Bermuda
|
1-15259
|
98-0214719
|
(State or other jurisdiction
of incorporation)
|
(Commission
File Number)
|
(I.R.S. Employer
Identification No.)
|
110 Pitts Bay Road
Pembroke HM 08
Bermuda
|
P.O. Box HM 1282
Hamilton HM FX
Bermuda
|
|
(Address, Including Zip Code,
of Principal Executive Offices)
|
(Mailing Address)
|
99.1
|
|
Press Release issued by Argo Group International Holdings, Ltd. dated February 9, 2015.
|
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
|
|||
Dated: February 9, 2015
|
By:
|
/s/ Jay S. Bullock | |
Name: Jay S. Bullock | |||
Title: Executive Vice President and Chief Financial Officer |
●
|
Net income was $183.2 million or $6.90 per diluted share, compared to $143.2 million or $5.14 per diluted share for 2013.
|
●
|
After-tax operating income was $94.1 million or $3.54 per diluted share, compared to $85.4 million or $3.06 per diluted share for 2013.
|
●
|
Gross written premiums were $1.91 billion, compared to $1.89 billion for 2013, while net written premiums increased to $1.37 billion from $1.33 billion for 2013 after deduction of other reinsurance-related expenses.
|
●
|
The combined ratio was 96.2%, compared to 97.5% for 2013.
|
●
|
Net favorable prior-year reserve development was $37.7 million (benefiting the combined ratio by 2.8 points), compared to $33.6 million (benefiting the combined ratio by 2.6 points) for 2013.
|
●
|
Estimated pre-tax catastrophe losses were $17.7 million or 1.4 points on the combined ratio, compared to $22.7 million or 1.9 points for 2013.
|
●
|
The current accident year loss ratio excluding catastrophes was 57.3%, compared to 58.6% for 2013.
|
●
|
In 2014, the Company repurchased $50.8 million or 1.1 million shares of its common stock at an average share price of $48.48, which represents 4.0% of net shares outstanding at December 31, 2013.
|
●
|
At December 31, 2014, cash and investments totaled $4.2 billion with a net pre-tax unrealized gain of approximately $208.7 million.
|
●
|
Pre-tax realized gains for the year of $94.0 million include the sale of real estate in the fourth quarter. After-tax proceeds from the sale of the real estate were $25.7 million.
|
●
|
Net income was $59.7 million or $2.28 per diluted share, compared to $47.8 million or $1.74 per diluted share for the fourth quarter of 2013.
|
●
|
After-tax operating income was $21.8 million or $0.83 per diluted share, compared to $22.6 million or $0.82 per diluted share for the fourth quarter of 2013.
|
●
|
Gross written premiums were up 2.9% to $425.0 million from $412.9 million in the fourth quarter of 2013, while net written premiums increased to $312.3 million from $302.8 million for the fourth quarter of 2013 after
deduction of other reinsurance-related expenses.
|
●
|
The combined ratio was 96.8% compared to 95.2% for the fourth quarter of 2013.
|
●
|
Net favorable prior-year reserve development was $11.3 million (benefiting the combined ratio by 3.3 points), compared with $12.1 million (benefiting the combined ratio by 3.6 points) for the fourth quarter of 2013.
|
●
|
Estimated pre-tax catastrophe losses were $3.8 million or 1.1 points on the combined ratio, compared to negligible catastrophe losses for the fourth quarter of 2013.
|
●
|
The current accident year loss ratio excluding catastrophes was 57.7%, compared to 59.4% in the fourth quarter of 2013.
|
●
|
Book value per share increased to $64.04, up 1.7% from $62.99 at Sept. 30, 2014, and up 8.6% from $58.96 at December 31, 2013.
|
●
|
During the quarter, the Company repurchased $8.7 million or 166,134 shares of its common stock at an average price of $52.08, which represents 0.5% of net shares outstanding at Sept. 30, 2014.
