Argo Group International Holdings Ltd. saw a steady increase in third quarter profits of almost $45 million from last year due to the success of its US business margins holding.

The Bermuda-based international underwriter of specialty insurance and reinsurance products in niche areas of the property and casualty market, reported a net income of $74.2 million or $2.70 per diluted share compared to $30.7 million or $1.40 per diluted share.

Gross written premiums increased to $332.9 million versus $307.3 million in the same three months of 2006, while total revenue rose to $258.7 million versus $242.3 million in the third quarter of last year.

During the third quarter of 2007, Argo Group completed its annual actuarial review of its asbestos and environmental (A&E) loss reserves and, as a result of the review, net A&E loss reserves were increased by approximately $26 million. Accordingly, loss and loss adjustment expenses for the quarter includes a pre-tax charge of $26 million.

Argo Group president and CEO Mark Watson III said: "I am pleased our business segments continued to perform well in the current marketplace. As we mentioned last quarter, select markets is executing its business plan to expand operations in targeted specialty lines, which drove that segment's growth for the quarter.

"Moreover, margins in all of our US businesses are holding, allowing us to continue to be selective in the types of risks we underwrite.

"And, while our international operations are just getting started, they are developing in line with our expectations as we look forward to January 1."

•Argo is set to sell off its Connecticut, US subsidiary PXRE Reinsurance Co. to UK-quoted non-life run-off consolidator Tawa Plc for $114 million.

The two companies entered into a stock purchase agreement with each other for Tawa's acquistion of PXRE, while the total consideration may be reduced by any pre-close dividend paid to Argo Group and is subject to adjustment following the calculation of the closing net asset value.

PXRE primarily wrote reinsurance of property, marine and aerospace risks with a focus on catastrophe-related coverage. Its operations were put into run-off in February, 2006, following PXRE's downgrade by analysts as a result of the 2005 hurricanes in the Gulf of Mexico and, as of June 30, PXRE's undiscounted pro forma net assets were $144 million.

Subject to regulatory approval, the acquisition is expected to be completed before the end of the first quarter of 2008.