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)
|
Title of Each Class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value of $1.00 per share
|
ARGO
|
New York Stock Exchange
|
Guarantee of Argo Group U.S., Inc. 6.500% Senior Notes due 2042
|
ARGD
|
New York Stock Exchange
|
ITEM 2.02.
|
RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
|
ITEM 9.01.
|
FINANCIAL STATEMENTS AND EXHIBITS.
|
|
|
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
|
||
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jay S. Bullock | |
Dated: August 5, 2019
|
|
Name:
|
Jay S. Bullock
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
Gross Written Premiums
$772.9M
↑ 10.0%
from Q2 2018
|
Net Income Per Diluted Share
$0.83
↓ 30.8%
from Q2 2018
|
Adjusted Operating
Income Per Diluted Share
(1)
$0.48
↓ 49.5%
from Q2 2018
|
Combined
Ratio
103.4%
↑ 7.1 pts
from Q2 2018
|
Book Value
Per Share
$56.28
↑ 10.6%
(1)
from Dec. 31, 2018
|
“For the first half of the year, Argo’s book value per share growth plus dividends paid was 10.6% and our annualized return on shareholders’ equity was 13.1%, which reflects strong
contributions from our investment portfolio. We continue to deliver strong shareholder value creation despite some isolated claims volatility impacting the second quarter of 2019,” said Mark E. Watson III, CEO. “Our focus on increasing
efficiency through digital enhancements and growing profitable business lines continues to yield positive results, with 10% gross written premium growth in the quarter.”
|
HIGHLIGHTS FOR THE THREE MONTHS
ENDED JUNE 30, 2019 |
HIGHLIGHTS FOR THE SIX MONTHS
ENDED JUNE 30, 2019
|
||||
●
|
Net income
was $28.8 million or $0.83 per diluted share, compared to net income of $41.8 million or $1.20 per diluted share for the 2018 second
quarter.
As recently announced, the 2019 second quarter net income included pre-tax charges of $32.3 million related to an increase in current and prior accident year losses of $10.0 million and $22.3 million,
respectively.
In addition, the 2019 second quarter included approximately $7.5 million of expenses associated with proxy solicitation and related activities. These expenses are included in “Other
corporate expenses” in the consolidated Financial Highlights below. Given the unique and non-recurring nature of the events that gave rise to these expenses, these costs are not included in the Company’s definition of adjusted operating
income and as such, not included in the calculation of the combined ratio as presented in the Financial Highlights below. There were no comparable costs incurred during the 2018 second quarter.
|
●
|
Net income
was $120.0 million or $3.45 per diluted share, compared to net income of $66.6 million or $1.92 per diluted share for the 2018 six month
period.
The 2019 six month period included pre-tax net gains related to changes in the fair value of equity securities of $66.8 million, compared to pre-tax net losses related to changes in the fair value of equity
securities of $26.6 million in the 2018 six month period, resulting in a year over year improvement of $93.4 million.
The 2019 six month period was adversely impacted by the previously announced increase in current and prior accident year losses of approximately $32.3 million.
The 2019 six month period also included approximately $8.0 million of expenses associated with proxy solicitation and related activities. These expenses are included in “Other corporate expenses” in the consolidated Financial Highlights
below. Given the unique and non-recurring nature of the events that gave rise to these expenses, these costs are not included in the Company’s definition of adjusted operating income and as such, not included in the calculation of the
combined ratio as presented in the Financial Highlights below. There were no comparable costs incurred during the 2018 second quarter.
|
●
|
Adjusted operating income
(1)(2)
was $16.8 million or $0.48 per diluted share, compared to adjusted operating
income of $32.9 million or $0.95 per diluted share for the 2018 second quarter.
For purposes of calculating adjusted operating income, effective January 1, 2019, the company prospectively decreased its assumed effective tax rate to 15% from 20%. This change is in response to ongoing tax
planning strategies implemented following the 2018 change in U.S. corporate tax rate from 35% to 21%.
|
●
|
Adjusted operating income
(1)(2)
was $58.3 million or $1.68 per diluted share, compared to adjusted operating
income of $69.4 million or $2.00 per diluted share for the 2018 six month period.
