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)
|
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: February 11, 2019
|
Name: Jay S. Bullock | ||
Title : Executive Vice President and Chief Financial Officer |
Gross Written
Premiums
$3.0B
↑ 9.6%
from 2017
|
Combined
Ratio
97.9%
↓ 9.3 pts
from 2017
|
Net Income per
Diluted Share
$1.83
↑ 28.9%
from 2017
|
Adjusted Operating
Income Per Diluted
Share
(1)
$3.22
↑ $3.06
per share
from 2017
|
Book Value
Per Share
$51.43
↓1.8%
(1)
from Dec. 31, 2017
|
"Our results in 2018 demonstrate the continued execution of our strategy to optimize the efficiency of the platform, grow in lines
with the most profit potential and scale the business globally," said Mark E. Watson III, President and CEO. “Our business has been performing well against a difficult market environment. We posted 9.6% growth in annual gross written
premiums including a 12.1 % rise in the U.S., improvements in current year margins, and a 260 basis point improvement in the annual expense ratio. While late year volatility in the investment markets masked the full impact of our solid
results, we believe we are well positioned to continue to deliver strong shareholder value.”
|
HIGHLIGHTS FOR THE THREE MONTHS
ENDED DECEMBER 31, 2018 |
HIGHLIGHTS FOR THE YEAR
ENDED DECEMBER 31, 2018 |
|||
●
|
Gross written
premiums
grew 15.8% to $702.0 million, compared to $606.3 million for the 2017 fourth quarter.
U.S. Operations grew 12.1% to $426.8 million, compared to $380.9 million in the 2017 fourth quarter. The
International Operations grew 22.1% to $275.2 million, compared to $225.3 million for the 2017 fourth quarter.
|
●
|
Gross written
premiums
grew 9.6% to $3.0 billion, compared to $2.7 billion in 2017.
U.S. Operations grew 12.1% to $1.7 billion, compared to $1.5 billion in 2017. The International Operations grew
6.4% to $1.3 billion, compared to $1.2 billion in 2017.
|
●
|
Net loss of $43.6
million
or $1.29 per diluted share, compared to net income of $28.9 million or $0.83 per diluted share for the 2017 fourth quarter.
As noted in prior quarters of 2018, comparisons to 2017 are impacted by the Company adopting a new accounting
standard (refer to the Notes below). As a result, the 2018 fourth quarter net income was adversely impacted by an after-tax
(2)
loss of $66.4 million (or a
loss per diluted share of $1.96) related to the change in fair value of equity securities. This loss was included as a component of Net Realized Investment Gains and Losses on the income statement.
In addition, the 2017 fourth quarter reflected a tax (and net income) benefit of approximately $20.2 million
related to the revaluation of net deferred tax liabilities due to the reduction of the U.S. Corporate tax rate from 35% to 21%.
|
●
|
Net income
was $63.6 million or $1.83 per diluted share, compared to net income of $50.3 million or $1.42 per diluted share for 2017.
As noted in prior quarters of 2018, comparisons to 2017 are impacted by the Company adopting a new accounting
standard (refer to the Notes below). As a result, 2018 was adversely impacted by an after-tax
(2)
loss of $84.1 million (or a loss per diluted share of $2.42)
related to the change in fair value of equity securities. This loss was included as a component of Net Realized Investment Gains and Losses on the income statement.
|
|
●
|
Adjusted operating
income
(1)(2)
was $18.8 million or $0.55 per diluted share, compared to adjusted operating income of $0.3
million or $0.01 per diluted share for the 2017 fourth quarter.
|
●
|
Adjusted operating
income
(
1)(2)
was $111.7 million or $3.22 per diluted share, compared to adjusted operating income of $5.5 million or $0.16 per diluted share for 2017.
|
|
●
|
The combined ratio
was 99.5% compared to 106.7% for the 2017 fourth quarter. The loss and expense ratios for the 2018 quarter were 62.0% and 37.5%, respectively, compared to 66.9% and 39.8%, respectively, for the 2017 fourth quarter.
The 2018 fourth quarter expense ratio, excluding the effects of net reinstatement and other CAT-related premium
adjustments, was 36.7%, an improvement of 2.8 points compared to 39.5% for the 2017 fourth quarter. This improvement reflected lower acquisition costs and the benefits of scale associated with an overall increase in net earned premiums.
The current
accident year, ex-CAT combined ratio
was 95.6% compared to 101.3% for the 2017 fourth quarter.
|
●
|
The combined ratio
was 97.9% compared to 107.2% for 2017. The loss and expense ratios for 2018 were 60.1% and 37.8%, respectively, compared to 66.8% and 40.4%, respectively for 2017.
The 2018 expense ratio, excluding the effects of net reinstatement and other CAT-related premium adjustments, was
37.6%, an improvement of 2.4 points, compared to 40.0% for 2017. This improvement reflected lower acquisition costs and the benefits of scale associated with an overall increase in net earned premiums.
