Bermuda
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1-15259
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98-0214719
|
(State or other jurisdiction
of incorporation)
|
(Commission
File Number)
|
(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 February 8, 2016.
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ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | |||
|
By:
|
/s/ Jay S. Bullock | |
Dated: February 8, 2016
|
Name: Jay S. Bullock | ||
Title: Executive Vice President and Chief Financial Officer |
●
|
Gross written premiums were up 5.6% to $2.012 billion from $1.905 billion in 2014.
|
●
|
After-tax operating income was $105.7 million or $3.70 per diluted share, compared to $94.1 million or $3.22 per diluted share in 2014.
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●
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Net income was $163.2 million or $5.72 per diluted share, compared to $183.2 million or $6.27 per diluted share in 2014.
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●
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Pre-tax underwriting income increased 28.5% to $66.2 million in 2015 from $51.5 million in 2014.
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●
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The combined ratio was 95.2% compared to 96.2% in 2014. The loss and expense ratios in 2015 were 55.8% and 39.4%, respectively compared to 55.9% and 40.3% in 2014.
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●
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Net favorable prior-year reserve development was $32.4 million (benefiting the combined ratio by 2.4 points), compared with $37.7 million (benefiting the combined ratio by 2.8 points) in 2014.
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●
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Estimated pre-tax catastrophe losses were $23.7 million or 1.8 points on the combined ratio, compared to $17.7 million or 1.4 points on the combined ratio in 2014.
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●
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The loss ratio excluding catastrophes and reserve development was 56.4% in 2015, compared to 57.3% in 2014.
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Argo House | T 441 296 5858 |
110 Pitts Bay Road | F 441 296 6162 |
Pembroke, Bermuda HM08 | |
www.argolimited.com |
●
|
In 2015, the Company repurchased $29.7 million or 575,155 shares of its common stock at an average share price of $51.58, which represents 2.0% of net shares outstanding at Dec. 31, 2014.
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●
|
Book value per share increased to $59.74, up 2.6% from $58.22 at Dec. 31, 2014.
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●
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At Dec. 31, 2015, cash and investments totaled $4.2 billion with a net pre-tax unrealized gain of approximately $84.2 million.
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●
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Gross written premiums were up 5.0% to $446.2 million from $425.0 million in the fourth quarter of 2014.
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●
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After-tax operating income was $25.8 million or $0.90 per diluted share, compared to $21.8 million or $0.76 per diluted share for the fourth quarter of 2014.
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●
|
Net income was $41.2 million or $1.44 per diluted share, compared to $59.7 million or $2.07 per diluted share for the fourth quarter of 2014.
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●
|
Pre-tax underwriting income increased 45.0% to $15.8 million in the fourth quarter of 2015 from $10.9 million for the fourth quarter of 2014.
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●
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The combined ratio was 95.4% compared to 96.8% for the fourth quarter of 2014. The loss and expense ratios for the quarter were 55.5% and 39.9%, respectively, compared to 55.5% and 41.3% for the fourth quarter of 2014.
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●
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Net favorable prior-year reserve development was $17.1 million (benefiting the combined ratio by 5.0 points), compared with $11.3 million (benefiting the combined ratio by 3.3 points) for the fourth quarter of 2014.
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●
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Estimated pre-tax catastrophe losses were $5.2 million or 1.5 points on the combined ratio, compared to $3.8 million or 1.1 points on the combined ratio for the fourth quarter of 2014.
