Argonaut Group Announces 2000 Results

February 6, 2001

Menlo Park, Calif.-based Argonaut Group Inc. announced a consolidated net loss of $83.3 million ($3.77 per diluted common share) on total revenue of $209.9 million for the 12 months ended Dec. 31, 2000, compared with a consolidated net loss of $15.2 million ($0.64 per diluted common share) on total revenue of $164.3 million for 1999.

For the fourth quarter of 2000, the consolidated net loss was $39.0 million ($1.78 per diluted common share) on total revenue of $47.1 million, compared with a consolidated net loss of $36.9 million ($1.63 per diluted common share) on total revenue of $21.5 million for the same quarter last year.

During the year, workers’ compensation in-force premium for Argonaut Insurance Company, the company’s principal subsidiary, increased for the first time in four years from $100 million at year-end 1999 to $113 at Dec. 31, 2000.

Argonaut Insurance’s in-force workers’ compensation premium in California decreased from 45 percent of the total in-force to 29 percent during the same period. Argonaut Insurance achieved significant rate increases during 2000, and anticipates continued rate increases throughout 2001.

During the third quarter, the company instituted a countrywide review of its claims operation which was concluded in December. Primarily as a result of this review, workers’ compensation loss reserves were increased by 10 percent from $409 million to $448 million ($39 million pre-tax) to reflect increased loss exposures in certain regions and product lines, particularly in California.

The company also recorded in the fourth quarter a $10-million increase in reserves for loss adjustment expenses to reflect the ongoing costs in handling its discontinued lines.

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