The current
accident year, ex-CAT combined ratio
was 95.4% compared to 98.6% for 2017.
|
|
●
|
Catastrophe losses
were $31.7 million, inclusive of net reinstatement premium adjustments
.
The 2017 fourth quarter catastrophe losses were $34.3 million, inclusive of net
reinstatement and other CAT-related premium adjustments
.
|
●
|
Catastrophe losses
were $61.9 million, inclusive of net reinstatement premium adjustments
.
The 2017 catastrophe losses were $145.1 million, inclusive of net reinstatement and
other CAT-related premium adjustments
.
|
|
●
|
Net favorable
prior-year reserve development
was $13.9 million compared to favorable prior-year development of $12.6 million in the 2017 fourth quarter.
|
●
|
Net favorable
prior-year reserve development
was $18.0 million compared to net favorable prior-year development of $8.2 million in 2017.
|
·
|
Gross written premiums in the 2018 fourth quarter of $426.8 million were up $45.9 million or 12.1% compared to the 2017 fourth
quarter. Gross written premiums for 2018 of $1.7 billion were up $182.4 million or 12.1% compared to 2017. Growth in both the quarter and full year was achieved in all major lines of business, most notably Professional lines (which grew
24.4% and 33.0% for the 2018 fourth quarter and year, respectively, and Specialty Lines which grew 16.6% and 16.4% for the 2018 fourth quarter and the year, respectively). These increases reflected the continued execution of strategic
growth and digital initiatives, while still executing on appropriate risk selection and exposure management actions.
|
·
|
Net earned premiums in the 2018 fourth quarter of $271.3 million were up $27.6 million or 11.3% from the 2017 fourth quarter. Net
earned premiums for 2018 of $1.1 billion were up $142.3 million or 15.2% from 2017. The increase in both the quarter and annual net earned premiums were driven by the aforementioned growth in gross written premiums.
|
·
|
The loss ratio for the 2018 fourth quarter was 59.0%, compared to 54.9% for the 2017 fourth quarter. The higher loss ratio in 2018
fourth quarter reflected increased catastrophe losses and a decline in net favorable prior-year reserve development, partially offset by an improvement of 2.9 points in the current accident year, ex-CAT loss ratio.
|
·
|
The current accident year ex-CAT loss ratio for the 2018 fourth quarter was 58.0%, compared to 60.9% for the 2017 fourth quarter.
The 2.9 point improvement in the current accident year ex-CAT loss ratio was driven in large part by a reduced level of non-catastrophe related, discrete property losses in the 2018 fourth quarter compared to the 2017 fourth quarter. The
current accident year ex-CAT loss ratio for 2018 was 58.3% which approximates the 2017 ratio of 58.4%.
|
·
|
Net favorable prior-year reserve development for the 2018 fourth quarter was $6.0 million
,
compared to net favorable prior-year reserve development of $10
.0
million in 2017 fourth quarter. Net
favorable prior-year reserve development for 2018 was $20.8 million, compared to net favorable prior-year reserve development of $38.7 million in 2017. Both the quarter and annual net favorable prior-year reserve development related
primarily to Liability and Specialty lines.
|
·
|
Catastrophe losses incurred for the 2018 fourth quarter were $4.4 million. In addition, the 2018 fourth quarter was adversely
impacted by $7.7 million in outward CAT-related reinstatement premium adjustments, resulting in a total catastrophe related impact of $12.1 million. Catastrophe losses in the 2017 fourth quarter reflected a net benefit of $4.0 million,
which included a reduction of $7.0 million for third quarter 2017 events. Catastrophe losses in 2018, inclusive of reinstatement premiums were $23.3 million, compared to $21.9 million in 2017.
|
·
|
The expense ratio for the 2018 fourth quarter was 33.0%, compared to 31.2% for the 2017 fourth quarter. As noted above, during
the 2018 fourth quarter net earned premiums were reduced by $7.7 million for outward CAT-related reinstatement premiums, which increased the current quarter expense ratio. In addition, the 2017 fourth quarter expenses included certain
one-time compensation expense reductions. On an adjusted basis, the expense ratio for the 2018 and 2017 fourth quarters were 32.0 and 32.5%, respectively.
|
·
|
Underwriting income for the 2018 fourth quarter was $21.7 million, compared to $33.7 million for the 2017 fourth quarter. The $12.0
million decrease in underwriting income was primarily related to higher catastrophe losses (a quarter over quarter increase in losses of $16.1 million), and a decrease in net favorable prior-year reserve development (a quarter over
quarter net decrease in benefits of $4.0 million.
|
·
|
Gross written premiums in the 2018 fourth quarter of $275.2 million were up $49.9 million or 22.1% compared to the 2017 fourth
quarter. Gross written premiums for 2018 of $1.3 billion were up $75.4 million or 6.4% compared to 2017.
