Business Wire | Nov 2, 2020 04:19PM EST

Argo Group Reports 2020 Third Quarter Results

Nov. 02, 2020

HAMILTON, Bermuda--(BUSINESS WIRE)--Nov. 02, 2020--Argo Group International Holdings, Ltd. (NYSE: ARGO) ("Argo" or the "Company") today announced financial results for the three and nine months ended September 30, 2020. Argo reported third quarter 2020 net loss attributable to common shareholders of $31.6 million or $(0.91) per diluted common share, compared to a net loss attributable to common shareholders of $25.1 million or $(0.73) per diluted common share for the 2019 third quarter. Operating loss in the third quarter of 2020 was $11.9 million or $(0.34) per diluted common share, compared to an operating loss of $15.2 million or $(0.44) per diluted common share for the 2019 third quarter.

2020 Third Quarter Consolidated Operating Highlights

$ in millions Three Months Ended Q/Q Nine Months Ended Y/Y September 30, September 30,

Consolidated 2020 2019 Change 2020 2019 Change



Gross written $ 890.2 $ 882.7 0.8 % $ 2,515.7 $ 2,416.4 4.1 %premiums

Net written 533.9 538.9 -0.9 % 1,370.5 1,355.0 1.1 %premiums

Earned premiums 445.5 451.5 -1.3 % 1,313.9 1,303.7 0.8 %



Underwriting $ (47.7) $ (51.3) NM $ (62.8) $ (43.4) NM(loss) income

Net investment 42.0 40.2 4.5 % 79.0 116.9 -32.4 %income



Net (loss)incomeattributable to $ (31.6) $ (25.1) NM $ (56.8) $ 94.9 NMcommonshareholders



Operating (loss) $ (11.9) $ (15.2) NM $ (4.0) $ 43.1 NMincome



Loss ratio 73.8 % 75.1 % -1.3 67.2 % 66.1 % 1.1 pts pts

Expense ratio 36.9 % 36.3 % 0.6 37.6 % 37.2 % 0.4 pts pts

Combined ratio 110.7 % 111.4 % -0.7 104.8 % 103.3 % 1.5 pts pts

CAY ex-CAT loss 56.9 % 61.5 % -4.6 56.7 % 59.0 % -2.3ratio pts pts

"We are pleased with the improved underlying margins of our business during the quarter, as well as the actions taken to simplify operations and exit lines that do not meet profitability expectations or are not aligned with our strategy," said Argo Chief Executive Officer Kevin J. Rehnberg. "While the industry faced historic levels of catastrophe activity in the third quarter, we have continued to make progress on our strategic objectives.

"This progress combined with continued gross written premium growth within profitable lines of business, improvement in pricing and a plan to reduce expenses demonstrates our firm commitment to continuing on a path toward increased shareholder value."

* On a consolidated basis, gross written premium grew 0.8% to $890.2 million during the third quarter of 2020. Premium growth in U.S. Operations of 2.4% was partially offset by a 1.4% decline in International Operations. Pricing increases remained in the low double digits on average across Argo, with a wide range varying by business line. * The combined ratio was 110.7% compared to 111.4% for the 2019 third quarter. The slightly lower combined ratio was primarily driven by a better current accident year (CAY) ex-CAT loss ratio and a lower level of net unfavorable reserve development, which for the third consecutive quarter, was modest during the period at $1.6 million. Partially offsetting these improvements was a higher level of catastrophe losses of $71.2 million, including $16.9 million related to the COVID-19 pandemic, primarily resulting from contingency exposures in Argo's International Operations. Additionally, net unfavorable reserve development of 0.4 points in the third quarter of 2020 was down from 9.3 points in the prior year quarter. The expense ratio was up modestly compared to the prior year quarter and reflected a 0.3 point unfavorable impact from reinstatement premiums in the 2020 third quarter. * The CAY ex-CAT combined ratio was 93.5% compared to 97.8% in the prior year quarter. The improvement in the CAY ex-CAT combined ratio was due to a lower CAY ex-CAT loss ratio that was driven by stronger pricing and lower loss activity in International Operations, while the expense ratio was roughly stable. * Net investment income of $42.0 million increased 4.5% compared to the 2019 third quarter. Net investment income excluding alternatives decreased 29.5% to $22.7 million, while alternative investments, which are reported on a lag, contributed a gain of $19.3 million in the third quarter of 2020. The decline in the portfolio excluding alternatives was primarily due to lower interest rates and portfolio de-risking actions that have been executed since the fourth quarter of 2019. The strong performance from alternative investments included a performance-related contingent payment from an investment that was sold during 2017. * Net loss attributable to common shareholders was $31.6 million or $(0.91) per diluted common share, compared to a net loss attributable to common shareholders of $25.1 million or $(0.73) per diluted common share for the 2019 third quarter. The 2020 third quarter result included foreign currency exchange losses and dividends on preferred shares compared to foreign exchange gains and no dividends on preferred shares in the prior year quarter. * Operating loss was $11.9 million or $(0.34) per diluted common share, compared to an operating loss of $15.2 million or $(0.44) per diluted common share for the 2019 third quarter. The primary driver of the smaller operating loss was a lower level of underwriting losses and stronger investment income in the third quarter of 2020.

U.S. Operations:

Three Months Nine Months Ended$ in millions Ended Q/Q September 30, Y/Y September 30,