|
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
|
CONSOLIDATED BALANCE SHEETS
|
(in millions, except per share amounts) |
December 31,
|
December 31,
|
||||||
2014
|
2013
|
||||||
(unaudited)
|
|||||||
Assets | |||||||
Total investments
|
$ | 4,097.9 | $ | 4,079.2 | |||
81.0 | 157.4 | ||||||
Accrued investment income
|
22.1 | 25.7 | |||||
Receivables
|
1,350.8 | 1,611.9 | |||||
Goodwill and intangible assets
|
230.8 | 239.8 | |||||
Deferred acquisition costs, net
|
124.6 | 113.9 | |||||
Ceded unearned premiums
|
207.6 | 196.3 | |||||
Other assets
|
241.5 | 166.8 | |||||
Total assets
|
$ | 6,356.3 | $ | 6,591.0 | |||
Liabilities and Shareholders' Equity
|
|||||||
Reserves for losses and loss adjustment expenses
|
$ | 3,042.4 | $ | 3,230.3 | |||
Unearned premiums
|
817.2 | 779.1 | |||||
Ceded reinsurance payable, net
|
178.8 | 354.7 | |||||
Senior unsecured fixed rate notes
|
143.8 | 143.8 | |||||
Other indebtedness
|
62.0 | 66.3 | |||||
Junior subordinated debentures
|
172.7 | 193.3 | |||||
Other liabilities
|
292.7 | 260.5 | |||||
Total liabilities
|
4,709.6 | 5,028.0 | |||||
Total shareholders' equity
|
1,646.7 | 1,563.0 | |||||
Total liabilities and shareholders' equity
|
$ | 6,356.3 | $ | 6,591.0 | |||
Book value per common share
|
$ | 64.04 | $ | 58.96 |
ARGO GROUP INTERNATIONAL HOLDINGS, LTD. |
FINANCIAL HIGHLIGHTS |
ALL SEGMENTS |
(in millions, except per share amounts) |
Three Months Ended
|
Twelve Months Ended
|
||||||||||||||
December 31,
|
December 31,
|
||||||||||||||
2014
|
2013
|
2014
|
2013
|
||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Gross written premiums
|
$ | 425.0 | $ | 412.9 | $ | 1,905.4 | $ | 1,888.4 | |||||||
Net written premiums
|
312.3 | 307.6 | 1,367.9 | 1,351.3 | |||||||||||
Earned premiums
|
338.7 | 341.6 | 1,338.1 | 1,303.8 | |||||||||||
Net investment income
|
21.9 | 22.7 | 86.6 | 100.0 | |||||||||||
Net realized investment gains and other
|
51.5 | 41.7 | 94.0 | 71.3 | |||||||||||
Total revenue
|
412.1 | 406.0 | 1,518.7 | 1,475.1 | |||||||||||
Losses and loss adjustment expenses
|
187.9 | 187.9 | 747.4 | 742.0 | |||||||||||
Other reinsurance-related expenses
|
0.0 | 4.8 | 0.0 | 19.2 | |||||||||||
Underwriting, acquisition and insurance expenses
|
139.9 | 132.8 | 539.2 | 510.8 | |||||||||||
Interest expense
|
4.9 | 5.1 | 19.9 | 20.2 | |||||||||||
Fee expense, net
|
0.7 | 5.4 | 0.6 | 4.9 | |||||||||||
Foreign currency exchange (gain) loss
|
(5.0 | ) | 3.5 | (7.8 | ) | (1.7 | ) | ||||||||
Impairment of intangible assets
|
3.4 | 0.0 | 3.4 | 0.0 | |||||||||||
Total expenses
|
331.8 | 339.5 | 1,302.7 | 1,295.4 | |||||||||||
Income before income taxes
|
80.3 | 66.5 | 216.0 | 179.7 | |||||||||||
Provision for income taxes
|
20.6 | 18.7 | 32.8 | 36.5 | |||||||||||
Net income
|
$ | 59.7 | $ | 47.8 | $ | 183.2 | $ | 143.2 | |||||||
Net income per common share (Basic)
|
$ | 2.32 | $ | 1.80 | $ | 7.02 | $ | 5.33 | |||||||
Net income per common share (Diluted)
|
$ | 2.28 | $ | 1.74 | $ | 6.90 | $ | 5.14 | |||||||
Weighted Average Common Shares:
