Completed Strategic Alternatives Review;
Entered into a Definitive Merger Agreement to be Acquired by
Brookfield Reinsurance for Approximately $1.1 Billion
- Simplified Business Model: Completed sale of Argo
Underwriting Agency Limited and its Lloyd's Syndicate 1200 on
February 2, 2023, transforming Argo into a focused, pure-play U.S.
specialty insurer.
- Further Strengthened and De-Risked Balance Sheet:
Completed U.S. loss portfolio transfer. In the fourth quarter 2022,
recognized an after-tax charge of approximately $100.0 million in
connection with the transaction.
- Reduced Catastrophe Exposure: Total catastrophe losses
were $9.4 million in the fourth quarter 2022. Full year 2022 total
catastrophe losses of $44.0 million were more than 50% lower
compared to the prior year.
Argo Group International Holdings, Ltd. (NYSE: ARGO) ("Argo" or
the "company") today announced financial results for the three
months and year ended December 31, 2022.
($ in millions, except per share data)
Three Months Ended
December 31,
Q/Q
Year Ended
December 31,
Y/Y
2022
2021
Change
2022
2021
Change
Net income (loss) attributable to common
shareholders
$
(111.8
)
$
(117.8
)
5.1
%
$
(185.7
)
$
(3.8
)
NM
Per diluted common share
$
(3.19
)
$
(3.38
)
5.6
%
$
(5.31
)
$
(0.11
)
NM
Operating earnings
$
(94.5
)
$
(61.8
)
-52.9
%
$
(4.7
)
$
41.5
-111.3
%
Per diluted common share
$
(2.69
)
$
(1.77
)
-52.0
%
$
(0.13
)
$
1.19
-110.9
%
Annualized return on average common
shareholders' equity
(39.4
)%
(28.3
)%
-11.1 pts
(13.9
)%
(0.2
)%
-13.7 pts
Annualized operating return on average
common shareholders' equity
(33.3
)%
(14.8
)%
-18.5 pts
(0.4
)%
2.5
%
-2.9 pts
"2022 was a transformative year for the company," said Argo
Executive Chairman and Chief Executive Officer, Thomas A. Bradley.
"The strategic actions we have taken strengthened Argo and better
position it to deliver strong returns moving forward. The Argo of
today is markedly different from the Argo of only two years ago. We
have streamlined the company to focus on our most profitable
business lines, achieved targeted expense reductions, and continued
to de-risk the balance sheet. At the same time, we have remained
nimble in the marketplace - responding to the needs of customers
and business partners. We are excited about our next chapter as
part of Brookfield Reinsurance. We believe the merger transaction
that we announced on February 8, 2023, will enhance our
opportunities for growth, and scale Argo into a market-leading
specialty insurer with capabilities across admitted and E&S
markets. Lastly, I want to thank our leadership team and employees
for their dedication over the past year as we worked through the
strategic alternatives review process."
Consolidated Highlights
($ in millions)
Three Months Ended
December 31,
Q/Q
Year Ended
December 31,
Y/Y
2022
2021
Change
2022
2021
Change
Gross written premiums
$
644.5
$
733.8
-12.2
%
$
2,848.1
$
3,181.2
-10.5
%
Net written premiums
326.7
479.0
-31.8
%
1,741.5
1,977.3
-11.9
%
Earned premiums
$
350.5
$
486.2
-27.9
%
$
1,740.4
$
1,910.1
-8.9
%
Loss and loss adjustment expenses
308.5
423.7
-27.2
%
1,166.9
1,314.6
-11.2
%
Acquisition expenses
90.7
73.6
23.2
%
328.3
317.8
3.3
%
General and administrative expenses
85.1
97.9
-13.1
%
342.4
384.5
-10.9
%
Underwriting income (loss)
$
(133.8
)
$
(109.0
)
-22.8
%
$
(97.2
)
$
(106.8
)
9.0
%
Net investment income
$
28.9
$
44.4
-34.9
%
$
129.8
$
187.6
-30.8
%
Loss ratio
88.0
%
87.1
%
0.9 pts
67.0
%
68.8
%
-1.8 pts
Acquisition expense ratio
25.9
%
15.1
%
10.8 pts
18.9
%
16.6
%
2.3 pts
General and administrative expense
ratio
24.3
%
20.2
%
4.1 pts
19.7
%
20.2
%
-0.5 pts
Expense ratio
50.2
%
35.3
%
14.9 pts
38.6
%
36.8
%
1.8 pts
Combined ratio
138.2
%
122.4
%
15.8 pts
105.6
%
105.6
%
0.0 pts
CAY ex-CAT loss ratio
75.9
%
58.5
%
17.4 pts
60.8
%
56.8
%
4.0 pts
In connection with the close of the U.S. loss portfolio transfer
(LPT), fourth quarter 2022 net and operating results reflect an
after-tax charge of approximately $100.0 million, which includes
commission and federal excise tax. On a pre-tax basis, the cost of
the LPT includes $121.0 million of ceded premiums and $10.5 million
in acquisition expenses, which have been accounted for in the
company's U.S. segment results.
Consolidated - Excluding LPT Cost
Three Months Ended
December 31,
Q/Q
Year Ended
December 31,
Y/Y
2022
2021
Change
2022
2021
Change
Loss ratio
65.4
%
87.1
%
-21.7 pts
62.7
%
68.8
%
-6.1 pts
Acquisition expense ratio
17.0
%
15.1
%
1.9 pts
17.1
%
16.6
%
0.5 pts
General and administrative expense
ratio
18.1
%
20.2
%
-2.1 pts
18.4
%
20.2
%
-1.8 pts
Expense ratio
35.1
%
35.3
%
-0.2 pts
35.5
%
36.8
%
-1.3 pts
Combined ratio
100.5
%
122.4
%
-21.9 pts
98.2
%
105.6
%
-7.4 pts
CAY ex-CAT loss ratio
56.4
%
58.5
%
-2.1 pts
56.8
%
56.8
%
0 pts
Fourth Quarter 2022 Results - Consolidated (All
comparisons vs. fourth quarter 2021, unless noted otherwise)
Premiums
Gross written premiums of $644.5 million decreased $89.3
million, or 12.2%, primarily due to businesses the company has
exited.
- Gross written premiums within the company’s ongoing business1
were broadly in line with the prior year fourth quarter.