U.S. Operations 2020 2019 Change 2020 2019 Change



Gross written $ 542.4 $ 529.9 2.4 % $ 1,499.1 $ 1,394.2 7.5 %premiums

Net written 349.2 360.3 -3.1 % 922.2 904.0 2.0 %premiums

Earned premiums 298.7 290.8 2.7 % 902.8 848.6 6.4 %



Losses and lossadjustment 205.5 178.6 15.1 % 566.3 496.3 14.1 %expenses

Underwriting 99.1 92.8 6.8 % 290.8 278.7 4.3 %expenses

Underwriting $ (5.9) $ 19.4 NM $ 45.7 $ 73.6 -37.9 %(loss) income



Loss ratio 68.8 % 61.4 % 7.4 62.7 % 58.5 % 4.2 pts pts

Expense ratio 33.2 % 31.9 % 1.3 32.2 % 32.8 % -0.6 pts pts

Combined ratio 102.0 % 93.3 % 8.7 94.9 % 91.3 % 3.6 pts pts

CAY ex-CAT loss 60.5 % 59.5 % 1 pts 57.9 % 58.0 % -0.1ratio pts

* In our U.S. Operations, gross written premiums increased 2.4% compared to the 2019 third quarter due to growth in Professional and Property lines, while premiums in Specialty were up modestly. Growth in the period reflected strong rate increases across most lines of business, which remained in the high single digits on average. This was partially offset by economic headwinds as a result of COVID-19 and re-underwriting actions in certain business units, which primarily impacted Liability lines including workers' compensation. * Net written premiums declined 3.1% compared to the 2019 third quarter due to the impact of additional reinsurance purchases. Net earned premium growth in the third quarter of 2020 was a result of previous growth in gross and net written premium, and was primarily attributed to Professional lines. * The loss ratio for the third quarter of 2020 was 68.8%, an increase of 7.4 points compared to the prior year quarter. The higher loss ratio was primarily driven by a 7.3 point increase in catastrophe losses and a 1.0 point increase in the CAY ex-CAT loss ratio. This was partially offset by a higher level of favorable reserve development relative to the prior year quarter. The increase in the CAY ex-CAT loss ratio reflected a large fire loss and large liability claim that added 1.7 points. Catastrophe losses in the quarter were primarily related to an active U.S. hurricane and storm season, as well as U.S. wildfires. Net favorable prior-year reserve development in the current quarter increased to $3.2 million from $0.7 million in the prior year quarter. * The expense ratio for the third quarter of 2020 was 33.2%, an increase of 1.3 points compared to the 2019 third quarter. The higher expense was driven by changes in business mix, non-recurring severance expense and the impact of reinstatement premiums. On a year-to-date basis, the nine month 2020 expense ratio improved 0.6 point from the prior year period.

International Operations:

$ in millions Three Months Ended Q/Q Nine Months Ended Y/Y September 30, September 30,

International 2020 2019 Change 2020 2019 ChangeOperations



Gross written $ 347.7 $ 352.8 -1.4 % $ 1,016.2 $ 1,022.1 -0.6 %premiums

Net written 184.6 178.6 3.4 % 447.9 450.9 -0.7 %premiums

Earned premiums 146.7 160.7 -8.7 % 410.8 455.0 -9.7 %



Losses and lossadjustment 113.0 160.0 -29.4 % 305.6 363.3 -15.9 %expenses

Underwriting 57.1 62.5 -8.6 % 175.0 174.7 0.2 %expenses

Underwriting loss $ (23.4) $ (61.8) NM $ (69.8) $ (83.0) NM



Loss ratio 77.1 % 99.6 % -22.5 74.4 % 79.8 % -5.4 pts pts

Expense ratio 38.9 % 38.9 % 0 pts 42.6 % 38.4 % 4.2 pts

Combined ratio 116.0 % 138.5 % -22.5 117.0 % 118.2 % -1.2 pts pts

CAY ex-CAT loss 50.0 % 65.0 % -15 pts 54.2 % 60.8 % -6.6ratio pts

* In our International Operations, gross written premiums declined modestly in the third quarter of 2020, as growth in Property and Liability lines was more than offset by a decrease in Specialty and Professional lines. Rates increased across all lines of business with particular strength in Liability and Property lines, and average rate increases remained in the mid-teens during the quarter. Rate increases across International were partially offset by re-underwriting and reducing line sizes in certain business lines, as well as the economic impact of COVID-19 on some businesses. * Net earned premium in the third quarter of 2020 decreased 8.7% from the prior year quarter. The decline was primarily related to the impact of business lines exited over the last 18 months, as well as additional reinstatement premiums incurred during the quarter. * The loss ratio for the third quarter of 2020 was 77.1%, an improvement of 22.5 points compared to the prior year quarter. The lower loss ratio was primarily due to 3.8 points of favorable reserve development in the current quarter compared to 26.3 points of unfavorable development in the prior year quarter, as well as a 15.0 point year-over-year improvement in the CAY ex-CAT loss ratio. Catastrophe losses totaled 30.9 points in the quarter, attributed to both estimated natural catastrophe loss and losses related to COVID-19 in contingency exposures. The CAY ex-CAT loss ratio improvement was primarily due to achieved rate increases earning through results and the impact of recent re-underwriting actions. * The expense ratio for the third quarter of 2020 was 38.9%, which was flat to the result in the prior year quarter as lower earned premium was matched by lower non-acquisition expenses.

Balance Sheet:

* Book value per common share was $49.63 at September 30, 2020, compared to $49.94 at June 30, 2020. Including dividends paid, book value per common share was unchanged relative to June 30, 2020. * During the third quarter, the Company completed an offering of 7.0% resettable fixed rate perpetual non-cumulative preference shares with a total liquidation preference of $150 million. Part of the proceeds were used to repay a $125 million term loan during the third quarter.

CONFERENCE CALL

Argo Group management will conduct an investor conference call starting at 10 a.m. EDT on Tuesday, November 3, 2020. 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 for the Argo Group earnings call. A live webcast of the conference call can be accessed at https://services.choruscall.com/links/argo201103.html

A webcast replay will be available shortly after the live conference call and can be accessed at https://services.choruscall.com/links/argo201103.html. A telephone replay of the conference call will be available through November 10, 2020, to callers in the U.S. by dialing (877) 344-7529 (conference #10148372). Callers dialing from outside the U.S. can access the replay by dialing (412) 317-0088 (conference #10148372).

ABOUT ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

Argo Group International Holdings Ltd. (NYSE: ARGO) is an underwriter of specialty insurance and reinsurance products in the property and casualty market. Argo 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 and its insurance subsidiaries are rated ?A-' by Standard and Poor's. Argo's insurance subsidiaries are rated ?A-' by A.M. Best. More information on Argo and its subsidiaries is available at www.argogroup.com.

FORWARD-LOOKING STATEMENTS

This press release includes forward-looking statements that reflect our current views with respect to future events and financial performance. 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," "remain optimistic," "path toward," "outlook," "trends," "future," "could," "would," "should," "target," "on track" and similar expressions of a future or forward-looking nature.

Such statements are subject to certain risks and uncertainties that could cause actual events or results to differ materially. For a more detailed discussion of such risks and uncertainties, see Item 1A, "Risk Factors" in Argo's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as supplemented in Part II, Item 1A, "Risk Factors" of Argo's subsequent Quarterly Reports on Form 10-Q and in other filings with the Securities and Exchange Commission ("SEC"). The inclusion of a forward-looking statement herein should not be regarded as a representation by Argo that Argo's objectives will be achieved. Argo undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on any such statements.

NON-GAAP FINANCIAL MEASURES

In presenting the Company's results, management has included and discussed in this press release certain non-generally accepted accounting principles ("non-GAAP") financial measures within the meaning of Regulation G as promulgated by the SEC. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain the Company's results of operations in a manner that allows for a more complete understanding of the underlying trends in the Company's business. However, these measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles ("U.S. GAAP").

"Underwriting income" is an internal performance measure used in the management of the Company's operations and represents net amount earned from underwriting activities (net premium earned less underwriting expenses and claims incurred). Although this measure of profit (loss) does not replace net income (loss) computed in accordance with U.S. GAAP as a measure of profitability, management uses this measure of profit (loss) to focus our reporting segments on generating underwriting income. The Company presents Underwriting income as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.

