Reinsurance News

Argo Group’s underwriting loss narrows in Q3 2021

3rd November 2021 - Author: Luke Gallin

Bermuda-based Argo Group International Holdings, Ltd. has reported net income of $19.8 million for the third quarter of 2021, compared with a loss of more than $25 million a year earlier, as the company’s combined ratio improved by 9.8 percentage points in the period.

argo globalOverall, Argo has returned to profit in the third-quarter of this year, although the re/insurer did still fall to an underwriting loss for the period, albeit an improved one.

For Q3 2021, the underwriting loss narrowed to $1.3 million compared with $45.3 million a year earlier. The combined ratio ended the quarter at 100.3%, which reflects an improvement of 9.8 percentage points on the 110.1% reported a year earlier.

Argo attributes the improvement to lower COVID-19 losses and natural catastrophe impacts, alongside an improved current accident year, ex-catastrophe, loss ratio.

Overall, catastrophe losses in Q3 2021 reached $27.3 million, of which $24.3 million relates to natural catastrophes, and $3 million to the COVID-19 pandemic. This compares to overall cat losses of $71.2 million for the same period in 2020.

During Q3 2021, the loss ratio was impacted by net unfavourable reserve development of $6.2 million.

Year-on-year, Argo has reported a stable acquisition expense ratio for the quarter of 17.1% and a flat general and administrative expense ratio of 19.2%. The loss ratio improved by 9.8%, year-on-year, to 64%.

The current accident year ex-CAT loss ratio was 57.1% in the third quarter of 2021 compared to 57.4% in the prior year third quarter.

Turning to premiums, and Argo has revealed that its gross written premiums (GWP) actually declined by 1.6% to $875.6 million during Q3 2021, driven mostly by the businesses the firm is exiting, plan to exit or have sold, including sales of Ariel Re and operations in Italy, Malta, and the U.S. grocery business. Argo also highlights re-underwriting efforts across its catastrophe exposed lines.

Net written premiums increased by 9.3% to $583.7 million during Q3 2021, as earned premiums jumped by 9.4% to $487.5 million.

Net investment income improved slightly from $42 million in Q3 2020 to $46.1 million this year, while income from alternative investments reached $24.2 million

As well as the rise in net income, Argo has reported operating income of $31.7 million for the third quarter of 2021, compared with an operating loss of $10 million for the same period last year.

Kevin J. Rehnberg, Argo’s Chief Executive Officer (CEO), commented: “Argo continues to pursue profitable growth, improve underwriting margins, reduce volatility and maintain disciplined expense management.

“The successful implementation of our strategy is evidenced in our financial performance. As we continue to optimize our business mix, the underlying strength of our core lines of business is more clear.

“We are particularly pleased that our efforts to reduce property catastrophe exposure have led to a significant improvement in our results, against the backdrop of the elevated catastrophe losses the insurance industry experienced this quarter.”

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