Earned premiums of $350.5 million, decreased $135.7 million, or
27.9%, primarily attributable to premiums ceded in connection with
the LPT. Excluding the ceded earned premiums associated with the
LPT, earned premiums decreased $14.7 million, or 3.0%
- Earned premiums increased approximately 11.5% within the
company’s ongoing business reflecting business mix shift towards
lines of business where the company retains more risk.
________________________________
1 Ongoing business excludes the following
businesses the company is exiting, plans to exit, or have sold,
including Ariel Re, which was sold in November 2020, Contract
Binding P&C which was sold in October 2021, U.S. Specialty
Property which the company exited in December 2021, Argo Seguros
Brasil which was sold in February 2022, ArgoGlobal Holdings (Malta)
which was sold in June 2022, Syndicate 1200 which was sold in
February 2023, Italy, and the U.S. grocery and retail business, and
certain program business.
Underwriting
The combined ratio of 138.2% increased 15.8 percentage points,
primarily due to lower net earned premiums driven by the cost of
the LPT.
The loss ratio of 88.0% increased 0.9 percentage points,
compared to 87.1% for the prior year fourth quarter.
- The current accident year, excluding catastrophes ("CAY
ex-CAT") loss ratio of 75.9% increased 17.4 percentage points.
Excluding the cost of the LPT, the CAY ex-CAT loss ratio for the
fourth quarter 2022 was 56.4%, an improvement of 2.1 percentage
points.
- Total catastrophe losses were $9.4 million or 2.7 percentage
points on the loss ratio. In comparison, catastrophe losses in the
prior year fourth quarter were $6.8 million or 1.4 percentage
points on the loss ratio.
- Net adverse prior year reserve development was $33.1 million,
or 9.4 percentage points on the loss ratio. In comparison, net
adverse prior year reserve development in the fourth quarter 2021
was $132.3 million, or 27.2 percentage points on the loss
ratio.
The CAY ex-CAT combined ratio was 126.1%, an increase of 32.3
percentage points compared to the prior year fourth quarter.
Excluding the cost of the LPT, the CAY ex CAT combined ratio was
91.5%, an improvement of 2.3 percentage points from a year ago.
Expenses
The expense ratio of 50.2% increased 14.9 percentage points due
to the cost of the LPT. Excluding the cost of the LPT, the expense
ratio for the fourth quarter 2022 was 35.1%, an improvement of 0.2
percentage points year-over-year driven by lower general and
administrative expenses.
Investment Income
Net investment income of $28.9 million decreased by $15.5
million. While investment income excluding alternatives, increased
$8.4 million due to higher reinvestment rates, the reduction in
investment income was attributable to a $23.9 million decrease in
alternative investment income compared to the fourth quarter 2021.
The company continues to hold a high quality, relatively short
duration portfolio with an average credit quality of A+ and an
average duration of 2.9 years, when including cash.
Earnings
Net loss attributable to common shareholders was $111.8 million,
or $3.19 per diluted share, for the fourth quarter 2022, compared
to a net loss attributable to common shareholders of $117.8
million, or $3.38 per diluted share for the fourth quarter 2021.
Annualized return on average common shareholders' equity was
(39.4%), compared to (28.3%) in the prior year fourth quarter.
- The net loss attributable to common shareholders in the fourth
quarter 2022 included pre-tax net realized investment and other
gains of $4.3 million, compared to $0.2 million of pre-tax net
realized investment and other gains in the prior year fourth
quarter.
- The net loss attributable to common shareholders in the fourth
quarter 2022 also included $11.5 million in foreign currency
exchange losses, compared to $2.8 million in foreign currency
exchange gains in the fourth quarter of 2021.
- In addition, the net loss attributable to common shareholders
in the fourth quarter 2022 included $17.6 million of non-operating
expenses, which were mainly attributable to non-operating advisory
fees. In comparison, the prior year fourth quarter reported $22.8
million in non-operating expenses.
Operating loss for the quarter was $94.5 million or $2.69 per
diluted share, compared to an operating loss of $61.8 million or
$1.77 per diluted share in the prior year fourth quarter.
Annualized operating return on average common shareholders' equity
was (33.3%), a decrease of 18.5 percentage points
year-over-year.
Shareholders' Equity
Book value per common share was $31.06 as of December 31, 2022,
a decrease of 7.9% from $33.72 on September 30, 2022. The decrease
in book value per common share is largely attributable to a
decrease in retained earnings for the quarter, partially offset by
an improvement in accumulated other comprehensive income
("AOCI").
Completed Strategic Alternatives Review
On February 8, 2023, the company announced that it had entered
into a definitive merger agreement to be acquired by Brookfield
Reinsurance for approximately $1.1 billion, subject to conditions
for closing, including but not limited to shareholder and
regulatory approvals.
U.S. Operations Highlights
($ in millions)
Three Months Ended
December 31,
Q/Q
Year Ended
December 31,
Y/Y
2022
2021
Change
2022
2021
Change
Gross written premiums
$
463.9
$
504.5
-8.0
%
$
1,940.6
$
2,069.4
-6.2
%
Net written premiums
197.4
319.6
-38.2
%
1,196.2
1,304.8
-8.3
%
Earned premiums
$
210.5
$
331.3
-36.5
%
$
1,209.0
$
1,283.7
-5.8
%
Loss and loss adjustment expenses
244.4
325.1
-24.8
%
870.1
908.2
-4.2
%
Acquisition expenses
64.9
48.1
34.9
%
229.6
197.7
16.1
%
General and administrative expenses
55.1
53.0
4.0
%
203.2
221.6
-8.3
%
Underwriting income (loss)
$
(153.9
)
$
(94.9
)
NM
$
(93.9
)
$
(43.8
)
NM
Loss ratio
116.1
%
98.1
%
18.0 pts
72.0
%
70.7
%
1.3 pts
Acquisition expense ratio
30.8
%
14.5
%
16.3 pts
19.0
%
15.4
%
3.6 pts
General and administrative expense
ratio
26.2
%
16.0
%
10.2 pts
16.8
%
17.3
%
-0.5 pts
Expense ratio
57.0
%
30.5
%
26.5 pts
35.8
%
32.7
%
3.1 pts
Combined ratio
173.1
%
128.6
%
44.5 pts
107.8
%
103.4
%
4.4 pts
CAY ex-CAT loss ratio
96.8
%
60.4
%
36.4 pts
65.6
%
58.5
%
7.1 pts
U.S. Operations - Excluding LPT Cost
($ in millions)
Three Months Ended
December 31,
Q/Q
Year Ended
December 31,
Y/Y
2022
2021
Change
2022
2021
Change
Loss ratio
73.7
%
98.1
%
-24.4 pts
65.4
%
70.7
%
-5.3 pts
Acquisition expense ratio
16.4
%
14.5
%
1.9 pts
16.5
%
15.4
%
1.1 pts
General and administrative expense
ratio
16.7
%
16.0
%
0.7 pts
15.3
%
17.3
%
-2.0 pts
Expense ratio
33.1
%
30.5
%
2.6 pts
31.8
%
32.7
%
-0.9 pts
Combined ratio
106.8
%
128.6
%
-21.8 pts
97.2
%
103.4
%
-6.2 pts
CAY ex-CAT loss ratio
61.5
%
60.4
%
1.1 pts
59.6
%
58.5
%
1.1 pts
Fourth Quarter 2022 Results - U.S. Operations (All
comparisons vs. fourth quarter 2021, unless noted otherwise)
Premiums
U.S. Operations gross written premiums of $463.9 million
decreased $40.6 million, or 8.0%, primarily due to businesses the
company has exited.