|
|||||||||||||||
Basic
|
25.7 | 26.6 | 26.1 | 26.9 | |||||||||||
Diluted
|
26.2 | 27.5 | 26.6 | 27.9 | |||||||||||
Loss ratio
|
55.5% | 55.8% | 55.9% | 57.8% | |||||||||||
Expense ratio
|
41.3% | 39.4% | 40.3% | 39.7% | |||||||||||
Combined ratio
|
96.8% | 95.2% | 96.2% | 97.5% |
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
|
SEGMENT DATA
|
(in millions)
|
Three Months Ended
|
Twelve Months Ended
|
||||||||||||||
December 31,
|
December 31,
|
||||||||||||||
2014
|
2013
|
2014
|
2013
|
||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Excess and Surplus Lines
|
|||||||||||||||
Gross written premiums
|
$ | 144.9 | $ | 151.4 | $ | 607.2 | $ | 594.2 | |||||||
Net written premiums
|
120.7 | 127.3 | 487.8 | 478.7 | |||||||||||
Earned premiums
|
121.3 | 125.8 | 485.2 | 460.2 | |||||||||||
Underwriting income
|
$ | 22.1 | $ | 21.0 | $ | 75.6 | $ | 54.1 | |||||||
Net investment income
|
9.5 | 9.9 | 36.7 | 42.2 | |||||||||||
Interest expense
|
(1.5 | ) | (1.7 | ) | (6.3 | ) | (6.9 | ) | |||||||
Income before income taxes
|
$ | 30.1 | $ | 29.2 | $ | 106.0 | $ | 89.4 | |||||||
Loss ratio
|
49.6 | 51.0 | 51.1 | 53.6 | |||||||||||
Expense ratio
|
32.2 | 32.2 | 33.3 | 34.5 | |||||||||||
GAAP combined ratio
|
81.8 | % | 83.2 | % | 84.4 | % | 88.1 | % | |||||||
Commercial Specialty
|
|||||||||||||||
Gross written premiums
|
$ | 112.0 | $ | 88.8 | $ | 440.2 | $ | 419.1 | |||||||
Net written premiums
|
74.2 | 60.6 | 301.1 | 288.2 | |||||||||||
Earned premiums
|
76.4 | 73.9 | 291.9 | 299.0 | |||||||||||
Underwriting income (loss)
|
$ | (0.2 | ) | $ | 2.1 | $ | (0.7 | ) | $ | 6.7 | |||||
Net investment income
|
4.9 | 5.2 | 18.7 | 22.8 | |||||||||||
Interest expense
|
(0.8 | ) | (1.0 | ) | (3.2 | ) | (3.8 | ) | |||||||
Fee income (expense), net
|
(0.8 | ) | (2.2 | ) | (2.5 | ) | (4.3 | ) | |||||||
Impairment of intangible assets
|
(3.4 | ) | - | (3.4 | ) | - | |||||||||
Income (loss) before income taxes
|
$ | (0.3 | ) | $ | 4.1 | $ | 8.9 | $ | 21.4 | ||||||
Loss ratio
|
65.2 | 68.0 | 64.8 | 65.1 | |||||||||||
Expense ratio
|
35.0 | 29.1 | 35.4 | 32.7 | |||||||||||
GAAP combined ratio
|
100.2 | % | 97.1 | % |
|
100.2 | % | 97.8 | % | ||||||
International Specialty
|
|||||||||||||||
Gross written premiums
|
$ | 45.6 | $ | 47.5 | $ | 290.2 | $ | 290.6 | |||||||
Net written premiums
|
21.0 | 20.1 | 156.6 | 155.4 | |||||||||||
Earned premiums
|
35.7 | 35.8 | 148.3 | 142.4 | |||||||||||
Underwriting income
|
$ | 3.4 | $ | 2.1 | $ | 16.0 | $ | 6.2 | |||||||
Net investment income
|
2.1 | 2.0 | 8.2 | 8.4 | |||||||||||
Interest expense
|
(0.8 | ) | (0.9 | ) | (3.1 | ) | (3.3 | ) | |||||||
Income before income taxes
|
$ | 4.7 | $ | 3.2 | $ | 21.1 | $ | 11.3 | |||||||
Loss ratio
|
52.2 | 50.1 | 52.5 | 58.7 | |||||||||||
Expense ratio
|
38.5 | 43.9 | 36.7 | 36.7 | |||||||||||
GAAP combined ratio
|
90.7 | % | 94.0 | % |
|
89.2 | % | 95.4 | % | ||||||
Syndicate 1200
|
|||||||||||||||
Gross written premiums
|
$ | 122.4 | $ | 125.2 | $ | 566.2 | $ | 583.9 | |||||||
Net written premiums
