ANNUAL
REVIEW
2016
argolimited.com
ANNUAL
REVIEW
2016
CONTENTS
2
Letter to the
Shareholders
A Message From
CEO Mark E. Watson III
5
6
10
13
16
23
2016 at a Glance
Key Figures for the Year
Business Segment
Overviews
How Our Businesses
Performed
Profiles in
Collaboration
How We Work With Our
Partners Around the World
Inside Argo
Highlights of 2016; Working
at Argo; Giving Back to Our
Communities
Condensed
Consolidated
Financial Statements
Shareholder
Information &
Forward Looking
Statements
Disclosure
CORPORATE PROFILE
Argo Group
International
Holdings Ltd.
(NASDAQ: AGII)
is an international underwriter of
specialty insurance and reinsurance
products in areas of the property and
casualty market.
Through its operating subsidiaries, Argo Group
offers a comprehensive line of products and
services designed to meet the unique coverage and
claims-handling needs of its clients in four business
segments: Excess & Surplus Lines, Commercial
Specialty, International Specialty and Syndicate
1200. Argo Group is headquartered in Bermuda.
The businesses of Argo Group work as a unified,
collaborative team around the world to deliver
unsurpassed service to our clients. We do this by
being smart, fast, eager and bold.
1
ANNUAL REVIEW 2016 LETTER TO THE SHAREHOLDERS
Argo is on course.
It’s great to acknowledge that the con-
tinuous improvements we are making to
become a high-performing company are
paying off.
As always, the proof is in the details.
Gross written premiums were up 7.6% to
$2.16 billion from $2.01 billion in 2015. Our
after-tax adjusted operating income(1) rose
from $108 million last year to $121 million in
2016. Our net income was almost $147 mil-
lion, compared to last year’s $163 million.
Our combined ratio was 96.2%, compared
to 95.0% in 2015, with major catastrophe
losses near the end of the year causing
much of that variance. In fact, while our
overall loss ratio moved from 55.8% to
57.4%, when we exclude catastrophe losses
and positive prior-year loss development,
the loss ratio for 2016 improved a full
percentage point to 55.4% (1), which is in
the top quartile of underwriting perfor-
mance for our industry. Our book value
per share grew 10% for the year to $59.73
at year-end, the 10th consecutive year of
improvement. Finally, our adjusted oper-
ating earnings(1) of $3.92 per share grew
14% from 2015. We achieved these results
notwithstanding catastrophe losses that
were two and a half times higher this year
due to Canadian wildfires, the largest
hailstorm in Texas history, Hurricane
Matthew and a series of smaller events
around the world.
I’m happy to note that investment income
– even in a challenging environment –
was $115.1 million, compared to $88.6 mil-
lion last year, an increase of almost 30%,
with our alternative investment portfolio
contributing solidly to that result. We
ended the year with cash and investments
totaling $4.4 billion.
I begin with our results in the United
States. As you may know, we have spent
considerable time and resources building
and rebuilding various parts of our U.S.
portfolio. A remarkable turnaround in our
Commercial Specialty segment was one of
the year’s highlights. Led by Kevin J. Rehn-
berg, our U.S. operations posted a record
underwriting income(1) of just under
$112 million in 2016, more than at any oth-
er time since I invested in the company.
My thanks go to everyone in the United
States for doing a fantastic job.
EXCESS & SURPLUS LINES
The continuing focus in our Excess &
Surplus Lines (E&S) business this year
was execution. Our success in earning
$49 million of underwriting income was
due in part to new technologies that
help us better analyze and select risk,
allowing us to increase the value of the
business we process. Thanks to close
collaboration between our technology
and engineering teams, we were able to
introduce a number of improvements
to our underwriting. We reduced cycle
times substantially through automation,
exponentially increasing the number of
submissions we respond to, while freeing
our underwriters to reach out to new
clients. This led to what otherwise would
have been a decline in premiums, given
prevailing market conditions. Our core
casualty business grew over 10%, which
contributed to our overall E&S growth of
4.1%. Needless to say, we let a fair amount
of underperforming business go. Gross
written premiums in E&S were $585.8
million. Catastrophe losses rose to $11.6
million from $5.5 million the year before,
accounting for 2.4 points on a combined
ratio of 89.9%.
COMMERCIAL SPECIALTY
In 2016, we saw improvement in most
businesses within our Commercial
Specialty segment. Growth came mainly
from program, surety and professional
lines businesses that leveraged our digital
tools, focused on real-time market re-
search and aggressively pursued potential
markets. Trident Public Risk Solutions
found innovative ways to grow our
public-entity business across the United
States. Argo Surety logged its ninth
consecutive year of growth. ARIS gained
momentum as the industry’s only insurer
to underwrite true title insurance for
fine art and other important collectibles.
Across the segment, enhanced collabo-
ration generated innovative responses to
emerging market opportunities, and the
figures reflect our success. In 2016, gross
written premiums were $691.9 million for
this segment, up $109.2 million or 18.7%
over the same period last year. Underwrit-
ing income was $62.5 million, compared
to $30.1 million in 2015. The combined
ratio of 82.8% compares to 91.3% in the
previous year.
INTERNATIONAL
While our U.S. results drove our overall
growth in 2016, our international busi-
nesses are holding steady, notwithstand-
ing market headwinds and above-average
catastrophe losses. Organized now under
Jose A. Hernandez – our new head of in-
ternational business – Argo’s London, Ber-
muda, Latin America and emerging-mar-
ket businesses are now collaborating to
drive business worldwide. Our long-term
investment in Brazil is working well for us,
with the digital platforms and products
we prototyped there now making money
and being replicated elsewhere. Having
said that, competition remains fierce at
Lloyd’s, where we compete in the tough-
est market of the last two decades. Even
so, our advantage lies both in our data
and in our relationships, deepened over
time by collaboration, solid underwrit-
ing and outstanding service. In London,
we are now recognized by key brokers
as a leading underwriting firm, and the
announcement of our acquisition of Ariel
Re has earned widespread interest. For
2016, our International Specialty business
earned gross written premiums of $261.3
million, and our Syndicate 1200 generated
gross written premiums of $625.5 million
for a total of $886.8 million, with an over-
all combined ratio of 95.4%.
A WORLD OF NEW POSSIBILITIES
Our industry rides on the tide of com-
merce. As geopolitical decisions influence
the shape and scope of global business,
the nature of risk itself changes dramati-
cally. Our duty is to know where condi-
tions are in flux, and to assess if we can
help businesses mitigate their risks with
sensibly priced coverage.
In the past year, we witnessed a hand-
ful of sweeping political changes. The
(1) Please see reconciliations of non-GAAP measures to their most directly comparable US GAAP beginning on page 21.
announcement of Britain’s vote to exit the
European Union in June had deep implica-
tions. No matter how hard or soft Brexit
implementation proves to be, important
questions of jurisdiction and authority
will see shifts in power that change trade
alliances, rates and routes. That said, with
insurance entities licensed in both the
United Kingdom and continental Europe,
we do not expect significant disruptions in
our own insurance activity. We believe that
regulatory changes affecting our business
will be introduced over years, not months.
