Bermuda-based property reinsurer PXRE Group and Argonaut Group, a specialty underwriter, have signed a definitive merger agreement that will result in a combined entity to be named Argo Group International Holdings.

<p>The new entity will become the Bermuda holding company for PXRE&#0039;s existing insurance subsidiaries, Argonaut Group&#0039;s US operations and a newly formed Bermuda reinsurer named Peleus Reinsurance. This will provide the group with a strong platform to further penetrate the Bermuda reinsurance market. <br /><br />Commenting on the transaction, Mark Watson III, president and CEO of Argonaut Group, said, Argonaut Group&#0039;s merger with PXRE is a natural progression in our long-term strategy as a growing specialty underwriter. With combined assets exceeding $5 billion and shareholder&#0039;s equity of approximately $1.3 billion, plus operations based in Bermuda, the US and Europe, we believe Argo Group will be well positioned to develop and grow a sustainable and profitable global business platform. We view this transaction as a solid investment consistent with our goal of securing the future for our shareholders and clients.<br /><br />The deal is subject to appropriate regulatory approval and is expected to draw to a close by the end of the third quarter in 2007.</p>