With a combined ratio of 95.6%, the group benefited from more favourable pricing and its exit from catastrophe lines
Argo Group has announced financial results for the three and six months ended June 30, 2022. Total cat losses were $2.5m in the second quarter 2022; reflecting Argo’s strategy to reduce exposure to nat cats.
Second quarter GWP decreased 10.2% to $732m, primarily due to the businesses the company has exited. Gross written premiums grew approximately 3.5% within the company’s ongoing business, while earned premiums from ongoing business increased approximately 12%.
The retention ratio, calculated as net written premiums divided by gross written premiums, increased 3.6 percentage points to 64.1%. The increase in the retention ratio primarily reflects business mix shifts towards ongoing business lines where Argo retains more of the risk on a net basis.
Net adverse prior year reserve development was $16.3m, or 3.6 percentage points on the loss ratio. The prior year second quarter had net favorable prior year reserve development of $1.2 million, which lowered the loss ratio by 0.3 percentage points.
The net loss attributable to common shareholders in the second quarter 2022 included pre-tax net realised investment and other losses of $40.4m, of which $21.3m was attributable to a loss on the sale of the company’s Malta operations, ArgoGlobal Holdings.
“The company’s second quarter results reflect our focused approach to profitable growth as we successfully target the most attractive business lines,” said Argo executive chairman and CEO, Thomas Bradley. “We are pleased with the success in executing on our strategic priorities, particularly, managing expenses and reducing volatility.
“Ongoing cost reduction efforts significantly lowered the expense ratio from the prior year second quarter and our commitment to reducing volatility in the underwriting results has driven improvement in year-over-year catastrophe losses for five consecutive quarters.”
“Through six months, operating earnings increased four percent from a year ago, primarily due to significantly higher underwriting income. We are also encouraged by increasing interest income from our fixed income portfolio.
”The meaningful increase in underwriting income more than offset the lower contribution from alternative investment income. Looking ahead, we believe the company continues to be well-positioned to deliver profitable growth.”