UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	~~QUARTERLY REPORT PURSUANT TO SECTION~~
☒			Quarterly report pursuant to Section 13 ORor 15(d) ~~OF THE SECURITIES EXCHANGE ACT OF~~of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2017~~

March 31, 2022

☐	~~TRANSITION REPORT PURSUANT TO SECTION~~
☐			Transition report pursuant to Section 13 ORor 15(d) ~~OF THE SECURITIES EXCHANGE ACT OF~~of the Securities Exchange Act of 1934 for the transition period fromto

~~For the transition period from to~~

Commission file number: 1-15259

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

(Exact name of registrant as specified in its charter)

~~Bermuda~~

~~98-0214719~~

Bermuda

98-0214719

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

~~110~~90 Pitts Bay Road
Pembroke HM08
Bermuda

P.O. Box HM 1282
Hamilton HM FX
Bermuda

Pembroke

HM08

Hamilton

HM FX

Bermuda

(Address of principal executive offices)

(Mailing address)

~~(441) 296-5858~~

(Registrant’s telephone number, including area code)

:(441) 296-5858

Securities registered pursuant to Section 12(b) of the Act:


Title of ~~Security~~ Each Class	Trading Symbol(s)	Name of ~~Each Exchange~~each exchange on ~~Which Registered~~ which registered
Common Stock, ~~par value~~Par Value of $1.00 ~~per share~~ Per Share	ARGO	~~NASDAQ Global Select Market~~ New York Stock Exchange
~~Guarantee of Argo Group US, Inc.~~ 6.500% Senior Notes ~~due~~Due 2042 issued by Argo Group U.S., Inc. and The Guarantee With Respects Thereto	ARGD	~~NASDAQ~~New York Stock ~~Market LLC~~ Exchange
Depositary Shares, Each Representing a 1/1000th Interest in 7.00% Resettable Fixed Rate Preference Share, Series A, Par Value $1.00 Per Share	ARGOPrA	New York Stock Exchange

~~Securities registered pursuant to Section 12(g) of the Act:~~

~~None~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer☒

☒

Accelerated filer☐

☐

Non-accelerated filer

☐


Smaller reporting company☐			☐			Emerging growth company			☐

~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes~~ ☐ No ☒

If an emerging growth company, indicate by check mark whether the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding (net of treasury shares) of each of the issuer’s classes of common shares as of ~~November 02, 2017.~~

May 4, 2022.

~~Title~~	~~Outstanding~~
Title		Outstanding
Common Shares, par value $1.00 per share		~~29,680,863~~ 34,958,238

Table of Contents

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

INDEX

	~~Page~~
		Page
PART I. Financial Information		3		4
Item 1.		Condensed Consolidated Financial Statements (unaudited)	3 4
		Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 3 1 , 202 2 and December 31, ~~2016~~202 1	3 4
		Condensed Consolidated Statements of Income (Loss) ~~Income~~ for the three months ended March 3 1 , 202 2 and ~~nine months ended September 30, 2017 and 2016~~202 1	4 5
		Condensed Consolidated Statements of ~~(Loss)~~ Comprehensive Income (Loss) for the three months ended March 3 1 , 202 2 and ~~nine months ended September 30, 2017 and 2016~~202 1	5 6
	Condensed Consolidated Statements of Shareholders’ Equity for the three mon ths ended March 3 1 , 202 2 and 2021	7
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~ months ended ~~September 30, 2017~~March 3 1 , 202 2 and ~~2016~~202 1	6 8
		Notes to Condensed Consolidated Financial Statements	7 9
	1. Basis of Presentation	9
	2. Recently Issued Accounting Pronouncements	9
	3. Investments	9
	4. Allowance for Credit Losses	19
	5. Reserves for Losses and Loss Adjustment Expenses	20
	6. Disclosures about Fair Value of Financial Instruments	21
	7. Shareholders' Equity	23
	8. Accumulated Other Comprehensive Income (Loss)	23
	9. Net Income (Loss) Per Common Share	24
	10. Supplemental Cash Flow Information	25
	11. Share-based Compensation	25
	12. Underwriting, Acquisition and Insurance Expenses	26
	13. Income Taxes	26
	14. Commitments and Contingencies	28
	15. Segment Information	28
	16. Subsequent Events	30
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	42 30
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	53 47
Item 4.		Controls and Procedures	54 49
PART II. Other Information		54		49
Item 1.		Legal Proceedings	54 49
Item 1A.		Risk Factors	54 49
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	54 50
Item 3.		Defaults Upon Senior Securities	55 50
Item 4.		Mine Safety Disclosures	55 50
Item 5.		Other Information	55 50
Item 6.		Exhibits	55 52
		Signatures	57 53

Table of Contents P~~ART~~

PART I. FINANCIAL INFORMATION

Item 1. ~~Condensed~~ Consolidated Financial Statements

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except number of shares and per share amounts)

September 30,

December 31,

2017

2016 *

(Unaudited)

Assets

Investments:

Fixed maturities available-for-sale, at fair value (cost: 2017 - $3,339.7; 2016 -
   $2,938.8)

$
3,378.4

$
2,932.4

Equity securities available-for-sale, at fair value (cost: 2017 - $347.6; 2016 - $335.2)

480.5

447.4

Other investments (cost: 2017 - $553.1; 2016 - $531.6)

562.6

539.0

Short-term investments, at fair value (cost: 2017 - $386.0; 2016 - $405.5)

386.0

405.5

Total investments

4,807.5

4,324.3

Cash

235.8

86.0

Accrued investment income

23.6

20.7

Premiums receivable

678.8

463.8

Reinsurance recoverables

2,101.9

1,385.6

Goodwill

152.2

152.2

Intangible assets, net of accumulated amortization

108.3

67.7

Deferred acquisition costs, net

168.8

139.1

Ceded unearned premiums

461.4

302.8

Other assets

319.7

262.8

Total assets

$
9,058.0

$
7,205.0

Liabilities and Shareholders' Equity

Reserves for losses and loss adjustment expenses

$
4,305.9

$
3,350.8

Unearned premiums

1,286.0

970.0

Accrued underwriting expenses

97.5

115.0

Ceded reinsurance payable, net

822.6

466.6

Funds held

45.0

77.1

Senior unsecured fixed rate notes

139.6

139.5

Other indebtedness

184.7

55.4

Junior subordinated debentures

256.5

172.7

Current income taxes payable, net

11.0

8.1

Deferred tax liabilities, net

41.5

24.1

Other liabilities

59.7

33.0

Total liabilities

7,250.0

5,412.3

Commitments and contingencies (Note 16)

Shareholders' equity:

Common shares - $1.00 par, 500,000,000 shares authorized; 40,300,433 and
   40,042,330 shares issued at September 30, 2017 and December 31, 2016,
   respectively

40.3

40.0

Additional paid-in capital

1,129.1

1,123.3

Treasury shares (10,640,789 and 10,028,755 shares at September 30, 2017
   and December 31, 2016, respectively)

(414.8
)

(378.2
)
Retained earnings

956.4

959.9

Accumulated other comprehensive income, net of taxes

97.0

47.7

Total shareholders' equity

1,808.0

1,792.7

Total liabilities and shareholders' equity

$
9,058.0

$
7,205.0


	March 31, 2022		December 31, 2021
	(Unaudited)
Assets
Investments:
Fixed maturities available-for-sale, at fair value (cost: 2022 - $4,302.7, 2021 - $4,203.2; allowance for expected credit losses: 2022 - $2.9, 2021 - $2.5)	$	4,143.9	$	4,223.3
Equity securities, at fair value (cost: 2022 - $61.3; 2021 - $70.3)	54.0		56.3
Other investments (cost: 2022 - $452.4; 2021 - $387.0)	452.5		387.2
Short-term investments, at fair value (cost: 2022 - $420.6; 2021 - $655.4)	421.1		655.8
Total investments	5,071.5		5,322.6
Cash	154.0		146.1
Accrued investment income	22.1		20.9
Premiums receivable	649.3		648.6
Reinsurance recoverables	2,857.9		2,966.4
Goodwill	147.3		147.3
Intangible assets, net of accumulated amortization	17.3		17.3
Current income taxes receivable, net	—		7.3
Deferred tax asset, net	99.2		73.6
Deferred acquisition costs, net	174.6		168.0
Ceded unearned premiums	494.9		506.7
Operating lease right-of-use assets	60.8		81.4
Other assets	232.1		211.6

Total assets	$	9,981.0	$	10,317.8
Liabilities and Shareholders' Equity
Reserves for losses and loss adjustment expenses	$	5,648.1	$	5,595.0
Unearned premiums	1,386.0		1,466.8
Accrued underwriting expenses and other liabilities	167.4		166.6
Ceded reinsurance payable, net	577.9		724.4
Funds held	65.8		76.6
Senior unsecured fixed rate notes	140.4		140.3
Other indebtedness	57.3		57.0
Junior subordinated debentures	258.3		258.2


Operating lease liabilities	69.0		97.7
Total liabilities	8,370.2		8,582.6
Commitments and contingencies (Note 14)	0		0
Shareholders' equity:
Preferred shares and additional paid-in capital - $1.00 par, 30,000,000 shares authorized; 6,000 shares issued at March 31, 2022 and December 31, 2021, respectively; liquidation preference $25,000	144.0		144.0
Common shares - $1.00 par, 500,000,000 shares authorized; 46,260,520 and 46,192,867 shares issued at March 31, 2022 and December 31, 2021, respectively	46.3		46.2
Additional paid-in capital	1,388.5		1,386.4
Treasury shares (11,315,889 shares at March 31, 2022 and December 31, 2021, respectively)	(455.1)		(455.1)
Retained earnings	622.0		636.4
Accumulated other comprehensive income, net of taxes	(134.9)		(22.7)
Total shareholders' equity	1,610.8		1,735.2
Total liabilities and shareholders' equity	$	9,981.0	$	10,317.8

*	~~Derived from audited consolidated financial statements.~~

See accompanying notes.

Table of Contents

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) ~~INCOME~~

(in millions, except number of shares and per share amounts)

(Unaudited)

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

2017

2016

Premiums and other revenue:

Earned premiums

$
389.3

$
358.7

$
1,167.8

$
1,048.5

Net investment income

30.9

32.7

105.0

89.6

Fee and other income

13.0

7.6

20.4

20.2

Net realized investment and other gains

6.0

17.7

25.1

12.8

Total revenue

439.2

416.7

1,318.3

1,171.1

Expenses:

Losses and loss adjustment expenses

326.4

207.8

779.5

596.0

Underwriting, acquisition and insurance expenses

166.1

137.4

474.4

403.0

Interest expense

7.5

4.9

20.4

14.6

Fee and other expense

5.0

5.9

12.4

18.1

Foreign currency exchange losses (gains)

0.1

(1.5
)

4.0

4.5

Total expenses

505.1

354.5

1,290.7

1,036.2

(Loss) income before income taxes

(65.9
)

62.2

27.6

134.9

Income tax (benefit) provision

(4.6
)

7.0

6.2

21.1

Net (loss) income

$
(61.3
)

$
55.2

$
21.4

$
113.8

Net (loss) income per common share:

Basic

$
(2.04
)

$
1.84

$
0.71

$
3.76

Diluted

$
(2.04
)

$
1.80

$
0.69

$
3.68

Dividend declared per common share

$
0.27

$
0.22

$
0.81

$
0.64

Weighted average common shares:

Basic

29,978,485

30,018,637

30,075,424

30,227,725

Diluted

29,978,485

30,728,383

30,893,026

30,889,487

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

2017

2016

Net realized investment and other gains before
   other-than-temporary impairment losses

$
6.2

$
20.1

$
26.8

$
21.8

Other-than-temporary impairment losses recognized in
   earnings:

Other-than-temporary impairment losses on fixed
   maturities

(0.1
)

(0.6
)

(0.1
)

(1.7
)
Other-than-temporary impairment losses on equity
   securities

(0.1
)

(1.8
)

(1.6
)

(7.3
)
Impairment losses recognized in earnings

(0.2
)

(2.4
)

(1.7
)

(9.0
)
Net realized investment and other gains

$
6.0

$
17.7

$
25.1

$
12.8


	For the Three Months Ended March 31,
		2022		2021
Premiums and other revenue:
Earned premiums		$	480.6	$	466.1
Net investment income		37.7		44.4

Net realized investment and other gains (losses):
Net realized investment and other losses		(40.2)		(1.3)
Change in fair value recognized		6.7		15.5
Change in allowance for credit losses on fixed maturity securities		(1.0)		(1.1)
Total net realized investment and other gains (losses)		(34.5)		13.1
Total revenue		483.8		523.6
Expenses:
Losses and loss adjustment expenses		283.6		307.6
Underwriting, acquisition and insurance expenses		172.9		176.4
Non-operating expenses		7.4		1.9
Interest expense		5.8		5.1
Fee and other (income) expense, net		(0.8)		0.1
Foreign currency exchange losses		2.9		1.3
Total expenses		471.8		492.4
Income before income taxes		12.0		31.2
Income tax provision		13.0		1.4
Net income (loss)		$	(1.0)	$	29.8
Dividends on preferred shares		2.6		2.6
Net income (loss) attributable to common shareholders		$	(3.6)	$	27.2

Net income (loss) attributable to common shareholders per common share:
Basic		$	(0.11)	$	0.78
Diluted		$	(0.11)	$	0.78
Dividend declared per common share		$	0.31	$	0.31
Weighted average common shares:
Basic		34,891,935		34,712,650
Diluted		34,891,935		34,938,013

See accompanying notes.

Table of Contents

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ~~INCOME~~

(in millions)

(Unaudited)

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

2017

2016

Net (loss) income

$
(61.3
)

$
55.2

$
21.4

$
113.8

Other comprehensive income:
��

Foreign currency translation adjustments

0.4

(1.0
)

(0.2
)

2.8

Unrealized gains on securities:

Gains arising during the year

38.5

19.8

100.1

97.7

Reclassification adjustment for gains included in
   net income

(17.4
)

(17.0
)

(36.3
)

(25.1
)
Other comprehensive income before tax

21.5

1.8

63.6

75.4

Income tax provision related to other comprehensive
   income:

Unrealized gains on securities:

Gains arising during the year

10.1

7.6

26.0

27.5

Reclassification adjustment for gains included in
   net income

(5.5
)

(7.9
)

(11.7
)

(11.8
)
Income tax provision (benefit) related to other
   comprehensive income

4.6

(0.3
)

14.3

15.7

Other comprehensive income, net of tax

16.9

2.1

49.3

59.7

Comprehensive (loss) income

$
(44.4
)

$
57.3

$
70.7

$
173.5


	For the Three Months Ended March 31,
		2022		2021
Net income (loss)		$	(1.0)	$	29.8
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation adjustments		4.1		(0.9)
Reclassification adjustment for foreign currency translation included in net income		27.3		—


Unrealized losses on fixed maturity securities:
Losses arising during the year		(172.0)		(62.1)
Reclassification adjustment for losses (gains) included in net income		(5.4)		(4.0)
Other comprehensive income (loss) before tax		(146.0)		(67.0)
Income tax (benefit) provision related to other comprehensive income (loss):


Unrealized gains (losses) on fixed maturity securities:
Losses arising during the year		(32.8)		(11.8)
Reclassification adjustment for (gains) losses included in net income		(1.0)		(0.8)
Income tax (benefit) provision related to other comprehensive income (loss)		(33.8)		(12.6)
Other comprehensive loss, net of tax		(112.2)		(54.4)
Comprehensive loss		$	(113.2)	$	(24.6)

See accompanying notes.

Table of Contents

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in millions, except number of shares and per share amounts)

(Unaudited)


	Preferred Shares and Additional Paid-in Capital		Common Shares		Additional Paid-In Capital		Treasury Shares		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Shareholders' Equity
Balance, December 31, 2020	$	144.0	$	46.0	$	1,380.2	$	(455.1)	$	684.1	$	58.6	$	1,857.8
Net income	—		—		—		—		29.8		—		29.8

Other comprehensive loss - Change in fair value of fixed maturities, net of taxes	—		—		—		—		—		(53.5)		(53.5)
Other comprehensive loss, net - Other	—		—		—		—		—		(0.9)		(0.9)
Activity under stock incentive plans	—		0.1		2.1		—		—		—		2.2
Retirement of common shares (tax payments on equity compensation)	—		—		(1.4)		—		—		—		(1.4)
Employee stock purchase plan	—		—		0.4		—		—		—		0.4
Dividends on preferred shares	—		—		—		—		(2.6)		—		(2.6)
Cash dividend declared - common shares ($0.31/share)	—		—		—		—		(10.8)		—		(10.8)

Balance, March 31, 2021	$	144.0	$	46.1	$	1,381.3	$	(455.1)	$	700.5	$	4.2	$	1,821.0

Balance, December 31, 2021	$	144.0	$	46.2	$	1,386.4	$	(455.1)	$	636.4	$	(22.7)	$	1,735.2
Net loss	—		—		—		—		(1.0)		—		(1.0)
Other comprehensive loss - Change in fair value of fixed maturities, net of taxes	—		—		—		—		—		(143.6)		(143.6)
Other comprehensive income, net - Other	—		—		—		—		—		31.4		31.4

Activity under stock incentive plans	—		0.1		2.7		—		—		—		2.8
Retirement of common shares (tax payments on equity compensation)	—		—		(1.0)		—		—		—		(1.0)
Employee stock purchase plan	—		—		0.4		—		—		—		0.4
Dividends on preferred shares	—		—		—		—		(2.6)		—		(2.6)
Cash dividend declared - common shares ($0.31/share)	—		—		—		—		(10.8)		—		(10.8)
Balance, March 31, 2022	$	144.0	$	46.3	$	1,388.5	$	(455.1)	$	622.0	$	(134.9)	$	1,610.8

See accompanying notes.

Table of Contents

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)

	For the Nine Months Ended September 30,
	2017			2016				For the Three Months Ended March 31,
Cash flows from operating activities:
Net income	$	21.4		$	113.8
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
								2022		2021
Cash flows (used in) provided by operating activities:							Cash flows (used in) provided by operating activities:
Net income (loss)							Net income (loss)	$	(1.0)	$	29.8
Adjustments to reconcile net income (loss) to cash provided by operating activities:							Adjustments to reconcile net income (loss) to cash provided by operating activities:
Amortization and depreciation		24.4			27.4		Amortization and depreciation	5.9		2.9
Share-based payments expense		11.2			11.1		Share-based payments expense	3.2		2.3
Deferred income tax (benefit) provision, net		(6.4	)		2.3
Net realized investment and other gains		(25.1	)		(12.8	)
Deferred income tax benefit, net							Deferred income tax benefit, net	9.3		0.3
Net realized investment (gains) losses							Net realized investment (gains) losses	34.5		(13.1)
Undistributed earnings from alternative investment portfolio		(38.6	)		(20.8	)	Undistributed earnings from alternative investment portfolio	(13.6)		(20.7)
Loss on disposals of fixed assets, net		1.4			0.2

Change in:							Change in:
Accrued investment income		(2.7	)		(0.3	)	Accrued investment income	(1.2)		(0.6)
Receivables		(690.9	)		(255.5	)	Receivables	43.9		242.5
Deferred acquisition costs		(19.7	)		(14.9	)	Deferred acquisition costs	(6.5)		(6.5)
Ceded unearned premiums		(65.8	)		(59.8	)	Ceded unearned premiums	(2.9)		(11.8)
Reserves for losses and loss adjustment expenses		756.5			154.2		Reserves for losses and loss adjustment expenses	101.4		(268.2)
Unearned premiums		162.5			120.3		Unearned premiums	(38.5)		(33.6)
Ceded reinsurance payable and funds held		179.7			128.3		Ceded reinsurance payable and funds held	(147.8)		158.2
Income taxes		3.5			19.7		Income taxes	3.2		1.3
Accrued underwriting expenses		(42.5	)		(27.4	)
Accrued underwriting expenses and other liabilities							Accrued underwriting expenses and other liabilities	11.5		6.4
Other, net		(16.5	)		(35.0	)	Other, net	(29.3)		(19.0)
Cash provided by operating activities		252.4			150.8
Cash flows from investing activities:
Cash (used in) provided by operating activities							Cash (used in) provided by operating activities	(27.9)		70.2
Cash flows provided by (used in) investing activities:							Cash flows provided by (used in) investing activities:
Sales of fixed maturity investments		1,069.7			761.8		Sales of fixed maturity investments	291.1		264.0
Maturities and mandatory calls of fixed maturity investments		493.2			839.0		Maturities and mandatory calls of fixed maturity investments	144.3		195.9
Sales of equity securities		140.0			155.3		Sales of equity securities	9.0		14.6
Sales of other investments		68.3			92.1		Sales of other investments	20.9		27.1
Purchases of fixed maturity investments		(1,916.9	)		(1,650.7	)	Purchases of fixed maturity investments	(597.4)		(617.6)
Purchases of equity securities		(118.1	)		(114.7	)	Purchases of equity securities	(1.0)		(0.5)
Purchases of other investments		(25.2	)		(90.3	)	Purchases of other investments	(17.9)		(20.6)
Change in foreign regulatory deposits and voluntary pools		(27.2	)		4.8		Change in foreign regulatory deposits and voluntary pools	(8.6)		(9.1)
Change in mortgage loans							Change in mortgage loans	(46.5)		—
Change in short-term investments		291.4			(78.7	)	Change in short-term investments	234.1		59.7
Settlements of foreign currency exchange forward contracts		—			(7.2	)	Settlements of foreign currency exchange forward contracts	—		(1.7)
Acquisition of subsidiaries, net of cash acquired		(105.2	)		—
Purchases of fixed assets		(20.4	)		(26.7	)
Proceeds from sale of Argo Seguros Brasil, net of cash transferred							Proceeds from sale of Argo Seguros Brasil, net of cash transferred	22.7		—

Purchases of fixed assets, net							Purchases of fixed assets, net	(0.7)		(7.7)
Other, net		(15.6	)		31.9		Other, net	—		45.9
Cash used in investing activities		(166.0	)		(83.4	)	Cash used in investing activities	50.0		(50.0)
Cash flows from financing activities:
Additional long-term borrowings		125.0			—
Cash flows used in financing activities:							Cash flows used in financing activities:

Activity under stock incentive plans		0.9			0.6		Activity under stock incentive plans	(1.1)		0.3
Repurchase of Company's common shares		(36.6	)		(45.3	)

Payment of cash dividends to preferred shareholders							Payment of cash dividends to preferred shareholders	(2.6)		(2.6)
Payment of cash dividends to common shareholders		(24.9	)		(19.8	)	Payment of cash dividends to common shareholders	(10.8)		(10.8)
Cash provided by (used in) financing activities		64.4			(64.5	)
Cash used in financing activities							Cash used in financing activities	(14.5)		(13.1)
Effect of exchange rate changes on cash		(1.0	)		(1.0	)	Effect of exchange rate changes on cash	0.3		0.8
Change in cash		149.8			1.9		Change in cash	7.9		7.9
Cash, beginning of year		86.0			121.7		Cash, beginning of year	146.1		148.8
Cash, end of period	$	235.8		$	123.6		Cash, end of period	$	154.0	$	156.7

See accompanying notes.

