HAMILTON, Bermuda--(BUSINESS WIRE)--May 2, 2013--Argo Group International Holdings, Ltd. (NasdaqGS: AGII) today announced financial results for the three months ended March 31, 2013.

Argo Group CEO Mark E. Watson III said, "I'm pleased with our first quarter performance. We generated solid top-line growth in a modestly improving pricing environment, and generated an underwriting profit in each of our four business segments. I am optimistic about the outlook for the remainder of 2013."

¹ – Results exclude net realized investment gains/losses and foreign currency exchange gains/losses.

For the three months ended March 31, 2013, Argo Group reported net income of $32.7 million or $1.28 per diluted share and net operating income after tax of $20.0 million or $0.78 per diluted share. By comparison, the first quarter of 2012 produced net income of $19.6 million or $0.74 per diluted share and net operating income after tax of $14.3 million or $0.54 per diluted share. (See the complete reconciliation between net income/loss and operating income/loss in the following tables.)

Gross written premiums for the three months ended March 31, 2013 and 2012, were $438.2 million and $396.3 million, respectively. Total revenue for the three months ended March 31, 2013 and 2012, was $341.6 million and $323.1 million, respectively. Earned premiums for the three months ended March 31, 2013 and 2012, were $304.2 million and $277.3 million, respectively.

Argo Group's combined ratios for the three months ended March 31, 2013 and 2012, were 99.4% and 103.4%, respectively. Catastrophe losses, net of reinsurance and estimated reinstatement premiums, were $1.9 million in the first quarter 2013 compared to $4.0 million in the same period in 2012. Favorable prior year loss development was $4.5 million compared to $3.3 million for the three months ended March 31, 2012. Included in underwriting expenses was a non-cash equity-based compensation charge of $6.5 million, compared to $1.0 million in the first quarter of 2012, reflecting the increase in the Company’s stock price during the quarter.

Net investment income for the three months ended March 31, 2013 and 2012, was $27.9 million and $31.4 million, respectively. For the three months ended March 31, 2013, the Company reported a net realized investment gain of $9.5 million versus $13.1 million for the same period in 2012.

At March 31, 2013, the investment portfolio totaled $4.1 billion with a net pre-tax unrealized gain of approximately $328.5 million.

Argo Group management will conduct an investor conference call starting at 10:30 a.m. EDT (11:30 a.m. ADT) tomorrow, May 3, 2013.

A live webcast of the conference call can be accessed by visiting Argo Group’s Investor Relations Website at http://www.argolimited.com/pages/investors/events-and-webcasts. Participants inside the U.S. and Canada can access the call by phone by dialing (888) 895-5271 (pass code: 34754739). Callers dialing from outside the U.S. and Canada can access the call by dialing (847) 619-6547 (pass code: 34754739).

A webcast replay will be available shortly after the conference call and can be accessed at http://www.argolimited.com/pages/investors/events-and-webcasts. In addition, a telephone replay of the call will be available through May 10, 2013, to callers from inside the U.S. and Canada by dialing (888) 843-7419 (pass code: 3475 4739#). Callers dialing from outside the U.S. and Canada can access the telephone replay by dialing (630) 652-3042 (pass code: 3475 4739#).

Argo Group International Holdings, Ltd. (NasdaqGS: AGII) is an international underwriter of specialty insurance and reinsurance products in the property and casualty market. Argo Group offers a full line of products and services designed to meet the unique coverage and claims handling needs of businesses in four primary segments: Excess & Surplus Lines, Commercial Specialty, International Specialty and Syndicate 1200. Argo Group's insurance subsidiaries are A. M. Best-rated 'A' (Excellent) (third highest rating out of 16 rating classifications) with a stable outlook, and Argo's U.S. insurance subsidiaries are Standard and Poor's-rated 'A-' (Strong) with a stable outlook. More information on Argo Group and its subsidiaries is available at www.argolimited.com.

This press release contains certain statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are qualified by the inherent risks and uncertainties surrounding future expectations generally and also may differ materially from actual future experience involving any one or more of such statements. For a more detailed discussion of such risks and uncertainties, see Argo Group's filings with the SEC. The inclusion of a forward-looking statement herein should not be regarded as a representation by Argo Group that Argo Group's objectives will be achieved. Argo Group undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.



ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)

	March 31,		December 31,
	2013		2012
	(unaudited)
Assets
Total investments	$	4,133.2	$	4,200.7
Cash and cash equivalents		91.2		95.8
Accrued investment income		26.9		30.3
Receivables		1,606.4		1,681.9
Goodwill and intangible assets		243.8		245.3
Deferred acquisition costs		100.6		99.4
Ceded unearned premiums		230.9		193.6
Other assets		169.5		141.9
Total assets	$	6,602.5	$	6,688.9

Liabilities and Shareholders' Equity
Reserves for losses and loss adjustment expenses	$	3,205.0	$	3,223.5
Unearned premiums		737.3		730.2
Ceded reinsurance payable		475.4		612.1
Senior unsecured fixed rate notes		143.8		143.8
Other indebtedness		64.4		63.8
Junior subordinated debentures		193.3		193.3
Other liabilities		236.7		208.1
Total liabilities		5,055.9		5,174.8

Total shareholders' equity		1,546.6		1,514.1
Total liabilities and shareholders' equity	$	6,602.5	$	6,688.9

Book value per common share	$	62.67	$	60.75



ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
FINANCIAL HIGHLIGHTS
ALL SEGMENTS
(in millions, except per share amounts)