As changes become better known, we will
take any steps needed to accommodate a
restructured international configuration.
The change of administration in the United
States has also opened speculation on
where business is headed, what opportuni-
ties will emerge, and whether prosperity is
better served by competition or protection.
The broad issue in both Europe and America
is the struggle between global interest, re-
gional interest and national interest, which
lately have been characterized
as divergent, incompatible
ideologies. In my view,
they may be
“Our late-year acquisition of Ariel Re
gives us a second Lloyd’s syndicate while
positioning Argo as a market leader with
immediate opportunities to expand into
new geographies.”
— Mark E. Watson III,
Chief Executive Officer
2
3
ANNUAL REVIEW 2016ANNUAL REVIEW 2016 conflicting but they are not irreconcil-
able. Where prosperity is concerned,
access to capital and sharing of risk are of
intrinsic value to the national good. Most
nations do not on their own have enough
capital to drive and protect all the growth
required or possible. That’s why insurance
was invented. That’s why Lloyd’s was
founded. That’s why Bermuda became a
center of reinsurance. If tariffs, taxes and
selective prohibitions become the tools of
national interest they once
were, access to insurance could
be unduly limited as it once was.
Without
insurance, communi-
ties, businesses and projects will
grind to a halt. Even if promised
infrastructure improvements are
backed by public funding, their
engagements will carry risks that
will have to be hedged with ad-
equate insurance. However the
debate on governance style is
resolved, our industry must be
allowed to carry on its role as a
prudent risk-taker that allows
the wheels of commerce to turn
smoothly. We are the grease
that makes that happen. The platforms
we’ve built for Argo in the United States,
Bermuda, London, Europe, Asia and Latin
America allow us to take advantage of
opportunities as they arise. But insurance
has rightly become a global community of
underwriters who share risk and protect
those who need it. We must be allowed to
continue.
A related issue is capital. The low-rate
investment climate continues to perplex.
Investors are scratching their heads,
uncertain of where they should put their
money to work. Having watched the U.S.
10-year bond annual yield slip steadily
from over 15% in 1982 to below 2% in 2016,
and now sensing a fully subscribed equity
market, many corporations are placing
capital in areas of business in which they
are not already exposed. We have seen
this trend in our own industry, where new
technology has driven the convergence of
insurance companies and capital markets.
Innovative disruption of the value chain
from policyholder to ultimate risk-taker
could shake things up, but I contend that
4
this convergence will ultimately prove
to be to the benefit of the policyholder
and those who possess superior technol-
ogy and the know-how to use it. As we
continue to make our own business more
simple and intimate through technology,
I am confident that our own deep-domain
expertise will allow us to thrive as a spe-
cialty insurer in an industry where new
entrants cannot easily compete without
such expertise.
Watson addresses Argo senior leadership at the Strategic Planning
Meeting 2016 in Vancouver.
GETTING THERE TOGETHER
At Argo, our companywide focus this year
was on learning how to engage the full
talents and creativity of our team, and
we were not disappointed. Together, we
found ways to collaborate and produce
impressive results. The most visible
evidence of our strategy was our late-year
acquisition announcement of Ariel Re,
which gives us a second Lloyd’s syndicate
while positioning Argo as a market leader
with immediate opportunities to expand
into new geographies. We have worked
hard to become data-driven. Ariel Re has
inspired us to be even more so. As one
entity, we will be able to exploit our com-
bined ability to take on innovative risks,
find new modes of insurance and reinsur-
ance, and compete well in an increasingly
competitive market.
Our team continued to improve through
an expanding program of training and
professional development. Talented
people continued to join us from other
high-performing companies – notably,
experts such as our head of international
See Mark’s recap of the year at
argolimited.com/message-2016
2016 AT A GLANCE
Jose A. Hernandez, our chief financial of-
ficer for the U.S. Oscar Guerrero, and our
chief actuary Robert Katzman from AIG;
and our head of digital Andy Breen from
American Express. Together, our team
found new ways to execute nimbly while
innovating in every corner of the compa-
ny. Encouraged by our program to seek
out brilliant new ideas, Argo staff helped
us change the way we communicate with
clients, design and launch new apps,
build risk-analysis tools, launch ingenious
quote-and-bind solutions, accelerate
claims resolution, and even reach
whole new markets through com-
plementary sponsorship programs.
Through collaboration, innovation is
changing us from within.
Finally, commitment to the commu-
nities in which we live and work has
always been a priority at Argo. In
2016, we proved that commitment in
important, practical ways. In London,
we raised funds for a local hospital.
In São Paulo, we donated food to the
homeless and helped cancer patients.
In cities across the United States,
we supplied underprivileged kids with
necessities, helped women build skills of
self-promotion and sent school supplies
to foster kids. We helped raise funds to
support those with Down syndrome,
and ran a United Way campaign in San
Antonio sending funds to local frontline
charities. In Bermuda, we reached an
impressive milestone as Argo’s overall
charitable giving topped $1.25 million.
To sum up, our company continues to
improve and grow, with overall underwrit-
ing revenues ahead of plan and a strong
Argo brand built through the discipline,
generosity and innovative spirit of our
exceptional team. We have become
efficient, creative and resourceful, and we
are achieving the success we planned for
five years ago. Our vision to be a leading
specialty underwriter is clearer now than
ever before.
Mark E. Watson III
Chief Executive Officer
GROSS
WRITTEN
PREMIUMS
2016
2015
2014
$2.16 BILLION
$2.01 BILLION
$1.91 BILLION
TOTAL ASSETS
COMBINED RATIO
BOOK VALUE PER SHARE
2014
2015
2016
2014
2015
2016
2014
2015
2016
$6.35 $6.63 $7.21
BILLION BILLION BILLION
96.0% 95.0% 96.2%
$52.93 $54.31 $59.73
OUR A.M. BEST RATING | ‘A’ (EXCELLENT)
For the Years Ended December 31
(in millions, except number of shares and per share amounts)
Gross written premiums
Net written premiums
Net earned premiums
Net investment income and realized gains
Total revenue
Net income
Net income per share
Basic
Diluted
Combined ratio
Total assets
Shareholders’ equity
Weighted average number of shares outstanding
Basic
Diluted
Book value per share
2014
2015
2016
$ 1,905.4
$ 2,012.1
$ 2,164.8
1,367.9
1,338.1
180.6
1,539.4
1,402.1
1,371.9
112.7
1,506.8
1,440.2
1,410.8
141.2
1,576.5
$ 183.2
$ 163.2
$ 146.7
$ 5.80
$ 5.70
96.0%
$ 6,351.6
$ 1,646.7
31.6
32.1
$ 5.31
$ 5.20
95.0%
$ 6,625.6
$ 1,668.1
30.8
31.4
$ 4.86
$ 4.75
96.2%
$ 7,205.0
$ 1,792.7
30.2
30.8
$ 52.93
$ 54.31
$ 59.73
GROSS WRITTEN PREMIUMS BY BUSINESS SEGMENT
EXCESS & SURPLUS
29%
27%
COMMERCIAL SPECIALTY
INTERNATIONAL SPECIALTY
12%
32%
SYNDICATE 1200
NOTICE
The financial highlights herein are a summarized version of Argo Group’s audited consolidated
financial statements and do not contain sufficient information to allow as full an understand-
ing of the financial position, results of operations, changes in financial position or cash flows
of Argo Group as would be provided by the complete financial statements of Argo Group. A
registered shareholder of Argo Group receiving these summarized financial statements may
notify Argo Group in writing that they elect to receive the complete financial statements for
the period for which the summarized financial statements are prepared, or for subsequent
periods, or both.