For purposes of calculating adjusted operating income, effective January 1, 2019, the company prospectively decreased its assumed effective tax rate to 15% from 20%. This change is in response to ongoing tax
planning strategies implemented following the 2018 change in U.S. corporate tax rate from 35% to 21%.
|
||
●
|
Gross written premiums
grew 10.0% to $772.9 million, compared to $702.8 million for the 2018 second quarter. U.S. Operations grew 10.6% to $453.6
million, compared to $410.0 million for the 2018 second quarter. International Operations grew 9.1% to $319.2 million, compared to $292.6 million for the 2018 second quarter.
|
●
|
Gross written premiums
grew 8.5% to $1.5 billion, compared to $1.4 billion for the 2018 six month period. U.S. Operations grew 10.4% to $864.3
million, compared to $782.8 million for the 2018 six month period. International Operations grew 6.2% to $669.3 million, compared to $630.3 million for the 2018 six month period.
|
||
●
|
The combined ratio
was 103.4% compared to 96.3% for the 2018 second quarter. The loss and expense ratios for the 2019 second quarter were 66.0% and 37.4%, respectively,
compared to 58.8% and 37.5%, respectively, for the 2018 second quarter. The current accident year, ex-CAT combined ratio was 96.7%, compared to 96.4% in the 2018 second quarter.
|
●
|
The combined ratio
was 99.0% compared to 96.1% for the 2018 six month period. The loss and expense ratios for the 2019 six month period were 61.3% and 37.7%,
respectively, compared to 58.0% and 38.1%, respectively, for the 2018 six month period. The current accident year, ex-CAT combined ratio was 95.3%, compared to 95.9% in the 2018 six month period.
|
||
●
|
Catastrophe losses
were $6.5 million, compared to $1.7 million for the 2018 second quarter.
|
●
|
Catastrophe losses
were $12.0 million, compared to $6.0 million for the 2018 six month period.
|
||
●
|
Net unfavorable prior-year reserve development
was $22.3 million, compared to favorable prior-year development of $2.4 million in the 2018 second quarter.
|
●
|
Net unfavorable prior-year reserve development
was $19.8 million, compared to favorable prior-year development of $4.4 million in the 2019 six month period.
|
||
●
|
Net investment income
increased 28.9% to $42.8 million, compared to $33.2 million in the 2018 second quarter.
Net investment income on the core portfolio increased 18.9% to $33.3 million, compared to $28.0 million in the 2018 second quarter. This increase was primarily due to an increase in the
invested asset base and higher investment yields.
Alternative investments, which are reported on a lag, contributed $9.5 million, compared to $5.2 million in the 2018 second quarter, an increase of 82.7%.
|
●
|
Net investment income
increased 10.8% to $76.7 million, compared to $69.2 million in the 2018 six month period.
Net investment income on the core portfolio increased 18.1% to $65.3 million, compared to $55.3 million in the 2018 six month period. This increase was primarily due to an increase in the
invested asset base and higher investment yields.
Alternative investments, which are reported on a lag, contributed $11.4 million, compared to $13.9 million in the 2018 six month period, a decrease of 18.0%.
|
||
●
|
The quarterly cash dividend was $0.31 per share. The Company did not purchase any shares of its common stock during the 2019 second quarter.
|
●
|
For the six month period cash dividends totaled $0.62 per share. The Company did not purchase any shares of its common stock during the 2019 six month period.
|
||
●
|
Book value
per share increased 2.5%
(1)
to $56.28 at June 30, 2019, compared to $55.23 at March 31, 2019.
|
●
|
Book value
per share increased 10.6%
(1)
to $56.28 at June 30, 2019, compared to $51.43 at December 31, 2018.
|
Notes
|
|
●
|
All references to catastrophe losses are pre-tax.
|
●
|
For purposes of calculating adjusted operating income, assumed tax rates of 15% and 20% were used for 2019 and 2018, respectively.
|
•
|
Gross written premiums in the 2019 second quarter of $453.6 million increased $43.6 million or 10.6% compared to the 2018 second quarter. Growth was achieved across all major lines of business compared to the
2018 second quarter. The overall increase in gross written premiums reflects an improving rate environment, continued focus on execution of strategic growth plans and digital initiatives, while still executing on appropriate risk selection
and exposure management actions.
|
•
|
Net earned premiums in the 2019 second quarter of $284.0 million were up $17.0 million or 6.4% from the 2018 second quarter, driven by the aforementioned growth in gross written premiums partially offset by
the increased use of reinsurance. All major lines of business reported growth in net earned premiums compared to the 2018 second quarter.
|
•
|
The loss ratio for the 2019 second quarter was 57.4%, compared to 58.3% for the 2018 second quarter, an improvement of 0.9 points. The lower 2019 second quarter ratio is driven by a 1.3 point improvement in
the current accident year ex-CAT loss ratio, an improvement of 0.6 points from an increase in favorable net prior-year reserve development, partially offset by an increase in catastrophe losses which resulted in a 1.0 point deterioration to
the overall loss ratio.
|
•
|
The current accident year ex-CAT loss ratio for the 2019 second quarter was 57.7%, compared to 59.0% for the 2018 second quarter. The 1.3 point improvement in the current accident year ex-CAT loss ratio was
driven by a decline in large property losses, as the 2018 second quarter included a number of discrete non-CAT, weather-related property losses.
