Argo Group International Holdings, Ltd., the Bermuda based insurance and reinsurance company, fell to a first-quarter loss to start the year, as claims from the Covid-19 pandemic dented its performance.
Argo has reported a net loss of $18.8 million for the first-quarter of 2020, but having suffered $26.2 million of claims related to the effects of Covid-19, primarily resulting from contingency and property exposures, the company would have been profitable absent the pandemic.
The re/insurer continued to expand its book into an improving market in Q1, with gross written premiums rising 8.6% to $825.9 million, compared to $760.8 million for Q1 2019.
Argo said that this growth was found in U.S. lines of business, while premium growth in its International segment was relatively flat compared to the prior year quarter.
“We achieved strong premium growth and positive operating results in the first quarter, but we are still not satisfied with our overall performance,” commented Argo Chief Executive Officer Kevin J. Rehnberg. “While we expect the premium and loss impact of COVID-19 to be challenging in 2020, we are committed to maintaining financial strength and implementing our strategy to drive long-term shareholder value – a focused review of our businesses; investment where there is significant opportunity; and a focus on maximizing underwriting profitability.”
Argo’s combined ratio rose to 103.2% for Q1 2020 on the back of the Covid-19 pandemic losses, compared to 94.7% for Q1 2019.
Catastrophe losses of $29.1 million included the $26.2 million related to the Covid-19 pandemic. While some reserve development added 0.6 points to the loss ratio in the first quarter of 2020 as well, Argo said.
Net reserve strengthening was reported for Argo’s U.S. Operations, although it said this was modest.
The Q1 2020 net loss was $18.8 million which compared to a net profit of $91.2 million in the prior year period.
Of this, the U.S. business drove the profits with underwriting income of $16.8 million and a 94.5% combined ratio, where as Argo’s international business fell to a -$19.5 million loss thanks to a 114.7% combined ratio.
On the asset side, net investment income of $35.5 million was up some 4.7% compared to Q1 2019, helping to offset some of the underwriting losses due to Covid-19.
The increase in underwritten premiums was all in the United States in lines of business including Professional and Liability risks, while Property and Specialty lines writings were roughly flat with the prior year period.