Bermuda
|
1-15259
|
98-0214719
|
||
(State or other jurisdiction
of incorporation) |
(Commission
File Number) |
(I.R.S. Employer
Identification No.) |
110 Pitts Bay Road
Pembroke HM 08 Bermuda |
P.O. Box HM 1282
Hamilton HM FX Bermuda |
(Address, Including Zip Code,
of Principal Executive Offices) |
(Mailing Address)
|
ITEM 2.02.
|
RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
|
ITEM 9.01.
|
FINANCIAL STATEMENTS AND EXHIBITS.
|
|
|
|
|
|
|
|
ARGO GROUP INTERNATIONAL HOLDINGS, LTD. | |||
Dated: November 5, 2018
|
By:
|
/s/ Jay S. Bullock
|
|
Name: Jay S. Bullock
|
|||
Title: Executive Vice President and Chief Financial Officer
|
Gross Written
Premiums
$839.9M
↑ 4.3%
from Q3 2017
|
Combined
Ratio
99.7%
↓ 26.8 pts
from Q3 2017
|
Net Income per
Diluted Share
$1.17
↑ 165.7%
from Q3 2017
|
Adjusted Operating
Income Per Diluted
Share (1)
$0.68
↑ 141.0%
from Q3 2017
|
Book Value
Per Share
$53.63
↑ 2.0%
from Q2 2018(2)
|
“At the beginning of 2018, following the integration of Ariel Re, we restructured our reinsurance program to mitigate risk exposure to catastrophe events and reduce earnings volatility. In this year’s third quarter, the industry was hit by heavy catastrophe losses on a global basis. At Argo, our program performed as planned. The company produced an overall underwriting profit for the quarter, and operating earnings of $23.5 million or $0.68 per diluted share,” said CEO Mark E. Watson III. “Our U.S. Operations are generating strong profitable premium growth reflecting our strategic growth and digital initiatives. In our International Operations, we are targeting growth in select markets, taking corrective underwriting actions in lines of business where needed, and utilizing third-party capital to support our Reinsurance business. The combination of improving margins, top-line growth, and strong investment results should generate improved returns for our shareholders, as we’ve already seen evidenced this quarter, with a 9% annualized return on equity.”
|
HIGHLIGHTS FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 2018 |
HIGHLIGHTS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2018 |
||
●
|
Gross written premiums grew 4.3% to $839.9 million, compared to $805.1 million for the 2017 third quarter.
U.S. Operations grew 12.5% to $482.6 million, while the International Operations declined 5.1% to $357.2 million compared to the 2017 third quarter.
Refer to the U.S. and International Operations sections below for additional commentary on gross written premiums.
|
●
|
Gross written premiums grew 7.8% to $2.3 billion, compared to $2.1 billion for the 2017 nine month period.
U.S. Operations grew 12.1% to $1.3 billion, while the International Operations grew 2.7% to $987.5 million compared to the 2017 nine month period.
|
●
|
Net income was $40.6 million or $1.17 per diluted share, compared to a net loss of $61.3 million or $1.78 per diluted share for the 2017 third quarter.
As noted in the first two quarters of 2018, the year over year comparisons are impacted by the Company adopting a new accounting standard (refer to the Notes below) and as a result, the 2018 third quarter net income was favorably impacted by an after-tax(3) gain of $3.6 million (earnings per diluted share of $0.10). Such amounts are included as a component of Net Realized Investment Gains.
|
●
|
Net income was $107.2 million or $3.09 per diluted share, compared to a net income of $21.4 million or $0.60 per diluted share for the 2017 nine month period.
As noted in the first two quarters of 2018, the year over year comparisons are impacted by the Company adopting a new accounting standard (refer to the Notes below) and as a result, the 2018 nine month period was adversely impacted by an after-tax(3) loss of $17.7 million (loss per diluted share of $0.51). Such amounts are included as a component of Net Realized Investment Gains.
|
●
|
Adjusted operating income(1)(3) was $23.5 million or $0.68 per diluted share, compared to an adjusted operating loss of $54.7 million or a loss of $1.66 per diluted share for the 2017 third quarter.
|
●
|
Adjusted operating income(1)(3) was $92.9 million or $2.68 per diluted share, compared to adjusted operating income of $5.2 million or income of $0.15 per diluted share for the 2017 nine month period.
|
●
|
The combined ratio was 99.7% compared to 126.5% for the 2017 third quarter. The loss and expense ratios for the 2018 quarter were 62.1% and 37.6%, respectively, compared to 83.8% and 42.7%, respectively, for the 2017 third quarter.
|
●
|
The combined ratio was 97.3% compared to 107.3% for the 2017 nine month period. The loss and expense ratios for the nine month period were 59.4% and 37.9%, respectively, compared to 66.7% and 40.6%, respectively for the 2017 nine month period.
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●
|
Catastrophe losses were $24.2 million, net of reinstatement and other CAT-related premium adjustments. The 2017 third quarter catastrophe losses were $104.5 million, inclusive of net reinstatement and other CAT-related premium adjustments.