Table of Contents

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	~~Basis of Presentation~~

1. Basis of Presentation

The accompanying consolidated financial statements of Argo Group International Holdings, Ltd. and its subsidiaries (“Argo Group,” ~~“we”~~“we,” “us,” “our” or the “Company”) ~~and its subsidiaries~~ have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Argo Group is an underwriter of specialty insurance products in the property and casualty market.

The preparation of interim financial statements in conformity with GAAP requires management 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 reported amounts of revenues and expenses during the reporting period. The major estimates reflected in our consolidated financial statements include, but are not limited to, reserves for losses and loss adjustment expenses; reinsurance recoverables, including the reinsurance recoverables allowance for ~~doubtful accounts;~~expected credit losses; estimates of written and earned premiums; reinsurance premium receivable; fair value of investments and assessment of potential ~~impairment;~~impairment, including the allowance for credit losses on fixed maturity securities; valuation of goodwill and intangibles and our deferred tax asset valuation allowance. Actual results could materially differ from those estimates. Certain financial information that is normally is included in annual financial statements, including certain financial statement footnotes, prepared in accordance with GAAP, is not required for interim reporting purposes and has been condensed or omitted. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, ~~2016,~~2021 filed with the Securities and Exchange Commission ~~on February 24, 2017.~~

~~Effective February 6, 2017, we completed the acquisition of Maybrooke Holdings, S.A. (“Maybrooke”~~("SEC") ~~and its direct subsidiaries, including Ariel Re. We have accounted for the acquisition in accordance with Accounting Standards Codification (“ASC”~~(collectively, “2021 Form 10-K”) 805, “Business Combinations,” and the purchase price has been preliminarily allocated to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. See Note 3, “Acquisition of Maybrooke,” for additional discussion regarding the acquisition and the related financial disclosures. The Consolidated Financial Statements as of and for the three and nine months ended September 30, 2017 and the Notes to the Consolidated Financial Statements reflect the consolidated results of Argo Group and Maybrooke commencing on the date of acquisition.

The interim financial information as of, and for, the three ~~and nine~~ months ended, ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 is unaudited. However, in the opinion of management, the interim information includes all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results presented for the interim periods. The operating results for the interim periods are not necessarily indicative of the results to be expected for the full year. All significant intercompany amounts have been eliminated in consolidation.

During the first quarter of 2017, we evaluated and modified the presentation of our reportable segments to better reflect our new operating framework and management structure. Under this model, Argo Group’s chief operating decision maker – Mark E. Watson III, President and Chief Executive Officer – evaluates performance and allocates resources based on the review of the U.S. Operations and the International Operations. The U.S. Operations includes the former Excess & Surplus and Commercial Specialty reportable segments. The International Operations includes the former Syndicate 1200, International Specialty reportable segments, and the recently acquired Ariel Re business. (See Note 3, “Acquisition of Maybrooke” for details regarding Ariel Re.) The business unit that produces the risk and not the location of the underlying exposure is the primary characteristic in distinguishing operating and reportable segments. For example, a U.S. property exposure underwritten through our Syndicate platform would be included in International Operations. Consistent with prior periods, the Run-off Lines and Corporate segments include all other activity of Argo Group and are included in our consolidated financial results. Segment results for the three and nine months ended September 30, 2016 Certain reclassifications have been ~~reclassified~~made to financial information presented for prior years to conform to the current year’s presentation.

2.	~~Recently Issued Accounting Pronouncements~~

Sale of Argo Seguros Brasil S.A.

~~In May 2017,~~

On February 15, 2022, we completed the ~~Financial Accounting Standards Board~~sale of our Brazilian operations, Argo Seguros Brasil S.A. (“~~FASB”~~Argo Seguros”) ~~issued Accounting Standards Update (“ASU”) 2017-09, “Compensation – Stock Compensation” (Topic 718): Scope~~, to Spice Private Equity Ltd., an investment company focused on global private equity investments, for a purchase price of ~~Modification Accounting. ASU 2017-09 clarifies when changes~~160 million Brazilian Reais (approximately $30.5 million), subject to the terms orand conditions ~~of a share-based payment award must be accounted for as modifications. The guidance requires entities to apply~~set forth in the ~~modification accounting guidance if the value, vesting conditions or classification~~purchase agreement. Argo Seguros is one of the ~~award changes. In addition~~units within our International Operations reporting segment. As a result, we realized a loss on the sale of Argo Seguros of $28.5 million, which is included as a component of Net realized investment and other gains (losses) in our Condensed Consolidated Statements of Income (Loss). This loss was primarily attributable to ~~all~~ the ~~disclosures about modifications that are required today,~~realization of historical foreign currency translation, which was previously a component of accumulated other comprehensive income. We previously recognized a $6.3 million loss during 2021 as we adjusted the entities are required to affirmatively disclose when compensation expense has not changed. The ASU will be applied prospectively and is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including in any interim period for which financial statements have not been issued or made available for issuance. We are currently evaluating the impact that the adoption of the ASU will have on our financial results and disclosures.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations” (Topic 805). ASU 2017-01 clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance specifies the minimum inputs and processes required to meet the definition of a business. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those periods, with early adoption permitted. We do not anticipate that this ASU will have a material impact on our financial results or disclosures.

~~In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other” (Topic 350). ASU 2017-04 eliminates the requirement to calculate the implied fair~~carrying value of ~~goodwill that is done in Step 2 of the current goodwill impairment test~~Argo Seguros to ~~measure a goodwill impairment loss. Instead, entities will record an impairment loss based on the excess of a reporting unit’s carrying amount over~~ its fair value.

2. Recently Issued Accounting Pronouncements

The ~~guidance will be applied prospectively~~Company evaluated recently issued accounting pronouncements and ~~is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019. We do not anticipate that this ASU will have a~~determined none are material ~~impact on our financial results or disclosures.~~

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments (Topic 230). ASU 2016-15 will reduce diversity in practice on how eight specific cash receipts and payments are classified on the statement of cash flows. The ASU will be effective for fiscal years beginning after December 15, 2017, including interim periods within those years. This ASU will have an impact on how we present the distributions received from equity method investees in our statement of cash flows. We have elected to adopt the cumulative earnings approach to classify distributions received from equity method investees, which we will adopt retrospectively. We anticipate that this ASU will have no net effect on our consolidated statements of cash flows, but will likely have an immaterial impact on the classification of specific cash receipts and payments within the statement.

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (Topic 326). ASU 2016-13 requires organizations to estimate credit losses on certain types of financial instruments, including receivables and available-for-sale debt securities, by introducing an approach based on expected losses. The expected loss approach will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The guidance requires a modified retrospective transition method and early adoption is permitted. We are currently evaluating the impact that the adoption of the ASU will have on our financial results and disclosures, but do not anticipate that any such potential impact would be material.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” (Topic 718). ASU 2016-09 simplifies the accounting for share-based payment award transactions including income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows, and accounting for forfeitures. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. We have adopted this ASU as of January 1, 2017, and for presentation purposes, the incremental tax windfall or shortfall associated with these events has been classified as a cash inflow from operating activity as compared with a financing activity, as previously required. The impact to our financial statements was not material. Additionally, we have selected to continue estimating forfeitures based on historical patterns and will true-up the expenses upon vesting.

In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842). ASU 2016-02 requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Additionally, the ASU modifies current guidance for lessors' accounting. The ASU is effective for interim and annual reporting periods beginning on or after January 1, 2019, with early adoption permitted. We do not anticipate that this ASU will have a material impact on our results of operations ~~but we anticipate an increase to the value of our assets and liabilities related to leases, with no material impact to equity.~~

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (Subtopic 825-10). ASU 2016-01 will require equity investments that are not consolidated or accounted for under the equity method of accounting to be measured at fair value with changes in fair value recognized in net income. This ASU will also require us to assess the ability to realize our deferred tax assets related to an available-for-sale debt security in combination with our other deferred tax assets. The ASU will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. While we continue to evaluate the impact of this ASU, we anticipate the standard will increase the volatility of our consolidated statements of income, resulting from the remeasurement of our equity investments.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606), which replaces most existing GAAP revenue recognition guidance and permits the use of either the retrospective or cumulative effect transition method. In August 2015, “Deferral of the Effective Date” (Topic 606), deferred the effective date of this guidance to interim and annual reporting periods beginning after December 15, 2017. Subsequently, in 2016, the FASB issued implementation guidance related to ASU 2014-09, including:

ASU 2016-08, “Principal versus Agent considerations (Reporting Revenue Gross versus Net)” (Topic 606), which is intended to provide further clarification on the application of the principal versus agent implementations;

financial position reported herein.

~~ASU 2016-10, “Identifying Performance Obligations and Licensing” (Topic 606), which is intended to clarify the guidance for identifying promised goods or service in a contract with a customer;~~

~~ASU 2016-11, “Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting” (Topics 605 & 815);~~

3. Investments

ASU 2016-12, “Narrow-Scope Improvements and Practical Expedients” (Topic 606), provides additional guidance for quantitative and qualitative disclosures in certain cases, and makes 12 additional technical corrections and improvements to the new revenue standard.

While insurance contracts are excluded from this ASU, fee income related to our brokerage operations and management of the third-party capital for our underwriting Syndicate 1200 at Lloyd’s will be subject to this updated guidance. We continue to evaluate what impact this ASU will have on our financial results and disclosures and which adoption method to apply, but do not anticipate such impact being material based on the limited revenue streams subject to the ASU.

3.	~~Acquisition of Maybrooke~~

Effective February 6, 2017, we completed the acquisition of Maybrooke whereby we acquired all of the issued and outstanding capital stock of Maybrooke. The initial purchase price of $235.3 million was paid in cash from funds on hand and available under our credit facility (see Note 7, “Other Indebtedness”). The initial purchase price was subject to post-closing adjustments based on a final calculation of the purchase price, which we delivered to the seller, as required, within 90 days of closing. As of the date of this filing, we are in discussions with the seller to finalize and agree upon certain changes included in the final purchase price calculation. We anticipate resolving this matter by the end of 2017 and do not expect any material adjustments to the purchase price disclosed below.

Through the acquisition of Maybrooke, we acquired Ariel Re, a global underwriter of specialty insurance and reinsurance business written primarily through its Lloyd’s Syndicate 1910. Ariel Re provides Argo Group with a number of strategic advantages, including enhanced scale in its London- and Bermuda-based platforms.

The acquisition is being accounted for in accordance with ASC 805, “Business Combinations.” Purchase accounting, as defined by ASC 805, requires that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. We are in the process of finalizing our determination of fair values, including an independent appraisal of certain assets and liabilities, including intangible assets. Therefore, a preliminary allocation of the purchase price to the acquired assets, liabilities, and intangible assets is presented in the table below:

(in millions)

Assets:

Investments

$
340.7

Cash

130.1

Accrued investment income

0.2

Premiums receivable

157.6

Reinsurance recoverables

80.2

Current income taxes receivable

0.6

Deferred acquisition costs, net

9.8

Ceded unearned premiums

92.6

Other assets

24.9

Total assets

836.7

Liabilities:

Reserves for losses and loss adjustment expenses

197.0

Unearned premiums

152.5

Accrued underwriting expenses

28.8

Ceded reinsurance payable, net

144.2

Junior subordinated debentures

83.6

Deferred tax liabilities

9.0

Other liabilities

30.7

Total liabilities

645.8

Net assets acquired

190.9

Initial purchase price

235.3

Intangible assets

$
44.4

During the second quarter of 2017, we engaged an independent valuation firm and anticipate completing our valuation analysis and closing the fair value measurement period by the end of 2017. The excess of the purchase price over the fair value of the net assets acquired has been preliminarily allocated to intangible assets, which will be specifically identified and quantified by the end of 2017. We did not record amortization expense related to the $44.4 million intangible assets during the nine months ended September 30, 2017, as the valuation analysis has not yet been completed. We anticipate recording both amortizable and non-amortizable identifiable intangible assets and goodwill upon the completion of the valuation analyses, including intangible assets relating to the Lloyd’s Syndicate 1910 stamp capacity (non-amortizable), distribution networks (amortizable), and the Ariel Re tradename (amortizable). Goodwill is calculated as the excess of the purchase price over the fair value of the net assets recognized, including identifiable intangible assets.

We recognized approximately $2.5 million of acquisition-related transaction costs in our Consolidated Statements of Income, all of which were recorded during the first quarter of 2017. Of these amounts, $2.2 million were reported in “Underwriting, acquisition and insurance expenses” and $0.3 million in “Interest expense” related to the borrowings under our credit facility to help fund the acquisition. No additional transaction costs were incurred during the three months ended September 30, 2017.

~~Maybrooke’s Contribution to Argo Group’s Revenue and (Loss) Income~~

~~The following selected financial information summarizes the results of Maybrooke from the date of acquisition that have been included in our Consolidated Statement of (Loss) Income:~~

(in millions)

For the Three
Months Ended
September 30, 2017

For the Nine
Months Ended
September 30, 2017

Revenues

$
27.5

$
93.7

Net loss

$
(26.7
)

$
(13.7
)

~~Unaudited Pro forma Results of Operations~~

The following unaudited pro forma financial information has been provided to present a summary of the combined results of Argo Group’s operations with Maybrooke’s as if the acquisition had occurred on January 1, 2016. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of what the results would have been had the acquisition been completed at the date indicated above, as it may not include all necessary adjustments. Future changes to Maybrooke’s business, such as, but not limited to, the impact from underwriting decisions, changes in risk selection, or retention rates, could result in a material favorable or unfavorable impact on Argo Group’s future results of operations and financial position. The unaudited pro forma results for nine months ended September 30, 2017 include favorable development from prior accident years of $10.5 million, including $6.2 million relating to one specific claim in January 2017. In addition, the $2.5 million of nonrecurring transaction costs directly attributable to the acquisition for nine months ended September 30, 2017, as disclosed above, have also been removed from the unaudited pro forma results in the table below.

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in millions, except per share data)

2017

2016

2017

2016

Pro forma revenues

$
439.2

$
466.0

$
1,332.4

$
1,340.5

Pro forma net (loss) income

(63.4
)

56.2

29.8

132.9

Pro forma net (loss) income per share - basic

(2.11
)

1.87

0.99

4.40

Pro forma net (loss) income per share - diluted

(2.11
)

1.83

0.96

4.30

4.	~~Investments~~

~~Composition of Invested Assets~~

~~The amortized cost, gross unrealized gains, gross unrealized losses and fair value of investments were as follows:~~

September 30, 2017

(in millions)

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

Fixed maturities

U.S. Governments

$
342.7

$
0.5

$
3.2

$
340.0

Foreign Governments

231.9

7.9

3.5

236.3

Obligations of states and political subdivisions

324.1

11.9

0.8

335.2

Corporate bonds

1,612.7

29.0

9.9

1,631.8

Commercial mortgage-backed securities

147.4

0.4

1.1

146.7

Residential mortgage-backed securities

271.7

3.4

1.6

273.5

Asset-backed securities

156.4

0.7

0.6

156.5

Collateralized loan obligations

252.8

6.6

1.0

258.4

Total fixed maturities

3,339.7

60.4

21.7

3,378.4

Equity securities

347.6

138.2

5.3

480.5

Other investments

553.1

9.5

—

562.6

Short-term investments

386.0

—

—

386.0

Total investments

$
4,626.4

$
208.1

$
27.0

$
4,807.5

December 31, 2016

(in millions)

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

Fixed maturities

U.S. Governments

$
275.1

$
0.6

$
4.5

$
271.2

Foreign Governments

244.2

1.1

8.0

237.3

Obligations of states and political subdivisions

375.7

8.9

1.8

382.8

Corporate bonds

1,316.9

23.3

19.5

1,320.7

Commercial mortgage-backed securities

154.9

0.4

1.6

153.7

Residential mortgage-backed securities

174.8

3.7

1.7

176.8

Asset-backed securities

127.6

0.1

2.1

125.6

Collateralized loan obligations

269.6

3.8

9.1

264.3

Total fixed maturities

2,938.8

41.9

48.3

2,932.4

Equity securities

335.2

117.9

5.7

447.4

Other investments

531.6

7.5

0.1

539.0

Short-term investments

405.5

—

—

405.5

Total investments

$
4,211.1

$
167.3

$
54.1

$
4,324.3

Included in ~~“Total investments”~~Total investments in our Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 is ~~$154.8~~$71.2 million and ~~$131.9~~$89.6 million, respectively, of assets managed on behalf of the trade capital providers, who are third-party participants that provide underwriting capital to the operations of ~~Syndicate 1200.~~

Syndicates 1200 and 1910.

Table of Contents

Fixed Maturities

The amortized cost, gross unrealized gains, gross unrealized losses, allowance for credit losses, and fair value of fixed maturity investments were as follows:


March 31, 2022
(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Fixed maturities
U.S. Governments	$	496.0	$	0.4	$	17.0	$	—	$	479.4
Foreign Governments	211.7		3.7		7.6		0.3		207.5
Obligations of states and political subdivisions	169.6		2.3		4.9		0.4		166.6
Corporate bonds	2,009.0		9.7		86.2		2.1		1,930.4
Commercial mortgage-backed securities	422.7		0.6		23.1		—		400.2
Residential mortgage-backed securities	455.4		1.9		26.5		—		430.8
Asset-backed securities	205.6		0.3		5.3		0.1		200.5
Collateralized loan obligations	332.7		0.6		4.8		—		328.5
Total fixed maturities	$	4,302.7	$	19.5	$	175.4	$	2.9	$	4,143.9


December 31, 2021
(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Fixed maturities
U.S. Governments	$	422.7	$	5.5	$	3.2	$	—	$	425.0
Foreign Governments	234.7		2.2		3.9		0.2		232.8
Obligations of states and political subdivisions	166.7		5.8		1.2		—		171.3
Corporate bonds	1,972.3		33.5		20.3		2.2		1,983.3
Commercial mortgage-backed securities	416.7		6.3		4.3		—		418.7
Residential mortgage-backed securities	480.7		7.5		5.7		—		482.5
Asset-backed securities	173.0		1.3		0.6		0.1		173.6
Collateralized loan obligations	336.4		1.3		1.6		—		336.1
Total fixed maturities	$	4,203.2	$	63.4	$	40.8	$	2.5	$	4,223.3

Contractual Maturity

The amortized cost and fair values of fixed maturity investments as of ~~September 30, 2017,~~March 31, 2022, by contractual maturity, were as follows:


(in millions)	Amortized Cost		Fair Value		(in millions)	Amortized Cost		Fair Value
Due in one year or less		231.9		230.3	Due in one year or less	$	229.3	$	232.1
Due after one year through five years		1,515.6		1,533.6	Due after one year through five years	1,849.4		1,795.6
Due after five years through ten years		594.1		604.6	Due after five years through ten years	719.4		673.7
Thereafter		169.8		174.8
Due after ten years					Due after ten years	88.2		82.5
Structured securities		828.3		835.1	Structured securities	1,416.4		1,360.0
Total	$	3,339.7	$	3,378.4	Total	$	4,302.7	$	4,143.9

The ~~expected~~actual maturities may differ from the contractual maturities because debtors may have the right to call or prepay obligations.

Table of Contents

Other ~~Invested Assets~~

Investments

Details regarding the carrying value and unfunded investment commitments of ~~the~~ other ~~invested assets portfolio~~investments as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 were as follows:

September 30, 2017

March 31, 2022						March 31, 2022
(in millions)	Carrying Value			Unfunded Commitments		(in millions)	Carrying Value		Unfunded Commitments
Investment Type						Investment Type
Hedge funds	$	180.1		$	—	Hedge funds	$	58.1	$	—
Private equity		167.7			117.9	Private equity	259.6		68.8
Long only funds		215.7			—
Other investments		(0.9	)		—
Total other invested assets	$	562.6		$	117.9
Overseas deposits						Overseas deposits	83.6		—
Commercial Mortgage Loans						Commercial Mortgage Loans	46.5		—
Other						Other	4.7		—
Total other investments						Total other investments	$	452.5	$	68.8

December 31, 2016

(in millions)

Carrying
Value

Unfunded
Commitments

Investment Type

Hedge funds

$
180.9

$
—

Private equity

179.0

93.4

Long only funds

170.7

—

Other investments

8.4

—

Total other invested assets

$
539.0

$
93.4


December 31, 2021
(in millions)	Carrying Value		Unfunded Commitments
Investment Type
Hedge funds	$	58.6	$	—
Private equity	248.9		64.2
Overseas deposits	74.9		—
Other	4.8		—
Total other investments	$	387.2	$	64.2

The following describes each investment type:

•Hedge funds:Hedge funds include funds that primarily buy and sell stocks, including short sales, multi-strategy credit, relative value credit and distressed credit.