"Current accident year (CAY) ex-CAT combined ratio" and the "Current accident year (CAY) ex-CAT loss ratio" are internal measures used by the management of the Company to evaluate the performance of its' underwriting activity and represents the net amount of underwriting income excluding catastrophe related charges (impacts to both premium and losses), the impact of changes to prior year loss reserves and other one-time items that would impact expenses or net earned premium. Although this measure does not replace the GAAP combined ratio it provides management with a view of the quality of earnings generated by underwriting activity for the current accident year.

"Operating income" is an internal performance measure used in the management of the Company's operations and represents after-tax (at an assumed effective tax rate of 15%) operating results excluding, as applicable, net realized investment gains or losses, net foreign exchange gain or loss, and other similar non-recurring items, as well as preferred share dividends. The Company excludes net realized investment gains or losses, net foreign exchange gain or loss, and other similar non-recurring items from the calculation of operating income because these amounts are influenced by and fluctuate in part, by market conditions that are outside of management's control. In addition to presenting net income determined in accordance with U.S. GAAP, the Company believes that showing operating income enables investors, analysts, rating agencies and other users of the Company's financial information to more easily analyze our results of operations and underlying business performance. Operating income should not be viewed as a substitute for U.S. GAAP net income.

"Annualized return on average common shareholders' equity" ("ROACE") is calculated using average common shareholders' equity. In calculating ROACE, the net income available to common shareholders for the period is multiplied by the number of periods in a calendar year to arrive at annualized net income available to common shareholders. The Company presents ROACE as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information. "Annualized operating return on average common shareholders' equity" is calculated using operating income (as defined above and annualized in the manner described for net income (loss) available to common shareholders under ROACE above) and average common shareholders' equity.

The "percentage change in book value per common share" includes (by adding) the effects of cash dividends paid per common share to the calculated book value per common share for the current period. This adjusted amount is then compared to the prior period's book value per common share to determine the period over period change. The Company believes that including the dividends paid per common share allows users of its financial statements to more easily identify the impact of the changes in book value per common share from the perspective of investors.

Reconciliations of non-GAAP financial measures to their most directly comparable U.S. GAAP measures are included in the attached tables and footnotes.

(financial tables follow)

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share amounts)

September 30, December 31,

2020 2019

(unaudited)

Assets

Total investments $ 5,006.0 $ 5,099.4

Cash 300.4 137.8

Accrued investment income 22.2 25.7

Receivables 3,843.5 3,792.8

Goodwill and intangible assets 247.3 253.2

Deferred acquisition costs, net 170.4 160.2

Ceded unearned premiums 660.9 545.0

Other assets 483.6 500.4

Total assets $ 10,734.3 $ 10,514.5



Liabilities and Shareholders' Equity

Reserves for losses and loss adjustment expenses $ 5,390.0 $ 5,157.6

Unearned premiums 1,574.2 1,410.9

Ceded reinsurance payable, net 1,085.0 1,203.1

Senior unsecured fixed rate notes 140.1 140.0

Other indebtedness 59.1 181.3

Junior subordinated debentures 257.7 257.4

Other liabilities 363.7 383.1

Total liabilities 8,869.8 8,733.4



Preferred shares 144.0 -

Common shareholders' equity 1,720.5 1,781.1

Total shareholders' equity 1,864.5 1,781.1

Total liabilities and shareholders' equity $ 10,734.3 $ 10,514.5



Book value per common share $ 49.63 $ 51.80

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in millions, except per share amounts)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Gross written premiums

$

890.2

$

882.7

$

2,515.7

$

2,416.4

Net written premiums

533.9

538.9

1,370.5

1,355.0

Earned premiums

445.5

451.5

1,313.9

1,303.7

Net investment income

42.0

40.2

79.0

116.9

Fee and other income

1.7

1.9

5.8

6.3

Net realized investment (losses) gains

(5.7)

(6.2)

(21.7)

58.3

Total revenue

483.5

487.4

1,377.0

1,485.2

Losses and loss adjustment expenses

328.9

338.8

883.0

861.5

Underwriting, acquisition and insurance expenses

164.3

164.0

493.7

485.6

Other corporate expenses

0.4

3.7

6.2

11.7

Interest expense

6.8

7.5

21.3

25.3

Fee and other expense

0.9

1.2

3.1

3.8

Foreign currency exchange losses (gains)

11.6

(1.6)

15.0

(6.2)

Total expenses

512.9

513.6

1,422.3

1,381.7

(Loss) income before income taxes

(29.4)

(26.2)

(45.3)

103.5

Income tax provision (benefit)

0.2

(1.1)

9.5

8.6

Net (loss) income

$

(29.6)

$

(25.1)

$

(54.8)

$

94.9

Dividends on preferred shares

2.0

-

2.0

$

-

Net (loss) income attributable to common shareholders

$

(31.6)

$

(25.1)

$

(56.8)

$

94.9

Net (loss) income per common share (basic)

$

(0.91)

$

(0.73)

$

(1.64)

$

2.78

Net (loss) income per common share (diluted)

$

(0.91)

$

(0.73)

$

(1.64)

$

2.73

Weighted average common shares:

Basic

34.7

34.3

34.6

34.2

Diluted

34.7

34.3

34.6

34.8

Loss ratio

73.8%

75.1%

67.2%

66.1%

Expense ratio (1)

36.9%

36.3%

37.6%

37.2%

GAAP combined ratio

110.7%

111.4%

104.8%

103.3%

CAY ex-CAT combined ratio (2)

93.5%

97.8%

94.1%

96.2%

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in millions, except per share amounts)

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Gross written premiums $ 890.2 $ 882.7 $ 2,515.7 $ 2,416.4

Net written premiums 533.9 538.9 1,370.5 1,355.0



Earned premiums 445.5 451.5 1,313.9 1,303.7

Net investment income 42.0 40.2 79.0 116.9

Fee and other income 1.7 1.9 5.8 6.3

Net realized investment (losses) (5.7) (6.2) (21.7) 58.3gains

Total revenue 483.5 487.4 1,377.0 1,485.2



Losses and loss adjustment 328.9 338.8 883.0 861.5expenses

Underwriting, acquisition and 164.3 164.0 493.7 485.6insurance expenses

Other corporate expenses 0.4 3.7 6.2 11.7

Interest expense 6.8 7.5 21.3 25.3

Fee and other expense 0.9 1.2 3.1 3.8

Foreign currency exchange losses 11.6 (1.6) 15.0 (6.2)(gains)

Total expenses 512.9 513.6 1,422.3 1,381.7



(Loss) income before income taxes (29.4) (26.2) (45.3) 103.5

Income tax provision (benefit) 0.2 (1.1) 9.5 8.6

Net (loss) income $ (29.6) $ (25.1) $ (54.8) $ 94.9

Dividends on preferred shares 2.0 - 2.0 $ -

Net (loss) income attributable to $ (31.6) $ (25.1) $ (56.8) $ 94.9common shareholders



Net (loss) income per common $ (0.91) $ (0.73) $ (1.64) $ 2.78share (basic)

Net (loss) income per common $ (0.91) $ (0.73) $ (1.64) $ 2.73share (diluted)



Weighted average common shares:

Basic 34.7 34.3 34.6 34.2

Diluted 34.7 34.3 34.6 34.8



Loss ratio 73.8% 75.1% 67.2% 66.1%

Expense ratio ^(1) 36.9% 36.3% 37.6% 37.2%

GAAP combined ratio 110.7% 111.4% 104.8% 103.3%

CAY ex-CAT combined ratio^ (2) 93.5% 97.8% 94.1% 96.2%

(1)The expense ratio is calculated as "Underwriting, acquisition and insurance expense" divided by "Earned premiums".