5
ANNUAL REVIEW 2016ANNUAL REVIEW 2016 BUSINESS SEGMENTS
EXCESS & SURPLUS LINES
Our Excess & Surplus Lines segment insures risks typically not
underwritten by the standard market. Colony Specialty underwrites
property and casualty risks.
Our commitment to
technology has paid off.
We make decisions faster now.
We knew going into 2016 that it was time
to prove our commitment to technology.
Focusing first on casualty and contract
binding, our Excess & Surplus Lines teams
took great effort to make our submissions
process smarter, faster and easier for
producers to use. Then we went further.
Our underwriting, engineering and
data-science teams found ways to
accelerate many repetitive functions
while giving underwriters the time and
the real-world data they need to accurate-
ly assess the complex risks that make
specialty insurance unique.
We reduced cycle times substantially
through automation, exponentially
increasing the number of submissions we
can respond to and freeing us to give key
clients our full attention. The response
was immediate. As we tightened our
processes, our rate of securing business
rose, as did the volume of new submis-
sions we received from our producers.
Our deepened actuarial, operational and
underwriting expertise is an enduring
competitive advantage in a time when
even standard-market carriers are eyeing
the specialty market with some envy.
As always, collaboration has been key.
Teams across the United States and
around the world now interact every day.
New tools for sharing best practices and
innovations among units and segments
have changed the way we do business,
and the way we think about it.
6
EXCESS & SURPLUS LINES
Gross written premiums
Earned premiums
Losses and loss adjustment expenses
Underwriting, acquisition and insurance expenses
Underwriting income
Net investment income
Interest expense
For the Years Ended December 31
(dollar amounts in millions)
2014
2015
2016
$ 530.4
$ 562.5
$ 585.8
$ 444.6
$ 471.2
$ 485.3
233.8
144.6
66.2
43.2
(6.0)
267.8
148.6
54.8
32.3
(5.7)
286.4
149.9
49.0
45.2
(5.8)
Income before income taxes
$ 103.4
$ 81.4
$ 88.4
Loss ratio
Expense ratio
Combined ratio
52.6%
32.5%
85.1%
56.8%
31.6%
88.4%
59.0%
30.9%
89.9%
Loss reserves at December 31
$ 1,075.2
$ 1,094.3
$ 1,112.8
GROSS WRITTEN PREMIUMS
(dollar amounts in millions)
$585.8
$562.5
$530.4
’14
’15
’16
4.1%
INCREASE
IN 2016
COMMERCIAL SPECIALTY
Commercial Specialty serves niche industries and businesses through seven
risk-bearing divisions: Argo Insurance, Argo Surety, Argo Pro, ARIS, Commercial
Programs, Rockwood and Trident Public Risk Solutions. In addition, our Alteris
division operates non–risk-bearing agency and brokerage businesses.
We made it easier for retail
agents to do business with
Argo. They liked it.
Last year we retooled our Commercial
Specialty segment to drive collaboration
between a variety of businesses with
different markets and diverse products,
yet all with similar distribution models
and growth potential. We improved our
processes. We brought more great people
onto our teams. We exited lines that were
distracting us, and aggressively sought
new markets.
All units in this segment have direct
relationships with retail agents. Their
common goal last year was to make it eas-
ier for those agents to work with Argo.
They succeeded. In 2016, we saw gains
across the segment.
Our public-entity business, Trident Public
Risk Solutions, logged great success this
year, growing gross written premium and
earning its highest operating income in 10
years. Our Surety operation continued to
bolster its mining and engineering teams,
differentiating Argo from the competition
and attracting new business because of it.
Our Argo Pro professional lines grew well,
in part by attracting additional, well-re-
spected staff with great reputations in the
industry. Within Commercial Programs,
we bolstered our Alteris Property
Program with good effect on gross
written premium. Our Risk Bearing
Program too had great success by
securing an opportunity that will bind
more premium in its first year than any
before.
With these gains and a deepened spirit of
collaboration, Commercial Specialty now
generates more written premium than
any other segment. All eyes now are on
new markets and opportunities.
COMMERCIAL SPECIALTY
Gross written premiums
Earned premiums
Losses and loss adjustment expenses
Underwriting, acquisition and insurance expenses
Underwriting income
Net investment income
Interest expense
Fee and other income
Fee and other expense
Impairment of intangible assets
Income before income taxes
Loss ratio
Expense ratio
Combined ratio
For the Years Ended December 31
(dollar amounts in millions)
2014
2015
2016
$ 517.0
$ 582.7
$ 691.9
$ 332.5
$ 344.2
$ 364.2
203.3
120.5
8.7
25.6
(3.6)
17.6
(20.1)
(3.4)
203.3
110.8
30.1
19.9
(3.5)
18.2
(21.7)
—
181.1
120.6
62.5
26.7
(3.4)
19.1
(18.9)
—
$ 24.8
$ 43.0
$ 86.0
61.2%
36.2%
97.4%
59.1%
32.2%
91.3%
49.7%
33.1%
82.8%
Loss reserves at December 31
$ 742.4
$ 794.3
$ 915.6
GROSS WRITTEN PREMIUMS
(dollar amounts in millions)
$691.9
$582.7
$517.0
’14
’15
’16
18.7%
INCREASE
IN 2016
7
ANNUAL REVIEW 2016ANNUAL REVIEW 2016 BUSINESS SEGMENTS
INTERNATIONAL SPECIALTY
International Specialty underwrites property catastrophe reinsurance and other
risks worldwide from offices in Bermuda, Dubai and Malta. Argo Seguros
underwrites cargo and marine, property and engineering, and financial lines
in Brazil and other Latin American markets.
With our solid reputation and
strong brand, we can drive
business around the world.
To be relevant globally, we must be
relevant locally wherever we do business.
Our thrust within our international
segment is to enter new markets with
strong cultural knowledge and close
relationships.
Last year, our international platforms
covered risks situated in a diverse array of
environments, from mega-cities to rural
villages, from miles below sea level to
miles above it. Our underwriters in
ArgoGlobal turned to our Lloyd’s
syndicate to cover some of the world’s
most complex risks against nature’s perils,
while our operations in Malta, Dubai,
Singapore and Brazil offered specialized
cover to their regional exposures.
In Bermuda, we proved that despite the
degree of competition in both the
insurance and reinsurance markets,
international customers still value
financial stability and depth of relation-
ship. We worked hard to maintain both.
Our combination of innovation and
experience has been rewarded, with
customers responding well to the
bespoke products we created for them
through such incubators as our structured
risk department.
Notably, our investment in innovation in
Brazil began to realize its potential this
year. Many of our forward-looking brokers
there are now building their businesses
quickly and efficiently through our online
Protector platform, enabling them to
grow.
