|
|
|
||
(State or other jurisdiction
of incorporation) |
(Commission
File Number) |
(I.R.S. Employer
Identification No.) |
|
P.O. Box HM 1282
Hamilton HM FX Bermuda |
(Address, Including Zip Code,
of Principal Executive Offices) |
(Mailing Address)
|
Title of each class |
Trading Symbol(s) |
Name of each exchange
on which registered
|
||
|
||||
No.
|
Exhibit
|
|
104
|
Cover Page Interactive Data File (embedded within the Inline XBRL document)
|
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 |
• |
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.
|
$ 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
|
• |
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.
|
$ 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.
|
$ 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.
|
• |
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.
|
|
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
|
|
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.
|
|
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.
|
|
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.
|
|
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
|
|
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
|
)
|
|
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.
|
|
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
|
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
|
|
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
|
|
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
|
|
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.
|
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
|
Exhibit 99.2 |