Argo warns of loss items ahead of earnings
Argo Group International Holdings Ltd has said its results for the third-quarter of 2019 will be adversely affected by several loss items, primarily related to its international operations.
The company is due to release it earnings news on November 7.
Mark Watson, chief executive officer of Argo Group, said: “The adjustment made to our current and prior accident year loss expectations over the last two quarters is related to large loss activity, business we have previously exited or where we have taken aggressive underwriting actions to improve profitability.
“These charges are a result of increased loss occurrence and a more challenging claims environment in some classes of business.
“Despite these challenges, we continue to experience strong results in our US operations and we are seeing rate improvement across several key lines of business both in the US as well as in our international operations.”
In a statement, the Bermudian-based company said that key items affecting the quarter include:
• Catastrophe losses of approximately $19 million pre-tax. Catastrophe losses were primarily related to Hurricane Dorian, Typhoon Faxai and flood losses in the US.
• Prior accident year losses of approximately $42 million. Reserve increases were related to the company’s Bermuda insurance business unit, as well as European and London operations within Argo’s international operations and were the result of new information received in the quarter relating to the resolution or notification of several large losses, as well as a continued review of international business currently in run-off. The company said the losses were partially offset by a modest net reserve decrease within its US operations.
• Current accident year losses of approximately $10 million, or an additional 6.4 points when compared to the second quarter 2019 year-to-date current accident year loss ratio for international operations. The losses are primarily related to property, liability and marine lines within international operations. Argo said the adjustment reflects a change in actuarial estimates based on a more frequent occurrence of large losses and the recalibration of the current year based on prior year adjustments.
In its statement, the company also said it performs an internal review of run-off reserves during third- or fourth-quarter annually.
It said at the end of the third-quarter the review of the reserve position was ongoing, and while information received to date “is consistent with management’s expectations”, it expects to conclude the review during the fourth-quarter.
Argo is also reviewing possible reinsurance alternatives to address the run-off reserves.
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