|
·
|
Net earned premiums in the 2018 fourth quarter of $181.1 increased $20.2 million or 12.6% from the 2017 fourth quarter. This
increase was due primarily to premiums reported related to the 2017 YOA within Syndicate 1200 and growth in net written premiums written. These increases were partially offset by the reduced retained percentage of certain of our Lloyd's
insurance and reinsurance businesses as noted above. Net earned premiums in 2018 of $652.5 million increased $16.7 million or 2.6%.
|
·
|
The loss ratio for the 2018 fourth quarter was 66.0%, compared to 84.3% for the 2017 fourth quarter. The 18.3 point improvement
in the loss ratio was due to lower catastrophe losses, an increase in net favorable prior-year reserve development, and a 2.9 point reduction in the current accident year, ex-CAT loss ratio.
|
·
|
The current accident year ex-CAT loss ratio for the 2018 fourth quarter was 60.4%, compared to 63.3% for the 2017 fourth quarter.
In connection with the acquisition and integration of Ariel Re (in February 2017), the Company made a number of one-time catastrophe and risk management reinsurance purchases in 2017. These 2017 purchases reduced net earned premiums
resulting in an increase in the 2017 fourth quarter loss ratio of approximately 3.6 points. The improvements in the loss ratio also reflected the effects of remedial underwriting actions undertaken in Syndicate 1200, most notably within
Property D&F business. Partially offsetting these improvements were a number of discrete Marine and Energy losses incurred during the 2018 fourth quarter.
|
·
|
Net favorable prior-year reserve development for the 2018 fourth quarter was $8.7 million, compared to net favorable prior-year
reserve development of $3.8 million in the 2017 fourth quarter. The 2018 fourth quarter net favorable prior-year reserve development was driven primarily by assumed reinsurance losses related to various 2016 and 2017 catastrophe events.
|
·
|
Catastrophe losses incurred for the 2018 fourth quarter were $17.9 million. In addition, the 2018 fourth quarter was adversely
impacted by $1.7 million in net outward CAT-related reinstatement premium adjustments, resulting in a total catastrophe related impact of $19.6 million.
|
·
|
The expense ratio for the 2018 fourth quarter was 38.5%, compared to 36.3% for the 2017 fourth quarter. The increase in the expense
ratio relates to a 2.6 point increase in acquisition costs due to business mix and certain commission adjustments recorded within the Reinsurance business unit
.
On a year to date basis, the expense ratio for 2018 improved to 37.7% from to 38.1% in 2017.
|
·
|
The underwriting loss for the 2018 fourth quarter was $8.1 million, compared to an underwriting loss of $33.1 million for the 2017
fourth quarter. The $25.0 million improvement in underwriting income was primarily related to lower catastrophe losses (a quarter over quarter decrease in losses of $18.7 million), and an increase in the net favorable prior-year reserve
development (a quarter over quarter increase of $4.9 million).
|
December 31,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Total investments
|
$
|
4,787.0
|
$
|
4,742.9
|
||||
Cash
|
139.2
|
176.6
|
||||||
Accrued investment income
|
27.2
|
23.5
|
||||||
Receivables
|
3,338.2
|
2,691.9
|
||||||
Goodwill and intangible assets
|
270.5
|
258.2
|
||||||
Deferred acquisition costs, net
|
167.3
|
160.4
|
||||||
Ceded unearned premiums
|
457.7
|
399.5
|
||||||
Other assets
|
371.1
|
311.0
|
||||||
Total assets
|
$
|
9,558.2
|
$
|
8,764.0
|
||||
Liabilities and Shareholders' Equity