|
96.3 | 99.6 | 420.8 | 428.5 | |||||||||||
Earned premiums
|
105.2 | 106.1 | 411.1 | 401.7 | |||||||||||
Underwriting income
|
$ | 7.8 | $ | 11.8 | $ | 35.2 | $ | 30.2 | |||||||
Net investment income
|
2.3 | 2.9 | 10.2 | 11.0 | |||||||||||
Interest expense
|
(0.8 | ) | (0.9 | ) | (3.2 | ) | (3.3 | ) | |||||||
Fee income (expense), net
|
0.1 | (3.2 | ) | 1.9 | (0.6 | ) | |||||||||
Income before income taxes
|
$ | 9.4 | $ | 10.6 | $ | 44.1 | $ | 37.3 | |||||||
Loss ratio
|
51.1 | 49.0 | 50.6 | 52.8 | |||||||||||
Expense ratio
|
41.4 | 39.7 | 40.8 | 39.6 | |||||||||||
GAAP combined ratio
|
92.5 | % | 88.7 | % |
|
91.4 | % | 92.4 | % |
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
|
LOSS RESERVE DATA
|
(in millions)
|
Three Months Ended
|
Twelve Months Ended
|
||||||||||||||
December 31,
|
December 31,
|
||||||||||||||
2014
|
2013
|
2014
|
2013
|
||||||||||||
(Unaudited)
|
(Unaudited)
|
||||||||||||||
Net prior year development
|
|||||||||||||||
(Favorable) Unfavorable:
|
|||||||||||||||
Excess and Surplus Lines
|
$ | (12.8 | ) | $ | (17.1 | ) | $ | (47.4 | ) | $ | (43.9 | ) | |||
Commercial Specialty
|
1.6 | 0.7 | 6.8 | 1.1 | |||||||||||
International Specialty
|
(0.3 | ) | 0.5 | (0.4 | ) | (0.1 | ) | ||||||||
Syndicate 1200
|
(5.3 | ) | (2.1 | ) | (21.1 | ) | (6.2 | ) | |||||||
Run-off Lines
|
5.5 | 5.9 | 24.4 | 15.5 | |||||||||||
Total
|
$ | (11.3 | ) | $ | (12.1 | ) | $ | (37.7 | ) | $ | (33.6 | ) |
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
|
RECONCILIATION OF OPERATING INCOME TO NET INCOME
|
(in millions, except per share amounts)
|
Three Months Ended
|
Twelve Months Ended
|
||||||||||||||
December 31,
|
December 31,
|
||||||||||||||
2014
|
2013
|
2014
|
2013
|
||||||||||||
(unaudited) |
(unaudited)
|
||||||||||||||
Income before income taxes:
|
|||||||||||||||
From operations
|
$ | 27.2 | $ | 28.3 | $ | 117.6 | $ | 106.7 | |||||||
Foreign currency exchange gain (loss)
|
5.0 | (3.5 | ) | 7.8 | 1.7 | ||||||||||
Impairment of intangible assets
|
(3.4 | ) | 0.0 | (3.4 | ) | 0.0 | |||||||||
Net realized investment gains and other
|
51.5 | 41.7 | 94.0 | 71.3 | |||||||||||
Income before income taxes
|
80.3 | 66.5 | 216.0 | 179.7 | |||||||||||
Provision for income taxes
|
20.6 | 18.7 | 32.8 | 36.5 | |||||||||||
Net income
|
$ | 59.7 | $ | 47.8 | $ | 183.2 | $ | 143.2 | |||||||
Net income per common share (Diluted)
|
$ | 2.28 | $ | 1.74 | $ | 6.90 | $ | 5.14 | |||||||
Operating income per common share (Diluted)
|
|||||||||||||||
At assumed income tax rate:
|
|||||||||||||||
Income
(a)
|
$ | 2.45 | $ | 1.93 | $ | 6.50 | $ | 5.16 | |||||||
Foreign currency exchange (gain) loss
(a)
|
(0.15 | ) | 0.10 | (0.23 | ) | (0.05 | ) | ||||||||
Impairment of intangible assets
|
0.10 | 0.00 | 0.10 | 0.00 | |||||||||||
Net realized investment gains and other
(a)
|
(1.57 | ) | (1.21 | ) | (2.83 | ) | (2.05 | ) | |||||||
Operating income per common share (Diluted)
|
$ | 0.83 | $ | 0.82 | $ | 3.54 | $ | 3.06 | |||||||
(a)
Per diluted share at assumed income tax rate of 20%.
|