|
•
|
Net favorable prior-year reserve development for the 2019 second quarter was $5.1 million, compared to $3.1 million in the 2018 second quarter. The current quarter favorable development related primarily to
Liability lines, partially offset by unfavorable development in Professional and Property lines.
|
•
|
Catastrophe losses for the 2019 second quarter were $4.2 million compared to catastrophe losses of $1.3 million in the 2018 second quarter.
|
•
|
The expense ratio for the 2019 second quarter was 32.3%, a 0.5 point increase compared to the 2018 second quarter (31.8%). The 2019 second quarter reflected higher acquisition costs and continued strategic
investments in people and technology, including digital initiatives in support of the aforementioned 10.6% gross written premium growth.
|
•
|
Underwriting income for the 2019 second quarter increased 11.4% to $29.4 million, compared to $26.4 million for the 2018 second quarter. The $3.0 million increase in underwriting income is primarily related
to an improvement in the current accident year ex-CAT loss ratio, an increase in net favorable prior-year reserve development, an increase in underwriting income related to the growth in net earned premiums, offset by an increase in
catastrophe losses and a modest increase in the expense ratio.
|
•
|
Gross written premiums in the 2019 second quarter of $319.2 million increased $26.6 million or 9.1%, compared to the 2018 second quarter. This growth was due primarily to Property lines, partially offset by
Specialty lines, as Professional and Liability lines approximate the 2018 second quarter writings. Geographically, the growth was primarily due to Bermuda (insurance) and was partially offset by planned decreases in Europe. The growth in
Bermuda related primarily to Property lines as a result of an increase in new business and favorable rate changes.
|
•
|
Consistent with net written premiums, net earned premiums in the 2019 second quarter of $147.6 million decreased $2.9 million or 1.9% from the 2018 second quarter. As noted above, all major lines of
business, with the exception of Property, reported growth in net earned premiums compared to the 2018 second quarter. The decline in Property related to the aforementioned increased use of reinsurance and third-party capital.
|
•
|
The loss ratio for the 2019 second quarter was 81.9%, compared to 58.9% for the 2018 second quarter, an increase of 23.0 points. The increase in the loss ratio was due to 17.9 points resulting from $26.4
million of net unfavorable prior-year reserve development in 2019 compared to net favorable prior-year reserves development of $0.5 million in the 2018 second quarter, 1.6 points related to 2019 second quarter catastrophe losses of $2.3
million, and a 3.5 point increase in the current accident year ex-CAT loss ratio.
|
•
|
The current accident year ex-CAT loss ratio for the 2019 second quarter was 62.4%, compared to 58.9% for the 2018 second quarter, and increase of 3.5 points. The increase in the loss ratio was primarily
related to a number of discrete property and energy losses.
|
•
|
Net unfavorable prior-year reserve development for the 2019 second quarter was $26.4 million compared to net favorable prior-year reserve development of $0.5 million. The 2019
unfavorable development related to certain Liability, Property and Specialty lines. The Liability charges related primarily to Bermuda operations, including losses on certain public utilities business, which were previously exited, and to
a lesser extent our European and Syndicate 1200 operations. As it relates to Europe, the adverse development primarily related to certain cover-holders whose contracts were previously terminated. As it relates to Syndicate 1200, the
adverse development related to businesses that we have previously exited or where aggressive remedial underwriting actions have been taken.
|
•
|
Catastrophe losses incurred for the 2019 second quarter were $2.3 million, compared to catastrophe losses of $0.4 million for the 2018 second quarter.
|
•
|
The expense ratio for the 2019 second quarter was 38.7%, an increase of 1.9 points compared to the 2018 second quarter (36.8%). The increase expense ratio related to an increase in the acquisition costs at
Syndicate 1200 and to a lesser extent Bermuda. In addition, the 2019 second quarter reflects the effects of increased investment of in technology in support of the aforementioned 9.1% growth in gross written premiums.
|
•
|
The underwriting loss for the 2019 second quarter was $30.4 million, compared to underwriting income of $6.4 million for the 2018 second quarter. The $36.8 million
decline in underwriting results was due primarily to the quarter over quarter change in net unfavorable prior-year reserve development, an increase in current accident year ex-CAT loss ratio, an increase in catastrophe-related losses.