•Private equity:Private equity includes buyout funds, real asset/infrastructure funds, credit special situations funds, mezzanine lending funds and direct investments and strategic non-controlling minority investments in private companies that are principally accounted for using the equity method of accounting.

~~Long only funds:~~ ~~Our long only funds include a fund that primarily owns international stocks and funds that primarily own investment-grade corporate and~~•Overseas deposits: Overseas deposits are principally invested in short-term sovereign fixed income ~~securities.~~

and investment grade corporate securities and international stocks.

•Commercial mortgage loans: Commercial mortgage loan investments are composed of participation interests in a portfolio of commercial mortgage loans. Loan collateral is diversified with regard to property type and geography.

•Other:Other ~~investments:~~ ~~Other investments include~~includes participation in investment ~~pools, foreign exchange currency forward contracts to manage our foreign currency exposure and a portfolio~~pools.

Table of ~~foreign exchange currency forward contracts that are actively traded by an external currency manager for a total return strategy.~~

Contents

Unrealized Losses ~~and Other-Than-Temporary Impairments~~

An aging of unrealized losses on our investments in fixed maturities ~~equity securities, other investments and short-term investments~~ is presented below:

September 30, 2017

Less Than One Year

One Year or Greater

Total

(in millions)

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fixed maturities

U.S. Governments

$
279.2

$
2.7

$
17.6

$
0.5

$
296.8

$
3.2

Foreign Governments

194.8

3.4

6.2

0.1

201.0

3.5

Obligations of states and political subdivisions

25.7

0.3

15.0

0.5

40.7

0.8

Corporate bonds

426.9

8.2

72.5

1.7

499.4

9.9

Commercial mortgage-backed securities

73.6

0.4

26.8

0.7

100.4

1.1

Residential mortgage-backed securities

137.9

1.3

17.9

0.3

155.8

1.6

Asset-backed securities

69.4

0.3

9.3

0.3

78.7

0.6

Collateralized loan obligations ⁽²⁾

61.0

1.0

2.3

—

63.3

1.0

Total fixed maturities

1,268.5

17.6

167.6

4.1

1,436.1

21.7

Equity securities

55.2

5.3

—

—

55.2

5.3

Other investments⁽¹⁾

0.3

—

—

—

0.3

—

Short-term investments⁽¹⁾

46.4

—

—

—

46.4

—

Total

$
1,370.4

$
22.9

$
167.6

$
4.1

$
1,538.0

$
27.0

December 31, 2016

Less Than One Year

One Year or Greater

Total

(in millions)

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fixed maturities

U.S. Governments

$
183.4

$
4.5

$
—

$
—

$
183.4

$
4.5

Foreign Governments

201.2

8.0

—

—

201.2

8.0

Obligations of states and political subdivisions

72.6

1.7

1.8

0.1

74.4

1.8

Corporate bonds

490.5

17.7

50.6

1.8

541.1

19.5

Commercial mortgage-backed securities

70.6

1.5

7.1

0.1

77.7

1.6

Residential mortgage-backed securities ⁽²⁾

87.5

1.7

4.4

—

91.9

1.7

Asset-backed securities

69.7

1.4

8.2

0.7

77.9

2.1

Collateralized loan obligations

122.5

8.6

16.9

0.5

139.4

9.1

Total fixed maturities

1,298.0

45.1

89.0

3.2

1,387.0

48.3

Equity securities

62.1

5.7

—

—

62.1

5.7

Other investments

0.3

0.1

—

—

0.3

0.1

Short-term investments ⁽¹⁾

4.8

—

—

—

4.8

—

Total

$
1,365.2

$
50.9

$
89.0

$
3.2

$
1,454.2

$
54.1

⁽¹⁾	~~Unrealized losses less than one year are less than $0.1 million.~~


March 31, 2022	Less Than One Year				One Year or Greater				Total
(in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturities
U.S. Governments	$	416.1	$	12.8	$	49.6	$	4.2	$	465.7	$	17.0
Foreign Governments	150.2		6.7		25.4		0.9		175.6		7.6
Obligations of states and political subdivisions	78.7		4.7		3.0		0.2		81.7		4.9
Corporate bonds	1,275.0		62.9		219.6		23.3		1,494.6		86.2
Commercial mortgage-backed securities	296.8		17.8		41.7		5.3		338.5		23.1
Residential mortgage-backed securities	234.6		13.8		120.7		12.7		355.3		26.5
Asset-backed securities	135.9		4.7		7.0		0.6		142.9		5.3
Collateralized loan obligations	274.8		4.8		1.0		—		275.8		4.8
Total fixed maturities	$	2,862.1	$	128.2	$	468.0	$	47.2	$	3,330.1	$	175.4

⁽²⁾	~~Unrealized losses one year or greater are less than $0.1 million.~~


December 31, 2021	Less Than One Year				One Year or Greater				Total
(in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturities
U.S. Governments	$	193.4	$	2.6	$	14.6	$	0.6	$	208.0	$	3.2
Foreign Governments	152.4		3.3		2.6		0.6		155.0		3.9
Obligations of states and political subdivisions	46.0		0.8		0.1		0.4		46.1		1.2
Corporate bonds	854.3		18.3		41.7		2.0		896.0		20.3
Commercial mortgage-backed securities	198.8		4.1		6.5		0.2		205.3		4.3
Residential mortgage-backed securities	284.2		5.6		4.0		0.1		288.2		5.7
Asset-backed securities	62.6		0.6		—		—		62.6		0.6
Collateralized loan obligations	176.1		1.6		0.5		—		176.6		1.6
Total fixed maturities	$	1,967.8	$	36.9	$	70.0	$	3.9	$	2,037.8	$	40.8

We regularly evaluate our investments for other-than-temporary impairment. For fixed maturity securities, the evaluation for a credit loss is generally based on the present value of expected cash flows of the security as compared to the amortized book value. For structured securities, frequency and severity of loss inputs are used in projecting future cash flows of the securities. Loss frequency is measured as the credit default rate, which includes such factors as loan-to-value ratios and credit scores of borrowers. For equity securities and other investments, the length of time and the amount of decline in fair value are the principal factors in determining other-than-temporary impairment. We also recognize other-than-temporary losses on fixed maturity securities that we intend to sell.

We hold a total of ~~8,410~~5,203 fixed maturity securities, of which ~~1,949~~1,080 were in an unrealized loss position for less than one year and ~~182~~208 were in an unrealized loss position for a period one year or greater as of ~~September 30, 2017. Unrealized losses greater than twelve months on~~March 31, 2022.

Allowance for Credit Losses

For fixed maturities ~~were~~with a decline in the ~~result~~fair value between the amortized cost due to credit-related factors, an allowance is established for the difference between the estimated recoverable value and amortized cost with a corresponding charge to Net realized investment and other gains (losses) in the Condensed Consolidated Statements of ~~a number of factors, including increased credit spreads, foreign currency fluctuations and higher market yields relative~~Income (Loss). The allowance is limited to the ~~date~~difference between amortized cost and fair value. The estimated recoverable value is the ~~securities were purchased,~~present value of cash flows expected to be collected, as determined by management. The difference between fair value and amortized cost that is not associated with credit-related factors is recognized in the Condensed Consolidated Statements of Comprehensive Income (Loss). Accrued interest is excluded from the measurement of the allowance for ~~structured securities, by~~credit losses.

When determining if a credit loss has been incurred, we may consider the historical performance of the security, available market information and security specific considerations such as the priority payment of the security. In addition, inputs used in our analysis include, but are not limited to, credit ratings and downgrades, delinquency rates, missed scheduled interest or principal payments, purchase yields, underlying asset performance, collateral ~~as well. In considering~~types, modeled default rates, modeled severity rates, call/prepayment rates, expected cash flows, industry concentrations, and potential or filed bankruptcies or restructurings.

Table of Contents

We evaluate for credit losses each quarter. If we determine that all or a portion of a fixed maturity is uncollectible, the uncollectible amortized cost is written off with a corresponding reduction to the allowance for credit losses. If we collect cash flows that were previously written off, the recovery is recognized in realized investment gains. We also consider whether ~~an investment is other-than-temporarily impaired or not,~~ we ~~also considered that we do not~~ intend to sell ~~the investments and~~an available-for-sale security or if it is ~~unlikely~~more likely than not that we will be required to sell the ~~investments~~security before recovery of ~~their~~its amortized cost. In these instances, a decline in fair value is recognized in Net realized investment and other gains (losses) in the Condensed Consolidated Statements of Income (Loss) based on the fair value of the security at the time of assessment, resulting in a new cost ~~bases, which may be maturity. In situations where we did not recognize other-than-temporary~~basis for the security.

The following table presents a roll-forward of the changes in allowance for credit losses on investments in our equity portfolio, we have evaluated the near-term prospects of the investment in relation to the severity and duration of the impairment and based on that evaluation, have the ability and intent to hold these investments until a recovery of the cost basis. We do not consider these investments to be other-than-temporarily impaired at September 30, 2017.

~~We recognized other-than-temporary losses on our~~available-for-sale fixed maturities by industry category for the three months ending March 31, 2022 and ~~equity portfolio as follows:~~

2021, respectively:

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in millions)

2017

2016

2017

2016

Other-than-temporary impairment:

Corporate bonds

$
(0.1
)

$
(0.6
)

$
(0.1
)

$
(1.7
)
Equity securities

(0.1
)

(1.8
)

(1.6
)

(7.3
)
Other-than-temporary impairment losses

$
(0.2
)

$
(2.4
)

$
(1.7
)

$
(9.0
)


(in millions)	Foreign Governments		Obligations of states and political subdivisions		Corporate bonds		Asset backed securities		Total
Beginning balance, January 1, 2022	$	0.2	$	—	$	2.2	$	0.1	$	2.5

Securities for which allowance was not previously recorded	0.1		—		0.4		—		0.5
Securities sold during the period	—		—		(0.6)		—		(0.6)
Additional net increases (decreases) in existing allowance	—		0.4		0.1		—		0.5
Ending balance, March 31, 2022	$	0.3	$	0.4	$	2.1	$	0.1	$	2.9


(in millions)	Foreign Governments		Obligations of states and political subdivisions		Corporate bonds		Asset backed securities		Total
Beginning balance, January 1, 2021	$	0.2	$	0.1	$	6.1	$	0.2	$	6.6

Securities for which allowance was not previously recorded	—		—		2.1		—		2.1
Securities sold during the period	—		—		(0.4)		—		(0.4)
Additional net increases (decreases) in existing allowance	(0.1)		(0.1)		(0.7)		(0.2)		(1.1)
Ending balance, March 31, 2021	$	0.1	$	—	$	7.1	$	—	$	7.2

Total credit impairment (gains) losses included in Net realized investment and other gains (losses) in the Condensed Consolidated Statements of Income (Loss) was $1.0 million and $1.1 million for the three months ended March 31, 2022 and 2021, respectively.

Table of Contents~~Realized~~

Investment Gains and Losses

The following table presents our gross realized investment gains and ~~other gains (losses):~~

losses:


	For the Three Months Ended March 31,
(in millions)		2022		2021
Realized gains on fixed maturities and other
Fixed maturities		$	11.2	$	5.5
Other investments, including short-terms		1.5		6.0

		12.7		11.5
Realized losses on fixed maturities and other
Fixed maturities		(16.6)		(1.5)
Other investments, including short-terms		(6.8)		(9.5)

		(23.4)		(11.0)


Net (losses) recognized on fixed maturities and other
Credit losses on fixed maturities		(1.0)		(1.1)

Other(1)		(28.5)		—
		(29.5)		(1.1)
Equity securities
Net realized gains (losses) on equity securities		(1.0)		(1.8)
Change in unrealized gains (losses) on equity securities held at the end of the period		6.7		15.5
Net realized gains (losses) on equity securities		5.7		13.7
Net realized investment and other gains (losses) before income taxes		(34.5)		13.1
Income tax (benefit) provision		(0.7)		2.6
Net realized investment and other gains (losses), net of income taxes		$	(33.8)	$	10.5

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in millions)

2017

2016

2017

2016

Realized gains

Fixed maturities

$
6.3

$
5.4

$
18.9

$
16.4

Equity securities

9.4

20.8

37.1

45.4

Other investments

7.0

4.2

17.8

31.2

Short-term investments

0.2

—

0.7

0.4

Other assets

—

1.2

—

1.2

Gross realized investment and other gains

22.9

31.6

74.5

94.6

Realized losses

Fixed maturities

(4.8
)

(6.1
)

(16.0
)

(21.0
)
Equity securities

(1.4
)

(1.9
)

(3.9
)

(9.0
)
Other investments

(10.5
)

(3.5
)

(27.7
)

(42.7
)
Short-term investments

—

—

(0.1
)

(0.1
)
Other-than-temporary impairment losses on
   fixed maturities

(0.1
)

(0.6
)

(0.1
)

(1.7
)
Other-than-temporary impairment losses on
   equity securities

(0.1
)

(1.8
)

(1.6
)

(7.3
)
Gross realized investment and other losses

(16.9
)

(13.9
)

(49.4
)

(81.8
)
Net realized investment and other gains (losses)
   before income taxes

6.0

17.7

25.1

12.8

Income tax expense

(2.2
)

(6.5
)

(7.9
)

(7.7
)
Net realized investment and other gains (losses),
   net of income taxes

$
3.8

$
11.2

$
17.2

$
5.1

(1)Refer to the sale of Argo Seguros in Note 1, “Basis of Presentation” for additional information.

The cost of securities sold is based on the specific identification method.

Changes in unrealized ~~appreciation (depreciation)~~gains (losses) related to investments are summarized as follows:

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in millions)

2017

2016

2017

2016

Change in unrealized gains (losses)

Fixed maturities

$
9.5

$
13.7

$
41.6

$
78.5

Equity securities

11.7

(10.8
)

20.2

(6.8
)
Other investments

(0.1
)

—

2.0

0.6

Short-term investments

—

(0.1
)

—

0.3

Net unrealized investment and other gains before
income taxes

21.1

2.8

63.8

72.6

Income tax provision

(4.6
)

0.3

(14.3
)

(15.7
)
Net unrealized investment and other gains, net of
income taxes

$
16.5

$
3.1

$
49.5

$
56.9


	For the Three Months Ended March 31,
(in millions)		2022		2021
Change in unrealized gains (losses)
Fixed maturities		$	(177.9)	$	(65.7)


Other and short-term investments		0.1		(0.4)
Net unrealized investment gains (losses) before income taxes		(177.8)		(66.1)
Income tax provision (benefit)		(33.9)		(12.6)
Net unrealized investment gains (losses), net of income taxes		$	(143.9)	$	(53.5)

Foreign Currency Exchange Forward Contracts

We ~~entered~~enter into foreign currency exchange forward contracts to manage operational currency exposure onfrom our ~~Canadian dollar (“CAD”) investment portfolio, minimize negative impacts to our investment portfolio returns, manage currency exposure on certain Euro (“EUR”) denominated investments~~non-USD insurance operations, and gain exposure to a total return strategy which invests in multiple currencies. ~~These~~The currency forward contracts are carried at fair value in our Condensed Consolidated Balance Sheets in ~~“Other investments”.~~Other liabilities and Other assets at March 31, 2022 and December 31, 2021, respectively. The net realized ~~and unrealized~~ gains and ~~losses~~(losses) are included in ~~“Net~~Net realized investment and other gains (losses) ~~gains”~~ in our Condensed Consolidated Statements of Income (Loss) ~~Income.~~

Table of Contents

The fair value of our foreign currency exchange forward contracts as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 was as follows:


(in millions)	September 30, 2017			December 31, 2016		(in millions)	March 31, 2022		December 31, 2021
Operational currency exposure	$	(1.6	)	$	—	Operational currency exposure	$	(8.5)	$	(0.3)
Asset manager investment exposure		(3.0	)		0.7	Asset manager investment exposure	0.8		(0.3)
Total return strategy		(0.8	)		3.3
	$	(5.4	)	$	4.0
Total						Total	$	(7.7)	$	(0.6)

The following table represents our gross realized investment ~~realized~~ gains and losses on our foreign currency exchange forward contracts:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,							For the Three Months Ended March 31,
(in millions)	2017			2016			2017			2016			(in millions)		2022		2021
Realized gains													Realized gains
Operational currency exposure	$	1.8		$	1.3		$	7.5		$	8.7		Operational currency exposure		$	2.5	$	3.9
Asset manager investment exposure		0.6			—			1.1			2.3		Asset manager investment exposure		1.1		1.0
Total return strategy		4.1			2.2			7.7			18.4		Total return strategy		—		8.5
Gross realized investment gains		6.5			3.5			16.3			29.4		Gross realized investment gains		3.6		13.4
Realized losses													Realized losses
Operational currency exposure		(4.2	)		(0.8	)		(10.1	)		(16.3	)	Operational currency exposure		(8.8)		(9.2)
Asset manager investment exposure		(3.6	)		(0.8	)		(10.4	)		(4.5	)

Total return strategy		(3.5	)		(1.6	)		(6.2	)		(20.1	)	Total return strategy		—		(7.5)
Gross realized investment losses		(11.3	)		(3.2	)		(26.7	)		(40.9	)	Gross realized investment losses		(8.8)		(16.7)
Net realized investment (losses) gains on foreign currency exchange forward contracts	$	(4.8	)	$	0.3		$	(10.4	)	$	(11.5	)	Net realized investment (losses) gains on foreign currency exchange forward contracts		$	(5.2)	$	(3.3)

Regulatory Deposits, Pledged Securities and Letters of Credit

(in millions)

September 30, 2017

December 31, 2016

Securities on deposit for regulatory and other purposes

$
177.8

$
168.7

Securities pledged as collateral for letters of credit

42.6

35.9

Securities and cash on deposit supporting Lloyd’s business

405.6

161.8

Total restricted investments

$
626.0

$
366.4

We are required to maintain assets on deposit with various regulatory authorities to support our insurance and reinsurance operations. We maintain assets pledged as collateral in support of irrevocable letters of credit issued under the terms of certain reinsurance agreements for reported loss and loss expense reserves. The following table presents our components of restricted assets:


(in millions)	March 31, 2022		December 31, 2021
Securities on deposit for regulatory and other purposes	$	177.0	$	195.6
Securities pledged as collateral for letters of credit and other	185.4		193.9
Securities and cash on deposit supporting Lloyd’s business (1)	290.9		296.8
Total restricted investments	$	653.3	$	686.3

(1) Argo Group is required to maintain Funds at Lloyd’s (“FAL”) to support it business for Syndicate 1200 and Syndicate 1910. At March 31, 2022 the amount pledged for FAL was $290.9 million, of which $137.6 million was provided by Argo Re Ltd.

Fair Value Measurements

Fair value is the price that would be received ~~to sell~~upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability, or in the absence of a principal market, the most advantageous market. Market participants are buyers and sellers in the principal (or most advantageous) market that are independent, knowledgeable, able to transact for the asset or liability and willing to transfer the asset or liability.

Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value. The inputs of these valuation techniques are categorized into three levels.

•Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the reporting date. We define actively traded as a security that has traded in the past seven days. We receive one quote per instrument for Level 1 inputs.

•Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. We receive one quote per instrument for Level 2 inputs.

Table of Contents

•Level 3 inputs are unobservable inputs. Unobservable inputs reflect our own judgments about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances.

We receive fair value prices from third-party pricing services and our outside investment managers. These prices are determined using observable market information such as dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things. We have reviewed the processes used by the third-party providers for pricing the securities and have determined that these processes result in fair values consistent with GAAP requirements. In addition, we review these prices for reasonableness, and have not adjusted any prices received from the third-party providers as of ~~September 30, 2017.~~March 31, 2022 and December 31, 2021. A description of the valuation techniques we use to measure assets at fair value is as follows:

Fixed Maturities (Available-for-Sale) Levels 1 and 2:

•United States Treasury securities are typically valued using Level 1 inputs. For these securities, we obtain fair value measurements from third-party pricing services using quoted prices (unadjusted) in active markets at the reporting date.

•United States Government agencies, non-U.S. Government securities, obligations of states and political subdivisions, credit securities and foreign denominated government and credit securities are reported at fair value using Level 2 inputs. For these securities, we obtain fair value measurements from third-party pricing services. Observable data may include dealer quotes, market spreads, yield curves, live trading levels, trade execution data, credit information and the security’s terms and conditions, among other things.

•Asset and mortgage-backed securities and collateralized loan obligations are reported at fair value using Level 2 or Level 3 inputs. For these securities, we obtain fair value measurements from third-party pricing services. Observable data may include dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things.

Fixed Maturities (Available-for-Sale) Levels 3:

We own a term ~~loan~~loans that isare valued using unobservable inputs.

Equity Securities Level 1:Equity securities are principally reported at fair value using Level 1 inputs. For these securities, we obtain fair value measurements from a third-party pricing service using quoted prices (unadjusted) in active markets at the reporting date.