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●
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Catastrophe losses were $30.2 million, net of reinstatement and other CAT-related premium adjustments. The 2017 nine month period catastrophe losses were $110.9, inclusive of net reinstatement and other CAT-related premium adjustments.
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●
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Net prior-year reserve development was $0.3 million unfavorable compared to favorable prior year development of $1.3 million in the 2017 third quarter.
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●
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Net prior-year reserve development was $4.1 million favorable compared with net adverse development of $4.4 million in the 2017 nine month period. The 2017 nine month period was adversely impacted by the Ogden rate change in the U.K. and losses related to Hurricane Matthew (approximately $10 million in total).
|
●
|
Net investment income increased 11.7% to $34.5 million compared to $30.9 million in the 2017 third quarter.
Net investment income on the core portfolio increased 9.9% to $27.7 million compared to $25.2 million in the 2017 third quarter. Alternative investments contributed $6.8 million in the 2018 third quarter compared to $5.7 million in the 2017 third quarter, an increase of 19.3%.
|
●
|
Net investment income decreased 1.2% to $103.7 million, compared to $105.0 million for the 2017 nine month period.
Net investment income on the core portfolio increased 25.0% to $83.0 million compared to $66.4 million in the 2017 nine month period. Alternative investments contributed $20.7 million in the 2018 nine month period compared to $38.6 million in the 2017 third quarter, a decrease of 46.4%.
The 2017 nine month period included a net pre-tax investment gain on Alternative investments of $11.6 million ($9.3 million after-tax(3) or $0.26 earnings per diluted share) relating to net asset sales initiated by an equity investee in the second quarter of 2017.
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●
|
Common stock repurchased by the Company during the 2018 third quarter totaled 156,456 shares for $9.6 million.
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●
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Common stock repurchased by the Company during the 2018 nine month period totaled 500,989 shares for $30.0 million.
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●
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Book value per share was $53.63 at September 30, 2018, up from $52.83 at June 30, 2018
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●
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Book value per share was $53.63 at September 30, 2018, up from $53.46 at December 31, 2017, and $53.01 at September 30, 2017.
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Notes
|
|
●
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Liabilities, using a cumulative effect adjustment. This adjustment transferred the unrealized gains and losses as of December 31, 2017, net of tax, on equity securities from accumulated other comprehensive income to retained earnings, resulting in no overall impact to shareholders’ equity.
|
In accordance with this accounting standard, in the 2018 third quarter, the Company recognized the change in the fair value of its equity securities as a pre-tax gain of $4.5 million ($3.6 million net of taxes(3) and earnings of $0.10 per diluted share). Since January 1, 2018, the Company recognized a pre-tax loss of $22.1 million ($17.7 million after taxes(3) and a loss of $0.51 per diluted share). These amounts are included as a component of net realized investment losses (gains) on the income statement. Amounts for the comparable 2017 periods are not presented as a component of net income, as ASU 2016-01 was required to be adopted on a prospective basis. | |
●
|
Excluding repurchased shares, all references to common shares associated with the recalculation of per share amounts for all periods presented have been adjusted for the 15% stock dividend paid on March 21, 2018, to shareholders of record at the close of business on March 7, 2018.
|
●
|
All references to catastrophe losses are pre-tax.
|
●
|
Point impacts on the combined ratio are calculated as the difference between the reported combined ratio and the combined ratio excluding incurred catastrophe losses and associated reinstatement and other catastrophe-related premium adjustments.
|
• |
Gross written premiums in the 2018 third quarter of $482.6 million were up $53.7 million or 12.5% compared to the 2017 third quarter. This growth was achieved in all major lines of business, reflecting the continued execution of strategic growth and digital initiatives, while still executing on appropriate risk selection and exposure management actions.
|
• |
Net earned premiums in the 2018 third quarter of $278.3 million were up $35.7 million or 14.7% from the 2017 third quarter, driven by the aforementioned growth in gross written premiums across all major lines of business.
|
• |
The loss ratio for the 2018 third quarter was 56.1%, compared to 61.2% for the 2017 third quarter. The lower loss ratio in 2018 third quarter reflects lower catastrophe losses, partially offset by a modest increase in the current accident year, ex-CAT loss ratio. The current accident year ex-CAT loss ratio for the 2018 third quarter was 57.9%, compared to 57.5% for the 2017 third quarter. This modest increase is primarily related to business mix changes.
|
• |
Net favorable prior-year reserve development for the 2018 third quarter was $10.7 million, consistent with the 2017 third quarter. The current quarter favorable development is largely attributable to Liability and Specialty lines.
|
• |
Catastrophe losses for the 2018 third quarter were $5.6 million compared to catastrophe losses of $17.2 million in the 2017 third quarter. In addition, the 2017 third quarter was adversely impacted by CAT-related premium adjustments of $3.8 million, resulting in a total catastrophe related impact of $21.0 million.