(2)For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement premium adjustments of $3.9 million and $6.0 million for the three and nine months ended September 30, 2020, respectively, and inward reinstatement premium adjustments of $0.1 million for both the three and nine months ended September 30, 2019.

^(1)The expense ratio is calculated as "Underwriting, acquisition and insuranceexpense" divided by "Earned premiums".

^(2)For purposes of calculating these ratios, net earned premiums were adjustedto exclude outward reinstatement premium adjustments of $3.9 million and $6.0million for the three and nine months ended September 30, 2020, respectively,and inward reinstatement premium adjustments of $0.1 million for both the threeand nine months ended September 30, 2019.

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

SEGMENT DATA

(in millions)

(unaudited)

Three Months Ended

Nine months ended

September 30,

September 30,

2020

2019

2020

2019

U.S. Operations

Gross written premiums

$

542.4

$

529.9

$

1,499.1

$

1,394.2

Net written premiums

349.2

360.3

922.2

904.0

Earned premiums

298.7

290.8

902.8

848.6

Underwriting (loss) income

(5.9)

19.4

45.7

73.6

Net investment income

30.1

27.4

56.1

80.1

Interest expense

(4.0)

(4.6)

(13.1)

(15.5)

Fee (expense) income, net

(0.1)

-

(0.5)

0.1

Net income before taxes

$

20.1

$

42.2

$

88.2

$

138.3

Loss ratio

68.8%

61.4%

62.7%

58.5%

Expense ratio (1)

33.2%

31.9%

32.2%

32.8%

GAAP combined ratio

102.0%

93.3%

94.9%

91.3%

CAY ex-CAT combined ratio (2)

93.3%

91.4%

90.0%

90.8%

International Operations

Gross written premiums

$

347.7

$

352.8

$

1,016.2

$

1,022.1

Net written premiums

184.6

178.6

447.9

450.9

Earned premiums

146.7

160.7

410.8

455.0

Underwriting loss

(23.4)

(61.8)

(69.8)

(83.0)

Net investment income

9.9

10.7

19.0

31.3

Interest expense

(1.9)

(2.5)

(6.2)

(8.4)

Fee income, net

0.7

0.7

2.5

2.4

Net loss before taxes

$

(14.7)

$

(52.9)

$

(54.5)

$

(57.7)

Loss ratio

77.1%

99.6%

74.4%

79.8%

Expense ratio (1)

38.9%

38.9%

42.6%

38.4%

GAAP combined ratio

116.0%

138.5%

117.0%

118.2%

CAY ex-CAT combined ratio (3)

88.7%

103.9%

96.5%

99.2%

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

SEGMENT DATA

(in millions)

(unaudited)

Three Months Ended Nine months ended

September 30, September 30,

2020 2019 2020 2019

U.S. Operations

Gross written premiums $ 542.4 $ 529.9 $ 1,499.1 $ 1,394.2

Net written premiums 349.2 360.3 922.2 904.0

Earned premiums 298.7 290.8 902.8 848.6



Underwriting (loss) income (5.9) 19.4 45.7 73.6

Net investment income 30.1 27.4 56.1 80.1

Interest expense (4.0) (4.6) (13.1) (15.5)

Fee (expense) income, net (0.1) - (0.5) 0.1

Net income before taxes $ 20.1 $ 42.2 $ 88.2 $ 138.3



Loss ratio 68.8% 61.4% 62.7% 58.5%

Expense ratio ^(1) 33.2% 31.9% 32.2% 32.8%

GAAP combined ratio 102.0% 93.3% 94.9% 91.3%

CAY ex-CAT combined ratio ^(2) 93.3% 91.4% 90.0% 90.8%



International Operations

Gross written premiums $ 347.7 $ 352.8 $ 1,016.2 $ 1,022.1

Net written premiums 184.6 178.6 447.9 450.9

Earned premiums 146.7 160.7 410.8 455.0



Underwriting loss (23.4) (61.8) (69.8) (83.0)

Net investment income 9.9 10.7 19.0 31.3

Interest expense (1.9) (2.5) (6.2) (8.4)

Fee income, net 0.7 0.7 2.5 2.4

Net loss before taxes $ (14.7) $ (52.9) $ (54.5) $ (57.7)



Loss ratio 77.1% 99.6% 74.4% 79.8%

Expense ratio ^(1) 38.9% 38.9% 42.6% 38.4%

GAAP combined ratio 116.0% 138.5% 117.0% 118.2%

CAY ex-CAT combined ratio^ (3) 88.7% 103.9% 96.5% 99.2%

(1) The expense ratio is calculated as "Underwriting, acquisition and insurance expense" divided by "Earned premiums".

(2) For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement premium adjustments of $3.2 million for the three and nine months ended September 30, 2020. There were no such adjustments for the three and nine months ended September 30, 2019.

(3) For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement premium adjustments of $0.7 million and $2.8 million for the three and nine months ended September 30, 2020, respectively, and inward reinstatement premium adjustments of $0.1 million for both the three and nine months ended September 30, 2019.

^(1) The expense ratio is calculated as "Underwriting, acquisition andinsurance expense" divided by "Earned premiums".

^(2) For purposes of calculating these ratios, net earned premiums wereadjusted to exclude outward reinstatement premium adjustments of $3.2 millionfor the three and nine months ended September 30, 2020. There were no suchadjustments for the three and nine months ended September 30, 2019.

^(3) For purposes of calculating these ratios, net earned premiums wereadjusted to exclude outward reinstatement premium adjustments of $0.7 millionand $2.8 million for the three and nine months ended September 30, 2020,respectively, and inward reinstatement premium adjustments of $0.1 million forboth the three and nine months ended September 30, 2019.

