Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

CORRECTING and REPLACING Argo Group Reports Second Quarter 2022 Results


The last bullet in the strategic actions section should read: An estimate of the financial effect to the financial statements as a whole cannot be made given the timing of the transaction. (instead of An estimate of the transaction is subject to regulatory approval.).

The updated release reads: 

ARGO GROUP REPORTS SECOND QUARTER 2022 RESULTS

Well-Positioned for Continued Profitable Growth

Argo Group International Holdings, Ltd. (NYSE: ARGO) ("Argo" or the "company") today announced financial results for the three and six months ended June 30, 2022.

($ in millions, except per share data)

 

Three Months Ended
June 30,

 

Q/Q

 

Six Months Ended
June 30,

 

Y/Y

 

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common shareholders

 

$

(18.9

)

 

$

67.1

 

 

NM

 

 

$

(22.5

)

 

$

94.3

 

 

NM

 

Per diluted common share

 

$

(0.54

)

 

$

1.92

 

 

NM

 

 

$

(0.64

)

 

$

2.70

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

 

$

31.0

 

 

$

56.1

 

 

-44.7

%

 

$

74.4

 

 

$

71.6

 

 

3.9

%

Per diluted common share

 

$

0.89

 

 

$

1.60

 

 

-44.4

%

 

$

2.13

 

 

$

2.05

 

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized return on average common shareholders' equity

 

 

(5.4

)%

 

 

15.6

%

 

-21.0 pts

 

 

(3.1

)%

 

 

10.9

%

 

-14.0 pts

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized operating return on average common shareholders' equity

 

 

8.9

%

 

 

13.1

%

 

-4.2 pts

 

 

10.2

%

 

 

8.3

%

 

1.9 pts

 

 

 

 

 

 

 

 

 

 

 

 

 

"The company's second quarter results reflect our focused approach to profitable growth as we successfully target the most attractive business lines," said Argo Executive Chairman and Chief Executive Officer, Thomas A. Bradley. "We are pleased with the success in executing on our strategic priorities, particularly, managing expenses and reducing volatility. Ongoing cost reduction efforts significantly lowered the expense ratio from the prior year second quarter and our commitment to reducing volatility in the underwriting results has driven improvement in year-over-year catastrophe losses for five consecutive quarters."

"Through six months, operating earnings increased four percent from a year ago, primarily due to significantly higher underwriting income. We are also encouraged by increasing interest income from our fixed income portfolio. The meaningful increase in underwriting income more than offset the lower contribution from alternative investment income. Looking ahead, we believe the company continues to be well-positioned to deliver profitable growth."

Consolidated Highlights

($ in millions)

 

Three Months Ended
June 30,

 

Q/Q

 

Six Months Ended
June 30,

 

Y/Y

 

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross written premiums

 

$

732.1

 

 

$

815.3

 

 

-10.2

%

 

$

1,452.7

 

 

$

1,571.8

 

 

-7.6

%

Net written premiums

 

 

469.1

 

 

 

493.3

 

 

-4.9

%

 

 

909.6

 

 

 

914.6

 

 

-0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned premiums

 

$

454.3

 

 

$

470.3

 

 

-3.4

%

 

$

934.9

 

 

$

936.4

 

 

-0.2

%

Loss and loss adjustment expenses

 

 

276.0

 

 

 

271.6

 

 

1.6

%

 

 

559.6

 

 

 

579.2

 

 

-3.4

%

Acquisition expenses

 

 

77.8

 

 

 

81.7

 

 

-4.8

%

 

 

160.4

 

 

 

160.9

 

 

-0.3

%

General and administrative expenses

 

 

83.2

 

 

 

95.6

 

 

-13.0

%

 

 

173.5

 

 

 

192.8

 

 

-10.0

%

Underwriting income

 

$

17.3

 

 

$

21.4

 

 

-19.2

%

 

$

41.4

 

 

$

3.5

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

29.3

 

 

$

52.7

 

 

-44.4

%

 

$

67.0

 

 

$

97.1

 

 

-31.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss ratio

 

 

60.8

%

 

 

57.7

%

 

3.1 pts

 

 

59.9

%

 

 

61.9

%

 

-2.0 pts

Acquisition expense ratio

 

 

17.1

%

 

 

17.4

%

 

-0.3 pts

 

 

17.2

%

 

 

17.2

%

 

0.0 pts

General and administrative expense ratio

 

 

18.3

%

 

 

20.3

%

 

-2.0 pts

 

 

18.5

%

 

 

20.6

%

 

-2.1 pts

Expense ratio

 

 

35.4

%

 

 

37.7

%

 

-2.3 pts

 

 

35.7

%

 

 

37.8

%

 

-2.1 pts

Combined ratio

 

 

96.2

%

 

 

95.4

%

 

0.8 pts

 

 

95.6

%

 

 

99.7

%

 

-4.1 pts

CAY ex-CAT loss ratio

 

 

56.6

%

 

 

55.6

%

 

1.0 pts

 

 

56.6

%

 

 

55.6

%

 

1.0 pts

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter 2022 Results - Consolidated

(All comparisons vs. second quarter 2021, unless noted otherwise)

Premiums

Gross written premiums of $732.1 million decreased 10.2%, or $83.2 million, primarily due to the businesses the company has exited.

The retention ratio, calculated as net written premiums divided by gross written premiums, increased 3.6 percentage points to 64.1%. The increase in the retention ratio primarily reflects business mix shifts towards ongoing business lines where we retain more of the risk on a net basis.

Underwriting

The combined ratio of 96.2% increased 0.8 percentage points, driven by a higher loss ratio, partially offset by an improved expense ratio.

The loss ratio of 60.8% increased 3.1 percentage points, compared to 57.7% for the prior year second quarter.

The CAY ex-CAT combined ratio of 92.0% improved 1.3 percentage points from 93.3%.

Expenses

The expense ratio of 35.4% improved 2.3 percentage points. This reduction was primarily driven by an improvement of 2.0 percentage points in the general and administrative ratio.

Investment Income

Net investment income of $29.3 million decreased by $23.4 million. While investment income from the fixed income portfolio increased $2.4 million driven by higher reinvestment rates, the reduction in investment income was attributable to $25.8 million in lower alternative investment income in the second quarter 2022, compared to strong alternative investment income results in the prior year second quarter.

Earnings

Net loss attributable to common shareholders was $18.9 million, or $0.54 per diluted share, for the second quarter 2022, compared to net income attributable to common shareholders of $67.1 million, or $1.92 per diluted share for the second quarter 2021. Annualized return on average common shareholders' equity was (5.4%), compared to 15.6% in the prior year second quarter.

Operating income was $31.0 million or $0.89 per diluted share, compared to $56.1 million or $1.60 per diluted share. Annualized operating return on average common shareholders' equity was 8.9%, compared to 13.1% in the prior year second quarter.