|
• |
The expense ratio for the 2018 third quarter was 32.5%, compared to 36.5% for the 2017 third quarter. The improvement in the expense ratio reflected the aforementioned 14.7% increase in net earned premiums and lower acquisition costs, partially offset by continued strategic investments in people and technology, including digital initiatives in support of premium growth. The 2017 third quarter included a $3.5 million charge relating to the final resolution of a premium tax dispute, which increased the expense ratio in the 2017 quarter by 1.4%.
|
• |
Underwriting income for the 2018 third quarter was $31.8 million, compared to $5.6 million for the 2017 third quarter. The $26.2 million increase in underwriting income is primarily related to lower catastrophe losses, an increase in underwriting gains related to the growth in net earned premiums, and improved scale, as reflected by a lower expense ratio.
|
• |
Gross written premiums in the 2018 third quarter of $357.2 million were down $19.1 million or 5.1% compared to the 2017 third quarter.
|
|
As discussed last quarter, in connection with the full integration of the reinsurance business of Ariel Re that we acquired in 2017, beginning in 2018 we changed the capital structure supporting that business by introducing certain third party capital to participate in the exposures we underwrite. This third party capital receives a corresponding proportion of the gross written premiums. As such, this structure has the effect of reducing the gross written premiums reported in our financial statements. In exchange, we receive certain remuneration for originating risks and for the underlying underwriting performance. During the 2018 third quarter, approximately $53.4 million of gross written premiums are attributable to our third party capital partners. There was no such structure for our Ariel Re business in 2017.
|
|
The decline in gross written premiums also reflects the effects of corrective underwriting actions within Syndicate 1200, most notably the Property D&F business and the non-renewal of certain casualty line accounts in Bermuda. Partially offsetting these declines were increases in Liability, Professional and Specialty lines in Europe, Liability, Professional and Specialty lines in Syndicate 1200 (including 2017 Year of Account (YOA) adjustments), Professional lines in Bermuda, and to a lesser extent growth in Specialty lines in Latin America.
|
• |
Net earned premiums in the 2018 third quarter of $168.5 million increased $21.7 million or 14.8% from the 2017 third quarter due largely to adjustments to certain 2017 YOA account binders within Syndicate 1200, and earning impacts for net written premiums written in the later part of 2017 and in 2018, partially offset by the retained percentage of certain of our Lloyd's insurance and reinsurance businesses as noted above.
|
• |
The loss ratio for the 2018 third quarter was 66.9%, compared to 113.0% for the 2017 third quarter. The improvement in the loss ratio was due to lower catastrophe losses and an improvement in the current accident year ex-CAT loss ratio, partially offset by unfavorable prior-year reserve development recorded in the 2018 third quarter compared to favorable prior-year reserve development for the 2017 third quarter.
|
|
The current accident year ex-CAT loss ratio for the 2018 third quarter was 54.3% compared to 60.9% for the 2017 third quarter. The 6.6 point improvement in the current accident year ex-CAT loss ratio is due primarily to the earned premium impact of one-time CAT and risk management reinsurance purchases in 2017 in connection with the acquisition of Ariel Re. The effect of these purchases was an increase to the 2017 current accident year ex-CAT loss ratio of 2.6 points. Additionally, the 2018 third quarter reflected improved property experience as a result of lower attritional losses, in part due to corrective underwriting actions within the Property D&F book within Syndicate 1200.
|
• |
For the 2018 third quarter, net unfavorable prior-year reserve development was $2.5 million, compared to net favorable prior-year reserve development of $2.6 million in the 2017 third quarter. The 2018 charge relates primarily to Syndicate 1200 Liability lines, partially offset by a reduction in Property lines.
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• |
Catastrophe losses for the 2018 third quarter were $19.0 million and net inward CAT-related premium adjustments were $0.4 million for a net catastrophe impact of $18.6 million. In the third quarter of 2017, catastrophe losses were $72.8 million and net outward CAT-related premium adjustments of $10.7 million were recorded for a total catastrophe impact of $83.5 million. The 2018 catastrophe losses are related to Hurricane Florence, Typhoon Jebi and other catastrophe and weather-related events in the third quarter of 2018 and include losses related to certain aggregate excess of loss contracts.
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• |
The expense ratio for the 2018 third quarter was 37.6%, compared to 43.3% for the 2017 third quarter. The decrease in the expense ratio relates to the aforementioned 14.8% increase in net earned premiums and lower operating costs within the Reinsurance business unit due to expenses attributable to third party capital providers, partially offset by certain investments in support of strategic growth areas, most notably in Europe, Latin America and Asia Pacific. Additionally, the 2017 third quarter expense ratio was increased due to a reduction in net earned premiums due to one-time CAT and risk management reinsurance purchases mentioned above.
|
• |
The underwriting loss for the 2018 third quarter was $7.7 million, compared to an underwriting loss of $82.7 million for the 2017 third quarter. The $75.0 million improvement in underwriting results was due primarily to lower impacts from catastrophes. As noted above, the 2018 third quarter includes catastrophe impacts of $18.6 million compared to $83.5 million in the 2017 third quarter. Additionally, the 2018 third quarter reflected an increase in underwriting gains related to the $21.7 million growth in net earned premiums, partially offset by net unfavorable prior-year reserve development.