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF LOSS RATIOS

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

U.S. Operations

Loss ratio

68.8

%

61.4

%

62.7

%

58.5

%

Prior accident year loss reserve development

1.1

%

0.2

%

0.1

%

1.2

%

Catastrophe losses

(9.4)

%

(2.1)

%

(4.9)

%

(1.7)

%

CAY ex-CAT loss ratio (1)

60.5

%

59.5

%

57.9

%

58.0

%

International Operations

Loss ratio

77.1

%

99.6

%

74.4

%

79.8

%

Prior accident year loss reserve development

3.8

%

(26.3)

%

1.1

%

(15.3)

%

Catastrophe losses

(30.9)

%

(8.3)

%

(21.3)

%

(3.7)

%

CAY ex-CAT loss ratio (2)

50.0

%

65.0

%

54.2

%

60.8

%

Consolidated

Loss ratio

73.8

%

75.1

%

67.2

%

66.1

%

Prior accident year loss reserve development

(0.4)

%

(9.3)

%

(0.5)

%

(4.7)

%

Catastrophe losses

(16.5)

%

(4.3)

%

(10.0)

%

(2.4)

%

CAY ex-CAT loss ratio (3)

56.9

%

61.5

%

56.7

%

59.0

%

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF LOSS RATIOS

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

U.S. Operations

Loss ratio 68.8 % 61.4 % 62.7 % 58.5 %

Prior accident year loss reserve 1.1 % 0.2 % 0.1 % 1.2 %development

Catastrophe losses (9.4) % (2.1) % (4.9) % (1.7) %

CAY ex-CAT loss ratio^ (1) 60.5 % 59.5 % 57.9 % 58.0 %



International Operations

Loss ratio 77.1 % 99.6 % 74.4 % 79.8 %

Prior accident year loss reserve 3.8 % (26.3) % 1.1 % (15.3) %development

Catastrophe losses (30.9) % (8.3) % (21.3) % (3.7) %

CAY ex-CAT loss ratio^ (2) 50.0 % 65.0 % 54.2 % 60.8 %



Consolidated

Loss ratio 73.8 % 75.1 % 67.2 % 66.1 %

Prior accident year loss reserve (0.4) % (9.3) % (0.5) % (4.7) %development

Catastrophe losses (16.5) % (4.3) % (10.0) % (2.4) %

CAY ex-CAT loss ratio^ (3) 56.9 % 61.5 % 56.7 % 59.0 %

(1) For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement premium adjustments of $3.2 million for the three and nine months ended September 30, 2020. There were no such adjustments for the three and nine months ended September 30, 2019.

(2) For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement premium adjustments of $0.7 million and $2.8 million for the three and nine months ended September 30, 2020, respectively, and inward reinstatement premium adjustments of $0.1 million for both the three and nine months ended September 30, 2019.

(3) For purposes of calculating these ratios, net earned premiums were adjusted to exclude outward reinstatement premium adjustments of $3.9 million and $6.0 million for the three and nine months ended September 30, 2020, respectively, and inward reinstatement premium adjustments of $0.1 million for both the three and nine months ended September 30, 2019.

^(1) For purposes of calculating these ratios, net earned premiums wereadjusted to exclude outward reinstatement premium adjustments of $3.2 millionfor the three and nine months ended September 30, 2020. There were no suchadjustments for the three and nine months ended September 30, 2019.

^(2) For purposes of calculating these ratios, net earned premiums wereadjusted to exclude outward reinstatement premium adjustments of $0.7 millionand $2.8 million for the three and nine months ended September 30, 2020,respectively, and inward reinstatement premium adjustments of $0.1 million forboth the three and nine months ended September 30, 2019.

^(3) For purposes of calculating these ratios, net earned premiums wereadjusted to exclude outward reinstatement premium adjustments of $3.9 millionand $6.0 million for the three and nine months ended September 30, 2020,respectively, and inward reinstatement premium adjustments of $0.1 million forboth the three and nine months ended September 30, 2019.



ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

NET PRIOR-YEAR RESERVE DEVELOPMENT & CATASTROPHE LOSSES BY SEGMENT

(in millions)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net Prior-Year Reserve Development

(Favorable)/Unfavorable

U.S. Operations

$

(3.2)

$

(0.7)

$

(0.5)

$

(9.8)

International Operations

(5.6)

42.3

(4.5)

69.5

Run-off Lines

10.4

0.2

11.1

1.9

Total net prior-year reserve development

$

1.6

$

41.8

$

6.1

$

61.6

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Catastrophe & COVID-19 Losses

Catastrophe losses

U.S. Operations

$

28.3

$

6.1

$

35.8

$

14.3

International Operations

26.0

13.2

31.9

17.0

Total catastrophe losses

54.3

19.3

67.7

31.3

COVID-19 losses

U.S. Operations

(2.0)

-

6.5

-

International Operations

18.9

-

54.0

-

Total COVID-19 losses

16.9

-

60.5

-

Catastrophe & COVID-19 losses

U.S. Operations

26.3

6.1

42.3

14.3

International Operations

44.9

13.2

85.9

17.0

Total catastrophe & COVID-19 losses

$

71.2

$

19.3

$

128.2

$

31.3

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

NET PRIOR-YEAR RESERVE DEVELOPMENT & CATASTROPHE LOSSES BY SEGMENT

(in millions)

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net Prior-Year Reserve Development

(Favorable)/Unfavorable

U.S. Operations $ (3.2) $ (0.7) $ (0.5) $ (9.8)

International Operations (5.6) 42.3 (4.5) 69.5

Run-off Lines 10.4 0.2 11.1 1.9

Total net prior-year reserve $ 1.6 $ 41.8 $ 6.1 $ 61.6 development

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Catastrophe & COVID-19 Losses

Catastrophe losses

U.S. Operations $ 28.3 $ 6.1 $ 35.8 $ 14.3

International Operations 26.0 13.2 31.9 17.0

Total catastrophe losses 54.3 19.3 67.7 31.3



COVID-19 losses

U.S. Operations (2.0) - 6.5 -

International Operations 18.9 - 54.0 -

Total COVID-19 losses 16.9 - 60.5 -



Catastrophe & COVID-19 losses

U.S. Operations 26.3 6.1 42.3 14.3

International Operations 44.9 13.2 85.9 17.0

Total catastrophe & COVID-19 $ 71.2 $ 19.3 $ 128.2 $ 31.3 losses

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF UNDERWRITING (LOSS) INCOME TO NET (LOSS) INCOME

CONSOLIDATED

(in millions)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net (loss) income

$

(29.6)

$

(25.1)

$

(54.8)

$

94.9

Add (deduct):

Income tax provision (benefit)

0.2

(1.1)

9.5

8.6

Net investment income

(42.0)

(40.2)

(79.0)

(116.9)

Net realized investment losses (gains)

5.7

6.2

21.7

(58.3)

Fee and other income

(1.7)

(1.9)

(5.8)

(6.3)

Interest expense

6.8

7.5

21.3

25.3

Fee and other expense

0.9

1.2

3.1

3.8

Foreign currency exchange losses (gains)

11.6

(1.6)

15.0

(6.2)

Other corporate expenses

0.4

3.7

6.2

11.7

Underwriting (loss) income

$

(47.7)

$

(51.3)

$

(62.8)

$

(43.4)

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF UNDERWRITING (LOSS) INCOME TO NET (LOSS) INCOME

CONSOLIDATED

(in millions)

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net (loss) income $ (29.6) $ (25.1) $ (54.8) $ 94.9

Add (deduct):

