“Argo’s results for the 2019 fourth quarter and full year are clearly unacceptable,” said
"We are experiencing substantial rate increases across our platform, with strong double-digit gains in International and certain
Key items affecting the fourth quarter include:
- Prior accident year losses of approximately
$77 millionor 18.0 points on Argo’s consolidated loss ratio for the fourth quarter. Reserve increases were related to the Company’s London, Bermuda Insuranceand European business units within Argo’s International Operations, as well as property, professional and liability lines within Argo’s U.S.Operations. Prior accident year losses in both segments were the result of new information received in the quarter relating to claims trends across various lines of business, as well as a continued review of International business currently in run-off. Prior year losses also include the conclusion of Argo’s annual review of Run-off reserves, which resulted in a $10 millionreserve increase.
- Current accident year losses of approximately
$30 million, or an additional 6 points when compared to the third quarter 2019 year-to-date current accident year loss ratio of 59%. The adjustment reflects a change in actuarial estimates based on a more uncertain claims environment and the recalibration of the current year based on prior accident year loss adjustments.
- Catastrophe losses and related reinstatement premiums of approximately
$3 million, or 0.5 points on Argo’s consolidated loss ratio for the fourth quarter. Catastrophe losses were primarily related to Typhoon Hagibis and were partially offset by a modest reduction to estimated losses for prior quarter events.
- Additional operating expenses of approximately
$12 millionor 2.9 points related to costs associated with a reduction in workforce, an allowance for doubtful accounts related to our European business unit, and adjustments to underwriting expenses based on certain costs previously allocated to investment functions and trade capital providers.
Based on these items discussed above, Argo expects to report an underwriting loss of approximately
Additionally, several non-operating charges will be reflected in fourth quarter results:
- As part of an ongoing strategic review and recent operating results, a goodwill impairment of approximately
$16 millionrelated to Argo’s European business unit.
- Expenses of approximately
$18 millionrelated to losses and impairments on certain long-lived assets that are held for sale, primarily a corporate aircraft and real estate properties; the cancellation of contracts related to certain sponsorships and marketing services; and to severance costs associated with separation from Argo’s former CEO.
- Other corporate expenses of approximately
$8 million, which primarily resulted from costs related to the previously announced independent directors’ review of certain governance and compensation matters and Argo’s cooperation agreement with Voce Capital.
Argo Schedules Earnings Release for
The company will release fourth quarter 2019 financial results after the close of
Instructions for Connecting to the
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ABOUT LOSS ESTIMATES
Argo Group’s estimates of losses are based on claims received to date, policy-level reviews, discussions with distribution partners, the Company’s internal and external modeling resources, and publicly available industry loss estimates. Argo Group’s estimates are dependent on broad assumptions about coverage, liability, reinsurance and potential changes to both known and unknown claims. Accordingly, the actual ultimate net impact may differ materially from Argo Group’s estimates.
This press release may include forward-looking statements, both with respect to
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,” “outlook,” “trends,” “future,” “could,” “would,” “should,” “target,” “on track” and similar expressions of a future or forward-looking nature. All forward-looking statements address matters that involve risks and uncertainties, many of which are beyond