|
||||||||
Reserves for losses and loss adjustment expenses
|
$
|
4,654.6
|
$
|
4,201.0
|
||||
Unearned premiums
|
1,300.9
|
1,207.7
|
||||||
Ceded reinsurance payable, net
|
970.5
|
734.0
|
||||||
Senior unsecured fixed rate notes
|
139.8
|
139.6
|
||||||
Other indebtedness
|
183.4
|
184.5
|
||||||
Junior subordinated debentures
|
257.0
|
256.6
|
||||||
Other liabilities
|
305.3
|
220.9
|
||||||
Total liabilities
|
7,811.5
|
6,944.3
|
||||||
Total shareholders' equity
|
1,746.7
|
1,819.7
|
||||||
Total liabilities and shareholders' equity
|
$
|
9,558.2
|
$
|
8,764.0
|
||||
Book value per common share
|
$
|
51.43
|
$
|
53.46
|
For the Three Months Ended
|
For the Years Ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Gross written premiums
|
$
|
702.0
|
$
|
606.3
|
$
|
2,955.2
|
$
|
2,697.2
|
||||||||
Net written premiums
|
424.5
|
389.8
|
1,765.5
|
1,653.5
|
||||||||||||
Earned premiums
|
452.4
|
404.5
|
1,731.7
|
1,572.3
|
||||||||||||
Net investment income
|
29.4
|
35.0
|
133.1
|
140.0
|
||||||||||||
Fee and other income
|
1.8
|
2.1
|
9.0
|
22.5
|
||||||||||||
Net realized investment gains (losses):
|
||||||||||||||||
Net realized investment gains
|
2.0
|
14.2
|
33.1
|
39.3
|
||||||||||||
Change in fair value of equity securities
(1)
|
(83.0
|
)
|
—
|
(105.1
|
)
|
—
|
||||||||||
Net realized investment (losses) gains
|
(81.0
|
)
|
14.2
|
(72.0
|
)
|
39.3
|
||||||||||
Total revenue
|
402.6
|
455.8
|
1,801.8
|
1,774.1
|
||||||||||||
Losses and loss adjustment expenses
|
280.6
|
270.7
|
1,040.8
|
1,050.2
|
||||||||||||
Underwriting, acquisition and insurance expenses
|
169.7
|
161.0
|
654.7
|
635.4
|
||||||||||||
Interest expense
|
8.2
|
7.3
|
31.6
|
27.7
|
||||||||||||
Fee and other expense
|
1.6
|
2.2
|
7.1
|
14.6
|
||||||||||||
Foreign currency exchange losses (gains)
|
2.2
|
2.3
|
(0.1
|
)
|
6.3
|
|||||||||||
Total expenses
|
462.3
|
443.5
|
1,734.1
|
1,734.2
|
||||||||||||
(Loss) income before income taxes
|
(59.7
|
)
|
12.3
|
67.7
|
39.9
|
|||||||||||
Income tax (benefit) provision
|
(16.1
|
)
|
(16.6
|
)
|
4.1
|
(10.4
|
)
|
|||||||||
Net (loss) income
|
$
|
(43.6
|
)
|
$
|
28.9
|
$
|
63.6
|
$
|
50.3
|
|||||||
Net (loss) income per common share (basic)
|
$
|
(1.29
|
)
|
$
|
0.85
|
$
|
1.87
|
$
|
1.46
|
|||||||
Net (loss) income per common share (diluted)
|
$
|
(1.29
|
)
|
$
|
0.83
|
$
|
1.83
|
$
|
1.42
|
|||||||
Weighted average common shares:
|
||||||||||||||||
Basic
|
33.9
|
34.1
|
33.9
|
34.5
|
||||||||||||
Diluted
|
33.9
|
34.9
|
34.7
|
35.4
|
||||||||||||
Loss ratio
|
62.0
|
%
|
66.9
|
%
|
60.1
|
%
|
66.8
|
%
|
||||||||
Expense ratio
|
37.5
|
%
|
39.8
|
%
|
37.8
|
%
|
40.4
|
%
|
||||||||
GAAP combined ratio
|
99.5
|
%
|
106.7
|
%
|
97.9
|
%
|
107.2
|
%
|
||||||||
CAY ex-CAT combined ratio
(2)
|
95.6
|
%
|
101.3
|
%
|
95.4
|
%
|
98.6
|
%
|
(1)
|
New reporting requirements for the change in fair value of equity securities commenced January 1, 2018 resulting from our adoption of ASU 2016-01. Amounts for the three months and year ended December 31, 2017 are not presented, as ASU 2016-01 was required to be adopted on a prospective basis. |
|
|
(2)
|
For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement and other catastrophe-related premium adjustments of $9.4 million and $9.0
million for the three months and year ended December 31, 2018, respectively, and $3.5 million and $17.9 million for the three months and year ended December 31, 2017, respectively
|
Three months ended
|
Year ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
U.S. Operations
|
||||||||||||||||
Gross written premiums
|
$
|
426.8
|
