HAMILTON, Bermuda--(BUSINESS WIRE)--Argo Group International Holdings, Ltd. (NASDAQ: AGII), an international underwriter of specialty insurance and reinsurance products, announced today it will make a change to its reporting of financial results aligned with two reportable segments – U.S. Operations and International Operations – rather than the previously reported four segments, representing a simplification of its former operational framework.
“This is an important step better reflecting the way we are managing our businesses and thinking about our operating platforms,” said Argo Group CEO Mark E. Watson III. “We achieved important enhancements last year with the addition of Jose A. Hernandez to lead our international business and the acquisition of Ariel Re, which closed earlier this year. These recent additions combined with the consolidation of our U.S. Operations under the leadership of Kevin J. Rehnberg, allows us to make this change. With these additions and operational changes, we are better positioned as a global underwriter of specialty insurance and reinsurance products.”
The reporting changes are effective with first quarter 2017 earnings. The U.S. Operations will include the Excess & Surplus Lines and Commercial Specialty businesses. International Operations will include Syndicate 1200, International Specialty and the newly acquired Ariel Re business.
To allow investors to view the new reporting segments structure prior to Argo Group’s upcoming earnings report, scheduled for release after the close of markets on Wednesday, May 3, 2017, certain historical information is attached and presented including segment information based on the new framework. The attached historical information includes (1) the recasting of previously issued segment-related financial information to reflect the new framework and (2) certain other historical financial information that is unchanged from previously reported financial information and included herein only for purposes of context. The attached financial information does not represent a restatement of previously issued financial statements and does not affect our consolidated financial statements for any of the previously reported periods.
ABOUT ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
Argo Group International Holdings, Ltd. (NASDAQ: AGII) is an international underwriter of specialty insurance and reinsurance products in the property and casualty market. Argo Group 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 Group's insurance subsidiaries are A. M. Best-rated 'A' (Excellent) (third highest rating out of 16 rating classifications) with a stable outlook, and Argo Group's U.S. insurance subsidiaries are Standard and Poor's-rated 'A-' (Strong) with a stable outlook. More information on Argo Group and its subsidiaries is available at www.argolimited.com.
FORWARD-LOOKING STATEMENTS
This press release contains certain statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are qualified by the inherent risks and uncertainties surrounding future expectations generally and also may differ materially from actual future experience involving any one or more of such statements. For a more detailed discussion of such risks and uncertainties, see Argo Group's filings with the SEC. The inclusion of a forward-looking statement herein should not be regarded as a representation by Argo Group that Argo Group's objectives will be achieved. Argo Group undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.
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 U.S. Securities and Exchange Commission. Management believes that these non-GAAP 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"). “Underwriting income” is an internal performance measure used in the management of the Company’s operations and represents net amount earned from underwriting activities (net premiums earned less underwriting expenses and claims incurred). 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. The Company presents Underwriting income as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information. "Adjusted operating income" is an internal performance measure used in the management of the Company's operations and represents after-tax (at an assumed effective tax rate of 20%) operational results excluding, as applicable, net realized investment gains or losses, net foreign exchange gain or loss, and other similar non-recurring items. The Company excludes net realized investment gains or losses, net foreign exchange gain or loss, and other similar non-recurring items from the calculation of adjusted operating income because these amounts are influenced by and fluctuate in part, by market conditions that are outside of managements’ control. In addition to presenting net income determined in accordance with U.S. GAAP, the Company believes that showing adjusted 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. Adjusted operating income should not be viewed as a substitute for U.S. GAAP net income. "Annualized return on average shareholders’ equity" ("ROAE") is calculated using average shareholders' equity. In calculating ROAE, the net income available to shareholders for the period is multiplied by the number of periods in a calendar year to arrive at annualized net income available to shareholders. The Company presents ROAE as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information. "Annualized adjusted operating return on average shareholders' equity" is calculated using adjusted operating income (as defined above and annualized in the manner described for net income (loss) available to shareholders under ROAE above) and average shareholders' equity. The assumed tax rate is 20%. Reconciliations of these financial measures to their most directly comparable U.S. GAAP measures are included in the attached tables.
Notes:
The presentation of Argo Group’s financial reporting segments was modified to better reflect its new operating framework and management structure. Under this model, Argo Group CEO Mark E. Watson III evaluates performance and allocates resources based on the review of the U.S. Operations and International Operations.
The U.S. Operations includes the former Excess & Surplus and Commercial Specialty reportable segments.
The International Operations includes the former Syndicate 1200, International Specialty reportable segments, and the recently acquired Ariel Re business.
