HAMILTON, Bermuda--(BUSINESS WIRE)--
Argo Group International Holdings, Ltd. (“Argo” or the “Company”) (ARGO) announced today that its results for the third quarter of 2019 will be adversely affected by several loss items, primarily related to its International Operations.
“The adjustment made to our current and prior accident year loss expectations over the last two quarters is 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.
"Despite these challenges, we continue to experience 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.”
Key items affecting the quarter include:
- Catastrophe losses of approximately $19 million pre-tax, or 4.3 points on Argo’s consolidated loss ratio for the third quarter. Catastrophe losses were primarily related to Hurricane Dorian, Typhoon Faxai and flood losses in the U.S.
- Prior accident year losses of approximately $42 million or 9.3 points on Argo’s consolidated loss ratio for the third quarter. Reserve increases were related to the Company’s Bermuda Insurance business unit, as well as European and London operations within Argo’s International Operations and were the result of new information received in the quarter relating to the resolution or notification of several large losses, as well as a continued review of International business currently in run-off. The losses were partially offset by a modest net reserve decrease within Argo’s U.S. Operations.
- Current accident year losses of approximately $10 million, or an additional 6.4 points when compared to the second quarter 2019 year-to-date current accident year loss ratio for International Operations. The losses are primarily related to property, liability and marine lines within International Operations. The adjustment reflects a change in actuarial estimates based on a more frequent occurrence of large losses and the recalibration of the current year based on prior year adjustments.
Additionally, Argo performs an internal review of Run-off reserves during third or fourth quarter annually. At the end of the third quarter the review of the reserve position was ongoing, and while information received to date is consistent with management’s expectations, we expect to conclude the review during the fourth quarter. As previously disclosed, Argo is also reviewing possible reinsurance alternatives to address the Run-off reserves.
Argo Schedules Earnings Release for November 7, 2019
The company will release third quarter 2019 financial results after the close of U.S. financial markets on Thursday, November 7, 2019. Company management will conduct an investor conference call starting at 11 a.m. EST on Friday, November 8, 2019.
Instructions for Connecting to the November 8, 2019 Conference Call
A live webcast of the conference call can be accessed at https://services.choruscall.com/links/argo191108.html. Participants in the U.S. can access the call by dialing (877) 291-5203. Callers dialing from outside the U.S. can access the call by dialing (412) 902-6610. Please ask the operator to be connected to the Argo Group earnings call.
A webcast replay will be available shortly after the live conference call and can be accessed at https://services.choruscall.com/links/argo191108.html. A telephone replay of the conference call will be available through November 15, 2019, to callers in the U.S. by dialing (877) 344-7529 (conference # 10136648). Callers dialing from outside the U.S. can access the telephone replay by dialing (412) 317-0088 (conference # 10136648).
ABOUT LOSS ESTIMATES
Argo Group’s estimates of losses are based on claims received to date, policy-level reviews, discussions with distribution partners, the Company’s internal and external modeling resources, and publicly available industry loss estimates. Argo Group’s estimates are dependent on broad assumptions about coverage, liability, reinsurance and potential changes to both known and unknown claims. Accordingly, the actual ultimate net impact may differ materially from Argo Group’s estimates.
ABOUT ARGO GROUP INTERNATIONAL HOLDINGS, LTD.
Argo Group International Holdings, Ltd. (ARGO) is an international underwriter of specialty insurance and reinsurance products in the property and casualty market. Argo Group offers a full line of products and services designed to meet the unique coverage and claims handling needs of businesses in two primary segments: U.S. Operations and International Operations. Argo Group's insurance subsidiaries are A.M. Best-rated 'A' (Excellent) (third highest rating out of 16 rating classifications) with a stable outlook, and Argo Group's U.S. insurance subsidiaries are Standard and Poor's-rated 'A-' (Strong) with a stable outlook. More information on Argo Group and its subsidiaries is available at www.argolimited.com.
This press release may include forward-looking statements, both with respect to Argo Group and its industry, that reflect our current views with respect to future events and financial performance. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are qualified by the inherent risks and uncertainties surrounding future expectations generally and also may differ materially from actual future experience involving any one or more of such statements. In addition, any estimates relating to loss events involve the exercise of considerable judgment and reflect a combination of ground-up evaluations, information available to date from brokers and cedants, market intelligence, initial tentative loss reports and other sources. The actuarial range of reserves and management’s best estimate is based on our then current state of knowledge including explicit and implicit assumptions relating to the pattern of claim development, the expected ultimate settlement amount, inflation and dependencies between lines of business. Our internal capital model is used to consider the distribution for reserving risk around this best estimate and predict the potential range of outcomes. However, due to the complexity of factors contributing to the losses and the preliminary nature of the information used to prepare these estimates, there can be no assurance that Argo Group’s ultimate losses will remain within the stated amount. For a more detailed discussion of such risks and uncertainties, see Argo Group's filings with the SEC. The inclusion of a forward-looking statement herein should not be regarded as a representation by Argo Group that Argo Group's objectives will be achieved. Argo Group undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.
Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as "expect," "intend," "plan," "believe," “do not believe,” “aim,” "project," "anticipate," “seek,” "will," “likely,” “assume,” “estimate,” "may," “continue,” “guidance,” “objective,” “outlook,” “trends,” “future,” “could,” “would,” “should,” “target,” “on track” and similar expressions of a future or forward-looking nature. All forward-looking statements address matters that involve risks and uncertainties, many of which are beyond Argo Group's control. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements.