Executive Summary

Q1 2023 headline: ARGO reported total revenue of $401.7M and a GAAP net loss of $36.4M (−$1.04 diluted EPS); operating loss was $10.8M (−$0.31 operating EPS). Combined ratio deteriorated to 108.1% on higher loss ratio, driven by adverse prior-year development (PYD) .
Loss ratio rose to 73.0% (CAY ex-CAT 59.6%) with $48.6M of adverse PYD; catastrophe losses declined sharply to $3.6M (0.9 pts), reflecting ongoing volatility-reduction efforts .
U.S. Operations combined ratio rose to 106.4% on elevated PYD (12.2 pts) and professional lines severity; International combined ratio was 101.1% with adverse PYD of 12.1 pts .
Strategic milestone: shareholders approved the proposed merger with Brookfield Reinsurance; management expects closing in 2H 2023 (regulatory approvals pending). Integration planning is underway and framed as enhancing franchise strength and growth prospects .
Estimates: S&P Global consensus was unavailable for ARGO this period; as a result, beat/miss vs Street cannot be assessed. Values were not retrievable from S&P Global due to missing mapping.

What Went Well and What Went Wrong

What Went Well

Catastrophe losses fell 59% YoY to $3.6M (0.9 loss ratio pts), consistent with the strategy to exit property-cat exposed lines .
Expense discipline: expense ratio improved 90 bps YoY to 35.1% on lower underwriting expenses (−$35.9M), despite lower earned premiums .
“Continued Strategic Growth in U.S. Ongoing Business”: earned premiums in U.S. ongoing business grew ~6.3% as mix shifted toward lines with higher net risk retention . Management: “We are pleased with the overwhelming shareholder support … [and] have developed an even greater appreciation for how this partnership will enhance our strong franchise and future growth prospects.” — Thomas A. Bradley, Executive Chairman & CEO .

What Went Wrong

Combined ratio deteriorated to 108.1% (vs. 95.0% prior-year), driven by a 14.0 pt increase in the loss ratio to 73.0% .
Adverse PYD totaled $48.6M (12.5 pts), largely from exited businesses and reassessment in professional lines (AY2019 and prior), weighing on both U.S. (12.2 pts) and International (12.1 pts) segments .
Net investment income declined $8.0M YoY to $29.7M as alternative investment income fell $13.8M; operating results shifted from $43.4M profit in Q1’22 to a $10.8M loss .

Financial Results

Consolidated results (oldest → newest)

Metric	Q3 2022	Q4 2022	Q1 2023
Total Revenue ($M)	$444.3	$383.7	$401.7
GAAP Diluted EPS	$(1.47)	$(3.19)	$(1.04)
Operating EPS (Diluted)	$0.44	$(2.69)	$(0.31)
Combined Ratio (%)	101.1%	138.2%	108.1%
Loss Ratio (%)	65.7%	88.0%	73.0%
Expense Ratio (%)	35.4%	50.2%	35.1%
CAY ex-CAT Loss Ratio (%)	58.0%	75.9%	59.6%

Segment breakdown (Earned Premiums, Underwriting, Combined ratio)

Segment	Metric	Q3 2022	Q4 2022	Q1 2023
U.S. Operations	Earned Premiums ($M)	$329.3	$210.5	$325.6
	Underwriting Income ($M)	$9.3	$(153.9)	$(21.0)
	Combined Ratio (%)	97.2%	173.1%	106.4%
International Operations	Earned Premiums ($M)	$125.2	$139.8	$64.3
	Underwriting Income ($M)	$(3.5)	$25.7	$(0.7)
	Combined Ratio (%)	102.8%	81.6%	101.1%

Key KPIs and drivers

KPI	Q3 2022	Q4 2022	Q1 2023
Gross Written Premiums ($M)	$750.9	$644.5	$596.7
Net Written Premiums ($M)	$505.2	$326.7	$335.9
Catastrophe Losses ($M)	$23.4	$9.4	$3.6
Net Prior-Year Reserve Development ($M)	$11.9 adverse	$33.1 adverse	$48.6 adverse
Book Value/Share (Period-End)	$33.72	$31.06	$31.31

Notes:

Q4 2022 was impacted by the U.S. loss portfolio transfer (LPT) cost; adjusted ratios disclosed in Q4 release provide ex-LPT views .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company guidance	2023	Not provided	Not provided in Q1 press release; focus on merger with Brookfield Reinsurance	N/A

Note: The Q1 2023 press release contains no formal financial guidance section, and management emphasizes closing the Brookfield Re merger in 2H23 subject to regulatory approvals .