It is the business unit that produces the risk and not the location of the underlying exposure that is the primary characteristic in distinguishing U.S. Operations from International Operations. For example, a U.S. property exposure underwritten through our Syndicate platform would be included in our International Operations.
Argo Group’s reportable segments will include four primary insurance and reinsurance services and offerings:
- Property – includes both property insurance and reinsurance solutions. Insurance products cover commercial properties primarily in North America with some residential and international covers. Reinsurance covers underlying exposures that are located throughout the world, including the United States. These offerings include coverages for man-made and natural disasters.
- Liability – includes a broad range of primary and excess casualty for risks on both an admitted and non-admitted basis in the United States. Internationally, Argo Group writes worldwide casualty risks primarily exposed in the UK, Canada, and Australia.
- Professional – includes various professional lines products including of errors and omissions, management liability (including Directors and Officers) and cyber coverages.
- Specialty – includes niche insurance coverages including marine & energy, accident & health, and surety product offerings.
Corporate and Run-Off include all other activity of Argo Group. Consistent with prior reporting, amounts for both Corporate and Run-Off are included in the consolidated financial results.
(financial tables follow)
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| (in millions, except per share amounts) | |||||||||||
| December 31, | December 31, | ||||||||||
| 2016 | 2015 | ||||||||||
| Assets | |||||||||||
| Total investments | $ | 4,324.3 | $ | 4,115.7 | |||||||
| Cash | 86.0 | 121.7 | |||||||||
| Accrued investment income | 20.7 | 21.6 | |||||||||
| Receivables | 1,849.4 | 1,525.6 | |||||||||
| Goodwill and intangible assets | 219.9 | 225.5 | |||||||||
| Deferred acquisition costs, net | 139.1 | 132.4 | |||||||||
| Ceded unearned premiums | 302.8 | 250.8 | |||||||||
| Other assets | 262.8 | 232.3 | |||||||||
| Total assets | $ | 7,205.0 | $ | 6,625.6 | |||||||
| Liabilities and Shareholders' Equity | |||||||||||
| Reserves for losses and loss adjustment expenses | $ | 3,350.8 | $ | 3,123.6 | |||||||
| Unearned premiums | 970.0 | 886.7 | |||||||||
| Ceded reinsurance payable, net | 466.6 | 312.4 | |||||||||
| Senior unsecured fixed rate notes | 139.5 | 139.3 | |||||||||
| Other indebtedness | 55.4 | 55.2 | |||||||||
| Junior subordinated debentures | 172.7 | 172.7 | |||||||||
| Other liabilities | 257.3 | 267.6 | |||||||||
| Total liabilities | 5,412.3 | 4,957.5 | |||||||||
| Total shareholders' equity | 1,792.7 | 1,668.1 | |||||||||
| Total liabilities and shareholders' equity | $ | 7,205.0 | $ | 6,625.6 | |||||||
| Book value per common share | $ | 59.73 | $ | 54.31 | |||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | ||||||||||
| FINANCIAL HIGHLIGHTS | ||||||||||
| ALL SEGMENTS | ||||||||||
| (in millions, except per share amounts) | ||||||||||
| Years Ended | ||||||||||
| December 31, | ||||||||||
| 2016 | 2015 | |||||||||
| Gross written premiums | $ | 2,164.8 | $ | 2,012.1 | ||||||
| Net written premiums | 1,440.2 | 1,402.1 | ||||||||
| Earned premiums | 1,410.8 | 1,371.9 | ||||||||
| Net investment income | 115.1 | 88.6 | ||||||||
| Fee and other income | 24.5 | 22.2 | ||||||||
