UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549
 
FORM 8-K
 
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 

Date of Report (Date of earliest event reported): November 2, 2020
 
Argo Group International Holdings, Ltd.
(Exact name of registrant as specified in its charter)
 
Bermuda
 
001-15259
 
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)
 
Registrant’s telephone number, including area code:  (441) 296-5858
 
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

   Written communications pursuant to Rule 425 under the Securities Act  (17 CFR 230.425)

   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
  Trading Symbol(s)
 
Name of each exchange
on which registered
Common Stock, par value of $1.00 per share
  ARGO
  New York Stock Exchange
Guarantee of Argo Group U.S., Inc. 6.500% Senior Notes due 2042
  ARGD
  New York Stock Exchange
Depositary Shares, Each Representing a 1/1,000th Interest in a 7.00% Resettable Fixed Rate Preference Share, Series A, Par Value $1.00 Per Share
  ARGOPrA
  New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02. Results of Operations and Financial Condition.
 
On November 2, 2020, Argo Group International Holdings, Ltd. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended September 30, 2020. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.
 
Exhibit 99.1 is furnished pursuant to Item 2.02 of this Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.
 
Item 8.01. Other Events
 
The Company issued a press release dated November 2, 2020, announcing the entry into an agreement to sell its reinsurance business, Ariel Re, to Pelican Ventures and J.C. Flowers & Co. A copy of the press release is attached as Exhibit 99.2 to this report and is incorporated herein by reference.
 
Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits:
 
No.
 
Exhibit
 
 
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:  November 2, 2020
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
 
 
 
 
 
By:
/s/ Jay S. Bullock
 
 
 
Name: Jay S. Bullock
 
 
 
Title:   Executive Vice President and Chief Financial Officer

Exhibit 99.1

Argo Group Reports 2020 Third Quarter Results
 
Continued Strategic Progress to Focus the Organization and Improve Underwriting Results
 

Strong Underlying Margins: Current accident year, ex-catastrophe loss ratio and combined ratio improved compared to the prior year period.

Favorable Market Conditions: Pricing increase above 10% on average across Argo's business.

Establishing Expense Targets: Initiatives underway to remove $100 million of expense from the 2019 total incurred; partially reinvesting in ongoing businesses and operations; targeting a 36% expense ratio by year-end 2022.

Hamilton, Bermuda - November 2, 2020 - Argo Group International Holdings, Ltd. (NYSE: ARGO) ("Argo" or the "Company") today announced financial results for the three and nine months ended September 30, 2020. Argo reported third quarter 2020 net loss attributable to common shareholders of $31.6 million or $(0.91) per diluted common share, compared to a net loss attributable to common shareholders of $25.1 million or $(0.73) per diluted common share for the 2019 third quarter. Operating loss in the third quarter of 2020 was $11.9 million or $(0.34) per diluted common share, compared to an operating loss of $15.2 million or $(0.44) per diluted common share for the 2019 third quarter.

2020 Third Quarter Consolidated Operating Highlights
 
$ in millions
 
Three Months Ended
September 30,
   
Q/Q

 
Nine Months Ended
September 30,
   
Y/Y

Consolidated
 
2020
   
2019
   
Change
     
2020
     
2019
   
Change
 
                                             
Gross written premiums
 
$
890.2
   
$
882.7
     
0.8
%
 
$
2,515.7
   
$
2,416.4
     
4.1
%
Net written premiums
   
533.9
     
538.9
     
-0.9
%
   
1,370.5
     
1,355.0
     
1.1
%
Earned premiums
   
445.5
     
451.5
     
-1.3
%
   
1,313.9
     
1,303.7
     
0.8
%
                                                 
Underwriting (loss) income
 
$
(47.7
)
 
$
(51.3
)
 
NM
   
$
(62.8
)
 
$
(43.4
)
 
NM
 
Net investment income
   
42.0
     
40.2
     
4.5
%
   
79.0
     
116.9
     
-32.4
%
                                                 
Net (loss) income attributable to
common shareholders
 
$
(31.6
)
 
$
(25.1
)
 
NM
   
$
(56.8
)
 
$
94.9
   
NM
 
                                                 
Operating (loss) income
 
$
(11.9
)
 
$
(15.2
)
 
NM
   
$
(4.0
)
 
$
43.1
   
NM
 
                                                 
Loss ratio
   
73.8
%
   
75.1
%
 
-1.3 pts
     
67.2
%
   
66.1
%
 
1.1 pts
 
Expense ratio
   
36.9
%
   
36.3
%
 
0.6 pts
     
37.6
%
   
37.2
%
 
0.4 pts
 
Combined ratio
   
110.7
%
   
111.4
%
 
-0.7 pts
     
104.8
%
   
103.3
%
 
1.5 pts
 
CAY ex-CAT loss ratio
   
56.9
%
   
61.5
%
 
-4.6 pts
     
56.7
%
   
59.0
%
 
-2.3 pts
 

"We are pleased with the improved underlying margins of our business during the quarter, as well as the actions taken to simplify operations and exit lines that do not meet profitability expectations or are not aligned with our strategy," said Argo Chief Executive Officer Kevin J. Rehnberg. "While the industry faced historic levels of catastrophe activity in the third quarter, we have continued to make progress on our strategic objectives.

“This progress combined with continued gross written premium growth within profitable lines of business, improvement in pricing and a plan to reduce expenses demonstrates our firm commitment to continuing on a path toward increased shareholder value.”

1

 
On a consolidated basis, gross written premium grew 0.8% to $890.2 million during the third quarter of 2020. Premium growth in U.S. Operations of 2.4% was partially offset by a 1.4% decline in International Operations. Pricing increases remained in the low double digits on average across Argo, with a wide range varying by business line.
 
The combined ratio was 110.7% compared to 111.4% for the 2019 third quarter. The slightly lower combined ratio was primarily driven by a better current accident year (CAY) ex-CAT loss ratio and a lower level of net unfavorable reserve development, which for the third consecutive quarter, was modest during the period at $1.6 million. Partially offsetting these improvements was a higher level of catastrophe losses of $71.2 million, including $16.9 million related to the COVID-19 pandemic, primarily resulting from contingency exposures in Argo’s International Operations. Additionally, net unfavorable reserve development of 0.4 points in the third quarter of 2020 was down from 9.3 points in the prior year quarter. The expense ratio was up modestly compared to the prior year quarter and reflected a 0.3 point unfavorable impact from reinstatement premiums in the 2020 third quarter.
 