~~Equity Securities Level 2:~~ We own interests in a mutual fund that is reported at fair value using Level 2 inputs. The valuation is based on the fund’s net asset value per share, at the end of each month. The underlying assets in the fund are valued primarily on the basis of closing market quotations or official closing prices on each valuation day.

Equity Securities Level 3: We own certain equity securities that are reported at fair value using Level 3 inputs. The valuation techniques for these securities include the following:

~~Fair value measurements are obtained from the National Association of Insurance Commissioners’ Security Valuation Office at the reporting date.~~

•Fair value measurements for an investment in an equity fund obtained by applying final prices provided by the administrator of the fund, which is based upon certain estimates and assumptions.

•Fair value measurements from brokers and independent valuation services, both based upon estimates, assumptions and other unobservable inputs.

Other Investments Level 2: Foreign regulatory deposits are assets held in trust in jurisdictions where there is a legal and regulatory requirement to maintain funds locally in order to protect policyholders. Lloyd’s is the appointed investment manager for the funds. These assets are invested in short-term government securities, agency securities and corporate bonds and are valued using Level 2 inputs based upon values obtained from Lloyd’s. ~~Foreign currency future contracts are valued by our counterparty using market driven foreign currency exchange rates and are considered Level 2 investments.~~

Short-term Investments: Short-term investments are principally reported at fair value using Level 1 inputs, with the exception of short-term corporate and governmental bonds reported at fair value using Level 2 inputs as described in the fixed maturities section above. Values for the investments categorized as Level 1 are obtained from various financial institutions as of the reporting date.

~~Transfers Between Level 1 and Level 2 Securities:~~ ~~There were no transfers between Level 1 and Level 2 securities during the three and nine months ended September 30, 2017.~~

Table of Contents

Based on an analysis of the inputs, our financial assets measured at fair value on a recurring basis have been categorized as follows:

Fair Value Measurements at Reporting Date Using

(in millions)

September 30, 2017

Level 1 ^(a)

Level 2 ^(b)

Level 3 ^(c)

Fixed maturities

U.S. Governments

$
340.0

$
335.3

$
4.7

$
—

Foreign Governments

236.3

—

236.3

—

Obligations of states and political subdivisions

335.2

—

335.2

—

Corporate bonds

1,631.8

—

1,629.9

1.9

Commercial mortgage-backed securities

146.7

—

146.7

—

Residential mortgage-backed securities

273.5

—

273.5

—

Asset-backed securities

156.5

—

156.5

—

Collateralized loan obligations

258.4

—

258.4

—

Total fixed maturities

3,378.4

335.3

3,041.2

1.9

Equity securities

480.5

476.6

3.5

0.4

Other investments

124.1

—

124.1

—

Short-term investments

386.0

347.6

38.4

—

$
4,369.0

$
1,159.5

$
3,207.2

$
2.3

^(a)	~~Quoted prices in active markets for identical assets~~

^(b)	~~Significant other observable inputs~~


			Fair Value Measurements at Reporting Date Using
(in millions)	March 31, 2022		Level 1 (a)		Level 2 (b)		Level 3 (c)
Fixed maturities
U.S. Governments	$	479.5	$	472.2	$	7.3	$	—
Foreign Governments	207.5		—		207.5		—
Obligations of states and political subdivisions	166.6		—		166.6		—
Corporate bonds	1,930.3		—		1,915.3		15.0
Commercial mortgage-backed securities	400.2		—		400.2		—
Residential mortgage-backed securities	430.8		—		430.8		—
Asset-backed securities	200.5		—		179.3		21.2
Collateralized loan obligations	328.5		—		328.5		—
Total fixed maturities	4,143.9		472.2		3,635.5		36.2
Equity securities	54.0		36.4		—		17.6
Other investments	84.0		—		84.0		—
Short-term investments	421.1		419.9		1.2		—
	$	4,703.0	$	928.5	$	3,720.7	$	53.8

^(c)	~~Significant unobservable inputs~~

Fair Value Measurements at Reporting Date Using

(in millions)

December 31, 2016

Level 1 ^(a)

Level 2 ^(b)

Level 3 ^(c)

Fixed maturities

U.S. Governments

$
271.2

$
228.0

$
43.2

$
—

Foreign Governments

237.3

—

237.3

—

Obligations of states and political subdivisions

382.8

—

382.8

—

Corporate bonds

1,320.7

—

1,318.7

2.0

Commercial mortgage-backed securities

153.7

—

153.7

—

Residential mortgage-backed securities

176.8

—

176.8

—

Asset-backed securities

125.6

—

125.6

—

Collateralized loan obligations

264.3

—

264.3

—

Total fixed maturities

2,932.4

228.0

2,702.4

2.0

Equity securities

447.4

444.9

2.1

0.4

Other investments

95.5

—

95.5

—

Short-term investments

405.5

375.1

30.4

—

$
3,880.8

$
1,048.0

$
2,830.4

$
2.4

^(a)	~~Quoted prices in active markets for identical assets~~

(a)Quoted prices in active markets for identical assets

^(b)	~~Significant other observable inputs~~

(b)Significant other observable inputs

^(c)	~~Significant unobservable inputs~~

(c)Significant unobservable inputs


			Fair Value Measurements at Reporting Date Using
(in millions)	December 31, 2021		Level 1 (a)		Level 2 (b)		Level 3 (c)
Fixed maturities
U.S. Governments	$	425.0	$	417.4	$	7.6	$	—
Foreign Governments	232.8		—		232.8		—
Obligations of states and political subdivisions	171.3		—		171.3		—
Corporate bonds	1,983.3		—		1,980.5		2.8
Commercial mortgage-backed securities	418.7		—		418.7		—
Residential mortgage-backed securities	482.5		—		482.5		—
Asset-backed securities	173.6		—		173.6		—
Collateralized loan obligations	336.1		—		336.1		—
Total fixed maturities	4,223.3		417.4		3,803.1		2.8
Equity securities	56.3		41.6		—		14.7
Other investments	75.4		—		75.4		—
Short-term investments	655.8		653.9		1.9		—
	$	5,010.8	$	1,112.9	$	3,880.4	$	17.5

(a)Quoted prices in active markets for identical assets

(b)Significant other observable inputs

(c)Significant unobservable inputs

The fair value measurements in the tables above do not equal ~~“Total investments”~~Total investments on our Consolidated Balance Sheets as they exclude certain other investments that are accounted for under the equity-method of accounting.

Table of Contents

A reconciliation of the beginning and ending balances for the investments categorized as Level 3 are as follows:

Fair Value Measurements Using ~~Observable~~Unobservable Inputs (Level 3)


(in millions)	Corporate Bonds			Equity Securities		Total			(in millions)	Credit Financial		Equity Securities		Total
Beginning balance, January 1, 2017	$	2.0		$	0.4	$	2.4
Beginning balance, January 1, 2022									Beginning balance, January 1, 2022	$	2.8	$	14.7	$	17.5
Transfers into Level 3		—			—		—		Transfers into Level 3	34.7		0.1		34.8
Transfers out of Level 3		—			—		—		Transfers out of Level 3	—		—		—
Total gains or losses (realized/unrealized):									Total gains or losses (realized/unrealized):
Included in net income (loss)		—			—		—
Included in other comprehensive income (loss)		(0.1	)		—		(0.1	)
Included in net income									Included in net income	(0.4)		1.8		1.4
Included in other comprehensive income									Included in other comprehensive income	0.8		—		0.8
Purchases, issuances, sales, and settlements:									Purchases, issuances, sales, and settlements:
Purchases		—			—		—		Purchases	—		1.0		1.0
Issuances		—			—		—		Issuances	—		—		—
Sales		—			—		—		Sales	(1.7)		—		(1.7)
Settlements		—			—		—		Settlements	—		—		—
Ending balance, September 30, 2017	$	1.9		$	0.4	$	2.3
Amount of total gains or losses for the year included in net income (loss) attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2017	$	—		$	—	$	—
Ending balance, March 31, 2022									Ending balance, March 31, 2022	$	36.2	$	17.6	$	53.8
Amount of total gains or losses for the year included in net income attributable to the change in unrealized gains or losses relating to assets still held at December 31, 2021									Amount of total gains or losses for the year included in net income attributable to the change in unrealized gains or losses relating to assets still held at December 31, 2021	$	—	$	—	$	—


(in millions)	Corporate Bonds		Equity Securities			Total			(in millions)	Credit Financial		Equity Securities		Total
Beginning balance, January 1, 2016	$	—	$	0.7		$	0.7
Beginning balance, January 1, 2021									Beginning balance, January 1, 2021	$	7.0	$	17.5	$	24.5
Transfers into Level 3		—		—			—		Transfers into Level 3	—		1.0		1.0
Transfers out of Level 3		—		—			—		Transfers out of Level 3	—		—		—
Total gains or losses (realized/unrealized):									Total gains or losses (realized/unrealized):
Included in net income (loss)		—		—			—
Included in other comprehensive income (loss)		—		—			—
Included in net income									Included in net income	—		4.2		4.2
Included in other comprehensive loss									Included in other comprehensive loss	(0.8)		—		(0.8)
Purchases, issuances, sales, and settlements:									Purchases, issuances, sales, and settlements:
Purchases		2.0		—			2.0		Purchases	0.1		1.2		1.3
Issuances		—		—			—		Issuances	—		—		—
Sales		—		(0.3	)		(0.3	)	Sales	(3.5)		(10.6)		(14.1)
Settlements		—		—			—		Settlements	—		—		—
Ending balance, December 31, 2016	$	2.0	$	0.4		$	2.4
Amount of total gains or losses for the year included in net income (loss) attributable to the change in unrealized gains or losses relating to assets still held at December 31, 2016	$	—	$	—		$	—
Ending balance, December 31, 2021									Ending balance, December 31, 2021	$	2.8	$	13.3	$	16.1
Amount of total gains or losses for the year included in net income attributable to the change in unrealized gains or losses relating to assets still held at December 31, 2020									Amount of total gains or losses for the year included in net income attributable to the change in unrealized gains or losses relating to assets still held at December 31, 2020	$	—	$	—	$	—

At ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, we did not have any financial assets or financial liabilities measured at fair value on a nonrecurring basis or any financial liabilities on a recurring basis.

5.	~~Reserves for Losses and Loss Adjustment Expenses~~

Table of Contents

4. Allowance for Credit Losses

Premiums receivable

The following table represents the balances of premiums receivable, net of allowance for expected credit losses, at March 31, 2022 and January 1, 2022, and the changes in the allowance for expected credit losses for the three months ended March 31, 2022.


(in millions)	Premiums Receivable, Net of Allowance for Estimated Uncollectible Premiums		Allowance for Estimated Uncollectible Premiums
Balance, January 1, 2022	$	648.6	$	5.7

Current period change for estimated uncollectible premiums			(0.4)
Write-offs of uncollectible premiums receivable			—

Balance, March 31, 2022	$	649.3	$	5.3

Reinsurance Recoverables

The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at March 31, 2022 and January 1, 2022, and changes in the allowance for estimated uncollectible reinsurance for the three months ended March 31, 2022.


(in millions)	Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance		Allowance for Estimated Uncollectible Reinsurance
Balance, January 1, 2022	$	2,966.4	$	3.8

Current period change for estimated uncollectible reinsurance			—
Write-offs of uncollectible reinsurance recoverables			—
Balance, March 31, 2022	$	2,857.9	$	3.8

We primarily utilize A.M. Best credit ratings when determining the allowance, and adjust as needed based on our historical experience with the reinsurers. A portion of our reinsurance recoverables are collateralized by letters of credit, funds held or trust agreements.

Table of Contents

5. Reserves for Losses and Loss Adjustment Expenses

The following table provides a reconciliation of reserves for losses and loss adjustment expenses (“LAE”):


	For the Three Months Ended March 31,
(in millions)	2022		2021
Net reserves beginning of the year	$	3,123.2	$	2,906.1


Add:
Losses and LAE incurred during current calendar year, net of reinsurance:
Current accident year	280.2		306.6
Prior accident years	3.4		1.0
Losses and LAE incurred during calendar year, net of reinsurance	283.6		307.6
Deduct:
Losses and LAE payments made during current calendar year, net of reinsurance:
Current accident year	19.0		33.0
Prior accident years	266.1		230.3
Losses and LAE payments made during current calendar year, net of reinsurance:	285.1		263.3

Divestitures (1)	(31.0)		—
Net reserve ceded - reinsurance to close transaction for years of account 2017 and prior (2)	—		207.8
Change in participation interest (3)	48.0		19.8
Foreign exchange adjustments	(0.4)		(0.8)
Net reserves - end of period	3,138.3		2,761.6
Add:
Reinsurance recoverables on unpaid losses and LAE, end of period	2,509.8		2,373.7
Gross reserves - end of period	$	5,648.1	$	5,135.3

For the Nine Months Ended September 30,

(in millions)
2017

2016

Net reserves beginning of the year
$
2,180.2

$
2,133.3

Net Maybrooke reserves acquired

131.8

—

Add:

Losses and LAE incurred during current calendar
   year, net of reinsurance:

Current accident year

775.1

614.8

Prior accident years

4.4

(18.8
)
Losses and LAE incurred during calendar year,
   net of reinsurance

779.5

596.0

Deduct:

Losses and LAE payments made during current
   calendar year, net of reinsurance:

Current accident year

165.6

115.3

Prior accident years

413.7

403.9

Losses and LAE payments made during current
   calendar year, net of reinsurance:

579.3

519.2

Change in participation interest ⁽¹⁾

(23.2
)

(36.3
)
Foreign exchange adjustments

18.9

1.0

Net reserves - end of period

2,507.9

2,174.8

Add:

Reinsurance recoverables on unpaid losses and
   LAE, end of year

1,798.0

1,110.0

Gross reserves - end of period
$
4,305.9

$
3,284.8

(1)Refer to the sale of Argo Seguros in Note 1, “Basis of Presentation” for additional information.

⁽¹⁾	~~Amount represents decreases in reserves due to change in syndicate participation~~

(2)Amount represents reserves ceded under the reinsurance to close transaction with RiverStone for Lloyd’s years of account 2017 and prior, effective January 1, 2021.

(3)Amount represents the change in reserves due to changing our participation in Syndicates 1200 and 1910.

Reserves for losses and LAE represent the estimated indemnity cost and related adjustment expenses necessary to investigate and settle claims. Such estimates are based upon individual case estimates for reported claims, estimates from ceding companies for reinsurance assumed and actuarial estimates for losses that have been incurred but not yet reported to the insurer. Any change in probable ultimate liabilities is reflected in current operating results.

The impact from the (favorable) unfavorable ~~(favorable)~~ development of prior accident years’ loss and LAE reserves on each reporting segment is presented below:


	For the Nine Months Ended September 30,							For the Three Months Ended March 31,
(in millions)	2017			2016			(in millions)	2022		2021
U.S. Operations	$	(28.7	)	$	(25.6	)	U.S. Operations	$	5.0	$	(0.4)
International Operations		17.0			(10.8	)	International Operations	(3.0)		—
Run-off Lines		16.1			17.6		Run-off Lines	1.4		1.4
Total unfavorable (favorable) prior-year development	$	4.4		$	(18.8	)
Total (favorable) unfavorable prior-year development							Total (favorable) unfavorable prior-year development	$	3.4	$	1.0

Table of Contents

The following describes the primary factors behind each segment’s prior accident year reserve development for ~~nine~~the three months ended ~~September 30, 2017,~~March 31, 2022 and ~~2016:~~

~~Nine~~2021:

Three months ended ~~September 30, 2017:~~

March 31, 2022:

•U.S. ~~Operations:~~ ~~Favorable development for the workers compensation, surety and commercial automobile lines.~~

~~International Operations:~~Operations: Unfavorable development ~~in the property and~~primarily related to liability lines, ~~primarily due to~~including the ~~first quarter 2017 Ogden rate change and claims from Hurricane Matthew.~~

~~Run-off Lines:Unfavorable development in asbestos and other run-off segments~~impact of large losses, partially offset by favorable development in specialty lines.

•International Operations: Favorable development primarily related to catastrophe losses and Europe liability losses partially offset by unfavorable development in liability and professional losses from our Bermuda insurance operations.

•Run-off Lines: Unfavorable loss reserve development on prior accident years in other run-off lines.

Three months ended March 31, 2021:

•U.S. Operations: Favorable development primarily in specialty lines, partially offset by unfavorable development in liability and professional lines.

•International Operations: Unfavorable development primarily related to a one-time accounting adjustment and large claim movements in Argo Insurance Bermuda, partially offset by favorable development in property lines, including losses associated with prior year catastrophe losses.

•Run-off Lines: Unfavorable loss reserve development on prior accident years in risk management ~~liability.~~

~~Nine months ended September 30, 2016:~~

~~U.S. Operations:~~ ~~Favorable development within the commercial automobile, surety,~~ workers compensation, ~~and property lines.~~

~~International Operations:~~ ~~Favorable development within the property~~other run-off lines and ~~our Brazil unit.~~

an individual environmental loss.

~~Run-off Lines:~~ ~~Unfavorable development in asbestos and risk management liability.~~

In the opinion of management, our reserves represent the best estimate of our ultimate liabilities, based on currently known facts, current law, current technology and reasonable assumptions ~~considered reasonable~~ where facts are not known. Due to the significant uncertainties and related management judgments, there can be no assurance that future favorable or unfavorable loss development, which may be material, will not occur.

6.	~~Junior Subordinated Debentures~~

~~Trust Preferred Debentures~~

~~Through a series~~

6. Disclosures About Fair Value of trusts, that are wholly-owned subsidiaries (non-consolidated), we issued debt. The debentures are variable with the rate being reset quarterly and subject to certain interest rate ceilings. Interest payments are payable quarterly. The debentures are all unsecured and are subordinated to other indebtedness. At September 30, 2017 and December 31, 2016, all debentures were eligible for redemption subject to certain terms and conditions at a price equal to 100% of the principal plus accrued and unpaid interest.

~~A summary of our outstanding junior subordinated debentures is presented below:~~

(in millions)

Issue Date

Trust Preferred Pools

Maturity

Rate Structure

Interest Rate at September 30, 2017

Amount

Argo Group

05/15/2003

PXRE Capital Statutory Trust II

05/15/2033

3M LIBOR + 4.10%

5.42%

$
18.1

11/06/2003

PXRE Capital Trust VI

09/30/2033

3M LIBOR + 3.90%

5.24%

10.3

Argo Group US

05/15/2003

Argonaut Group Statutory Trust I

05/15/2033

3M LIBOR + 4.10%

5.42%

15.5

12/16/2003

Argonaut Group Statutory Trust III

01/08/2034

3M LIBOR + 4.10%

5.40%

12.3

04/29/2004

Argonaut Group Statutory Trust IV

04/29/2034

3M LIBOR + 3.85%

5.17%

13.4

05/26/2004

Argonaut Group Statutory Trust V

05/24/2034

3M LIBOR + 3.85%

5.17%

12.3

05/12/2004

Argonaut Group Statutory Trust VI

05/12/2034

3M LIBOR + 3.80%

5.12%

13.4

09/17/2004

Argonaut Group Statutory Trust VII

12/15/2034

3M LIBOR + 3.60%

4.92%

15.5

09/22/2004

Argonaut Group Statutory Trust VIII

09/22/2034

3M LIBOR + 3.55%

4.87%

15.5

10/22/2004

Argonaut Group Statutory Trust IX

12/15/2034

3M LIBOR + 3.60%

4.92%

15.5

09/15/2005

Argonaut Group Statutory Trust X

09/15/2035

3M LIBOR + 3.40%

4.72%

30.9

Total Outstanding

$
172.7

Financial Instruments

(in millions)

Issue Date

Trust Preferred Pools

Maturity

Rate Structure

Interest Rate at December 31, 2016

Amount

Argo Group

05/15/2003

PXRE Capital Statutory Trust II

05/15/2033

3M LIBOR + 4.10%

5.00%

$
18.1

11/06/2003

PXRE Capital Trust VI

09/30/2033

3M LIBOR + 3.90%

4.90%

10.3

Argo Group US

05/15/2003

Argonaut Group Statutory Trust I

05/15/2033

3M LIBOR + 4.10%

5.00%

15.5

12/16/2003

Argonaut Group Statutory Trust III

01/08/2034

3M LIBOR + 4.10%

4.98%

12.3

04/29/2004

Argonaut Group Statutory Trust IV

04/29/2034

3M LIBOR + 3.85%

4.76%

13.4

05/26/2004

Argonaut Group Statutory Trust V

05/24/2034

3M LIBOR + 3.85%

4.77%

12.3

05/12/2004

Argonaut Group Statutory Trust VI

05/12/2034

3M LIBOR + 3.80%

4.79%

13.4

09/17/2004

Argonaut Group Statutory Trust VII

12/15/2034

3M LIBOR + 3.60%

4.56%

15.5

09/22/2004

Argonaut Group Statutory Trust VIII

09/22/2034

3M LIBOR + 3.55%

4.55%

15.5

10/22/2004

Argonaut Group Statutory Trust IX

12/15/2034

3M LIBOR + 3.60%

4.56%

15.5

09/15/2005

Argonaut Group Statutory Trust X

09/15/2035

3M LIBOR + 3.40%

4.36%

30.9

Total Outstanding

$
172.7

~~Maybrooke Junior Subordinated Debentures~~

Unsecured junior subordinated debentures with a principal balance of $91.8 million were assumed through the acquisition of Maybrooke (“the Maybrooke debt”). The Maybrooke debt is carried on our consolidated balance sheet at $83.8 million, which represents our initial estimate of the debt’s fair value at the date of acquisition plus accumulated accretion of discount to par value, as required by accounting for business combinations under ASC 805 (see Note 3, “Acquisition of Maybrooke”). This fair value is subject to change based on finalizing the valuation of Maybrooke’s opening balance sheet by the end of 2017. At September 30, 2017, the Maybrooke debt was eligible for redemption at par. Interest accrues on the Maybrooke debt based on a variable rate, which is reset quarterly. Interest payments are payable quarterly. A summary of the terms of the Maybrooke debt outstanding at September 30, 2017 is presented below:

(in millions)

Issue Date

Maturity

Rate Structure

Interest Rate at September 30, 2017

Principal at September 30, 2017

Carrying Value at September 30, 2017

9/15/2007

9/15/2037

3 month LIBOR + 3.15%

4.47%

$
91.8

$
83.8

7.	~~Other Indebtedness~~

Our Consolidated Balance Sheets includes various long-term debt instruments under the caption “Other indebtedness,” as detailed in the table below. Information regarding the terms and principal amounts of each of these debt instruments is also provided.