|
June 30,
|
December 31,
|
|||||||
2019
|
2018
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Total investments
|
$
|
4,877.6
|
$
|
4,787.0
|
||||
Cash
|
182.3
|
139.2
|
||||||
Accrued investment income
|
26.7
|
27.2
|
||||||
Receivables
|
3,497.5
|
3,338.2
|
||||||
Goodwill and intangible assets
|
269.6
|
270.5
|
||||||
Deferred acquisition costs, net
|
163.9
|
167.3
|
||||||
Ceded unearned premiums
|
593.9
|
457.7
|
||||||
Other assets
|
555.2
|
371.1
|
||||||
Total assets
|
$
|
10,166.7
|
$
|
9,558.2
|
||||
Liabilities and Shareholders' Equity
|
||||||||
Reserves for losses and loss adjustment expenses
|
$
|
4,735.7
|
$
|
4,654.6
|
||||
Unearned premiums
|
1,404.0
|
1,300.9
|
||||||
Ceded reinsurance payable, net
|
1,052.8
|
970.5
|
||||||
Senior unsecured fixed rate notes
|
139.9
|
139.8
|
||||||
Other indebtedness
|
182.3
|
183.4
|
||||||
Junior subordinated debentures
|
257.2
|
257.0
|
||||||
Other liabilities
|
465.8
|
305.3
|
||||||
Total liabilities
|
8,237.7
|
7,811.5
|
||||||
Total shareholders' equity
|
1,929.0
|
1,746.7
|
||||||
Total liabilities and shareholders' equity
|
$
|
10,166.7
|
$
|
9,558.2
|
||||
Book value per common share
|
$
|
56.28
|
$
|
51.43
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Gross written premiums
|
$
|
772.9
|
$
|
702.8
|
$
|
1,533.7
|
$
|
1,413.3
|
||||||||
Net written premiums
|
455.2
|
443.3
|
816.1
|
810.4
|
||||||||||||
Earned premiums
|
431.7
|
417.7
|
852.2
|
832.4
|
||||||||||||
Net investment income
|
42.8
|
33.2
|
76.7
|
69.2
|
||||||||||||
Fee and other income
|
2.1
|
1.9
|
4.4
|
3.9
|
||||||||||||
Net realized investment gains (losses):
|
||||||||||||||||
Net realized investment (losses) gains
|
(0.6
|
)
|
6.2
|
(2.3
|
)
|
21.4
|
||||||||||
Change in fair value of equity securities
|
12.6
|
4.3
|
66.8
|
(26.6
|
)
|
|||||||||||
Net realized investment gains (losses)
|
12.0
|
10.5
|
64.5
|
(5.2
|
)
|
|||||||||||
Total revenue
|
488.6
|
463.3
|
997.8
|
900.3
|
||||||||||||
Losses and loss adjustment expenses
|
284.8
|
245.5
|
522.7
|
482.7
|
||||||||||||
Underwriting, acquisition and insurance expenses
|
161.4
|
156.8
|
321.6
|
317.0
|
||||||||||||
Other corporate expenses
|
7.5
|
—
|
8.0
|
—
|
||||||||||||
Interest expense
|
9.3
|
7.8
|
17.8
|
15.5
|
||||||||||||
Fee and other expense
|
1.3
|
1.6
|
2.6
|
3.6
|
||||||||||||
Foreign currency exchange gains
|
(5.3
|
)
|
(5.5
|
)
|
(4.6
|
)
|
(0.6
|
)
|
||||||||
Total expenses
|
459.0
|
406.2
|
868.1
|
818.2
|
||||||||||||
Income before income taxes
|
29.6
|
57.1
|
129.7
|
82.1
|
||||||||||||
Income tax provision
|
0.8
|
15.3
|
9.7
|
15.5
|
||||||||||||
Net income
|
$
|
28.8
|
$
|
41.8
|
$
|
120.0
|
$
|
66.6
|
||||||||
Net income per common share (basic)
|
$
|
0.84
|
$
|
1.23
|
$
|
3.52
|
$
|
1.96
|
||||||||
Net income per common share (diluted)
|
$
|
0.83
|
$
|
1.20
|
$
|
3.45
|
$
|
1.92
|
||||||||
Weighted average common shares:
|
||||||||||||||||
Basic
|
34.2
|
33.9
|
34.1
|
33.9
|
||||||||||||
Diluted
|
34.8
|
34.7
|
34.8
|
34.7
|
||||||||||||