Shareholders' Equity

Book value per common share was $37.65 as of June 30, 2022, compared to $41.97 on March 31, 2022. The decrease in book value per common share is largely attributable to the movement in AOCI in the quarter.

Book value per common share, excluding AOCI, was $44.97 as of June 30, 2022, a decrease of 1.9% from $45.84 at March 31, 2022.

U.S. Operations Highlights

($ in millions)

 

Three Months Ended
June 30,

 

Q/Q

 

Six Months Ended
June 30,

 

Y/Y

 

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross written premiums

 

$

501.1

 

 

$

513.0

 

 

-2.3

%

 

$

976.3

 

 

$

1,002.4

 

 

-2.6

%

Net written premiums

 

 

331.9

 

 

 

317.2

 

 

4.6

%

 

 

644.8

 

 

 

610.2

 

 

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned premiums

 

$

332.8

 

 

$

314.5

 

 

5.8

%

 

$

669.2

 

 

$

628.9

 

 

6.4

%

Loss and loss adjustment expenses

 

 

202.5

 

 

 

183.6

 

 

10.3

%

 

 

408.7

 

 

 

379.2

 

 

7.8

%

Acquisition expenses

 

 

51.4

 

 

 

50.3

 

 

2.2

%

 

 

108.9

 

 

 

100.6

 

 

8.3

%

General and administrative expenses

 

 

50.7

 

 

 

55.7

 

 

-9.0

%

 

 

100.9

 

 

 

112.9

 

 

-10.6

%

Underwriting income

 

$

28.2

 

 

$

24.9

 

 

13.3

%

 

$

50.7

 

 

$

36.2

 

 

40.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss ratio

 

 

60.8

%

 

 

58.3

%

 

2.5 pts

 

 

61.1

%

 

 

60.3

%

 

0.8 pts

Acquisition expense ratio

 

 

15.4

%

 

 

16.0

%

 

-0.6 pts

 

 

16.3

%

 

 

16.0

%

 

0.3 pts

General and administrative expense ratio

 

 

15.3

%

 

 

17.7

%

 

-2.4 pts

 

 

15.0

%

 

 

17.9

%

 

-2.9 pts

Expense ratio

 

 

30.7

%

 

 

33.7

%

 

-3.0 pts

 

 

31.3

%

 

 

33.9

%

 

-2.6 pts

Combined ratio

 

 

91.5

%

 

 

92.0

%

 

-0.5 pts

 

 

92.4

%

 

 

94.2

%

 

-1.8 pts

CAY ex-CAT loss ratio

 

 

58.5

%

 

 

57.9

%

 

0.6 pts

 

 

58.7

%

 

 

56.8

%

 

1.9 pts

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter 2022 Results - U.S. Operations

(All comparisons vs. second quarter 2021, unless noted otherwise)

Premiums

U.S. Operations gross written premiums of $501.1 million decreased 2.3%, or $11.9 million, primarily due to the businesses the company has exited.

The retention ratio, calculated as net written premiums divided by gross written premiums, increased 4.4 percentage points to 66.2%. The higher retention ratio primarily reflects business mix shifts towards ongoing business lines where we retain more of the risk on a net basis.

Underwriting

The loss ratio of 60.8% increased 2.5 percentage points, compared to the prior year second quarter.

Expenses

The expense ratio was 30.7%, an improvement of 3.0 percentage points. This reduction was driven by improvements in both the general and administrative expense ratio and acquisition expense ratio.

Strategic Actions

The company entered into a LPT agreement with a wholly owned subsidiary of Enstar Group Limited ("Enstar") covering a majority of the company's U.S. casualty insurance reserves, including construction, for accident years 2011 to 2019. 

International Operations Highlights

($ in millions)

 

Three Months Ended
June 30,

 

Q/Q

 

Six Months Ended
June 30,

 

Y/Y

 

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross written premiums

 

$

230.8

 

 

$

302.1

 

 

-23.6

%

 

$

476.2

 

 

$

569.0

 

 

-16.3

%

Net written premiums

 

 

137.0

 

 

 

175.9

 

 

-22.1

%

 

 

264.6

 

 

 

304.0

 

 

-13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned premiums

 

$

121.3

 

 

$

155.7

 

 

-22.1

%

 

$

265.5

 

 

$

307.2

 

 

-13.6

%

Loss and loss adjustment expenses

 

 

72.1

 

 

 

86.8

 

 

-16.9

%

 

 

148.1

 

 

 

197.4

 

 

-25.0

%

Acquisition expenses

 

 

25.6

 

 

 

31.3

 

 

-18.2

%

 

 

50.7

 

 

 

60.3

 

 

-15.9

%

General and administrative expenses

 

 

27.8

 

 

 

30.1

 

 

-7.6

%

 

 

57.6

 

 

 

63.8

 

 

-9.7

%

Underwriting income (loss)

 

$

(4.2

)

 

$

7.5

 

 

NM

 

 

$

9.1

 

 

$

(14.3

)

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss ratio

 

 

59.4

%

 

 

55.7

%

 

3.7 pts

 

 

55.8

%

 

 

64.3

%

 

-8.5 pts

Acquisition expense ratio

 

 

21.1

%

 

 

20.1

%

 

1.0 pts

 

 

19.1

%

 

 

19.6

%

 

-0.5 pts

General and administrative expense ratio

 

 

23.0

%

 

 

19.3

%

 

3.7 pts

 

 

21.7

%

 

 

20.8

%

 

0.9 pts

Expense Ratio

 

 

44.1

%

 

 

39.4

%

 

4.7 pts

 

 

40.8

%

 

 

40.4

%

 

0.4 pts

Combined ratio

 

 

103.5

%

 

 

95.1

%

 

8.4 pts

 

 

96.6

%

 

 

104.7

%

 

-8.1 pts

CAY ex-CAT loss ratio

 

 

51.4

%

 

 

51.0

%

 

0.4 pts

 

 

51.5

%

 

 

53.3

%

 

-1.8 pts

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter 2022 Results - International Operations

(All comparisons vs. second quarter 2021, unless noted otherwise)

Premiums

Gross written premiums of $230.8 decreased 23.6%, or $71.3 million, primarily due to the businesses the company has exited.

Underwriting

The loss ratio of 59.4% increased 3.7 percentage points, compared to 55.7% in the prior year second quarter.

Expenses

The expense ratio was 44.1%, an increase of 4.7 percentage points. While total expenses decreased by $8.0 million in the second quarter, the increase in the expense ratio is attributable to the reduction in net earned premiums.