(in millions)

Debt Type

September 30, 2017

December 31, 2016

Floating rate loan stock

$
59.1

$
54.8

Term loan

125.0

—

Other debt

0.6

0.6

Total other indebtedness

$
184.7

$
55.4

~~Floating Rate Loan Stock~~

This debt was assumed through the acquisition of Lloyd’s Syndicate 1200. These notes are unsecured. At September 30, 2017 and December 31, 2016, all notes were eligible for redemption subject to certain terms and conditions at a price equal to 100% of the principal plus accrued and unpaid interest. Interest on the U.S. Dollar and Euro notes is due semiannually and quarterly, respectively. A summary of the notes outstanding at September 30, 2017 and December 31, 2016 is presented below:

(in millions)

Issue Date

Currency

Maturity

Rate Structure

Interest Rate at September 30, 2017

Amount

12/08/2004

U.S. Dollar

11/15/2034

6 month LIBOR + 4.2%

5.66%

$
6.5

09/06/2005

Euro

08/22/2035

3 month LIBOR + 4.0%

3.67%

14.2

10/31/2006

U.S. Dollar

01/15/2036

6 month LIBOR + 4.0%

5.46%

10.0

10/31/2006

Euro

11/22/2036

3 month LIBOR + 4.0%

3.67%

12.4

06/08/2007

Euro

09/15/2037

3 month LIBOR + 3.9%

3.57%

16.0

$
59.1

(in millions)

Issue Date

Currency

Maturity

Rate Structure

Interest Rate at December 31, 2016

Amount

12/08/2004

U.S. Dollar

11/15/2034

6 month LIBOR + 4.2%

5.18%

$
6.5

09/06/2005

Euro

08/22/2035

3 month LIBOR + 4.0%

3.70%

12.8

10/31/2006

U.S. Dollar

01/15/2036

6 month LIBOR + 4.0%

4.98%

10.0

10/31/2006

Euro

11/22/2036

3 month LIBOR + 4.0%

3.70%

11.2

06/08/2007

Euro

09/15/2037

3 month LIBOR + 3.9%

3.58%

14.3

$
54.8

No principal payments have been made since the acquisition of Lloyd’s Syndicate 1200. The floating rate loan stock denominated in Euros fluctuates due to foreign currency translation. The outstanding balance on these ~~loans was $42.6~~ ~~million and~~ ~~$38.3 million as of September 30, 2017 and December 31, 2016, respectively. The foreign currency translation adjustment is recorded in our Consolidated Statements of (Loss) Income.~~

~~Borrowing Under Credit Facility~~

On March 3, 2017, each of Argo Group, Argo Group US, Inc., Argo International Holdings Limited and Argo Underwriting Agency Limited (the “Borrowers”) entered into a $325.0 million Credit Agreement (“New Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent. The New Credit Agreement replaced and terminated the previous $175.0 million Credit Agreement (“Prior Agreement”).

The New Credit Agreement provides for a $200.0 million revolving credit facility with a maturity date of March 3, 2022 unless extended in accordance with the terms of the New Credit Agreement. In addition, the New Credit Agreement includes a $125.0 million term loan borrowing, which Argo Group used to pay off in its entirety the $125.0 million borrowing drawn on January 31, 2017 under the Prior Agreement to help fund the acquisition of Maybrooke. Interest accrues based on a variable rate, which resets and is payable based on reset options selected by Argo Group pursuant to the terms of the New Credit Agreement. A summary of the terms of the outstanding balance at September 30, 2017 is presented below:

(in millions)

Issue Date

Maturity

Rate Structure

Interest Rate at September 30, 2017

Amount

3/3/2017

3/3/2019

2 month LIBOR + 1.5%

2.80%

$
125.0

Borrowings under the New Credit Agreement may be used for general corporate purposes, including working capital, permitted acquisitions and letters of credit, and each of the Borrowers has agreed to be jointly and severally liable for the obligations of the other Borrowers under the New Credit Agreement.

The New Credit Agreement contains customary events of default. If an event of default occurs and is continuing, the Borrowers could be required immediately to repay all amounts outstanding under the New Credit Agreement. Lenders holding at least a majority of the loans and commitments under the New Credit Agreement could elect to accelerate the maturity of the loans and/or terminate the commitments under the New Credit Agreement upon the occurrence and during the continuation of an event of default.

Included in the New Credit Agreement is a provision that allows up to $200.0 million of the revolving credit facility to be used for LOCs, subject to availability. On March 3, 2017, the $0.2 million LOC outstanding under the Prior Credit Agreement was transferred to the New Credit Agreement. At September 30, 2017 and December 31, 2016, there were no borrowings outstanding under the revolving portions of the credit facilities. At September 30, 2017 and December 31, 2016, there were $0.5 million and $0.2 million, respectively in LOCs against the New and Prior Credit Agreement, respectively.

~~Other Debt~~

~~As part of the ARIS Title Insurance Corporation (“ARIS”) acquisition,~~ ~~at September 30, 2017 and December 31, 2016, we had a note payable for $0.6 million.~~ The note had a variable interest rate of 2.00% above 30-day LIBOR, with the variable interest rate being reset quarterly and subject to certain interest rate ceilings. Interest payments are payable quarterly. The note payable matures on April 1, 2019.

8.	~~Disclosures about Fair Value of Financial Instruments~~

Cash. The carrying amount approximates fair value.

Investment securities and short-term ~~investments~~.investments. See Note 4,3, “Investments,” for additional information.

Premiums receivable and reinsurance recoverables on paid losses. The carrying value of current receivables ~~approximates fair value. At September 30, 2017~~ and December 31, 2016, the carrying values of premiums receivable over 90 days were $20.5 million and $14.3 million, respectively. Included in “Reinsurance recoverables” in our Consolidated Balance Sheets at September 30, 2017 and December 31, 2016, are amounts that are due from trade capital providers associated with the operations of Syndicate 1200. Upon settlement, the receivable is offset against the liability which is included in “Ceded reinsurance payable, net” in our accompanying Consolidated Balance Sheets. At September 30, 2017 and December 31, 2016, the payable was in excess of the receivable. Of our reinsurance recoverables on paid losses ~~excluding amounts attributable to Syndicate 1200’s trade capital providers, at September 30, 2017~~approximates fair value.

Debt. At March 31, 2022 and December 31, 2016, the carrying values over 90 days were $13.2 million and $11.2 million, respectively. Our methodology for establishing our allowances for doubtful accounts includes specifically identifying all potential uncollectible balances regardless of aging. At September 30, 2017 and December 31, 2016, the allowance for doubtful accounts for premiums receivable was $3.0 million and $2.7 million, respectively, and the allowance for doubtful accounts for reinsurance recoverables on paid losses was $2.1 million. At September 30, 2017, the amount of premiums receivable over 90 days secured by collateral was negligible. At December 31, 2016, premiums receivable over 90 days were secured by collateral in the amount of $0.1 million. Reinsurance recoverables on paid losses over 90 days were secured by collateral in the amount of $0.6 million at September 30, 2017 and December 31, 2016.

~~Debt. At September 30, 2017 and December 31, 2016,~~2021, the fair value of our ~~junior subordinated debentures,~~debt instruments is determined using both Level 1 and Level 2 inputs, as previously defined in Note 3, “Investments.”

We receive fair value prices from third-party pricing services for our financial instruments as well as for similar financial instruments. These prices are determined using observable market information such as publicly traded quoted prices, and trading prices for similar financial instruments actively being traded in the current market. We have reviewed the processes used by the third-party providers for pricing the securities and have determined that these processes result in fair values consistent with GAAP requirements. In addition, we review these prices for reasonableness, and have not adjusted any prices received from the third-party providers as of March 31, 2022 and December 31, 2021. A description of the valuation techniques we use to measure these liabilities at fair value is as follows:

Senior Unsecured Fixed Rate Notes Level 1:

•Our senior unsecured fixed rate notes ~~and other indebtedness was estimated~~are valued using ~~appropriate market indices or~~Level 1 inputs. For these securities, we obtain fair value measurements from a third-party pricing service using quoted prices (unadjusted) in active markets at the reporting date.

Junior Subordinated Debentures and Floating Rate Loan Stock Level 2:

•Our trust preferred debentures, subordinated debentures and floating rate loan stock are typically valued using Level 2 inputs. For these securities, we obtain fair value measurements from ~~external sources based on current market conditions.~~

a third-party pricing service using quoted prices for similar securities being traded in active markets at the reporting date, as our specific debt instruments are more infrequently traded.

Table of Contents

A summary of our financial instruments whose carrying value did not equal fair value is shown below:


	September 30, 2017				December 31, 2016					March 31, 2022				December 31, 2021
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Junior subordinated debentures
Junior subordinated debentures:									Junior subordinated debentures:
Trust preferred debentures	$	172.7	$	168.6	$	172.7	$	162.4	Trust preferred debentures	$	172.7	$	173.2	$	172.7	$	172.9
Maybrooke subordinated debenture		83.8		86.3		—		—
Subordinated debentures									Subordinated debentures	85.6		92.1		85.5		91.9
Total junior subordinated debentures									Total junior subordinated debentures	258.3		265.3		258.2		264.8
Senior unsecured fixed rate notes		139.6		139.4		139.5		139.3	Senior unsecured fixed rate notes	140.4		144.1		140.3		148.4
Floating rate loan stock		59.1		57.7		54.8		51.5	Floating rate loan stock	57.3		57.4		57.0		57.1
										$	456.0	$	466.8	$	455.5	$	470.3

9.	~~Shareholders’ Equity~~

Based on an analysis of the inputs, our financial instruments measured at fair value for disclosure purposes have been categorized as follows:


	Fair Value Measurements at Reporting Date Using
(in millions)	March 31, 2022		Level 1 (a)		Level 2 (b)		Level 3 (c)
Junior subordinated debentures:
Trust preferred debentures	$	173.2	$	—	$	173.2	$	—
Subordinated debentures	92.1		—		92.1		—
Total junior subordinated debentures	265.3		—		265.3		—
Senior unsecured fixed rate notes	144.1		144.1		—		—
Floating rate loan stock	57.4		—		57.4		—
	$	466.8	$	144.1	$	322.7	$	—

(a)Quoted prices in active markets for identical assets

(b)Significant other observable inputs

(c)Significant unobservable inputs


	Fair Value Measurements at Reporting Date Using
(in millions)	December 31, 2021		Level 1 (a)		Level 2 (b)		Level 3 (c)
Junior subordinated debentures:
Trust preferred debentures	$	172.9	$	—	$	172.9	$	—
Subordinated debentures	91.9		—		91.9		—
Total junior subordinated debentures	264.8		—		264.8		—
Senior unsecured fixed rate notes	148.4		148.4		—		—
Floating rate loan stock	57.1		—		57.1		—
	$	470.3	$	148.4	$	321.9	$	—

(a)Quoted prices in active markets for identical assets

(b)Significant other observable inputs

(c)Significant unobservable inputs

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7. Shareholders’ Equity

On ~~August 8, 2017~~February 16, 2022, our Board of Directors declared a quarterly cash dividend in the amount of ~~$0.27~~$0.31 on each ~~share of~~ common ~~stock~~share outstanding. On ~~September~~March 15, ~~2017,~~2022, we paid ~~$8.3~~$10.8 million to our shareholders of record on ~~September 1, 2017.~~

February 28, 2022.

On ~~August 2, 2016~~February 16, 2022, our Board of Directors declared a quarterly cash dividend in the amount of ~~$0.22~~$437.500 per share on our 7.00% Resettable Fixed Rate Preference Shares, Series A, par value of $1.00 per share, with a liquidation preference of $25,000 per share (the “Series A Preference Shares”). Holders of depositary shares, each representing a 1/1,000th interest in a Series A Preference Share (the “Depositary Shares”), received $0.437500 per Depositary Share. On March 15, 2022, we paid $2.6 million to our shareholders of record of Series A Preference Shares on February 28, 2022.

On February 12, 2021, our Board of Directors declared a quarterly cash dividend in the amount of $0.31 on each ~~share of~~ common ~~stock~~share outstanding. On ~~August 29, 2016,~~March 12, 2021, we paid ~~$6.7~~$10.8 million to our shareholders of record on ~~August 15, 2016.~~

February 26, 2021.

On ~~May 3, 2016,~~February 12, 2021, our Board of Directors declared a ~~10% stock~~quarterly cash dividend ~~payable~~in the amount of $437.50 per share on ~~June~~our 7.00% Resettable Fixed Rate Preference Shares, Series A, par value of $1.00 per share, with a liquidation preference of $25,000 per share (the “Series A Preference Shares”). Holders of depositary shares, each representing a 1/1,000th interest in a Series A Preference Share (the “Depositary Shares”), received $0.43750 per Depositary Share. On March 15, ~~2016,~~2021, we paid $2.6 million to our shareholders of record ~~at the close~~ of ~~business~~Series A Preference Shares on June 1, 2016. As a result of the stock dividend, 2,735,542 additional shares were issued. Cash was paid in lieu of fractional shares of our common shares. All references to share and per share amounts in this document and related disclosures have been adjusted to reflect the stock dividend for all periods presented.

February 28, 2021.

On May 3, 2016, our Board of Directors authorized the repurchase of up to $150.0 million of our common shares (“2016 Repurchase Authorization”). The 2016 Repurchase Authorization supersedes all ~~the~~ previous ~~Repurchase Authorizations.~~repurchase authorizations. As of ~~September 30, 2017,~~March 31, 2022, availability under the 2016 Repurchase Authorization for future repurchases of our common shares was ~~$93.7~~$53.3 million.

~~For the nine months ended September 30, 2017, we repurchased a total of 612,034~~

We did not repurchase any common shares for ~~$36.6 million. A summary of activity from January 1, 2017 through September 30, 2017 follows.~~

~~A summary of common shares repurchased for~~ the ~~nine~~three months ended ~~September 30, 2017 is shown below:~~

March 31, 2022.

Repurchase Type

Date
Trading Plan
Initiated

2017
Purchase
Period

Number of
Shares
Repurchased

Average Price
of Shares
Repurchased

Total Cost
(in millions)

Repurchase
Authorization
Year
10b5-1 Trading Plan

6/14/2017

06/20/2017-08/10/2017

156,570

$
59.53

$
9.4

2016
10b5-1 Trading Plan

9/15/2017

09/18/2017-09/28/2017

33,488

$
60.85

$
2.0

2016
Open Market

N/A

08/11/2017-09/15/2017

421,976

$
59.75

25.2

2016
Total

612,034

$
59.75

$
36.6

~~10.~~

8. Accumulated Other Comprehensive Income (Loss) ~~Income~~

A summary of changes in accumulated other comprehensive (loss) income, net of taxes (where applicable) by component for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2022 and ~~2016~~2021 is presented below:


(in millions)	Foreign Currency Translation Adjustments		Unrealized Holding Gains (Losses) on Securities		Defined Benefit Pension Plans		Total
Balance, January 1, 2022	$	(35.3)	$	19.7	$	(7.1)	$	(22.7)
Other comprehensive income (loss) before reclassifications	4.1		(139.2)		—		(135.1)
Amounts reclassified from accumulated other comprehensive loss	27.3		(4.4)		—		22.9
Net current-period other comprehensive income (loss)	31.4		(143.6)		—		(112.2)
Balance, March 31, 2022	$	(3.9)	$	(123.9)	$	(7.1)	$	(134.9)

(in millions)

Foreign
Currency
Translation
Adjustments

Unrealized
Holding Gains
on Securities

Defined
Benefit
Pension
Plans

Total

Balance at January 1, 2017

$
(17.6
)

$
72.4

$
(7.1
)

$
47.7

Other comprehensive (loss) income before
   reclassifications

(0.2
)

74.1

—

73.9

Amounts reclassified from accumulated other
   comprehensive (loss) income

—

(24.6
)

—

(24.6
)
Net current-period other comprehensive (loss)
   income

(0.2
)

49.5

—

49.3

Balance at September 30, 2017

$
(17.8
)

$
121.9

$
(7.1
)

$
97.0


(in millions)	Foreign Currency Translation Adjustments		Unrealized Holding Gains (Losses) on Securities		Defined Benefit Pension Plans		Total
Balance, January 1, 2021	$	(37.9)	$	105.1	$	(8.6)	$	58.6
Other comprehensive loss before reclassifications	(0.9)		(50.3)		—		(51.2)
Amounts reclassified from accumulated other comprehensive loss	—		(3.2)		—		(3.2)
Net current-period other comprehensive loss	(0.9)		(53.5)		—		(54.4)

Balance, March 31, 2021	$	(38.8)	$	51.6	$	(8.6)	$	4.2

(in millions)

Foreign
Currency
Translation
Adjustments

Unrealized
Holding Gains
on Securities

Defined
Benefit
Pension
Plans

Total

Balance at January 1, 2016

$
(21.6
)

$
40.0

$
(6.9
)

$
11.5

Other comprehensive (loss) income before
   reclassifications

2.8

70.2

—

73.0

Amounts reclassified from accumulated other
   comprehensive (loss) income

—

(13.3
)

—

(13.3
)
Net current-period other comprehensive (loss)
   income

2.8

56.9

—

59.7

Balance at September 30, 2016

$
(18.8
)

$
96.9

$
(6.9
)

$
71.2

Table of Contents

The ~~following table illustrates the~~ amounts reclassified from accumulated other comprehensive income (loss) ~~income~~ shown in the above ~~tables that~~table have been included in the following captions in our Condensed Consolidated Statements of Income (Loss):


	For the Three Months Ended March 31,
(in millions)		2022		2021
Unrealized gains and losses on securities:
Net realized investment gains		$	(5.4)	$	(4.0)
Provision for income taxes		1.0		0.8
Foreign currency translation adjustments:
Net realized investment and other gains (losses)		27.3		—
Total, net of taxes		$	22.9	$	(3.2)

Income tax effects are released from accumulated other comprehensive income (loss) for unrealized gains or losses when the gains or losses are realized, and are taxed at the statutory rate based on jurisdiction of the underlying transaction.

9. Net Income (Loss) ~~Income:~~

Per Common Share

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in millions)

2017

2016

2017

2016

Unrealized gains on securities:

Net realized investment gains

$
(17.4
)

$
(17.0
)

$
(36.3
)

$
(25.1
)
Provision for income taxes (benefit)

5.5

7.9

11.7

11.8

Net of taxes

$
(11.9
)

$
(9.1
)

$
(24.6
)

$
(13.3
)

~~11.~~

~~Net (Loss) Income Per Common Share~~

The following table presents the calculation of net income (loss) ~~income~~ per common share on a basic and diluted basis:


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,					For the Three Months Ended March 31,
(in millions, except number of shares and per share amounts)	2017			2016		2017		2016		(in millions, except number of shares and per share amounts)		2022		2021
Net (loss) income	$	(61.3	)	$	55.2	$	21.4	$	113.8
Net income (loss)										Net income (loss)		$	(1.0)	$	29.8
Less: Preferred share dividends										Less: Preferred share dividends		2.6		2.6
Net income (loss) attributable to common shareholders										Net income (loss) attributable to common shareholders		(3.6)		27.2
Weighted average common shares outstanding - basic		29,978,485			30,018,637		30,075,424		30,227,725	Weighted average common shares outstanding - basic		34,891,935		34,712,650
Effect of dilutive securities:										Effect of dilutive securities:
Equity compensation awards		—			709,746		817,602		661,762	Equity compensation awards		—		225,363
Weighted average common shares outstanding - diluted		29,978,485			30,728,383		30,893,026		30,889,487	Weighted average common shares outstanding - diluted		34,891,935		34,938,013
Net (loss) income per common share:
Net income (loss) per common share:										Net income (loss) per common share:
Basic	$	(2.04	)	$	1.84	$	0.71	$	3.76	Basic		$	(0.11)	$	0.78
Diluted	$	(2.04	)	$	1.80	$	0.69	$	3.68	Diluted		$	(0.11)	$	0.78

Excluded from the weighted average common shares outstanding calculation at ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 are ~~10,640,789~~11,315,889 shares, ~~and 9,996,840 shares, respectively,~~ which are held as treasury shares. The shares are excluded as of their repurchase date. For the three months ended ~~September 30, 2017, 711,854 shares~~March 31, 2022, 173,541 potentially dilutive securities were not included in the calculation of diluted net ~~loss~~income per common share as ~~their effect would have been anti-dilutive.~~

these instruments were anti-dilutive due to the net loss attributable to common shareholders incurred for the period then ended. For the three months ended March 31, 2021, there were no equity compensation awards with an anti-dilutive effect.