The CAY ex-CAT combined ratio was 93.5% compared to 97.8% in the prior year quarter. The improvement in the CAY ex-CAT combined ratio was due to a lower CAY ex-CAT loss ratio that was driven by stronger pricing and lower loss activity in International Operations, while the expense ratio was roughly stable.
 
Net investment income of $42.0 million increased 4.5% compared to the 2019 third quarter. Net investment income excluding alternatives decreased 29.5% to $22.7 million, while alternative investments, which are reported on a lag, contributed a gain of $19.3 million in the third quarter of 2020. The decline in the portfolio excluding alternatives was primarily due to lower interest rates and portfolio de-risking actions that have been executed since the fourth quarter of 2019. The strong performance from alternative investments included a performance-related contingent payment from an investment that was sold during 2017.
 
Net loss attributable to common shareholders was $31.6 million or $(0.91) per diluted common share, compared to a net loss attributable to common shareholders of $25.1 million or $(0.73) per diluted common share for the 2019 third quarter. The 2020 third quarter result included foreign currency exchange losses and dividends on preferred shares compared to foreign exchange gains and no dividends on preferred shares in the prior year quarter.
 
Operating loss was $11.9 million or $(0.34) per diluted common share, compared to an operating loss of $15.2 million or $(0.44) per diluted common share for the 2019 third quarter. The primary driver of the smaller operating loss was a lower level of underwriting losses and stronger investment income in the third quarter of 2020.
 
2

U.S. Operations:
 
$ in millions
 
Three Months Ended
September 30,
   
Q/Q

 
Nine Months Ended
September 30,
   
Y/Y

U.S. Operations
 
2020
   
2019
   
Change
   
2020
   
2019
   
Change
 
Gross written premiums
 
$
542.4
   
$
529.9
     
2.4
%
 
$
1,499.1
   
$
1,394.2
     
7.5
%
Net written premiums
   
349.2
     
360.3
     
-3.1
%
   
922.2
     
904.0
     
2.0
%
Earned premiums
   
298.7
     
290.8
     
2.7
%
   
902.8
     
848.6
     
6.4
%
                                                 
Losses and loss adjustment expenses
   
205.5
     
178.6
     
15.1
%
   
566.3
     
496.3
     
14.1
%
Underwriting expenses
   
99.1
     
92.8
     
6.8
%
   
290.8
     
278.7
     
4.3
%
Underwriting (loss) income
 
$
(5.9
)
 
$
19.4
   
NM
   
$
45.7
   
$
73.6
     
-37.9
%
                                                 
Loss ratio
   
68.8
%
   
61.4
%
 
7.4 pts
     
62.7
%
   
58.5
%
 
4.2 pts
 
Expense ratio
   
33.2
%
   
31.9
%
 
1.3 pts
     
32.2
%
   
32.8
%
 
-0.6 pts
 
Combined ratio
   
102.0
%
   
93.3
%
 
8.7 pts
     
94.9
%
   
91.3
%
 
3.6 pts
 
CAY ex-CAT loss ratio
   
60.5
%
   
59.5
%
 
1 pts
     
57.9
%
   
58.0
%
 
-0.1 pts
 

In our U.S. Operations, gross written premiums increased 2.4% compared to the 2019 third quarter due to growth in Professional and Property lines, while premiums in Specialty were up modestly. Growth in the period reflected strong rate increases across most lines of business, which remained in the high single digits on average. This was partially offset by economic headwinds as a result of COVID-19 and re-underwriting actions in certain business units, which primarily impacted Liability lines including workers' compensation.
 
Net written premiums declined 3.1% compared to the 2019 third quarter due to the impact of additional reinsurance purchases. Net earned premium growth in the third quarter of 2020 was a result of previous growth in gross and net written premium, and was primarily attributed to Professional lines.
 
The loss ratio for the third quarter of 2020 was 68.8%, an increase of 7.4 points compared to the prior year quarter. The higher loss ratio was primarily driven by a 7.3 point increase in catastrophe losses and a 1.0 point increase in the CAY ex-CAT loss ratio. This was partially offset by a higher level of favorable reserve development relative to the prior year quarter. The increase in the CAY ex-CAT loss ratio reflected a large fire loss and large liability claim that added 1.7 points. Catastrophe losses in the quarter were primarily related to an active U.S. hurricane and storm season, as well as U.S. wildfires. Net favorable prior-year reserve development in the current quarter increased to $3.2 million from $0.7 million in the prior year quarter.
 
The expense ratio for the third quarter of 2020 was 33.2%, an increase of 1.3 points compared to the 2019 third quarter. The higher expense was driven by changes in business mix, non-recurring severance expense and the impact of reinstatement premiums. On a year-to-date basis, the nine month 2020 expense ratio improved 0.6 point from the prior year period.
 
3

International Operations:
 
$ in millions
 
Three Months Ended
September 30,
   
Q/Q

 
Nine Months Ended
September 30,
   
Y/Y

International Operations
 
2020
   
2019
   
Change
     
2020
     
2019
   
Change
 
Gross written premiums
 
$
347.7
   
$
352.8
     
-1.4
%
 
$
1,016.2
   
$
1,022.1
     
-0.6
%
Net written premiums
   
184.6
     
178.6
     
3.4
%
   
447.9
     
450.9
     
-0.7
%
Earned premiums
   
146.7
     
160.7
     
-8.7
%
   
410.8
     
455.0
     
-9.7
%
                                                 
Losses and loss adjustment expenses
   
113.0
     
160.0
     
-29.4
%
   
305.6
     
363.3
     
-15.9
%
Underwriting expenses
   
57.1
     
62.5
     
-8.6
%
   
175.0
     
174.7
     
0.2
%
Underwriting loss
 
$
(23.4
)
 
$
(61.8
)
 
NM
   
$
(69.8
)
 
$
(83.0
)
 
NM
 
                                                 
Loss ratio
   
77.1
%
   
99.6
%
 
-22.5 pts
     
74.4
%
   
79.8
%
 
-5.4 pts
 
Expense ratio
   
38.9
%
   
38.9
%
 
0 pts
     
42.6
%
   
38.4
%
 
4.2 pts
 
Combined ratio
   
116.0
%
   
138.5
%
 
-22.5 pts
     
117.0
%
   
118.2
%
 
-1.2 pts
 
CAY ex-CAT loss ratio
   
50.0
%
   
65.0
%
 
-15 pts
     
54.2
%
   
60.8
%
 
-6.6 pts
 

In our International Operations, gross written premiums declined modestly in the third quarter of 2020, as growth in Property and Liability lines was more than offset by a decrease in Specialty and Professional lines. Rates increased across all lines of business with particular strength in Liability and Property lines, and average rate increases remained in the mid-teens during the quarter. Rate increases across International were partially offset by re-underwriting and reducing line sizes in certain business lines, as well as the economic impact of COVID-19 on some businesses.
 
