Argo Group Q1 Net Income Falls to $27 Million; Operating Income Rises

The Bermuda-based Argo Group International Holdings announced that its net income for the first quarter of 2009 was “$27.0 million or $0.88 per diluted share, which includes $11.8 million of net pre-tax realized investment losses and other than temporary impairment write-downs in the investment portfolio, versus $36.9 million or $1.20 per diluted share for the first quarter of 2008.”

Other highlights for the period were detailed as follows:
— Pre-tax operating income in the 2009 first quarter was $43.2 million versus $40.0 million in the first quarter of 2008; after-tax operating income per share was $1.13 versus $1.14 for the 2009 and 2008 first quarters, respectively;
— Total revenue was $371.1 million, up 43.8 percent over the first quarter of 2008;
— Gross written premiums increased 43.1 percent to $496.1 million versus $346.6 million in the first quarter of last year;
— Net investment income was $39.3 million versus $38.1 million in the year-ago quarter;
— Book value per share at March 31, 2009, was $45.16 versus $44.18 at Dec. 31, 2008.

President and CEO Mark E. Watson III commented: “Our business segments produced solid underwriting results in the first quarter as we focused on profitable business in a challenging marketplace. The continued development of Argo Group’s business strategy of building an international specialty platform puts us in a good position to react to a changing environment.”

Argo’s bulletin also noted that the group’s “financial results for the three months ended March 31, 2009, include results produced by Argo Group’s Lloyd’s of London operation, Heritage Underwriting Agency plc (Heritage), which was acquired in 2008.”

In addition it said that the growth in total revenue “for the quarter is reflective of the establishment of Argo Re in the first quarter of 2008 and the substantial completion of the acquisition of Heritage in May of 2008. Earned premiums for the three months ended March 31, 2009, were $343.4 million compared to $218.7 million for the same three months in 2008. Net investment income for the quarters ended March 31, 2009 and 2008, was $39.3 million and $38.1 million, respectively.”

The Group’s combined ratio for the first quarter of 2009 was 96.3 percent versus 95.9 percent in the first quarter of 2008. “Argo Group’s 2009 first quarter combined ratios for each business segment were Excess & Surplus Lines at 95.1 percent; Commercial Specialty at 91.4 percent; Reinsurance at 57.4 percent; and International Specialty at 97.3 percent, “said the bulletin.

The full report and details on accessing today’s earnings conference call, which is scheduled for 8 a.m. EDT (9 a.m. ADT) may be obtained on the Group’s web site at: www.argolimited.com.

A live webcast of the conference call can be accessed by visiting Argo Group’s investor relations Web site and clicking on the following links: Investors – News & Events – Webcasts. Participants inside the U.S. and Canada can access the call by dialing (888) 713-4215 (pass code 88585036). Callers dialing from outside the U.S. and Canada can access the call by dialing (617) 213-4867 (pass code: 88585036).

Source: Argo Group International Holdings