| Net realized investment and other gains | 26.1 | 24.1 | ||||||||
| Total revenue | 1,576.5 | 1,506.8 | ||||||||
| Losses and loss adjustment expenses | 810.1 | 766.1 | ||||||||
| Underwriting, acquisition and insurance expenses | 547.0 | 536.7 | ||||||||
| Interest expense | 19.6 | 19.0 | ||||||||
| Fee and other expense, net | 22.4 | 25.8 | ||||||||
| Foreign currency exchange gain | (4.5 | ) | (18.3 | ) | ||||||
| Total expenses | 1,394.6 | 1,329.3 | ||||||||
| Income before taxes | 181.9 | 177.5 | ||||||||
| Income tax provision | 35.2 | 14.3 | ||||||||
| Net income | $ | 146.7 | $ | 163.2 | ||||||
| Net income per common share (basic) | $ | 4.86 | $ | 5.31 | ||||||
| Net income per common share (diluted) | $ | 4.75 | $ | 5.20 | ||||||
| Weighted average common shares: | ||||||||||
| Basic | 30.2 | 30.8 | ||||||||
| Diluted | 30.8 | 31.4 | ||||||||
| No change to previously reported amounts. | ||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | |||||||||||
| SEGMENT DATA | |||||||||||
| (in millions) | |||||||||||
| Years Ended | |||||||||||
| December | December | ||||||||||
| 2016 | 2015 | ||||||||||
|
US OPERATIONS |
|||||||||||
| Gross written premiums | $ | 1,277.7 | $ | 1,145.2 | |||||||
| Net written premiums | 883.5 | 838.5 | |||||||||
| Earned premiums | 849.5 | 815.4 | |||||||||
| Underwriting income | 111.5 | 84.9 | |||||||||
| Net investment income | 71.9 | 52.2 | |||||||||
| Fee and other income (expense), net | 0.2 | (3.5 | ) | ||||||||
| Interest expense | (9.2 | ) | (9.2 | ) | |||||||
| Net income before taxes | $ | 174.4 | $ | 124.4 | |||||||
| Loss ratio | 55.0 | % | 57.8 | % | |||||||
| Expense ratio | 31.8 | % | 31.8 | % | |||||||
| GAAP combined ratio | 86.9 | % | 89.6 | % | |||||||
|
INTERNATIONAL OPERATIONS |
|||||||||||
| Gross written premiums | $ | 886.8 | $ | 866.4 | |||||||
| Net written premiums | 556.4 | 563.2 | |||||||||
| Earned premiums | 560.9 | 556.1 | |||||||||
| Underwriting income | 25.8 | 49.3 | |||||||||
| Net investment income | 28.7 | 20.3 | |||||||||
| Fee and other income, net | 2.4 | 0.4 | |||||||||
| Interest expense | (5.3 | ) | (5.6 | ) | |||||||
| Net income before taxes | $ | 51.6 | $ | 64.4 | |||||||
| Loss ratio | 57.8 | % | 51.5 | % | |||||||
| Expense ratio | 37.6 | % | 39.6 | % | |||||||
| GAAP combined ratio | 95.4 | % | 91.1 | % | |||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | |||||||||||||||||||||||||||||||||||
| QUARTERLY SEGMENT DATA | |||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| December | September | June | March | December | September | June | March | ||||||||||||||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||||||||||||||||
|
US OPERATIONS |
|||||||||||||||||||||||||||||||||||
| Gross written premiums | $ | 307.5 | $ | 360.8 | $ | 321.8 | $ | 287.6 | $ | 276.7 | $ | 310.2 | $ | 288.7 | $ | 269.6 | |||||||||||||||||||
| Net written premiums | 211.7 | 258.9 | 223.5 | 189.4 | 197.0 | 230.0 | 221.6 | 189.9 | |||||||||||||||||||||||||||
| Earned premiums | 219.8 | 216.3 | 206.8 | 206.6 | 207.9 | 209.0 | 202.8 | 195.7 | |||||||||||||||||||||||||||
| Underwriting income | 32.6 | 27.5 | 27.2 | 24.2 | 19.9 | 27.3 | 19.1 | 18.6 | |||||||||||||||||||||||||||
| Net investment income | 16.1 | 20.3 | 21.7 | 13.8 | 12.5 | 11.6 | 15.1 | 13.0 | |||||||||||||||||||||||||||
| Fee and other income (expense), net | 1.9 | 0.3 | (1.1 | ) | (0.9 | ) | (1.5 | ) | 0.5 | (1.7 | ) | (0.8 | ) | ||||||||||||||||||||||
| Interest expense | (2.4 | ) | (2.2 | ) | (2.4 | ) | (2.2 | ) | (2.3 | ) | (2.3 | ) | (2.3 | ) | (2.3 | ) | |||||||||||||||||||
