Argo Group Reports Second Quarter Results
Bermuda-based Argo Group International Holdings, Ltd. announced financial results for the three and six months ended June 30, 2015.
“Argo Group’s second quarter results demonstrate continued momentum in the first half of 2015,” said CEO Mark E. Watson III. “The improvement in our underwriting income is a direct result of the ongoing focus on underwriting as well as a disciplined approach to profitable growth in our niche markets.”
Highlights For The Second Quarter Ended June 30, 2015:
- Gross written premiums were up 7.2% to $557.8 million from $520.1 million in the second quarter of 2014.
- After-tax operating income was $25.9 million or $0.91 per diluted share, compared to $23.7 million or $0.81 per diluted share for the second quarter of 2014.
- Net income was $27.9 million or $0.98 per diluted share, compared to $38.6 million or $1.32 per diluted share for the second quarter of 2014.
- Pre-tax underwriting income increased 12.0% to $15.9 million in the second quarter of 2015 from $14.2 million in 2014.
- The combined ratio was 95.4% compared to 95.8% for the second quarter of 2014. The loss and expense ratios for the quarter were 55.1% and 40.3%, respectively compared to 55.1% and 40.7% for the second quarter of 2014.
- Included in underwriting expenses was a non-cash, equity-based compensation charge of $10.4 million [representing 3.0 combined ratio points], compared to $6.8 million [representing 2.0 combined ratio points] in the second quarter of 2014, resulting from the increase in the Company’s stock price during the quarter of each year.
- Net favorable prior-year reserve development was $5.0 million [benefiting the combined ratio by 1.4 points], compared with $14.4 million [benefiting the combined ratio by 4.3 points] for the second quarter of 2014.
- Estimated pre-tax catastrophe losses were $2.3 million or 0.6 points on the combined ratio, compared to $4.2 million or 1.3 points on the combined ratio for the second quarter of 2014.
- The loss ratio excluding catastrophes and reserve development was 55.9% for the second quarter of 2015, compared to 58.1% for the second quarter of 2014.
- During the quarter, the Company repurchased $6.8 million or 136,042 shares of its common stock at an average price of $49.80 per share.
Highlights For The Six Months Ended June 30, 2015:
- Gross written premiums were up 5.2% to $1.035 billion from $983.2 million in the first half of 2014.
- After-tax operating income was $55.4 million or $1.94 per diluted share, compared to $48.7 million or $1.65 per diluted share for the first half of 2014.
- Net income was $86.7 million or $3.03 per diluted share, compared to $78.8 million or $2.67 per diluted share for the first half of 2014.
- Pre-tax underwriting income increased 29.6% to $37.2 million in the first half of 2015 from $28.7 million in 2014.
- The combined ratio was 94.5% compared to 95.7% for the first half of 2014. The loss and expense ratios for the first half of 2015 were 55.0% and 39.5%, respectively compared to 55.6% and 40.1% for the first half of 2014.
- Included in underwriting expenses was a non-cash, equity-based compensation charge of $15.3 million, [representing 2.2 combined ratio points], compared to $11.1 million [representing 1.6 combined ratio points], in the first half of 2014, resulting from the increase in the Company’s stock price during the first six months of each year.
- Net favorable prior-year reserve development was $8.7 million [benefiting the combined ratio by 1.3 points], compared with $23.3 million [benefiting the combined ratio by 3.5 points] for the first half of 2014.
- Estimated pre-tax catastrophe losses were $5.3 million or 0.8 points on the combined ratio, compared to $8.4 million or 1.3 points on the combined ratio for the first half of 2014.
- The current accident year loss ratio excluding catastrophes was 55.5% for the first half of 2015, compared to 57.8% for the first half of 2014.
- In the first half of 2015, the Company repurchased $24.9 million or 489,096 shares of its common stock at an average share price of $50.93, which represents 1.7% of net shares outstanding at December 31, 2014.
- Book value per share increased to $59.76, up 2.6% from $58.22 at Dec. 31, 2014.
- At June 30, 2015, cash and investments totaled $4.2 billion with a net pre-tax unrealized gain of approximately $166.5 million.
Argo Group also announced today its board of directors has declared a quarterly cash dividend of $0.20 per share on the company’s common stock. The dividend will be paid on September 15, 2015, to shareholders of record on September 1, 2015.
