Argonaut Group Notes Q3 Results; Core Business Segments Produce Sub-100 Combined Ratio

Texas-based Argonaut Group, Inc. announced financial results for the three- and nine-month periods ended Sept. 30.

Highlights for the third quarter of 2003 include the following: – The company’s continuing segments produced a combined ratio of 97.4 percent; – Cash flow generated from operations during the quarter totaled $55.6 million, bringing the nine-month total to $129.8 million – Earned premiums for the quarter were $148.1 million, a 54 percent increase over the prior year.

Argonaut Group President and CEO Mark Watson III noted, “Each of our business segments delivered operating performance improvements, which contributed to solid financial results during the third quarter. We are pleased to report a sub-100 consolidated combined ratio for our continuing lines, an achievement that reflects our disciplined approach to underwriting profitability.”

Segment Results
Specialty Excess & Surplus Lines – For the third quarter of 2003, gross written premiums for E&S lines totaled $100.5 million, generating pre-tax income of $11.8 million and a GAAP combined ratio of 89.7 percent. This is compared to gross written premiums of $83.0 million, pre-tax income of $5.8 million and a GAAP combined ratio of 92.6 percent for the same period in 2002.

Risk Management – Gross written premiums were $54.6 million for the three months ended Sept. 30, 2003, resulting in pre-tax income of $2.8 million, compared to gross written premiums of $61.6 million and pre-tax income of $3.9 million for the same period in 2002. For the third quarter, the GAAP combined ratio in this segment was 112.8 percent versus 112.9 percent a year earlier.

Specialty Commercial Lines – During the third quarter, gross written premiums were $39.7 million resulting in pre-tax income of $2.4 million, compared to gross written premiums of $35.1 million and pre-tax income of $3.0 million during the same period in 2002. The GAAP combined ratio for the third quarter of 99.9 percent versus 98.0 percent a year earlier was impacted by approximately $1.9 million in catastrophic losses, primarily from food spoilage claims related to the power outage in the Northeast United States in August 2003. Specialty Commercial’s combined ratio net of catastrophic losses was 93.8 percent in the third quarter of 2003 and 94.6 percent in the same period of 2002.

Public Entity – Gross written premiums for the third quarter were $25.3 million, versus $10.1 million for the quarter ended Sept. 30, 2002. The GAAP combined ratio of 89.9 percent generated pre-tax income of $1.1 million, versus a GAAP combined ratio of 101.5 percent and pre-tax income of $0.1 million during the same three-month period in 2002.