$
|
380.9
|
$
|
1,692.2
|
$
|
1,509.8
|
||||||||
Net written premiums
|
259.5
|
250.7
|
1,125.7
|
1,031.8
|
||||||||||||
Earned premiums
|
271.3
|
243.7
|
1,078.9
|
936.6
|
||||||||||||
Underwriting income
|
21.7
|
33.7
|
95.9
|
89.4
|
||||||||||||
Net investment income
|
18.2
|
21.2
|
82.9
|
87.2
|
||||||||||||
Interest expense
|
(4.3
|
)
|
(3.8
|
)
|
(16.2
|
)
|
(14.1
|
)
|
||||||||
Fee income (expense), net
|
(1.0
|
)
|
(0.6
|
)
|
(1.2
|
)
|
6.9
|
|||||||||
Net income before taxes
|
$
|
34.6
|
$
|
50.5
|
$
|
161.4
|
$
|
169.4
|
||||||||
Loss ratio
|
59.0
|
%
|
54.9
|
%
|
58.2
|
%
|
56.4
|
%
|
||||||||
Expense ratio
|
33.0
|
%
|
31.2
|
%
|
32.9
|
%
|
34.1
|
%
|
||||||||
GAAP combined ratio
|
92.0
|
%
|
86.1
|
%
|
91.1
|
%
|
90.5
|
%
|
||||||||
CAY ex-CAT combined ratio
(1)
|
90.0
|
%
|
92.0
|
%
|
91.0
|
%
|
92.3
|
%
|
||||||||
International Operations
|
||||||||||||||||
Gross written premiums
|
$
|
275.2
|
$
|
225.3
|
$
|
1,262.7
|
$
|
1,187.3
|
||||||||
Net written premiums
|
165.0
|
139.1
|
639.5
|
621.7
|
||||||||||||
Earned premiums
|
181.1
|
160.9
|
652.5
|
635.8
|
||||||||||||
Underwriting (loss) income
|
(8.1
|
)
|
(33.1
|
)
|
6.4
|
(111.2
|
)
|
|||||||||
Net investment income
|
7.3
|
8.3
|
32.9
|
32.7
|
||||||||||||
Interest expense
|
(2.4
|
)
|
(2.6
|
)
|
(9.3
|
)
|
(9.7
|
)
|
||||||||
Fee income, net
|
1.2
|
0.8
|
2.9
|
1.5
|
||||||||||||
Net (loss) income before taxes
|
$
|
(2.0
|
)
|
$
|
(26.6
|
)
|
$
|
32.9
|
$
|
(86.7
|
)
|
|||||
Loss ratio
|
66.0
|
%
|
84.3
|
%
|
61.3
|
%
|
79.4
|
%
|
||||||||
Expense ratio
|
38.5
|
%
|
36.3
|
%
|
37.7
|
%
|
38.1
|
%
|
||||||||
GAAP combined ratio
|
104.5
|
%
|
120.6
|
%
|
99.0
|
%
|
117.5
|
%
|
||||||||
CAY ex-CAT combined ratio
(2)
|
98.5
|
%
|
99.1
|
%
|
94.6
|
%
|
96.1
|
%
|
Three months ended
|
Year ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
U.S. Operations
|
||||||||||||||||
Loss ratio
|
59.0
|
%
|
54.9
|
%
|
58.2
|
%
|
56.4
|
%
|
||||||||
Prior accident year loss reserve development
|
2.2
|
%
|
4.1
|
%
|
1.9
|
%
|
4.1
|
%
|
||||||||
Catastrophe losses
|
(3.2
|
)%
|
1.9
|
%
|
(1.8
|
)%
|
(2.1
|
)%
|
||||||||
CAY ex-CAT loss ratio
(1)
|
58.0
|
%
|
60.9
|
%
|
58.3
|
%
|
58.4
|
%
|
||||||||
International Operations
|
||||||||||||||||
Loss ratio
|
66.0
|
%
|
84.3
|
%
|
61.3
|
%
|
79.4
|
%
|
||||||||
Prior accident year loss reserve development
|
4.8
|
%
|
2.3
|
%
|
1.5
|
%
|
(2.0
|
)%
|
||||||||
Catastrophe losses
|
(10.4
|
)%
|
(23.3
|
)%
|
(5.8
|
)%
|
(18.6
|
)%
|
||||||||
CAY ex-CAT loss ratio
(2)
|
60.4
|
%
|
63.3
|
%
|
57.0
|
%
|
58.8
|
%
|
||||||||
Consolidated
|
||||||||||||||||
Loss ratio
|
62.0
|
%
|
66.9
|
%
|
60.1
|
%
|
66.8
|
%
|
||||||||
Prior accident year loss reserve development
|
3.0
|
%
|
3.1
|
%
|
1.0
|
%
|
0.5
|
%
|
||||||||
Catastrophe losses
|
(6.1
|
)%
|
(8.2
|
)%
|
(3.3
|
)%
|
(8.7
|
)%
|
||||||||
CAY ex-CAT loss ratio
(3)
|
58.9
|
%
|
61.8
|
%
|
57.8
|
%
|
58.6
|
%
|
(1)
|
For purposes of calculating these ratios, net earned premiums were adjusted to
exclude outward reinstatement and other catastrophe-related premium adjustments of $7.7 million for both the three months and year ended December 31, 2018, and $1.3 million and $5.1 million for the three months and year ended December
31, 2017, respectively.
|
|
|
(2)
|
For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward
reinstatement and other catastrophe-related premium adjustments of $1.7 million and $1.3 million for the three months and year ended December 31, 2018, respectively, and $2.2 million and $12.8 million for the three months and year ended
December 31, 2017, respectively.
