Argo Reports Q4 Net Income of $59.7 Million; $183.2 Million for Full Year

February 10, 2015

Bermuda-based Argo Group International Holdings Ltd., the underwriter of specialty insurance and reinsurance products, reported net income for the year ended December 31, 2014 of $183.2 million or $6.90 per diluted share, compared to $143.2 million or $5.14 per diluted share for 2013.

Net income for the fourth quarter of 2014 was $59.7 million or $2.28 per diluted share, compared to $47.8 million or $1.74 per diluted share for the same quarter of 2013, according to the company.

“Argo Group posted improved underwriting margins for the year, despite ever-increasing competitive pressures,” said CEO Mark E. Watson III. “We reported record underwriting income in 2014 and a return on average shareholders’ equity of 11.4 percent.”

Highlights for the year include:

  • After-tax operating income was $94.1 million or $3.54 per diluted share, compared to $85.4 million or $3.06 per diluted share for 2013.
  • Gross written premiums were $1.91 billion, compared to $1.89 billion for 2013, while net written premiums increased to $1.37 billion from $1.33 billion for 2013 after deduction of other reinsurance-related expenses.
  • The combined ratio was 96.2 percent, compared to 97.5 percent for 2013.
  • Net favorable prior-year reserve development was $37.7 million (benefiting the combined ratio by 2.8 points), compared to $33.6 million (benefiting the combined ratio by 2.6 points) for 2013.
  • Estimated pre-tax catastrophe losses were $17.7 million or 1.4 points on the combined ratio, compared to $22.7 million or 1.9 points for 2013.
  • The current accident year loss ratio excluding catastrophes was 57.3 percent, compared to 58.6 percent for 2013.
  • In 2014, the company repurchased $50.8 million or 1.1 million shares of its common stock at an average share price of $48.48, which represents 4.0 percent of net shares outstanding at December 31, 2013.
  • At December 31, 2014, cash and investments totaled $4.2 billion with a net pre-tax unrealized gain of approximately $208.7 million.
  • Pre-tax realized gains for the year of $94.0 million include the sale of real estate in the fourth quarter. After-tax proceeds from the sale of the real estate were $25.7 million.

Highlights for the 4th quarter include:

  • After-tax operating income was $21.8 million or $0.83 per diluted share, compared to $22.6 million or $0.82 per diluted share for the fourth quarter of 2013.
  • Gross written premiums were up 2.9 percent to $425.0 million from $412.9 million in the fourth quarter of 2013, while net written premiums increased to $312.3 million from $302.8 million for the fourth quarter of 2013 after deduction of other reinsurance-related expenses.
  • The combined ratio was 96.8 percent compared to 95.2 percent for the fourth quarter of 2013.
  • Net favorable prior-year reserve development was $11.3 million (benefiting the combined ratio by 3.3 points), compared with $12.1 million (benefiting the combined ratio by 3.6 points) for the fourth quarter of 2013.
  • Estimated pre-tax catastrophe losses were $3.8 million or 1.1 points on the combined ratio, compared to negligible catastrophe losses for the fourth quarter of 2013.
  • The current accident year loss ratio excluding catastrophes was 57.7 percent, compared to 59.4 percent in the fourth quarter of 2013.
  • Book value per share increased to $64.04, up 1.7 percent from $62.99 at Sept. 30, 2014, and up 8.6 percent from $58.96 at December 31, 2013.
  • During the quarter, the company repurchased $8.7 million or 166,134 shares of its common stock at an average price of $52.08, which represents 0.5 percent of net shares outstanding at Sept. 30, 2014.

Source: Argo Group International Holdings

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