- Rates on average were up in the low-single digits for the
fourth quarter 2022.
- Gross written premiums within the U.S. ongoing business2 were
in line with the prior year fourth quarter.
Earned premiums of $210.5 million decreased $120.8 million, or
36.5%, primarily attributable to the premiums ceded in connection
with the LPT. Excluding the ceded earned premiums associated with
the LPT, earned premiums were in line with the prior year fourth
quarter.
- Earned premiums increased approximately 12.2% within the
company’s ongoing business reflecting business mix shift towards
lines of business where the company retains more risk.
________________________________
2 U.S. ongoing business excludes the
following businesses the company has sold, including sales of
Contract Binding P&C in October 2021 and U.S. Specialty
Property in December 2021, and the exits of our grocery and retail
business and certain program business.
Underwriting
The loss ratio of 116.1% increased 18.0 percentage points.
Excluding the cost of the LPT, the loss ratio for the fourth
quarter was 73.7%, an improvement of 24.4 percentage points from
the prior year fourth quarter.
- The CAY ex-CAT loss ratio of 96.8% increased 36.4 percentage
points. Excluding the cost of the LPT, the CAY ex-CAT loss ratio
was for the fourth 2022 was 61.5%, an increase of 1.1 percentage
points from the fourth quarter 2021, reflecting the company's
response to anticipated inflationary loss cost trends.
- Catastrophe losses were $4.0 million, or 1.9 percentage points
on the loss ratio, compared to $3.2 million or 1.0 percentage
points on the loss ratio in the prior year fourth quarter.
Catastrophe losses in the fourth quarter 2022 were due to winter
storm Elliot.
- Net adverse prior year reserve development was $36.6 million or
17.4 percentage points on the loss ratio. In comparison, net
adverse development in the prior year fourth quarter was $121.6
million, or 36.7 percentage point on the loss ratio. The adverse
development in the fourth quarter 2022 was primarily attributable
to liability lines for accident years 2019 and prior in businesses
the company has exited.
Expenses
The expense ratio of 57.0% increased 26.5 percentage points was
primarily driven by the cost of the LPT. Excluding the cost of the
LPT, the expense ratio for the fourth quarter 2022 was 33.1%, an
increase of 2.6 percentage points year-over-year driven primarily
by higher acquisition expenses resulting from reductions in
proportional reinsurance and changes in business mix.
U.S. LPT Transaction
On November 9, 2022, the U.S. LPT transaction with a
wholly-owned subsidiary of Enstar, covering a majority of the
company’s U.S. casualty insurance reserves, including construction,
for accident years 2011 to 2019 was completed.
- Enstar's subsidiary is providing ground up cover of $746.0
million of reserves, and an additional $275.0 million of cover in
excess of $821.0 million, up to a policy limit of $1,096.0 million.
The company retained a loss corridor of $75.0 million up to $821.0
million.
- For the year ended December 31, 2022, the company exhausted the
$75.0 million loss corridor.
International Operations Highlights
($ in millions)
Three Months Ended
December 31,
Q/Q
Year Ended
December 31,
Y/Y
2022
2021
Change
2022
2021
Change
Gross written premiums
$
180.4
$
229.1
-21.3
%
$
906.7
$
1,111.0
-18.4
%
Net written premiums
129.2
159.2
-18.8
%
544.5
671.7
-18.9
%
Earned premiums
$
139.8
$
154.7
-9.6
%
$
530.5
$
625.8
-15.2
%
Loss and loss adjustment expenses
64.1
60.9
5.3
%
293.9
362.1
-18.8
%
Acquisition expenses
25.7
25.1
2.4
%
97.6
119.6
-18.4
%
General and administrative expenses
24.3
32.4
-25.0
%
107.7
126.7
-15.0
%
Underwriting income
$
25.7
$
36.3
-29.2
%
$
31.3
$
17.4
79.9
%
Loss ratio
45.9
%
39.4
%
6.5 pts
55.4
%
57.9
%
-2.5 pts
Acquisition expense ratio
18.4
%
16.2
%
2.2 pts
18.4
%
19.1
%
-0.7 pts
General and administrative expense
ratio
17.3
%
20.9
%
-3.6 pts
20.3
%
20.2
%
0.1 pts
Expense Ratio
35.7
%
37.1
%
-1.4 pts
38.7
%
39.3
%
-0.6 pts
Combined ratio
81.6
%
76.5
%
5.1 pts
94.1
%
97.2
%
-3.1 pts
CAY ex-CAT loss ratio
44.5
%
54.5
%
-10.0 pts
50.1
%
53.1
%
-3.0 pts
Fourth Quarter 2022 Results - International Operations
(All comparisons vs. fourth quarter 2021, unless noted
otherwise)
Premiums
Gross written premiums of $180.4 million decreased $48.7
million, or 21.3% primarily due to the businesses the company has
exited.
- Rates on average were up in the high-single digits for the
fourth quarter 2022.
Earned premiums of $139.8 million decreased $14.9 million, or
9.6%.
