Argo Group Net Income Rose by 87% in 2009 to $117.5 Million

February 22, 2010

The Bermuda-based Argo Group International Holdings, Ltd. (the successor company of the Argonaut Group) announced a record result for 2009 with net income rising by 87 percent to $117.5 million, or $3.81 per diluted share from $62.9 million or $2.05 per share for 2008.

The Group’s report also listed the following “highlights” for the year ended Dec. 31, 2009:
— Gross written premiums increased 24.2 percent to $2.0 billion versus $1.6 billion last year;
— Total revenue increased 23.7 percent to $1.5 billion compared to $1.2 billion in 2008;
— Net pre-tax operating income, or pre-tax income before net realized investment gains and losses, impairment of intangible asset charges and foreign currency exchange gains and losses, grew to a record $164.8 million compared with $122.0 million in the prior year;
— Net after-tax operating income per share was $4.28, compared to $3.17 per share in the prior year;
— Book value per share (BVPS) increased 18.6 percent in 2009, to $52.36 at Dec. 31, 2009, an all-time high. BVPS has increased 16.0 percent since 2007. BVPS grew at a compound average growth rate (CAGR) of 12.2 percent for the past seven years; tangible BVPS grew at a 15.8 percent CAGR over the same seven-year period.

Highlights for the three months ended Dec. 31, 2009 were listed as follows:
— Gross written premiums increased 9.3 percent to $415 million from $380 million in the year-ago quarter;
— Total revenue increased 12.9 percent to $391 million compared to $346 million for the three months ended Dec. 31, 2008;
— Net income was $41.0 million or $1.33 per diluted share versus $11.8 million or $0.38 per diluted share for the fourth quarter of 2008;
— Net pre-tax operating income, or pre-tax income before net realized investment gains and losses, impairment of intangible asset charges and foreign currency exchange gains and losses, was $39.4 million versus $35.9 million in the last three months of 2008;
— Net after-tax operating income per share was $1.02, up from $0.94 per share in the prior year quarter.

CEO Mark E. Watson III commented: “Our record 2009 results and continued growth in book value per share reflect the benefit of our diversified business platform, which affords us maximum flexibility in deploying capital. Looking ahead, what’s most exciting is that we are beginning to leverage the entire potential of our international platform through higher margin opportunities worldwide. We believe this platform differentiates Argo Group in the specialty insurance market.”

The bulletin noted that The Group’s combined ratio for the year ended Dec. 31, 2009, was 96.9 percent versus 100.5 percent for 2008. Argo Group’s 2009 combined ratios in each business segment were as follows: Excess & Surplus Lines at 99.6 percent; Commercial Specialty at 95.6 percent; Reinsurance at 52.3 percent; and International Specialty at 95.8 percent.

The Group’s combined ratio for the fourth quarter of 2009 was 97.2 percent versus 98.6 percent for the same period in 2008. Argo Group’s 2009 fourth quarter combined ratios for each business segment were as follows: Excess & Surplus Lines at 109.3 percent; Commercial Specialty at 95.2 percent; Reinsurance at 44.0 percent; and International Specialty at 90.3 percent.

The full earnings report and details on accessing the replay of the earnings conference call, held Feb. 19, are available on the Company’s web site at: www.argolimited.com. In addition, a telephone replay of the call will be available through Feb. 26, 2010, to callers dialing from inside the U.S. and Canada by dialing (888) 286-8010 (pass code 49372895). Callers dialing from outside the U.S. and Canada can access the call replay by dialing (617) 801-6888 (pass code 49372895).

Source: Argo Group

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