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8-K - FORM 8-K - Argo Group International Holdings, Ltd.d8k.htm
Investor Presentation
November 2009
Exhibit 99.1


2.
Forward-Looking Statements
This presentation contains “forward-looking statements” which are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.  The forward-looking
statements are based on the Company's current expectations and beliefs concerning future
developments and their potential effects on the Company. There can be no assurance that actual
developments will be those anticipated by the Company. Actual results may differ materially from
those projected as a result of significant risks and uncertainties, including non-receipt of the
expected payments, changes in interest rates, effect of the performance of financial markets on
investment income and fair values of investments, development of claims and the effect on loss
reserves, accuracy in projecting loss reserves, the impact of competition and pricing
environments, changes in the demand for the Company's products, the effect of general
economic conditions, adverse state and federal legislation, regulations and regulatory
investigations into industry practices,  developments relating to existing agreements, heightened
competition, changes in pricing  environments, and changes in asset valuations.  The Company
undertakes no obligation to publicly update any forward-looking statements as a result of events
or developments subsequent to the presentation.
   


3.
The Argo Group Story
The Company
Argo Group is an international specialty underwriter of
property/casualty insurance and reinsurance focused in niche
markets.
The Objective
To maintain our profitable growth record while maximizing on the
opportunities afforded us through our international platform.
The Strategy
Apply our proven business model to deploy capital in attractive
niche markets that offer opportunities for maximum return.


4.
Argo Group Today
Specialty underwriter in attractive niche areas of P&C insurance
and reinsurance markets
Headquarters: Bermuda
Operate in 50 states and internationally
View the specialty market as a single marketplace
Total capitalization of $2.0 billion
Four ongoing business segments
Excess and Surplus Lines (U.S.)
Commercial Specialty (U.S.)
Reinsurance
International Specialty
Major business
segment locations
Headquarters
Brussels
London
Bermuda


5.
Strategic
Business
Plan
Focus:  Specialty underwriter in niche markets
Growing an International Specialty Underwriter
Growth and Profitability


6.
A Recap of Our Successful Strategic Business Plan
1.
Target attractive
niche markets
2.
Develop leading,
differentiated
positions
3.
Expand position
organically
geographically
selective acquisitions
4.
Results:
growth
in
premiums, earnings
and book value


7.
1.  ATTRACTIVE NICHE MARKETS
A Different Type of Approach
Higher margin and return
Market leadership in a reasonable time frame
Disciplined underwriting
Sustained, profitable organic growth
Key Criteria In Selecting Niche Markets


8.
Leader
Lloyd’s direct and facultative market
Leader
E&S market top-tier
Leader
Commercial insurance for small / medium
public entities
Leader
Insurance for the retail dry cleaning industry
Leader
Workers’
compensation for coal mines in
Pennsylvania and Maryland
Leader
P/C insurance for independent grocery stores
2.  DEVELOP LEADERSHIP POSITIONS
Examples of Leadership Positions


9.
3.  EXPAND POSITION
Initiatives Supplementing Organic Growth
Revenues
Since 2000,
accounts for
over 90% of
total growth
Since 2000,
accounts for
over 90% of
total growth
Business Development Activity Since 2000
Synergies Gained
Cross Selling
Increased Product Offerings
Interstate
Coregis
Assets acquired:
Grocers
Fulcrum
Businesses acquired:
Massamont
Rockwood
Heritage
PXRE
Colony
Insight
New businesses launched:
Argonaut Financial
Argo Surety
Argo Pro
Argo Re
Excess Casualty
Argo Specialty
Trident


10.
$125M
$1.1B
2000
2008
Earned Premiums
$1.6B
$186M
2000
2008
Gross Written Premiums
31%
CAGR
32%
CAGR
4.  RESULTS: GROWTH
An Impressive Growth Record…


