3 August 2016 Insurance

Investments boost profits at Argo but cat losses hit combined ratio

Solid increases in investment returns helped Argo Group to an increase in its net income in the second quarter of 2016, but cat losses adversely affected its combined ratio and its overall growth was staid.

Argo's net income was $30.9 million for the second quarter of 2016, an increase of 12.3 percent from the $27.9 million it made in the second quarter of 2015.

Its net investment income was $35.7 million, compared with $24.4 million in the same period a year earlier.

Its combined ratio went up 0.2 percentage points to 95.6 percent for the period ending June 30 2016.

Argo's estimated pre-tax catastrophe losses were $22.7 million, or 6.8 points on the combined ratio, compared to $2.3 million or 0.6 points on the combined ratio for the same period in 2015.

Argo reported gross written premiums of $560.6 million for the three-month period ending June 30, up 0.5 percent from $557.8 million in the second quarter of 2015.

This was based on a mixed picture. Argo's commercial specialty segment reported GWP of $153.7 million, a 27 percent increase from $121 million for the same period of 2015. Argo attributed this strong growth by its programme and surety businesses.

In contrast, its excess and surplus lines segment reported GWP of $168.1 million, an increase from $167.7 million in the second quarter in 2015. Argo attributed the slower growth to increased competition and de-emphasising of select business lines.

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