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●
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The loss ratio excluding catastrophes and reserve development was 59.0% for the fourth quarter of 2015, compared to 57.7% for the fourth quarter of 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)
|
||||||||
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Total investments
|
$ | 4,115.7 | $ | 4,097.9 | ||||
Cash
|
121.7 | 81.0 | ||||||
Accrued investment income
|
21.6 | 22.1 | ||||||
Receivables
|
1,525.6 | 1,350.8 | ||||||
Goodwill and intangible assets
|
225.5 | 230.8 | ||||||
Deferred acquisition costs, net
|
132.4 | 124.6 | ||||||
Ceded unearned premiums
|
250.8 | 207.6 | ||||||
Other assets
|
236.8 | 241.5 | ||||||
Total assets
|
$ | 6,630.1 | $ | 6,356.3 | ||||
Liabilities and Shareholders' Equity
|
||||||||
Reserves for losses and loss adjustment expenses
|
$ | 3,123.6 | $ | 3,042.4 | ||||
Unearned premiums
|
886.7 | 817.2 | ||||||
Ceded reinsurance payable, net
|
312.4 | 178.8 | ||||||
Senior unsecured fixed rate notes
|
143.8 | 143.8 | ||||||
Other indebtedness
|
55.2 | 62.0 | ||||||
Junior subordinated debentures
|
172.7 | 172.7 | ||||||
Other liabilities
|
267.6 | 292.7 | ||||||
Total liabilities
|
4,962.0 | 4,709.6 | ||||||
Total shareholders' equity
|
1,668.1 | 1,646.7 | ||||||
Total liabilities and shareholders' equity
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$ | 6,630.1 | $ | 6,356.3 | ||||
Book value per common share
|
$ | 59.74 | $ | 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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Years Ended
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|||||||||||||||
December 31
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December 31
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Gross written premiums
|
$ | 446.2 | $ | 425.0 | $ | 2,012.1 | $ | 1,905.4 | ||||||||
Net written premiums
|
308.3 | 312.3 | 1,402.1 | 1,367.9 | ||||||||||||
Earned premiums
|
345.3 | 338.7 | 1,371.9 | 1,338.1 | ||||||||||||
Net investment income
|
21.7 | 21.9 | 85.6 | 86.6 | ||||||||||||
Net realized investment and other gains
|
2.1 | 51.5 | 27.1 | 94.0 | ||||||||||||
Total revenue
|
369.1 | 412.1 | 1,484.6 | 1,518.7 | ||||||||||||
Losses and loss adjustment expenses
|
191.8 | 187.9 | 766.1 | 747.4 | ||||||||||||
Underwriting, acquisition and insurance expenses
|
137.7 | 139.9 | 539.6 | 539.2 | ||||||||||||
Interest expense
|
4.7 | 4.9 | 19.0 | 19.9 | ||||||||||||
Fee and other expense, net
|
0.6 | 0.7 | 0.7 | 0.6 | ||||||||||||
Foreign currency exchange gain
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(9.9 | ) | (5.0 | ) | (18.3 | ) | (7.8 | ) | ||||||||
Impairment of intangible assets
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0.0 | 3.4 | 0.0 | 3.4 | ||||||||||||
Total expenses
|
324.9 | 331.8 | 1,307.1 | 1,302.7 | ||||||||||||
Income before taxes
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44.2 | 80.3 | 177.5 | 216.0 | ||||||||||||
Income tax provision
|
3.0 | 20.6 | 14.3 | 32.8 | ||||||||||||
Net income
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$ | 41.2 | $ | 59.7 | $ | 163.2 | $ | 183.2 | ||||||||
Net income per common share (basic)
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$ | 1.48 | $ | 2.11 | $ | 5.83 | $ | 6.39 | ||||||||
Net income per common share (diluted)
|
$ | 1.44 | $ | 2.07 | $ | 5.72 | $ | 6.27 | ||||||||
Weighted average common shares:
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||||||||||||||||
Basic
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27.9 | 28.3 | 28.0 | 28.7 | ||||||||||||
Diluted
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28.5 | 28.8 | 28.6 | 29.2 |
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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Years Ended
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|||||||||||||||
December 31,
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December 31,
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|||||||||||||||
2015
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2014
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2015
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2014
|
|||||||||||||
(unaudited)
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(unaudited)
|
|||||||||||||||
Excess and Surplus Lines
|
||||||||||||||||
