Argo Group Holdings Ltd.'s second-quarter profit beat the estimates of Wall Street analysts thanks to a 36-percent rise in revenue.

The international specialty re/insurance underwriter saw its net income drop slightly to $21.9 million, or 71 cents per share, for the second quarter of 2009 from $23 million or 75 cents per share for the same period last year.

But total revenue was up at $407 million from $299.2 million over the respective periods, net operating income was $40.3 million or $1.31 per share versus $24.9 million or 81 cents per share in the year-ago quarter and book value per share at June 30, 2009, rose 7.5 percent to $47.51 from $44.18 at December 31, 2008.

However, the investment portfolio incurred net pre-tax realised investment losses and other than temporary impairments write-downs of $9.2 million in the quarter compared to $1.2 million in losses in the second quarter of 2008.

Argo Group's CEO, Mark Watson, said: "Our continued growth in book value in the current market environment can be attributed to our diversified international business model coupled with our investment and risk management practices.

"Following these core strategies has allowed us to expand Argo Group's international footprint in a challenging part of the insurance cycle. As a result, the company is positioned to take advantage of opportunities in the marketplace."

For the three months ended June 30, 2009, favourable loss reserve development was recognised primarily in Excess & Surplus ($4.9 million) and reinsurance ($1.6 million). Unfavourable loss reserve development was recognised in international specialty, where ultimate estimates for both losses and premium were revised for the 2008 and prior property binder book resulting in approximately $22 million in additional losses and approximately $17 million in additional premium.

Earned premiums for the second quarter of 2009 were $372.2 million compared to $261.9 million for the second quarter of 2008. Net investment income for the three months ended June 30, 2009 and 2008 was $41.9 million and $36.5 million, respectively.

The Group's combined ratio for the second quarter of 2009 was 95.8 percent versus 99.3 percent for the same period in 2008.

Argo Group's 2009 second quarter combined ratios for each business segment were: E&S 93.7 percent; commercial specialty 100.5 percent; reinsurance 63.2 percent; and international specialty 95.8 percent.

ARGO GROUP Q2 REPORT CARD

Net income: $21.9 million compared to $23 million in 2008

Combined ratio: 95.8 percent compared to 99.3 percent in 2008

Gross premiums written: $572 million compared to $397.6 million in 2008