Merger Agreement
On February 8, 2023, Brookfield Reinsurance Ltd. (the Company) and BNRE Bermuda Merger Sub Ltd., a wholly owned subsidiary of the
Company (Merger Sub), entered into a definitive agreement and plan of merger (the Merger Agreement) with Argo Group International Holdings, Ltd. (Argo Group). The Merger Agreement provides
that, subject to the satisfaction or waiver of certain conditions set forth therein, Merger Sub will merge with and into Argo Group in accordance with the Bermuda Companies Act 1981 (the Merger), with Argo Group surviving the
Merger as a wholly owned subsidiary of the Company (such entity, the Surviving Company).
At the effective time of the Merger, each
common share, par value $1.00 per share, of Argo Group (each, an Argo Group Share), issued and outstanding immediately prior to the effective time of the Merger (other than any Argo Group Share (i) granted under Argo
Groups 2014 Long-Term Incentive Plan or 2019 Omnibus Incentive Plan (each, an Argo Group Share Plan) that is subject to (a) vesting restrictions (each, an Argo Group Restricted Share), or (b) a
share appreciation right (each, an Argo Group SAR), or (ii) owned by Argo Group, the Company, Merger Sub or any other direct or indirect wholly owned subsidiary of Argo Group or the Company), will automatically be canceled
and converted into and will thereafter represent the right to receive an amount in cash equal to $30.00, without interest (the Merger Consideration).
At the effective time of the Merger, each issued and outstanding depositary share, each representing a
1/1,000th interest in a 7.00% Resettable Fixed Rate Preference Share, Series A, par value $1.00 per share, of Argo Group (each, a Series A Preferred Share), will remain issued
and outstanding as a depositary share of the Surviving Company. Each issued and outstanding Series A Preferred Share will remain issued and outstanding as a preferred share of the Surviving Company and will be entitled to the same dividend and all
other preferences and privileges, voting rights, relative, participating, optional and other special rights, and qualifications, limitations and restrictions set forth in the certificate of designations applicable to the Series A Preferred Shares,
which certificate of designations will remain at and following the effective time of the Merger in full force and effect as an obligation of the Surviving Company in accordance with Section 109(2) of the Bermuda Companies Act 1981. It is
expected that the depositary shares, each representing a 1/1000th interest in a Series A Preferred Share will continue to be listed on the New York Stock Exchange.
At the effective time of the Merger, each Argo Group Restricted Share outstanding immediately prior to the effective time of the Merger will
(i) (a) become fully vested, in the case of a time-based vesting Argo Group Restricted Share, or (b) become vested at the assumed level of performance determined in accordance with the Merger Agreement and the applicable Argo Group
Share Plan, in the case of a performance-based vesting Argo Group Restricted Share, and (ii) be canceled and converted into the right to receive an amount in cash equal to the sum of (x) the Merger Consideration and (y) the value of
any dividends accrued in respect of such Argo Group Restricted Share that remain unpaid as of immediately prior to the effective time of the Merger.
At
the effective time of the Merger, each Argo Group SAR award outstanding immediately prior to the effective time of the Merger, whether vested or unvested, will be deemed to be fully vested and will be canceled and converted into solely the right to
receive a lump-sum amount in cash equal to the product of (i) the excess, if any of (a) the Merger Consideration, over (b) the per share exercise price of such Argo Group SAR, multiplied by (ii) the total number of Argo Group
Shares subject to such Argo Group SAR immediately prior to the effective time of the Merger.
The Merger Agreement contains various customary
representations and warranties from each of Argo Group, the Company and Merger Sub. Argo Group has also agreed to various customary covenants, including but not limited to conducting its business in all material respects in the ordinary course and
not engaging in certain types of transactions during the period between the execution of the Merger Agreement and the closing of the Merger. Argo Group has also agreed to suspend any dividends that would otherwise be declared and paid on the Argo
Group Shares during the period from the date of the Merger Agreement through the earlier of the closing of the Merger and the termination of the Merger Agreement. However, the Merger Agreement permits Argo Group to pay periodic cash dividends on the
Series A Preferred Shares not to exceed $437.50 per Series A Preferred Share during such interim period.
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