Income tax provision (benefit) 0.2 (1.1) 9.5 8.6

Net investment income (42.0) (40.2) (79.0) (116.9)

Net realized investment losses 5.7 6.2 21.7 (58.3) (gains)

Fee and other income (1.7) (1.9) (5.8) (6.3)

Interest expense 6.8 7.5 21.3 25.3

Fee and other expense 0.9 1.2 3.1 3.8

Foreign currency exchange 11.6 (1.6) 15.0 (6.2) losses (gains)

Other corporate expenses 0.4 3.7 6.2 11.7

Underwriting (loss) income $ (47.7) $ (51.3) $ (62.8) $ (43.4)

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF OPERATING INCOME TO NET (LOSS) INCOME

CONSOLIDATED

(in millions, except per share amounts)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net (loss) income, as reported

$

(29.6)

$

(25.1)

$

(54.8)

$

94.9

Income tax provision (benefit)

0.2

(1.1)

9.5

8.6

Net income (loss), before taxes

(29.4)

(26.2)

(45.3)

103.5

Add (deduct):

Net realized investment losses (gains)

5.7

6.2

21.7

(58.3)

Foreign currency exchange losses (gains)

11.6

(1.6)

15.0

(6.2)

Other corporate expenses

0.4

3.7

6.2

11.7

Operating (loss) income before taxes and preferred share dividends

(11.7)

(17.9)

(2.4)

50.7

Income tax (benefit) provision, at assumed rate (1)

(1.8)

(2.7)

(0.4)

7.6

Preferred share dividends

2.0

-

2.0

-

Operating (loss) income

$

(11.9)

$

(15.2)

$

(4.0)

$

43.1

Operating (loss) income per common share (diluted)

$

(0.34)

$

(0.44)

$

(0.12)

$

1.24

Weighted average common shares, diluted

34.7

34.3

34.6

34.8

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF OPERATING INCOME TO NET (LOSS) INCOME

CONSOLIDATED

(in millions, except per share amounts)

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net (loss) income, as $ (29.6) $ (25.1) $ (54.8) $ 94.9 reported

Income tax provision 0.2 (1.1) 9.5 8.6 (benefit)

Net income (loss), before (29.4) (26.2) (45.3) 103.5 taxes

Add (deduct):

Net realized investment 5.7 6.2 21.7 (58.3) losses (gains)

Foreign currency exchange 11.6 (1.6) 15.0 (6.2) losses (gains)

Other corporate expenses 0.4 3.7 6.2 11.7

Operating (loss) incomebefore taxes and preferred (11.7) (17.9) (2.4) 50.7 share dividends

Income tax (benefit)provision, at assumed rate ^ (1.8) (2.7) (0.4) 7.6 (1)

Preferred share dividends 2.0 - 2.0 -

Operating (loss) income $ (11.9) $ (15.2) $ (4.0) $ 43.1



Operating (loss) income per $ (0.34) $ (0.44) $ (0.12) $ 1.24 common share (diluted)



Weighted average common 34.7 34.3 34.6 34.8 shares, diluted

(1) For the purpose of calculating Operating Income, an assumed tax rate of 15% was used for all periods presented.^(1) For the purpose of calculating Operating Income, an assumed tax rate of15% was used for all periods presented.ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF SEGMENT INCOME TO NET (LOSS) INCOME

(in millions)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Segment income (loss) before income taxes:

U.S. Operations

$

20.1

$

42.2

$

88.2

$

138.3

International Operations

(14.7)

(52.9)

(54.5)

(57.7)

Run-off Lines

(10.2)

0.7

(11.0)

0.2

Corporate and Other

(6.9)

(7.9)

(25.1)

(30.1)

Net realized investment (losses) gains

(5.7)

(6.2)

(21.7)

58.3

Foreign currency exchange (losses) gains

(11.6)

1.6

(15.0)

6.2

Other corporate expenses

(0.4)

(3.7)

(6.2)

(11.7)

(Loss) income before income taxes

(29.4)

(26.2)

(45.3)

103.5

Income tax provision (benefit)

0.2

(1.1)

9.5

8.6

Net (loss) income

$

(29.6)

$

(25.1)

$

(54.8)

$

94.9

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

RECONCILIATION OF SEGMENT INCOME TO NET (LOSS) INCOME

(in millions)

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Segment income (loss) before income taxes:

U.S. Operations $ 20.1 $ 42.2 $ 88.2 $ 138.3

International Operations (14.7) (52.9) (54.5) (57.7)

Run-off Lines (10.2) 0.7 (11.0) 0.2

Corporate and Other (6.9) (7.9) (25.1) (30.1)

Net realized investment (losses) (5.7) (6.2) (21.7) 58.3 gains

Foreign currency exchange (11.6) 1.6 (15.0) 6.2 (losses) gains

Other corporate expenses (0.4) (3.7) (6.2) (11.7)

(Loss) income before income (29.4) (26.2) (45.3) 103.5 taxes

Income tax provision (benefit) 0.2 (1.1) 9.5 8.6

Net (loss) income $ (29.6) $ (25.1) $ (54.8) $ 94.9

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

PREMIUMS BY SEGMENT AND LINE OF BUSINESS

(in millions)

(unaudited)

