Argo Group Reports 2014 Q3 Net Income

October 31, 2014

Bermuda-based Argo Group International Holdings, Ltd. announced financial results for the three and nine months ended September 30, 2014.

Results for the third quarter of 2014 were solid,” said Argo Group CEO Mark E. Watson III. “Our underwriting margins continue to steadily improve. Top line growth was modest as we continue to focus on our higher margin businesses while reducing in areas where we do not see sufficiently attractive returns.”

HIGHLIGHTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2014:

  • Net income was $44.7 million or $1.69 per diluted share, compared to $31.0 million or $1.12 per diluted share for the third quarter of 2013.
  • After-tax operating income was $23.5 million or $0.89 per diluted share, compared to $22.1 million or $0.80 per diluted share for the third quarter of 2013.
  • Gross written premiums were $497.2 million compared to $495.1 million for the third quarter of 2013, while net written premiums increased to $380.5 million from $369.9 million for the third quarter of 2013 after deduction of other reinsurance-related expenses.
  • The combined ratio was 96.4% compared to 97.5% for the third quarter of 2013.
  • Net favorable prior-year reserve development was $3.1 million (benefiting the combined ratio by 0.9 points), compared with $4.2 million (benefiting the combined ratio by 1.3 points) for the third quarter of 2013.
  • Estimated pre-tax catastrophe losses were $5.5 million or 1.7 points on the combined ratio, compared to $11.3 million or 3.6 points for the third quarter of 2013.
  • The current accident year loss ratio excluding catastrophes was 56.0%, compared to 56.3% in the third quarter of 2013.
  • Book value per share increased to $62.99, up 0.3% from $62.80 at June 30, 2014, and up 6.8% from $58.96 at December 31, 2013.
  • During the quarter the Company repurchased $10.8 million or 206,710 shares of its common stock at an average price of $52.12, which represents 0.8% of net shares outstanding at June 30, 2014.

HIGHLIGHTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014:

  • Net income was $123.5 million or $4.63 per diluted share, compared to $95.4 million or $3.41 per diluted share for the first nine months of 2013.
  • After-tax operating income was $72.3 million or $2.72 per diluted share, compared to $62.7 million or $2.24 per diluted share for the first nine months of 2013.
  • Gross written premiums were $1.480 billion, compared to $1.476 billion for the first nine months of 2013, while net written premiums increased to $1.056 billion from $1.029 billion for the first nine months of 2013 after deduction of other reinsurance-related expenses.
  • The combined ratio was 96.0%, compared to 98.3% for the first nine months of 2013.
  • Net favorable prior-year reserve development was $26.4 million (benefiting the combined ratio by 2.6 points), compared to $21.5 million (benefiting the combined ratio by 2.3 points) for the first nine months of 2013.
  • Estimated pre-tax catastrophe losses were $13.9 million or 1.5 points on the combined ratio, compared to $22.9 million or 2.5 points for the first nine months of 2013.
  • The current accident year loss ratio excluding catastrophes was 57.2%, compared to 58.2% for the first nine months of 2013.
  • In the first nine months of 2014, the Company repurchased $42.2 million or 882,010 shares of its common stock at an average share price of $47.80, which represents 3.3% of net shares outstanding at December 31, 2013.
  • At September 30, 2014, cash and investments totaled $4.2 billion with a net pre-tax unrealized gain of approximately $240.2 million.

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