8
INTERNATIONAL SPECIALTY
Gross written premiums
Earned premiums
Losses and loss adjustment expenses
Underwriting, acquisition and insurance expenses
Underwriting income
Net investment income
Interest expense
For the Years Ended December 31
(dollar amounts in millions)
2014
2015
2016
$ 279.4
$ 266.3
$ 261.3
$ 144.8
$ 146.4
$ 154.5
76.4
52.8
15.6
11.3
(3.1)
74.5
51.3
20.6
11.4
(3.0)
83.3
47.0
24.2
16.8
(2.8)
Income before income taxes
$ 23.8
$ 29.0
$ 38.2
Loss ratio
Expense ratio
Combined ratio
52.8%
50.9%
54.0%
36.4%
35.0%
30.4%
89.2%
85.9%
84.4%
Loss reserves at December 31
$ 299.2
$ 313.1
$ 374.0
GROSS WRITTEN PREMIUMS
(dollar amounts in millions)
$279.4
$266.3
$261.3
’14
’15
’16
1.9%
DECREASE
FROM 2015
SYNDICATE 1200
Syndicate 1200 underwrites worldwide property, specialty and non-U.S.
liability insurance within the Lloyd’s of London global franchise. It operates
through four divisions: property, liability, marine and energy, and specialty.
Syndicate 1200 continues
to navigate through fierce
competition.
In just its eighth year as a member of
Argo Group, Syndicate 1200 last year
solidified its position as a core contributor
to Argo results. Operating in one of the
insurance industry’s most competitive
markets, Syndicate 1200’s divisions wrote
more premium in 2016 than they had
before. The growth of the business has
been driven by the new classes and
geographies in which the Syndicate has
invested. Coupled with the development
of leadership skills in wordings and
claims, this added breadth makes a real
difference to our supporting brokers
and clients.
In line with Argo’s overall commitment to
continuous improvement, Syndicate 1200
sought to strengthen and broaden its
already strong relationships with London
brokers and to support the Lloyd’s
platform in London and around the world.
We exited the aerospace business due to
the ongoing competitive environment,
and we worked to expand profitable lines
of business while establishing new
products in areas where we believe the
group’s strengths will serve us well.
The Syndicate continued to develop
long-term relationships with Trade Capital
Partners as part of the strategy of
working collaboratively with overseas
partners to generate new opportunities in
other geographies. Syndicate 1200 teams
partnered with colleagues in other Argo
business segments to meet customer
needs with new products, leveraging the
benefits of operating within a multi-
platform group. They also continued
development of a data warehouse that
will allow us to meet the reporting
requirements of the European Union’s
Solvency II Directive.
SYNDICATE 1200
Gross written premiums
Earned premiums
Losses and loss adjustment expenses
Underwriting, acquisition and insurance expenses
Underwriting income
Net investment income
Interest expense
Fee and other income
Fee and other expense
Income before income taxes
Loss ratio
Expense ratio
Combined ratio
Loss reserves at December 31
GROSS WRITTEN PREMIUMS
(dollar amounts in millions)
$625.5
$600.1
$577.0
’14
’15
’16
For the Years Ended December 31
(dollar amounts in millions)
2014
2015
2016
$ 577.0
$ 600.1
$ 625.5
$ 414.6
$ 409.7
$ 406.4
209.5
167.3
37.8
10.9
(3.2)
3.1
(3.4)
211.9
169.1
28.7
8.9
(2.6)
3.2
(2.8)
240.7
164.1
1.6
11.9
(2.5)
3.1
(0.7)
$ 45.2
$ 35.4
$ 13.4
50.5%
40.4%
90.9%
51.7%
41.3%
93.0%
59.2%
40.4%
99.6%
$ 607.1
$ 615.6
$ 657.5
4.2%
INCREASE
IN 2016
9
ANNUAL REVIEW 2016ANNUAL REVIEW 2016
PROFILES IN COLLABORATION
Rebuilding on a
Foundation of
Shared Expertise
When Hurricane Sandy slammed into
New York City in 2012, it left behind
$32 billion in destruction, including major
flooding and extensive damage to a 1,400-
unit housing complex on the Rockaway
Peninsula in Queens.
In 2016 a nearly $200 million renovation
project was approved for this waterfront
complex. And soon afterward, Cynthia
O’Brien, Wholesale Division president
at New York’s Program Brokerage Corp.,
got the call from a retail broker request-
ing quotes for a policy to cover the
renovation.
“We were under a time crunch to deliver
the quote. Most insurance companies ran
away. But the culture at Argo is one of
service and responsiveness. Our relation-
ship goes beyond business. We know our
underwriters on a personal level. We trust
them. And working with them, we were
able to turn around a quote within days.”
“We know our Argo
underwriters on a personal
level. We trust them.”
— Cynthia O’Brien
Why were many carriers hesitant to quote
the project? Its sheer scale, as well as the
complexities of New York labor law.
NEW YORK CITY
“There’s one word for it,” says Jordan S.
Marks, the Argo underwriter who worked
with O’Brien. “Massive. Any construction
site in New York presents a large amount
of risk, in part because of the state’s
unique labor laws. But our specialized unit
recognizes and underwrites the complex-
ities of New York construction. Everyone
on my team is extremely passionate
about it. We understand it.”
“There is a true partnership between us
and Argo,” says O’Brien. “We understand
each other’s needs. We work toward the
same goals.”
Watch the video at
argolimited.com/nyc-2016
10
A Constructive Relationship
Top from left, Jordan S. Marks and Cynthia O’Brien.
Bottom, New York labor laws require deep expertise.
Keeping a Business
in Business to Feed
the World
Winter blizzards sweep across miles of
flat agricultural land. Tornadoes roar
through in spring. Hail and lightning
strike without warning.
Weather dominates southwest Kansas,
where Cattle Empire raises nearly 250,000
beef cattle in one of the largest cattle
feeding operations in the United States.
Argo, in partnership with brokerage Cline
Wood, a Marsh & McLennan Agency LLC
company, manages an insurance program
for Cattle Empire that covers its property
and cattle.
“Cattle Empire is an extraordinary
operation,” says Bart Schaffer, senior vice
president for commercial programs.
“It has a large amount of insured values,
a wide expanse of operations and unique
coverage needs. You’d be shocked to hear
how much a commercial scale costs if you
need to replace it!”
“Our livelihoods depend on the
health and wellbeing of these
animals. It’s in our best
interest to minimize risk.”
— Lucas Christensen
Cline Wood producer Matt Koster works
closely with Schaffer and understands the
risks equally well. “Last week it was 60 de-
grees and sunny in Satanta, Kansas,” says
Koster, “and 24 hours later there’s five
inches of snow and ice on the ground.”
And Lucas Christensen, Cattle Empire’s
chief financial officer, appreciates working
with people who share a passion for and
understanding of his business and its
environment. “I grew up in Montana,” he
says, “and I’ve lived on a cattle ranch my
entire life.” He’s equally appreciative of
the insurance that lets his business trans-
fer risk and operate without interruption.
After all, he says, “what we’re doing is
feeding the world.”