Net earned premium in the third quarter of 2020 decreased 8.7% from the prior year quarter. The decline was primarily related to the impact of business lines exited over the last 18 months, as well as additional reinstatement premiums incurred during the quarter.
 
The loss ratio for the third quarter of 2020 was 77.1%, an improvement of 22.5 points compared to the prior year quarter. The lower loss ratio was primarily due to 3.8 points of favorable reserve development in the current quarter compared to 26.3 points of unfavorable development in the prior year quarter, as well as a 15.0 point year-over-year improvement in the CAY ex-CAT loss ratio. Catastrophe losses totaled 30.9 points in the quarter, attributed to both estimated natural catastrophe loss and losses related to COVID-19 in contingency exposures. The CAY ex-CAT loss ratio improvement was primarily due to achieved rate increases earning through results and the impact of recent re-underwriting actions.
 
The expense ratio for the third quarter of 2020 was 38.9%, which was flat to the result in the prior year quarter as lower earned premium was matched by lower non-acquisition expenses.
 
Balance Sheet:
 
Book value per common share was $49.63 at September 30, 2020, compared to $49.94 at June 30, 2020. Including dividends paid, book value per common share was unchanged relative to June 30, 2020.
 
During the third quarter, the Company completed an offering of 7.0% resettable fixed rate perpetual non-cumulative preference shares with a total liquidation preference of $150 million. Part of the proceeds were used to repay a $125 million term loan during the third quarter.

4

CONFERENCE CALL
Argo Group management will conduct an investor conference call starting at 10 a.m. EDT on Tuesday, November 3, 2020. Participants in the U.S. can access the call by dialing (877) 291-5203. Callers dialing from outside the U.S. can access the call by dialing (412) 902-6610. Please ask the operator for the Argo Group earnings call. A live webcast of the conference call can be accessed at https://services.choruscall.com/links/argo201103.html

A webcast replay will be available shortly after the live conference call and can be accessed at https://services.choruscall.com/links/argo201103.html. A telephone replay of the conference call will be available through November 10, 2020, to callers in the U.S. by dialing (877) 344-7529 (conference #10148372). Callers dialing from outside the U.S. can access the replay by dialing (412) 317-0088 (conference #10148372).

ABOUT ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
Argo Group International Holdings Ltd. (NYSE: ARGO) is an underwriter of specialty insurance and reinsurance products in the property and casualty market. Argo offers a full line of products and services designed to meet the unique coverage and claims handling needs of businesses in two primary segments: U.S. Operations and International Operations. Argo and its insurance subsidiaries are rated ‛A-’ by Standard and Poor’s. Argo’s insurance subsidiaries are rated ‛A-’ by A.M. Best. More information on Argo and its subsidiaries is available at www.argogroup.com.

FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as "expect," "intend," "plan," "believe," “do not believe,” “aim,” "project," "anticipate," “seek,” "will," “likely,” “assume,” “estimate,” "may," “continue,” “guidance,” “objective,” “remain optimistic,” "path toward," “outlook,” “trends,” “future,” “could,” “would,” “should,” “target,” “on track” and similar expressions of a future or forward-looking nature.

Such statements are subject to certain risks and uncertainties that could cause actual events or results to differ materially. For a more detailed discussion of such risks and uncertainties, see Item 1A, “Risk Factors” in Argo’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as supplemented in Part II, Item 1A, “Risk Factors” of Argo’s subsequent Quarterly Reports on Form 10-Q and in other filings with the Securities and Exchange Commission (“SEC”). The inclusion of a forward-looking statement herein should not be regarded as a representation by Argo that Argo’s objectives will be achieved. Argo undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on any such statements.

NON-GAAP FINANCIAL MEASURES
In presenting the Company's results, management has included and discussed in this press release certain non-generally accepted accounting principles ("non-GAAP") financial measures within the meaning of Regulation G as promulgated by the SEC. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain the Company's results of operations in a manner that allows for a more complete understanding of the underlying trends in the Company's business. However, these measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles ("U.S. GAAP").

“Underwriting income” is an internal performance measure used in the management of the Company’s operations and represents net amount earned from underwriting activities (net premium earned less underwriting expenses and claims incurred). Although this measure of profit (loss) does not replace net income (loss) computed in accordance with U.S. GAAP as a measure of profitability, management uses this measure of profit (loss) to focus our reporting segments on generating underwriting income. The Company presents Underwriting income as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.

“Current accident year (CAY) ex-CAT combined ratio” and the “Current accident year (CAY) ex-CAT loss ratio" are internal measures used by the management of the Company to evaluate the performance of its' underwriting activity and represents the net amount of underwriting income excluding catastrophe related charges (impacts to both premium and losses), the impact of changes to prior year loss reserves and other one-time items that would impact expenses or net earned premium. Although this measure does not replace the GAAP combined ratio it provides management with a view of the quality of earnings generated by underwriting activity for the current accident year.

5

“Operating income" is an internal performance measure used in the management of the Company's operations and represents after-tax (at an assumed effective tax rate of 15%) operating results excluding, as applicable, net realized investment gains or losses, net foreign exchange gain or loss, and other similar non-recurring items, as well as preferred share dividends. The Company excludes net realized investment gains or losses, net foreign exchange gain or loss, and other similar non-recurring items from the calculation of operating income because these amounts are influenced by and fluctuate in part, by market conditions that are outside of management’s control. In addition to presenting net income determined in accordance with U.S. GAAP, the Company believes that showing operating income enables investors, analysts, rating agencies and other users of the Company's financial information to more easily analyze our results of operations and underlying business performance. Operating income should not be viewed as a substitute for U.S. GAAP net income.