|
|
|
(3)
|
For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement and other catastrophe-related premium
adjustments of $9.4 million and $9.0 million for the three months and year ended December 31, 2018, respectively, and $3.5 million and $17.9 million for the three months and year ended December 31, 2017, respectively.
|
Three months ended
|
Year ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net Prior-Year Reserve Development
|
||||||||||||||||
(Favorable)/Unfavorable
|
||||||||||||||||
U.S. Operations
|
$
|
(6.0
|
)
|
$
|
(10.0
|
)
|
$
|
(20.8
|
)
|
$
|
(38.7
|
)
|
||||
International Operations
|
(8.7
|
)
|
(3.8
|
)
|
(9.5
|
)
|
13.2
|
|||||||||
Run-off Lines
|
0.8
|
1.2
|
12.3
|
17.3
|
||||||||||||
Total net prior-year reserve development
|
$
|
(13.9
|
)
|
$
|
(12.6
|
)
|
$
|
(18.0
|
)
|
$
|
(8.2
|
)
|
Three months ended
|
Year ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Catastrophe Losses
|
||||||||||||||||
Catastrophe losses:
|
||||||||||||||||
U.S. Operations
|
$
|
4.4
|
$
|
(5.3
|
)
|
$
|
15.6
|
$
|
16.8
|
|||||||
International Operations
|
17.9
|
36.1
|
37.3
|
110.4
|
||||||||||||
Total catastrophe losses
|
22.3
|
30.8
|
52.9
|
127.2
|
||||||||||||
CAT-related premium adjustments:
|
||||||||||||||||
U.S. Operations
|
7.7
|
1.3
|
7.7
|
5.1
|
||||||||||||
International Operations
|
1.7
|
2.2
|
1.3
|
12.8
|
||||||||||||
Total CAT-related premium adjustments
|
9.4
|
3.5
|
9.0
|
17.9
|
||||||||||||
Catastrophe losses, inclusive of CAT-related premium adjustments:
|
||||||||||||||||
U.S. Operations
|
12.1
|
(4.0
|
)
|
23.3
|
21.9
|
|||||||||||
International Operations
|
19.6
|
38.3
|
38.6
|
123.2
|
||||||||||||
Total catastrophe losses, inclusive of CAT-related premium adjustments
|
$
|
31.7
|
$
|
34.3
|
$
|
61.9
|
$
|
145.1
|
|
Three months ended
|
Year ended
|
||||||||||||||
|
December 31,
|
December 31,
|
||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Net (loss) income
|
$
|
(43.6
|
)
|
$
|
28.9
|
$
|
63.6
|
$
|
50.3
|
|||||||
Add (deduct):
|
||||||||||||||||
Income tax (benefit) provision
|
(16.1
|
)
|
(16.6
|
)
|
4.1
|
(10.4
|
)
|
|||||||||
Net investment income
|
(29.4
|
)
|
(35.0
|
)
|
(133.1
|
)
|
(140.0
|
)
|
||||||||
Net realized investment losses (gains)
|
81.0
|
(14.2
|
)
|
72.0
|
(39.3
|
)
|
||||||||||
Fee and other income
|
(1.8
|
)
|
(2.1
|
)
|
(9.0
|
)
|
(22.5
|
)
|
||||||||
Interest expense
|
8.2
|
7.3
|
31.6
|
27.7
|
||||||||||||
Fee and other expense
|
1.6
|
2.2
|
7.1
|
14.6
|
||||||||||||
Foreign currency exchange losses (gains)
|
2.2
|
2.3
|
(0.1
|
)
|
6.3
|
|||||||||||
Underwriting income (loss)
|
$
|
2.1
|
$
|
(27.2
|
)
|
$
|
36.2
|
$
|
(113.3
|
)
|
Three months ended
|
Year ended
|
|||||||||||
December 31,
|
December 31,
|
|||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||
Net (loss) income, as reported
|
$
(43.6
|
)
|
$
28.9
|
$
63.6
|
$
50.3
|
|||||||
Income tax (benefit) provision
|
(16.1
|
)
|
(16.6
|
)
|
4.1
|
(10.4
|
)
|
|||||
Net (loss) income, before taxes
|
(59.7
|
)
|
12.3
|
67.7
|
39.9
|
|||||||
Add (deduct):
|
||||||||||||
Net realized investment losses (gains)
|
81.0
|
(14.2
|
)
|
72.0
|
(39.3
|
)
|
||||||
Foreign currency exchange losses (gains)
|
2.2
|
2.3
|
(0.1
|
)
|
6.3
|
