Argo Group Posts $27.6 Million Q3 Net Income; Conference Call Today

The Bermuda-based Argo Group International Holdings, Ltd. announced financial results for the three and nine months ended Sept. 30, 2009.

The Group listed the following “Highlights” for the three months ended Sept. 30, 2009:
— Total revenue was $383.8 million, up 9.2 percent over last year’s third quarter;
— Net income was $27.6 million versus a net loss of $8.8 million for the same three months in 2008;
— Net operating income after tax was $25.4 million versus $12.2 million in the third quarter of 2008;
— Book value per share at Sept. 30, 2009, rose 7.4 percent to $51.04 from $47.51 at June 30, 2009, and has increased 15.5 percent year-to-date.

Highlights for the nine months ended Sept. 30, 2009 were listed as follows:
— Total revenue was $1.16 billion versus $908.7 million for the first nine months of 2008;
— Net income was $76.5 million, an increase of 49.7 percent over the first three quarters of 2008;
— Net operating income after tax was $100.3 million versus $68.9 million for the nine months ended Sept. 30, 2008.

Argo Group’s CEO Mark E. Watson III commented: “Despite the difficult, competitive environment in our underwriting businesses and the equally challenging investment landscape, I’m pleased we have continued to deliver solid value creation for our shareholders.

“This is evidenced by our growth in book value per share, which is up more than 15 percent since the beginning of the year and stands at a record $51.04 per share. This follows a year when our book value per share experienced a very modest decline, which was much less pronounced than others in our industry.

“During this period we have invested in Argo Group’s underlying business infrastructure and broadened the expertise of our senior management team. Our prudent underwriting and reserving policies have resulted in continued favorable development of business written in prior years. I believe Argo Group, therefore, is well positioned to manage through the current environment and poised to take advantage of opportunities as they become available.”

Argo’s bulletin noted that “both net income and net operating income were impacted during the period by a matter pertaining to our run-off unit that was subjected to binding arbitration, which resulted in a net charge after-tax of $3.8 million or $0.12 per share. By comparison, the third quarter of 2008 produced a net loss of $8.8 million or $0.29 per diluted share. The three months ended Sept. 30, 2008 produced net operating income of $12.2 million or $0.40 per diluted share.”

Argo also posted a combined ratio for Q3 2009 of 98.6 percent, compared to 106.2 percent for the same period in 2008. Argo said its Q3 combined ratios for each business segment were as follows: “Excess & Surplus Lines at 100.3 percent; Commercial Specialty at 95.1 percent; Reinsurance at 46.7 percent; and International Specialty at 100.7 percent.”

The Group’s combined ratio for the nine months ended Sept. 30, 2009, was 96.9 percent, compared to 101.1 percent for the same period in 2008. Argo Group’s combined ratios for the first nine months of 2009 in each business segment were given as follows: “Excess & Surplus Lines at 96.4 percent; Commercial Specialty at 95.7 percent; Reinsurance at 55.5 percent; and International Specialty at 97.8 percent.”

As of Sept. 30, 2009, the Group’s investment portfolio totaled $4.3 billion with a net pre-tax unrealized gain of approximately $180.3 million, an improvement of approximately $119 million since June 30, 2009.

Argo Group will conduct an investor conference call starting at 10 a.m. EST (11 a.m. AST) today, Tuesday, Nov. 3, 2009. A live webcast of the conference call can be accessed by visiting Argo Group’s investor relations Web site at: www.argolimited.com, and clicking on the following links: Investors – News & Events – Webcasts. Participants inside the U.S. and Canada can access the call by dialing (888) 680-0890 (pass code 25866782). Callers dialing from outside the U.S. and Canada can access the call by dialing (617) 213-4857 (pass code: 25866782).

Argo Group is offering call participants a pre-registration option that expedites access to the call and minimizes hold times. Those who would like to take advantage of pre-registration can do so by accessing the following website: www.theconferencingservice.com/prereg/key.process?key=PCPWCU6TC.

A webcast replay will be made available shortly after the conclusion of the conference. The complete earnings report and additional information is also available on the Group’s web site.

Source: Argo Group International Holdings, Ltd.