| Net income before taxes | $ | 48.2 | $ | 45.9 | $ | 45.4 | $ | 34.9 | $ | 28.6 | $ | 37.1 | $ | 30.2 | $ | 28.5 | |||||||||||||||||||
| Loss ratio | 54.3 | % | 54.3 | % | 55.7 | % | 55.9 | % | 59.2 | % | 55.1 | % | 58.4 | % | 58.4 | % | |||||||||||||||||||
| Expense ratio | 30.8 | % | 33.0 | % | 31.2 | % | 32.4 | % | 31.2 | % | 31.8 | % | 32.1 | % | 32.1 | % | |||||||||||||||||||
| GAAP combined ratio | 85.2 | % | 87.3 | % | 86.8 | % | 88.3 | % | 90.4 | % | 86.9 | % | 90.6 | % | 90.5 | % | |||||||||||||||||||
|
INTERNATIONAL OPERATIONS |
|||||||||||||||||||||||||||||||||||
| Gross written premiums | $ | 191.5 | $ | 224.5 | $ | 238.6 | $ | 232.2 | $ | 169.4 | $ | 220.9 | $ | 268.7 | $ | 207.4 | |||||||||||||||||||
| Net written premiums | 121.8 | 156.3 | 164.3 | 114.0 | 111.3 | 155.9 | 189.6 | 106.4 | |||||||||||||||||||||||||||
| Earned premiums | 142.4 | 142.3 | 137.9 | 138.3 | 137.4 | 136.7 | 142.8 | 139.2 | |||||||||||||||||||||||||||
| Underwriting income (loss) | (4.8 | ) | 12.5 | 6.3 | 11.8 | 13.8 | 5.5 | 13.9 | 16.1 | ||||||||||||||||||||||||||
| Net investment income | 6.0 | 7.5 | 9.1 | 6.1 | 4.9 | 4.4 | 5.9 | 5.1 | |||||||||||||||||||||||||||
| Fee and other income (expense), net | (1.4 | ) | 1.5 | 1.2 | 1.1 | (2.0 | ) | 1.1 | 0.9 | 0.4 | |||||||||||||||||||||||||
| Interest expense | (1.3 | ) | (1.4 | ) | (1.3 | ) | (1.3 | ) | (1.4 | ) | (1.4 | ) | (1.3 | ) | (1.5 | ) | |||||||||||||||||||
| Net income before taxes | $ | (1.5 | ) | $ | 20.1 | $ | 15.3 | $ | 17.7 | $ | 15.3 | $ | 9.6 | $ | 19.4 | $ | 20.1 | ||||||||||||||||||
| Loss ratio | 65.8 | % | 55.4 | % | 55.6 | % | 54.0 | % | 49.6 | % | 56.8 | % | 49.9 | % | 49.8 | % | |||||||||||||||||||
| Expense ratio | 37.6 | % | 35.8 | % | 39.8 | % | 37.5 | % | 40.4 | % | 39.1 | % | 40.3 | % | 38.6 | % | |||||||||||||||||||
| GAAP combined ratio | 103.4 | % | 91.2 | % | 95.4 | % | 91.5 | % | 90.0 | % | 96.0 | % | 90.3 | % | 88.4 | % | |||||||||||||||||||
| ANNUAL: | ||||||||||||||||||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | ||||||||||||||||||||||||||
| GROSS WRITTEN PREMIUM BY SEGMENT AND LINE OF BUSINESS | ||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Years Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||
|
US OPERATIONS |
||||||||||||||||||||||||||
| Property | $ | 239.8 | $ | 185.8 | ||||||||||||||||||||||
| Liability | 794.8 | 770.7 | ||||||||||||||||||||||||
| Professional | 140.4 | 119.1 | ||||||||||||||||||||||||
| Specialty | 102.8 | 69.6 | ||||||||||||||||||||||||
| Total | $ | 1,277.7 | $ | 1,145.2 | ||||||||||||||||||||||
|
INTERNATIONAL OPERATIONS |
||||||||||||||||||||||||||
| Property | $ | 321.8 | $ | 307.1 | ||||||||||||||||||||||
| Liability | 145.5 | 154.4 | ||||||||||||||||||||||||
| Professional | 159.0 | 150.3 | ||||||||||||||||||||||||
| Specialty | 260.5 | 254.6 | ||||||||||||||||||||||||
| Total | $ | 886.8 | $ | 866.4 | ||||||||||||||||||||||
| HISTORICAL QUARTERLY: | ||||||||||||||||||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | ||||||||||||||||||||||||||
| GROSS WRITTEN PREMIUM BY SEGMENT AND LINE OF BUSINESS | ||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| December | September | June | March | December | September | June | March | |||||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||||
|
US OPERATIONS |
||||||||||||||||||||||||||
| Property | $ | 51.2 | $ | 69.1 | $ | 75.7 | $ | 43.7 | $ | 44.1 | $ | 47.4 | $ | 55.2 | $ | 39.1 | ||||||||||
