8-K
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2020-04-29
2020-04-29
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us-gaap:CommonStockMember
2020-04-29
2020-04-29
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us-gaap:SeniorNotesMember
2020-04-29
2020-04-29
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 29, 2020
Argo Group International Holdings, Ltd.
(Exact Name of Registrant as Specified in Charter)
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Bermuda
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001-15259
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98-0214719
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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110 Pitts Bay Road
Pembroke HM 08
Bermuda
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P.O. Box HM 1282
Hamilton HM FX
Bermuda
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(Address, Including Zip Code,
of Principal Executive Offices)
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(Mailing Address)
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Registrant’s telephone number, including area code: (441) 296-5858
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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☐
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Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading
Symbol(s)
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Name of each exchange
on which registered
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Common Stock, par value of $1.00 per share
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ARGO
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New York Stock Exchange
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Guarantee of Argo Group U.S., Inc. 6.500% Senior Notes due 2042
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ARGD
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New York Stock Exchange
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On April 29, 2020, Argo Group International Holdings, Ltd. (the “Company”) issued a press release regarding its anticipated financial results for the fiscal quarter ended March 31, 2020. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.
ITEM 8.01. OTHER EVENTS.
The Company is supplementing its risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 as follows:
The ongoing COVID-19 pandemic could adversely affect our business, including revenues, profitability, results of operations, and/or cash flows, in a manner and to a degree that cannot be predicted but could be material.
The global COVID-19 pandemic has resulted in and is expected to continue to result in significant disruptions in economic activity and financial markets. COVID-19 has directly and indirectly adversely affected the Company and may continue to do so for an uncertain period of time. The cumulative effects of COVID-19 on the Company cannot be predicted at this time, but could include, without limitation:
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Reduced demand for our insurance policies due to reduced economic activity which could negatively impact our revenues,
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Reduced cash flows from our policyholders delaying premium payments,
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Increased claims, losses, litigation, and related expenses,
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Increased losses due to legislative, regulatory, and judicial actions in response to COVID-19, including, but not limited to, actions prohibiting us from cancelling insurance policies in accordance with our policy terms, requiring us to cover losses when our policies did not provide coverage or excluded coverage, ordering us to provide premium refunds, granting extended grace periods for payment of premiums, and providing for extended periods of time to pay past due premiums,
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An increase in the demand and frequency of reporting by regulators that could place stress on our ability to accurately and timely meet those and existing demands, and a delay or denial in regulatory rate approvals could contribute to financial stress,
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An increase in claims as a result of the COVID-19 pandemic. Ultimate losses from COVID-19-related claims could be greater than our reserves for those losses,
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A negative impact on our ability to timely and properly pay claims and establish reserves due to uncertainty around claims patterns, including impediments to adjusting claims in the field,
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Volatility and declines in financial markets which, in response to COVID-19, has reduced, and could continue to reduce, the fair market value of, or result in the impairment of, invested assets held by the Company,
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Decline in interest rates which could reduce future investment results,
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Erosion of capital and an increase in the cost of reinsurance as well as an increase in counterparty credit risk,
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Decreased access to capital, if needed, and the cost of external capital could be elevated,
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Disruptions in our operations due to difficulties experienced by our partners and outsourced providers that may, among other items, adversely impact our ability to manage claims,
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Increased costs of operations due to the remote working environments of our employees, and
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Increased vulnerability to cyberthreats or other disruption in our operations while most of our workforce is continuing to work remotely.
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The extent to which COVID-19 impacts our business will depend on future developments, and while we are not able to estimate the impact that COVID-19 will have on our financial results and financial condition, it could be material. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in “Part I, Item 1A—Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits:
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: April 29, 2020
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ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
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By:
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/s/ Jay S. Bullock
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Name: Jay S. Bullock
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Title: Executive Vice President and Chief Financial Officer
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Exhibit 99.1
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Argo Group Comments on Results for First Quarter 2020,
Schedules Earnings Release and Conference Call
HAMILTON, Bermuda – April 29, 2020 – Argo Group International Holdings, Ltd. (“Argo” or the “company”) (NYSE: ARGO) announced today that its results for the first quarter of 2020 will be adversely affected by certain loss items primarily related to the impact of the COVID-19 pandemic and volatility in global financial markets, summarized in more detail below.