______________________________

1 Ongoing business excludes the following businesses the company is exiting, plan to exit, or have sold, including sales of Ariel Re, which was sold in November 2020, Contract Binding P&C in October 2021, U.S. Specialty Property exited in December 2021, Argo Seguros Brasil in February 2022, ArgoGlobal Holdings (Malta) in June 2022, and businesses in Italy, London Property D&F and North American Binders business in Syndicate 1200, and the U.S. grocery business.

 

2 U.S. ongoing business excludes the following businesses the company has sold, including sales of Contract Binding P&C in October 2021 and U.S. Specialty Property in December 2021, and the exit of our grocery and restaurant business.

 

3 International ongoing business excludes the following businesses the company is exiting, plan to exit or has exited, including sales of Ariel Re in November 2020, Argo Seguros Brasil in February 2022, and ArgoGlobal Holdings (Malta) in June 2022, the planned exit of businesses in Italy, and London Property D&F and North American Binders business in Syndicate 1200.

CONFERENCE CALL

Argo management will conduct an investor conference call starting at 10 a.m. EDT on Tuesday, August 9, 2022. Participants in the U.S. can access the call by dialing (844) 200-6205 (access code 995303). Callers dialing from outside the U.S. can access the call by dialing (929) 526-1599 (access code 995303). Please ask the operator for the Argo earnings call. A live webcast of the conference call can be accessed at https://events.q4inc.com/attendee/108878366.

A webcast replay will be available shortly after the live conference call and can be accessed at https://events.q4inc.com/attendee/108878366. A telephone replay of the conference call will be available through August 16, 2022, to callers in the U.S. by dialing (866) 813-9403 (access code 004931) and to callers outside the U.S. by dialing +44-204-525-0658 (access code 004931).

ABOUT ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

Argo Group International Holdings, Ltd. (NYSE: ARGO) is an underwriter of specialty insurance products in the property and casualty market. Argo offers a full line of products and services designed to meet the unique coverage and claims-handling needs of businesses in two primary segments: U.S. Operations and International Operations. Argo and its insurance subsidiaries are rated ?A-' by Standard and Poor's. Argo's insurance subsidiaries are rated ?A-' by A.M. Best. More information on Argo and its subsidiaries is available at www.argogroup.com.

FORWARD-LOOKING STATEMENTS

This press release and related oral statements may include forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as "expect," "intend," "plan," "believe," "do not believe," "aim," "project," "anticipate," "seek," "will," "likely," "assume," "estimate," "may," "continue," "guidance," "growth," "objective," "remain optimistic," "improve," "progress," "path toward," "looking forward," "outlook," "trends," "future," "could," "would," "should," "target," "on track" and similar expressions of a future or forward-looking nature.

Such statements are subject to certain risks and uncertainties that could cause actual events or results to not occur or differ materially. For a more detailed discussion of such risks and uncertainties, see Item 1A, "Risk Factors" in Argo's Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2021 and in other filings with the Securities and Exchange Commission (the "SEC"). The inclusion of a forward-looking statement herein should not be regarded as a representation by Argo that its objectives will be achieved. Any forward-looking statements speak only as of the date of this press release. Argo undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on any such statements.

NON-GAAP FINANCIAL MEASURES

In presenting the company's results, management has included and discussed in this press release certain non-generally accepted accounting principles ("non-GAAP") financial measures within the meaning of Regulation G as promulgated by the SEC. Management believes that these non-GAAP financial measures, which may be defined differently by other companies, better explain the company's results of operations in a manner that allows for a more complete understanding of the underlying trends in the company's business. However, these measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles ("U.S. GAAP").

"CAY ex-CAT combined ratio" and the "CAY ex-CAT loss ratio" are internal measures used by the management of the company to evaluate the performance of its underwriting activity and represents the net amount of underwriting income excluding catastrophe related charges and the impact of changes to prior year loss reserves. Although this measure does not replace the GAAP combined ratio, it provides management with a view of the quality of earnings generated by underwriting activity for the current accident year.

"Operating income (loss)" is an internal performance measure used in the management of the company's operations and represents operating results after-tax (at an assumed effective tax rate of 19%) and preferred share dividends excluding, as applicable, net realized investment and other gains or losses, net foreign exchange gain or loss, non- operating expenses, and other similar non-recurring items. The company excludes net realized investment and other gains or losses, net foreign exchange gain or loss, non-operating expenses, and other similar non-recurring items from the calculation of operating income because these amounts are influenced by and fluctuate in part, by market conditions that are outside of management's control. In addition to presenting net income determined in accordance with U.S. GAAP, the company believes that showing operating income enables investors, analysts, rating agencies and other users of the company's financial information to more easily analyze our results of operations and underlying business performance.

"Annualized operating return on average common shareholders' equity" is calculated using operating income (loss) (as defined above and annualized in the manner described for net income (loss) attributable to common shareholders ("ROACE")) and average common shareholders' equity. In calculating ROACE, the net income attributable to common shareholders for the period is multiplied by the number of periods in a calendar year to arrive at annualized net income available to common shareholders. In addition to presenting ROACE determined in accordance with U.S. GAAP, the company believes that showing annualized operating return on average common shareholders' equity enables investors, analysts, rating agencies and other users of the company's financial information to more easily analyze our results of operations and underlying business performance.

"Operating income (loss) per common share (diluted)" is calculated using operating income (as defined above) and the weighted average common shares (diluted) for the current period. In addition to presenting net income (loss) per common share (diluted) in accordance with U.S. GAAP, the company believes that showing the operating income (loss) per common share (diluted) enables investors, analysts, rating agencies and other users of the company's financial information to more easily analyze our results of operations and underlying business performance.

"Underwriting income (loss)" is an internal performance measure used in the management of the company's operations and represents net amount earned from underwriting activities (net premium earned less underwriting expenses and claims incurred). Underwriting income is a financial measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information. Although this measure of profit (loss) does not replace net income (loss) computed in accordance with U.S. GAAP as a measure of profitability, management uses this measure of profit (loss) to focus our reporting segments on generating underwriting income.

"Book value per common share excluding AOCI" is total common shareholders' equity excluding AOCI, net of tax, included in shareholders' equity, divided by the number of common shares outstanding. In the opinion of the company's management, book value per common share excluding AOCI is useful in an analysis of a property casualty company's book value per share as it removes the effect of changing prices on invested assets (i.e., net unrealized investment gains (losses), net of tax), which do not have an equivalent impact on unpaid claims and claim adjustment expense reserves.

"Tangible book value per common share" is book value per share excluding the after-tax value of goodwill and other intangible assets divided by the number of common shares outstanding. In the opinion of the company's management, tangible book value per common share is useful in an analysis of a property casualty company's book value on a nominal basis as it removes certain effects of purchase accounting (i.e., goodwill and other intangible assets).