Underwriting
The loss ratio of 45.9% increased 6.5 percentage points,
compared to 39.4% in the prior year fourth quarter.
- The CAY ex-CAT loss ratio was 44.5%, an improvement of 10.0
percentage points.
- Catastrophe losses were $5.4 million, or 3.9 percentage points
on the loss ratio, compared to $3.6 million, or 2.4 percentage
points on the loss ratio in the prior year fourth quarter.
- Net favorable prior year reserve development was $3.5 million,
which lowered the loss ratio by 2.5 percentage points. In
comparison, the prior year fourth quarter had $27.0 million of net
favorable development, which lowered the loss ratio 17.5 percentage
points.
Expenses
The expense ratio of 35.7% improved 1.4 percentage points,
driven by a $8.1 million reduction in general and administrative
expenses.
Sale of Argo's Lloyd's Operation
On February 2, 2023, the company completed the previously
announced sale of Argo Underwriting Agency Limited and its Lloyd's
Syndicate to Westfield.
ABOUT ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
Argo Group International Holdings, Ltd. (NYSE: ARGO) is an
underwriter of specialty insurance 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. 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 and related oral statements may include
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,” “growth,”
“objective,” “remain optimistic,” “improve,” “progress,” "path
toward," "looking forward," “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 not occur or differ
materially, including, but not limited to, recent changes in
interest rates and inflation, the outcome of our exploration of
strategic alternatives and our ability to realize the anticipated
benefits of any actions taken in connection therewith, including
that the company and Brookfield Reinsurance may be unable to
complete their proposed transaction, the adequacy of our projected
loss reserves, employee retention and changes in key personnel, the
ability of our insurance subsidiaries to meet risk-based capital
and solvency requirements, the outcome of legal and regulatory
proceedings, investigations, inquiries, claims and litigation, and
other risks and uncertainties discussed in our filings with the
Securities and Exchange Commission (the "SEC"). For a more detailed
discussion of such risks and uncertainties, see Item 1A, “Risk
Factors” in Argo’s Annual Report on Form 10-K and Form 10-K/A for
the fiscal year ended December 31, 2021 and in other filings with
the SEC. The inclusion of a forward-looking statement herein should
not be regarded as a representation by Argo that its objectives
will be achieved. Any forward-looking statements speak only as of
the date of this press release. 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 financial 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").
“CAY ex-CAT combined ratio” and the “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
and the impact of changes to prior year loss reserves. 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.
“Operating income (loss)" is an internal performance measure
used in the management of the company's operations and represents
operating results after-tax (at an assumed effective tax rate of
19%) and preferred share dividends excluding, as applicable, net
realized investment and other gains or losses, net foreign exchange
gain or loss, non- operating expenses, and other similar
non-recurring items. The company excludes net realized investment
and other gains or losses, net foreign exchange gain or loss,
non-operating expenses, 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.
"Annualized operating return on average common shareholders'
equity" is calculated using operating income (loss) (as defined
above and annualized in the manner described for net income (loss)
attributable to common shareholders ("ROACE")) and average common
shareholders' equity. In calculating ROACE, the net income
attributable 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. In addition to
presenting ROACE determined in accordance with U.S. GAAP, the
company believes that showing annualized operating return on
average common shareholders' equity 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 (loss) per common share (diluted)" is
calculated using operating income (as defined above) and the
weighted average common shares (diluted) for the current period. In
addition to presenting net income (loss) per common share (diluted)
in accordance with U.S. GAAP, the company believes that showing the
operating income (loss) per common share (diluted) 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.
“Underwriting income (loss)” 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). Underwriting
income is a financial measure that is commonly recognized as a
standard of performance by investors, analysts, rating agencies and
other users of its financial information. 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.
"Book value per common share excluding AOCI" is total common
shareholders’ equity excluding AOCI, net of tax, included in
shareholders’ equity, divided by the number of common shares
outstanding. In the opinion of the company’s management, book value
per common share excluding AOCI is useful in an analysis of a
property casualty company’s book value per share as it removes the
effect of changing prices on invested assets (i.e., net unrealized
investment gains (losses), net of tax), which do not have an
equivalent impact on unpaid claims and claim adjustment expense
reserves.
"Tangible book value per common share" is book value per share
excluding the after-tax value of goodwill and other intangible
assets divided by the number of common shares outstanding. In the
opinion of the company’s management, tangible book value per common
share is useful in an analysis of a property casualty company’s
book value on a nominal basis as it removes certain effects of
purchase accounting (i.e., goodwill and other intangible
assets).
"Tangible book value per common share excluding AOCI" is book
value per share excluding the after-tax value of goodwill and other
intangible assets and AOCI, net of tax. In the opinion of the
company's management, tangible book value per common share
excluding AOCI is useful in an analysis of a property casualty
company's book value per share as it removes certain aspects of
purchase accounting (i.e., goodwill and other intangible assets)
and the effect of changing prices on invested assets (i.e., net
unrealized investment gains (losses), net of tax).
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
following tables and footnotes.