Watch the video at
argolimited.com/cattle-2016
SATANTA, KANSAS
Heartland Values
Top, Cattle Empire specializes in beef cattle. Below,
Bart Schaffer, Lucas Christensen and Matt Koster.
11
ANNUAL REVIEW 2016ANNUAL REVIEW 2016 PROFILES IN COLLABORATION
At Lloyd’s,
Business is Up
Close and Personal
Founded in 1688, Lloyd’s of London is the
world’s foremost insurance marketplace.
And at Lloyd’s, business is done in person.
Each of the nearly 100 syndicates that
underwrite risk has one or more boxes
in the bustling Underwriting Room in
which underwriters and brokers meet to
transact business.
“The face-to-face approach at Lloyd’s is
critical,” says James McPartland, a pro-
fessional indemnity underwriter at Argo
Global, which operates as Syndicate 1200.
“It provides the opportunity for both sides
of the party to discuss risks and common
objectives. Emails are great for sending
mass amounts of information, but you
can’t beat the split-second decision-mak-
ing that happens in the box. It’s an old
way of doing business, but it works, and
that’s the reason it still exists.”
“It’s an old way of doing
business, but it works, and
that’s the reason it still exists.”
— James McPartland
Among the brokers McPartland discuss-
es business with every day is Anthony
Green, director at B&W Brokers.
“Lloyd’s is formed on a bedrock of rela-
tionships,” says Green. “Brokers interact
daily with underwriters. We get answers
directly from decision-makers, and that’s
the key.”
As McPartland says, “we think of insur-
ance as a collaboration between our syn-
dicate, the broker and the insured.” This
belief in collaboration, combined with
deep experience and industry knowledge,
has underpinned Lloyd’s for centuries.
And, not surprisingly, these are some of
the core values that have long grounded
Argo itself.
Watch the video at
argolimited.com/lloyds-2016
12
LONDON
The Personal Touch
Top, from left, James McPartland and Anthony Green
in an Argo underwriting box. Bottom, the distinctive
Underwriting Room at Lloyd’s of London.
INSIDE ARGO
A Year of Innovation
and Achievement
In 2016 we won awards, launched exciting
new products, announced a new racing
sponsorship and grew our team around
the world.
Innovators
We made Advisen’s list
of top 10 companies for
product innovation.
Trustworthy
Forbes in August named
us one of America’s 50
most trustworthy financial
companies.
Insurance for drones
We launched
Insure4Drones in March,
an online portal to buy
drone insurance in the
United Kingdom.
Cyber smart
We started a cyber division
in September led by cyber
expert Russell Heaton as
underwriter.
Most
transformational CEO
Mark E. Watson III won
the E&Y Entrepreneur of
the Year Award for Central
Texas, Transformational
CEO category.
Racing toward the future
We’re sponsoring team
Faraday Future Dragon
Racing in the Formula E
racing circuit for
electric cars.
11
Countries in which our
employees work (Belgium,
Bermuda, Brazil, France,
Italy, Malta, Singapore,
Switzerland, United Arab
Emirates, United Kingdom
and the United States)
3.0
Seconds from
0 to 60 mph for the
Faraday Future Dragon
Racing Formula E car
we’re sponsoring
in 2017
A
(Excellent)
Our A.M.
Best rating.
19
Languages spoken by our
employees (English, Spanish, Dutch,
French, German, Portuguese,
Maltese, Tamil, Malay, Standard
Mandarin, Romansh, Arabic, Persian,
Hindi, Urdu, Bengali, Tagalog,
Chinese and Malayalam)
277
People hired in 2016 –
including 109 employees
in underwriting and
43 in claims
13
ANNUAL REVIEW 2016ANNUAL REVIEW 2016 INSIDE ARGO
A Startup Approach
Empowers the
Argo Digital Team
Around the world, our employees work
together and innovate to drive the suc-
cess of the company. A perfect example
of this can be found at Argo Digital, the
group that’s using technology to develop
new ways of assessing and transferring
risk in the 21st century.
Argo Digital works in squads of three to
seven employees, each squad moving
nimbly from one challenge to the next,
testing hypotheses grounded in observa-
tions of the real world. “When we studied
the companies that innovate at scale, like
Facebook, Google and Amazon, we saw
the impact of very small teams operating
inside them,” explains Andy Breen, Argo
senior vice president of digital. “They’re
basically a collection of small startups
that are allowed a lot of autonomy. As
new opportunities arise, adding new
squads is a quick and cost-efficient way to
try new ways of solving problems.”
“The conventional wisdom is
that small and agile beats big
and traditional. We think big
and agile wins the day.”
— Andy Breen
“We’re product owners, designers, engi-
neers and data scientists,” says Breen.
“Some of us are small business owners
ourselves. We’re all curious and question-
ing the conventions of how the insurance
industry transacts business. We talk to
customers, and we know what problems
they have. With big problems come big
opportunities. We’re out to solve them
with new approaches.”
Empowered by independence and trust,
Argo Digital is developing new products
and processes and demonstrating how
Argo supports the ideas and ambitions of
its passionate and driven team members.
Watch the video at
argolimited.com/digital-2016
14
Common Purpose
Passion for excellence is the foundation for building
a strong and profitable company. Argo seeks the
industry’s best talent.
INSIDE ARGO
We Give Back to the
Places in Which We
Live and Work
Commitment to the communities in
which we live and work has always been
a priority at Argo. In 2016, we proved this
commitment in notable ways.
In London, the ArgoGlobal Charity Gala
Dinner raised £20,000 for the Great
Ormond Street Hospital Children’s
Charity, which is devoted to treatments
and cures for childhood illnesses.
In São Paulo, we donated 600 pounds of
food to the homeless, supported a local
hospital and backed an organization that
helps cancer patients.
In San Antonio, we participated in the
annual Artpace “Chalk It Up” event to
help raise awareness for art education.
We distributed food to families in need
during the Thanksgiving holiday. And we
ran a United Way campaign that provided
financial support to local charities.
“Everybody wants a chance to
have a better life. With our
resources and our team, we
can help make that happen.”
— Mark E. Watson III
We hosted youth sailors in Toulon, France,
inviting them to tour the Artemis Racing
AC45F sailboat. Argo sponsors Artemis
Racing and supports the Andrew Simpson
Sailing Foundation, which engages chil-
dren around the world through sailing.
Through the Argo Foundation, we reached
an impressive milestone in 2016 as the
company’s overall charitable giving
topped $1.25 million. Established in 2009,
the Argo Foundation invests in programs
and services that enrich the lives of
Bermuda’s youth, preparing them for a
productive and rewarding future.
Across the United States, we raised funds
for a playhouse, helped supply under-
privileged kids with necessities, helped
women build skills of self-promotion and
provided hundreds of meals through local
food drives.
Giving Back
Top, distributing Thanksgiving food to families in need in San Antonio.
Center, raising awareness for art education in San Antonio. Bottom, fund-
raising to help children in poverty on Red Nose Day in Richmond, Virginia.
15
ANNUAL REVIEW 2016ANNUAL REVIEW 2016 Report of Independent Registered Public Accounting Firm
on Condensed Consolidated Financial Statements
The Board of Directors and Shareholders of Argo Group International Holdings, Ltd.
