Bermuda
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1-15259
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98-0214719
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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110 Pitts Bay Road
Pembroke HM 08
Bermuda
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P.O. Box HM 1282
Hamilton HM FX
Bermuda
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|||
(Address, Including Zip Code,
of Principal Executive Offices)
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(Mailing Address)
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ITEM 2.02.
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RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
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ITEM 9.01.
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FINANCIAL STATEMENTS AND EXHIBITS.
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99.1
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Press Release issued by Argo Group International Holdings, Ltd. dated May 4, 2015.
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ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | |||
By: | /s/ Jay S. Bullock | ||
Dated: May 4, 2015 | Name: | Jay S. Bullock | |
Title: | Executive Vice President and Chief Financial Officer |
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Net income was $58.8 million or $2.05 per diluted share, compared to $40.2 million or $1.36 per diluted share for the first quarter of 2014.
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After-tax operating income was $29.3 million or $1.02 per diluted share, compared to $24.9 million or $0.84 per diluted share for the first quarter of 2014.
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Gross written premiums were up 2.9% to $476.7 million from $463.1 million in the first quarter of 2014.
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The combined ratio was 93.6% compared to 95.5% for the first quarter of 2014. The loss and expense ratios for the quarter were 54.9% and 38.7%, respectively compared to 56.0% and 39.5% for the first quarter of 2014.
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Net favorable prior-year reserve development was $3.7 million (benefiting the combined ratio by 1.1 points), compared with $8.9 million (benefiting the combined ratio by 2.7 points) for the first quarter of 2014.
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Estimated pre-tax catastrophe losses were $3.0 million or 0.9 points on the combined ratio, compared to $4.2 million or 1.3 points on the combined ratio for the first quarter of 2014.
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Book value per share increased to $59.48, up 2.2% from $58.22 at Dec. 31, 2014.
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During the quarter, the Company repurchased $18.1 million or 353,054 shares of its common stock at an average price of $51.37 per share (not adjusted for the stock dividend), which represents 1.2% of net shares outstanding at Dec. 31, 2014.
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ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
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CONSOLIDATED BALANCE SHEETS
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(in millions, except per share amounts)
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March 31,
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December 31,
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2015
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2014
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(unaudited)
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Assets | ||||||||
Total investments
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$ | 4,064.4 | $ | 4,097.9 | ||||
Cash | 89.1 | 81.0 | ||||||
Accrued investment income
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20.9 | 22.1 | ||||||
Receivables
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1,359.0 | 1,350.8 | ||||||
Goodwill and intangible assets
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231.0 | 230.8 | ||||||
Deferred acquisition costs, net
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129.7 | 124.6 | ||||||
Ceded unearned premiums
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256.6 | 207.6 | ||||||
Other assets
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226.4 | 241.5 | ||||||
Total assets
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$ | 6,377.1 | $ | 6,356.3 | ||||
Liabilities and Shareholders' Equity
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Reserves for losses and loss adjustment expenses
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$ | 3,035.1 | $ | 3,042.4 | ||||
Unearned premiums
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826.4 | 817.2 | ||||||
Ceded reinsurance payable, net
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207.9 | 178.8 | ||||||
Senior unsecured fixed rate notes
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143.8 | 143.8 | ||||||
Other indebtedness
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57.5 | 62.0 | ||||||
Junior subordinated debentures
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172.7 | 172.7 | ||||||
Other liabilities
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270.9 | 292.7 | ||||||
Total liabilities
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4,714.3 | 4,709.6 | ||||||
Total shareholders' equity
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1,662.8 | 1,646.7 | ||||||
Total liabilities and shareholders' equity
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6,377.1
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$ | 6,356.3 | |||||
Book value per common share
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$ | 59.48 | $ | 58.22 |
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
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FINANCIAL HIGHLIGHTS
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ALL SEGMENTS
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(in millions, except per share amounts)
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Three Months Ended
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March 31,
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2015
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2014
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(unaudited) | ||||||||
Gross Written Premiums
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$ | 476.7 | $ | 463.1 | ||||
Net Written Premiums
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296.0 | 276.8 | ||||||
Earned Premiums
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334.6 | 325.7 | ||||||
Net Investment Income
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20.8 | 23.3 | ||||||
Net Realized Investment Gains and Other
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16.0 | 11.1 | ||||||
Total Revenue
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371.4 | 360.1 | ||||||
Losses and Loss Adjustment Expenses
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183.7 | 182.5 | ||||||
Underwriting, Acquisition and Insurance Expenses
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129.6 | 128.7 | ||||||
Interest Expense
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4.9 | 5.0 | ||||||
Fee Expense, net
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0.4 | 1.4 | ||||||
Foreign Currency Exchange Gain
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(9.6 | ) | (0.2 | ) | ||||
Total Expenses
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309.0 | 317.4 | ||||||
Income Before Taxes
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62.4 | 42.7 | ||||||
Income Tax Provision
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3.6 | 2.5 | ||||||
Net Income
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$ | 58.8 | $ | 40.2 | ||||
Net Income per Common Share (Basic)
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$ | 2.09 | $ | 1.38 | ||||
Net Income per Common Share (Diluted)
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$ | 2.05 | $ | 1.36 | ||||
Weighted Average Common Shares:
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Basic
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28.1 | 29.2 | ||||||
Diluted
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28.7 | 29.7 |
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
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SEGMENT DATA
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(in millions)
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Three Months Ended
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March 31,
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2015
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2014
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(unaudited) | ||||||||
