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Argo Group (AGII) Q4 Earnings & Revenues Beat Estimates

Argo Group International Holdings, Ltd . AGII reported fourth-quarter 2016 earnings per share of 65 cents that beat the Zacks Consensus Estimate by a couple of cents. Earnings decreased about 17% from the year-ago quarter.

Behind the Headlines

Gross premiums written increased 11.8% year over year to $499 million on higher premiums written across all segments.

Net investment income grew nearly 27% to $25.5 million.

Operating revenues jumped 6% year over year to $392 million due to higher premiums and investment income. Revenues surpassed the Zacks Consensus Estimate by 1.9%.

Total expense increased 8.9% year over year to $358.4 million as losses and loss adjustment expenses and underwriting, acquisition and insurance expenses escalated.

Argo Group's underwriting income plunged 77% year over year to $4.2 million. Combined ratio deteriorated 430 basis points (bps) to 98.8%.

2016 Highlights

Operating income per share came in at $3.92, up 14% from 2015. Operating revenues of $1.6 billion improved 7% year over year.

Argo Group International Holdings, Ltd. Price, Consensus and EPS Surprise

Argo Group International Holdings, Ltd. Price, Consensus and EPS Surprise | Argo Group International Holdings, Ltd. Quote

Segment Result

Excess and Surplus Lines : Gross written premiums improved 6% to $129.8 million on better performance at casualty lines and rate increases in certain specialty classes. Underwriting income of $10.8 million dipped 1.8% from the year-ago quarter. Combined ratio deteriorated 40 bps to 91.1%.

Commercial Specialty : Gross premiums written in the quarter rose 15.2% year over year to $177.7 million on strong performance at program, surety, and professional lines businesses. Underwriting income skyrocketed 145% year over year to $21.8 million. Combined ratio improved 1220 bps year over year to 77.8%.

Syndicate 1200 : Gross written premiums were up 15% year over year to $145.3 million. Underwriting loss of $7.5 million compared unfavorably with the year-ago income of $7.8 million. Combined ratio deteriorated 1040 bps year over year to 107.2%.

International Specialty : Gross written premiums increased 8.7% year over year to $$46.2 million in the quarter. Growth in Bermuda insurance business was offset by decline in reinsurance business amid a competitive rating environment. Underwriting income was down 55% to $2.7 million. Combined ratio deteriorated 870 bps year over year to 92.3%.

Financial Update

Argo Group exited 2016 with cash and investments of $4.4 billion as against $4.2 billion at year-end 2015.

Shareholders' equity was $1.8 billion at year-end 2016. This was higher than $1.7 billion at the end of 2015.

As of Dec 31, 2016, diluted book value per share was $59.73, up 10% year over year. Notably, Argo Group has grown book value per share by more than of 10% on a compounded annual basis over the last 15 years.

Return on equity was 8.5% in 2016, down 130 bps from 2015. The company's return on equity averaged 9.8% in the last four years.

The company spent $47.1 million in 2016 to buy back 0.8 million shares.

Zacks Rank

Argo Group presently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other P&C Insurers

Among the other players from the same space that have reported their fourth-quarter earnings so far, the bottom line at Progressive Corp. PGR and The Travelers Companies Inc. TRV and RLI Corp. RLI beat their respective Zacks Consensus Estimate.

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RLI Corp. (RLI): Free Stock Analysis Report

The Travelers Companies, Inc. (TRV): Free Stock Analysis Report

Progressive Corporation (The) (PGR): Free Stock Analysis Report

Argo Group International Holdings, Ltd. (AGII): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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