Argonaut Insurance's headquarters are located in a facility that consists of an office building on approximately two acres of land in Menlo Park, California. Argonaut Great Central's headquarters are located in a facility in Peoria, Illinois. Argonaut Insurance and Argonaut Great Central own the buildings in which their headquarters are located. In addition, the Company has entered into short term leases in conjunction with its operations at various locations throughout the country. The Company believes that its properties are adequate for its present needs.
The information set forth under the caption "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the Annual Report to Shareholders of Argonaut Group for the fiscal year ended December 31, 1998, is incorporated herein by reference. See Exhibit Index.
On January 28, 1998, the Company announced that it was reviewing a range of strategic alternatives to enhance shareholder value. These alternatives include the potential combination with another company. The Company had engaged Credit Suisse First Boston Corporation to assist in this process. On November 24, 1998 the Company announced that it had completed the review and determined it would remain an independent provider of specialty property-casualty insurance products through its 26 offices throughout the United States. The Company will continue to pursue its specialty niches, with emphasis on value-added workers compensation and its strength in "wrap-up" construction projects for industry and government entities using its safety engineering expertise.
It is the opinion of management that as of April 30, 1998, the Company's client server policy management, policy rating and claims processing systems are Year 2000 compliant. These computer systems use a four-position field to store and process all dates. In addition, it is the opinion of management that effective September 30, 1998, the Company's mission critical mainframe legacy systems have been remediated to process dates beyond the Year 2000. The Company has completed testing its mission critical business processing client server and mainframe legacy systems, computer hardware, computer infrastructure systems software and office automation software to assure continuity of service beyond the Year 2000. The Company will continue the testing of non-mission critical user systems and validating the above mission critical systems for Year 2000 compliance/remediation into 1999. The Company will prepare a contingency plan that will include a designated team to resolve any unforeseen problems that arise beyond the Year 2000.
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, was issued on June 16, 1998. The Company's required adoption date is January 1, 2000. The Company does not anticipate SFAS No. 133 to have an impact on its results of operations or financial position.
The Report of Independent Public Accountants and consolidated financial statements and related notes of Argonaut Group, Inc. and subsidiaries listed on the index to financial statements set forth in Item 14(a)1 of this Form 10-K Report are incorporated herein by reference to the Annual Report to Shareholders of Argonaut Group for the fiscal year ended December 31, 1998.