Argonaut Reports 54% Increase in Q3 2003 Premiums

San Antonio-based Argonaut Group Inc. announced financial results for the three- and nine-month periods ended Sept. 30, 2003.

According to the company, highlights for the third quarter of 2003 include:
· The Company’s continuing segments produced a combined ratio of 97.4 percent;
· Cash flow generated from operations during the quarter totaled $55.6 million, bringing the nine-month total to $129.8 million;
· Earned premiums for the quarter were $148.1 million, a 54 percent increase over the prior year.

Argonaut Group president and CEO Mark E. Watson III commented, “Each of our business segments delivered operating performance improvements, which contributed to solid financial results during the third quarter. We are pleased to report a sub-100 consolidated combined ratio for our continuing lines, an achievement that reflects our disciplined approach to underwriting profitability.”

During the third quarter of 2003, Argonaut reported net income after tax of $24.7 million, or $1.00 per diluted common share on 24.6 million shares, compared to net income of $4.7 million or $0.22 per diluted common share on 21.6 million shares, for the same three-month period in 2002. During the third quarter, Argonaut Group reported pre-tax operating income(a) of $5.0 million, which included a $10.2 million charge related to the Company’s run-off lines, compared to pre-tax operating income of $4.9 million for the same three-month period in 2002. Operating results include corporate and other expenses of $2.9 million and exclude pre-tax gains on sales of investments, which totaled $48.5 million during the third quarter.

Total revenue, which includes gains on sales of investments, was $209.9 million during the third quarter of 2003, compared to $110.4 million for the same period in 2002.

For the nine months ended Sept. 30, 2003, the Company reported net income after tax of $78.0 million or $3.30 per diluted common share on 23.6 million weighted average shares, compared to $18.3 million or $0.84 per diluted common share on 21.7 million weighted average shares for the first nine months of 2002.

For the first three quarters of 2003, total revenue was $569.4 million versus $320.1 million during the same nine-month period in 2002.

Segment Results:
Specialty Excess & Surplus Lines – For the third quarter of 2003, gross written premiums for E&S lines totaled $100.5 million, generating pre-tax income of $11.8 million and a GAAP combined ratio of 89.7 percent. This is compared to gross written premiums of $83.0 million, pre-tax income of $5.8 million and a GAAP combined ratio of 92.6 percent for the same period in 2002.

Risk Management – Gross written premiums were $54.6 million for the three months ended Sept. 30, 2003, resulting in pre-tax income of $2.8 million, compared to gross written premiums of $61.6 million and pre-tax income of $3.9 million for the same period in 2002. For the third quarter, the GAAP combined ratio in this segment was 112.8 percent versus 112.9 percent a year earlier.

Specialty Commercial Lines – During the third quarter, gross written premiums were $39.7 million resulting in pre-tax income of $2.4 million, compared to gross written premiums of $35.1 million and pre-tax income of $3.0 million during the same period in 2002. The GAAP combined ratio for the third quarter of 99.9 percent versus 98.0 percent a year earlier was impacted by approximately $1.9 million in catastrophic losses, primarily from food spoilage claims related to the power outage in the Northeast United States in August 2003.

Specialty Commercial’s combined ratio net of catastrophic losses was 93.8 percent in the third quarter of 2003 and 94.6 percent in the same period of 2002.

Topics Trends Profit Loss Excess Surplus Pricing Trends