(financial tables follow)
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
CONSOLIDATED BALANCE
SHEETS
(in millions, except per share
amounts)
December 31,
December 31,
2022
2021
(unaudited)
Assets
Total investments
$
3,651.9
$
5,322.6
Cash
50.2
146.1
Accrued investment income
18.6
20.9
Receivables
3,321.1
3,615.0
Goodwill and intangible assets
118.6
164.6
Deferred acquisition costs, net
107.0
168.0
Ceded unearned premiums
375.5
506.7
Other assets
325.3
373.9
Assets held-for-sale
2,066.2
$
—
Total assets
$
10,034.4
$
10,317.8
Liabilities and Shareholders'
Equity
Reserves for losses and loss adjustment
expenses
$
5,051.6
$
5,595.0
Unearned premiums
1,039.9
1,466.8
Ceded reinsurance payable, net
158.7
724.4
Senior unsecured fixed rate notes
140.5
140.3
Other indebtedness
—
57.0
Junior subordinated debentures
258.6
258.2
Other liabilities
237.7
340.9
Liabilities held-for-sale
1,914.5
—
Total liabilities
8,801.5
8,582.6
Preferred shares
144.0
144.0
Common shares
46.4
46.2
Additional paid-in capital
1,395.4
1,386.4
Treasury shares
(455.1
)
(455.1
)
Retained earnings
407.3
636.4
Accumulated other comprehensive income,
net of taxes
(305.1
)
(22.7
)
Total shareholders' equity
1,232.9
1,735.2
Total liabilities and
shareholders' equity
$
10,034.4
$
10,317.8
Book value per common share
$
31.06
$
45.62
Tangible book value per common share
$
27.67
$
40.90
Book value per common share excluding
AOCI, net of tax
$
39.76
$
46.27
Tangible book value per common share
excluding AOCI, net of tax
$
36.38
$
41.55
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
CONSOLIDATED FINANCIAL
HIGHLIGHTS
(in millions, except per share
amounts)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Gross written premiums
$
644.5
$
733.8
$
2,848.1
$
3,181.2
Net written premiums
326.7
479.0
1,741.5
1,977.3
Earned premiums
350.5
486.2
1,740.4
1,910.1
Net investment income
28.9
44.4
129.8
187.6
Net investment and other gains
(losses):
Net realized investment and other gains
(losses)
3.3
69.3
(115.9
)
72.4
Change in fair value recognized
0.6
(71.2
)
3.1
(40.4
)
Change in allowance for credit losses on
fixed maturity securities
0.4
2.1
(2.5
)
0.6
Net realized investment and other gains
(losses)
4.3
0.2
(115.3
)
32.6
Total revenue
383.7
530.8
1,754.9
2,130.3
Losses and loss adjustment expenses
308.5
423.7
1,166.9
1,314.6
Acquisition expenses
90.7
73.6
328.3
317.8
General and administrative expenses
85.1
97.9
342.4
384.5
Non-operating expenses
17.6
22.8
51.5
43.7
Interest expense
8.1
5.3
26.8
21.6
Fee and other (income) expense, net
0.5
(0.2
)
(1.3
)
(2.0
)
Foreign currency exchange (gains)
losses
11.5
(2.8
)
(5.0
)
1.6
Impairment of goodwill
—
43.2
28.5
43.2
Total expenses
522.0
663.5
1,938.1
2,125.0
Income (loss) before income taxes
(138.3
)
(132.7
)
(183.2
)
5.3
Income tax provision (benefit)
(29.1
)
(17.5
)
(8.0
)
(1.4
)
Net income (loss)
$
(109.2
)
$
(115.2
)
$
(175.2
)
$
6.7
Dividends on preferred shares
2.6
2.6
10.5
10.5
Net income (loss) attributable to common
shareholders
$
(111.8
)
$
(117.8
)
$
(185.7
)
$
(3.8
)
Net income (loss) per common share
(basic)
$
(3.19
)
$
(3.38
)
$
(5.31
)
$
(0.11
)
Net income (loss) per common share
(diluted)
$
(3.19
)
$
(3.38
)
$
(5.31
)
$
(0.11
)
Weighted average common shares:
Basic
35.1
34.9
35.0
34.8
Diluted
35.1
34.9
35.0
34.8
Loss ratio
88.0
%
87.1
%
67.0
%
68.8
%
Acquisition expense ratio
25.9
%
15.1
%
18.9
%
16.6
%
General and administrative expense
ratio
24.3
%
20.2
%
19.7
%
20.2
%
Expense ratio
50.2
%
35.3
%
38.6
%
36.8
%
GAAP combined ratio
138.2
%
122.4
%
105.6
%
105.6
%
CAY ex-CAT combined ratio
126.1
%
93.8
%
99.4
%
93.6
%
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
SEGMENT DATA
(in millions)
(unaudited)
Three Months Ended
Year ended
December 31,
December 31,
2022
2021
2022
2021
U.S. Operations
Gross written premiums
$
463.9
$
504.5
$
1,940.6
$
2,069.4
Net written premiums
197.4
319.6
1,196.2
1,304.8
Earned premiums
210.5
331.3
1,209.0
1,283.7
Underwriting income
(153.9
)
(94.9
)
(93.9
)
(43.8
)
Net investment income
19.7
27.7
88.4
119.4
Interest expense
(4.7
)
(3.5
)
(17.5
)
(14.1
)
Fee (expense), net
0.1
0.2
0.1
(0.4
)
Operating (loss) income before taxes
$
(138.8
)
$
(70.5
)
$
(22.9
)
$
61.1
Loss ratio
116.1
%
98.1
%
72.0
%
70.7
%
Acquisition expense ratio
30.8
%
14.5
%
19.0
%
15.4
%
General and administrative expense
ratio
26.2
%
16.0
%
16.8
%
17.3
%
Expense Ratio
57.0
%
30.5
%
35.8
%
32.7
%
GAAP combined ratio
173.1
%
128.6
%
107.8
%
103.4
%
CAY ex-CAT combined ratio
153.8
%
90.9
%
101.4
%
91.2
%
International
Operations
Gross written premiums
$
180.4
$
229.1
$
906.7
$
1,111.0
Net written premiums
129.2
159.2
544.5
671.7
Earned premiums
139.8
154.7
530.5
625.8
Underwriting income (loss)
25.7
36.3
31.3
17.4
Net investment income
8.7
12.4
39.1
50.6
Interest expense
(2.1
)
(1.4
)
(7.8
)
(5.6
)
Fee income, net
(0.6
)
0.2
1.2
1.7
Operating income before taxes
$
31.7
$
47.5
$
63.8
$
64.1
Loss ratio
45.9
%
39.4
%
55.4
%
57.9
%
Acquisition expense ratio
18.4
%
16.2
%
18.4
%
19.1
%
General and administrative expense
ratio
17.3
%
20.9
%
20.3
%
20.2
%
Expense Ratio
35.7
%
37.1
%
38.7
%
39.3
%
GAAP combined ratio
81.6
%
76.5
%
94.1
%
97.2
%
CAY ex-CAT combined ratio
80.2
%
91.6
%
88.8
%
92.4
%
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
RECONCILIATION OF LOSS
RATIOS
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
U.S. Operations
Loss ratio
116.1
%
98.1
%
72.0
%
