Reinsurance News

Argo improves combined ratio, reports strong growth for 2018

12th February 2019 - Author: Luke Gallin

Argo Group International Holdings, Ltd. saw its combined ratio strengthen in both Q4 and the full-year 2018, as the re/insurer continued to expand its business operations.

Argo Group logoArgo has reported its financial results for the fourth-quarter and full-year 2018, posting a net loss of $43.6 million and net income of $63.6 million, respectively.

For the quarter, the insurer and reinsurer posted a combined ratio of 99.5% (106.7% Q4 2017), while its full-year combined ratio improved more significantly to 97.9% (107.2% 2017).

The impact of catastrophe losses in both the fourth-quarter and the full-year declined year-on-year, to $31.7 million ($34.3 million) and $61.9 million ($145.1 million), respectively. The catastrophe loss experience was driven mostly by the firm’s International business, as well as outward CAT-related reinstatement premium adjustments in the U.S.

Somewhat offsetting operating improvements, Argo’s Q4 net investment income fell to $29.4 million while its full-year 2018 net investment income declined to $133.1 million.

The insurer and reinsurer’s results show that the firm grew in both the U.S. and across its international business operations in both Q4 and the full-year. Fourth-quarter gross written premiums (GWP) increased by almost 16% to $702 million, underlined by 12.1% growth in the U.S. and 22.1% premium growth in its international operations.

For the full-year, GWP grew by nearly 10% to $3 billion, helped by 12.1% growth in the U.S. and 6.4% growth in international business operations.

Argo states that growth in the quarter was most notable in international property business, primarily as a result of inward CAT-related reinstatement premiums in its reinsurance business, and to a lesser extent some growth in Europe.

In the U.S., underwriting income declined to $21.7 million in Q4 as a result of higher cat losses, while for the full-year, underwriting income increased to roughly $96 million, due to the benefits of scale related to higher net earned premiums.

Within its International operations, Argo recorded an underwriting loss of $8.1 million for the quarter and underwriting income of $6.4 million for the full-year.

President and Chief Executive Officer (CEO), Mark Watson III, said: “Our results in 2018 demonstrate the continued execution of our strategy to optimize the efficiency of the platform, grow in lines with the most profit potential and scale the business globally.

“Our business has been performing well against a difficult market environment. We posted 9.6% growth in annual gross written premiums including a 12.1 % rise in the U.S., improvements in current year margins, and a 260 basis point improvement in the annual expense ratio. While late year volatility in the investment markets masked the full impact of our solid results, we believe we are well positioned to continue to deliver strong shareholder value.”

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