|
September 30,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Total investments
|
$
|
4,864.7
|
$
|
4,742.9
|
||||
Cash
|
118.5
|
176.6
|
||||||
Accrued investment income
|
26.3
|
23.5
|
||||||
Receivables
|
2,917.1
|
2,691.9
|
||||||
Goodwill and intangible assets
|
271.9
|
258.2
|
||||||
Deferred acquisition costs, net
|
174.6
|
160.4
|
||||||
Ceded unearned premiums
|
515.6
|
399.5
|
||||||
Other assets
|
391
|
311
|
||||||
Total assets
|
$
|
9,279.7
|
$
|
8,764.0
|
||||
Liabilities and Shareholders' Equity
|
||||||||
Reserves for losses and loss adjustment expenses
|
$
|
4,291.7
|
$
|
4,201.0
|
||||
Unearned premiums
|
1,387.5
|
1,207.7
|
||||||
Ceded reinsurance payable, net
|
885.4
|
734.0
|
||||||
Senior unsecured fixed rate notes
|
139.8
|
139.6
|
||||||
Other indebtedness
|
183.9
|
184.5
|
||||||
Junior subordinated debentures
|
256.9
|
256.6
|
||||||
Other liabilities
|
316.4
|
220.9
|
||||||
Total liabilities
|
7,461.6
|
6,944.3
|
||||||
Total shareholders' equity
|
1,818.1
|
1,819.7
|
||||||
Total liabilities and shareholders' equity
|
$
|
9,279.7
|
$
|
8,764.0
|
||||
Book value per common share
|
$
|
53.63
|
$
|
53.46
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Gross written premiums
|
$
|
839.9
|
$
|
805.1
|
$
|
2,253.2
|
$
|
2,090.9
|
||||||||
Net written premiums
|
530.6
|
473.2
|
1,341.0
|
1,263.7
|
||||||||||||
Earned premiums
|
446.9
|
389.3
|
1,279.3
|
1,167.8
|
||||||||||||
Net investment income
|
34.5
|
30.9
|
103.7
|
105.0
|
||||||||||||
Fee and other income
|
3.3
|
13.0
|
7.2
|
20.4
|
||||||||||||
Net realized investment gains (losses):
|
||||||||||||||||
Net realized investment gains
|
9.7
|
6.0
|
31.1
|
25.1
|
||||||||||||
Change in fair value of equity securities (1)
|
4.5
|
-
|
(22.1
|
)
|
-
|
|||||||||||
Net realized investment gains
|
14.2
|
6.0
|
9.0
|
25.1
|
||||||||||||
Total revenue
|
498.9
|
439.2
|
1,399.2
|
1,318.3
|
||||||||||||
Losses and loss adjustment expenses
|
277.5
|
326.4
|
760.2
|
779.5
|
||||||||||||
Underwriting, acquisition and insurance expenses
|
168.0
|
166.1
|
485.0
|
474.4
|
||||||||||||
Interest expense
|
7.9
|
7.5
|
23.4
|
20.4
|
||||||||||||
Fee and other expense
|
1.9
|
5.0
|
5.5
|
12.4
|
||||||||||||
Foreign currency exchange (gains) losses
|
(1.7
|
)
|
0.1
|
(2.3
|
)
|
4.0
|
||||||||||
Total expenses
|
453.6
|
505.1
|
1,271.8
|
1,290.7
|
||||||||||||
Income (loss) before income taxes
|
45.3
|
(65.9
|
)
|
127.4
|
27.6
|
|||||||||||
Income tax provision (benefit)
|
4.7
|
(4.6
|
)
|
20.2
|
6.2
|
|||||||||||
Net income (loss)
|
$
|
40.6
|
$
|
(61.3
|
)
|
$
|
107.2
|
$
|
21.4
|
|||||||
Net income per common share (basic)
|
$
|
1.20
|
$
|
(1.78
|
)
|
$
|
3.16
|
$
|
0.62
|
|||||||
Net income per common share (diluted)
|
$
|
1.17
|
$
|
(1.78
|
)
|
$
|
3.09
|
$
|
0.60
|
|||||||
Weighted average common shares:
|
||||||||||||||||
Basic
|
34.0
|
34.5
|
33.9
|
34.6
|
||||||||||||
Diluted
|
34.7
|
34.5
|
34.7
|
35.5
|
||||||||||||
Loss ratio
|
62.1
|
%
|
83.8
|
%
|
59.4
|
%
|
66.7
|
%
|
||||||||
Expense ratio
|
37.6
|
%
|
42.7
|
%
|
37.9
|
%
|
40.6
|
%
|
||||||||
Combined ratio
|
99.7
|
%
|
126.5
|
%
|
97.3
|
%
|
107.3
|
%
|
||||||||
CAY ex-CAT combined ratio (2)
|
94.1
|
%
|
100.0
|
%
|
95.2
|
%
|
97.5
|
%
|
(1) |
New reporting requirements for the change in fair value of equity securities commenced January 1, 2018 resulting from our adoption of ASU 2016-01. Amounts for the three and nine months ended September 30, 2017 are not presented, as ASU 2016-01 was required to be adopted on a prospective basis.
|
(2) |
For purposes of calculating these ratios, net earned premiums were adjusted to exclude reinstatement and other catastrophe-related premium adjustments of $0.4 million (inward premiums) for both the three and nine months ended September 30, 2018, and $14.5 million (outward premiums) for both the three and nine months ended September 30, 2017.
