Earnings Reports: Argo Group, Flagstone Re

By | August 7, 2012

Selected earnings highlights from the Bermuda-based Argo Group for the second quarter and the first six months of 2012 are as follows:
Q2 2012 Q2 2011
Gross premiums written ———— $474.20 mn $406.70 mn
Net premiums written ————— $361.50 mn $283.30 mn
Net premiums earned ———– $290.20 mn $271.70 mn
Net income after tax —————- $24.10 mn $21.60 mn
Operating income pre tax ——— $17.90 mn $2.60 mn
Net investment income ————- $30.00 mn $32.90 mn
Net realized invest gain/loss ——— ($2.70 mn) $31.50 mn
Q2 combined ratio: 102.5 percent (109.3 percent in Q2 2011)

1st Half 2012 1st Half 2011
Gross premiums written ———— $870.50 mn $754.50 mn
Net premiums written ————— $602.70 mn $527.70 mn
Net premiums earned ————— $567.50 mn $533.10 mn
Net income (loss) after tax ——— $43.60 mn ($72.50 mn)
Operating income (loss) pre tax — $35.80 mn ($86.80 mn)
Net investment income ———— $61.40 mn $66.30 mn
Net realized invest gain/loss ———$10.40 mn $33.80 mn
1st half combined ratio: 102.9 percent (126.8 percent in 1st half 2011)

Group CEO Mark E. Watson III commented: “It was another solid quarter in terms of profits and growth. Each of our four business segments generated top line growth in the quarter and three of our four businesses reported an underwriting profit. It’s good to be heading in the right direction.”

Source: Argo Group

Selected earnings highlights from Luxembourg-based Flagstone Re for the second quarter and the first six months of 2012 are as follows:
Q2 2012 Q2 2011
Gross premiums written ———— $171.150 mn $264.128 mn
Net premiums written ————— $164.865 mn $219.719 mn
Net premiums earned ————– $102.499 mn $118.620 mn
Net income (loss) ——————- $13.490 mn ($19.013 mn)
Operating income (loss) ———– $8.60 mn ($11.60 mn)
Net investment income ————- $3.866 mn $12.30 mn

Q2 combined ratio: 94.1 percent (119.5 percent in Q2 2011)

1st Half 2012 1st Half 2011
Gross premiums written ———— $341.378 mn $616.803 mn
Net premiums written ————— $250.194 mn $453.644 mn
Net premiums earned ————- $216.244 mn $319.673 mn
Net income (loss) ——————- $53.810 mn ($179.409 mn)
Operating income loss) ————– $16.20 mn ($160.30 mn)
Net investment income ————- $8.933 mn $21.498 mn
1st half combined ratio: 95.9 percent (156.1 percent in 1st half 2011)

The earnings report noted that “on April 2, 2012, and April 3, 2012, the Company entered into definitive agreements to divest its former Island Heritage and Lloyd’s reportable segments, respectively. The Island Heritage transaction was completed on April 5, 2012, as previously announced. The Lloyd’s transaction is expected to be completed during the third quarter of 2012 following receipt on final approvals from Lloyd’s.”

CEO David Brown commented: “We are pleased with our second quarter results as we continue to benefit from the strategic shift in our business model as Flagstone becomes a more focused and efficient underwriter. Evidence of the effectiveness of this strategy and its benefits could be seen this quarter with reduced frequency and attritional losses, coupled with our ongoing expense saving initiatives, which drove positive underwriting performance despite significant tornado, wind, and wildfire industry losses in the United States during the quarter.

“Flagstone’s improved performance in the second quarter also reflects the benefits of attractive rates in our core business, which partially offset the reduction in income as we continue to reposition our portfolio. Furthermore, our mid-year underwriting renewals were strong and are a testament to our value in the marketplace and demonstrate our commitment to our clients.”

The bulletin also noted: “Flagstone is, in all material respects, nearing the completion of the business realignment as we announced in October 2011. The Company remains focused on leveraging the existing strengths in Flagstone’s core businesses in order to deliver enhanced value for its shareholders.

“Flagstone’s written premium for the second quarter, inclusive of reinstatements, was $171.2 million, which represents a decrease of 35.2 percent over the same period in 2011, as Flagstone continues to execute on its plan to decrease operating leverage and lower overall risk. This decrease was primarily attributed to risk reduction both in limits sold and a shift upward in attachment levels, as well as a reduction in business that was not considered appropriate within the re-focused portfolio.”

Source: Flagstone Re

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