Loss ratio
|
66.0
|
%
|
58.8
|
%
|
61.3
|
%
|
58.0
|
%
|
||||||||
Expense ratio
(1)
|
37.4
|
%
|
37.5
|
%
|
37.7
|
%
|
38.1
|
%
|
||||||||
GAAP combined ratio
(1)
|
103.4
|
%
|
96.3
|
%
|
99.0
|
%
|
96.1
|
%
|
||||||||
CAY ex-CAT combined ratio
(1)
|
96.7
|
%
|
96.4
|
%
|
95.3
|
%
|
95.9
|
%
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
U.S. Operations
|
||||||||||||||||
Gross written premiums
|
$
|
453.6
|
$
|
410.0
|
$
|
864.3
|
$
|
782.8
|
||||||||
Net written premiums
|
295.3
|
278.1
|
543.7
|
527.1
|
||||||||||||
Earned premiums
|
284.0
|
267.0
|
557.8
|
529.3
|
||||||||||||
Underwriting income
|
29.4
|
26.4
|
54.2
|
42.4
|
||||||||||||
Net investment income
|
29.6
|
20.7
|
52.7
|
43.3
|
||||||||||||
Interest expense
|
(5.7
|
)
|
(4.1
|
)
|
(10.9
|
)
|
(8.0
|
)
|
||||||||
Fee (expense) income, net
|
(0.1
|
)
|
(0.5
|
)
|
0.1
|
(1.2
|
)
|
|||||||||
Net income before taxes
|
$
|
53.2
|
$
|
42.5
|
$
|
96.1
|
$
|
76.5
|
||||||||
Loss ratio
|
57.4
|
%
|
58.3
|
%
|
57.0
|
%
|
58.9
|
%
|
||||||||
Expense ratio
|
32.3
|
%
|
31.8
|
%
|
33.3
|
%
|
33.1
|
%
|
||||||||
GAAP combined ratio
|
89.7
|
%
|
90.1
|
%
|
90.3
|
%
|
92.0
|
%
|
||||||||
CAY ex-CAT combined ratio
|
90.0
|
%
|
90.8
|
%
|
90.4
|
%
|
91.7
|
%
|
||||||||
International Operations
|
||||||||||||||||
Gross written premiums
|
$
|
319.2
|
$
|
292.6
|
$
|
669.3
|
$
|
630.3
|
||||||||
Net written premiums
|
159.8
|
165.0
|
272.3
|
283.1
|
||||||||||||
Earned premiums
|
147.6
|
150.5
|
294.3
|
302.9
|
||||||||||||
Underwriting (loss) income
|
(30.4
|
)
|
6.4
|
(21.2
|
)
|
22.2
|
||||||||||
Net investment income
|
11.5
|
8.4
|
20.6
|
17.2
|
||||||||||||
Interest expense
|
(3.1
|
)
|
(2.3
|
)
|
(5.9
|
)
|
(4.6
|
)
|
||||||||
Fee income, net
|
1.0
|
0.7
|
1.7
|
1.3
|
||||||||||||
Net (loss) income before taxes
|
$
|
(21.0
|
)
|
$
|
13.2
|
$
|
(4.8
|
)
|
$
|
36.1
|
||||||
Loss ratio
|
81.9
|
%
|
58.9
|
%
|
69.1
|
%
|
55.4
|
%
|
||||||||
Expense ratio
|
38.7
|
%
|
36.8
|
%
|
38.1
|
%
|
37.2
|
%
|
||||||||
GAAP combined ratio
|
120.6
|
%
|
95.7
|
%
|
107.2
|
%
|
92.6
|
%
|
||||||||
CAY ex-CAT combined ratio
|
101.1
|
%
|
95.7
|
%
|
96.7
|
%
|
93.5
|
%
|
Three Months Ended
|
Six Months Ended
|
|||||||||||
June 30,
|
June 30,
|
|||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||
U.S. Operations
|
||||||||||||
Loss ratio
|
57.4
|
%
|
58.3
|
%
|
57.0
|
%
|
58.9
|
%
|
||||
Prior accident year loss reserve development
|
1.8
|
%
|
1.2
|
%
|
1.6
|
%
|
0.8
|
%
|
||||
Catastrophe losses
|
(1.5
|
)%
|
(0.5
|
)%
|
(1.5
|
)%
|
(1.1
|
)%
|
||||
CAY ex-CAT loss ratio
|
57.7
|
%
|
59.0
|
%
|
57.1
|
%
|
58.6
|
%
|
||||
International Operations
|
||||||||||||
Loss ratio
|
81.9
|
%
|
58.9
|
%
|
69.1
|
%
|
55.4
|
%
|
||||
Prior accident year loss reserve development
|
(17.9
|
)%
|
0.3
|
%
|
(9.2
|
)%
|
1.1
|
%
|
||||
Catastrophe losses
|
(1.6
|
)%
|
(0.3
|
)%
|
(1.3
|
)%
|
(0.2
|
)%
|
||||
CAY ex-CAT loss ratio
|
62.4
|
%
|
58.9
|
%
|
58.6
|
%
|
56.3
|
%
|
||||
Consolidated
|
||||||||||||
Loss ratio
|
66.0
|
