Specialty re/insurer Argo has registered a $6.4 million net loss in the second quarter, down from the $28.8 million profit in the prior year quarter.
Meanwhile, the company’s combined ratio hit 100.3%, compared to 103.4% in Q2 2019.
Argo’s $1.2 million underwriting loss for the quarter represents an improvement from the $14.5 million recorded in the the prior year quarter.
Gross Written Premium stood at $800 million, with 5.9% growth in the US and 3.5% on a consolidated basis.
The 2020 second quarter result included lower investment income and foreign currency exchange losses compared to foreign currency exchange gains in the prior year period.
On a consolidated basis, gross written premium grew 3.5% to $799.6 million driven by pricing increases, compared to $772.9 million for the 2019 second quarter.
Premium growth in US Operations was 5.9%, while premiums in International Operations were flat compared to the prior year quarter.
Net investment income of $1.5 million decreased 96.5% compared to $48.2 million the 2019 second quarter.
Net investment income excluding alternatives decreased 25.2% to $24.9 million, while alternative investments, which are reported on a lag, contributed a loss of $23.4 million in the second quarter of 2020.
The decline in the portfolio excluding alternatives was primarily due to lower interest rates and portfolio de-risking actions that have been executed since the fourth quarter of 2019.
Operating loss was $4.7 million, compared to operating income of $16.8 million or for the 2019 second quarter.
The primary driver of the decline in operating income was lower investment income in the second quarter of 2020, partially offset by improved underwriting results.
“We are pleased to report the strongest quarterly underwriting income for the U.S. in Argo’s history,” said Argo Chief Executive Officer Kevin J. Rehnberg.
“This demonstrates our shift to more positive underlying performance, particularly in our core U.S. specialty business that delivered an excellent quarter despite the broader economic challenges related to COVID-19.
“The company’s operating results were, however, still negatively impacted by market volatility in our investment portfolio and the pandemic’s effects on premium growth and catastrophe losses, particularly in our International Operations.”
“We continue to experience strong improvement in pricing across the business,” added Rehnberg.
“We remain optimistic that current market conditions will provide opportunity for continued growth and margin improvement.
“In addition, our recent preferred stock offering provides Argo with additional capital, enhancing our financial strength, and enables us to more aggressively pursue our strategic growth objectives in this attractive underwriting environment.”