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of
Argo Group International Holdings, Ltd. (the Company) at December 31, 2016 and 2015 and the related consolidated statements of income, comprehensive
income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2016 (not presented separately herein) and in our
report dated February 24, 2017, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth
in the accompanying condensed consolidated financial statements as of December 31, 2016 and 2015 and for each of the three years in the period ended
December 31, 2016 (presented on pages 17 through 20) is fairly stated, in all material respects, in relation to the consolidated financial statements from which
it has been derived.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control—Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 24, 2017 (not presented
separately herein) expressed an unqualified opinion thereon.
ARGO GROUP International Holdings, Ltd.
Condensed Consolidated Balance Sheets
(in millions, except number of shares and per share amounts)
ASSETS
Investments:
Fixed maturities, at fair value:
Available-for-sale (cost: 2016 - $2,938.8; 2015 - $2,971.0)
$ 2,932.4
$ 2,927.3
As of December 31
2016
2015
Equity securities, at fair value (cost: 2016 - $335.2; 2015 - $349.7)
Other investments (cost: 2016 - $531.6; 2015 - $506.9)
Short-term investments, at fair value (cost: 2016 - $405.5; 2015 - $211.2)
Total investments
Cash
San Antonio, TX
February 24, 2017
Premiums receivable and reinsurance recoverable
Goodwill and other intangibles, net of accumulated amortization
Current income taxes receivable, net
Ceded unearned premiums
Other assets
Total Assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Reserves for losses and loss adjustment expenses
Unearned premiums
Ceded reinsurance payable, net
Senior unsecured fixed rate notes
Other indebtedness
Junior subordinated debentures
Current income taxespayable, net
Deferred tax liabilities, net
Accrued underwriting expenses and other liabilities
Total liabilities
Shareholder’s equity
Common shares - $1.00 par, 40,042,330 and 37,104,294 shares
issued at December 31, 2016 and 2015, respectively
Additional paid-in capital
Treasury shares (10,028,755 and 9,181,644 shares at
December 31, 2016 and 2015, respectively)
Retained earnings
Accumulated other comprehensive income, net of taxes
Total shareholders’ equity
Total liabilities and shareholders’ equity
Please see accompanying “Summary of Significant Accounting Policies” on page 20.
16
447.4
539.0
405.5
4,324.3
86.0
1,849.4
219.9
—
302.8
422.6
463.9
513.7
210.8
4,115.7
121.7
1,525.6
225.5
11.6
250.8
374.7
$ 7,205.0
$ 6,625.6
$ 3,350.8
$ 3,123.6
970.0
466.6
139.5
55.4
172.7
8.1
24.1
225.1
5,412.3
40.0
1,123.3
(378.2)
959.9
47.7
1,792.7
886.7
312.4
139.3
55.2
172.7
—
23.6
244.0
4,957.5
37.1
964.9
(331.1)
985.7
11.5
1,668.1
$ 7,205.0
$ 6,625.6
17
ANNUAL REVIEW 2016ANNUAL REVIEW 2016
ARGO GROUP International Holdings, Ltd.
ARGO GROUP International Holdings, Ltd.
Condensed Consolidated Statements of Income
and Comprehensive Income
(in millions, except number of shares and per share amounts)
Premiums and other revenue:
Earned premiums
Net investment income
Net realized investment and other gains
Fee and other income
Total Revenue
Expenses:
Losses and loss adjustment expenses
Underwriting, acquisition and insurance expenses
Interest expense and other
Fee and other expense
Foreign currency gain
Impairment of intangible assets
Total Expenses
Income before income taxes
Provision for income taxes
Net income
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
As of December 31
2016
2015
2014
$ 1,410.8
$ 1,371.9
$ 1,338.1
115.1
26.1
24.5
88.6
24.1
22.2
106.1
74.5
20.7
1,576.5
1,506.8
1,539.4
810.1
547.0
19.6
22.4
(4.5)
—
1,394.6
181.9
35.2
766.1
536.7
19.0
25.8
(18.3)
—
1,329.3
177.5
14.3
747.4
537.0
19.9
23.5
(7.8)
3.4
1,323.4
216.0
32.8
$ 146.7
$ 163.2
$ 183.2
$ 4.0
$ (6.0)
$ (4.1)
Defined benefit pension plans net (loss) gain arising during the period
(0.2)
0.1
(2.4)
Unrealized gains on securities:
Gains (losses) arising during the period
Reclassification adjustment for gains included in net income
Other comprehensive income (loss), net of tax
Comprehensive income
Net income per common share:
Basic
Diluted
42.4
(10.0)
36.2
(89.8)
(0.9)
(96.6)
(12.5)
(20.7)
(39.7)
$ 182.9
$ 66.6
$ 143.5
$ 4.86
$ 4.75
$ 5.31
$ 5.80
$ 5.20
$ 5.70
Cash dividend declared per common share:
$ 0.86
$ 0.73
$ 0.57
Condensed Consolidated Statements of Cash Flows
(in millions, except number of shares and per share amounts)
Years Ended December 31
2016
2015
2014
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
$ 146.7
$ 163.2
$ 183.2
Amortization and depreciation
Share-based payments expense
Excess tax expense from share-based payments arrangements
Deferred federal income tax (benefit) provision, net
Net realized investment and other gains
Undistributed earnings from alternative investment portfolio
(Gain) Loss on disposal of fixed assets, net
Amortization of dept issuance costs
Impairment of intangible assets
Change in:
Receivables
Reserves for losses and loss adjustment expenses
Unearned premiums
Ceded reinsurance payable and funds held
Other assets and liabilities, net
Cash provided by operating activities
Cash flows from investing activities:
Sales, maturities and mandatory calls of investments
Purchases of investments
Change in short-term investments, foreign regulatory deposits and voluntary pools
Settlements of foreign currency exchange forward contracts
Other, net
Cash used provided by investing activities
Cash flows from financing activities:
Payment on note payable
Redemption of trust preferred securities, net
Activity under stock incentive plans
Repurchase of company’s common shares
Excess tax expense from share-based payment arrangements
Payment of cash dividend to common shareholders
Cash used by financing activities
Effect of exchange rate changes on cash
35.4
19.8
(0.6)
(1.1)
(26.1)
(23.9)
(0.1)
0.2
—
(318.0)
220.2
80.1
153.6
(104.8)
181.4
38.7
29.1
(0.6)
8.3
(24.1)
(3.0)
0.2
0.2
—
(182.6)
94.3
76.5
157.2
(74.8)
282.6
37.2
19.6
(0.1)
27.6
(74.5)
(19.5)
—
0.2
3.4
256.7
(182.0)
39.1
(163.9)
3.5
130.5
2,446.2
(2,380.5)
(195.2)
(5.4)
(10.2)
(145.1)
1,811.8
(2,034.1)
49.6
(10.1)
(10.8)
(193.6)
1,585.0
(1,736.8)
96.5
(1.1)
(64.9)
(121.3)
—
—
1.0
(47.1)
0.6
(26.6)
(72.1)
0.1
(35.7)
121.7
—
—
1.8
(29.7)
0.6
(22.7)
(50.0)
1.7
40.7
81.0
(0.1)
(18.0)
4.6
(50.8)
0.1
(18.2)
(82.4)
(3.2)
(76.4)
157.4
$ 86.0
$ 121.7
$ 81.0
19
Weighted average common shares:
Basic
Diluted
18
30,166,440
30,769,089
31,559,422
30,845,710
31,385,460
32,134,218
Please see accompanying “Summary of Significant Accounting Policies” on page 20.
