Argo Group International Holdings, Ltd. has announced that it is set to incur prior accident year losses of approximately $42 million – or 9.3 points – on its consolidated loss ratio for the third quarter of 2019.
The company released a statement ahead of its Q3 results warning of the reserve charge, as well as other catastrophe loss items.
Argo is anticipating approximately $19 million of catastrophe losses, pre-tax, to impact its results for the quarter, representing 4.3 points on its consolidated loss ratio.
These losses will stem primarily from Hurricane Dorian, Typhoon Faxai, and flood losses in the US.
Argo also explained that its reserve increases related to its Bermuda Insurance business unit, as well as European and London operations within its International Operations.
They were the result of new information received in Q3 relating to the resolution or notification of several large losses, the company added, as well as a continued review of International business in run-off.
Losses were, however, partially offset by a modest net reserve decrease within Argo’s US Operations.
“The adjustments made to our current and prior accident year loss expectations over the last two quarters are related to large loss activity, business we have previously exited or where we have taken aggressive underwriting actions to improve profitability,” said Argo Group CEO Mark E. Watson III.
“These charges are a result of increased loss occurrence and a more challenging claims environment in some classes of business,” he continued.
“Despite these challenges, we continue experiencing strong results in our U.S. Operations, and we are seeing rate improvement across several key lines of business both in the U.S. as well as in our International Operations.”
Argo expects currently accident year losses of $10 million for its International Operations, or an additional 6.4 points when compared to the second quarter 2019 year-to-date current accident year loss ratio.
The losses are primarily related to property liability, and marine lines within International Operations, and the adjustments reflects a change in actuarial estimates based on more frequent large losses and the recalibration of the current year based on prior year adjustments.
Argo’s internal review of run-off reserves is ongoing and is expected to conclude during Q4. The company continues to review possible reinsurance alternatives to address these reserves.