~~12.~~

~~Supplemental Cash Flow Information~~

~~Income taxes paid.~~ We

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10. Supplemental Cash Flow Information

Interest paid and income taxes ~~of $10.1 million and $1.5 million during the nine months ended September 30, 2017, and 2016, respectively.~~

~~Income taxes recovered. We recovered income taxes of $2.4 million and $0.5 million during the nine months ended September 30, 2017, and 2016, respectively.~~

~~Interest~~ paid ~~was~~(recovered) were as follows:


	For the Three Months Ended March 31,
(in millions)	2022		2021
Senior unsecured fixed rate notes	$	2.3	$	2.3
Junior subordinated debentures	2.5		2.5
Other indebtedness	0.8		0.8
Total interest paid	$	5.6	$	5.6

Income taxes paid	$	0.3	$	0.9
Income taxes recovered	(0.2)		(0.1)
Income taxes paid, net	$	0.1	$	0.8

For the Nine Months Ended September 30,

(in millions)

2017

2016

Senior unsecured fixed rate notes

$
7.0

$
7.0

Junior subordinated debentures

9.4

5.7

Other indebtedness

3.0

2.0

Revolving credit facility

0.3

—

Total interest paid

$
19.7

$
14.7

~~13.~~

~~Share-based Compensation~~

The fair value method of accounting is used for share-based compensation plans. Under the fair value method, compensation cost is measured based on the fair value of the award at the measurement date and recognized over the requisite service period. We use the Black-Scholes model to estimate the fair values on the measurement date for share options and share appreciation rights (“SARs”). The Black-Scholes model uses several assumptions to value a share award. The risk-free rate of return assumption is based on the

11. Share-based Compensation

five-year U.S. Treasury constant maturity rate on the measurement date. The expected dividend yield is based on our history and expected dividend payouts. The expected award life is based upon the average holding period over the history of the incentive plan. The expected volatility assumption is based on the historical change in our stock price over the previous five years preceding the measurement date.

~~The following table summarizes the assumptions we used for the nine months ended September 30, 2017, and 2016:~~

For the Nine Months Ended September 30,

2017

2016

Risk-free rate of return

1.85
%

1.12
%
Expected dividend yields

1.71
%

1.65
%
Expected award life (years)

4.48

4.50

Expected volatility

18.13
%

18.73
%

Argo Group’s ~~Long-Term~~2019 Omnibus Incentive ~~Plans~~

Plan

In ~~November 2007,~~May 2019, our shareholders approved the ~~2007 Long-Term~~2019 Omnibus Incentive Plan (the ~~“2007~~“2019 Plan”), which provides equity-based and cash-based incentives to key employees and non-employee directors. The intent of the 2019 Plan is to encourage and provide for the acquisition of an ~~aggregate of 4.5 million shares~~ownership interest in Argo Group, enabling us to attract and retain qualified and competent persons to serve as members of our management team and Board of Directors. The 2019 Plan authorizes 1,885,000 common ~~stock~~shares to be granted as equity-based awards. No further grants will be made under any prior plan; however, any awards under a prior plan that ~~may~~are outstanding as of the effective date shall remain subject to the terms and conditions of, and be ~~issued to executives, non-employee directors, and other key employees. As of May 2014, 1.46 million shares remained available for grant~~governed by, such prior plan.

Awards granted under the ~~2007 Plan. In May 2014, our shareholders approved the 2014 Long-Term Incentive~~2019 Plan (the “2014 Plan”), which provides for an additional 2.8 million shares of our common stock to be available for issuance to executives, non-employee directors and other key employees. The share awards may be in the form of ~~share~~stock options, ~~SARs,~~stock appreciation rights, restricted ~~shares, restricted share~~stock awards, restricted ~~share~~stock unit awards, performance awards, other ~~share-based~~stock-based awards ~~and~~or other cash-based awards. Awards may be granted either alone, in addition to or in tandem with other awards authorized under the 2019 Plan. Awards that are settled in stock will count as one share for the purposes of reducing the share reserve under the 2019 Plan. Shares issued under this plan may be shares that are authorized and unissued or shares that we have reacquired, including shares purchased on the open market. ~~Share~~

Stock options and SARs will count as one share for the purposes of the limits under the incentive plans; restricted shares, restricted share units, performance units, performance shares or other share-based incentive awards which settle in common shares will count as 2.75 shares for purpose of the limits under the 2014 Plan.

~~Share options may be in the form of incentive share options, non-qualified share options and restorative options. Share options~~stock appreciation rights are required to have an exercise price that is not less than the fair market value on the date of grant. ~~We are prohibited from repricing the options.~~ The term of ~~the share options cannot~~these awards is not to exceed ~~seven years from the grant date.~~

ten years.

Restricted Shares

A summary of non-vested restricted share activity as of ~~September 30, 2017~~March 31, 2022 and changes during the ~~nine~~three months then ended is as follows:

	Shares			Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2017		702,030		$	42.69
							Shares	Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2022						Outstanding at January 1, 2022	278,430	$	49.57
Granted		239,997		$	62.91	Granted	240,677	41.00
Reclassed from performance shares						Reclassed from performance shares	14,373	32.61
Vested and issued		(154,706	)	$	41.65	Vested and issued	(83,101)	46.32
Expired or forfeited		(34,970	)	$	48.80	Expired or forfeited	(13,379)	48.72
Outstanding at September 30, 2017		752,351		$	49.07
Outstanding at March 31, 2022						Outstanding at March 31, 2022	437,000	$	44.58

The restricted shares vest over one to ~~eight~~four years. Expense recognized under this plan for the restricted shares was ~~$2.5~~$2.2 million and ~~$7.5~~$1.5 million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively, as compared to $1.7 million~~March 31, 2022 and ~~$5.2 million for the three and nine months ended September 30, 2016,~~2021, respectively. Compensation expense for all share-based compensation awards is included in ~~“Underwriting,~~Underwriting, acquisition and insurance ~~expenses”~~expenses in the accompanying Condensed Consolidated Statements of Income (Loss) ~~Income.~~. As of ~~September 30, 2017,~~March 31, 2022, there was ~~$27.4~~$18.0 million of total unrecognized compensation cost related to restricted share compensation arrangements granted by Argo Group.

~~Stock-Settled SARs~~

~~In January 2016, we modified~~

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Performance Shares

We have issued to certain ~~unvested cash-settled SARs, converting~~key employees non-vested restricted stock awards whose vesting is subject to the achievement of certain performance measures. The non-vested performance share awards vest over three to four years. Non-vested performance share awards are valued based on the fair market value as of the grant date. Vesting of the awards ~~into stock-settled SARs.~~is subject to the achievement of defined performance measures and the number of shares vested may be adjusted based on the achievement of certain targets. We ~~evaluated~~evaluate the likelihood of the employee achieving the performance condition and include this ~~modification under~~estimate in the ~~terms~~determination of ~~ASU 718 “Share Based Payments,” and determined that no additional expense resulted from~~ the ~~conversion. The expense~~forfeiture factor for ~~the stock-settled SARs will be amortized over the remaining vesting period.~~

these grants.

A summary of ~~stock-settled SARs~~non-vested performance share activity as of ~~September 30, 2017~~March 31, 2022 and changes during the ~~nine~~three months then ended is as follows:

Shares

Weighted-Average
Exercise Price

Outstanding at January 1, 2017

1,982,695

$
34.80

Exercised

(396,355
)

$
31.52

Expired or forfeited

(105,024
)

$
40.62

Outstanding at September 30, 2017

1,481,316

$
35.26


	Shares	Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2022	200,564	$	47.52
Granted	125,074	41.00
Reclassed to restricted shares	(14,373)	32.61
Vested and issued	(1,831)	68.27
Expired or forfeited	(17,398)	59.03
Outstanding at March 31, 2022	292,036	$	44.64

The stock-settled SARs vest over a one to four-year period. Upon exercise of the stock-settled SARs, the employee is entitled to receive shares of our common stock equal to the appreciation of the stock as compared to the exercise price.

Expense recognized under this plan for the ~~stock-settled SARs~~performance shares was ~~$0.7~~$0.5 million and ~~$3.5~~$0.7 million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively, as compared to $1.0 million~~March 31, 2022 and ~~$3.6 million for the three and nine months ended September 30, 2016,~~2021, respectively. As of ~~September 30, 2017,~~March 31, 2022, there was ~~$4.3~~$8.5 million of total unrecognized compensation cost related to ~~stock-settled SARs outstanding.~~

~~Cash-Settled SARs~~

~~A summary of cash-settled SARs activity as of September 30, 2017~~performance share compensation arrangements granted by Argo Group.

12. Underwriting, Acquisition and ~~changes during the nine months then ended is as follows:~~

Insurance Expenses

Shares

Weighted-Average
Exercise Price

Outstanding at January 1, 2017

500,486

$
32.08

Exercised

(235,663
)

$
32.37

Expired or forfeited

(14,628
)

$
23.74

Outstanding at September 30, 2017

250,195

$
32.30

As of September 30, 2017, all the cash-settled SARs are fully vested. Upon exercise of the cash-settled SARs, the employee is entitled to receive cash payment for the appreciation in the value of our common stock over the exercise price. We account for the cash-settled SARs as liability awards, which require the awards to be revalued at each reporting period. Expense recognized for the cash-settle SARs was $0.3 million for the three months ended September 30, 2017. Due to a decrease in the fair market value of our stock, we recouped $0.6 million of expense for nine months ended September 30, 2017. Expense recognized for the cash-settle SARs was $2.6 million and $2.1 million for the three and nine months ended September 30, 2016, respectively. As of September 30, 2017, there was no unrecognized compensation cost related to cash-settled SARs outstanding.

~~14.~~

~~Underwriting, Acquisition and Insurance Expenses~~

Underwriting, acquisition and insurance expenses were as follows:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,							For the Three Months Ended March 31,
(in millions)	2017			2016			2017			2016			(in millions)		2022		2021
Commissions	$	70.8		$	59.3		$	201.2		$	178.5		Commissions		$	77.9	$	76.5
General expenses		89.7			75.6			266.4			217.3
Premium taxes, boards and bureaus		11.8			6.1			25.9			19.0
		172.3			141.0			493.5			414.8
Other underwriting and insurance expenses													Other underwriting and insurance expenses		103.2		106.6
Total underwriting, acquisition and insurance expenses before deferral													Total underwriting, acquisition and insurance expenses before deferral		181.1		183.1
Net deferral of policy acquisition costs		(6.2	)		(3.6	)		(19.1	)		(11.8	)	Net deferral of policy acquisition costs		(8.2)		(6.7)
Total underwriting, acquisition and insurance expenses	$	166.1		$	137.4		$	474.4		$	403.0		Total underwriting, acquisition and insurance expenses		$	172.9	$	176.4

The $14.1 million and the $49.1 million increases in general expenses for the three and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016 were driven by expenses attributable to the operations of Maybrooke coupled with increased information technology, marketing, occupancy and depreciation costs.

~~15.~~

~~Income Taxes~~

13. Income Taxes

We are incorporated under the laws of Bermuda and, under current Bermuda law, are not obligated to pay any taxes in Bermuda based upon income or capital gains. We have received an undertaking from the Supervisor of Insurance in Bermuda pursuant to the provisions of the Exempted Undertakings Tax Protection Amendment Act, 2011, which exempts us from any Bermuda taxes computed on profits, income or any capital asset, gain or appreciation or any tax in the nature of estate, duty or inheritance tax, at least until the year 2035.

We do not consider ourselves to be engaged in a trade or business in the ~~United States~~U.S. or the ~~United Kingdom~~U.K. and, accordingly, do not expect to be subject to direct ~~United States~~U.S. or ~~United Kingdom~~U.K. income taxation.

We have subsidiaries based in the ~~United Kingdom~~U.K. that are subject to the tax laws of that country. Under current law, these subsidiaries are taxed at the applicable corporate tax rates. ~~Eight~~Certain of the ~~United Kingdom~~U.K. subsidiaries are deemed to be engaged in business in the ~~United States,~~U.S., and therefore, are subject to ~~United States~~U.S. corporate tax in respect of a proportion of their ~~United States~~U.S. underwriting business only. Relief is available against the ~~United Kingdom~~U.K. tax liabilities in respect of overseas taxes paid that arise from the underwriting business. Our ~~United Kingdom~~U.K. subsidiaries file separate ~~United Kingdom~~U.K. income tax returns.

We have subsidiaries based in the ~~United States~~U.S. that are subject to ~~United States~~U.S. tax laws. Under current law, these subsidiaries are taxed at the applicable corporate tax rates. Our ~~United States~~U.S. subsidiaries generally file a consolidated ~~United States~~U.S. federal income tax return.

Table of Contents

We also have operations in ~~Belgium,~~ Brazil, France, Ireland, ~~Luxembourg,~~Italy, Malta, ~~Spain,~~ and Switzerland, which also are subject to income taxes imposed by the jurisdiction in which they operate. During the period ending March 31, 2022, our operations in Brazil were divested. We also have operations in Barbados and the United Arab Emirates, which are not subject to income tax under the laws of ~~that country.~~

~~Our income~~those countries.

On June 10, 2021, U.K. tax ~~provision~~legislation referred to as Finance Act 2021 received Royal Assent and was enacted. The effects of changes in tax laws and tax rates are recognized in the period of enactment. Accordingly, we recorded the impacts of Finance Act 2021 in our June 30, 2021 consolidated financial statements which primarily includes the ~~following components:~~

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in millions)

2017

2016

2017

2016

Current tax provision (benefit)

$
(2.9
)

$
10.8

$
12.6

$
18.8

Deferred tax provision (benefit) related to:

Future tax deductions

(2.5
)

(3.0
)

(6.1
)

1.9

Valuation allowance change

0.8

(0.8
)

(0.3
)

0.4

Income tax provision (benefit)

$
(4.6
)

$
7.0

$
6.2

$
21.1

~~For~~remeasurement of our deferred tax assets and liabilities for the ~~three and nine months ended September 30, 2017 and 2016, pre-tax income (loss) attributable~~increased U.K. federal tax rate from 19% to ~~our operations and the operations’ effective tax rates were as follows:~~

For the Three Months Ended September 30,

(in millions)

2017

2016

Pre-Tax
Income (Loss)

Effective
Tax
Rate

Pre-Tax
Income (Loss)

Effective
Tax
Rate

Bermuda

$
(43.0
)

0.0
%

$
35.6

0.0
%
United States

(1.3
)

52.9
%

28.2

24.2
%
United Kingdom

(24.6
)

16.4
%

(2.8
)

-3.0
%
Barbados

—

⁽¹⁾

0.0
%

—

⁽¹⁾

0.0
%
Belgium

0.1

36.1
%

—

⁽¹⁾

-160.0
%
Brazil

—

⁽¹⁾

0.0
%

0.4

0.0
%
Ireland ⁽²⁾

(0.1
)

0.0
%

(0.1
)

0.0
%
Luxembourg

(1.3
)

0.0
%

—

⁽¹⁾

0.0
%
Malta

0.6

0.0
%

0.9

0.0
%
Switzerland

0.2

18.1
%

—

⁽¹⁾

21.2
%
United Arab Emirates

3.5

0.0
%

—

⁽¹⁾

0.0
%
Total

$
(65.9
)

7.0
%

$
62.2

11.3
%
25% beginning on April 1, 2023.

For the Nine Months Ended September 30,

(in millions)

2017

2016

Pre-Tax
Income (Loss)

Effective
Tax
Rate

Pre-Tax
Income (Loss)

Effective
Tax
Rate

Bermuda

$
8.7

0.0
%

$
79.7

0.0
%
United States

57.4

24.1
%

78.0

26.3
%
United Kingdom

(36.6
)

21.6
%

(24.9
)

-1.9
%
Barbados

—

⁽¹⁾

0.0
%

—

0.0
%
Belgium

0.2

36.2
%

—

⁽¹⁾

0.0
%
Brazil

(0.2
)

0.0
%

1.1

0.0
%
Ireland ⁽²⁾

(0.1
)

0.0
%

(0.2
)

0.0
%
Luxembourg

(3.7
)

0.0
%

—

⁽¹⁾

0.0
%
Malta

1.7

0.0
%

1.2

0.0
%
Switzerland

0.2

21.1
%

—

⁽¹⁾

21.1
%
United Arab Emirates

—

⁽¹⁾

0.0
%

—

⁽¹⁾

0.0
%
Total

$
27.6

22.3
%

$
134.9

15.7
%

⁽¹⁾	~~Pre-tax income for the respective year was less than $0.1 million.~~

Our expected income tax provision computed on pre-tax income (loss) at the weighted average tax rate has been calculated as the sum of the pre-tax income (loss) in each jurisdiction multiplied by that jurisdiction’s applicable statutory tax rate. For the three months ended March 31, 2022 and 2021, pre-tax income (loss) attributable to our operations and the corresponding operations’ effective tax rates were as follows:


	For the Three Months Ended March 31,
	2022				2021
(in millions)	Pre-Tax Income (Loss)		Effective Tax Rate		Pre-Tax Income (Loss)		Effective Tax Rate
Bermuda	$	(0.2)	—	%	$	5.0	—	%
United States	38.8		21.9	%	41.3		15.7	%
United Kingdom	5.0		80.8	%	(18.3)		28.1	%

Brazil	(0.1)		(422.4)	%	1.6		—	%
United Arab Emirates	0.6		—	%	0.3		—	%
Ireland	(33.3)		—	%	(0.1)		—	%
Italy	0.1		138.1	%	0.9		—	%
Malta	1.1		—	%	0.5		—	%

Pre-tax income	$	12.0	109.7	%	$	31.2	4.3	%

Our effective tax rate may vary significantly from period to period depending on the jurisdiction generating the pre-tax income (loss) and its corresponding statutory tax rate. The geographic distribution of pre-tax income (loss) can fluctuate significantly between periods given the inherit nature of our business.

A reconciliation of the difference between the provision for income taxes and the expected tax provision at the weighted average tax rate is as follows:

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in millions)

2017

2016

2017

2016

Income tax provision at expected rate

$
(5.5
)

$
9.8

$
12.9

$
23.2

Tax effect of:

Tax-exempt interest

(0.6
)

(0.7
)

(2.1
)

(2.5
)
Dividends received deduction

(0.5
)

(0.4
)

(1.4
)

(1.7
)
Valuation allowance change

0.8

(0.8
)

(0.3
)

0.4

Other permanent adjustments, net

—

0.1

(1.1
)

0.3

Adjustment for prior period

(1.2
)

(0.8
)

(1.9
)

(0.8
)
Adjustment for annualized rate

0.8

(0.9
)

(1.5
)

(1.5
)
Other foreign adjustments

0.2

(0.1
)

0.1

(0.7
)
State income taxes, net of Federal benefit

—

—

0.1

(0.3
)
Foreign exchange adjustments

1.4

0.8

1.1

4.4

Foreign withholding taxes

—

—

0.3

0.3

Income tax provision (benefit)

$
(4.6
)

$
7.0

$
6.2

$
21.1

Income tax (benefit) provision - Foreign

$
(3.9
)

$
0.2

$
(7.7
)

$
0.6

Income tax provision (benefit) - United States, Federal

(0.8
)

6.8

$
13.4

20.2

Income tax provision - United States, State

0.1

—

0.2

—

Foreign withholding taxes

—

—

0.3

0.3

Income tax provision (benefit)

$
(4.6
)

$
7.0

$
6.2

$
21.1


	For the Three Months Ended March 31,
(in millions)		2022		2021
Income tax provision at expected rate		$	9.4	$	6.3
Tax effect of:
Nontaxable investment income		(0.1)		(0.2)
Foreign exchange adjustments		0.1		(0.2)
Sale of Brazil Operations		1.6		—
Change in uncertain tax position liability		0.1		(2.4)
Change in valuation allowance		(1.8)		(0.8)
Impact of change in tax rate related to Finance Act 2021		0.5		—
Lease termination		2.0		—
Other		1.2		(1.3)
Income tax provision		$	13.0	$	1.4

Table of Contents

Our ~~net~~gross deferred tax assets ~~(liabilities)~~ are supported by taxes paid in previous periods, reversal of taxable temporary differences and recognition of future taxable income. Management regularly evaluates the recoverability of the deferred tax assets and makes any necessary adjustments to them based upon any changes in management’s expectations of future taxable income. Realization of deferred tax assets is dependent upon our generation of ~~sufficient~~future taxable income ~~in the future~~sufficient to recover tax benefits that cannot be recovered from taxes paid in the carryback period, generally for our U.S. property and casualty insurers two years for net operating losses and for all our U.S. subsidiaries three years for capital ~~losses for our United States operations.~~

~~Management has determined~~losses. If a company determines that any of its deferred tax assets will not result in future tax benefits, a valuation allowance ~~is required~~must be established for athe portion of these assets that are not expected to be realized. For the ~~tax-effected~~three months ended March 31, 2022, the net ~~operating loss carryforward included as part of~~change in valuation allowance for deferred tax assets decreased $1.8 million relating to the United States consolidated group of $15.1 million generated from PXRE Corporation and for the tax-effected net operating loss carryforward of $1.0 million from ARIS. The valuation allowances have been established asfollowing: Internal Revenue Code Section 382 limits the application of net operating loss and net capital loss carryforwards following an ownership change. The loss carryforwards available per year are $2.8 million as required by Internal Revenue Code Section 382.

Furthermore, due to cumulative losses since inception, management has concluded that a valuation allowance is required for the full amount of the tax-effected net operating losses generated by our Brazil and Malta entities.