"Annualized return on average common shareholders’ equity" ("ROACE") is calculated using average common shareholders' equity. In calculating ROACE, the net income available to common shareholders for the period is multiplied by the number of periods in a calendar year to arrive at annualized net income available to common shareholders. The Company presents ROACE as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information. "Annualized operating return on average common shareholders' equity" is calculated using operating income (as defined above and annualized in the manner described for net income (loss) available to common shareholders under ROACE above) and average common shareholders' equity.

The “percentage change in book value per common share” includes (by adding) the effects of cash dividends paid per common share to the calculated book value per common share for the current period. This adjusted amount is then compared to the prior period’s book value per common share to determine the period over period change. The Company believes that including the dividends paid per common share allows users of its financial statements to more easily identify the impact of the changes in book value per common share from the perspective of investors.

Reconciliations of non-GAAP financial measures to their most directly comparable U.S. GAAP measures are included in the attached tables and footnotes.


(financial tables follow)

6

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)

 
 
September 30,
 
December 31,
 
 
2020
 
2019
 
 
(unaudited)
 
 
Assets
 
 
 
 
Total investments
 
$
5,006.0 
   
$
5,099.4 
 
Cash
 
300.4 
   
137.8 
 
Accrued investment income
 
22.2 
   
25.7 
 
Receivables
 
3,843.5 
   
3,792.8 
 
Goodwill and intangible assets
 
247.3 
   
253.2 
 
Deferred acquisition costs, net
 
170.4 
   
160.2 
 
Ceded unearned premiums
 
660.9 
   
545.0 
 
Other assets
 
483.6 
   
500.4 
 
Total assets
 
$
10,734.3 
   
$
10,514.5 
 
         
Liabilities and Shareholders' Equity
       
Reserves for losses and loss adjustment expenses
 
$
5,390.0 
   
$
5,157.6 
 
Unearned premiums
 
1,574.2 
   
1,410.9 
 
Ceded reinsurance payable, net
 
1,085.0 
   
1,203.1 
 
Senior unsecured fixed rate notes
 
140.1 
   
140.0 
 
Other indebtedness
 
59.1 
   
181.3 
 
Junior subordinated debentures
 
257.7 
   
257.4 
 
Other liabilities
 
363.7 
   
383.1 
 
Total liabilities
 
8,869.8 
   
8,733.4 
 
         
Preferred shares
 
144.0 
   
— 
 
Common shareholders’ equity
 
1,720.5 
   
1,781.1 
 
Total shareholders' equity
 
1,864.5 
   
1,781.1 
 
Total liabilities and shareholders' equity
 
$
10,734.3 
   
$
10,514.5 
 
         
Book value per common share
 
$
49.63 
   
$
51.80 
 
 
7

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(in millions, except per share amounts)
(unaudited)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2020
 
2019
 
2020
 
2019
Gross written premiums
 
$
890.2
 
$
882.7
 
$
2,515.7
 
$
2,416.4
Net written premiums
 
533.9
 
538.9
 
1,370.5
 
1,355.0
                 
Earned premiums
 
445.5
 
451.5
 
1,313.9
 
1,303.7
Net investment income
 
42.0
 
40.2
 
79.0
 
116.9
Fee and other income
 
1.7
 
1.9
 
5.8
 
6.3
Net realized investment (losses) gains
 
(5.7)
 
(6.2)
 
(21.7)
 
58.3
Total revenue
 
483.5
 
487.4
 
1,377.0
 
1,485.2
                 
Losses and loss adjustment expenses
 
328.9
 
338.8
 
883.0
 
861.5
Underwriting, acquisition and insurance expenses
 
164.3
 
164.0
 
493.7
 
485.6
Other corporate expenses
 
0.4
 
3.7
 
6.2
 
11.7
Interest expense
 
6.8
 
7.5
 
21.3
 
25.3
Fee and other expense
 
0.9
 
1.2
 
3.1
 
3.8
Foreign currency exchange losses (gains)
 
11.6
 
(1.6)
 
15.0
 
(6.2)
Total expenses
 
512.9
 
513.6
 
1,422.3
 
1,381.7
                 
(Loss) income before income taxes
 
(29.4)
 
(26.2)
 
(45.3)
 
103.5
Income tax provision (benefit)
 
0.2
 
(1.1)
 
9.5
 
8.6
Net (loss) income
 
$
(29.6)
 
$
(25.1)
 
$
(54.8)
 
$
94.9
Dividends on preferred shares
 
2.0
 
 
2.0
 
$
Net (loss) income attributable to common shareholders
 
$
(31.6)
 
$
(25.1)
 
$
(56.8)
 
$
94.9
                 
Net (loss) income per common share (basic)
 
$
(0.91)
 
$
(0.73)
 
$
(1.64)
 
$
2.78
Net (loss) income per common share (diluted)
 
$
(0.91)
 
$
(0.73)
 
$
(1.64)
 
$
2.73
                 
Weighted average common shares:
               
Basic
 
34.7
 
34.3
 
34.6
 
34.2
Diluted
 
34.7
 
34.3
 
34.6
 
34.8
                 
Loss ratio
 
73.8%
 
75.1%
 
67.2%
 
66.1%
Expense ratio (1)
 
36.9%
 
36.3%
 
37.6%
 
37.2%
GAAP combined ratio
 
110.7%
 
111.4%
 
104.8%
 
103.3%
CAY ex-CAT combined ratio (2)
 
93.5%
 
97.8%
 
94.1%
 
96.2%
 
(1)
The expense ratio is calculated as "Underwriting, acquisition and insurance expense" divided by "Earned premiums".
 
(2)
For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement premium adjustments of $3.9 million and $6.0 million for the three and nine months ended September 30, 2020, respectively, and inward reinstatement premium adjustments of $0.1 million for both the three and nine months ended September 30, 2019.