"Tangible book value per common share excluding AOCI" is book value per share excluding the after-tax value of goodwill and other intangible assets and AOCI, net of tax. In the opinion of the company's management, tangible book value per common share excluding AOCI is useful in an analysis of a property casualty company's book value per share as it removes certain aspects of purchase accounting (i.e., goodwill and other intangible assets) and the effect of changing prices on invested assets (i.e., net unrealized investment gains (losses), net of tax).

The "percentage change in book value per common share" includes (by adding) the effects of cash dividends paid per common share to the calculated book value per common share for the current period. This adjusted amount is then compared to the prior period's book value per common share to determine the period over period change. The company believes that including the dividends paid per common share allows users of its financial statements to more easily identify the impact of the changes in book value per common share from the perspective of investors.

Reconciliations of non-GAAP financial measures to their most directly comparable U.S. GAAP measures are included in the following tables and footnotes.

(financial tables follow)

 

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share amounts)

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2022

 

2021

 

 

(unaudited)

 

 

Assets

 

 

 

 

Total investments

 

$

4,913.7

 

 

$

5,322.6

 

Cash

 

 

165.1

 

 

 

146.1

 

Accrued investment income

 

 

22.2

 

 

 

20.9

 

Receivables

 

 

3,562.1

 

 

 

3,615.0

 

Goodwill and intangible assets

 

 

164.6

 

 

 

164.6

 

Deferred acquisition costs, net

 

 

174.3

 

 

 

168.0

 

Ceded unearned premiums

 

 

480.5

 

 

 

506.7

 

Other assets

 

 

393.6

 

 

 

373.9

 

Total assets

 

$

9,876.1

 

 

$

10,317.8

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

Reserves for losses and loss adjustment expenses

 

$

5,595.5

 

 

$

5,595.0

 

Unearned premiums

 

 

1,384.4

 

 

 

1,466.8

 

Ceded reinsurance payable, net

 

 

525.0

 

 

 

724.4

 

Senior unsecured fixed rate notes

 

 

140.4

 

 

 

140.3

 

Other indebtedness

 

 

54.4

 

 

 

57.0

 

Junior subordinated debentures

 

 

258.4

 

 

 

258.2

 

Other liabilities

 

 

457.3

 

 

 

340.9

 

Total liabilities

 

 

8,415.4

 

 

 

8,582.6

 

 

 

 

 

 

Preferred shares

 

 

144.0

 

 

 

144.0

 

Common shares

 

 

46.3

 

 

 

46.2

 

Additional paid-in capital

 

 

1,388.9

 

 

 

1,386.4

 

Treasury shares

 

 

(455.1

)

 

 

(455.1

)

Retained earnings

 

 

592.6

 

 

 

636.4

 

Accumulated other comprehensive income, net of taxes

 

 

(256.0

)

 

 

(22.7

)

Total shareholders' equity

 

 

1,460.7

 

 

 

1,735.2

 

Total liabilities and shareholders' equity

 

$

9,876.1

 

 

$

10,317.8

 

 

 

 

 

 

Book value per common share

 

$

37.65

 

 

$

45.62

 

Tangible book value per common share

 

$

32.94

 

 

$

40.90

 

Book value per common share excluding AOCI, net of tax

 

$

44.97

 

 

$

46.27

 

Tangible book value per common share excluding AOCI, net of tax

 

$

40.26

 

 

$

41.55

 

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in millions, except per share amounts)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

Gross written premiums

 

$

732.1

 

 

$

815.3

 

 

$

1,452.7

 

 

$

1,571.8

 

Net written premiums

 

 

469.1

 

 

 

493.3

 

 

 

909.6

 

 

 

914.6

 

 

 

 

 

 

 

 

 

 

Earned premiums

 

 

454.3

 

 

 

470.3

 

 

 

934.9

 

 

 

936.4

 

Net investment income

 

 

29.3

 

 

 

52.7

 

 

 

67.0

 

 

 

97.1

 

Net investment and other gains (losses):

 

 

 

 

 

 

 

 

Net realized investment and other gains (losses)

 

 

(36.9

)

 

 

4.0

 

 

 

(77.0

)

 

 

2.7

 

Change in fair value recognized

 

 

(3.0

)

 

 

20.3

 

 

 

3.7

 

 

 

35.8

 

Change in allowance for credit losses on fixed maturity securities

 

 

(0.5

)

 

 

0.4

 

 

 

(1.6

)

 

 

(0.7

)

Net realized investment and other gains (losses)

 

 

(40.4

)

 

 

24.7

 

 

 

(74.9

)

 

 

37.8

 

Total revenue

 

 

443.2

 

 

 

547.7

 

 

 

927.0

 

 

 

1,071.3

 

 

 

 

 

 

 

 

 

 

Losses and loss adjustment expenses

 

 

276.0

 

 

 

271.6

 

 

 

559.6

 

 

 

579.2

 

Acquisition expenses

 

 

77.8

 

 

 

81.7

 

 

 

160.4

 

 

 

160.9

 

General and administrative expenses

 

 

83.2

 

 

 

95.6

 

 

 

173.5

 

 

 

192.8

 

Non-operating expenses

 

 

15.6

 

 

 

10.8

 

 

 

23.0

 

 

 

12.7

 

Interest expense

 

 

6.1

 

 

 

5.7

 

 

 

11.9

 

 

 

10.8

 

Fee and other (income) expense, net

 

 

(1.1

)

 

 

(0.8

)

 

 

(1.9

)

 

 

(0.7

)

Foreign currency exchange (gains) losses

 

 

(10.3

)

 

 

4.4

 

 

 

(7.4

)

 

 

5.7

 

Total expenses

 

 

447.3

 

 

 

469.0

 

 

 

919.1

 

 

 

961.4

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

(4.1

)

 

 

78.7

 

 

 

7.9

 

 

 

109.9

 

Income tax provision

 

 

12.1

 

 

 

8.9

 

 

 

25.1

 

 

 

10.3

 

Net income (loss)

 

$

(16.2

)

 

$

69.8

 

 

$

(17.2

)

 

$

99.6

 

Dividends on preferred shares

 

 

2.7

 

 

 

2.7

 

 

 

5.3

 

 

 

5.3

 

Net income (loss) attributable to common shareholders

 

$

(18.9

)

 

$

67.1

 

 

$

(22.5

)

 

$

94.3

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share (basic)

 

$

(0.54

)

 

$

1.93

 

 

$

(0.64

)

 

$

2.72

 

Net income (loss) per common share (diluted)

 

$

(0.54

)

 

$

1.92

 

 

$

(0.64

)

 

$

2.70

 

 

 

 

 

 

 

 

 

 

Weighted average common shares:

 

 

 

 

 

 

 

 

Basic

 

 

35.0

 

 

 

34.8

 

 

 

34.9

 

 

 

34.8

 

Diluted

 

 

35.0

 

 

 

35.0

 

 

 

34.9

 

 

 

35.0

 

 

 

 

 

 

 