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
U.S. Operations
|
||||||||||||||||
Gross written premiums
|
$
|
482.6
|
$
|
428.9
|
$
|
1,265.4
|
$
|
1,128.9
|
||||||||
Net written premiums
|
339.1
|
302.6
|
866.2
|
781.1
|
||||||||||||
Earned premiums
|
278.3
|
242.6
|
807.6
|
692.9
|
||||||||||||
Underwriting income
|
31.8
|
5.6
|
74.2
|
55.7
|
||||||||||||
Net investment income
|
21.4
|
18.8
|
64.7
|
66.0
|
||||||||||||
Interest expense
|
(3.9
|
)
|
(3.8
|
)
|
(11.9
|
)
|
(10.3
|
)
|
||||||||
Fee income (expense), net
|
1.0
|
8.1
|
(0.2
|
)
|
7.5
|
|||||||||||
Net income before taxes
|
$
|
50.3
|
$
|
28.7
|
$
|
126.8
|
$
|
118.9
|
||||||||
Loss ratio
|
56.1
|
%
|
61.2
|
%
|
58.0
|
%
|
56.8
|
%
|
||||||||
Expense ratio
|
32.5
|
%
|
36.5
|
%
|
32.8
|
%
|
35.1
|
%
|
||||||||
GAAP combined ratio
|
88.6
|
%
|
97.7
|
%
|
90.8
|
%
|
91.9
|
%
|
||||||||
CAY ex-CAT combined ratio (1)
|
90.4
|
%
|
93.5
|
%
|
91.2
|
%
|
92.4
|
%
|
||||||||
International Operations
|
||||||||||||||||
Gross written premiums
|
$
|
357.2
|
$
|
376.3
|
$
|
987.5
|
$
|
962.0
|
||||||||
Net written premiums
|
191.4
|
170.7
|
474.5
|
482.6
|
||||||||||||
Earned premiums
|
168.5
|
146.8
|
471.4
|
474.9
|
||||||||||||
Underwriting (loss) income
|
(7.7
|
)
|
(82.7
|
)
|
14.5
|
(78.1
|
)
|
|||||||||
Net investment income
|
8.4
|
7.7
|
25.6
|
24.4
|
||||||||||||
Interest expense
|
(2.3
|
)
|
(2.8
|
)
|
(6.9
|
)
|
(7.1
|
)
|
||||||||
Fee income, net
|
0.4
|
0.3
|
1.7
|
0.7
|
||||||||||||
Net (loss) income before taxes
|
$
|
(1.2
|
)
|
$
|
(77.5
|
)
|
$
|
34.9
|
$
|
(60.1
|
)
|
|||||
Loss ratio
|
66.9
|
%
|
113.0
|
%
|
59.5
|
%
|
77.7
|
%
|
||||||||
Expense ratio
|
37.6
|
%
|
43.3
|
%
|
37.4
|
%
|
38.7
|
%
|
||||||||
GAAP combined ratio
|
104.5
|
%
|
156.3
|
%
|
96.9
|
%
|
116.4
|
%
|
||||||||
CAY ex-CAT combined ratio (2)
|
92.0
|
%
|
101.2
|
%
|
93.1
|
%
|
95.1
|
%
|
(1)
|
For purposes of calculating these ratios, net earned premiums were adjusted to exclude reinstatement and other catastrophe-related premium adjustments of $3.8 million (outward premiums) for both the three and nine months ended September 30, 2017. There were no such premium adjustments for the three and nine months ended September 30, 2018.
|
(2)
|
For purposes of calculating these ratios, net earned premiums were adjusted to exclude reinstatement and other catastrophe-related premium adjustments of $0.4 million (inward premiums) for both the three and nine months ended September 30, 2018, and $10.7 million (outward premiums) for both the three and nine months ended September 30, 2017.
