Argo: Net Income $26.1 Million
Bermuda-based Argo Group International Holdings, Ltd announced financial results for the three and six months ended June 30, 2010. Argo Group’s Chief Executive Officer, Mark E. Watson III, said, “Our results reflect the impact of several large loss events that occurred in the first half of the year, none of which have led to improved pricing. Given the highly competitive marketplace, our strategy is to reduce exposure where returns are inadequate as we evaluate and pursue additional opportunities that will provide higher returns now and over the longer term. Additionally, we continued during the second quarter to return capital to shareholders through additional repurchases of Argo Group stock and the payment of a dividend.”
Highlights for the three months ended June 30, 2010:
– Total revenue was $362.4 million versus $403.8 million in the second quarter of 2009;
– Net income was $26.1 million or $0.86 per diluted share, compared to $21.9 million or $0.71 per diluted share for the three months ended June 30, 2009;
– Net pre-tax operating income, or pre-tax income before net realized investment gains and losses, foreign currency exchange gains and losses and an impairment charge, was $18.6 million versus $50.5 million in the second quarter of 2009;
– Net after-tax operating income per diluted share was $0.49 versus $1.31 per diluted share in the year-ago quarter.
– Book value per share (BVPS) increased to an all-time high of $54.76 at June 30, 2010, up 1.8 percent from March 31, 2010, and 15.3 percent from June 30, 2009.
Highlights for the six months ended June 30, 2010:
– Total revenue was $734.7 million compared to $773.3 million for the first half of 2009;
– Net income was $46.8 million or $1.53 per diluted share versus $48.9 million or $1.59 per diluted share for the first six months of 2009;
– Net pre-tax operating income, or pre-tax income before net realized investment gains and losses, foreign currency exchange gains and losses and an impairment charge, was $30.8 million or $1.01 per diluted share versus $93.7 million or $3.05 per diluted share in the first six months of 2009.
For the three months ended June 30, 2010, net income was $26.1 million or $0.86 per diluted share. Net operating income after tax was $14.9 million or $0.49 per diluted share. As the Company previously announced, 2010 second quarter results were impacted by spring storms in the U.S., the Deepwater Horizon incident in the Gulf of Mexico, and additional information reported on the Chilean earthquake that occurred in February 2010. By comparison, the second quarter of 2009 produced net income of $21.9 million or $0.71 per diluted share, with no material catastrophic losses impacting results. The three months ended June 30, 2009, produced net operating income of $40.4 million or $1.31 per diluted share. The differences between net income and net operating income for the three months ended June 30, 2010, include 1) realized gains of $5.0 million pre-tax associated with the Company’s investment portfolio; and 2) foreign currency exchange gains of $8.5 million pre-tax. (See the complete reconciliation in the attached tables.) Included in the results for the three months ended June 30, 2010 and 2009, are favorable prior year reserve development of $12.3 million, including additional premiums of $3.0 million, and favorable prior year reserve development of $2.4 million, including additional premiums of $17.2 million, respectively.
Total revenue in the second quarter of 2010 was $362.4 million versus $403.8 million in the same period in 2009. Earned premiums for the second quarter of 2010 were $324.5 million compared to $372.2 million for the second quarter of 2009. Net investment income for the three months ended June 30, 2010 and 2009 was $33.1 million and $41.9 million, respectively. Net investment income in 2009 includes an interest payment of $4.5 million related to a favorable settlement of a state income tax dispute. Net realized gains on sales of investments were $5.0 million for the three months ended June 30, 2010, versus losses on sales of investments and other than temporary impairment write-downs of $9.2 million for the three months ended June 30, 2009.