 

 

 

Loss ratio

 

 

60.8

%

 

 

57.7

%

 

 

59.9

%

 

 

61.9

%

Acquisition expense ratio

 

 

17.1

%

 

 

17.4

%

 

 

17.2

%

 

 

17.2

%

General and administrative expense ratio

 

 

18.3

%

 

 

20.3

%

 

 

18.5

%

 

 

20.6

%

Expense ratio

 

 

35.4

%

 

 

37.7

%

 

 

35.7

%

 

 

37.8

%

GAAP combined ratio

 

 

96.2

%

 

 

95.4

%

 

 

95.6

%

 

 

99.7

%

CAY ex-CAT combined ratio

 

 

92.0

%

 

 

93.3

%

 

 

92.3

%

 

 

93.4

%

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

SEGMENT DATA

(in millions)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six months ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

U.S. Operations

 

 

 

 

 

 

 

 

Gross written premiums

 

$

501.1

 

 

$

513.0

 

 

$

976.3

 

 

$

1,002.4

 

Net written premiums

 

 

331.9

 

 

 

317.2

 

 

 

644.8

 

 

 

610.2

 

Earned premiums

 

 

332.8

 

 

 

314.5

 

 

 

669.2

 

 

 

628.9

 

 

 

 

 

 

 

 

 

 

Underwriting income

 

 

28.2

 

 

 

24.9

 

 

 

50.7

 

 

 

36.2

 

Net investment income

 

 

20.0

 

 

 

33.7

 

 

 

45.6

 

 

 

62.5

 

Interest expense

 

 

(4.2

)

 

 

(3.5

)

 

 

(8.1

)

 

 

(7.1

)

Fee (expense), net

 

 

(0.1

)

 

 

(0.6

)

 

 

(0.1

)

 

 

(0.5

)

Operating income before taxes

 

$

43.9

 

 

$

54.5

 

 

$

88.1

 

 

$

91.1

 

 

 

 

 

 

 

 

 

 

Loss ratio

 

 

60.8

%

 

 

58.3

%

 

 

61.1

%

 

 

60.3

%

Acquisition expense ratio

 

 

15.4

%

 

 

16.0

%

 

 

16.3

%

 

 

16.0

%

General and administrative expense ratio

 

 

15.3

%

 

 

17.7

%

 

 

15.0

%

 

 

17.9

%

Expense Ratio

 

 

30.7

%

 

 

33.7

%

 

 

31.3

%

 

 

33.9

%

GAAP combined ratio

 

 

91.5

%

 

 

92.0

%

 

 

92.4

%

 

 

94.2

%

CAY ex-CAT combined ratio

 

 

89.2

%

 

 

91.6

%

 

 

90.0

%

 

 

90.7

%

 

 

 

 

 

 

 

 

 

International Operations

 

 

 

 

 

 

 

 

Gross written premiums

 

$

230.8

 

 

$

302.1

 

 

$

476.2

 

 

$

569.0

 

Net written premiums

 

 

137.0

 

 

 

175.9

 

 

 

264.6

 

 

 

304.0

 

Earned premiums

 

 

121.3

 

 

 

155.7

 

 

 

265.5

 

 

 

307.2

 

 

 

 

 

 

 

 

 

 

Underwriting income (loss)

 

 

(4.2

)

 

 

7.5

 

 

 

9.1

 

 

 

(14.3

)

Net investment income

 

 

8.7

 

 

 

13.9

 

 

 

20.1

 

 

 

25.9

 

Interest expense

 

 

(1.9

)

 

 

(1.5

)

 

 

(3.6

)

 

 

(2.9

)

Fee income, net

 

 

1.2

 

 

 

0.9

 

 

 

2.0

 

 

 

0.5

 

Operating income before taxes

 

$

3.8

 

 

$

20.8

 

 

$

27.6

 

 

$

9.2

 

 

 

 

 

 

 

 

 

 

Loss ratio

 

 

59.4

%

 

 

55.7

%

 

 

55.8

%

 

 

64.3

%

Acquisition expense ratio

 

 

21.1

%

 

 

20.1

%

 

 

19.1

%

 

 

19.6

%

General and administrative expense ratio

 

 

23.0

%

 

 

19.3

%

 

 

21.7

%

 

 

20.8

%

Expense Ratio

 

 

44.1

%

 

 

39.4

%

 

 

40.8

%

 

 

40.4

%

GAAP combined ratio

 

 

103.5

%

 

 

95.1

%

 

 

96.6

%

 

 

104.7

%

CAY ex-CAT combined ratio

 

 

95.5

%

 

 

90.4

%

 

 

92.3

%

 

 

93.7

%

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF LOSS RATIOS

(unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

U.S. Operations

 

 

 

 

 

 

 

 

Loss ratio

 

60.8

%

 

58.3

%

 

61.1

%

 

60.3

%

Prior accident year loss reserve development

 

(2.0

)%

 

0.2

%

 

(1.7

)%

 

0.1

%

Catastrophe losses

 

(0.3

)%

 

(0.6

)%

 

(0.7

)%

 

(3.6

)%

CAY ex-CAT loss ratio

 

58.5

%

 

57.9

%

 

58.7

%

 

56.8

%

 

 

 

 

 

 

 

 

 

International Operations

 

 

 

 

 

 

 

 

Loss ratio

 

59.4

%

 

55.7

%

 

55.8

%

 

64.3

%

Prior accident year loss reserve development

 

(6.8

)%

 

1.2

%

 

(2.0

)%

 

0.6

%

Catastrophe losses

 

(1.2

)%

 

(5.9

)%

 

(2.3

)%

 

(11.6

)%

CAY ex-CAT loss ratio

 

51.4

%

 

51.0

%

 

51.5

%

 

53.3

%

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

Loss ratio

 

60.8

%

 

57.7

%

 

59.9

%

 

61.9

%

Prior accident year loss reserve development

 

(3.6

)%

 

0.3

%

 

(2.1

)%

 

?

%

Catastrophe losses

 

(0.6

)%

 

(2.4

)%

 

(1.2

)%

 

(6.3

)%

CAY ex-CAT loss ratio

 

56.6

%

 

55.6

%

 

56.6

%

 

55.6

%

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

NET PRIOR-YEAR RESERVE DEVELOPMENT & CATASTROPHE LOSSES BY SEGMENT

(in millions)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

Net Prior-Year Reserve Development

 

 

 

 

 

 

 

 

(Favorable)/Unfavorable

 

 

 

 

 

 

 

 

U.S. Operations

 

$

6.7

 

$

(0.5

)

 

$

11.7

 

$

(0.9

)

International Operations

 

 

8.2

 

 

 

(1.9

)

 

 

5.2

 

 

 

(1.9

)

Run-off Lines

 

 

1.4

 

 

 

1.2

 

 

 

2.8

 

 

 

2.6

 

Total net prior-year reserve development

 

$

16.3

 

 

$

(1.2

)

 

$

19.7

 

 

$

(0.2

)

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

Catastrophe & COVID-19 Losses

 

 

 

 

 

 

 

 

Catastrophe losses

 

 

 

 

 

 

 

 

U.S. Operations

 

$

1.0

 

$

2.0

 

$

5.0

 

$

22.9

International Operations

 

 

1.5

 

 

 

4.5

 

 

 

6.2

 

 

 

26.7

 

Total catastrophe losses

 

 

2.5

 

 

 

6.5

 

 

 

11.2

 

 

 

49.6

 

 

 

 

 

 

 

 

 

 

COVID-19 losses

 

 

 

 

 

 

 

 

U.S. Operations

 

 

?

