriate measures are taken to prioritize the functions that are most critical, including the timely settlement of claims.
At the time of this report, Argo Group is continuing business during the COVID-19 coronavirus pandemic with fully operational processes.