Accordingly, a valuation allowance of $25.9 million is required as of September 30, 2017 of which $13.2 million relates to the PXRE Corporation and ARIS loss carryforwards, $8.1 million relates to Brazil operations, $3.8 million relates to Maybrooke, and $0.8 million relates to Malta operations. For the nine months ended September 30, 2017, the valuation allowance was reduced by $0.7 million pertaining to the PXRE Corporation and ARIS loss carryforwards, $0.3 million pertaining to our Brazil operations, and $0.4 million pertaining to our Malta operations. Additionally, the valuation allowance increased $3.8 million pertaining to Maybrooke of which $2.7 million valuation allowance was acquired with Maybrooke.

~~Of the PXRE Corporation~~limited net operating loss carryforwards ~~$13.6 million~~within the United States, cumulative losses incurred since inception, and valuation allowances acquired through or related to acquisitions or disposals. Based upon a review of our available evidence, both positive and negative discussed above, our management concluded that it is more-likely-than-not that the other deferred tax assets will expire if not used by December 31, 2025 and $1.5 million will expire if not used by December 31, 2027. Of the ARIS loss carryforward, $0.2 million will expire if not used by December 31, 2027, $0.4 million will expire if not used by December 31, 2028 and $0.4 million will expire if not used by December 31, 2029.

be realized.

For any uncertain tax positions not meeting the “more-likely-than-not” recognition threshold, accounting standards require recognition, measurement and disclosure in a company’s financial statements. ~~We had no material unrecognized~~For the three months ended March 31, 2022, the uncertain tax ~~benefits as~~positions liability increased in the amount of ~~September 30, 2017 and 2016.~~ $0.1 million. A net increase of interest in the amount of $0.1 million has been recorded in the line item Interest expense in our Consolidated Statements of Income (Loss) for the three months ended March 31, 2022.

Our ~~United States~~U.S. subsidiaries are no longer subject to U.S. federal and state income tax examinations by tax authorities for years before ~~2013.~~2018. Our ~~United Kingdom~~U.K. subsidiaries are no longer subject to ~~United Kingdom~~U.K. income tax examinations by Her Majesty’s Revenue and Customs for years before ~~2014.~~

2020.

~~16.~~

~~Commitments and Contingencies~~

Numerous foreign jurisdictions in which we operate have provided or proposed income-tax relief in response to the COVID-19 pandemic. The Company does not anticipate any of the recent legislative initiatives to have a material impact on its financial statements and will continue to analyze these initiatives in response to the COVID-19 pandemic.

14. Commitments and Contingencies

Argo Group’s subsidiaries are parties to legal actions incidental to their business. Based on the opinion of legal counsel, management believes that the resolution of these matters will not materially affect our financial condition or results of operations.

We have contractual commitments to invest up to ~~$117.9~~$68.8 million related to our limited partnership investments at ~~September 30, 2017.~~March 31, 2022, as further disclosed in Note 3, “Investments.” These commitments will be funded as required by the partnership agreements which can be called to be fulfilled at any time, not to exceed ~~thirteen~~twelve years.

~~17.~~

15. Segment Information

We are primarily engaged in underwriting property and casualty ~~insurance and reinsurance.~~insurance. We have ~~two~~2 ongoing reporting segments: U.S. Operations and International Operations. Additionally, we have a Run-off Lines ~~segment~~ for certain products that we no longer underwrite. ~~See Note 1, “Basis of Presentation,” for information on the changes to our reporting segments that were effective beginning in the first quarter of 2017.~~

We consider many factors, including the nature of each segment’s insurance and reinsurance products, production sources, distribution strategies and the regulatory environment, in determining how to aggregate reporting segments.

In evaluating the operating performance of our segments, we focus on core underwriting and investing results before the consideration of realized gains or losses from ~~the sales of~~ investments. Realized investment gains are reported as a component of the Corporate and Other segment, as decisions regarding the acquisition and disposal of securities reside with the corporate investment function and are not under the control of the individual business segments. Identifiable assets by segment are those assets used in the operation of each segment.

Table of Contents

Revenue and income (loss) before income taxes for each segment were as follows:


	For the Three Months Ended March 31,
(in millions)		2022		2021
Revenue:
Earned premiums
U.S. Operations		$	336.4	$	314.4
International Operations		144.2		151.5
Run-off Lines		—		0.2
Total earned premiums		480.6		466.1
Net investment income
U.S. Operations		25.6		28.8
International Operations		11.4		12.0
Run-off Lines		0.7		0.8
Corporate and Other		—		2.8
Total net investment income		37.7		44.4
Net realized investment and other gains (losses)		(34.5)		13.1
Total revenue		$	483.8	$	523.6

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in millions)

2017

2016

2017

2016

Revenue:

Earned premiums

U.S. Operations

$
242.6

$
216.3

$
692.9

$
629.7

International Operations

146.8

142.3

474.9

418.5

Run-off Lines

(0.1
)

0.1

—

0.3

Total earned premiums

389.3

358.7

1,167.8

1,048.5

Net investment income

U.S. Operations

18.8

20.3

66.0

55.8

International Operations

7.7

7.5

24.4

22.7

Run-off Lines

2.0

3.2

7.0

8.8

Corporate and Other

2.4

1.7

7.6

2.3

Total net investment income

30.9

32.7

105.0

89.6

Fee and other income

13.0

7.6

20.4

20.2

Net realized investment and other gains

6.0

17.7

25.1

12.8

Total revenue

$
439.2

$
416.7

$
1,318.3

$
1,171.1


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,							For the Three Months Ended March 31,
(in millions)	2017			2016			2017			2016			(in millions)		2022		2021
Income (loss) before income taxes													Income (loss) before income taxes
U.S. Operations	$	28.7		$	45.9		$	118.9		$	126.2		U.S. Operations		$	43.9	$	36.6
International Operations		(77.5	)		20.1			(60.1	)		53.1		International Operations		22.7		(11.8)
Run-off Lines		(12.7	)		(10.0	)		(16.4	)		(14.6	)	Run-off Lines		(1.0)		0.6
Total segment (loss) income before taxes		(61.5	)		56.0			42.4			164.7
Total segment income (loss) before income taxes													Total segment income (loss) before income taxes		65.6		25.4
Corporate and Other		(10.4	)		(11.5	)		(39.9	)		(42.6	)	Corporate and Other		(16.2)		(6.0)
Net realized investment and other gains		6.0			17.7			25.1			12.8
Total (loss) income before income taxes	$	(65.9	)	$	62.2		$	27.6		$	134.9
Net realized investment and other gains (losses)													Net realized investment and other gains (losses)		(34.5)		13.1
Foreign currency exchange losses													Foreign currency exchange losses		(2.9)		(1.3)

Total income (loss) before income taxes													Total income (loss) before income taxes		$	12.0	$	31.2

The table below presents earned premiums by geographic location for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016.~~2021. For this disclosure, we determine geographic location by the country of domicile of our subsidiaries that underwrite the business and not by the location of insureds or reinsureds from whom the business was generated.


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended March 31,
(in millions)	2017		2016		2017		2016		(in millions)		2022		2021
United States									United States		$	336.4	$	312.8
United Kingdom									United Kingdom		127.1		99.0
Bermuda	$	23.3	$	29.0	$	72.0	$	86.1	Bermuda		6.4		25.1
Brazil		11.7		10.4		36.8		29.6
Malta		2.7		0.6		5.0		1.6	Malta		2.3		14.0
United Kingdom		109.1		102.4		361.2		301.1
United States		242.5		216.3		692.8		630.1
All other jurisdictions									All other jurisdictions		8.4		15.2
Total earned premiums	$	389.3	$	358.7	$	1,167.8	$	1,048.5	Total earned premiums		$	480.6	$	466.1

Table of Contents

The following table represents identifiable assets:


(in millions)	March 31, 2022		December 31, 2021
U.S. Operations	$	5,716.2	$	5,800.1
International Operations	3,780.9		3,932.3
Run-off Lines	305.3		314.7
Corporate and Other	178.6		270.7
Total	$	9,981.0	$	10,317.8

(in millions)

September 30, 2017

December 31, 2016

U.S. Operations

$
4,335.1

$
3,961.2

International Operations

3,814.2

2,356.9

Run-off Lines

458.9

537.0

Corporate and Other

449.8

349.9

Total

$
9,058.0

$
7,205.0

Included in total assets at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 are ~~$815.7~~$247.0 million and ~~$630.4~~$825.9 million, respectively, in assets associated with trade capital providers.

~~18.~~

~~Senior Unsecured Fixed Rate Notes~~

~~In September 2012, Argo Group (the “Parent Guarantor”), through~~

16. Subsequent Events

On April 28, 2022, the Company announced that its ~~subsidiary Argo Group US (the “Subsidiary Issuer”), issued $143,750,000 aggregate principal amount~~Board of Directors has initiated an exploration of strategic alternatives. As part of this process, the ~~Subsidiary Issuer’s 6.5% Senior Notes due September 15, 2042 (the “Notes”).~~Board of Directors will consider a wide range of options for the Company including, among other things, a potential sale, merger or other strategic transaction.

There can be no assurance that this process will result in the Company pursuing a particular transaction or other strategic outcome. The ~~Notes are unsecured~~Company has not set a timetable for completion of this process, and ~~unsubordinated obligations of~~it does not intend to disclose further developments unless and until it determines that further disclosure is appropriate or necessary.

Additionally, in April 2022, the ~~Subsidiary Issuer and rank equally in right of payment with all of the Subsidiary Issuer’s other unsecured and unsubordinated debt. The Notes are guaranteed~~Company reached agreement on a ~~full and unconditional senior unsecured basis by the Parent Guarantor. The Notes may be redeemed,~~loss portfolio transfer (“LPT”) transaction for cash, in whole or in part, on or after September 15, 2017, at the Subsidiary Issuer’s option, at any time and from time to time, prior to maturity at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued but unpaid interest on the principal amount being redeemed to, but not including, the redemption date.

In accordance with ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (Topic 835), we present the unamortized debt issuance costs in the balance sheet as a direct deduction from the carrying value of the debt liability. At September 30, 2017 and December 31, 2016, the Notes consisted of the following:

(in millions)

September 30, 2017

December 31, 2016

Senior unsecured fixed rate notes

Principal

$
143.8

$
143.8

Less: unamortized debt issuance costs

(4.2
)

(4.3
)
Senior unsecured fixed rate notes, less unamortized debt
issuance costs

$
139.6

$
139.5

~~In accordance with Article 10 of SEC Regulation S-X, we have elected to present condensed consolidating financial information in lieu of separate financial statements~~Syndicate 1200's reserves for the ~~Subsidiary Issuer. The following tables present condensed consolidating financial information at September 30, 2017~~2018 and ~~December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016,~~2019 Years of the Parent Guarantor and the Subsidiary Issuer. The Subsidiary Issuer is an indirect wholly-owned subsidiary of the Parent Guarantor. Investments in subsidiaries are accounted for by the Parent Guarantor under the equity method for purposes of the supplemental consolidating presentation. Earnings of subsidiaries are reflected in the Parent Guarantor’s investment accounts and earnings.

The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer. Condensed consolidating financial information of the Subsidiary Issuer is presented on a consolidated basis and consists principally of the net assets, results of operations and cash flows of operating insurance company subsidiaries.

~~CONDENSED CONSOLIDATING BALANCE SHEET~~

~~SEPTEMBER 30, 2017~~

~~(in millions)~~

~~(Unaudited)~~

Argo Group
International
Holdings, Ltd
(Parent Guarantor)

Argo Group US, Inc.
and Subsidiaries
(Subsidiary Issuer)

Other Subsidiaries
and Eliminations ⁽¹⁾

Consolidating
Adjustments ⁽²⁾

Total

Assets

Investments

$
(1.6
)

$
3,039.1

$
1,770.0

$
—

$
4,807.5

Cash

—

73.5

162.3

—

235.8

Accrued investment income

—

16.8

6.8

—

23.6

Premiums receivable

—

227.3

451.5

—

678.8

Reinsurance recoverables

—

1,450.3

651.6

—

2,101.9

Goodwill and other intangible assets, net

44.4

125.2

90.9

—

260.5

Deferred acquisition costs, net

—

82.3

86.5

—

168.8

Ceded unearned premiums

—

194.9

266.5

—

461.4

Other assets

8.3

173.7

137.7

—

319.7

Intercompany note receivable

—

50.2

69.8

(120.0
)

—

Investments in subsidiaries

2,086.7

—

—

(2,086.7
)

—

Total assets

$
2,137.8

$
5,433.3

$
3,693.6

$
(2,206.7
)

$
9,058.0

Liabilities and Shareholders' Equity

Reserves for losses and loss adjustment expenses

$
—

$
2,452.6

$
1,853.3

$
—

$
4,305.9

Unearned premiums

—

694.5

591.5

—

1,286.0

Funds held and ceded reinsurance payable, net

—

790.1

77.5

—

867.6

Long-term debt

153.4

284.6

142.8

—

580.8

Current income taxes payable, net

—

7.9

3.1

—

11.0

Deferred tax liabilities, net

—

37.3

4.2

—

41.5

Accrued underwriting expenses and other liabilities

12.1

103.2

41.9

—

157.2

Due to affiliates

44.3

6.9

(6.9
)

(44.3
)

—

Intercompany note payable

120.0

40.1

(40.1
)

(120.0
)

—

Total liabilities

329.8

4,417.2

2,667.3

(164.3
)

7,250.0

Total shareholders' equity

1,808.0

1,016.1

1,026.3

(2,042.4
)

1,808.0

Total liabilities and shareholders' equity

$
2,137.8

$
5,433.3

$
3,693.6

$
(2,206.7
)

$
9,058.0

⁽¹⁾	~~Includes all other subsidiaries of Argo Group International Holdings, Ltd. and all intercompany eliminations.~~

Account.

⁽²⁾	~~Includes all Argo Group parent company eliminations.~~

~~CONDENSED CONSOLIDATING BALANCE SHEET~~

~~DECEMBER 31, 2016~~

~~(in millions)~~

Argo Group
International
Holdings, Ltd
(Parent Guarantor)

Argo Group US, Inc.
and Subsidiaries
(Subsidiary Issuer)

Other Subsidiaries
and Eliminations ⁽¹⁾

Consolidating
Adjustments ⁽²⁾

Total

Assets

Investments

$
2.2

$
2,834.2

$
1,487.9

$
—

$
4,324.3

Cash

—

53.7

32.3

—

86.0

Accrued investment income

—

16.0

4.7

—

20.7

Premiums receivable

—

204.9

258.9

—

463.8

Reinsurance recoverables

—

1,348.4

37.2

—

1,385.6

Goodwill and other intangible assets, net

—

127.1

92.8

—

219.9

Deferred acquisition costs, net

—

63.5

75.6

—

139.1

Ceded unearned premiums

—

168.9

133.9

—

302.8

Other assets

8.7

168.0

86.1

—

262.8

Intercompany note receivable

—

50.2

(50.2
)

—

—

Investments in subsidiaries

1,834.4

—

—

(1,834.4
)

—

Total assets

$
1,845.3

$
5,034.9

$
2,159.2

$
(1,834.4
)

$
7,205.0

Liabilities and Shareholders' Equity

Reserves for losses and loss adjustment expenses

$
—

$
2,322.4

$
1,028.4

$
—

$
3,350.8

Unearned premiums

—

580.0

390.0

—

970.0

Funds held and ceded reinsurance payable, net

—

750.2

(206.5
)

—

543.7

Long-term debt

28.4

284.4

54.8

—

367.6

Current income taxes payable, net

—

8.5

(0.4
)

—

8.1

Deferred tax liabilities, net

—

17.6

6.5

—

24.1

Accrued underwriting expenses and other liabilities

13.7

92.0

42.3

—

148.0

Due to affiliates

10.5

1.8

(1.8
)

(10.5
)

—

Total liabilities

52.6

4,056.9

1,313.3

(10.5
)

5,412.3

Total shareholders' equity

1,792.7

978.0

845.9

(1,823.9
)

1,792.7

Total liabilities and shareholders' equity

$
1,845.3

$
5,034.9

$
2,159.2

$
(1,834.4
)

$
7,205.0

⁽¹⁾	~~Includes all other subsidiaries of Argo Group International Holdings, Ltd. and all intercompany eliminations.~~

⁽²⁾	~~Includes all Argo Group parent company eliminations.~~

~~CONDENSED CONSOLIDATING STATEMENT OF LOSS~~

~~FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2017~~

~~(in millions)~~

~~(Unaudited)~~

Argo Group
International
Holdings, Ltd
(Parent Guarantor)

Argo Group US, Inc.
and Subsidiaries
(Subsidiary Issuer)

Other Subsidiaries
and Eliminations ⁽¹⁾

Consolidating
Adjustments ⁽²⁾

Total

Premiums and other revenue:

Earned premiums

$
—

$
145.3

$
244.0

$
—

$
389.3

Net investment (expense) income

(1.1
)

16.5

15.5

—

30.9

Fee and other income

—

12.3

0.7

—

13.0

Net realized investment and other gains (losses)

—

6.6

(0.6
)

—

6.0

Total revenue

(1.1
)

180.7

259.6

—

439.2

Expenses:

Losses and loss adjustment expenses

—

99.1

227.3

—

326.4

Underwriting, acquisition and insurance
   expenses

5.6

74.0

86.5

—

166.1

Interest expense

1.6

4.2

1.7

—

7.5

Fee and other expense

—

4.1

0.9

—

5.0

Foreign currency exchange (gains) loss

—

(0.1
)

0.2

—

0.1

Total expenses

7.2

181.3

316.6

—

505.1

(Loss) Income before income taxes

(8.3
)

(0.6
)

(57.0
)

—

(65.9
)
Provision for income taxes

—

(0.6
)

(4.0
)

—

(4.6
)
Net (loss) income before equity in earnings of
   subsidiaries

(8.3
)

0.0

(53.0
)

—

(61.3
)
Equity in undistributed earnings of
   subsidiaries

(53.0
)

—

—

53.0

—

Net loss

$
(61.3
)

$
0.0

$
(53.0
)

$
53.0

$
(61.3
)

⁽¹⁾	~~Includes all other subsidiaries of Argo Group International Holdings, Ltd. and all intercompany eliminations.~~

⁽²⁾	~~Includes all Argo Group parent company eliminations.~~

~~CONDENSED CONSOLIDATING STATEMENT OF INCOME~~

~~FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016~~

~~(in millions)~~

~~(Unaudited)~~

Argo Group
International
Holdings, Ltd
(Parent Guarantor)

Argo Group US, Inc.
and Subsidiaries
(Subsidiary Issuer)

Other Subsidiaries
and Eliminations ⁽¹⁾

Consolidating
Adjustments ⁽²⁾

Total

Premiums and other revenue:

Earned premiums

$
—

$
128.0

$
230.7

$
—

$
358.7

Net investment (expense) income

(0.9
)

22.5

11.1

—

32.7

Fee and other income

—

5.5

2.1

—

7.6

Net realized investment and other gains (losses)

—

19.4

(1.7
)

—

17.7

Total revenue

(0.9
)

175.4

242.2

—

416.7

Expenses:

Losses and loss adjustment expenses

—

83.5

124.3

—

207.8

Underwriting, acquisition and insurance
   expenses

3.7

54.0

79.7

—

137.4

Interest expense

0.3

4.0

0.6

—

4.9

Fee and other expense

—

5.5

0.4

—

5.9

Foreign currency exchange (gains) loss

—

0.2

(1.7
)

—

(1.5
)
Total expenses

4.0

147.2

203.3

—

354.5

(Loss) Income before income taxes

(4.9
)

28.2

38.9

—

62.2

Provision for income taxes

—

6.8

0.2

—

7.0

Net (loss) income before equity in earnings of
   subsidiaries

(4.9
)

21.4

38.7

—

55.2

Equity in undistributed earnings of
   subsidiaries

60.1

—

—

(60.1
)

—

Net income

$
55.2

$
21.4

$
38.7

$
(60.1
)

$
55.2

⁽¹⁾	~~Includes all other subsidiaries of Argo Group International Holdings, Ltd. and all intercompany eliminations.~~

⁽²⁾	~~Includes all Argo Group parent company eliminations.~~

~~CONDENSED CONSOLIDATING STATEMENT OF INCOME~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017~~

~~(in millions)~~

~~(Unaudited)~~

Argo Group
International
Holdings, Ltd
(Parent Guarantor)

Argo Group US, Inc.
and Subsidiaries
(Subsidiary Issuer)

Other Subsidiaries
and Eliminations ⁽¹⁾

Consolidating
Adjustments ⁽²⁾

Total

Premiums and other revenue:

Earned premiums

$
—

$
411.7

$
756.1

$
—

$
1,167.8

Net investment (expense) income

(3.2
)

64.7

43.5

—

105.0

Fee and other income

—

18.0

2.4

—

20.4

Net realized investment and other gains (losses)

0.5

25.6

(1.0
)

—

25.1

Total revenue

(2.7
)

520.0

801.0

—

1,318.3

Expenses:

Losses and loss adjustment expenses

—

247.7

531.8

—

779.5

Underwriting, acquisition and insurance
expenses

17.8

190.7

265.9

—

474.4

Interest expense

3.0

12.7

4.7

—

20.4

Fee and other expense

—

10.7

1.7

—

12.4

Foreign currency exchange loss

—

(0.1
)

4.1

—

4.0

Total expenses

20.8

461.7

808.2

—

1,290.7

(Loss) Income before income taxes

(23.5
)

58.3

(7.2
)

—

27.6

Provision for income taxes

—

13.9

(7.7
)

—

6.2

Net (loss) income before equity in earnings of
subsidiaries

(23.5
)

44.4

0.5

—

21.4

Equity in undistributed earnings of subsidiaries

44.9

—

—

(44.9
)

—

Net income

$
21.4

$
44.4

$
0.5

$
(44.9
)

