Argo Group Sees Progress After Rate Hikes, Reducing Property Catastrophe Exposure

Argo Group International Holdings made money during the 2021 third quarter versus a net loss the year before. Results stemmed, in part, from the Bermuda-based specialty insurer reducing its property catastrophe exposure as well as an improved underwriting margin.

Net income for Q3 2021 came in at just under $20 million, or $0.56 per diluted common share. Over the same period in 2020, Argo Group lost more than $25 million, or negative $0.72 per diluted share.

Catastrophe losses reached $27.3 million during the quarter, down from $71.2 million in Q3 2020.

“Argo continues to pursue profitable growth, improve underwriting margins, reduce volatility and maintain disciplined expense management,” said Argo Chief Executive Officer Kevin Rehnberg in prepared remarks. “The successful implementation of our strategy is evidenced in our financial performance. As we continue to optimize our business mix, the underlying strength of our core lines of business is more clear.”

Argo said it enjoyed strong growth from ongoing business in both the U.S. and international segments after various underwriting actions including rate increases. It also booked a consolidated combined ratio of 100.3, just shy of profitability. A lower number is healthier, of course, but it compares to a 110.1 combined ratio in the same, year-ago quarter. Rehnberg said the improvement stems, in part from reducing property catastrophe exposure.

Here are other Q3 result highlights:

• Consolidated gross written premiums came in at $875 million, and net premiums written were $583.7 million. A year ago, those numbers came in at $890.2 million and $533.9 million, respectively.

• Argo said the decline in Q3 gross written premiums stemmed from businesses it is exiting, plan to exit or have sold, including the sale of Ariel Re in November 2020 and businesses in Italy, Malta and the U.S. grocery business. “Re-underwriting” actions across the company’s catastrophe exposed lines of business also led to the dip. On the other hand, premiums in ongoing businesses grew 17 percent during Q3 versus a year ago.

• Consolidated net investment income was $46.1 million, versus $42 million over the same period in 2020.

• For U.S. operations, Argo reported $562.5 million in gross premiums written and $375 million in net premiums written. That compares to $542.4 million and $349.2 million, respectively in the 2020 third quarter. The U.S. Combined ratio dipped down to a healthy 95.4 during the quarter, compared to 101.7 in the 2020 third quarter.

• Agrgo said U.S. gross written premiums grew due to its Liability and Professional Lines, though Property lines premiums declined as planned reductions were enacted. Growth came from “strategic growth businesses” including Argo Pro, Casualty, Construction, Environmental, Inland Marine and Surety.

• International gross premiums written reached nearly $313 million during the quarter, and net written premiums came in at $208.5 million. That compares to close to $347 million and $184.6 million, respectively, in the 2020 third quarter. Premiums in the space declined by 10 percent due to plans to exit or sell businesses, including the sale of Ariel Re in November 2020. For ongoing businesses, including the share of Syndicate 1200’s capacity, gross written premiums grew nearly 20 percent due to higher rates, and growth in Marine in Specialty Lines.

Source: Argo Group International Holdings