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Argo posts first quarter net income of $91.2m, a 240% increase from Q1 2018

30th April 2019 - Author: Charlie Wood

Specialty re/insurer Argo Group International Holdings has posted a net income for the first quarter of 2019 of $91.2 million, a 270% increase from Q1 2018, and a 109% jump from the previous quarter.

Argo Group logoGross Written Premiums grew 7.1% to $760.8 million, compared to $710.5 million for the the same quarter a year previous.

Elsewhere, Argo’s combined ratio was 94.8% compared to 95.8% for Q1 2018.

The loss and expense ratios for Q1 2019 were 56.6% and 38.2%, respectively, compared to 57.2% and 38.6%, respectively, for Q1 2018.

The current accident year, ex-CAT combined ratio was 94.1%, compared to 95.3% in the 2018 first quarter.

Catastrophe losses were $5.5 million, compared to $4.3 million for the 2018 first quarter.

In a statement released today, Argo Group Chief Executive Officer Mark E. Watson III described the company’s annualised Return on Equity (ROE) of 20.1% as “an outstanding achievement.”

“The 9.1% annualised operating ROE for the quarter, a 100 basis point improvement year-over-year, reflects strong momentum toward our run rate objective of 10%. In addition, book value per share increased 8.0% from the beginning of the year,” said Watson.

Meanwhile, US operations grew 10.2% to $410.7 million, compared to $372.8 million for Q1 2018.

Net retained premiums for US operations in Q1 2019 were 60.5%, consistent with the fourth quarter of 2018, and somewhat lower when compared to 66.8% for the Q1 2018.

Argo says the overall current quarter decrease in the percent of net premiums retained was due in large part to an increase in ongoing strategic use of reinsurance programs, as part of overall risk management initiatives, and as it relates to Property, a new fronted program.

International Operations grew 3.7% to $350.1 million, compared to $337.7 million for the Q1 2018.

Net retained premiums for the 2019 first quarter were 32.1%, compared to 35.0% for the Q1 2018.

Argo says the current quarter decrease in the percent of net premiums retained was due in large part to an increase in ongoing strategic use of reinsurance programs and an increased use of third-party capital, most notably within Property Reinsurance lines.

As a result, net written premiums for Property lines in the first quarter of 2019 decreased by $22.3 million or 72.6%, compared to the 2018 first quarter.

This decline was largely offset by growth in Specialty, Professional, and Liability lines.

Consistent with net written premiums, net earned premiums in the 2019 first quarter of $146.7 million decreased $5.7 million or 3.7% from the 2018 first quarter.

As noted above, all major lines of business, with the exception of Property, reported growth in net earned premiums compared to the 2018 first quarter.

The decline in Property related to the aforementioned increased use of reinsurance and third party capital.

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