| Liability | 181.6 | 226.8 | 192.6 | 193.9 | 177.8 | 212.7 | 188.9 | 191.3 | ||||||||||||||||||
| Professional | 41.5 | 35.3 | 34.1 | 29.5 | 35.8 | 29.0 | 29.2 | 25.1 | ||||||||||||||||||
| Specialty | 33.2 | 29.6 | 19.4 | 20.5 | 19.0 | 21.1 | 15.4 | 14.1 | ||||||||||||||||||
| Total | $ | 307.5 | $ | 360.8 | $ | 321.8 | $ | 287.6 | $ | 276.7 | $ | 310.2 | $ | 288.7 | $ | 269.6 | ||||||||||
|
INTERNATIONAL OPERATIONS |
||||||||||||||||||||||||||
| Property | $ | 48.7 | $ | 76.6 | $ | 99.5 | $ | 97.0 | $ | 45.1 | $ | 73.0 | $ | 115.9 | $ | 73.0 | ||||||||||
| Liability | 35.6 | 40.5 | 33.1 | 36.3 | 36.7 | 42.5 | 44.0 | 31.1 | ||||||||||||||||||
| Professional | 47.8 | 39.7 | 39.8 | 31.7 | 37.7 | 41.4 | 35.7 | 35.6 | ||||||||||||||||||
| Specialty | 59.4 | 67.7 | 66.2 | 67.2 | 49.9 | 63.9 | 73.1 | 67.7 | ||||||||||||||||||
| Total | $ | 191.5 | $ | 224.5 | $ | 238.6 | $ | 232.2 | $ | 169.4 | $ | 220.9 | $ | 268.7 | $ | 207.4 | ||||||||||
| ANNUAL: | ||||||||||||||||||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | ||||||||||||||||||||||||||
| NET WRITTEN PREMIUM BY SEGMENT AND LINE OF BUSINESS | ||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Years Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||
|
US OPERATIONS |
||||||||||||||||||||||||||
| Property | $ | 125.7 | $ | 135.9 | ||||||||||||||||||||||
| Liability | 575.5 | 578.5 | ||||||||||||||||||||||||
| Professional Lines | 100.3 | 69.3 | ||||||||||||||||||||||||
| Specialty | 81.9 | 54.9 | ||||||||||||||||||||||||
| Total | $ | 883.5 | $ | 838.5 | ||||||||||||||||||||||
|
INTERNATIONAL OPERATIONS |
||||||||||||||||||||||||||
| Property | $ | 200.7 | $ | 202.2 | ||||||||||||||||||||||
| Liability | 80.6 | 91.0 | ||||||||||||||||||||||||
| Professional Lines | 104.9 | 101.2 | ||||||||||||||||||||||||
| Specialty | 170.1 | 168.8 | ||||||||||||||||||||||||
| Total | $ | 556.4 | $ | 563.2 | ||||||||||||||||||||||
| HISTORICAL QUARTERLY: | ||||||||||||||||||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | ||||||||||||||||||||||||||
| NET WRITTEN PREMIUM BY SEGMENT AND LINE OF BUSINESS | ||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| December | September | June | March | December | September | June | March | |||||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||||
|
US OPERATIONS |
||||||||||||||||||||||||||
| Property | $ | 23.3 | $ | 42.8 | $ | 40.5 | $ | 19.1 | $ | 28.8 | $ | 38.1 | $ | 45.3 | $ | 23.6 | ||||||||||
| Liability | 134.7 | 164.2 | 140.9 | 135.7 | 133.0 | 158.7 | 146.5 | 140.4 | ||||||||||||||||||
| Professional Lines | 28.6 | 28.6 | 25.8 | 17.3 | 20.9 | 16.5 | 17.4 | 14.5 | ||||||||||||||||||
| Specialty | 25.1 | 23.3 | 16.2 | 17.3 | 14.3 | 16.8 | 12.4 | 11.4 | ||||||||||||||||||
| Total | $ | 211.7 | $ | 258.9 | $ | 223.5 | $ | 189.4 | $ | 197.0 | $ | 230.0 | $ | 221.6 | $ | 189.9 | ||||||||||
|
INTERNATIONAL OPERATIONS |
||||||||||||||||||||||||||
| Property | $ | 30.3 | $ | 58.3 | $ | 70.0 | $ | 42.1 | 31.0 | 54.0 | 91.9 | 25.3 | ||||||||||||||
| Liability | 18.5 | 23.0 | 18.6 | 20.5 | 20.4 | 26.3 | 25.0 | 19.3 | ||||||||||||||||||
| Professional Lines | 34.2 | 25.9 | 27.3 | 17.6 | 25.6 | 30.3 | 22.6 | 22.8 | ||||||||||||||||||
| Specialty | 38.7 | 49.1 | 48.4 | 33.9 | 34.4 | 45.4 | 50.0 | 39.0 | ||||||||||||||||||
| Total | $ | 121.8 | $ | 156.3 | $ | 164.3 | $ | 114.0 | $ | 111.3 | $ | 155.9 | $ | 189.6 | $ | 106.4 | ||||||||||
| ANNUAL: | ||||||||||||||||||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | ||||||||||||||||||||||||||