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
U.S. Operations
|
||||||||||||||||
Loss ratio
|
56.1
|
%
|
61.2
|
%
|
58.0
|
%
|
56.8
|
%
|
||||||||
Prior accident year loss reserve development
|
3.8
|
%
|
4.3
|
%
|
1.8
|
%
|
4.1
|
%
|
||||||||
Catastrophe losses
|
(2.0)
|
%
|
(8.0)
|
%
|
(1.4)
|
%
|
(3.4)
|
%
|
||||||||
CAY ex-CAT loss ratio
|
57.9
|
%
|
57.5
|
%
|
58.4
|
%
|
57.5
|
%
|
||||||||
International Operations
|
||||||||||||||||
Loss ratio
|
66.9
|
%
|
113.0
|
%
|
59.5
|
%
|
77.7
|
%
|
||||||||
Prior accident year loss reserve development
|
(1.5)
|
%
|
1.7
|
%
|
.2
|
%
|
(3.5)
|
%
|
||||||||
Catastrophe losses
|
(11.1)
|
%
|
(53.8)
|
%
|
(4.0)
|
%
|
(17.0)
|
%
|
||||||||
CAY ex-CAT loss ratio
|
54.3
|
%
|
60.9
|
%
|
55.7
|
%
|
57.2
|
%
|
||||||||
Consolidated
|
||||||||||||||||
Loss ratio
|
62.1
|
%
|
83.8
|
%
|
59.4
|
%
|
66.7
|
%
|
||||||||
Prior accident year loss reserve development
|
(.1)
|
%
|
.3
|
%
|
.3
|
%
|
(.4)
|
%
|
||||||||
Catastrophe losses
|
(5.5)
|
%
|
(25.2)
|
%
|
(2.4)
|
%
|
(8.9)
|
%
|
||||||||
CAY ex-CAT loss ratio
|
56.5
|
%
|
58.9
|
%
|
57.3
|
%
|
57.4
|
%
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net Prior-Year Development
|
||||||||||||||||
(Favorable)/Unfavorable
|
||||||||||||||||
U.S. Operations
|
$
|
(10.7
|
)
|
$
|
(10.7
|
)
|
$
|
(14.8
|
)
|
$
|
(28.7
|
)
|
||||
International Operations
|
2.5
|
(2.6
|
)
|
(0.8
|
)
|
17.0
|
||||||||||
Run-off Lines
|
8.5
|
12.0
|
11.5
|
16.1
|
||||||||||||
Total net prior-year reserve development
|
$
|
0.3
|
$
|
(1.3
|
)
|
$
|
(4.1
|
)
|
$
|
4.4
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Catastrophe Losses
|
||||||||||||||||
Catastrophe losses:
|
||||||||||||||||
U.S. Operations
|
$
|
5.6
|
$
|
17.2
|
$
|
11.2
|
$
|
22.1
|
||||||||
International Operations
|
19.0
|
72.8
|
19.4
|
74.3
|
||||||||||||
Total catastrophe losses
|
24.6
|
90.0
|
30.6
|
96.4
|
||||||||||||
CAT-related premium adjustments:
|
||||||||||||||||
U.S. Operations
|
-
|
3.8
|
-
|
3.8
|
||||||||||||
International Operations
|
(0.4
|
)
|
10.7
|
(0.4
|
)
|
10.7
|
||||||||||
Total CAT-related premium adjustments
|
(0.4
|
)
|
14.5
|
(0.4
|
)
|
14.5
|
||||||||||
Catastrophe losses, inclusive of CAT-related premium adjustments:
|
||||||||||||||||
U.S. Operations
|
5.6
|
21.0
|
11.2
|
25.9
|
||||||||||||
International Operations
|
18.6
|
83.5
|
19.0
|
85.0
|
||||||||||||
Total catastrophe losses, inclusive of CAT-related
premium adjustments
|
$ | 24.2 |
$
|
104.5
|
$
|
30.2
|
$
|
110.9
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net income (loss)
|
$
|
40.6
|
$
|
(61.3
|
)
|
$
|
107.2
|
$
|
21.4
|
|||||||
Add (deduct):
|
||||||||||||||||
Income tax provision (benefit)
|
4.7
|
(4.6
|
)
|
20.2
|
6.2
|
|||||||||||
Net investment income
|
(34.5
|
)
|
(30.9
|
)
|
(103.7
|
)
|
(105.0
|
)
|
||||||||
Net realized investment gains
|
(14.2
|
)
|
(6.0
|
)
|
(9.0
|
)
|
(25.1
|
)
|
||||||||
Fee and other income
|
(3.3
|
)
|
(13.0
|
)
|
(7.2
|
)
|
(20.4
|
)
|
||||||||
Interest expense
|
7.9
|
7.5
|
23.4
|
20.4
|
||||||||||||
Fee and other expense
|
1.9
|
5.0
|
5.5
|
12.4
|
||||||||||||
Foreign currency exchange (gains) losses
|
(1.7
|
)
|
0.1
|
(2.3
|
)
|
4.0
|
||||||||||
Underwriting income (loss)
|
$
|
1.4
|
$
|
(103.2
|
)
|
$
|
34.1
|
$
|