8

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
SEGMENT DATA
(in millions)
(unaudited)

 
 
Three Months Ended
 
Nine months ended
 
 
September 30,
 
September 30,
 
 
2020
 
2019
 
2020
 
2019
U.S. Operations
         
 
 
 
Gross written premiums
 
$
542.4
 
$
529.9
 
$
1,499.1
 
$
1,394.2
Net written premiums
 
349.2
 
360.3
 
922.2
 
904.0
Earned premiums
 
298.7
 
290.8
 
902.8
 
848.6
                 
Underwriting (loss) income
 
(5.9)
 
19.4
 
45.7
 
73.6
Net investment income
 
30.1
 
27.4
 
56.1
 
80.1
Interest expense
 
(4.0)
 
(4.6)
 
(13.1)
 
(15.5)
Fee (expense) income, net
 
(0.1)
 
 
(0.5)
 
0.1
Net income before taxes
 
$
20.1
 
$
42.2
 
$
88.2
 
$
138.3
                 
Loss ratio
 
68.8%
 
61.4%
 
62.7%
 
58.5%
Expense ratio (1)
 
33.2%
 
31.9%
 
32.2%
 
32.8%
GAAP combined ratio
 
102.0%
 
93.3%
 
94.9%
 
91.3%
CAY ex-CAT combined ratio (2)
 
93.3%
 
91.4%
 
90.0%
 
90.8%
                 
International Operations
               
Gross written premiums
 
$
347.7
 
$
352.8
 
$
1,016.2
 
$
1,022.1
Net written premiums
 
184.6
 
178.6
 
447.9
 
450.9
Earned premiums
 
146.7
 
160.7
 
410.8
 
455.0
                 
Underwriting loss
 
(23.4)
 
(61.8)
 
(69.8)
 
(83.0)
Net investment income
 
9.9
 
10.7
 
19.0
 
31.3
Interest expense
 
(1.9)
 
(2.5)
 
(6.2)
 
(8.4)
Fee income, net
 
0.7
 
0.7
 
2.5
 
2.4
Net loss before taxes
 
$
(14.7)
 
$
(52.9)
 
$
(54.5)
 
$
(57.7)
                 
Loss ratio
 
77.1%
 
99.6%
 
74.4%
 
79.8%
Expense ratio (1)
 
38.9%
 
38.9%
 
42.6%
 
38.4%
GAAP combined ratio
 
116.0%
 
138.5%
 
117.0%
 
118.2%
CAY ex-CAT combined ratio (3)
 
88.7%
 
103.9%
 
96.5%
 
99.2%
 
(1)
The expense ratio is calculated as "Underwriting, acquisition and insurance expense" divided by "Earned premiums".
 
(2)
For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement premium adjustments of $3.2 million for the three and nine months ended September 30, 2020. There were no such adjustments for the three and nine months ended September 30, 2019.
 
(3)
For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement premium adjustments of $0.7 million and $2.8 million for the three and nine months ended September 30, 2020, respectively, and inward reinstatement premium adjustments of $0.1 million for both the three and nine months ended September 30, 2019.

9

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
RECONCILIATION OF LOSS RATIOS
(unaudited)

 
 
Three Months Ended
   
Nine Months Ended
 
 
 
September 30,
   
September 30,
 
 
 
2020
   
2019
   
2020
   
2019
 
U.S. Operations
                       
Loss ratio
   
68.8
%
   
61.4
%
   
62.7
%
   
58.5
%
Prior accident year loss reserve development
   
1.1
%
   
0.2
%
   
0.1
%
   
1.2
%
Catastrophe losses
   
(9.4
)%
   
(2.1
)%
   
(4.9
)%
   
(1.7
)%
CAY ex-CAT loss ratio (1)
   
60.5
%
   
59.5
%
   
57.9
%
   
58.0
%
                                 
International Operations
                               
Loss ratio
   
77.1
%
   
99.6
%
   
74.4
%
   
79.8
%
Prior accident year loss reserve development
   
3.8
%
   
(26.3
)%
   
1.1
%
   
(15.3
)%
Catastrophe losses
   
(30.9
)%
   
(8.3
)%
   
(21.3
)%
   
(3.7
)%
CAY ex-CAT loss ratio (2)
   
50.0
%
   
65.0
%
   
54.2
%
   
60.8
%
                                 
Consolidated
                               
Loss ratio
   
73.8
%
   
75.1
%
   
67.2
%
   
66.1
%
Prior accident year loss reserve development
   
(0.4
)%
   
(9.3
)%
   
(0.5
)%
   
(4.7
)%
Catastrophe losses
   
(16.5
)%
   
(4.3
)%
   
(10.0
)%
   
(2.4
)%
CAY ex-CAT loss ratio (3)
   
56.9
%
   
61.5
%
   
56.7
%
   
59.0
%

(1)
For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement premium adjustments of $3.2 million for the three and nine months ended September 30, 2020. There were no such adjustments for the three and nine months ended September 30, 2019.
 
(2)
For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement premium adjustments of $0.7 million and $2.8 million for the three and nine months ended September 30, 2020, respectively, and inward reinstatement premium adjustments of $0.1 million for both the three and nine months ended September 30, 2019.
 
(3)
For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement premium adjustments of $3.9 million and $6.0 million for the three and nine months ended September 30, 2020, respectively, and inward reinstatement premium adjustments of $0.1 million for both the three and nine months ended September 30, 2019.

10

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
NET PRIOR-YEAR RESERVE DEVELOPMENT & CATASTROPHE LOSSES BY SEGMENT
(in millions)
(unaudited)

 
 
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
   
2020
   
2019
   
2020
   
2019
 
Net Prior-Year Reserve Development
                       
(Favorable)/Unfavorable
                       
U.S. Operations
 
$
(3.2
)
 
$
(0.7
)
 
$
(0.5
)
 
$
(9.8
)
International Operations
   
(5.6
)
   
42.3
     
(4.5
)
   
69.5
 
Run-off Lines
   
10.4
     
0.2
     
11.1
     
1.9
 
Total net prior-year reserve development
 
$
1.6
   
$
41.8
   
$
6.1
   
$
61.6
 

 
 
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
   
2020
   
2019
   
2020
   
2019
 
Catastrophe & COVID-19 Losses
                       
Catastrophe losses
                       
U.S. Operations
 
$
28.3
   
$
6.1
   
$
35.8
   
$
14.3
 
International Operations
   
26.0
     
13.2
     
31.9
     
17.0
 
Total catastrophe losses
   
54.3
     
19.3
     
67.7
     
31.3
 
                                 
COVID-19 losses
                               
U.S. Operations
   
(2.0
)
   
     
6.5
     
 
International Operations
   
18.9
     
     
54.0
     
 
Total COVID-19 losses
   
16.9
     
     
60.5
     
 
                                 
Catastrophe & COVID-19 losses
                               
U.S. Operations
   
26.3
     
6.1
     
42.3
     
14.3
 
International Operations
   
44.9
     
13.2
     
85.9
     
17.0
 
Total catastrophe & COVID-19 losses
 
$
71.2
   
$
19.3
   
$
128.2
   
$
31.3
 

11

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
RECONCILIATION OF UNDERWRITING (LOSS) INCOME TO NET (LOSS) INCOME
CONSOLIDATED
(in millions)
(unaudited)