11.
$62M
$150M
2000
2008
12%
CAGR
$3M
$63M
2001
2008
Net Income
Net Investment Income
46%
CAGR
4.  RESULTS: GROWTH
Improved Bottom Line Results…


12.
$51.04
$44.18
$45.15
$23.40
$27.22
$30.36
$33.52
$39.08
2002
2003
2004
2005
2006
2007
2008
2009-Q3
4.  RESULTS: GROWTH
…and Consistent Growth of Book Value
BVPS Growth Since 2002
12.2%
CAGR
* Book value per common share - outstanding, includes the impact of the Series A Mandatory Convertible Preferred Stock on
an as if converted basis.  Preferred stock had fully converted into common shares as of Dec. 31, 2007.


13.
Growing an International Specialty Underwriter
Growth and Profitability
Focus:  Specialty underwriter in niche markets
Four
Business
Units


14.
Excess & Surplus
Lines
International
Specialty*
2008 GWP $283M*
Lloyd’s platform
2008 GWP $684M
Excess & Surplus
Lines
Reinsurance
2008 GWP $126M
Bermuda platform
Commercial
Specialty
2008 GWP $511M
Four Growth Platforms
*June 1 –
Dec 31 only


15.
EXCESS & SURPLUS LINES:
Largest and Most Profitable Segment
Status
Combined ratio in low 90% range
Colony, Argonaut Specialty & Argo Pro
Competitive advantages
Excellent infrastructure –
broad
geography
Underwriting expertise
Broad product portfolio for small acct
U/Ws
Controlled distribution
Wholesale agents
Benefits
from a category XII ‘A’
(Excellent) rating by A.M. Best
Pre-Tax Operating Income
($M)
92.6%
88.9%
89.3%
Combined ratio
*  Includes $12.7M of losses from 2008 hurricanes.
$58
$102
$113
2005
2006
2007
$98
2008*
93.3%
2009 Nine Months: $63.6M
2008 Nine Months: $66.6M


16.
COMMERCIAL SPECIALITY:
Fastest Growing Segment
Status
2008 GWP up 21%
Primarily admitted, retail-driven
Competitive advantages
Expertise in niche markets
grocery stores
mining operations
laundry & dry cleaners
small/medium-size public entities
religious institutions
Benefits from a category XII ‘A’
(Excellent) rating by A.M. Best
Pre-Tax Operating Income
($M)
Combined ratio
* Includes $2.8M of losses from 2008 hurricanes.
92.6%
89.4%
88.7%
$38
$50
$61
2005
2006
2007
$43
2008*
96.5%
2009 Nine Months: $34.5M
2008 Nine Months: $25.3M


17.
Nine Months Ended
Sept. 30, 2009
($M)
Combined ratio
55.5%
$34
$63
$143
Operating
Income
Earned
Premium
Gross Written
Premium
Status
Began 2008 with ~ $1.3B in capital
Produced solid year one results
Reported favorable development related
to Hurricane Ike
Added Casualty and Professional Risks;
appointed Nigel Mortimer to lead
Competitive advantages
Utilized established infrastructure
Built diversified book of business
Proven record of leadership
Benefits from a category XII ‘A’
(Excellent) rating by A.M. Best
REINSURANCE:
Argo Re –
Performing Well


18.
Status
Acquired Heritage in 2008;      
rebranded to Argo International
Enoizi to CEO; Carrier to U/W director
Worldwide property
Direct and Facultative
North American and International
Binding Authority
Non-U.S. liability
Professional indemnity
General liability
Competitive advantages
Specialist knowledge
Access to decision makers
Carries the Lloyd’s market ratings of
‘A’
(Excellent) rating by A.M. Best, and
‘A+’
by S&P
INTERNATIONAL SPECIALTY:
Argo International (Lloyd’s)
Nine Months Ended
Sept. 30, 2009
($M)
Combined ratio
97.8%
$8.1
$321
$563
Operating
Income
Earned
Premium


19.
Combined Business Mix
Unique platform to prudently write business
worldwide and penetrate niche markets
Specialty Insurance
Excess & Surplus Lines
Commercial Specialty
Reinsurance
Quota share reinsurance
of business partners
Property reinsurance
Prospective insurance
opportunities
~70%
~10%
~20%
International Specialty (Lloyd’s)
Worldwide property
Non-U.S. liability
19.