|||||||
Adjusted operating income before taxes
|
23.5
|
0.4
|
139.6
|
6.9
|
||||||||
Provision for income taxes, at assumed rate
(1)
|
4.7
|
0.1
|
27.9
|
1.4
|
||||||||
Adjusted operating income
|
$
18.8
|
$
0.3
|
$
111.7
|
$
5.5
|
||||||||
Adjusted operating income per common share (diluted)
|
$
0.55
|
$
0.01
|
$
3.22
|
$
0.16
|
||||||||
Weighted average common shares, diluted
|
33.9
|
34.9
|
34.7
|
35.4
|
|
Three months ended
|
Year ended
|
||||||||||
|
December 31,
|
December 31,
|
||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Segment income (loss) before income taxes:
|
||||||||||||
U.S. Operations
|
$
34.6
|
$
50.5
|
$
161.4
|
$
169.4
|
||||||||
International Operations
|
(2.0
|
)
|
(26.6
|
)
|
32.9
|
(86.7
|
)
|
|||||
Run-off Lines
|
(0.7
|
)
|
(1.5
|
)
|
(9.3
|
)
|
(17.9
|
)
|
||||
Corporate and Other
|
(8.4
|
)
|
(22.0
|
)
|
(45.4
|
)
|
(57.9
|
)
|
||||
Net realized investment (losses) gains
|
(81.0
|
)
|
14.2
|
(72.0
|
)
|
39.3
|
||||||
Foreign currency exchange (losses) gains
|
(2.2
|
)
|
(2.3
|
)
|
0.1
|
(6.3
|
)
|
|||||
(Loss) income before income taxes
|
(59.7
|
)
|
12.3
|
67.7
|
39.9
|
|||||||
Income tax (benefit) provision
|
(16.1
|
)
|
(16.6
|
)
|
4.1
|
(10.4
|
)
|
|||||
Net (loss) income
|
$
(43.6
|
)
|
$
28.9
|
$
63.6
|
$
50.3
|
U.S. Operations
|
Three months ended December 31, 2018
|
Three months ended December 31, 2017
|
||||||||||||||||||||||
Gross
Written
|
Net
Written |
Net
Earned |
Gross
Written
|
Net
Written |
Net
Earned |
|||||||||||||||||||
Property
|
$
|
58.6
|
$
|
22.2
|
$
|
25.6
|
$
|
53.3
|
$
|
33.6
|
$
|
27.6
|
||||||||||||
Liability
|
251.5
|
162.5
|
178.5
|
231.3
|
162.5
|
164.4
|
||||||||||||||||||
Professional
|
70.4
|
39.4
|
36.1
|
56.6
|
23.8
|
25.8
|
||||||||||||||||||
Specialty
|
46.3
|
35.4
|
31.1
|
39.7
|
30.8
|
25.9
|
||||||||||||||||||
Total
|
$
|
426.8
|
$
|
259.5
|
$
|
271.3
|
$
|
380.9
|
$
|
250.7
|
$
|
243.7
|
Year ended December 31, 2018
|
Year ended December 31, 2017
|
|||||||||||||||||||||||
Gross
Written
|
Net
Written |
Net
Earned |
Gross
Written
|
Net
Written |
Net
Earned |
|||||||||||||||||||
Property
|
$
|
252.3
|
$
|
135.9
|
$
|
126.4
|
$
|
246.7
|
$
|
138.5
|
$
|
113.4
|
||||||||||||
Liability
|
1,042.3
|
716.1
|
707.1
|
946.7
|
673.8
|
619.2
|
||||||||||||||||||
Professional
|
234.8
|
147.0
|
131.6
|
176.5
|
113.1
|
111.3
|
||||||||||||||||||
Specialty
|
162.8
|
126.7
|
113.8
|
139.9
|
106.4
|
92.7
|
||||||||||||||||||
Total
|
$
|
1,692.2
|
$
|
1,125.7
|
$
|
1,078.9
|
$
|
1,509.8
|
$
|
1,031.8
|
$
|
936.6
|
International Operations
|
Three months ended December 31, 2018
|
Three months ended December 31, 2017
|
||||||||||||||||||||||
Gross
Written
|
Net
Written |
Net
Earned |
Gross
Written
|
Net
Written |
Net
Earned |
|||||||||||||||||||
Property
|
$
|
87.7
|
$
|
41.6
|
$
|
54.6
|
$
|
52.3
|
$
|
36.4
|
$
|
55.4
|
||||||||||||
Liability
|
48.8
|
27.2
|
28.4
|
36.0
|
16.5
|
19.5
|
||||||||||||||||||
Professional
|
48.8
|
32.5
|
27.3
|
49.3
|
32.4
|
30.5
|
||||||||||||||||||
Specialty
|
89.9
|
63.7
|
70.8
|
87.7
|
53.8
|
55.5
|
||||||||||||||||||
Total
|
$
|
275.2
|
$
|
165.0
|
$
|
181.1
|
$
|
225.3
|
$
|
139.1
|
$
|
160.9
|
Year ended December 31, 2018
|
Year ended December 31, 2017
|
|||||||||||||||||||||||
