Argo profits up 270.4% in Q1, CEO says results demonstrate value to shareholders
Argo Group International Holdings has had a strong start to 2019, increasing its first quarter profits 270.4 percent year-on-year, at a time where the Bermuda-based specialty re/insurer in an ongoing dispute with activist shareholder Voce Capital Management.
Argo’s net income for the three month period ending March 31, 2019, was $91.2 million, an increase of 270.4 percent for the same period in 2018.
The re/insurer’s combined ratio was 94.8 percent compared with 95.8 percent for the 2018 first quarter.
Gross written premiums grew 7.1 percent in the quarter to $760.8 million, compared to $710.5 million for the first quarter.
“Our strong first quarter 2019 results demonstrate our focus on delivering value to shareholders. Our annualised return on equity (ROE) of 20.1 percent in the first quarter is an outstanding achievement. The 9.1 percent annualized operating ROE for the quarter, a 100 basis point improvement year-over-year, reflects strong momentum toward our run rate objective of 10 percent. In addition, book value per share increased 8.0% from the beginning of the year," said Mark Watson III, CEO.
"These results were enabled by a 7.1 percent increase in gross written premiums, with a 10.2 percent rise in the US Operations, an improvement in our expense ratio, and a 26.6 percent increase in our underwriting income. We expect our strategy to continue to deliver superior and sustainable returns to shareholders."
These results come at a time where 5.8 percent shareholder Voce has been very public in its criticisms of Argo Group’s corporate expenses, making claims around private jet use and corporate housing, which Argo has been quick to dismiss as “false and misleading”.
Voce, which is the fourth-largest shareholder with 1.9 million shares, has argued that Argo needs to improve its return on equity (ROE), and will not be able to create sustainable, long-term shareholder value with its current strategy and expense structure.
Argo’s board has suggested Voce has ignored the re/insurer’s track record of value creation for its shareholders, citing 1, 3 and 5-year period total shareholder returns of 39 percent, 69 percent and 136 percent, respectively. From 2010 to 2018, Argo returned in excess of $645 million of capital to shareholders.