| NET EARNED PREMIUM BY SEGMENT AND LINE OF BUSINESS | ||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Years Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||
|
US OPERATIONS |
||||||||||||||||||||||||||
| Property | $ | 124.9 | $ | 138.1 | ||||||||||||||||||||||
| Liability | 575.3 | 567.9 | ||||||||||||||||||||||||
| Professional Lines | 79.3 | 57.1 | ||||||||||||||||||||||||
| Specialty | 70.0 | 52.5 | ||||||||||||||||||||||||
| Total | $ | 849.5 | $ | 815.4 | ||||||||||||||||||||||
|
INTERNATIONAL OPERATIONS |
||||||||||||||||||||||||||
| Property | $ | 205.8 | $ | 199.8 | ||||||||||||||||||||||
| Liability | 86.2 | 88.1 | ||||||||||||||||||||||||
| Professional Lines | 102.6 | 99.2 | ||||||||||||||||||||||||
| Specialty | 166.3 | 169.0 | ||||||||||||||||||||||||
| Total | $ | 560.9 | $ | 556.1 | ||||||||||||||||||||||
| HISTORICAL QUARTERLY: | ||||||||||||||||||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | ||||||||||||||||||||||||||
| NET EARNED PREMIUM BY SEGMENT AND LINE OF BUSINESS | ||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| December | September | June | March | December | September | June | March | |||||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||||
|
US OPERATIONS |
||||||||||||||||||||||||||
| Property | $ | 31.2 | $ | 28.6 | $ | 31.6 | $ | 33.5 | $ | 34.2 | $ | 34.5 | $ | 34.8 | $ | 34.6 | ||||||||||
| Liability | 146.2 | 146.3 | 142.0 | 140.8 | 143.0 | 145.8 | 141.8 | 137.3 | ||||||||||||||||||
| Professional Lines | 22.5 | 21.2 | 17.9 | 17.6 | 16.7 | 14.9 | 13.5 | 12.0 | ||||||||||||||||||
| Specialty | 19.8 | 20.1 | 15.3 | 14.7 | 14.1 | 13.7 | 12.8 | 11.8 | ||||||||||||||||||
| Total | $ | 219.8 | $ | 216.3 | $ | 206.8 | $ | 206.6 | $ | 207.9 | $ | 209.0 | $ | 202.8 | $ | 195.7 | ||||||||||
|
INTERNATIONAL OPERATIONS |
||||||||||||||||||||||||||
| Property | $ | 52.0 | $ | 53.3 | $ | 48.8 | $ | 51.7 | $ | 52.1 | $ | 47.2 | $ | 53.3 | $ | 47.2 | ||||||||||
| Liability | 20.5 | 24.3 | 20.2 | 21.3 | 22.4 | 23.8 | 21.0 | 21.0 | ||||||||||||||||||
| Professional Lines | 30.8 | 22.3 | 26.0 | 23.5 | 24.6 | 25.7 | 23.9 | 24.9 | ||||||||||||||||||
| Specialty | 39.2 | 42.5 | 42.8 | 41.8 | 38.3 | 39.9 | 44.7 | 46.1 | ||||||||||||||||||
| Total | $ | 142.4 | $ | 142.3 | $ | 137.9 | $ | 138.3 | $ | 137.4 | $ | 136.7 | $ | 142.8 | $ | 139.2 | ||||||||||
| ANNUAL: | |||||||||||||||||||||||||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | |||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||
| Years Ended | |||||||||||||||||||||||||||||||||
| Net Prior Year Development | December 31, | ||||||||||||||||||||||||||||||||
|
(Favorable)/Unfavorable |
2016 | 2015 | |||||||||||||||||||||||||||||||
| US Operations | $ | (35.9 | ) | $ | (23.0 | ) | |||||||||||||||||||||||||||
| International Operations | (16.0 | ) | (18.0 | ) | |||||||||||||||||||||||||||||
| Run-off | 18.6 | 8.6 | |||||||||||||||||||||||||||||||
| Total | $ | (33.3 | ) | $ | (32.4 | ) | |||||||||||||||||||||||||||
| HISTORICAL QUARTERLY: | |||||||||||||||||||||||||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | |||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||
| Net Prior Year Development | December | September | June | March | December | September | June | March | |||||||||||||||||||||||||
|
(Favorable)/Unfavorable |
2016 | 2016 | 2016 | 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||||||||||
| US Operations | $ | (10.3 | ) | $ | (13.7 | ) | $ | (9.0 | ) | $ | (2.9 | ) | $ | (8.3 | ) | $ | (11.3 | ) | $ | (2.4 | ) | $ | (1.0 | ) | |||||||||