 

 

 

?

 

 

 

?

 

 

 

?

 

International Operations

 

 

?

 

 

 

4.6

 

 

 

?

 

 

 

9.0

 

Total COVID-19 losses

 

 

?

 

 

 

4.6

 

 

 

?

 

 

 

9.0

 

 

 

 

 

 

 

 

 

 

Catastrophe & COVID-19 losses

 

 

 

 

 

 

 

 

U.S. Operations

 

 

1.0

 

 

 

2.0

 

 

 

5.0

 

 

 

22.9

 

International Operations

 

 

1.5

 

 

 

9.1

 

 

 

6.2

 

 

 

35.7

 

Total catastrophe & COVID-19 losses

 

$

2.5

 

 

$

11.1

 

 

$

11.2

 

 

$

58.6

 

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF UNDERWRITING INCOME (LOSS) TO NET INCOME (LOSS)

CONSOLIDATED

(in millions)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

Net income (loss)

 

$

(16.2

)

 

$

69.8

 

 

$

(17.2

)

 

$

99.6

 

Add (deduct):

 

 

 

 

 

 

 

 

Income tax provision

 

 

12.1

 

 

 

8.9

 

 

 

25.1

 

 

 

10.3

 

Net investment income

 

 

(29.3

)

 

 

(52.7

)

 

 

(67.0

)

 

 

(97.1

)

Net realized investment and other (gains) losses

 

 

40.4

 

 

 

(24.7

)

 

 

74.9

 

 

 

(37.8

)

Interest expense

 

 

6.1

 

 

 

5.7

 

 

 

11.9

 

 

 

10.8

 

Fee and other (income) expense, net

 

 

(1.1

)

 

 

(0.8

)

 

 

(1.9

)

 

 

(0.7

)

Foreign currency exchange (gains) losses

 

 

(10.3

)

 

 

4.4

 

 

 

(7.4

)

 

 

5.7

 

Non-operating expenses

 

 

15.6

 

 

 

10.8

 

 

 

23.0

 

 

 

12.7

 

Underwriting income

 

$

17.3

 

 

$

21.4

 

 

$

41.4

 

 

$

3.5

 

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET INCOME (LOSS)

CONSOLIDATED

(in millions, except per share amounts)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

Net income (loss), as reported

 

$

(16.2

)

 

$

69.8

 

 

$

(17.2

)

 

$

99.6

 

Income tax provision

 

 

12.1

 

 

 

8.9

 

 

 

25.1

 

 

 

10.3

 

Net income (loss), before taxes

 

 

(4.1

)

 

 

78.7

 

 

 

7.9

 

 

 

109.9

 

Add (deduct):

 

 

 

 

 

 

 

 

Net realized investment and other (gains) losses

 

 

40.4

 

 

 

(24.7

)

 

 

74.9

 

 

 

(37.8

)

Foreign currency exchange (gains) losses

 

 

(10.3

)

 

 

4.4

 

 

 

(7.4

)

 

 

5.7

 

Non-operating expenses

 

 

15.6

 

 

 

10.8

 

 

 

23.0

 

 

 

12.7

 

Operating income before taxes and preferred share dividends

 

 

41.6

 

 

 

69.2

 

 

 

98.4

 

 

 

90.5

 

Income tax provision, at assumed rate (1)

 

 

7.9

 

 

 

10.4

 

 

 

18.7

 

 

 

13.6

 

Preferred share dividends

 

 

2.7

 

 

 

2.7

 

 

 

5.3

 

 

 

5.3

 

Operating income

 

$

31.0

 

 

$

56.1

 

 

$

74.4

 

 

$

71.6

 

 

 

 

 

 

 

 

 

 

Operating income per common share (diluted)

 

$

0.89

 

 

$

1.60

 

 

$

2.13

 

 

$

2.05

 

 

 

 

 

 

 

 

 

 

Weighted average common shares, diluted

 

 

35.0

 

 

 

35.0

 

 

 

34.9

 

 

 

35.0

 

(1)

For the purpose of calculating Operating Income, an assumed tax rate of 19% is used for 2022 which represents our expected weighted average statutory tax rate. This compares with an assumed tax rate of 15% used in the calculation of Operating Income after tax in the second quarter 2021.

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF PRE-TAX OPERATING INCOME (LOSS) BY SEGMENT TO NET INCOME (LOSS)

(in millions)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

Operating income (loss) before income taxes:

 

 

 

 

 

 

 

 

U.S. Operations

 

$

43.9

 

 

$

54.5

 

 

$

88.1

 

 

$

91.1

 

International Operations

 

 

3.8

 

 

 

20.8

 

 

 

27.6

 

 

 

9.2

 

Run-off Lines

 

 

(1.5

)

 

 

(0.1

)

 

 

(2.5

)

 

 

(0.9

)

Corporate and Other

 

 

(4.6

)

 

 

(6.0

)

 

 

(14.8

)

 

 

(8.9

)

Total operating income before income taxes

 

 

41.6

 

 

 

69.2

 

 

 

98.4

 

 

 

90.5

 

Net realized investment and other gains (losses)

 

 

(40.4

)

 

 

24.7

 

 

 

(74.9

)

 

 

37.8

 

Foreign currency exchange (losses) gains

 

 

10.3

 

 

 

(4.4

)

 

 

7.4

 

 

 

(5.7

)

Non-operating expenses

 

 

(15.6

)

 

 

(10.8

)

 

 

(23.0

)

 

 

(12.7

)

Income before income taxes

 

 

(4.1

)

 

 

78.7

 

 

 

7.9

 

 

 

109.9

 

Income tax provision

 

 

12.1

 

 

 

8.9

 

 

 

25.1

 

 

 

10.3

 

Net income (loss)

 

$

(16.2

)

 

$

69.8

 

 

$

(17.2

)

 

$

99.6

 

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

PREMIUMS BY SEGMENT AND LINE OF BUSINESS

(in millions)

(unaudited)

 

U.S. Operations

 

Three months ended June 30, 2022

 

