The Bermuda company, which maintains its U.S. headquarters in San Antonio where it employs about 200, reported Thursday that $26.2 million of $29.1 million in catastrophe losses in the quarter were related to the COVID-19 pandemic.
Argo lost $18.8 million, or 55 cents a share, on $435.5 million in revenue in the three months ended March 31. By comparison, it earned $91.2 million, or $2.63 a share, on $509.2 million in the same period last year.
“It’s too early to share the full understanding of how our business and performance will ultimately be impacted by the pandemic,” Argo CEO Kevin J. Rehnberg said in a conference call with analysts Friday. “The most immediate negative effects will be on our investment income and written premiums.
“It’s less clear how the current situation will impact overall loss results over our book of business,” he added.
Much of that will depend on how long lock-downs last and if future events are postponed or canceled, CFO Jay S. Bullock said.
Argo is a midsize player in a niche field of insuring complex or hard-to-price risks other insurers won’t touch. For example, Argo paid Disney on a life insurance claim following actress Carrie Fisher’s 2016 death. She was slated to reprise her role as Princess Leia in “Star Wars: Episode IX.”
Argo has insured concert performances. If the act is too sick to perform, the company would be on the hook to cover some of the costs of a show’s cancellation.
Almost $19 million of the pandemic-related losses were in Argo’s international segment. The losses were roughly split between event cancellation coverage and property exposures where it has some business-interruption coverage for communicable diseases.
“In the U.S., fewer than half of our property policies provide any business-interruption coverage at all,” Bullock said. “And the vast majority of these have specific virus exclusions.”
Where Argo has business-interruption coverage for communicable disease, Bullock said there are specific limits that curb its exposure. In those cases, Argo has assessed those policies individually and put up a specific provision for expected loss.
The Bermuda company, which maintains its U.S. headquarters in San Antonio where it employs about 200, reported Thursday that $26.2 million of $29.1 million in catastrophe losses in the quarter were related to the COVID-19 pandemic.
Argo lost $18.8 million, or 55 cents a share, on $435.5 million in revenue in the three months ended March 31. By comparison, it earned $91.2 million, or $2.63 a share, on $509.2 million in the same period last year.
“It’s too early to share the full understanding of how our business and performance will ultimately be impacted by the pandemic,” Argo CEO Kevin J. Rehnberg said in a conference call with analysts Friday. “The most immediate negative effects will be on our investment income and written premiums.
“It’s less clear how the current situation will impact overall loss results over our book of business,” he added.
Much of that will depend on how long lock-downs last and if future events are postponed or canceled, CFO Jay S. Bullock said.
Argo is a midsize player in a niche field of insuring complex or hard-to-price risks other insurers won’t touch. For example, Argo paid Disney on a life insurance claim following actress Carrie Fisher’s 2016 death. She was slated to reprise her role as Princess Leia in “Star Wars: Episode IX.”
Argo has insured concert performances. If the act is too sick to perform, the company would be on the hook to cover some of the costs of a show’s cancellation.
Almost $19 million of the pandemic-related losses were in Argo’s international segment. The losses were roughly split between event cancellation coverage and property exposures where it has some business-interruption coverage for communicable diseases.
“In the U.S., fewer than half of our property policies provide any business-interruption coverage at all,” Bullock said. “And the vast majority of these have specific virus exclusions.”
Where Argo has business-interruption coverage for communicable disease, Bullock said there are specific limits that curb its exposure. In those cases, Argo has assessed those policies individually and put up a specific provision for expected loss.
The pandemic also will have “indirect impacts,” including reduced expenses.
“We believe risk exposures should generally be lower under our current living and working conditions,” Bullock said.
While Argo has a “reasonable size” business insuring municipalities, workers’ compensation represents a very small part of that, Rehnberg said. So he doesn’t anticipate much activity on claims from emergency personnel who contract the virus.
One of its business segments, Argo Insurance, has some workers’ compensation exposure from grocery stores.
“The total comp writings of the company where we are actually retaining risk is less than $125 million,” Rehnberg said.
Argo had $825.9 million in gross premiums in the latest quarter, up 8.6 percent from the same period last year when it was $760.8 million.
Argo’s loss ratio, which assesses losses on claims to premiums earned, rose 8 percentage points to 64.6 percent in first quarter.
Its combined loss ratio — which measures losses plus expenses to premiums earned — was 103.2 percent in the latest quarter, up from 94.7 percent a year ago. The figure is considered an easy way to measure an insurance company’s performance. Anything above 100 percent is considered bad, while anything below is considered good.
The increase in the combined ratio was due to COVID-19, Rehnberg said. Excluding charges related to the pandemic, the combined loss ratio was within its goal of 96 to 98 percent.
Argo officials didn’t offer any update on the Securities and Exchange Commission’s investigation into the company’s disclosures on executive perks. Earlier this year, the company reported it paid various expenses incurred by former CEO Mark Watson III from 2017 through last year. Those included the cost of a housekeeper, furniture, maintenance, utilities, flowers and cable.