Argo posts Q2 net loss of $19m
Argo Group International Holdings has reported a net loss attributable to common shareholders of nearly $19 million for the second quarter of this year, down from a net profit of $67 million for Q2 2021. That produced a net loss for the six months to 30 June of $22.5 million, compared with an H1 2021 net profit of just over $94 million.
Gross written premium in the second quarter fell by 10% year on year to $732 million from $815 million.
The combined ratio improved by 0.8 points to 96.2% from 95.4%, driven by a higher loss ratio, partially offset by an improved expense ratio.
The Q2 net loss included pre-tax net realised investment and other losses of $40.4 million, of which $21.3 million was attributable to a loss on the sale of the company's Malta operations, ArgoGlobal Holdings. In comparison, net income in the prior year second quarter included $24.7 million of pre-tax net realized investment and other gains.
The net loss in Q2 this year also included $15.6 million of non-operating expenses, which were mainly attributable to non-operating advisory fees and severance expenses. In comparison, the prior year second quarter reported $10.8 million in non-operating expenses.
The effective tax rate, calculated as the income tax provision divided by income before income taxes, was (295.1%), compared to 11.3% in the prior year second quarter. The effective tax rate in the second quarter of 2022 was impacted by the sale of the company's Malta operations, in which the realised loss on the sale of the business was not subject to corporate tax.
Total catastrophe losses were $2.5 million in the second quarter of 2022, which Argo said reflected its strategy to reduce catastrophe exposure despite continued industry catastrophe losses this quarter.
“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 chief executive officer, 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% 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.”