70.7
%
Prior accident year loss reserve
development
(17.4
)%
(36.7
)%
(5.3
)%
(9.4
)%
Catastrophe losses
(1.9
)%
(1.0
)%
(1.1
)%
(2.8
)%
CAY ex-CAT loss ratio
96.8
%
60.4
%
65.6
%
58.5
%
International
Operations
Loss ratio
45.9
%
39.4
%
55.4
%
57.9
%
Prior accident year loss reserve
development
2.5
%
17.5
%
0.5
%
4.3
%
Catastrophe losses
(3.9
)%
(2.4
)%
(5.8
)%
(9.1
)%
CAY ex-CAT loss ratio
44.5
%
54.5
%
50.1
%
53.1
%
Consolidated
Loss ratio
88.0
%
87.1
%
67.0
%
68.8
%
Prior accident year loss reserve
development
(9.4
)%
(27.2
)%
(3.7
)%
(7.2
)%
Catastrophe losses
(2.7
)%
(1.4
)%
(2.5
)%
(4.8
)%
CAY ex-CAT loss ratio
75.9
%
58.5
%
60.8
%
56.8
%
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
NET PRIOR-YEAR RESERVE
DEVELOPMENT & CATASTROPHE LOSSES BY SEGMENT
(in millions)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Net Prior-Year Reserve
Development
(Favorable)/Unfavorable
U.S. Operations
$
36.6
$
121.6
$
64.5
$
120.9
International Operations
(3.5
)
(27.0
)
(2.7
)
(26.9
)
Run-off Lines
—
37.7
2.9
44.3
Total net prior-year reserve
development
$
33.1
$
132.3
$
64.7
$
138.3
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Catastrophe & COVID-19
Losses
Catastrophe
losses
U.S. Operations
$
4.0
$
3.2
$
13.2
$
36.1
International Operations
5.4
3.2
30.8
44.2
Total catastrophe losses
9.4
6.4
44.0
80.3
COVID-19
losses
U.S. Operations
—
—
—
—
International Operations
—
0.4
—
12.4
Total COVID-19 losses
—
0.4
—
12.4
Catastrophe &
COVID-19 losses
U.S. Operations
4.0
3.2
13.2
36.1
International Operations
5.4
3.6
30.8
56.6
Total catastrophe & COVID-19
losses
$
9.4
$
6.8
$
44.0
$
92.7
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
RECONCILIATION OF LOSS AND
EXPENSE RATIOS
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
U.S. Operations
Loss ratio
116.1
%
98.1
%
72.0
%
70.7
%
Prior accident year loss reserve
development
(17.4
)%
(36.7
)%
(5.3
)%
(9.4
)%
Catastrophe losses
(1.9
)%
(1.0
)%
(1.1
)%
(2.8
)%
CAY ex-CAT loss ratio
96.8
%
60.4
%
65.6
%
58.5
%
Impact of U.S. LPT Cost
(35.3
)%
—
%
(6.0
)%
—
%
CAY ex-CAT loss ratio (Adjusted)
61.5
%
60.4
%
59.6
%
58.5
%
International
Operations
Loss ratio
45.9
%
39.4
%
55.4
%
57.9
%
Prior accident year loss reserve
development
2.5
%
17.5
%
0.5
%
4.3
%
Catastrophe losses
(3.9
)%
(2.4
)%
(5.8
)%
(9.1
)%
CAY ex-CAT loss ratio
44.5
%
54.5
%
50.1
%
53.1
%
Impact of U.S. LPT Cost
—
%
—
%
—
%
—
%
CAY ex-CAT loss ratio (Adjusted)
44.5
%
54.5
%
50.1
%
53.1
%
Consolidated
Loss ratio
88.0
%
87.1
%
67.0
%
68.8
%
Prior accident year loss reserve
development
(9.4
)%
(27.2
)%
(3.7
)%
(7.2
)%
Catastrophe losses
(2.7
)%
(1.4
)%
(2.5
)%
(4.8
)%
CAY ex-CAT loss ratio
75.9
%
58.5
%
60.8
%
56.8
%
Impact of U.S. LPT Cost
(19.5
)%
—
%
(4.0
)%
—
%
CAY ex-CAT loss ratio (Adjusted)
56.4
%
58.5
%
56.8
%
56.8
%
U.S. Operations
Expense Ratio
57.0
%
30.5
%
35.8
%
32.7
%
Impact of U.S. LPT Cost
(23.9
)%
—
%
(4.0
)%
—
%
Expense ratio (Adjusted)
33.1
%
30.5
%
31.8
%
32.7
%
International
Operations
Expense Ratio
35.7
%
37.1
%
38.7
%
39.3
%
Impact of U.S. LPT Cost
—
%
—
%
—
%
—
%
Expense ratio (Adjusted)
35.7
%
37.1
%
38.7
%
39.3
%
Consolidated
Expense Ratio
50.2
%
35.3
%
38.6
%
36.8
%
Impact of U.S. LPT Cost
(15.1
)%
—
%
(3.1
)%
—
%
Expense ratio (Adjusted)
35.1
%
35.3
%
35.5
%
36.8
%
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
RECONCILIATION OF UNDERWRITING
INCOME (LOSS) TO NET INCOME (LOSS)
CONSOLIDATED
(in millions)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Net income (loss)
$
(109.2
)
$
(115.2
)
$
(175.2
)
$
6.7
Add (deduct):
Income tax provision (benefit)
(29.1
)
(17.5
)
(8.0
)
(1.4
)
Net investment income
(28.9
)
(44.4
)
(129.8
)
(187.6
)
Net realized investment and other (gains)
losses
(4.3
)
(0.2
)
115.3
(32.6
)
Interest expense
8.1
5.3
26.8
21.6
Fee and other (income) expense, net
0.5
(0.2
)
(1.3
)
(2.0
)
Foreign currency exchange (gains)
losses
11.5
(2.8
)
(5.0
)
1.6
Non-operating expenses
17.6
22.8
51.5
43.7
Impairment of goodwill
—
43.2
28.5
43.2
Underwriting income (loss)
$
(133.8
)
$
(109.0
)
$
(97.2
)
$
(106.8
)
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
RECONCILIATION OF OPERATING
INCOME (LOSS) TO NET INCOME (LOSS)
CONSOLIDATED
(in millions, except per share
amounts)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Net income (loss), as reported
$
(109.2
)
$
(115.2
)
$
(175.2
)
$
6.7
Income tax provision (benefit)
(29.1
)
(17.5
)
(8.0
)
(1.4
)
Net income (loss), before taxes
(138.3
)
(132.7
)
(183.2
)
5.3
Add (deduct):
Net realized investment and other (gains)
losses
(4.3
)
(0.2
)
115.3
(32.6
)
Foreign currency exchange (gains)
losses
11.5
(2.8
)
(5.0
)
1.6
Non-operating expenses
17.6
22.8
51.5
43.7
Impairment of goodwill
—
43.2
28.5
43.2
Operating income (loss) before taxes and
preferred share dividends
(113.5
)
(69.7
)
7.1
61.2
Income tax provision (benefit), at assumed
rate (1)
(21.6
)
(10.5
)
1.3
9.2
Preferred share dividends
2.6
2.6
10.5
10.5
Operating (loss) income
$
(94.5
)
$
(61.8
)
$
(4.7
)
$
41.5
Operating income per common share
(diluted)
$
(2.69
)
$
(1.77
)
$
(0.13
)
$
1.19
Weighted average common shares,
diluted
35.1
34.9
35.0
34.8
(1)
For the purpose of calculating
Operating Income, an assumed tax rate of 19% is used for 2022 which
represents our expected weighted average statutory tax rate. This
compares with an assumed tax rate of 15% used in the calculation of
Operating Income after tax in the fourth quarter 2021.