| International Operations | (5.2 | ) | (0.6 | ) | (8.5 | ) | (1.7 | ) | (9.4 | ) | (2.4 | ) | (3.4 | ) | (2.8 | ) | |||||||||||||||||
| Run-off | 1.0 | 11.4 | 4.8 | 1.4 | 0.6 | 7.1 | 0.8 | 0.1 | |||||||||||||||||||||||||
| Total | $ | (14.5 | ) | $ | (2.9 | ) | $ | (12.7 | ) | $ | (3.2 | ) | $ | (17.1 | ) | $ | (6.6 | ) | $ | (5.0 | ) | $ | (3.7 | ) | |||||||||
| ANNUAL: | ||||||||||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | ||||||||||||||||||
| RECONCILIATION OF LOSS RATIOS | ||||||||||||||||||
| (in millions) | ||||||||||||||||||
| Years Ended | ||||||||||||||||||
| December 31, | ||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||
|
US OPERATIONS |
||||||||||||||||||
| Loss ratio | 55.0% | 57.8% | ||||||||||||||||
| Prior accident year loss development | 4.2% | 2.8% | ||||||||||||||||
| Catastrophe losses | -1.7% | -1.3% | ||||||||||||||||
| Current accident year ex-cats loss ratio | 57.5% | 59.3% | ||||||||||||||||
|
INTERNATIONAL OPERATIONS |
||||||||||||||||||
| Loss ratio | 57.8% | 51.5% | ||||||||||||||||
| Prior accident year loss development | 2.8% | 3.2% | ||||||||||||||||
| Catastrophe losses | -8.6% | -2.4% | ||||||||||||||||
| Current accident year ex-cats loss ratio | 52.0% | 52.3% | ||||||||||||||||
|
CONSOLIDATED |
||||||||||||||||||
| Loss ratio | 57.4% | 55.8% | ||||||||||||||||
| Prior accident year loss development | 2.4% | 2.4% | ||||||||||||||||
| Catastrophe losses | -4.4% | -1.8% | ||||||||||||||||
| Current accident year ex-cats loss ratio | 55.4% | 56.4% | ||||||||||||||||
| HISTORICAL QUARTERLY: | ||||||||||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | ||||||||||||||||||
| RECONCILIATION OF LOSS RATIOS | ||||||||||||||||||
| (in millions) | ||||||||||||||||||
| December | September | June | March | December | September | June | March | |||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||
|
US OPERATIONS |
||||||||||||||||||
| Loss ratio | 54.3% | 54.3% | 55.7% | 55.9% | 59.2% | 55.1% | 58.4% | 58.4% | ||||||||||
| Prior accident year loss development | 4.7% | 6.3% | 4.3% | 1.4% | 4.0% | 5.4% | 1.2% | 0.5% | ||||||||||
| Catastrophe losses | -1.2% | -2.1% | -2.2% | -1.1% | -2.0% | -1.5% | -1.1% | -0.5% | ||||||||||
| Current accident year ex-cats loss ratio | 57.8% | 58.5% | 57.8% | 56.2% | 61.2% | 59.0% | 58.5% | 58.4% | ||||||||||
|
INTERNATIONAL OPERATIONS |
||||||||||||||||||
| Loss ratio | 65.8% | 55.4% | 55.6% | 54.0% | 49.6% | 56.8% | 49.9% | 49.8% | ||||||||||
| Prior accident year loss development | 3.6% | 0.4% | 6.4% | 1.3% | 6.8% | 1.8% | 2.4% | 2.0% | ||||||||||
| Catastrophe losses | -14.3% | -5.9% | -13.8% | -0.8% | -0.8% | -7.7% | 0.0% | -1.4% | ||||||||||
| Current accident year ex-cats loss ratio | 55.1% | 49.9% | 48.2% | 54.5% | 55.6% | 50.9% | 52.3% | 50.4% | ||||||||||
|
CONSOLIDATED |
||||||||||||||||||
| Loss ratio | 59.1% | 57.9% | 57.0% | 55.5% | 55.5% | 57.8% | 55.1% | 54.9% | ||||||||||
| Prior accident year loss development | 4.0% | 0.8% | 3.7% | 0.9% | 5.0% | 1.9% | 1.4% | 1.1% | ||||||||||
| Catastrophe losses | -6.4% | -3.6% | -6.8% | -0.9% | -1.5% | -3.9% | -0.6% | -0.9% | ||||||||||
| Current accident year ex-cats loss ratio | 56.7% | 55.1% | 53.9% | 55.5% | 59.0% | 55.8% | 55.9% | 55.1% | ||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | |||||||||||
| RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) TO NET INCOME (LOSS) | |||||||||||
| (in millions, except per share amounts) | |||||||||||
| (unaudited) | |||||||||||