%
|
58.8
|
%
|
61.3
|
%
|
58.0
|
%
|
||||
Prior accident year loss reserve development
|
(5.2
|
)%
|
0.5
|
%
|
(2.3
|
)%
|
0.5
|
%
|
||||
Catastrophe losses
|
(1.5
|
)%
|
(0.4
|
)%
|
(1.4
|
)%
|
(0.7
|
)%
|
||||
CAY ex-CAT loss ratio
|
59.3
|
%
|
58.9
|
%
|
57.6
|
%
|
57.8
|
%
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Net Prior-Year Reserve Development
|
||||||||||||||||
(Favorable)/Unfavorable
|
||||||||||||||||
U.S. Operations
|
$
|
(5.1
|
)
|
$
|
(3.1
|
)
|
$
|
(9.1
|
)
|
$
|
(4.1
|
)
|
||||
International Operations
|
26.4
|
(0.5
|
)
|
27.2
|
(3.3
|
)
|
||||||||||
Run-off Lines
|
1.0
|
1.2
|
1.7
|
3.0
|
||||||||||||
Total net prior-year reserve development
|
$
|
22.3
|
$
|
(2.4
|
)
|
$
|
19.8
|
$
|
(4.4
|
)
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Catastrophe Losses
|
||||||||||||||||
Catastrophe losses:
|
||||||||||||||||
U.S. Operations
|
$
|
4.2
|
$
|
1.3
|
$
|
8.2
|
$
|
5.6
|
||||||||
International Operations
|
2.3
|
0.4
|
3.8
|
0.4
|
||||||||||||
Total catastrophe losses
|
$
|
6.5
|
1.7
|
$
|
12.0
|
$
|
6.0
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Net income
|
$
|
28.8
|
$
|
41.8
|
$
|
120.0
|
$
|
66.6
|
||||||||
Add (deduct):
|
||||||||||||||||
Income tax provision
|
0.8
|
15.3
|
9.7
|
15.5
|
||||||||||||
Net investment income
|
(42.8
|
)
|
(33.2
|
)
|
(76.7
|
)
|
(69.2
|
)
|
||||||||
Net realized investment (gains) losses
|
(12.0
|
)
|
(10.5
|
)
|
(64.5
|
)
|
5.2
|
|||||||||
Fee and other income
|
(2.1
|
)
|
(1.9
|
)
|
(4.4
|
)
|
(3.9
|
)
|
||||||||
Interest expense
|
9.3
|
7.8
|
17.8
|
15.5
|
||||||||||||
Fee and other expense
|
1.3
|
1.6
|
2.6
|
3.6
|
||||||||||||
Foreign currency exchange gains
|
(5.3
|
)
|
(5.5
|
)
|
(4.6
|
)
|
(0.6
|
)
|
||||||||
Other corporate expenses
|
7.5
|
—
|
8.0
|
—
|
||||||||||||
Underwriting (loss) income
|
$
|
(14.5
|
)
|
$
|
15.4
|
$
|
7.9
|
$
|
32.7
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Net income, as reported
|
$
|
28.8
|
$
|
41.8
|
$
|
120.0
|
$
|
66.6
|
||||||||
Income tax provision
|
0.8
|
15.3
|
9.7
|
15.5
|
||||||||||||
Net income, before taxes
|
29.6
|
57.1
|
129.7
|
82.1
|
||||||||||||
Add (deduct):
|
||||||||||||||||
Net realized investment (gains) losses
|
(12.0
|
)
|
(10.5
|
)
|
(64.5
|
)
|
5.2
|
|||||||||
Foreign currency exchange gains
|
(5.3
|
)
|
(5.5
|
)
|
(4.6
|
)
|
(0.6
|
)
|
||||||||
Other corporate expenses
|
7.5
|
—
|
8.0
|
—
|
||||||||||||
Adjusted operating income before taxes
|
19.8
|
41.1
|
68.6
|
86.7
|
||||||||||||
Provision for income taxes, at assumed rate
(1)
|
3.0
|
8.2
|
10.3
|
17.3
|
||||||||||||
Adjusted operating income
|
$
|
16.8
|
$
|
32.9
|
$
|
58.3
|
$
|
69.4
|
||||||||
Adjusted operating income per common share (diluted)
|
$
|
0.48
|
$
|
0.95
|
$
|
1.68
|
$
|
2.00
|
||||||||
Weighted average common shares, diluted
|
34.8
|
34.7
|
34.8
|
34.7
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Segment income (loss) before income taxes:
|
||||||||||||||||
U.S. Operations
|
$
|
53.2
|
$
|
42.5
|
$
|
96.1
|
$
|
76.5
|
||||||||