Excess & Surplus Lines
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Gross Written Premiums
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$ | 162.6 | $ | 140.0 | ||||
Net Written Premiums
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126.1 | 98.2 | ||||||
Earned Premiums
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123.1 | 117.4 | ||||||
Underwriting Income
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$ | 17.7 | $ | 12.4 | ||||
Net Investment Income
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8.5 | 9.3 | ||||||
Interest Expense
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(1.5 | ) | (1.6 | ) | ||||
Operating Income Before Taxes
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$ | 24.7 | $ | 20.1 | ||||
Loss Ratio
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53.1 | 55.3 | ||||||
Expense Ratio
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32.5 | 34.1 | ||||||
GAAP Combined Ratio
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85.6 | % | 89.4 | |||||
Commercial Specialty
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Gross Written Premiums
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$ | 107.0 | $ | 105.9 | ||||
Net Written Premiums
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63.8 | 68.0 | ||||||
Earned Premiums
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72.6 | 71.7 | ||||||
Underwriting Income (Loss)
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$ | 0.9 | $ | (1.1 | ) | |||
Net Investment Income
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4.5 | 4.7 | ||||||
Interest Expense
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(0.8 | ) | (0.8 | ) | ||||
Fee Expense, net
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(0.8 | ) | (1.1 | ) | ||||
Operating Income Before Taxes
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$ | 3.8 | $ | 1.7 | ||||
Loss Ratio
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67.3 | 66.6 | ||||||
Expense Ratio
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31.4 | 34.9 | ||||||
GAAP Combined Ratio
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98.7 | % | 101.5 | |||||
Syndicate 1200
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Gross Written Premiums
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$ | 137.6 | $ | 133.6 | ||||
Net Written Premiums
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78.8 | 76.7 | ||||||
Earned Premiums
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101.9 | 99.3 | ||||||
Underwriting Income
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$ | 9.1 | $ | 13.2 | ||||
Net Investment Income
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2.2 | 3.7 | ||||||
Interest Expense
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(0.7 | ) | (0.8 | ) | ||||
Fee Income (Expense), net
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0.4 | (0.3 | ) | |||||
Operating Income Before Taxes
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$ | 11.0 | $ | 15.8 | ||||
Loss Ratio
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51.5 | 45.8 | ||||||
Expense Ratio
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39.5 | 40.9 | ||||||
GAAP Combined Ratio
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91.0 | % | 86.7 | |||||
International Specialty
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Gross Written Premiums
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$ | 69.8 | $ | 83.2 | ||||
Net Written Premiums
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27.6 | 33.5 | ||||||
Earned Premiums
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37.3 | 37.0 | ||||||
Underwriting Income
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$ | 7.0 | $ | 5.8 | ||||
Net Investment Income
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2.9 | 1.8 | ||||||
Interest Expense
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(0.8 | ) | (0.8 | ) | ||||
Operating Income Before Taxes
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$ | 9.1 | $ | 6.8 | ||||
Loss Ratio
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45.1 | 50.8 | ||||||
Expense Ratio
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36.4 | 33.3 | ||||||
GAAP Combined Ratio
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81.5 | % | 84.1 |
ARGO GROUP INTERNATIONAL HOLDINGS LTD
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(in millions)
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(unaudited)
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For the Three Months
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Ended March 31,
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Net Prior Year Development
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2015
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2014
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(Favorable)/Unfavorable
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E&S
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$ | (8.2 | ) | $ | (8.0 | ) | ||
Commercial Specialty
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7.2 | 2.0 | ||||||
Syndicate 1200
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(0.3 | ) | (8.8 | ) | ||||
International Specialty
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(2.5 | ) | 0.4 | |||||
Run-off
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0.1 | 5.5 | ||||||
Total
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$ | (3.7 | ) | $ | (8.9 | ) |
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
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RECONCILIATION OF OPERATING INCOME (LOSS) TO NET INCOME (LOSS)
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(in millions, except per share amounts)
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Three Months Ended
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March 31,
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2015
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2014
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(unaudited) | ||||||||
Income Before Taxes:
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From Operations
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$ | 36.8 | $ | 31.4 | ||||
Foreign Currency Exchange Gain
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9.6 | 0.2 | ||||||
Net Realized Investment Gains
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16.0 | 11.1 | ||||||
Income Before Taxes
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62.4 | 42.7 | ||||||
Income Tax Provision
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3.6 | 2.5 | ||||||
Net Income
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$ | 58.8 | $ | 40.2 | ||||
Net Income per Common Share (Diluted)
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$ | 2.05 | $ | 1.36 | ||||
Operating Income per Common Share (Diluted)
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At Assumed Tax Rate:
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Income (a)
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1.74 | 1.15 | ||||||
Foreign Currency Exchange Gains (a)
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(0.27 | ) | (0.01 | ) | ||||
Net Realized Investment Gains (a)
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(0.45 | ) | (0.30 | ) | ||||
Operating Income per Common Share
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1.02 | 0.84 | ||||||
(a) Per diluted share at assumed tax rate of 20%.
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ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
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SHAREHOLDER RETURN ANALYSIS
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(in millions)
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Three Months Ended March 31,
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2015
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2014
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% Change
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Net income
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$ | 58.8 | $ | 40.2 | 46.3 | % | ||||||
Operating income
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29.3 | 24.9 | 17.7 | % | ||||||||
Shareholders' Equity - Beginning of the period
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1,646.7 | 1,563.0 | 5.4 | % | ||||||||
Shareholders' Equity - End of current period
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1,662.8 | 1,594.9 | 4.3 | % | ||||||||
Average Shareholders' Equity
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$ | 1,654.8 | $ | 1,579.0 | 4.8 | % | ||||||
Annualized return on average shareholders' equity
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14.2 | % | 10.2 | % | ||||||||
Annualized operating return on average shareholders' equity
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7.1 | % | 6.4 | % |