Gross written premiums
|
$ | 158.3 | $ | 144.9 | $ | 679.5 | $ | 607.2 | ||||||||
Net written premiums
|
128.0 | 120.7 | 552.9 | 487.8 | ||||||||||||
Earned premiums
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135.4 | 121.3 | 525.3 | 485.2 | ||||||||||||
Underwriting income
|
13.2 | 22.1 | 66.8 | 75.6 | ||||||||||||
Net investment income
|
8.9 | 9.5 | 35.2 | 36.7 | ||||||||||||
Interest expense
|
(1.5 | ) | (1.5 | ) | (6.0 | ) | (6.3 | ) | ||||||||
Income before income taxes
|
$ | 20.6 | $ | 30.1 | $ | 96.0 | $ | 106.0 | ||||||||
Loss ratio
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59.3 | % | 49.6 | % | 55.5 | % | 51.1 | % | ||||||||
Expense ratio
|
30.9 | 32.2 | 31.8 | 33.3 | ||||||||||||
GAAP combined ratio
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90.2 | % | 81.8 | % | 87.3 | % | 84.4 | % | ||||||||
Commercial Specialty
|
||||||||||||||||
Gross written premiums
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$ | 118.4 | $ | 112.0 | $ | 465.7 | $ | 440.2 | ||||||||
Net written premiums
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69.0 | 74.2 | 285.6 | 301.1 | ||||||||||||
Earned premiums
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72.5 | 76.4 | 290.1 | 291.9 | ||||||||||||
Underwriting income (loss)
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6.7 | (0.2 | ) | 18.1 | (0.7 | ) | ||||||||||
Net investment income
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4.7 | 4.9 | 18.5 | 18.7 | ||||||||||||
Interest expense
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(0.8 | ) | (0.8 | ) | (3.2 | ) | (3.2 | ) | ||||||||
Fee expense, net
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(1.5 | ) | (0.8 | ) | (3.5 | ) | (2.5 | ) | ||||||||
Impairment of intangible assets
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- | (3.4 | ) | - | (3.4 | ) | ||||||||||
Income (loss) before income taxes
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$ | 9.1 | $ | (0.3 | ) | $ | 29.9 | $ | 8.9 | |||||||
Loss ratio
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58.9 | % | 65.2 | % | 61.8 | % | 64.8 | % | ||||||||
Expense ratio
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32.0 | 35.0 | 32.0 | 35.4 | ||||||||||||
GAAP combined ratio
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90.9 | % | 100.2 | % | 93.8 | % | 100.2 | % | ||||||||
Syndicate 1200
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||||||||||||||||
Gross written premiums
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$ | 124.0 | $ | 122.4 | $ | 587.5 | $ | 566.2 | ||||||||
Net written premiums
|
86.8 | 96.3 | 403.3 | 420.8 | ||||||||||||
Earned premiums
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101.9 | 105.2 | 407.4 | 411.1 | ||||||||||||
Underwriting income
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3.3 | 7.8 | 23.9 | 35.2 | ||||||||||||
Net investment income
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2.3 | 2.3 | 9.2 | 10.2 | ||||||||||||
Interest expense
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(0.7 | ) | (0.8 | ) | (2.6 | ) | (3.2 | ) | ||||||||
Fee income, net
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0.9 | 0.1 | 3.3 | 1.9 | ||||||||||||
Income before income taxes
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$ | 5.8 | $ | 9.4 | $ | 33.8 | $ | 44.1 | ||||||||
Loss Ratio
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51.9 | % | 51.1 | % | 52.4 | % | 50.6 | % | ||||||||
Expense Ratio
|
44.8 | 41.4 | 41.7 | 40.8 | ||||||||||||
GAAP Combined Ratio
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96.7 | % | 92.5 | % | 94.1 | % | 91.4 | % | ||||||||
International Specialty
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||||||||||||||||
Gross written premiums
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$ | 45.4 | $ | 45.6 | $ | 278.9 | $ | 290.2 | ||||||||
Net written premiums
|
24.5 | 21.0 | 159.9 | 156.6 | ||||||||||||
Earned premiums
|
35.5 | 35.7 | 148.7 | 148.3 | ||||||||||||
Underwriting income
|
7.6 | 3.4 | 22.5 | 16.0 | ||||||||||||
Net investment income
|
3.0 | 2.1 | 11.8 | 8.2 | ||||||||||||
Interest expense
|
(0.7 | ) | (0.8 | ) | (3.0 | ) | (3.1 | ) | ||||||||
Income before income taxes
|
$ | 9.9 | $ | 4.7 | $ | 31.3 | $ | 21.1 | ||||||||
Loss ratio
|
42.9 | % | 52.2 | % | 49.0 | % | 52.5 | % | ||||||||
Expense ratio
|
35.8 | 38.5 | 35.9 | 36.7 | ||||||||||||