Three months ended June 30, 2021

 

 

Gross
Written

 

Net
Written

 

Net
Earned

 

Gross
Written

 

Net
Written

 

Net
Earned

Property

 

$

57.5

 

$

39.8

 

$

39.1

 

$

72.8

 

$

33.7

 

$

38.3

Liability

 

 

274.5

 

 

171.5

 

 

171.7

 

 

265.0

 

 

159.7

 

 

165.4

Professional

 

 

109.7

 

 

76.7

 

 

80.0

 

 

120.2

 

 

81.1

 

 

74.7

Specialty

 

 

59.4

 

 

43.9

 

 

42.0

 

 

55.0

 

 

42.7

 

 

36.1

Total

 

$

501.1

 

$

331.9

 

$

332.8

 

$

513.0

 

$

317.2

 

$

314.5

 

 

Six months ended June 30, 2022

 

Six months ended June 30, 2021

 

 

Gross
Written

 

Net
Written

 

Net
Earned

 

Gross
Written

 

Net
Written

 

Net
Earned

Property

 

$

101.9

 

$

66.6

 

$

79.6

 

$

129.7

 

$

54.4

 

$

80.8

Liability

 

 

545.1

 

 

341.5

 

 

342.1

 

 

531.5

 

 

322.3

 

 

331.1

Professional

 

 

211.0

 

 

146.1

 

 

164.5

 

 

232.2

 

 

153.3

 

 

146.4

Specialty

 

 

118.3

 

 

90.6

 

 

83.0

 

 

109.0

 

 

80.2

 

 

70.6

Total

 

$

976.3

 

$

644.8

 

$

669.2

 

$

1,002.4

 

$

610.2

 

$

628.9

International Operations

 

Three months ended June 30, 2022

 

Three months ended June 30, 2021

 

 

Gross
Written

 

Net
Written

 

Net
Earned

 

Gross
Written

 

Net
Written

 

Net
Earned

Property

 

$

60.9

 

$

21.6

 

$

18.8

 

$

81.1

 

$

28.6

 

$

33.8

Liability

 

 

57.9

 

 

37.8

 

 

29.1

 

 

65.5

 

 

38.3

 

 

35.5

Professional

 

 

54.4

 

 

31.2

 

 

30.4

 

 

53.1

 

 

40.2

 

 

36.3

Specialty

 

 

57.6

 

 

46.4

 

 

43.0

 

 

102.4

 

 

68.8

 

 

50.1

Total

 

$

230.8

 

$

137.0

 

$

121.3

 

$

302.1

 

$

175.9

 

$

155.7

 

 

Six months ended June 30, 2022

 

Six months ended June 30, 2021

 

 

Gross
Written

 

Net
Written

 

Net
Earned

 

Gross
Written

 

Net
Written

 

Net
Earned

Property

 

$

113.0

 

$

31.6

 

$

48.2

 

$

160.5

 

$

48.5

 

$

75.9

Liability

 

 

107.3

 

 

66.0

 

 

64.7

 

 

122.8

 

 

69.0

 

 

65.7

Professional

 

 

102.5

 

 

59.2

 

 

62.2

 

 

106.2

 

 

67.6

 

 

69.5

Specialty

 

 

153.4

 

 

107.8

 

 

90.4

 

 

179.5

 

 

118.9

 

 

96.1

Total

 

$

476.2

 

$

264.6

 

$

265.5

 

$

569.0

 

$

304.0

 

$

307.2

Consolidated

 

Three months ended June 30, 2022

 

Three months ended June 30, 2021

 

 

Gross
Written

 

Net
Written

 

Net
Earned

 

Gross
Written

 

Net
Written

 

Net
Earned

Property

 

$

118.4

 

$

61.4

 

$

57.9

 

$

153.9

 

$

62.3

 

$

72.1

Liability

 

 

332.6

 

 

209.5

 

 

201.0

 

 

330.7

 

 

198.2

 

 

201.0

Professional

 

 

164.1

 

 

107.9

 

 

110.4

 

 

173.3

 

 

121.3

 

 

111.0

Specialty

 

 

117.0

 

 

90.3

 

 

85.0

 

 

157.4

 

 

111.5

 

 

86.2

Total

 

$

732.1

 

$

469.1

 

$

454.3

 

$

815.3

 

$

493.3

 

$

470.3

 

 

Six months ended June 30, 2022

 

Six months ended June 30, 2021

 

 

Gross
Written

 

Net
Written

 

Net
Earned

 

Gross
Written

 

Net
Written

 

Net
Earned

Property

 

$

214.9

 

$

98.2

 

$

127.8

 

$

290.2

 

$

102.9

 

$

156.7

Liability

 

 

652.6

 

 

407.7

 

 

407.0

 

 

654.7

 

 

391.7

 

 

397.1

Professional

 

 

313.5

 

 

205.3

 

 

226.7

 

 

338.4

 

 

220.9

 

 

215.9

Specialty

 

 

271.7

 

 

198.4

 

 

173.4

 

 

288.5

 

 

199.1

 

 

166.7

Total

 

$

1,452.7

 

$

909.6

 

$

934.9

 

$

1,571.8

 

$

914.6

 

$

936.4

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

COMPONENTS OF NET INVESTMENT INCOME & NET REALIZED INVESTMENT AND OTHER GAINS (LOSSES)

CONSOLIDATED

(in millions)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

Net Investment Income

 

 

 

 

 

 

 

 

Net investment income, excluding alternative investments

 

$

25.2

 

$

22.8

 

$

49.3

 

$

46.5

Alternative investments

 

 

4.1

 

 

 

29.9

 

 

 

17.7

 

 

 

50.6

 

Total net investment income

 

$

29.3

 

 

$

52.7

 

 

$

67.0

 

 

$

97.1

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

Net Realized Investment and Other Gains (Losses)

 

 

 

 

 

 

 

 

Net realized investment (losses) gains

 

$

(11.7

)

 

$

15.5

 

 

$

(23.3

)

 

$

14.2

 

Change in fair value recognized

 

 

(3.0

)

 

 

20.3

 

 

 

3.7

 

 

 

35.8

 

Change in allowance for credit losses on fixed maturity securities

 

 

(0.5

)

 

 

0.4

 

 

 

(1.6

)

 

 

(0.7

)

(Loss) on sale of Trident assets

 

 

?

 

 

 

(11.5

)

 

 

?

 

 

 

(11.5

)

Loss on the sale of business divestitures including the realization of foreign exchange translation losses

 

 

(25.2

)

 

 

?

 

 

 

(53.7

)

 

 

?