Change in cash
Cash, beginning of period
Cash, end of period
Please see accompanying “Summary of Significant Accounting Policies” on page 20.
ANNUAL REVIEW 2016ANNUAL REVIEW 2016 ARGO GROUP International Holdings, Ltd.
ARGO GROUP International Holdings, Ltd.
ARGO GROUP International Holdings, Ltd.
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Reconciliations of Non-GAAP Financial Measures
Reserves for Losses and Loss Adjustment
Expenses. Liabilities for unpaid losses and
loss adjustment expenses include the
accumulation of individual case estimates
for claims reported as well as estimates of
incurred but not reported claims and
estimates of claim settlement expenses.
Reinsurance recoverables on unpaid claims
and claim expenses represent estimates of
the portion of such liabilities that will be
recoverable from reinsurers. Amounts
recoverable from reinsurers are recognized
as assets at the same time and in a manner
consistent with the unpaid claims liabilities
associated with the reinsurance policy.
Income Taxes. Deferred tax assets and
liabilities are recognized for the estimated
future tax consequences attributable to
differences between the financial statement
carrying amounts of existing assets and
liabilities and their respective tax bases.
Deferred tax assets and liabilities are
measured using enacted tax rates in effect
for the year in which those temporary
differences are expected to be recovered or
settled. The effect on deferred tax assets
and liabilities of a change in tax rates is
recognized in net income in the period in
which the change is enacted.
(Further information on our accounting
policies can be found in Argo Group’s 2016
Form 10-K: in the Critical Accounting
Policies section of Management’s Discussion
and Analysis and also in Note 1 to the
Financial Statements).
references to share and per share amounts
in these condensed consolidated financial
statements have been adjusted to reflect
the stock dividends for all periods presented.
Investments. Investments in fixed
maturities at December 31, 2016 and 2015
include bonds and structured securities.
Equity securities include common stocks.
Other investments consist of private equity
funds and limited partnerships. Short-term
investments consist of money market funds,
funds on deposit with Lloyd’s as security to
support the corporate member’s capital,
United Kingdom short-term government
gilts, U.S. Treasury bills, sovereign debt and
interest-bearing cash accounts. Short-term
investments, maturing in less than one year,
are classified as investments in the
consolidated financial statements.
Goodwill and Intangible Assets. Goodwill
is the result of the purchase prices of our
business combinations being in excess of
the identified net tangible and intangible
assets. Goodwill is recorded as an asset and
is not amortized. Intangible assets with a
finite life are amortized over the estimated
useful life of the asset. Intangible assets
with an indefinite useful life are not
amortized. Goodwill and intangible assets
are tested for impairment on an annual basis
or more frequently if events or changes in
circumstances indicate that the carrying
amount may not be recoverable. If the
goodwill or intangible asset is impaired, it is
written down to its fair value with a
corresponding expense reflected in the
Consolidated Statements of Income.
Goodwill and intangible assets are allocated
to the segment in which the results of
operations for the acquired company are
reported.
Amortization expense incurred in 2016, 2015
and 2014 associated with assets having a
finite life was $5.5 million, $7.5 million and
$5.6 million, respectively.
Earned Premiums. Premium revenue is
recognized ratably over the policy period.
Premiums that have yet to be earned are
reported as “Unearned premiums” in the
Condensed Consolidated Balance Sheets.
Business. Argo Group International
Holdings, Ltd. and subsidiaries (collectively,
“we” or “Argo Group”) is an international
underwriter of specialty insurance and
reinsurance products in the property and
casualty market.
Basis of Presentation. The condensed
consolidated financial statements of Argo
Group have been prepared in accordance
with accounting principles generally
accepted in the United States (“GAAP”). The
preparation of financial statements in
conformity with GAAP requires manage-
ment to make estimates and assumptions
that affect the reported amounts of assets
and liabilities and disclosure of contingent
assets and liabilities at the date of the
financial statements and the reported
amounts of revenues and expenses during
the reporting period. Actual results could
differ from those estimates.
The information in the Condensed Consoli-
dated Balance Sheets, the Condensed
Consolidated Statements of Income and the
Condensed Consolidated Statements of
Cash Flows, shown on pages 17 through 20,
is derived from the information in the in the
Consolidated Balance Sheets, the Consoli-
dated Statements of Income and the Consol-
idated Statements of Cash Flow in Argo
Group International Holdings, Ltd. 2016
Form 10-K. For complete financial state-
ments, including notes, please refer to the
Consolidated Financial Statements
beginning on Page F-1 of Argo Group
International Holdings, Ltd. 2016 Form 10-K.
See also Management’s Discussion and
Analysis of Financial Condition and Results
of Operations and other information in the
2016 Form 10-K.
The financial statements include the
accounts and operations of Argo Group. All
material intercompany accounts and
transactions have been eliminated.
10% Stock Dividend. On May 3, 2016, our
Board of Directors declared a 10% stock
dividend, payable on June 15, 2016, to
shareholders of record at the close of
business on June 1, 2016. On February 17,
2015, our Board of Directors declared a 10%
stock dividend payable on March 16, 2015, to
shareholders of record at the close of
business on March 2, 2015. For the years
ended December 31, 2015 and 2014, all
20
“Adjusted operating income” is an internal performance measure used in the manage-
ment of the Company’s operations and represents after-tax (at an assumed effective tax
rate of 20%) operational results excluding, as applicable, net realized investment gains
or losses, net foreign exchange gain or loss, and other non-recurring items.
“Underwriting income” is an internal performance measure used in the management
of the Company’s operations and represents net amount earned from underwriting
activities (net premiums earned less underwriting expenses and claims incurred).
Reconciliation of Adjusted Operating Income
to Net Income
(in millions, except per share amounts)
(unaudited)
Years Ended December 31
Reconciliation of Underwriting Income
to Net Income
(in millions)
(unaudited)
Years Ended December 31
35.2
(115.1)
(26.1)
(24.5)
19.6
22.4
(4.5)
14.3
(88.6)
(24.1)
(22.2)
19.0
25.8
(18.3)
2016
2015
$ 146.7
$ 163.2
2016
2015
14.3
Net income, as reported
$ 146.7
$ 163.2
Net income, as reported
Provision for income taxes
Net income, before taxes
Deduct:
Net realized investment and other gains
Foreign currency exchange gains
Adjusted operating income before taxes
Provision for income taxes, at assumed rate (a)
35.2
181.9
(26.1)
(4.5)
151.3
30.3
177.5
Add (deduct):
Income tax provision
Net investment income
Net realized investment and other gains
Fee and other income
Interest expense
(24.1)
(18.3)
135.1
27.0
Adjusted operating income
$ 121.0
$ 108.1
Fee and other expense
Adjusted operating income per common share
$ 3.92
$ 3.44
Foreign currency exchange gains
(diluted)
Underwriting income
$ 53.7
$ 69.1
Weighted average common shares, diluted
30.8
31.4
Components of underwriting income:
(a) At assumed tax rate of 20%.
