Argo Group International Holdings Ltd
Argo Group International — Corporate Update (September 2022)
23 slides from Argo Group International's corporate update, Sep 8, 2022
Slide 1: Argo Group Strategic Update
1 September 8, 2022 ARGO GROUP Strategic Update
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements This presentation and any related oral statements may include forward-looking statements, both with respect to Argo Group International Holdings, Ltd. (“Argo Group”, “we”, or “our”) and its industry, that reflect our current views with respect to future events and financ
Slide 3: Table of Contents
3 Table of Contents Executive Summary 1 Argo Profile 2 Overview of Syndicate 1200 Transaction 3 Overview of LPT Transaction 4 Update on Strategic Alternatives Process 5
Slide 4: 1. Executive Summary
4 1. Executive Summary
Slide 5: Transformative Business Strategy Driving Positive Results
5 Transformative Business Strategy Driving Positive Results Actions Taken over Past Two Years: Argo Today: ◼ $2+bn premium pure play U.S. specialty business ◼ Strong capital position and on- going business portfolio ◼ Reduced earnings volatility ◼ Strengthened balance sheet Leadership and the Board
Slide 6: Completed Significant Business Divestitures to Focus on more Profitable Lines
6 Completed Significant Business Divestitures to Focus on more Profitable Lines Announced 10 significant divestitures to exit international businesses including Italy, Brazil and Malta businesses, as well as announced the sale of its Lloyd’s syndicate operations Brazil: $79 GWP Syndicate 1200 and 19
Slide 7: Announced U.S. LPT Transaction to Reduce Earnings Volatility and Improve Regulatory Capital Position
7 Announced U.S. LPT Transaction to Reduce Earnings Volatility and Improve Regulatory Capital Position On August 8, 2022, Argo announced a Loss Portfolio Transfer (“LPT”) transaction with Enstar, effective January 1, 2022, covering a majority of the company’s U.S. Casualty insurance reserves, includ
Slide 8: Re-underwriting actions focused on on-going profitable business
8 93.6% 88.2% 97.4% 94.5% 124.5% 126.1% 133.2% 97.1% 2019 2020 2021 H1 2022 Ongoing Combined Ratio Exited Combined Ratio '19 -'21 Ongoing Average: 93.0% '19 -'21 Exited Average: 127.9% Re-underwriting actions focused on on-going profitable business 3 Completed Re-underwriting Actions Argo Ongoing vs
Slide 9: Successfully Reduced Expense Ratio by Nearly 3 Points
9 18.5% 17.2% 35.7% H1 2022 20.2% 16.6% 36.8% 2021 Successfully Reduced Expense Ratio by Nearly 3 Points 21.5% 20.7% 20.1% 17.0% 16.8% 16.6% 38.5% 37.5% 36.8% Non-Acquisition Expense Ratio Acquisition Expense Ratio 4 Expense Ratio 2.8 pts Reduction 21.5% 17.0% 38.5% 2019 20.7% 16.8% 37.5% 2020
Slide 10: 2. Argo Profile
10 2. Argo Profile
Slide 11: Argo Key Highlights
11 Argo Key Highlights Following completion of these transactions, Argo will be a pure play U.S. specialty business with solid fundamentals focused on underwriting expertise and strong growth momentum Diversified specialty insurer operating in profitable business segments 1 Strong growth momentum in
Slide 12: Pure Play U.S. Specialty Insurer Operating in Profitable Business Segments
12 U.S. Risk 99% International Risk 1% Property $302 Liability $1,189 Professional $539 Specialty $228 Ongoing Q2 2022 LTM GWP: $2.3bn ~99% of Argo’s ongoing business is U.S-based risk Pure Play U.S. Specialty Insurer Operating in Profitable Business Segments Argo’s Competitive Advantages ✓ Diversif
Slide 13: Strong Growth Momentum in On-going Businesses
13 Strong Growth Momentum in On-going Businesses 3 Argo has optimized its portfolio to focus on profitable and scalable businesses Ongoing GWP $ in millions. Selected Business Lines Six different P&L underwriting units with strong business leaders ARGO PRO CONSTRUCTION SURETY CASUALTY ENVIRONMENTAL
Slide 14: Business Repositioning is Substantially Complete with Reduced Risk Exposures
14 Business Repositioning is Substantially Complete with Reduced Risk Exposures 4 Reduction in Catastrophe Losses $ in millions. Argo has significantly reduced CAT exposure and liability exposure through strategic business exits $ 57.0 $ 58.6 $ 11.2 $ 179.2 $ 92.7 2020 2021 2022 Q2 YTD Full Year
Slide 15: Strong Balance Sheet and Capital Position
15 Strong Balance Sheet and Capital Position 5 • Sale of Lloyd’s business Provides enhanced capital position from transaction proceeds and capital release • LPT Transaction with Enstar provides protection against reserve volatility and provides Argo with additional capital flexibility • Ratings for
Slide 16: 3. Overview of Syndicate 1200 Transaction
16 3. Overview of Syndicate 1200 Transaction
Slide 17: Sale of Argo's Lloyd's Business
17 Sale of Argo’s Lloyd’s Business Transaction Summary ◼ On September 8, 2022, Argo entered into a definitive agreement for the sale of Argo Underwriting Agency Limited (including each of its subsidiaries), which incorporates Argo’s Lloyd’s Syndicate 1200 business to Westfield ◼ Westfield is a U.S.-
Slide 18: Post-Sale Pro Forma Business Mix
18 Liability 53% Professional 24% Specialty 10% Property 13% Liability 44% Professional 23% Specialty 17% Property 15% Post-Sale Pro Forma Business Mix Sale of Syndicate 1200 achieves Argo’s transformation into a pure play U.S. specialty insurer Q2 2022 LTM Total Gross Written Premiums: $3.1
Slide 19: 4. Overview of LPT Transaction
19 4. Overview of LPT Transaction
Slide 20: U.S. Loss Portfolio Transfer Key Terms
20 U.S. Loss Portfolio Transfer Key Terms Key Points Accelerates Argo’s Derisking Plans ◼ Enstar will reinsure a number of Argo’s direct U.S. casualty insurance portfolios, including construction, relating to the accident years 2011 to 2019 ◼ Provides protection against reserve volatility and provid
Slide 21: 5. Update on Strategic Alternatives Process
21 5. Update on Strategic Alternatives Process
Slide 22: Continued Focus on Exploring Strategic Alternatives and Maximizing Shareholder Value
22 Continued Focus on Exploring Strategic Alternatives and Maximizing Shareholder Value • Initiated on April 28, 2022, Argo’s exploration of strategic alternatives has progressed significantly under the Board’s Strategic Review Committee o Executed on strategic transactions with Westfield and Enstar
Slide 23: Key Takeaways
23 Key Takeaways Argo will be a pure play U.S. specialty business, having executed 10+ significant actions to simplify its business model, strengthen/de-risk its balance sheet and re-underwrite and drive efficiencies in its core businesses The Board continues to review all strategic alternatives, in
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