Earnings Call Themes & Trends

(Company did not disclose an earnings call transcript for Q1 2023; no conference-call details appear in the Q1 press release. For context, Q3 2022 included a call; Q4 2022 did not include call details in the press release.)

Topic	Previous Mentions (Q-2: Q3’22; Q-1: Q4’22)	Current Period (Q1’23)	Trend
Strategic simplification / portfolio actions	Announced sale of Lloyd’s Syndicate 1200; continued exits; position as focused U.S. specialty insurer	Completed sale of Lloyd’s Syndicate (Feb 2, 2023); shareholder approval of Brookfield Re merger	Progressing toward completion
Loss portfolio transfer / reserve actions	Planned U.S. LPT; anticipated ~$100M after-tax charge in Q4’22	LPT completed; Q4 reported large ex-LPT adjustments; Q1 shows elevated adverse PYD ($48.6M)	Reserve clean-up ongoing; adverse PYD persists
Catastrophe exposure reduction	Cat losses down vs. PY despite Hurricane Ian; volatility reduction emphasized	Cat losses down 59% YoY to $3.6M; cat ratio 0.9 pts	Continued improvement
Expense discipline	Expense ratio improved; G&A reductions	Expense ratio improved 90 bps YoY to 35.1%	Sustained focus
Professional lines / severity	U.S. CAY ex-CAT stable; some adverse PYD	Higher CAY ex-CAT in U.S. (60.5%); PYD concentrated in exited businesses and professional lines (AY2019 and prior)	Mixed: severity/PYD pressure

Management Commentary

“We are pleased with the overwhelming shareholder support … [This] transaction maximizes shareholder value and represents the best path forward for Argo… We continue to expect to complete the merger in the second half of 2023, subject to customary closing conditions, including receipt of required regulatory approvals.” — Thomas A. Bradley, Executive Chairman & CEO .
Strategy execution updates: reduced catastrophe losses via exits; expense ratio improvement from cost actions; ongoing growth in U.S. ongoing business (earned premiums +~6%) as mix shifts to lines with higher net retention .

Q&A Highlights

No Q&A section is available for Q1 2023; the press release does not include conference-call details and no transcript was found in the document set. For comparison, Q3 2022 included a scheduled call/webcast in the press release .

Estimates Context

Wall Street consensus (S&P Global) for Q1 2023 could not be retrieved for ARGO; therefore, we cannot assess beat/miss versus estimates this quarter. S&P Global consensus data unavailable for this ticker mapping at the time of request.
Given the 108.1% combined ratio and $48.6M of adverse PYD, near-term models may tilt conservative on EPS until reserve trends stabilize; however, the pending Brookfield Re transaction remains the principal stock driver in 2023 .

Key Takeaways for Investors

Results driven by reserve noise: Combined ratio of 108.1% reflects 12.5 pts adverse PYD; underwriting quality ex-PYD and catastrophes (CAY ex-CAT loss ratio 59.6%) remains closer to recent run-rate levels .
Positive signs on volatility and costs: Catastrophe losses fell to $3.6M and the expense ratio improved to 35.1%, consistent with portfolio simplification and cost actions .
U.S. ongoing-business growth continues: U.S. ongoing earned premiums grew ~6% as mix shifts to lines with higher net retention, though professional lines severity and PYD weighed on loss ratios .
Capital/Book stability: Book value per share ticked up to $31.31 from $31.06 at YE’22 on AOCI improvement (partially offset by lower retained earnings) .
Primary catalyst is the Brookfield Re merger: Shareholders approved; closing expected 2H 2023 pending regulatory approvals. Integration planning underway; management views the partner as enhancing franchise and growth prospects .
Modeling stance: Without Street consensus, focus on underwriting trend ex-PYD, expense trajectory, and any further reserve actions. The merger timeline/approvals likely dominate near-term stock direction .

Appendix: Prior two quarters (source for trend analysis)

Q4 2022: Combined ratio 138.2% driven by U.S. LPT cost; ex-LPT ratios improved (ex-LPT combined 100.5%). Net loss $(3.19) diluted EPS; operating EPS $(2.69). Book value/share $31.06 .
Q3 2022: Combined ratio 101.1%; cat losses $23.4M; operating EPS $0.44; book value/share $33.72 (AOCI build a headwind) .

Argo Group International Holdings, Inc. (ARGO)·Q1 2023 Earnings Summary