 
 
Three Months Ended
   
Nine Months Ended
 
 
 
September 30,
   
September 30,
 
 
 
2020
   
2019
   
2020
   
2019
 
Net (loss) income
 
$
(29.6
)
 
$
(25.1
)
 
$
(54.8
)
 
$
94.9
 
Add (deduct):
                               
Income tax provision (benefit)
   
0.2
     
(1.1
)
   
9.5
     
8.6
 
Net investment income
   
(42.0
)
   
(40.2
)
   
(79.0
)
   
(116.9
)
Net realized investment losses (gains)
   
5.7
     
6.2
     
21.7
     
(58.3
)
Fee and other income
   
(1.7
)
   
(1.9
)
   
(5.8
)
   
(6.3
)
Interest expense
   
6.8
     
7.5
     
21.3
     
25.3
 
Fee and other expense
   
0.9
     
1.2
     
3.1
     
3.8
 
Foreign currency exchange losses (gains)
   
11.6
     
(1.6
)
   
15.0
     
(6.2
)
Other corporate expenses
   
0.4
     
3.7
     
6.2
     
11.7
 
Underwriting (loss) income
 
$
(47.7
)
 
$
(51.3
)
 
$
(62.8
)
 
$
(43.4
)

12

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
RECONCILIATION OF OPERATING INCOME TO NET (LOSS) INCOME
CONSOLIDATED
(in millions, except per share amounts)
(unaudited)

 
 
Three Months Ended
   
Nine Months Ended
 
 
 
September 30,
   
September 30,
 
 
 
2020
   
2019
   
2020
   
2019
 
Net (loss) income, as reported
 
$
(29.6
)
 
$
(25.1
)
 
$
(54.8
)
 
$
94.9
 
Income tax provision (benefit)
   
0.2
     
(1.1
)
   
9.5
     
8.6
 
Net income (loss), before taxes
   
(29.4
)
   
(26.2
)
   
(45.3
)
   
103.5
 
Add (deduct):
                               
Net realized investment losses (gains)
   
5.7
     
6.2
     
21.7
     
(58.3
)
Foreign currency exchange losses (gains)
   
11.6
     
(1.6
)
   
15.0
     
(6.2
)
Other corporate expenses
   
0.4
     
3.7
     
6.2
     
11.7
 
Operating (loss) income before taxes and preferred share dividends
   
(11.7
)
   
(17.9
)
   
(2.4
)
   
50.7
 
Income tax (benefit) provision, at assumed rate (1)
   
(1.8
)
   
(2.7
)
   
(0.4
)
   
7.6
 
Preferred share dividends
   
2.0
     
     
2.0
     
 
Operating (loss) income
 
$
(11.9
)
 
$
(15.2
)
 
$
(4.0
)
 
$
43.1
 
                                 
Operating (loss) income per common share (diluted)
 
$
(0.34
)
 
$
(0.44
)
 
$
(0.12
)
 
$
1.24
 
                                 
Weighted average common shares, diluted
   
34.7
     
34.3
     
34.6
     
34.8
 
 
(1)
For the purpose of calculating Operating Income, an assumed tax rate of 15% was used for all periods presented.

13

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
RECONCILIATION OF SEGMENT INCOME TO NET (LOSS) INCOME
(in millions)
(unaudited)

 
 
Three Months Ended
   
Nine Months Ended
 
 
 
September 30,
   
September 30,
 
 
 
2020
   
2019
   
2020
   
2019
 
Segment income (loss) before income taxes:
                       
U.S. Operations
 
$
20.1
   
$
42.2
   
$
88.2
   
$
138.3
 
International Operations
   
(14.7
)
   
(52.9
)
   
(54.5
)
   
(57.7
)
Run-off Lines
   
(10.2
)
   
0.7
     
(11.0
)
   
0.2
 
Corporate and Other
   
(6.9
)
   
(7.9
)
   
(25.1
)
   
(30.1
)
Net realized investment (losses) gains
   
(5.7
)
   
(6.2
)
   
(21.7
)
   
58.3
 
Foreign currency exchange (losses) gains
   
(11.6
)
   
1.6
     
(15.0
)
   
6.2
 
Other corporate expenses
   
(0.4
)
   
(3.7
)
   
(6.2
)
   
(11.7
)
(Loss) income before income taxes
   
(29.4
)
   
(26.2
)
   
(45.3
)
   
103.5
 
Income tax provision (benefit)
   
0.2
     
(1.1
)
   
9.5
     
8.6
 
Net (loss) income
 
$
(29.6
)
 
$
(25.1
)
 
$
(54.8
)
 
$
94.9
 

14

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
PREMIUMS BY SEGMENT AND LINE OF BUSINESS
(in millions)
(unaudited)
U.S. Operations
 
