Argonaut Group, Inc. Announces 2007 First Quarter Results
biz.yahoo.com
Monday May 7, 7:00 am ET
Record First Quarter Operating Results Propel Double-Digit Increase in Earnings, Improved ROE
SAN ANTONIO--(BUSINESS WIRE)--Argonaut Group, Inc. (NasdaqGS:AGII) today announced financial results for the three months ended March 31, 2007.
Highlights for the 2007 first quarter include the following:
* Net income increased to $25.1 million ($.73 per diluted share), up 22.4 percent compared to the first quarter of 2006
* Return on equity increased to 11.8 percent on 21 percent higher shareholders' equity than the first quarter of 2006;
* Operating results improved in all three of Argonaut Group's business segments;
* Investment income rose 14.2 percent over the 2006 first quarter;
* Cash flow increased to $52.1 million from $48.8 million during the same three months last year; and
* Book value per diluted common share increased 3.6 percent from Dec. 31, 2006.
Argonaut Group President and CEO Mark E. Watson III said, "Each of our business segments delivered solid first quarter operating results, which collectively produced Argonaut Group's best-ever first quarter performance for gross, net and earned premiums, total revenue, underwriting income and operating income. I'm pleased we have been able to improve our market position and sustain our operating momentum in an increasingly competitive market environment."
FINANCIAL RESULTS
For the first quarter of 2007, Argonaut Group reported net income of $25.1 million, or $0.73 per diluted common share on 34.2 million shares. This compares to 2006 first quarter net income of $20.5 million, or $0.61 per share on 33.8 million shares.
The Company believes operating income is another meaningful measure of Argonaut Group's performance, although it differs from net income under accounting principles generally accepted in the United States (GAAP) in that operating income excludes income tax benefit or expense and net realized investment gains and losses. For a reconciliation of operating income to GAAP net income for the three months ended March 31, 2007 and 2006, respectively, please refer to the reconciliation table included in this news release. Pre-tax operating income increased 18 percent for the quarter ended March 31, 2007 to $36.8 million, as compared to pre-tax operating income in the comparable quarter of 2006 of $31.2 million.
Total revenue was $234.4 million during the first quarter of 2007 versus $224.6 million for the comparable quarter in 2006. Total revenue includes realized gains on the sales of investments, which were $0.6 million and zero for the first quarters of 2007 and 2006, respectively. Earned premiums for the three months ended March 31, 2007 were $205.6 million compared to $199.9 million for the same three months in 2006.
The Company's combined ratio for the first quarter of 2007 was 94.2 percent versus 95.2 percent for the same three-month period in 2006. Pre-tax underwriting income for the first quarter of 2007 included $9.1 million of net favorable development on prior year loss reserves. First quarter 2007 combined ratios for Argonaut Group's primary business segments were as follows: Excess and Surplus Lines at 87.3 percent; Select Markets at 92.5 percent; and Public Entity at 82.0 percent.
SEGMENT RESULTS
Excess & Surplus Lines (E&S) - For the first quarter of 2007, gross written premiums and operating income for E&S totaled $187.7 million and $29.8 million, respectively. This compares to gross written premiums of $178.0 million and operating income of $17.0 million in the first quarter of 2006. The combined ratio for the 2007 first quarter was 87.3 percent, versus 93.4 percent for the same three-month period in 2006. During the first quarter of 2007, catastrophe losses from storm activity were zero versus $3.3 million during the first quarter of 2006.
Select Markets - During the first quarter, gross written premiums were $78.3 million and operating income totaled $9.5 million, compared to gross written premiums of $72.9 million and operating income of $7.1 million during the same period in 2006. The combined ratio for the first quarter of 2007 was 92.5 percent versus 93.9 percent in the first quarter last year. During the first quarter of 2007, catastrophe losses from storm activity were zero versus $1.0 million during the first quarter of 2006.
Public Entity - Gross written premiums for the first quarter were $20.8 million and operating income totaled $4.2 million, versus gross written premiums of $17.8 million and operating income of $2.1 million for the quarter ended March 31, 2006. For the first quarter of 2007, the combined ratio in this segment was 82.0 percent versus 92.2 percent during the same three-month period in 2006. |