U.S. Operations

Three months ended September 30, 2020

Three months ended September 30, 2019

Gross

Written

NetWritten

NetEarned

Gross

Written

NetWritten

NetEarned

Property

$

90.8

$

62.3

$

36.6

$

85.1

$

61.1

$

35.3

Liability

291.6

183.7

165.2

313.9

211.2

179.9

Professional

111.7

71.9

63.3

83.4

54.8

44.2

Specialty

48.3

31.3

33.6

47.5

33.2

31.4

Total

$

542.4

$

349.2

$

298.7

$

529.9

$

360.3

$

290.8

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Gross

Written

NetWritten

NetEarned

Gross

Written

NetWritten

NetEarned

Property

$

237.5

$

124.5

$

117.3

$

227.3

$

112.6

$

100.1

Liability

804.4

505.8

507.4

812.9

557.1

533.8

Professional

312.7

193.8

177.4

220.1

136.1

119.6

Specialty

144.5

98.1

100.7

133.9

98.2

95.1

Total

$

1,499.1

$

922.2

$

902.8

$

1,394.2

$

904.0

$

848.6

International Operations

Three months ended September 30, 2020

Three months ended September 30, 2019

Gross

Written

NetWritten

NetEarned

Gross

Written

NetWritten

NetEarned

Property

$

161.0

$

66.2

$

44.3

$

151.2

$

55.2

$

42.5

Liability

73.4

32.6

26.7

57.2

28.8

28.1

Professional

49.7

37.7

29.9

53.2

31.9

28.9

Specialty

63.6

48.1

45.8

91.2

62.7

61.2

Total

$

347.7

$

184.6

$

146.7

$

352.8

$

178.6

$

160.7

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Gross

Written

NetWritten

NetEarned

Gross

Written

NetWritten

NetEarned

Property

$

416.5

$

128.9

$

115.6

$

445.2

$

120.7

$

119.1

Liability

185.8

81.7

73.0

150.6

74.2

83.9

Professional

156.7

88.0

88.0

151.2

85.6

82.7

Specialty

257.2

149.3

134.2

275.1

170.4

169.3

Total

$

1,016.2

$

447.9

$

410.8

$

1,022.1

$

450.9

$

455.0

Consolidated

Three months ended September 30, 2020

Three months ended September 30, 2019

Gross

Written

NetWritten

NetEarned

Gross

Written

NetWritten

NetEarned

Property

$

251.8

$

128.5

$

80.9

$

236.3

$

116.3

$

77.8

Liability

365.1

216.4

192.0

371.1

240.0

208.0

Professional

161.4

109.6

93.2

136.6

86.7

73.1

Specialty

111.9

79.4

79.4

138.7

95.9

92.6

Total

$

890.2

$

533.9

$

445.5

$

882.7

$

538.9

$

451.5

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Gross

Written

NetWritten

NetEarned

Gross

Written

NetWritten

NetEarned

Property

$

654.0

$

253.4

$

232.9

$

672.5

$

233.3

$

219.2

Liability

990.6

587.9

580.7

963.6

631.4

617.8

Professional

469.4

281.8

265.4

371.3

221.7

202.3

Specialty

401.7

247.4

234.9

409.0

268.6

264.4

Total

$

2,515.7

$

1,370.5

$

1,313.9

$

2,416.4

$

1,355.0

$

1,303.7

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

PREMIUMS BY SEGMENT AND LINE OF BUSINESS

(in millions)

(unaudited)

U.S. Operations Three months ended September 30, 2020 Three months ended September 30, 2019

Gross Net Net Gross Net Net Written Earned Written Earned Written Written

Property $ 90.8 $ 62.3 $ 36.6 $ 85.1 $ 61.1 $ 35.3

Liability 291.6 183.7 165.2 313.9 211.2 179.9

Professional 111.7 71.9 63.3 83.4 54.8 44.2

Specialty 48.3 31.3 33.6 47.5 33.2 31.4

Total $ 542.4 $ 349.2 $ 298.7 $ 529.9 $ 360.3 $ 290.8

Nine months ended September 30, 2020 Nine months ended September 30, 2019

Gross Net Net Gross Net Net Written Earned Written Earned Written Written

Property $ 237.5 $ 124.5 $ 117.3 $ 227.3 $ 112.6 $ 100.1

Liability 804.4 505.8 507.4 812.9 557.1 533.8

Professional 312.7 193.8 177.4 220.1 136.1 119.6

Specialty 144.5 98.1 100.7 133.9 98.2 95.1

Total $ 1,499.1 $ 922.2 $ 902.8 $ 1,394.2 $ 904.0 $ 848.6

International Three months ended September 30, 2020 Three months ended September 30, 2019Operations

Gross Net Net Gross Net Net Written Earned Written Earned Written Written

Property $ 161.0 $ 66.2 $ 44.3 $ 151.2 $ 55.2 $ 42.5

Liability 73.4 32.6 26.7 57.2 28.8 28.1

Professional 49.7 37.7 29.9 53.2 31.9 28.9

Specialty 63.6 48.1 45.8 91.2 62.7 61.2

Total $ 347.7 $ 184.6 $ 146.7 $ 352.8 $ 178.6 $ 160.7

Nine months ended September 30, 2020 Nine months ended September 30, 2019

Gross Net Net Gross Net Net Written Earned Written Earned Written Written

Property $ 416.5 $ 128.9 $ 115.6 $ 445.2 $ 120.7 $ 119.1

Liability 185.8 81.7 73.0 150.6 74.2 83.9

Professional 156.7 88.0 88.0 151.2 85.6 82.7

Specialty 257.2 149.3 134.2 275.1 170.4 169.3

Total $ 1,016.2 $ 447.9 $ 410.8 $ 1,022.1 $ 450.9 $ 455.0

Consolidated Three months ended September 30, 2020 Three months ended September 30, 2019

Gross Net Net Gross Net Net Written Earned Written Earned Written Written

Property $ 251.8 $ 128.5 $ 80.9 $ 236.3 $ 116.3 $ 77.8

Liability 365.1 216.4 192.0 371.1 240.0 208.0

Professional 161.4 109.6 93.2 136.6 86.7 73.1

Specialty 111.9 79.4 79.4 138.7 95.9 92.6

Total $ 890.2 $ 533.9 $ 445.5 $ 882.7 $ 538.9 $ 451.5

Nine months ended September 30, 2020 Nine months ended September 30, 2019

Gross Net Net Gross Net Net Written Earned Written Earned Written Written

Property $ 654.0 $ 253.4 $ 232.9 $ 672.5 $ 233.3 $ 219.2

Liability 990.6 587.9 580.7 963.6 631.4 617.8

Professional 469.4 281.8 265.4 371.3 221.7 202.3

Specialty 401.7 247.4 234.9 409.0 268.6 264.4

Total $ 2,515.7 $ 1,370.5 $ 1,313.9 $ 2,416.4 $ 1,355.0 $ 1,303.7

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

COMPONENTS OF NET INVESTMENT INCOME & NET REALIZED INVESTMENT GAINS (LOSSES)

CONSOLIDATED

(in millions)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net Investment Income

Net investment income, excluding alternative investments

$

22.7

$

32.2

$

80.6

$

97.5

Alternative investments

19.3

8.0

(1.6)

19.4

Total net investment income

$

42.0

$

40.2

$

79.0

$

116.9

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net Realized Investment Gains (Losses)

Net realized investment (losses) gains

$

(5.7)

$

2.6

$

1.0

$

0.3

Change in fair value of equity securities

10.5

(8.8)

(12.0)

58.0

Credit losses on fixed maturity securities

(10.5)

-

(43.0)

-

Gain on sale of Trident assets

-

-

32.3

-

Total net realized investments (losses) gains

$

(5.7)

$

(6.2)

$

(21.7)

$

58.3

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

COMPONENTS OF NET INVESTMENT INCOME & NET REALIZED INVESTMENT GAINS (LOSSES)

CONSOLIDATED

(in millions)

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net Investment Income

Net investment income,excluding alternative $ 22.7 $ 32.2 $ 80.6 $ 97.5 investments

Alternative investments 19.3 8.0 (1.6) 19.4

Total net investment income $ 42.0 $ 40.2 $ 79.0 $ 116.9

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net Realized Investment Gains (Losses)

Net realized investment $ (5.7) $ 2.6 $ 1.0 $ 0.3 (losses) gains

Change in fair value of equity 10.5 (8.8) (12.0) 58.0 securities

Credit losses on fixed (10.5) - (43.0) - maturity securities

Gain on sale of Trident assets - - 32.3 -

Total net realized investments $ (5.7) $ (6.2) $ (21.7) $ 58.3 (losses) gains

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

COMPONENTS OF INVESTMENT PORTFOLIO

CONSOLIDATED

(in millions)