International Operations
|
(21.0
|
)
|
13.2
|
(4.8
|
)
|
36.1
|
||||||||||
Run-off Lines
|
(1.1
|
)
|
(0.3
|
)
|
(0.5
|
)
|
(1.0
|
)
|
||||||||
Corporate and Other
|
(11.3
|
)
|
(14.3
|
)
|
(22.2
|
)
|
(24.9
|
)
|
||||||||
Net realized investment gains (losses)
|
12.0
|
10.5
|
64.5
|
(5.2
|
)
|
|||||||||||
Foreign currency exchange gains
|
5.3
|
5.5
|
4.6
|
0.6
|
||||||||||||
Other corporate expenses
|
(7.5
|
)
|
—
|
(8.0
|
)
|
—
|
||||||||||
Income before income taxes
|
29.6
|
57.1
|
129.7
|
82.1
|
||||||||||||
Income tax provision
|
0.8
|
15.3
|
9.7
|
15.5
|
||||||||||||
Net income
|
$
|
28.8
|
$
|
41.8
|
$
|
120.0
|
$
|
66.6
|
U.S. Operations
|
Three months ended June 30, 2019
|
Three months ended June 30, 2018
|
||||||||||||||||||||||
Gross Written
|
Net
Written |
Net
Earned |
Gross Written
|
Net
Written |
Net
Earned |
|||||||||||||||||||
Property
|
$
|
78.0
|
$
|
44.1
|
$
|
33.3
|
$
|
71.8
|
$
|
38.4
|
$
|
32.4
|
||||||||||||
Liability
|
256.4
|
173.7
|
175.4
|
245.6
|
173.7
|
173.8
|
||||||||||||||||||
Professional
|
75.9
|
46.1
|
43.6
|
55.9
|
37.3
|
33.4
|
||||||||||||||||||
Specialty
|
43.3
|
31.4
|
31.7
|
36.7
|
28.7
|
27.4
|
||||||||||||||||||
Total
|
$
|
453.6
|
$
|
295.3
|
$
|
284.0
|
$
|
410.0
|
$
|
278.1
|
$
|
267.0
|
Six months ended June 30, 2019
|
Six months ended June 30, 2018
|
|||||||||||||||||||||||
Gross Written
|
Net
Written |
Net
Earned |
Gross Written
|
Net
Written |
Net
Earned |
|||||||||||||||||||
Property
|
$
|
142.2
|
$
|
51.5
|
$
|
64.8
|
$
|
117.4
|
$
|
56.8
|
$
|
67.1
|
||||||||||||
Liability
|
499.0
|
345.9
|
353.9
|
488.7
|
343.7
|
345.7
|
||||||||||||||||||
Professional
|
136.7
|
81.3
|
75.4
|
103.2
|
69.1
|
62.5
|
||||||||||||||||||
Specialty
|
86.4
|
65.0
|
63.7
|
73.5
|
57.5
|
54.0
|
||||||||||||||||||
Total
|
$
|
864.3
|
$
|
543.7
|
$
|
557.8
|
$
|
782.8
|
$
|
527.1
|
$
|
529.3
|
International Operations
|
Three months ended June 30, 2019
|
Three months ended June 30, 2018
|
||||||||||||||||||||||
Gross Written
|
Net
Written |
Net
Earned |
Gross Written
|
Net
Written |
Net
Earned |
|||||||||||||||||||
Property
|
$
|
139.0
|
$
|
57.1
|
$
|
41.0
|
$
|
107.5
|
$
|
51.9
|
$
|
48.7
|
||||||||||||
Liability
|
46.4
|
17.8
|
26.4
|
44.7
|
24.9
|
24.2
|
||||||||||||||||||
Professional
|
42.1
|
26.2
|
24.6
|
42.3
|
24.8
|
22.8
|
||||||||||||||||||
Specialty
|
91.7
|
58.7
|
55.6
|
98.1
|
63.4
|
54.8
|
||||||||||||||||||
Total
|
$
|
319.2
|
$
|
159.8
|
$
|
147.6
|
$
|
292.6
|
$
|
165.0
|
$
|
150.5
|
Six months ended June 30, 2019
|
Six months ended June 30, 2018
|
|||||||||||||||||||||||
Gross Written
|
Net
Written |
Net
Earned |
Gross Written
|
Net
Written |
Net
Earned |
|||||||||||||||||||
Property
|
$
|
294.0
|
$
|
65.5
|
$
|
76.6
|
$
|
261.8
|
$
|
82.6
|
$
|
106.7
|
||||||||||||
Liability
|
93.4
|
45.4
|
55.8
|
91.9
|
50.5
|
44.3
|
||||||||||||||||||
Professional
|
98.0
|
53.7
|
53.8
|
88.7
|
48.1
|
48.1
|
||||||||||||||||||
Specialty
|
183.9
|
107.7
|
108.1
|
187.9
|
101.9
|
103.8
|
||||||||||||||||||
Total
|
$
|
669.3