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
RECONCILIATION OF PRE-TAX
OPERATING INCOME (LOSS) BY SEGMENT TO NET INCOME (LOSS)
(in millions)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Operating income (loss) before income
taxes:
U.S. Operations
$
(138.8
)
$
(70.5
)
$
(22.9
)
$
61.1
International Operations
31.7
47.5
63.8
64.1
Run-off Lines
0.1
(37.0
)
(1.8
)
(41.5
)
Corporate and Other
(6.5
)
(9.7
)
(32.0
)
(22.5
)
Total operating income before income
taxes
(113.5
)
(69.7
)
7.1
61.2
Net realized investment and other gains
(losses)
4.3
0.2
(115.3
)
32.6
Foreign currency exchange (losses)
gains
(11.5
)
2.8
5.0
(1.6
)
Non-operating expenses
(17.6
)
(22.8
)
(51.5
)
(43.7
)
Impairment of goodwill
—
(43.2
)
(28.5
)
(43.2
)
Income (loss) before income taxes
(138.3
)
(132.7
)
(183.2
)
5.3
Income tax provision (benefit)
(29.1
)
(17.5
)
(8.0
)
(1.4
)
Net income (loss)
$
(109.2
)
$
(115.2
)
$
(175.2
)
$
6.7
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
PREMIUMS BY SEGMENT AND LINE
OF BUSINESS
(in millions)
(unaudited)
U.S. Operations
Three months ended December
31, 2022
Three months ended December
31, 2021
Gross
Written
Net
Written
Net
Earned
Gross
Written
Net
Written
Net
Earned
Property
$
54.8
$
34.4
$
35.7
$
49.8
$
30.9
$
33.4
Liability
240.5
38.1
56.6
255.8
154.4
171.6
Professional
101.8
72.1
70.7
142.1
93.5
87.4
Specialty
66.8
52.8
47.5
56.8
40.8
38.9
Total
$
463.9
$
197.4
$
210.5
$
504.5
$
319.6
$
331.3
Year ended December 31,
2022
Year ended December 31,
2021
Gross
Written
Net
Written
Net
Earned
Gross
Written
Net
Written
Net
Earned
Property
$
214.3
$
144.4
$
148.8
$
253.0
$
139.5
$
149.9
Liability
1,073.7
575.7
576.7
1,093.6
669.1
672.8
Professional
410.5
290.3
310.0
504.1
336.2
315.1
Specialty
242.1
185.8
173.5
218.7
160.0
145.9
Total
$
1,940.6
$
1,196.2
$
1,209.0
$
2,069.4
$
1,304.8
$
1,283.7
International Operations
Three months ended December
31, 2022
Three months ended December
31, 2021
Gross
Written
Net
Written
Net
Earned
Gross
Written
Net
Written
Net
Earned
Property
$
21.6
$
17.3
$
22.8
$
47.3
$
27.0
$
28.2
Liability
56.6
35.1
29.6
64.8
39.5
31.5
Professional
51.3
41.2
36.2
57.3
40.7
35.0
Specialty
50.9
35.6
51.2
59.7
52.0
60.0
Total
$
180.4
$
129.2
$
139.8
$
229.1
$
159.2
$
154.7
Year ended December 31,
2022
Year ended December 31,
2021
Gross
Written
Net
Written
Net
Earned
Gross
Written
Net
Written
Net
Earned
Property
$
190.7
$
62.3
$
82.8
$
295.1
$
120.5
$
132.4
Liability
227.5
137.1
124.7
256.8
147.3
130.7
Professional
208.5
145.1
133.9
226.0
160.7
148.3
Specialty
280.0
200.0
189.1
333.1
243.2
214.4
Total
$
906.7
$
544.5
$
530.5
$
1,111.0
$
671.7
$
625.8
Consolidated
Three months ended December
31, 2022
Three months ended December
31, 2021
Gross
Written
Net
Written
Net
Earned
Gross
Written
Net
Written
Net
Earned
Property
$
76.4
$
51.7
$
58.5
$
97.1
$
57.9
$
61.6
Liability
297.3
73.3
86.4
320.9
194.0
203.3
Professional
153.1
113.3
106.9
199.4
134.2
122.4
Specialty
117.7
88.4
98.7
116.4
92.9
98.9
Total
$
644.5
$
326.7
$
350.5
$
733.8
$
479.0
$
486.2
Year ended December 31,
2022
Year ended December 31,
2021
Gross
Written
Net
Written
Net
Earned
Gross
Written
Net
Written
Net
Earned
Property
$
405.0
$
206.7
$
231.6
$
548.1
$
260.0
$
282.3
Liability
1,302.0
713.6
702.3
1,351.3
817.1
804.1
Professional
619.0
435.4
443.9
730.1
496.9
463.4
Specialty
522.1
385.8
362.6
551.7
403.3
360.3
Total
$
2,848.1
$
1,741.5
$
1,740.4
$
3,181.2
$
1,977.3
$
1,910.1
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
COMPONENTS OF NET INVESTMENT
INCOME & NET REALIZED INVESTMENT AND OTHER GAINS
(LOSSES)
CONSOLIDATED
(in millions)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Net Investment Income
Net investment income, excluding
alternative investments
$
32.1
$
23.7
$
112.1
$
92.1
Alternative investments
(3.2
)
20.7
17.7
95.5
Total net investment income
$
28.9
$
44.4
$
129.8
$
187.6
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Net Realized Investment and
Other Gains (Losses)
Net realized investment (losses) gains
$
3.3
$
69.3
$
(60.8
)
$
82.9
Change in fair value recognized
0.6
(71.2
)
3.1
(40.4
)
Change in allowance for credit losses on
fixed maturity securities
0.4
2.1
(2.5
)
0.6
(Loss) on sale of Trident assets
—
—
—
(10.5
)
Loss on the sale of business divestitures
including the realization of foreign exchange translation
losses
—
—
(55.1
)
—
Total net realized investments and other
gains (losses)
$
4.3
$
0.2
$
(115.3
)
$
32.6
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
COMPONENTS OF INVESTMENT
PORTFOLIO
CONSOLIDATED
(in millions)
(unaudited)
December 31,
December 31,
2022
2021