20.
Insurance / Reinsurance Business Mix
Reinsurance
Insurance
YTD as of  Sept. 30, 2009
Note: Based on gross written premiums (GWP)
91%
9%


21.
Property / Casualty Business Mix
Property
Casualty
~70%
~30%


22.
Argo Group 2008 Financial Highlights
2007
2008
Change
Gross Written Premium
$ 1.18B
$ 1.60B
36%
Net Earned Premium
$ 860M
$ 1.13B
31%
Total Revenue
$   1.0B
$ 1.25B
25%
Net Investment Income
$ 134M
$ 150M
12%
Net Income Per Share
$ 5.58
$ 2.05**
172%**
** Impacted by $17.4mm of pre-tax losses from U.S. storms in Q2 and $74.0mm from hurricanes Gustav and Ike in Q3.


23.
Argo Group 2009 Third Quarter Results
2008
Nine Months
2009
Nine Months
Change
Gross Written Premium
$ 1.2B
$  1.6B
29%
Net Earned Premium
$ 803M
$ 1.1B
32%
Total Revenue
$ 909M
$ 1.2B
28%
Net Investment Income
$
113M
$
113M
0%
Net Income Per Share
$ 1.66
$ 2.48
49%


24.
Strong Balance Sheet and Capital Base
In millions except for book value and leverage data
Dec 31, 2008
2,997
24.1%
1,782
1,353
6,382
$4,001
429
$44.18
Dec 31, 2007
2,425
21.0%
1,754
1,385
5,124
$3,598
369
$45.15
Reserves
Total Leverage
Total Capital
Shareholders’
Equity
Total Assets
Investment Portfolio
Indebtedness
Book Value Per Share
Sep 30, 2009
3,187
19.5%
1,954
1,573
6,821
$4,317
381
$51.04


25.
Conservative Investment Portfolio
Fixed income (94%)
Equities (6%)
Total: $4.0bn
Total: $0.3bn
Average Rating of AA+
Duration of 3.0 years
Internally and externally managed
Conservative focus on large cap
32%
14%
19%
15%
15%
U.S. Government
State / Muni
Corporate
Structured
Short Term
Other
5%
Financials
Industrial & Other
17%
83%


26.
Focus Areas for the Coming Year
Investments in people
Investment in IT
Expense savings
Controlled expansion in the US and London
Focus on clients
Focus on distribution partners
Focus on the competitive environment
Internal
External
Premiums / Risk Selection
Levers to Drive a Profitable Organization
Investment Leverage / Yields
Financial Leverage / Capital Structure
Infrastructure Cost


27.
Capital Deployment Strategy
Support balance sheet, mainly loss reserves
Growth of core business
Deploy capital opportunistically across all four segments
Reduce reliance on third-party reinsurance
Pursue attractive market opportunities
Selective acquisitions that complement existing business lines
Books of business and companies
Repatriate capital depending on capital position and stock price
$150M stock repurchase program authorized should above opportunities
fail to appear
Dividend


28.
I
N  S
U
M
M
A
R
Y
A Strong and Well-Positioned Specialty Underwriter
Proven and successful strategic business plan
Strong growth record
Improved profitability in continuing lines
Capital management
Expanded, proven leadership team
Powerful
competitive force in specialty lines market
Flexible international platform
U.S., Bermuda and London advantages
Diversified business mix
Growth though geographic and product diversification
Focus on profitable growth
Effective capital deployment + high-margin focus = ROE improvement
Consistent increase in book value per share over time


Thank you!