United States
International
Run-off Lines
Corporate and Other
Underwriting income
$ 111.5
$ 84.9
25.8
(25.1)
(58.5)
49.3
(14.1)
(51.0)
$ 53.7
$ 69.1
“Accident year loss ratio excluding catastrophes” is an internal performance measure
used in the management of the Company’s operations that represents loss ratios
excluding prior year reserve development and current year catastrophe losses.
We manage our business by operating segments. The reconciliation of segment
income to net income is as follows:
Reconciliation of Loss Ratios
(unaudited)
Years Ended December 31
2016
2015
Reconciliation of Segment Income to Net Income
(in millions)
(unaudited)
Years Ended December 31
2016
2015
2014
Consolidated
Loss ratio
Prior accident year loss development
Catastrophe losses
Current accident year ex-catastrophes loss ratio
57.4%
2.4%
-4.4%
55.4%
55.8%
Segment income (loss) before income taxes
2.4%
-1.8%
56.4%
Excess and Surplus Lines
$ 88.4
$ 81.4
$ 103.4
Commercial Specialty
International Specialty
Syndicate 1200
Run-off Lines
Corporate and Other
Realized investment and other gains
Foreign currency exchange gains
Net income before income taxes
Provision for taxes
Net income
86.0
38.2
13.4
(15.2)
(59.5)
26.1
4.5
181.9
35.2
43.0
29.0
35.4
(7.4)
(46.3)
24.1
18.3
177.5
14.3
24.8
23.8
45.2
(20.7)
(42.8)
74.5
7.8
216.0
32.8
$ 146.7
$ 163.2
$ 183.2
21
ANNUAL REVIEW 2016ANNUAL REVIEW 2016 Executive Leadership
Board of Directors
Gary V. Woods
President, McCombs Enterprises
Chairman of the Board (1) (3) (4) (5) (6)
John R. Power Jr.
President, the Patrician Group
Director (2) (3) (5) (6)
F. Sedgwick Browne
Retired Counsel, Sidley Austin LLP
Director (2) (3) (5) (6)
Al-Noor Ramji
Group Chief Digital Officer, Prudential plc
Director
H. Berry Cash
Retired General Partner, InterWest Partners
Director (3) (4) (6)
Hector De Leon
Chairman, De Leon & Washburn, P.C
Director (1) (2) (3) (6)
Mural R. Josephson
Retired Chief Financial Officer,
Kemper Insurance Companies
Dee Lehane
Retired Managing Partner
Global Insurance Industry, Accenture
Kathleen A. Nealon
Retired Group Head of Legal and
Compliance, Standard Chartered Plc
Director (2) (6)
Director
Director (2) (6)
Senior Management
Argo Group International Holdings, Ltd.
Mark E. Watson III
Chief Executive Officer (7)
Stuart Boyne
Jay S. Bullock
Senior Vice President and
Chief Human Resources Officer
Executive Vice President and
Chief Financial Officer (7)
John H. Tonelli
Managing Director and Head of Debt
Capital Markets & Syndication,
Oppenheimer & Co., Inc.
Mark E. Watson III
Chief Executive Officer,
Argo Group International Holdings, Ltd.
Director (4) (5) (6)
Director (1) (4) (6)
(1) Member of the Executive Committee of the Board of Directors
(2) Member of the Audit Committee of the Board of Directors
(3) Member of the Human Resources Committee of the Board of Directors
(4) Member of the Investment Committee of the Board of Directors
(5) Member of the Nominating Committee of the Board of Directors
(6) Member of the Risk & Capital Committee
Argo Group US
Kevin J. Rehnberg
Joshua C. Betz
Andrew Borst
Arthur Davis
Rooney Gleason
President, U.S. Operations (7)
President, Argo Surety
President, U.S. Specialty Programs
President, Excess and Surplus Lines
President, Argo Insurance – U.S. Retail
Jose A. Hernandez
Head of International Business (7)
Frank Mike-Mayer
Chief Underwriting Officer
Alex Hindson
Chief Risk Officer
Robert Katzman
Senior Vice President and
Chief Actuary
Kurt Tipton
Philip Vedell
Ronald Vindivich
Mark Wade
Nigel Mortimer
President, Argo Insurance Bermuda
International Specialty
Mark H. Rose
Axel Schmidt
Susan Spivak Bernstein
(7) Executive Officer
Senior Vice President and
Chief Investment Officer
Group Chief Underwriting Officer (7)
Senior Vice President,
Investor Relations
Nigel Mortimer
Pedro Purm Jr.
Matthew Wilken
Syndicate 1200
David Harris
David Lang
Bruno Ritchie
President, Rockwood
Head of Global Operations
President, Trident Public Risk Solutions
Chief Claims Officer
President, Argo Insurance Bermuda
President, Argo Seguros
President, Argo Re
Managing Director
Chief Operating Officer
Underwriting Director
Shareholder Information
Stock Listing
Argo Group International Holdings,
Ltd. common stock trades on
NASDAQ under the symbol AGII.
Stock Transfer Agent
Questions regarding stock
registration, change of address,
change of name, or transfer should
be directed to:
American Stock Transfer
& Trust Company, LLC
6201 15th Ave.
Brooklyn, NY 11219
www.amstock.com
T. 800-937-5449
info@amstock.com
Corporate Office
Argo Group International
Holdings, Ltd.
110 Pitts Bay Road
Pembroke HM 08
Bermuda
T. 441-296-5858
Internet
www.argolimited.com
Shareholder Services /
Investor Relations
Mailing address:
Argo Group International
Holdings, Ltd.
Shareholder Services/Investor
Relations
PO Box HM 1282
Hamilton HM FX
Bermuda
T. 441-296-5858
Investor Relations Contact
Susan Spivak Bernstein
Senior Vice President, Investor Relations
T. 212-607-8835
IR@argolimited.com
Forward-Looking Statements
Disclosure
This report contains certain
statements that are “forward-looking
statements” within the meaning
of Section 27A of the Securities
Act of 1933 and Section 21E of the
Securities Exchange Act of 1934,
as amended. Such statements are
qualified by the inherent risks and
uncertainties surrounding future
expectations generally and also may
differ materially from actual future
experience involving any one or
more of such statements. For a more
detailed discussion of such risks
and uncertainties, see Argo Group’s
filings with the SEC. The inclusion
of a forward-looking statement
herein should not be regarded
as a representation by Argo Group
that Argo Group’s objectives will
be achieved. Argo Group undertakes
no obligation to publicly update
forward-looking statements, whether
as a result of new information, future
events or otherwise.
22
23
A copy of the Company’s annual report filed with the Securities and Exchange Commission (Form 10-K) will be furnished without charge to any
shareholder upon written request directed to our Senior Vice President, Investor Relations at the Shareholder Services / Investor Relations
address shown above.
ANNUAL REVIEW 2016ANNUAL REVIEW 2016