U.S. Governments and government
agencies
$
380.7
$
425.0
States and political subdivisions
99.8
171.3
Foreign governments
28.4
232.8
Corporate – Financial
636.4
986.9
Corporate – Industrial
520.1
850.6
Corporate – Utilities
77.6
145.8
Asset-backed securities
139.2
173.6
Collateralized loan obligations
237.9
336.1
Mortgage-backed securities – Agency
259.1
457.2
Mortgage-backed securities –
Commercial
285.4
418.7
Mortgage-backed securities –
Residential
10.9
25.3
Total fixed maturities
2,675.5
4,223.3
Commercial Mortgage Loans
159.7
—
Common stocks
43.9
55.6
Preferred stocks
—
0.7
Total equity securities available for
sale
43.9
56.3
Private equity
264.6
248.9
Hedge fund
54.0
58.6
Overseas deposits
—
74.9
Other
4.6
4.8
Total other investments
323.2
387.2
Short term investments and cash
equivalents
449.6
655.8
Cash
50.2
146.1
Total cash and invested assets
$
3,702.1
$
5,468.7
December 31,
December 31,
2022
2021
U.S. Governments and government
agencies
$
639.8
$
882.1
AAA
364.6
788.6
AA
241.8
390.9
A
592.5
894.2
BBB
565.6
820.5
BB
64.1
174.2
B
60.6
71.3
Lower than B
14.9
22.5
Not rated
131.6
179.0
Total fixed maturities
$
2,675.5
$
4,223.3
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
RECONCILIATION OF COMMON
SHAREHOLDERS' EQUITY TO TANGIBLE SHAREHOLDERS' EQUITY
CONSOLIDATED
(in millions)
(unaudited)
December 31,
December 31,
2022
2021
Common shareholders' equity
$
1,088.9
$
1,591.2
Less: Accumulated other comprehensive
income (AOCI), net of taxes
(305.1
)
(22.7
)
Common shareholders' equity excluding
AOCI, net of tax
$
1,394.0
$
1,613.9
Common shareholders' equity
$
1,088.9
$
1,591.2
Less: Goodwill and intangible assets
118.6
164.6
Tangible common shareholders' equity
970.3
1,426.6
Less: AOCI, net of tax
(305.1
)
(22.7
)
Tangible common shareholders' equity
excluding AOCI, net of tax
$
1,275.4
$
1,449.3
Common shares outstanding - end of
period
35.061
34.877
Book value per common share
$
31.06
$
45.62
Tangible book value per common share
$
27.67
$
40.90
Book value per common share excluding
AOCI, net of tax
$
39.76
$
46.27
Tangible book value per common share
excluding AOCI, net of tax
$
36.38
$
41.55
ARGO GROUP INTERNATIONAL
HOLDINGS, LTD.
SHAREHOLDER RETURN
ANALYSIS
(in millions, except per share
data)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Net income (loss) attributable to common
shareholders
$
(111.8
)
$
(117.8
)
$
(185.7
)
$
(3.8
)
Operating income (loss) (1)
(94.5
)
(61.8
)
(4.7
)
41.5
Common Shareholders' Equity - Beginning of
period
$
1,180.9
$
1,743.6
$
1,591.2
$
1,713.8
Common Shareholders' Equity - End of
period
1,088.9
1,591.2
1,088.9
1,591.2
Average Common Shareholders' Equity
$
1,134.9
$
1,667.4
$
1,340.1
$
1,652.5
Common shares outstanding - End of
period
35.061
34.877
35.061
34.877
Book value per common share
$
31.06
$
45.62
$
31.06
$
45.62
Cash dividends paid per common share
during 2022
0.31
1.24
Book value per common share, December 31,
2022 - including cash dividends paid
$
31.37
$
32.30
Book value per common share, prior period
(2)
$
33.72
$
45.62
Change in book value per common share
during 2022
(7.9
)%
(31.9
)%
Change in book value per common share
including cash dividends paid, during 2022 (2)
(7.0
)%
(29.2
)%
Annualized return on average common
shareholders' equity
(39.4
)%
(28.3
)%
(13.9
)%
(0.2
)%
Annualized operating return on average
common shareholders' equity
(33.3
)%
(14.8
)%
(0.4
)%
2.5
%
(1)
For the purpose of calculating
Operating Income, an assumed tax rate of 19% is used for 2022 which
represents our expected weighted average statutory tax rate. This
compares with an assumed tax rate of 15% used in the calculation of
Operating Income after tax in the fourth quarter 2021.
(2)
The percentage change in book
value per common share is calculated by including cash dividends of
$0.31 per common share and $1.24 per common share paid to
shareholders during the three months and year ended December 31,
2022, respectively. This adjusted amount (Book value per common
share, including dividends) is then compared to the book value per
common share as of September 30, 2022 and December 31, 2021,
respectively, to determine the change for the three months and year
ended December 31, 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230227005557/en/
Andrew Hersom Head of Investor Relations 860.970.5845
andrew.hersom@argogroupus.com
David Snowden Senior Vice President, Communications
210.321.2104 david.snowden@argogroupus.com
Gregory Charpentier AVP, Investor Relations and Corporate
Finance 978.387.4150 gregory.charpentier@argogroupus.com
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