Three months ended September 30, 2020
   
Three months ended September 30, 2019
 
   
Gross
Written
   
Net
Written
   
Net
Earned
   
Gross
Written
   
Net
Written
   
Net
Earned
 
Property
 
$
90.8
   
$
62.3
   
$
36.6
   
$
85.1
   
$
61.1
   
$
35.3
 
Liability
   
291.6
     
183.7
     
165.2
     
313.9
     
211.2
     
179.9
 
Professional
   
111.7
     
71.9
     
63.3
     
83.4
     
54.8
     
44.2
 
Specialty
   
48.3
     
31.3
     
33.6
     
47.5
     
33.2
     
31.4
 
Total
 
$
542.4
   
$
349.2
   
$
298.7
   
$
529.9
   
$
360.3
   
$
290.8
 

   
Nine months ended September 30, 2020
   
Nine months ended September 30, 2019
 
   
Gross
Written
   
Net
Written
   
Net
Earned
   
Gross
Written
   
Net
Written
   
Net
Earned
 
Property
 
$
237.5
   
$
124.5
   
$
117.3
   
$
227.3
   
$
112.6
   
$
100.1
 
Liability
   
804.4
     
505.8
     
507.4
     
812.9
     
557.1
     
533.8
 
Professional
   
312.7
     
193.8
     
177.4
     
220.1
     
136.1
     
119.6
 
Specialty
   
144.5
     
98.1
     
100.7
     
133.9
     
98.2
     
95.1
 
Total
 
$
1,499.1
   
$
922.2
   
$
902.8
   
$
1,394.2
   
$
904.0
   
$
848.6
 

International Operations
 
Three months ended September 30, 2020
   
Three months ended September 30, 2019
 
   
Gross
Written
   
Net
Written
   
Net
Earned
   
Gross
Written
   
Net
Written
   
Net
Earned
 
Property
 
$
161.0
   
$
66.2
   
$
44.3
   
$
151.2
   
$
55.2
   
$
42.5
 
Liability
   
73.4
     
32.6
     
26.7
     
57.2
     
28.8
     
28.1
 
Professional
   
49.7
     
37.7
     
29.9
     
53.2
     
31.9
     
28.9
 
Specialty
   
63.6
     
48.1
     
45.8
     
91.2
     
62.7
     
61.2
 
Total
 
$
347.7
   
$
184.6
   
$
146.7
   
$
352.8
   
$
178.6
   
$
160.7
 

   
Nine months ended September 30, 2020
   
Nine months ended September 30, 2019
 
   
Gross
Written
   
Net
Written
   
Net
Earned
   
Gross
Written
   
Net
Written
   
Net
Earned
 
Property
 
$
416.5
   
$
128.9
   
$
115.6
   
$
445.2
   
$
120.7
   
$
119.1
 
Liability
   
185.8
     
81.7
     
73.0
     
150.6
     
74.2
     
83.9
 
Professional
   
156.7
     
88.0
     
88.0
     
151.2
     
85.6
     
82.7
 
Specialty
   
257.2
     
149.3
     
134.2
     
275.1
     
170.4
     
169.3
 
Total
 
$
1,016.2
   
$
447.9
   
$
410.8
   
$
1,022.1
   
$
450.9
   
$
455.0
 

Consolidated
 
Three months ended September 30, 2020
   
Three months ended September 30, 2019
 
   
Gross
Written
   
Net
Written
   
Net
Earned
   
Gross
Written
   
Net
Written
   
Net
Earned
 
Property
 
$
251.8
   
$
128.5
   
$
80.9
   
$
236.3
   
$
116.3
   
$
77.8
 
Liability
   
365.1
     
216.4
     
192.0
     
371.1
     
240.0
     
208.0
 
Professional
   
161.4
     
109.6
     
93.2
     
136.6
     
86.7
     
73.1
 
Specialty
   
111.9
     
79.4
     
79.4
     
138.7
     
95.9
     
92.6
 
Total
 
$
890.2
   
$
533.9
   
$
445.5
   
$
882.7
   
$
538.9
   
$
451.5
 

   
Nine months ended September 30, 2020
   
Nine months ended September 30, 2019
 
   
Gross
Written
   
Net
Written
   
Net
Earned
   
Gross
Written
   
Net
Written
   
Net
Earned
 
Property
 
$
654.0
   
$
253.4
   
$
232.9
   
$
672.5
   
$
233.3
   
$
219.2
 
Liability
   
990.6
     
587.9
     
580.7
     
963.6
     
631.4
     
617.8
 
Professional
   
469.4
     
281.8
     
265.4
     
371.3
     
221.7
     
202.3
 
Specialty
   
401.7
     
247.4
     
234.9
     
409.0
     
268.6
     
264.4
 
Total
 
$
2,515.7
   
$
1,370.5
   
$
1,313.9
   
$
2,416.4
   
$
1,355.0
   
$
1,303.7
 

15

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
COMPONENTS OF NET INVESTMENT INCOME & NET REALIZED INVESTMENT GAINS (LOSSES)
CONSOLIDATED
(in millions)
(unaudited)

 
 
Three Months Ended
   
Nine Months Ended
 
 
 
September 30,
   
September 30,
 
 
 
2020
   
2019
   
2020
   
2019
 
Net Investment Income
                       
Net investment income, excluding alternative investments
 
$
22.7
   
$
32.2
   
$
80.6
   
$
97.5
 
Alternative investments
   
19.3
     
8.0
     
(1.6
)
   
19.4
 
Total net investment income
 
$
42.0
   
$
40.2
   
$
79.0
   
$
116.9
 

 
 
Three Months Ended
   
Nine Months Ended
 
 
 
September 30,
   
September 30,
 
 
 
2020
   
2019
   
2020
   
2019
 
Net Realized Investment Gains (Losses)
                       
Net realized investment (losses) gains
 
$
(5.7
)
 
$
2.6
   
$
1.0
   
$
0.3
 
Change in fair value of equity securities
   
10.5
     
(8.8
)
   
(12.0
)
   
58.0
 
Credit losses on fixed maturity securities
   
(10.5
)
   
     
(43.0
)
   
 
Gain on sale of Trident assets
   
     
     
32.3
     
 
Total net realized investments (losses) gains
 
$
(5.7
)
 
$
(6.2
)
 
$
(21.7
)
 
$
58.3
 

16

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
COMPONENTS OF INVESTMENT PORTFOLIO
CONSOLIDATED
(in millions)
(unaudited)

 
 
September 30,
   
December 31,
 
 
 
2020
   
2019
 
U.S. Governments and government agencies
 
$
392.5
   
$
354.6
 
States and political subdivisions
   
169.5
     
152.6
 
Foreign governments
   
278.0
     
248.7
 
Corporate – Financial
   
832.8
     
783.8
 
Corporate – Industrial
   
823.3
     
789.5
 
Corporate – Utilities
   
191.3
     
207.1
 
Asset-backed securities
   
143.3
     
165.5
 
Collateralized loan obligations
   
274.5
     
225.8
 
Mortgage-backed securities – Agency
   
403.9
     
373.8
 
Mortgage-backed securities – Commercial
   
335.8
     
217.0
 
Mortgage-backed securities – Residential
   
69.5
     
115.1
 
Total fixed maturities
   
3,914.4
     
3,633.5
 
Common stocks
   
149.0
     
116.5
 
Preferred stocks
   
1.7
     
7.9
 
Total equity securities available for sale
   
150.7
     
124.4
 
Private equity
   
204.7
     
268.1
 
Hedge fund
   
105.7
     
109.5
 
Overseas deposits
   
97.2
     
114.6
 
Other
   
4.6
     
4.3
 
Total other investments
   
412.2
     
496.5
 
Short term investments and cash equivalents
   
528.7
     
845.0
 
Cash
   
300.4
     
137.8
 
Total cash and invested assets
 
$
5,306.4
   
$
5,237.2
 

 
 