GAAP combined ratio
|
78.7 | % | 90.7 | % | 84.9 | % | 89.2 | % |
ARGO GROUP INTERNATIONAL HOLDINGS LTD
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(in millions)
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
For the Three Months
|
For the Years
|
|||||||||||||||
Ended December 31,
|
Ended December 31,
|
|||||||||||||||
Net Prior Year Development
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
(Favorable)/Unfavorable
|
||||||||||||||||
Excess and Surplus Lines
|
$ | (7.0 | ) | $ | (12.8 | ) | $ | (32.1 | ) | $ | (47.4 | ) | ||||
Commercial Specialty
|
(1.3 | ) | 1.6 | 9.1 | 6.8 | |||||||||||
Syndicate 1200
|
(7.5 | ) | (5.3 | ) | (10.3 | ) | (21.1 | ) | ||||||||
International Specialty
|
(1.9 | ) | (0.3 | ) | (7.7 | ) | (0.4 | ) | ||||||||
Run-off
|
0.6 | 5.5 | 8.6 | 24.4 | ||||||||||||
Total
|
$ | (17.1 | ) | $ | (11.3 | ) | $ | (32.4 | ) | $ | (37.7 | ) |
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
|
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RECONCILIATION OF OPERATING INCOME TO NET INCOME
|
||||||||||||||||
(in millions, except per share amounts)
|
||||||||||||||||
Three Months Ended
|
Years Ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Income before taxes:
|
||||||||||||||||
From operations
|
$ | 32.2 | $ | 27.2 | $ | 132.1 | $ | 117.6 | ||||||||
Foreign currency exchange gains
|
9.9 | 5.0 | 18.3 | 7.8 | ||||||||||||
Net realized investment and other gains
|
2.1 | 51.5 | 27.1 | 94.0 | ||||||||||||
Impairment of intangible assets
|
0.0 | (3.4 | ) | 0.0 | (3.4 | ) | ||||||||||
Income before taxes
|
44.2 | 80.3 | 177.5 | 216.0 | ||||||||||||
Income tax provision
|
3.0 | 20.6 | 14.3 | 32.8 | ||||||||||||
Net income
|
$ | 41.2 | $ | 59.7 | $ | 163.2 | $ | 183.2 | ||||||||
Net income per common share (diluted)
|
$ | 1.44 | $ | 2.07 | $ | 5.72 | $ | 6.27 | ||||||||
Operating income per common share (diluted)
|
||||||||||||||||
At assumed income tax rate:
|
||||||||||||||||
Income (a)
|
$ | 1.24 | $ | 2.23 | $ | 4.97 | $ | 5.92 | ||||||||
Foreign currency exchange gains
|
(0.28 | ) | (0.14 | ) | (0.51 | ) | (0.21 | ) | ||||||||
Net realized investment and other gains
|
(0.06 | ) | (1.43 | ) | (0.76 | ) | (2.58 | ) | ||||||||
Impairment of intangible assets
|
- | 0.09 | - | 0.09 | ||||||||||||
Operating income per common share (diluted)
|
$ | 0.90 | $ | 0.76 | $ | 3.70 | $ | 3.22 |
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
|
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RECONCILIATION OF UNDERWRITING INCOME TO NET INCOME
|
||||||||||||||||
(in millions)
|
||||||||||||||||
Three Months Ended
|
Years Ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Earned Premiums
|
$ | 345.3 | $ | 338.7 | $ | 1,371.9 | $ | 1,338.1 | ||||||||
Losses and Loss Adjustment Expenses
|
191.8 | 187.9 | 766.1 | 747.4 | ||||||||||||
Underwriting, Acquisition and Insurance Expenses
|
137.7 | 139.9 | 539.6 | 539.2 | ||||||||||||
Underwriting Income
|
15.8 | 10.9 | 66.2 | 51.5 | ||||||||||||
Net investment income
|
21.7 | 21.9 | 85.6 | 86.6 | ||||||||||||
Net realized investment and other gains
|
2.1 | 51.5 | 27.1 | 94.0 | ||||||||||||
Interest expense
|
(4.7 | ) | (4.9 | ) | (19.0 | ) | (19.9 | ) | ||||||||
Fee and other expense, net
|
(0.6 | ) | (0.7 | ) | (0.7 | ) | (0.6 | ) | ||||||||
Foreign currency exchange gain
|
9.9 | 5.0 | 18.3 | 7.8 | ||||||||||||
Impairment of intangible assets
|
0.0 | (3.4 | ) | 0.0 | (3.4 | ) | ||||||||||
Income Before Taxes
|
44.2 | 80.3 | 177.5 | 216.0 | ||||||||||||
Income Tax Provision
|
3.0 | 20.6 | 14.3 | 32.8 | ||||||||||||
Net Income
|
$ | 41.2 | $ | 59.7 | $ | 163.2 | $ | 183.2 |
ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
|
||||||||||||
SHAREHOLDER RETURN ANALYSIS
|
||||||||||||
(in millions)
|
||||||||||||
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
% Change
|
||||||||||
Net income
|
$ | 163.2 | $ | 183.2 | (10.9 | %) | ||||||
Operating income (a)
|
105.7 | 94.1 | 12.3 | % | ||||||||
Shareholders' Equity - Beginning of the period
|
1,646.7 | 1,563.0 | 5.4 | % | ||||||||
Shareholders' Equity - End of current period
|
1,668.1 | 1,646.7 | 1.3 | % | ||||||||
Average Shareholders' Equity
|
$ | 1,657.4 | $ | 1,604.9 | 3.3 | % |
Annualized net income return on average shareholders' equity
|
9.8 | % | 11.4 | % | ||||||||
Annualized operating income return on average shareholders' equity
|
6.4 | % | 5.9 | % |