	Three Months Ended
	March 31,
	2013			2012
	(unaudited)

Gross Written Premiums	$	438.2		$	396.3
Net Written Premiums		279.0			241.2

Earned Premiums		304.2			277.3
Net Investment Income		27.9			31.4
Net Realized Investment Gains		9.5			13.1
Fee Income, net		0.0			1.3
Total Revenue		341.6			323.1

Losses and Loss Adjustment Expenses		170.5			165.8
Other Reinsurance-Related Expenses		5.1			6.9
Underwriting, Acquisition and Insurance Expenses		126.7			113.7
Interest Expense		4.9			5.7
Foreign Currency Exchange (Gain) Loss		(3.1	)		2.9
Total Expenses		304.1			295.0

Income Before Taxes		37.5			28.1
Income Tax Provision		4.8			8.5
Net Income	$	32.7		$	19.6


Net Income per Common Share (Basic)	$	1.32		$	0.75


Net Income per Common Share (Diluted)	$	1.28		$	0.74

Weighted Average Common Shares:
Basic		24.8			26.2
Diluted		25.6			26.5



ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
SEGMENT DATA
(in millions)

	Three Months Ended
	March 31,
		2013			2012
	(unaudited)
Excess & Surplus Lines
Gross Written Premiums	$	127.6		$	107.3
Net Written Premiums		100.8			88.9
Earned Premiums		105.1			96.2
Underwriting Income	$	4.6		$	8.2
Net Investment Income		10.9			13.0
Interest Expense		(1.6	)		(2.3	)
Operating Income Before Taxes	$	13.9		$	18.9
Loss Ratio		56.5			54.2
Expense Ratio		39.1			37.3
GAAP Combined Ratio		95.6	%		91.5	%
Commercial Specialty
Gross Written Premiums	$	106.1		$	107.7
Net Written Premiums		71.7			78.7
Earned Premiums		75.2			82.0
Underwriting Income (Loss)	$	1.0		$	(6.0	)
Net Investment Income		5.9			6.9
Interest Expense		(0.9	)		(1.4	)
Fee Income (Expense), net		(0.3	)		0.2
Operating (Loss) Income Before Taxes	$	5.7		$	(0.3	)
Loss Ratio		63.4			72.4
Expense Ratio		35.2			35.0
GAAP Combined Ratio		98.6	%		107.4	%
International Specialty
Gross Written Premiums	$	78.2		$	57.6
Net Written Premiums		32.2			28.9
Earned Premiums		32.7			28.0
Underwriting Income	$	3.3		$	2.7
Net Investment Income		2.3			4.1
Interest Expense		(0.8	)		(1.0	)
Operating Income Before Taxes	$	4.8		$	5.8
Loss Ratio		50.1			51.4
Expense Ratio		39.5			38.2
GAAP Combined Ratio		89.6	%		89.6	%
Syndicate 1200
Gross Written Premiums	$	126.1		$	123.1
Net Written Premiums		74.1			44.1
Earned Premiums		90.9			71.1
Underwriting Income (Loss)	$	6.0		$	(2.4	)
Net Investment Income		2.8			3.9
Interest Expense		(0.7	)		(0.9	)
Fee Income, net		0.3			1.1
Operating Income Before Taxes	$	8.4		$	1.7
Loss Ratio		53.5			56.5
Expense Ratio		39.8			46.9
GAAP Combined Ratio		93.3	%		103.4	%

Run-off
Operating (Loss) Income Before Taxes	$	(0.5	)	$	(0.4	)



ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
(in millions)

Prior Year Development	Three Months Ended
(Favorable)/Adverse	March 31,
		2013			2012
	(unaudited)

E&S	$	(5.2	)	$	(9.3	)
Commercial Specialty		1.1			4.6
Int'l Specialty		0.9			(0.2	)
Syndicate 1200		(2.2	)		(0.4	)
Runoff		0.9			2.0
Combined		(4.5	)		(3.3	)


Catastrophe Losses ⁽¹⁾	Three Months Ended
	March 31,
		2013			2012
	(unaudited)

E&S	$	0.8		$	0.1
Commercial Specialty		1.1			2.3
Int'l Specialty		0.0			1.6
Syndicate 1200		0.0			0.0
Combined		1.9			4.0

⁽¹⁾ net of reinstatement premiums



ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET INCOME (LOSS)
(in millions, except per share amounts)


	Three Months Ended
	March 31,
		2013			2012
	(unaudited)

Income Before Taxes:
From Operations	$	24.9		$	17.9
Foreign Currency Exchange Gain (Loss)		3.1			(2.9	)
Net Realized Investment Gains		9.5			13.1
Income Before Taxes		37.5			28.1
Income Tax Provision		4.8			8.5
Net Income	$	32.7		$	19.6


Net Income per Common Share (Diluted)	$	1.28		$	0.74

Operating Income (Loss) per Common Share (Diluted)
At Assumed Tax Rate:
Income (a)		1.17			0.85
Foreign Currency Exchange (Gain) Loss (a)		(0.09	)		0.09
Net Realized Investment Gains (a)		(0.30	)		(0.40	)

Operating Income per Common Share (Diluted)		0.78			0.54

(a) Per diluted share at assumed tax rate of 20%.

CONTACT:
Argo Group International Holdings, Ltd.
Jay Bullock, 441-278-3727
Chief Financial Officer
or
George Luecke, 212-607-8802
Group Treasurer