(86.1
|
)
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net income (loss), as reported
|
$
|
40.6
|
$
|
(61.3
|
)
|
$
|
107.2
|
$
|
21.4
|
|||||||
Income tax provision (benefit)
|
4.7
|
(4.6
|
)
|
20.2
|
6.2
|
|||||||||||
Net income (loss), before taxes
|
45.3
|
(65.9
|
)
|
127.4
|
27.6
|
|||||||||||
Add (deduct):
|
||||||||||||||||
Net realized investment gains
|
(14.2
|
)
|
(6.0
|
)
|
(9.0
|
)
|
(25.1
|
)
|
||||||||
Foreign currency exchange (gains) losses
|
(1.7
|
)
|
0.1
|
(2.3
|
)
|
4.0
|
||||||||||
Adjusted operating income before taxes
|
29.4
|
(71.8
|
)
|
116.1
|
6.5
|
|||||||||||
Provision for income taxes, at assumed rate (1)
|
5.9
|
(14.4
|
)
|
23.2
|
1.3
|
|||||||||||
Adjusted operating income (loss)
|
$
|
23.5
|
$
|
(57.4
|
)
|
$
|
92.9
|
$
|
5.2
|
|||||||
Adjusted operating income (loss) per common share (diluted)
|
$ | 0.68 |
$
|
(1.66
|
)
|
$
|
2.68
|
$
|
0.15
|
|||||||
Weighted average common shares, diluted
|
34.7
|
34.5
|
34.7
|
35.5
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Segment income (loss) before income taxes:
|
||||||||||||||||
U.S. Operations
|
$
|
50.3
|
$
|
28.7
|
$
|
126.8
|
$
|
118.9
|
||||||||
International Operations
|
(1.2
|
)
|
(77.5
|
)
|
34.9
|
(60.1
|
)
|
|||||||||
Run-off Lines
|
(7.6
|
)
|
(12.7
|
)
|
(8.6
|
)
|
(16.4
|
)
|
||||||||
Corporate and Other
|
(12.1
|
)
|
(10.3
|
)
|
(37.0
|
)
|
(35.9
|
)
|
||||||||
Net realized investment gains
|
14.2
|
6.0
|
9.0
|
25.1
|
||||||||||||
Foreign currency exchange gains (losses)
|
1.7
|
(0.1
|
)
|
2.3
|
(4.0
|
)
|
||||||||||
Income (loss) before income taxes
|
45.3
|
(65.9
|
)
|
127.4
|
27.6
|
|||||||||||
Income tax provision (benefit)
|
4.7
|
(4.6
|
)
|
20.2
|
6.2
|
|||||||||||
Net income (loss)
|
$
|
40.6
|
$
|
(61.3
|
)
|
$
|
107.2
|
$
|
21.4
|
U.S. Operations
|
Three months ended September 30, 2018
|
Three months ended September 30, 2017
|
||||||||||||||||||||||
Gross
Written
|
Net
Written
|
Net
Earned
|
Gross
Written
|
Net
Written
|
Net
Earned
|
|||||||||||||||||||
Property
|
$
|
76.3
|
$
|
56.9
|
$
|
33.7
|
$
|
68.1
|
$
|
45.5
|
$
|
26.8
|
||||||||||||
Liability
|
302.1
|
209.9
|
182.9
|
277.2
|
196.9
|
160.2
|
||||||||||||||||||
Professional
|
61.2
|
38.5
|
33.0
|
46.2
|
32.1
|
30.8
|
||||||||||||||||||
Specialty
|
43.0
|
33.8
|
28.7
|
37.4
|
28.1
|
24.8
|
||||||||||||||||||
Total
|
$
|
482.6
|
$
|
339.1
|
$
|
278.3
|
$
|
428.9
|
$
|
302.6
|
$
|
242.6
|
||||||||||||
Nine months ended September 30, 2018
|
Nine months ended September 30, 2017
|
|||||||||||||||||||||||
Gross
Written
|
Net
Written
|
Net
Earned
|
Gross
Written
|
Net
Written
|
Net
Earned
|
|||||||||||||||||||
Property
|
$
|
193.7
|
$
|
113.7
|
$
|
100.8
|
$
|
193.4
|
$
|
104.9
|
$
|
85.8
|
||||||||||||
Liability
|
790.8
|
553.6
|
528.6
|
715.4
|
511.3
|
454.8
|
||||||||||||||||||
Professional
|
164.4
|
107.6
|
95.5
|
119.9
|
89.3
|
85.5
|
||||||||||||||||||
Specialty
|
116.5
|
91.3
|
82.7
|
100.2
|
75.6
|
66.8
|
||||||||||||||||||
Total
|
$
|
1,265.4
|
$
|
866.2
|
$
|
807.6
|
$
|
1,128.9
|
$
|
781.1
|
$
|
692.9
|
International Operations
|
Three months ended September 30, 2018
|
Three months ended September 30, 2017
|
||||||||||||||||||||||
Gross
Written
|
Net
Written
|
Net
Earned
|
Gross
Written
|
Net
Written
|
Net
Earned
|
|||||||||||||||||||