September 30,
   
December 31,
 
 
 
2020
   
2019
 
U.S. Governments and government agencies
 
$
796.4
   
$
354.7
 
AAA
   
894.3
     
1,171.3
 
AA
   
379.1
     
347.0
 
A
   
811.9
     
750.9
 
BBB
   
687.6
     
585.3
 
BB
   
183.3
     
159.9
 
B
   
74.0
     
131.7
 
Lower than B
   
30.3
     
61.7
 
Not rated
   
57.5
     
71.0
 
Total fixed maturities
 
$
3,914.4
   
$
3,633.5
 

17

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
SHAREHOLDER RETURN ANALYSIS
(in millions, except per share data)
(unaudited)

 
 
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
 
 
2020
   
2019
   
2020
   
2019
 
Net (loss) income attributable to common shareholders
 
$
(31.6
)
 
$
(25.1
)
 
$
(56.8
)
 
$
94.9
 
Operating (loss) income (1)
   
(11.9
)
   
(15.2
)
   
(4.0
)
   
43.1
 
                                 
Common Shareholders' Equity - Beginning of period
 
$
1,730.0
   
$
1,929.0
   
$
1,781.1
   
$
1,746.7
 
Common Shareholders' Equity - End of period
   
1,720.5
     
1,893.4
     
1,720.5
     
1,893.4
 
Average Common Shareholders' Equity
 
$
1,725.3
   
$
1,911.2
   
$
1,750.8
   
$
1,820.1
 
                                 
Common shares outstanding - End of period
   
34.670
     
34.314
     
34.670
     
34.314
 
                                 
Book value per common share
 
$
49.63
   
$
55.18
   
$
49.63
   
$
55.18
 
Cash dividends paid per common share during 2020
   
0.31
             
0.93
         
Book value per common share, September 30, 2020 - including cash dividends paid
 
$
49.94
           
$
50.56
         
                                 
Book value per common share, prior period (2)
 
$
49.94
           
$
51.80
         
Change in book value per common share during 2020
   
(0.6
)%
           
(4.2
)%
       
Change in book value per common share including cash dividends paid, during 2020 (2)
   
%
           
(2.4
)%
       
                                 
Annualized return on average common shareholders' equity
   
(7.3
)%
   
(5.3
)%
   
(4.3
)%
   
7.0
%
Annualized operating return on average common shareholders' equity
   
(2.8
)%
   
(3.2
)%
   
(0.3
)%
   
3.2
%
 
(1)
For the purpose of calculating Operating Income, an assumed tax rate of 15% was used for all periods presented.

(2)
The percentage change in book value per common share is calculated by including cash dividends of $0.31 per common share and $0.93 per common share paid to shareholders during the three and nine months ended September 30, 2020, respectively. This adjusted amount (Book value per common share, including dividends) is then compared to the book value per common share as of June 30, 2020 and December 31, 2019, respectively, to determine the change for the three and nine months ended September 30, 2020.

 Contact:

Brett Shirreffs
David Snowden
   
Head of Investor Relations
Senior Vice President, Communications
   
212.607.8830
210.321.2104
   
brett.shirreffs@argogroupus.com
david.snowden@argogroupus.com



18
Exhibit 99.2

Argo Group Announces Agreement to Sell Ariel Re to Pelican Ventures and J.C. Flowers

HAMILTON, Bermuda – Nov. 2, 2020 – Argo Group International Holdings, Ltd. (NYSE: ARGO), an underwriter of specialty insurance and reinsurance products, today announced an agreement to sell its reinsurance business, Ariel Re, to Pelican Ventures and J.C. Flowers & Co., both private equity investors with significant insurance expertise. Closing of the transaction is subject to regulatory approval and is expected to occur in 2020.

“Ariel Re is well known in the reinsurance market, and we are confident the business will thrive as part of Pelican Ventures,” said Chief Executive Officer Kevin J. Rehnberg.

“Argo Group will continue to focus on specialty insurance lines of business that we expect will result in profitable growth and improved shareholder value,” Rehnberg said. “This transaction aligns with our strategy to simplify the business and streamline operations.”

Under the terms of the agreement, the buying group’s corporate member will provide Ariel Re’s capital for the 2021 year of account, and Argo Group has agreed to retain historical reserves.

"Pelican Ventures is excited to be investing in Ariel Re and bringing on board talented professionals with unparalleled reinsurance market underwriting expertise and risk management analysis skills,” said Pelican Ventures Co-Founder Jim Stanard. “With the financial strength and insights of our new ownership group and under the leadership of Ryan Mather, we will pursue our ambition of building a world-class manager of (re)insurance risk.”

Morgan Stanley; Paul, Weiss, Rifkind, Wharton & Garrison LLP; and Clyde & Co LLP served as advisers on the transaction.

ABOUT ARGO GROUP INTERNATIONAL HOLDINGS LTD.
Argo Group International Holdings Ltd. (NYSE: ARGO) is an underwriter of specialty insurance and reinsurance products in the property and casualty market. Argo offers a full line of products and services designed to meet the unique coverage and claims-handling needs of businesses in two primary segments: U.S. Operations and International Operations. Argo Group and its insurance subsidiaries are rated ‛A-’ by Standard & Poor’s. Argo’s insurance subsidiaries are rated ‛A-’ by A.M. Best. More information on Argo and its subsidiaries is available at argogroup.com.

FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as "expect," "intend," "plan," "believe," “do not believe,” “aim,” "project," "anticipate," “seek,” "will," “likely,” “assume,” “estimate,” "may," “continue,” “guidance,” “objective,” “remain optimistic,” “outlook,” “trends,” “future,” “could,” “would,” “should,” “target,” “on track” and similar expressions of a future or forward-looking nature. Such statements are subject to certain risks and uncertainties that could cause actual events or results to differ materially. For a more detailed discussion of such risks and uncertainties, see Item 1A, “Risk Factors” in Argo’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as supplemented in Argo’s subsequent Quarterly Reports on Form 10-Q , and in other filings with the Securities and Exchange Commission (“SEC”). The inclusion of a forward-looking statement herein should not be regarded as a representation by Argo that Argo’s objectives will be achieved. Argo undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on any such statements.

###

Contacts

Investors:
Brett Shirreffs
Head of Investor Relations
212-607-8830
brett.shirreffs@argogroupus.com 

Media:
David Snowden
Senior Vice President, Group Communications
210-321-2104
david.snowden@argogroupus.com