(unaudited)

September 30,

December 31,

2020

2019

U.S. Governments and government agencies

$

392.5

$

354.6

States and political subdivisions

169.5

152.6

Foreign governments

278.0

248.7

Corporate - Financial

832.8

783.8

Corporate - Industrial

823.3

789.5

Corporate - Utilities

191.3

207.1

Asset-backed securities

143.3

165.5

Collateralized loan obligations

274.5

225.8

Mortgage-backed securities - Agency

403.9

373.8

Mortgage-backed securities - Commercial

335.8

217.0

Mortgage-backed securities - Residential

69.5

115.1

Total fixed maturities

3,914.4

3,633.5

Common stocks

149.0

116.5

Preferred stocks

1.7

7.9

Total equity securities available for sale

150.7

124.4

Private equity

204.7

268.1

Hedge fund

105.7

109.5

Overseas deposits

97.2

114.6

Other

4.6

4.3

Total other investments

412.2

496.5

Short term investments and cash equivalents

528.7

845.0

Cash

300.4

137.8

Total cash and invested assets

$

5,306.4

$

5,237.2

September 30,

December 31,

2020

2019

U.S. Governments and government agencies

$

796.4

$

354.7

AAA

894.3

1,171.3

AA

379.1

347.0

A

811.9

750.9

BBB

687.6

585.3

BB

183.3

159.9

B

74.0

131.7

Lower than B

30.3

61.7

Not rated

57.5

71.0

Total fixed maturities

$

3,914.4

$

3,633.5

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

COMPONENTS OF INVESTMENT PORTFOLIO

CONSOLIDATED

(in millions)

(unaudited)



September December 31, 30,

2020 2019

U.S. Governments and government agencies $ 392.5 $ 354.6

States and political subdivisions 169.5 152.6

Foreign governments 278.0 248.7

Corporate - Financial 832.8 783.8

Corporate - Industrial 823.3 789.5

Corporate - Utilities 191.3 207.1

Asset-backed securities 143.3 165.5

Collateralized loan obligations 274.5 225.8

Mortgage-backed securities - Agency 403.9 373.8

Mortgage-backed securities - Commercial 335.8 217.0

Mortgage-backed securities - Residential 69.5 115.1

Total fixed maturities 3,914.4 3,633.5

Common stocks 149.0 116.5

Preferred stocks 1.7 7.9

Total equity securities available for sale 150.7 124.4

Private equity 204.7 268.1

Hedge fund 105.7 109.5

Overseas deposits 97.2 114.6

Other 4.6 4.3

Total other investments 412.2 496.5

Short term investments and cash equivalents 528.7 845.0

Cash 300.4 137.8

Total cash and invested assets $ 5,306.4 $ 5,237.2

September December 31, 30,

2020 2019

U.S. Governments and government agencies $ 796.4 $ 354.7

AAA 894.3 1,171.3

AA 379.1 347.0

A 811.9 750.9

BBB 687.6 585.3

BB 183.3 159.9

B 74.0 131.7

Lower than B 30.3 61.7

Not rated 57.5 71.0

Total fixed maturities $ 3,914.4 $ 3,633.5

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

SHAREHOLDER RETURN ANALYSIS

(in millions, except per share data)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net (loss) income attributable to common shareholders

$

(31.6

)

$

(25.1

)

$

(56.8

)

$

94.9

Operating (loss) income (1)

(11.9

)

(15.2

)

(4.0

)

43.1

Common Shareholders' Equity - Beginning of period

$

1,730.0

$

1,929.0

$

1,781.1

$

1,746.7

Common Shareholders' Equity - End of period

1,720.5

1,893.4

1,720.5

1,893.4

Average Common Shareholders' Equity

$

1,725.3

$

1,911.2

$

1,750.8

$

1,820.1

Common shares outstanding - End of period

34.670

34.314

34.670

34.314

Book value per common share

$

49.63

$

55.18

$

49.63

$

55.18

Cash dividends paid per common share during 2020

0.31

0.93

Book value per common share, September 30, 2020 - including cash dividends paid

$

49.94

$

50.56

Book value per common share, prior period (2)

$

49.94

$

51.80

Change in book value per common share during 2020

(0.6

)

%

(4.2

)

%

Change in book value per common share including cash dividends paid, during 2020 (2)

-

%

(2.4

)

%

Annualized return on average common shareholders' equity

(7.3

)

%

(5.3

)

%

(4.3

)

%

7.0

%

Annualized operating return on average common shareholders' equity

(2.8

)

%

(3.2

)

%

(0.3

)

%

3.2

%

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

SHAREHOLDER RETURN ANALYSIS

(in millions, except per share data)

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net (loss) incomeattributable to $ (31.6 ) $ (25.1 ) $ (56.8 ) $ 94.9 commonshareholders

Operating (loss) (11.9 ) (15.2 ) (4.0 ) 43.1 income ^(1)



CommonShareholders'Equity - $ 1,730.0 $ 1,929.0 $ 1,781.1 $ 1,746.7 Beginning ofperiod

CommonShareholders' 1,720.5 1,893.4 1,720.5 1,893.4 Equity - End ofperiod

Average CommonShareholders' $ 1,725.3 $ 1,911.2 $ 1,750.8 $ 1,820.1 Equity



Common sharesoutstanding - End 34.670 34.314 34.670 34.314 of period



Book value per $ 49.63 $ 55.18 $ 49.63 $ 55.18 common share

Cash dividendspaid per common 0.31 0.93 share during 2020

Book value percommon share,September 30, $ 49.94 $ 50.56 2020 - includingcash dividendspaid



Book value percommon share, $ 49.94 $ 51.80 prior period ^(2)

Change in bookvalue per common (0.6 ) % (4.2 ) % share during 2020

Change in bookvalue per commonshare including - % (2.4 ) % cash dividendspaid, during 2020^(2)



Annualized returnon average common (7.3 ) % (5.3 ) % (4.3 ) % 7.0 %shareholders'equity

Annualizedoperating returnon average common (2.8 ) % (3.2 ) % (0.3 ) % 3.2 %shareholders'equity

(1) For the purpose of calculating Operating Income, an assumed tax rate of 15% was used for all periods presented.

(2) The percentage change in book value per common share is calculated by including cash dividends of $0.31 per common share and $0.93 per common share paid to shareholders during the three and nine months ended September 30, 2020, respectively. This adjusted amount (Book value per common share, including dividends) is then compared to the book value per common share as of June 30, 2020 and December 31, 2019, respectively, to determine the change for the three and nine months ended September 30, 2020.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201102006001/en/

CONTACT: Brett Shirreffs Head of Investor Relations 212.607.8830 brett.shirreffs@argogroupus.com David Snowden Senior Vice President, Communications 210.321.2104 david.snowden@argogroupus.com