Argo expects to report pre-tax net catastrophe losses of $29 million, including approximately $26 million related to the COVID-19 pandemic, primarily resulting from contingency and property exposures in the company’s International Operations and property exposures in its U.S. Operations. Property losses relate to sub-limited affirmative business interruption coverage primarily in certain International markets, as well as expected costs associated with potential litigation.
“Our company has a long history of assisting policyholders as they navigate unprecedented times,” said Argo Chief Executive Officer Kevin J. Rehnberg. “While this continuing event is significant, Argo remains financially strong and will continue to support our customers and producers through the challenges ahead.
“I’m grateful for the broader Argo team who like so many worldwide have been working long hours in remote locations to serve our customers. My sympathy goes out to all of those affected by this virus directly or indirectly.”
Charges related to the COVID-19 pandemic represents estimated losses incurred through March 31, 2020. Argo expects to incur some additional losses and claim related expenses in subsequent quarters depending on the timing and duration of impacts related to the COVID-19 pandemic. Additionally, net prior year reserve development was not material in the first quarter of 2020.
Investment results in the quarter were adversely impacted by extreme volatility in interest rates, credit spreads and equity markets. As a result, Argo expects to report pre-tax net realized and unrealized investment losses of $162 million, partially offset by net investment income of $35 million for the first quarter of 2020.
Argo Schedules Earnings Release for May 7, 2020
The company will release first quarter 2020 financial results after the close of U.S. financial markets on Thursday, May 7, 2020. Company management will conduct an investor conference call starting at 11 a.m. EST on Friday, May 8, 2020.
Instructions for Connecting to the May 8, 2020 Conference Call
A live webcast of the conference call can be accessed at https://services.choruscall.com/links/argo200508.html. Participants in the U.S. can access the call by dialing (877) 291-5203. Callers dialing from outside the U.S. can access the call by dialing
(412) 902-6610. Please ask the operator to be connected to the Argo Group earnings call.
A webcast replay will be available shortly after the live conference call and can be accessed at https://services.choruscall.com/links/argo200508.html. A telephone replay of the conference call will be available through May 15, 2020, to callers in the U.S. by dialing (877) 344-7529 (conference 10143599). Callers dialing from outside the U.S. can access the telephone replay by dialing
(412) 317-0088 (conference 10143599).
ABOUT LOSS ESTIMATES
Argo Group’s estimates of losses are based on claims received to date, policy-level reviews, discussions with distribution partners, the Company’s internal and external modeling resources, and publicly available industry loss estimates. Argo Group’s estimates are dependent on broad assumptions about coverage, liability, reinsurance and potential changes to both known and unknown claims. Accordingly, the actual ultimate net impact may differ materially from Argo Group’s estimates.
ABOUT ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
Argo Group International Holdings, Ltd. (NYSE: ARGO), is an 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), and Argo Group’s U.S. insurance subsidiaries are Standard and Poor’s–rated “A-” (Strong). More information on Argo Group and its subsidiaries is available at argolimited.com.
FORWARD-LOOKING STATEMENTS
This press release includes 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,” “objective,” “outlook,” “trends,” “future,” “could,” “would,” “should,” “target,” “on track” and similar expressions of a future or forward-looking nature.
These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual events or results to differ materially. For a more detailed discussion of such risks and uncertainties, see Item 1A, “Risk Factors” in Argo Group’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in other filings with the Securities and Exchange Commission. 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. You should not place undue reliance on any such statements.
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Investors:
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Media:
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Brett Shirreffs
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David Snowden
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Head of Investor Relations
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Senior Vice President, Group Communications
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212.607.8830
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210.321.2104
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brett.shirreffs@argogroupus.com
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david.snowden@argogroupus.com
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