Argonaut has successfully diversified its business mix away from its historical focus on workers' compensation. Financial leverage, including preferred stock, has risen to about 21% as of Sept. 30, 2004, from 12% at year-end 2003 but remains conservative for the rating. Fixed-charge coverage is also good at an estimated 5x for 2004. Double leverage of 91% is modest for the rating category. Operating company capitalization was somewhat low for the rating as of year-end 2003. Underwriting results improved in 2003 but lagged behind many of Argonaut's competitors due to losses on discontinued operations. The counterparty credit rating on Argonaut Group Inc. (Argonaut) reflects the company's improved business mix, relatively low financial leverage, and improving operating performance. Partly offsetting these factors
