Liability, professional and speciality lines boost Argo in Q1
Argo Group posted strong growth in the first quarter of 2018 driven by its liability, professional and speciality lines in both its US and international books of business. Its profits dipped slighted because of higher expenses and changes in the value of its equity securities.
The company posted a net profit of was $24.8 million in the period, a decrease on the $36.7 million it posted a year earlier. It noted that effective January 1, 2018, the company adopted ASU No. 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Liabilities, using a cumulative effect adjustment. In accordance with this accounting standard, in the first quarter of 2018, the company recognized the change in the fair value of its equity securities since January 1, 2018 as a pre-tax loss of $30.9 million.
Its operating profit, however, increased to $36.5 million compared with $21.9 million a year earlier, a 66 percent improvement, which it attributed to improvements in both underwriting and net investment income. Its combined ratio for the period was 95.8 percent compared with 99.1 percent for the 2017 first quarter.
Its gross written premiums overall increased by 18.7 percent to $710.5 million, compared with $598.6 million for the 2017 first quarter. Both its US and international operations reported growth in gross written premiums compared to the 2017 quarter.
Its US operations enjoyed growth of 11.3 percent versus the 2017 first quarter driven by liability, professional and specialty lines, reflecting, the company said, the execution of strategic growth initiatives. Property lines were down compared to the prior year’s first quarter due to planned reductions to exposures in certain classes of business within this line.
Its international operations’ gross written premiums increased by 28.1 percent in the first quarter of 2018 compared to the prior year period. This was driven by increases in property, liability and professional lines, most notably within Lloyd’s syndicate-based insurance, reinsurance and European business platforms. The increase was partially offset by planned reductions in specialty lines. In addition, the 2018 first quarter includes three months of premium related to the acquisition of Ariel Re compared to only two months included in the 2017 first quarter.
“The first quarter reflects the balanced and meaningful approach to growth and profit from our international and US operations, as well as our investments in people, technology and innovation,” said Argo Group CEO Mark Watson III.
“In addition, investment income continued as a consistent contributor as it grew by 18 percent over the prior year’s results. This despite the increasingly volatile investment environment experienced through the first months of the year. Through the continuing strategy of disciplined, differentiated underwriting and above-average top-line growth, we feel very positive about the coming quarters and beyond.”
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