Argo Group (AGII) Tops Q1 EPS by 9c, Beat on Revenues

Argo Group (NASDAQ: AGII) reported Q1 EPS of $0.71, $0.09 better than the analyst estimate of $0.62. Revenue for the quarter came in at $428.1 million versus the consensus estimate of $373.8 million.

HIGHLIGHTS FOR THE FIRST QUARTER ENDED MARCH 31, 2017

• Gross written premiums were up 15.2% to $598.6 million from $519.8 million in the first quarter of 2016. In the U.S. Operations, gross written premiums were up 16.5% to $335.0 million from $287.6 million. In the International Operations gross written premiums grew 13.5% to $263.6 million from $232.2 million. Excluding Ariel Re, which closed in February 2017, overall gross written premiums were up 9.3% in the first quarter comparison.
• Net income was $36.7 million or $1.19 per diluted share, compared to $27.7 million or $0.89 per diluted share for the first quarter of 2016.
• Adjusted operating income (1) was $21.9 million or $0.71 per diluted share, compared to $29.9 million or $0.96 per diluted share for the first quarter of 2016. The current quarter included $16.5 million or $0.43 per diluted share in pre-announced non-recurring charges and claims from fourth quarter 2016 catastrophe events.
• Pre-tax underwriting income (1) was $3.3 million, compared to $20.7 million in the first quarter of 2016.
• The loss ratio for the first quarter of 2017 was 58.6% compared to 55.5% for the first quarter of 2016. The loss ratio excluding catastrophes and reserve development for the first quarter of 2017 was 56.4%, compared to 55.5% for the first quarter of 2016.
• Estimated pre-tax catastrophe losses for the first quarter of 2017 were $1.8 million or 0.4 points on the combined ratio, compared to $3.3 million or 0.9 points on the combined ratio for the first quarter of 2016.
• As previously reported, the quarter was impacted by approximately $10.0 million from the combination of the Ogden rate change, and claims from Hurricane Matthew. As a result net unfavorable prior-year reserve development in the quarter was $6.8 million or 1.8 points on the combined ratio, compared to net favorable prior-year reserve development of $3.2 million or 0.9 points on the combined ratio for the first quarter of 2016.
• Excluding previously announced non-recurring charges related to the Ariel Re transaction and information technology transition costs, the expense ratio was 38.8% for the first quarter of 2017, compared to 38.5% for the first quarter of 2016.
• Net Investment Income was $30.5 million, compared to $21.2 million for the 2016 first quarter.
• Book value per share increased to $60.84, up 1.9% from $59.73 at Dec. 31, 2016.
• Cash and investments at March 31, 2017 totaled approximately $4.8 billion with a net pre-tax unrealized gain of approximately $130.9 million.

For earnings history and earnings-related data on Argo Group (AGII) click here.

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