| Years Ended | |||||||||||
| December 31, | |||||||||||
| 2016 | 2015 | ||||||||||
| Net income, as reported | $ | 146.7 | $ | 163.2 | |||||||
| Provision for income taxes | 35.2 | 14.3 | |||||||||
| Net income, before taxes | 181.9 | 177.5 | |||||||||
| Add (deduct): | |||||||||||
| Net realized investment and other gains | (26.1 | ) | (24.1 | ) | |||||||
| Foreign currency exchange gains | (4.5 | ) | (18.3 | ) | |||||||
| Adjusted operating income before taxes | 151.3 | 135.1 | |||||||||
| Provision for income taxes, at assumed rate (a) | 30.3 | 27.0 | |||||||||
| Adjusted operating income | $ | 121.0 | $ | 108.1 | |||||||
| Adjusted operating income per common share (diluted) | $ | 3.92 | $ | 3.44 | |||||||
| Weighted average common shares, diluted | 30.8 | 31.4 | |||||||||
| (a) At assumed tax rate of 20%. | |||||||||||
| No change to previously reported amounts. | |||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | ||||||||||
| RECONCILIATION OF UNDERWRITING INCOME TO NET INCOME | ||||||||||
| (in millions) | ||||||||||
| (unaudited) | ||||||||||
| Years Ended | ||||||||||
| December 31, | ||||||||||
| 2016 | 2015 | |||||||||
| Net Income | $ | 146.7 | $ | 163.2 | ||||||
| Add (deduct): | ||||||||||
| Income tax provision | 35.2 | 14.3 | ||||||||
| Net investment income | (115.1 | ) | (88.6 | ) | ||||||
| Net realized investment and other gains | (26.1 | ) | (24.1 | ) | ||||||
| Fee and other income | (24.5 | ) | (22.2 | ) | ||||||
| Interest expense | 19.6 | 19.0 | ||||||||
| Fee and other expense | 22.4 | 25.8 | ||||||||
| Foreign currency exchange gains | (4.5 | ) | (18.3 | ) | ||||||
| Underwriting income | $ | 53.7 | $ | 69.1 | ||||||
| No change to previously reported amounts. | ||||||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | ||||||||||
| RECONCILIATION OF SEGMENT INCOME TO NET INCOME | ||||||||||
| (in millions) | ||||||||||
| (unaudited) | ||||||||||
| For the Years Ended | ||||||||||
| December 31, | ||||||||||
| 2016 | 2015 | |||||||||
| Segment income (loss) before income taxes | ||||||||||
| US Operations | $ | 174.4 | $ | 124.4 | ||||||
| International Operations | 51.6 | 64.4 | ||||||||
| Run-off Lines | (15.2 | ) | (7.4 | ) | ||||||
| Corporate and Other | (59.5 | ) | (46.3 | ) | ||||||
| Realized investment and other gains | 26.1 | 24.1 | ||||||||
| Foreign currency exchange gains | 4.5 | 18.3 | ||||||||
| Net income before income taxes | 181.9 | 177.5 | ||||||||
| Provision for taxes | 35.2 | 14.3 | ||||||||
| Net income | $ | 146.7 | $ | 163.2 | ||||||
| ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | |||||||||||||||
| SHAREHOLDER RETURN ANALYSIS | |||||||||||||||
| (in millions) | |||||||||||||||
| (unaudited) | |||||||||||||||
| For the Years Ended December 31, | |||||||||||||||
| 2016 | 2015 | % Change | |||||||||||||
| Net income | $ | 146.7 | $ | 163.2 | (10.1 | %) | |||||||||
| Adjusted operating income (a) | 121.0 | 108.1 | 12.0 | % | |||||||||||
| Shareholders' Equity - Beginning of the period | $ | 1,668.1 | $ | 1,646.7 | 1.3 | % | |||||||||
| Shareholders' Equity - End of current period | 1,792.7 | 1,668.1 | 7.5 | % | |||||||||||
| Average Shareholders' Equity | $ | 1,730.4 | $ | 1,657.4 | 4.4 | % | |||||||||
| Annualized return on average shareholders' equity | 8.5 | % | 9.8 | % | |||||||||||
| Annualized adjusted operating return on average shareholders' equity | 7.0 | % | 6.5 | % | |||||||||||
| (a) at assumed 20% tax rate | |||||||||||||||
| No change to previously reported amounts. | |||||||||||||||