|
$
|
272.3
|
$
|
294.3
|
$
|
630.3
|
$
|
283.1
|
$
|
302.9
|
Consolidated
|
Three months ended June 30, 2019
|
Three months ended June 30, 2018
|
||||||||||||||||||||||
Gross Written
|
Net
Written |
Net
Earned |
Gross Written
|
Net
Written |
Net
Earned |
|||||||||||||||||||
Property
|
$
|
217.0
|
$
|
101.2
|
$
|
74.3
|
$
|
179.3
|
$
|
90.3
|
$
|
81.1
|
||||||||||||
Liability
|
302.9
|
191.6
|
201.9
|
290.5
|
198.8
|
198.2
|
||||||||||||||||||
Professional
|
118.0
|
72.3
|
68.2
|
98.2
|
62.1
|
56.2
|
||||||||||||||||||
Specialty
|
135.0
|
90.1
|
87.3
|
134.8
|
92.1
|
82.2
|
||||||||||||||||||
Total
|
$
|
772.9
|
$
|
455.2
|
$
|
431.7
|
$
|
702.8
|
$
|
443.3
|
$
|
417.7
|
Six months ended June 30, 2019
|
Six months ended June 30, 2018
|
|||||||||||||||||||||||
Gross Written
|
Net
Written |
Net
Earned |
Gross Written
|
Net
Written |
Net
Earned |
|||||||||||||||||||
Property
|
$
|
436.2
|
$
|
117.0
|
$
|
141.4
|
$
|
379.2
|
$
|
139.4
|
$
|
173.8
|
||||||||||||
Liability
|
592.5
|
391.4
|
409.8
|
580.8
|
394.4
|
390.2
|
||||||||||||||||||
Professional
|
234.7
|
135.0
|
129.2
|
191.9
|
117.2
|
110.6
|
||||||||||||||||||
Specialty
|
270.3
|
172.7
|
171.8
|
261.4
|
159.4
|
157.8
|
||||||||||||||||||
Total
|
$
|
1,533.7
|
$
|
816.1
|
$
|
852.2
|
$
|
1,413.3
|
$
|
810.4
|
$
|
832.4
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Net investment income, excluding alternative investments
|
$
|
33.3
|
$
|
28.0
|
$
|
65.3
|
$
|
55.3
|
||||||||
Alternative investments
|
9.5
|
5.2
|
11.4
|
13.9
|
||||||||||||
Total net investment income
|
$
|
42.8
|
$
|
33.2
|
$
|
76.7
|
$
|
69.2
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Net income
|
$
|
28.8
|
$
|
41.8
|
$
|
120.0
|
$
|
66.6
|
||||||||
Adjusted operating income
(1)
|
16.8
|
32.9
|
58.3
|
69.4
|
||||||||||||
Shareholders' Equity - Beginning of period
|
$
|
1,880.6
|
$
|
1,787.4
|
$
|
1,746.7
|
$
|
1,819.7
|
||||||||
Shareholders' Equity - End of period
|
1,929.0
|
1,797.1
|
1,929.0
|
1,797.1
|
||||||||||||
Average Shareholders' Equity
|
$
|
1,904.8
|
$
|
1,792.3
|
$
|
1,837.9
|
$
|
1,808.4
|
||||||||
Shares outstanding - End of period
|
34.278
|
34.015
|
34.278
|
34.015
|
||||||||||||
Book value per share
|
$
|
56.28
|
$
|
52.83
|
$
|
56.28
|
$
|
52.83
|
||||||||
Cash dividends paid per share during 2019
|
0.31
|
0.62
|
||||||||||||||
Book value per share, June 30, 2019 - including cash dividends paid
|
$
|
56.59
|
$
|
56.90
|
||||||||||||
Book value per share, prior period
(2)
|
$
|
55.23
|
$
|
51.43
|
||||||||||||
Change in book value per share during 2019
(2)
|
2.5
|
%
|
10.6
|
%
|
||||||||||||
Annualized return on average shareholders' equity
|
6.0
|
%
|
9.3
|
%
|
13.1
|
%
|
7.4
|
%
|
||||||||
Annualized adjusted operating return on average shareholders' equity
|
3.5
|
%
|
7.3
|
%
|
6.3
|
%
|
7.7
|
%
|
Brett Shirreffs
Interim Head of Investor Relations
212.607.8830
brett.shirreffs@argogroupus.com
|
David Snowden
Senior Vice President, Communications & Media
210.321.2104
david.snowden@argogroupus.com
|