Property
|
$
|
147.1
|
$
|
52.5
|
$
|
49.4
|
$
|
177.1
|
$
|
64.1
|
$
|
48.8
|
||||||||||||
Liability
|
53.0
|
29.7
|
27.4
|
56.3
|
25.1
|
22.6
|
||||||||||||||||||
Professional
|
52.7
|
32.2
|
27.9
|
42.8
|
27.9
|
22.7
|
||||||||||||||||||
Specialty
|
104.4
|
77.0
|
63.8
|
100.1
|
53.6
|
52.7
|
||||||||||||||||||
Total
|
$
|
357.2
|
$
|
191.4
|
$
|
168.5
|
$
|
376.3
|
$
|
170.7
|
$
|
146.8
|
||||||||||||
Nine months ended September 30, 2018
|
Nine months ended September 30, 2017
|
|||||||||||||||||||||||
Gross
Written
|
Net
Written
|
Net
Earned
|
Gross
Written
|
Net
Written
|
Net
Earned
|
|||||||||||||||||||
Property
|
$
|
408.9
|
$
|
135.1
|
$
|
156.1
|
$
|
390.3
|
$
|
161.9
|
$
|
168.9
|
||||||||||||
Liability
|
144.9
|
80.2
|
71.7
|
126.6
|
61.3
|
60.1
|
||||||||||||||||||
Professional
|
141.4
|
80.3
|
76.0
|
120.4
|
72.3
|
70.4
|
||||||||||||||||||
Specialty
|
292.3
|
178.9
|
167.6
|
324.7
|
187.1
|
175.5
|
||||||||||||||||||
Total
|
$
|
987.5
|
$
|
474.5
|
$
|
471.4
|
$
|
962.0
|
$
|
482.6
|
$
|
474.9
|
Consolidated
|
Three months ended September 30, 2018
|
Three months ended September 30, 2017
|
||||||||||||||||||||||
Gross
Written
|
Net
Written
|
Net
Earned
|
Gross
Written
|
Net
Written
|
Net
Earned
|
|||||||||||||||||||
Property
|
$
|
223.4
|
$
|
109.4
|
$
|
83.1
|
$
|
245.1
|
$
|
109.5
|
$
|
75.5
|
||||||||||||
Liability
|
355.2
|
239.7
|
210.4
|
333.5
|
222.0
|
182.8
|
||||||||||||||||||
Professional
|
113.9
|
70.7
|
60.9
|
89.0
|
60.0
|
53.5
|
||||||||||||||||||
Specialty
|
147.4
|
110.8
|
92.5
|
137.5
|
81.7
|
77.5
|
||||||||||||||||||
Total
|
$
|
839.9
|
$
|
530.6
|
$
|
446.9
|
$
|
805.1
|
$
|
473.2
|
$
|
389.3
|
||||||||||||
Nine months ended September 30, 2018
|
Nine months ended September 30, 2017
|
|||||||||||||||||||||||
Gross
Written
|
Net
Written
|
Net
Earned
|
Gross
Written
|
Net
Written
|
Net
Earned
|
|||||||||||||||||||
Property
|
$
|
602.6
|
$
|
248.8
|
$
|
256.9
|
$
|
583.7
|
$
|
266.8
|
$
|
254.7
|
||||||||||||
Liability
|
936.0
|
634.1
|
600.6
|
842.0
|
572.6
|
514.9
|
||||||||||||||||||
Professional
|
305.8
|
187.9
|
171.5
|
240.3
|
161.6
|
155.9
|
||||||||||||||||||
Specialty
|
408.8
|
270.2
|
250.3
|
424.9
|
262.7
|
242.3
|
||||||||||||||||||
Total
|
$
|
2,253.2
|
$
|
1,341.0
|
$
|
1,279.3
|
$
|
2,090.9
|
$
|
1,263.7
|
$
|
1,167.8
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net investment income, excluding alternative investments
|
$
|
27.7
|
$
|
25.2
|
$
|
83.0
|
$
|
66.4
|
||||||||
Alternative investments
|
6.8
|
5.7
|
20.7
|
38.6
|
||||||||||||
Total net investment income
|
$
|
34.5
|
$
|
30.9
|
$
|
103.7
|
$
|
105.0
|
For the Nine Months Ended
|
||||||||||||
September 30,
|
||||||||||||
2018
|
2017
|
% Change
|
||||||||||
Net income
|
$
|
107.2
|
$
|
21.4
|
400.9
|
%
|
||||||
Adjusted operating income (1)
|
92.9
|
5.2
|
1,686.5
|
%
|
||||||||
Shareholders' Equity - Beginning of period
|
$
|
1,819.7
|
$
|
1,792.7
|
1.5
|
%
|
||||||
Shareholders' Equity - End of period
|
1,818.1
|
1,808.0
|
.6
|
%
|
||||||||
Average Shareholders' Equity
|
$
|
1,818.9
|
$
|
1,800.4
|
1.0
|
%
|
||||||
Annualized return on average shareholders' equity
|
7.9
|
%
|
1.6
|
%
|
||||||||
Annualized adjusted operating return on average shareholders' equity
|
6.8
|
%
|
.4
|
%
|