Gross
Written
|
Net
Written |
Net
Earned |
Gross
Written
|
Net
Written |
Net
Earned |
|||||||||||||||||||
Property
|
$
|
496.6
|
$
|
176.7
|
$
|
210.7
|
$
|
442.6
|
$
|
198.3
|
$
|
224.3
|
||||||||||||
Liability
|
193.7
|
107.4
|
100.1
|
162.6
|
77.8
|
79.6
|
||||||||||||||||||
Professional
|
190.2
|
112.8
|
103.3
|
169.7
|
104.7
|
100.9
|
||||||||||||||||||
Specialty
|
382.2
|
242.6
|
238.4
|
412.4
|
240.9
|
231.0
|
||||||||||||||||||
Total
|
$
|
1,262.7
|
$
|
639.5
|
$
|
652.5
|
$
|
1,187.3
|
$
|
621.7
|
$
|
635.8
|
Consolidated
|
Three months ended December 31, 2018
|
Three months ended December 31, 2017
|
||||||||||||||||||||||
Gross
Written
|
Net
Written |
Net
Earned |
Gross
Written
|
Net
Written |
Net
Earned |
|||||||||||||||||||
Property
|
$
|
146.3
|
$
|
63.8
|
$
|
80.2
|
$
|
105.6
|
$
|
70.0
|
$
|
83.0
|
||||||||||||
Liability
|
300.3
|
189.7
|
206.9
|
267.4
|
179.0
|
183.9
|
||||||||||||||||||
Professional
|
119.2
|
71.9
|
63.4
|
105.9
|
56.2
|
56.3
|
||||||||||||||||||
Specialty
|
136.2
|
99.1
|
101.9
|
127.4
|
84.6
|
81.3
|
||||||||||||||||||
Total
|
$
|
702.0
|
$
|
424.5
|
$
|
452.4
|
$
|
606.3
|
$
|
389.8
|
$
|
404.5
|
Year ended December 31, 2018
|
Year ended December 31, 2017
|
|||||||||||||||||||||||
Gross
Written
|
Net
Written |
Net
Earned
|
Gross
Written
|
Net
Written |
Net
Earned |
|||||||||||||||||||
Property
|
$
|
748.9
|
$
|
312.6
|
$
|
337.1
|
$
|
689.3
|
$
|
336.8
|
$
|
337.7
|
||||||||||||
Liability
|
1,236.3
|
823.8
|
807.5
|
1,109.4
|
751.6
|
698.8
|
||||||||||||||||||
Professional
|
425.0
|
259.8
|
234.9
|
346.2
|
217.8
|
212.2
|
||||||||||||||||||
Specialty
|
545.0
|
369.3
|
352.2
|
552.3
|
347.3
|
323.6
|
||||||||||||||||||
Total
|
$
|
2,955.2
|
$
|
1,765.5
|
$
|
1,731.7
|
$
|
2,697.2
|
$
|
1,653.5
|
$
|
1,572.3
|
For the Three Months Ended
|
For the Years Ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net investment income, excluding alternative investments
|
$
|
30.3
|
$
|
24.1
|
$
|
113.3
|
$
|
90.5
|
||||||||
Alternative investments
|
(0.9
|
)
|
10.9
|
19.8
|
49.5
|
|||||||||||
Total net investment income
|
$
|
29.4
|
$
|
35.0
|
$
|
133.1
|
$
|
140.0
|
For the Years Ended
|
||||||||||||
December 31,
|
||||||||||||
2018
|
2017
|
% Change
|
||||||||||
Net income
|
$
|
63.6
|
$
|
50.3
|
26.4
|
%
|
||||||
Adjusted operating income
(1)
|
111.7
|
5.5
|
1,930.9
|
%
|
||||||||
Shareholders' Equity - Beginning of period
|
$
|
1,819.7
|
$
|
1,792.7
|
1.5
|
%
|
||||||
Shareholders' Equity - End of period
|
1,746.7
|
1,819.7
|
(4.0
|
)%
|
||||||||
Average Shareholders' Equity
|
$
|
1,783.2
|
$
|
1,806.2
|
(1.3
|
)%
|
||||||
Shares outstanding - End of period
|
32.961
|
34.040
|
||||||||||
Book value per share
|
$
|
51.43
|
$
|
53.46
|
(3.8
|
)%
|
||||||
Cash dividends paid per share
|
1.08
|
|||||||||||
Current year book value per share, including dividends paid per share
|
$
|
52.51
|
||||||||||
Change in book value per share
(3)
|
(1.8
|
)%
|
||||||||||
Annualized return on average shareholders' equity
|
3.6
|
%
|
2.8
|
%
|
||||||||
Annualized return on average shareholders' equity, as adjusted
(2)
|
8.3
|
%
|
2.8
|
%
|
||||||||
Annualized adjusted operating return on average shareholders' equity
|
6.3
|
%
|
0.3
|
%
|