 

Total net realized investments and other gains (losses)

 

$

(40.4

)

 

$

24.7

 

 

$

(74.9

)

 

$

37.8

 

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

COMPONENTS OF INVESTMENT PORTFOLIO

CONSOLIDATED

(in millions)

(unaudited)

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2022

 

2021

U.S. Governments and government agencies

 

$

488.3

 

$

425.0

States and political subdivisions

 

 

171.7

 

 

 

171.3

 

Foreign governments

 

 

193.9

 

 

 

232.8

 

Corporate ? Financial

 

 

862.3

 

 

 

986.9

 

Corporate ? Industrial

 

 

763.7

 

 

 

850.6

 

Corporate ? Utilities

 

 

117.3

 

 

 

145.8

 

Asset-backed securities

 

 

192.0

 

 

 

173.6

 

Collateralized loan obligations

 

 

293.3

 

 

 

336.1

 

Mortgage-backed securities ? Agency

 

 

382.1

 

 

 

457.2

 

Mortgage-backed securities ? Commercial

 

 

367.1

 

 

 

418.7

 

Mortgage-backed securities ? Residential

 

 

17.3

 

 

 

25.3

 

Total fixed maturities

 

 

3,849.0

 

 

 

4,223.3

 

Common stocks

 

 

48.0

 

 

 

55.6

 

Preferred stocks

 

 

0.1

 

 

 

0.7

 

Total equity securities available for sale

 

 

48.1

 

 

 

56.3

 

Private equity

 

 

260.7

 

 

 

248.9

 

Hedge fund

 

 

55.3

 

 

 

58.6

 

Overseas deposits

 

 

73.4

 

 

 

74.9

 

Commercial Mortgage Loans

 

 

157.5

 

 

 

?

 

Other

 

 

4.7

 

 

 

4.8

 

Total other investments

 

 

551.6

 

 

 

387.2

 

Short term investments and cash equivalents

 

 

465.0

 

 

 

655.8

 

Cash

 

 

165.1

 

 

 

146.1

 

Total cash and invested assets

 

$

5,078.8

 

 

$

5,468.7

 

 

 

June 30,

 

December 31,

 

 

2022

 

2021

U.S. Governments and government agencies

 

$

870.4

 

$

882.1

AAA

 

 

671.9

 

 

 

788.6

 

AA

 

 

356.1

 

 

 

390.9

 

A

 

 

826.1

 

 

 

894.2

 

BBB

 

 

747.1

 

 

 

820.5

 

BB

 

 

131.9

 

 

 

174.2

 

B

 

 

70.1

 

 

 

71.3

 

Lower than B

 

 

16.3

 

 

 

22.5

 

Not rated

 

 

159.1

 

 

 

179.0

 

Total fixed maturities

 

$

3,849.0

 

 

$

4,223.3

 

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF COMMON SHAREHOLDERS' EQUITY TO TANGIBLE SHAREHOLDERS' EQUITY

CONSOLIDATED

(in millions)

(unaudited)

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2022

 

2021

Common shareholders' equity

 

$

1,316.7

 

 

$

1,591.2

 

Less: Accumulated other comprehensive income (AOCI), net of taxes

 

 

(256.0

)

 

 

(22.7

)

Common shareholders' equity excluding AOCI, net of tax

 

$

1,572.7

 

 

$

1,613.9

 

 

 

 

 

 

Common shareholders' equity

 

$

1,316.7

 

 

$

1,591.2

 

Less: Goodwill and intangible assets

 

 

164.6

 

 

 

164.6

 

Tangible common shareholders' equity

 

 

1,152.1

 

 

 

1,426.6

 

Less: AOCI, net of tax

 

 

(256.0

)

 

 

(22.7

)

Tangible common shareholders' equity excluding AOCI, net of tax

 

$

1,408.1

 

 

$

1,449.3

 

 

 

 

 

 

Common shares outstanding - end of period

 

 

34.976

 

 

 

34.877

 

 

 

 

 

 

Book value per common share

 

$

37.65

 

 

$

45.62

 

Tangible book value per common share

 

$

32.94

 

 

$

40.90

 

Book value per common share excluding AOCI, net of tax

 

$

44.97

 

 

$

46.27

 

Tangible book value per common share excluding AOCI, net of tax

 

$

40.26

 

 

$

41.55

 

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

SHAREHOLDER RETURN ANALYSIS

(in millions, except per share data)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

Net income (loss) attributable to common shareholders

 

$

(18.9

)

 

$

67.1

 

 

$

(22.5

)

 

$

94.3

 

Operating income (loss) (1)

 

 

31.0

 

 

 

56.1

 

 

 

74.4

 

 

 

71.6

 

 

 

 

 

 

 

 

 

 

Common Shareholders' Equity - Beginning of period

 

$

1,466.8

 

 

$

1,677.0

 

 

$

1,591.2

 

 

$

1,713.8

 

Common Shareholders' Equity - End of period

 

 

1,316.7

 

 

 

1,753.9

 

 

 

1,316.7

 

 

 

1,753.9

 

Average Common Shareholders' Equity

 

$

1,391.8

 

 

$

1,715.5

 

 

$

1,454.0

 

 

$

1,733.9

 

 

 

 

 

 

 

 

 

 

Common shares outstanding - End of period

 

 

34.976

 

 

 

34.843

 

 

 

34.976

 

 

 

34.843

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

37.65

 

 

$

50.34

 

 

$

37.65

 

 

$

50.34

 

Cash dividends paid per common share during 2022

 

 

0.31

 

 

 

 

 

0.62

 

 

 

Book value per common share, June 30, 2022 - including cash dividends paid

 

$

37.96

 

 

 

 

$

38.27

 

 

 

 

 

 

 

 

 

 

 

 

Book value per common share, prior period (2)

 

$

41.97

 

 

 

 

$

45.62

 

 

 

Change in book value per common share during 2022

 

 

(10.3

)%

 

 

 

 

(17.5

)%

 

 

Change in book value per common share including cash dividends paid, during 2022 (2)

 

 

(9.6

)%

 

 

 

 

(16.1

)%

 

 

 

 

 

 

 

 

 

 

 

Annualized return on average common shareholders' equity

 

 

(5.4

)%

 

 

15.6

%

 

 

(3.1

)%

 

 

10.9

%

Annualized operating return on average common shareholders' equity

 

 

8.9

%

 

 

13.1

%

 

 

10.2

%

 

 

8.3

%

(1)

For the purpose of calculating Operating Income, an assumed tax rate of 19% is used for 2022 which represents our expected weighted average statutory tax rate. This compares with an assumed tax rate of 15% used in the calculation of Operating Income after tax in the second quarter 2021.

 

(2)

The percentage change in book value per common share is calculated by including cash dividends of $0.31 per common share and $0.62 per common share paid to shareholders during the three and six months ended June 30, 2022, respectively. This adjusted amount (Book value per common share, including dividends) is then compared to the book value per common share as of March 31, 2022 and December 31, 2021, respectively, to determine the change for the three and six ended June 30, 2022.

 


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