$
21.4

⁽¹⁾	~~Includes all other subsidiaries of Argo Group International Holdings, Ltd. and all intercompany eliminations.~~

⁽²⁾	~~Includes all Argo Group parent company eliminations.~~

~~CONDENSED CONSOLIDATING STATEMENT OF INCOME~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016~~

~~(in millions)~~

~~(Unaudited)~~

Argo Group
International
Holdings, Ltd
(Parent Guarantor)

Argo Group US, Inc.
and Subsidiaries
(Subsidiary Issuer)

Other Subsidiaries
and Eliminations ⁽¹⁾

Consolidating
Adjustments ⁽²⁾

Total

Premiums and other revenue:

Earned premiums

$
—

$
368.1

$
680.4

$
—

$
1,048.5

Net investment (expense) income

(2.0
)

62.6

29.0

—

89.6

Fee and other income

—

14.9

5.3

—

20.2

Net realized investment and other gains (losses)

0.2

32.5

(19.9
)

—

12.8

Total revenue

(1.8
)

478.1

694.8

—

1,171.1

Expenses:

Losses and loss adjustment expenses

—

220.9

375.1

—

596.0

Underwriting, acquisition and insurance
   expenses

10.0

150.6

242.4

—

403.0

Interest expense

1.0

11.8

1.8

—

14.6

Fee and other expense

—

16.7

1.4

—

18.1

Foreign currency exchange (gains) loss

—

0.1

4.4

—

4.5

Total expenses

11.0

400.1

625.1

—

1,036.2

(Loss) Income before income taxes

(12.8
)

78.0

69.7

—

134.9

Provision for income taxes

—

20.5

0.6

—

21.1

Net (loss) income before equity in earnings of
   subsidiaries

(12.8
)

57.5

69.1

—

113.8

Equity in undistributed earnings of
   subsidiaries

126.6

—

—

(126.6
)

—

Net income

$
113.8

$
57.5

$
69.1

$
(126.6
)

$
113.8

⁽¹⁾	~~Includes all other subsidiaries of Argo Group International Holdings, Ltd. and all intercompany eliminations.~~

⁽²⁾	~~Includes all Argo Group parent company eliminations.~~

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017~~

~~(in millions)~~

~~(Unaudited)~~

Argo Group
International
Holdings, Ltd
(Parent Guarantor)

Argo Group US, Inc.
and Subsidiaries
(Subsidiary Issuer)

Other Subsidiaries
and Eliminations ⁽¹⁾

Consolidating
Adjustments ⁽²⁾

Total

Net cash flows from  operating activities

$
11.8

$
175.3

$
65.3

$
—

$
252.4

Cash flows from investing activities:

Proceeds from sales of investments

—

652.5

625.5

—

1,278.0

Maturities and mandatory calls of fixed
   maturity investments

—

350.6

142.6

—

493.2

Purchases of investments

—

(1,140.8
)

(919.4
)

—

(2,060.2
)
Change in short-term investments and
   foreign regulatory deposits

1.8

29.6

232.8

—

264.2

Settlements of foreign currency exchange
   forward contracts

0.8

(5.5
)

4.7

—

—

Acquisition of subsidiaries, net of cash

(235.3
)

—

130.1

—

(105.2
)
Issuance of intercompany note, net

—

—

(120.0
)

120.0

—

Purchases of fixed assets and other, net

(0.1
)

(5.3
)

(30.6
)

—

(36.0
)
Cash (used in) provided by investing activities

(232.8
)

(118.9
)

65.7

120.0

(166.0
)
Cash flows from financing activities:

Additional long-term borrowings

125.0

—

—

—

125.0

Borrowing under intercompany note, net

120.0

—

—

(120.0
)

—

Activity under stock incentive plans

0.9

—

—

—

0.9

Repurchase of Company's common shares

—

(36.6
)

—

—

(36.6
)
Payment of cash dividend to common
   shareholders

(24.9
)

—

—

—

(24.9
)
Cash provided by (used in) financing activities

221.0

(36.6
)

—

(120.0
)

64.4

Effect of exchange rate changes on cash

—

—

(1.0
)

—

(1.0
)
Change in cash

—

19.8

130.0

—

149.8

Cash, beginning of year

—

53.7

32.3

—

86.0

Cash, end of period

$
—

$
73.5

$
162.3

$
—

$
235.8

⁽¹⁾	~~Includes all other subsidiaries of Argo Group International Holdings, Ltd. and all intercompany eliminations.~~

⁽²⁾	~~Includes all Argo Group parent company eliminations.~~

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016~~

~~(in millions)~~

~~(Unaudited)~~

Argo Group
International
Holdings, Ltd
(Parent Guarantor)

Argo Group US, Inc.
and Subsidiaries
(Subsidiary Issuer)

Other Subsidiaries
and Eliminations ⁽¹⁾

Consolidating
Adjustments ⁽²⁾

Total

Net cash flows from (used in) operating activities

$
19.6

$
60.7

$
70.5

$
—

$
150.8

Cash flows from investing activities:

Proceeds from sales of investments

—

762.4

246.8

—

1,009.2

Maturities and mandatory calls of fixed
   maturity investments

—

419.7

419.3

—

839.0

Purchases of investments

—

(1,134.6
)

(721.1
)

—

(1,855.7
)
Change in short-term investments and
   foreign regulatory deposits

(0.4
)

(70.5
)

(3.0
)

—

(73.9
)
Settlements of foreign currency exchange
   forward contracts

—

—

(7.2
)

—

(7.2
)
Purchases of fixed assets and other, net

—

8.1

(2.9
)

—

5.2

Cash (used in) provided by investing activities

(0.4
)

(14.9
)

(68.1
)

—

(83.4
)
Cash flows from financing activities:

Activity under stock incentive plans

0.6

—

—

—

0.6

Repurchase of Company's common shares

—

(45.3
)

—

—

(45.3
)
Payment of cash dividend to common
   shareholders

(19.8
)

—

—

—

(19.8
)
Cash used in financing activities

(19.2
)

(45.3
)

—

—

(64.5
)
Effect of exchange rate changes on cash

—

—

(1.0
)

—

(1.0
)
Change in cash

—

0.5

1.4

—

1.9

Cash, beginning of year

—

88.8

32.9

—

121.7

Cash, end of period

$
—

$
89.3

$
34.3

$
—

$
123.6

⁽¹⁾	~~Includes all other subsidiaries of Argo Group International Holdings, Ltd. and all intercompany eliminations.~~

⁽²⁾	~~Includes all Argo Group parent company eliminations.~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of our results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 compared with the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2021, and ~~also~~ a discussion of our financial condition as of ~~September 30, 2017.~~March 31, 2022. This discussion and analysis should be read in conjunction with the attached unaudited interim Condensed Consolidated Financial Statements and notes thereto and Argo Group’s ~~Annual Report on~~2021 Form 10-K, ~~for the year ended December 31, 2016 filed with the Securities and Exchange Commission (“SEC”) on February 24, 2017,~~ including the audited Consolidated Financial Statements and notes thereto.

Certain reclassifications have been made to financial information presented for prior years to conform to the current year’s presentation.

Forward Looking Statements

~~Management’s Discussion~~

This report includes forward-looking statements that reflect our current views with respect to future events and ~~Analysis~~financial performance. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of ~~Financial Condition~~words such as "expect," "intend," "plan," "believe," “do not believe,” “aim,” "project," "anticipate," “seek,” "will," “likely,” “assume,” “estimate,” "may," “continue,” “guidance,” “growth,” “objective,” “remain optimistic,” “improve,” “progress,” “path toward,” “outlook,” “trends,” “future,” “could,” “would,” “should,” “target,” “on track” and ~~Results~~similar expressions of Operations, Quantitative and Qualitative Disclosures about Market Risk and the accompanying Consolidated Financial Statements (including the notes thereto) may contain “forward looking statements,” which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward lookinga future or forward-looking nature.

Such statements are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that actual developments will be those anticipated by us. Actual results may differ materially as a result of significantsubject to certain risks and uncertainties including non-receipt of expected payments, capital markets and their effect on investment income and fair value of the investment portfolio, development of claims and the effect on loss reserves, accuracy in estimating loss reserves, changes in the demand for our products, effect of general economic conditions, adverse government legislation and regulations, government investigations into industry practices, developments relatingthat could cause actual events or results to ~~existing agreements, heightened competition, changes in pricing environments and changes in asset valuations.~~differ materially. For a more detailed discussion of such risks and uncertainties, see ~~our public filings made with the SEC. We undertake~~Item 1A, “Risk Factors” in Argo Group’s 2021 Form 10-K. 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. You should not place undue reliance on any ~~forward looking~~such statements.

Generally, it is our policy to communicate events that may have a material adverse impact on our operations or financial position, including property and casualty catastrophe events and material losses in the investment portfolio, in a timely manner through a public announcement. It is also our policy not to make public announcements regarding events that are believed to have no material adverse impact on our results

Table of ~~operations or financial position based on management’s current estimates and available information, other than through regularly scheduled calls, press releases or filings.~~

Contents

Consolidated Results of Operations

For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2022, we reported net loss attributable to common shareholders of $3.6 million ($0.11 per diluted common share). For the three months ended March 31, 2021, we reported a net ~~loss~~income attributable to common shareholders of ~~$61.3~~$27.2 million ($~~2.04~~0.78 per diluted common share) and net income of $21.4 million ($0.69 per diluted share), respectively. Effective February 6, 2017, we completed the acquisition of Maybrooke Holdings, S.A., and its subsidiaries, including Ariel Reinsurance, Ltd. (collectively “Ariel Re”). Included in our consolidated results of operations for the three and nine months ended September 30, 2017 is activity specifically attributable to Ariel Re from the date of acquisition. For the three and nine months ended September 30, 2016, we reported net income of $55.2 million ($1.80 per diluted share) and $113.8 million ($3.68 per diluted share), respectively.

The following is a comparison of selected data from our ~~operations:~~

operations, as well as book value per common share, for the relevant comparative periods:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,							For the Three Months Ended March 31,
(in millions)	2017			2016			2017			2016			(in millions)		2022			2021
Gross written premiums	$	805.1		$	585.4		$	2,090.9		$	1,665.8		Gross written premiums		$	720.6		$	756.5
Earned premiums	$	389.3		$	358.7		$	1,167.8		$	1,048.5		Earned premiums		$	480.6		$	466.1
Net investment income		30.9			32.7			105.0			89.6		Net investment income		37.7			44.4
Fee and other income		13.0			7.6			20.4			20.2
Net realized investment and other gains		6.0			17.7			25.1			12.8

Net realized investment and other gains (losses):													Net realized investment and other gains (losses):
Net realized investment and other losses													Net realized investment and other losses		(40.2)			(1.3)
Change in fair value recognized													Change in fair value recognized		6.7			15.5
Change in allowance for credit losses on fixed maturity securities													Change in allowance for credit losses on fixed maturity securities		(1.0)			(1.1)
Total net realized investment and other gains (losses)													Total net realized investment and other gains (losses)		(34.5)			13.1
Total revenue	$	439.2		$	416.7		$	1,318.3		$	1,171.1		Total revenue		$	483.8		$	523.6
(Loss) income before income taxes	$	(65.9	)	$	62.2		$	27.6		$	134.9
Income tax (benefit) provision		(4.6	)		7.0			6.2			21.1
Net (loss) income	$	(61.3	)	$	55.2		$	21.4		$	113.8
Income before income taxes													Income before income taxes		$	12.0		$	31.2
Income tax provision													Income tax provision		13.0			1.4
Net income (loss)													Net income (loss)		$	(1.0)		$	29.8
Less: Dividends on preferred shares													Less: Dividends on preferred shares		2.6			2.6
Net income (loss) attributable to common shareholders													Net income (loss) attributable to common shareholders		$	(3.6)		$	27.2
GAAP Ratios:													GAAP Ratios:
Loss ratio		83.8	%		57.9	%		66.7	%		56.8	%	Loss ratio		59.0		%	66.0		%
Expense ratio		42.7	%		38.3	%		40.6	%		38.4	%	Expense ratio		36.0		%	37.8		%
Combined ratio		126.5	%		96.2	%		107.3	%		95.2	%	Combined ratio		95.0		%	103.8		%

The table above includes GAAP ratios we use to measure our profitability. We believe that they enhance an investor’s understanding of our profitability. They are calculated as follows:

a.Loss ratio: the ratio of claims and claims expense to premiums earned. Loss ratios include the impact of catastrophe losses.

b.Expense ratio: the ratio of underwriting, acquisition and insurance expense to premiums earned.

c.Combined ratio: the sum of the loss ratio and the expense ratio. The difference between 100% and the combined ratio represents underwriting income (loss) as a percentage of premiums earned, or underwriting margin.


	March 31, 2022		December 31, 2021		March 31, 2021
Book value per common share	$	41.97	$	45.62	$	48.23

Table of Contents

Impact of COVID-19

Beginning in March 2020 and continuing throughout 2021 and year to date 2022, the global COVID-19 pandemic, including the arrival of new strains of the virus, has resulted in significant disruptions in economic activity and financial markets. While the Company’s consolidated net investment income benefited from the gradual improvement of economic conditions as the impact of the pandemic lessened during 2021, COVID-19 has directly and indirectly adversely affected the Company and may continue to do so for an uncertain period of time. The Company did not incur any COVID-19 catastrophe losses during the three months ended March 31, 2022, as compared to $4.4 million for the three months ended March 31, 2021. Our liquidity and capital resources were not materially impacted by COVID-19 and related economic conditions during the three months ended March 31, 2022 or 2021. Although vaccines are now available and are in the process of being widely distributed, the extent to which COVID-19 (including emerging new strains of the COVID-19 virus) will continue to impact our business will depend on future developments that cannot be predicted, and while we have recorded our best estimates of this impact as of and for the three months ended March 31, 2022, actual results in future periods could materially differ from those disclosed herein.

Non-GAAP Measures

In presenting our results in the following discussion and analysis of our results of operations, we have included certain non-generally accepted accounting principles ("non-GAAP") financial measures. We believe that these non-GAAP measures, specifically current accident year non-catastrophe losses, current accident year non-catastrophe loss ratio and current accident year non-catastrophe combined ratios, which may be defined differently by other companies, explain our results of operations in a manner that allows for an understanding of the underlying trends in our business. However, these measures should not be viewed as a substitute for those determined in accordance with U.S. generally accepted accounting principles ("GAAP"). Reconciliations of these financial measures to their most directly comparable GAAP measures are included in the tables below.


	For the Three Months Ended March 31,
	2022				2021
(in millions)	Amount		Ratio		Amount		Ratio
Earned premiums	$	480.6			$	466.1




Losses and loss adjustment expenses, as reported	$	283.6	59.0	%	$	307.6	66.0	%
Less:
Favorable (unfavorable) prior accident year loss development	(3.4)		(0.7)	%	(1.0)		(0.2)	%
Catastrophe losses, including COVID-19	(8.7)		(1.8)	%	(47.5)		(10.2)	%
Current accident year non-catastrophe losses (non-GAAP)	$	271.5	56.5	%	$	259.1	55.6	%
Expense ratio			36.0	%			37.8	%
Current accident year non-catastrophe combined ratio (non-GAAP)			92.5	%			93.4	%

Current accident year non-catastrophe losses, current accident year non-catastrophe loss ratio and current accident year non-catastrophe combined ratio are internal performance measures used by the Company to evaluate its underwriting activity by excluding catastrophe related charges and the impact of changes to prior year loss reserves. Management believes that these non-GAAP metrics measure performance in a way that is useful to investors as it removes the impact of volatile and unpredictable catastrophe losses and prior accident year reserve development.

Table of Contents

Gross Written and Net Earned Premiums

Consolidated gross written and net earned premiums by our four primary insurance lines were as follows:

For the Three Months Ended September 30,

2017

2016

(in millions)
Gross Written

Net Earned

Gross Written

Net Earned

Property
$
245.1

$
75.5

$
145.8

$
81.8

Liability

333.5

182.8

267.3

170.7

Professional

89.0

53.5

75.0

43.6

Specialty

137.5

77.5

97.3

62.6

Total
$
805.1

$
389.3

$
585.4

$
358.7


	For the Nine Months Ended September 30,									For the Three Months Ended March 31,
	2017				2016					2022				2021
(in millions)	Gross Written		Net Earned		Gross Written		Net Earned		(in millions)	Gross Written		Net Earned		Gross Written		Net Earned
Property	$	583.7	$	254.7	$	461.7	$	247.5	Property	$	96.5	$	69.9	$	136.3	$	84.6
Liability		842.0		514.9		723.4		495.2	Liability	320.0		206.0		324.0		196.1
Professional		240.3		155.9		210.1		128.6	Professional	149.4		116.3		165.1		104.9
Specialty		424.9		242.3		270.6		177.2	Specialty	154.7		88.4		131.1		80.5
Total	$	2,090.9	$	1,167.8	$	1,665.8	$	1,048.5	Total	$	720.6	$	480.6	$	756.5	$	466.1

~~The increase in consolidated gross~~

Gross written premiums decreased $35.9 million, or 4.7%, for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022, as compared to the ~~same periods~~three months ended ~~2016 was~~March 31, 2021. The decrease in gross written premiums is primarily attributable to ~~growth~~businesses we are exiting, including contract binding and excess and surplus (“E&S”) property businesses in the U.S. in addition to the exits of our London direct and facultative and North American binder business in our International Operations. Re-underwriting actions across ~~all product~~our catastrophe exposed lines of business further contributed to this decrease. Both U.S. Operations and International Operations continued to see overall rate increases (mid single to low double digits) during 2021 and 2022.

Consolidated net earned premiums increased $14.5 million, or 3.1%, for the three months ended March 31, 2022, as ~~we continue~~compared to ~~focus on introducing new products and increasing renewal retention. Additionally, Ariel Re contributed gross written~~the three months ended March 31, 2021. The increase is primarily driven by business units in our U.S. Operations for which the segment observed a net earned premiums increase of ~~$136.0 million and $255.5~~$22.0 million for the three ~~and nine~~ months ended September 30, 2017, respectively. During 2017, all product lines have experienced increased competition and pressure on rates due to market conditions. Consolidated earned premiums increased for the three and nine months ended September 30, 2017March 31, 2022, as compared to the ~~same periods in 2016 due to increased~~three months ended March 31, 2021. The main drivers of growth include Argo Pro, primarily driven by higher premium retention, and additional growth from surety, casualty, specialty programs and garage business units.

Our gross written ~~premiums in the fourth quarter of 2016~~ and ~~into the first nine months of 2017. The increase in consolidated~~net earned premiums are further discussed by reporting segment and major lines of business below under the heading “Segment Results.”

Net Investment Income

Consolidated net investment income decreased $6.7 million, or 15.1%, for the three ~~and nine~~ months ended September 30, 2017 includes Ariel Re earned premiums of $26.0 million and $90.9 million, respectively. Partially offsetting these increases was the reduction in our participation percentage for the Syndicate 1200 operations, from 53.5% for 2016 to 46.0% for 2017. Additionally, during the third quarter of 2017, we recorded catastrophe-related reinsurance premium adjustments which reduced net earned premiums by $14.5 million and, in connection with risk management activities relatedMarch 31, 2022 as compared to the ~~acquisition of Ariel Re, purchased additional reinsurance contracts which reduced net earned premiums by $8.1 million, all within our property lines.~~

three months ended March 31, 2021. The decrease in ~~consolidated~~net investment income was driven by a decrease in income from our alternative investment portfolio which includes earnings from both private equity and hedge fund investments. Our alternative investment portfolio, which is reported on a one to three-month lag, produced net investment income for the three months ended ~~September 30, 2017 as~~March 31, 2022 of $13.6 million, compared to the same period ended 2016 was primarily attributable to decreased investment income from our alternative investment portfolio and increased investment related expenses, partially offset by increased investment income on fixed maturities. For the three months ended September 30, 2017, net investment income from our alternative investment portfolio decreased $4.0 million, from $9.8$20.7 million for the same period ended ~~2016,~~March 31, 2021, primarily from lower returns on hedge funds and ~~investment related expenses increased $1.0 million. Partially offsetting these decreases in net~~private equity investments.

Net investment income ~~was $2.5~~from fixed maturity assets held directly and dividends from equity securities increased slightly to $24.1 million ~~of increased investment income on our fixed maturities portfolio, primarily related to the investment of Ariel Re cash. The increase in consolidated net investment income~~ for the ~~nine~~three months ended ~~September 30, 2017 as~~March 31, 2022, compared to $23.7 million for the same period ended ~~2016 was~~2021, primarily ~~attributable~~due to ~~a $14.0 million~~an increase in ~~the net investment income~~invested assets.

Table of ~~our alternative investment portfolio~~Contents

Net Realized Investment and a $7.0 million increase in income from our fixed maturities portfolio, partially offset by increased investment related expenses. Included in net investment income was $11.6 million of net investment gains relating to net asset sales initiated by an equity investee during the nine months ended September 30, 2017.

Other Gains and Losses

Consolidated net realized investment and other gains ~~of $6.0~~and losses decreased $47.6 million for the three months ended September 30, 2017 consisted of $9.7 million in realized gains from the sale of equity and fixed maturity securities and $1.3 million in realized gains from other invested assets, primarily options. Partially offsetting these realized gains was $4.8 million of realized loss on our foreign currency forward contracts. ForMarch 31, 2022 as compared to the three months ended ~~September 30, 2017, we recognized $0.2 million in other-than-temporary impairment losses within our equity and fixed maturity portfolios.~~March 31, 2021. Consolidated net realized investment and other ~~gains~~losses of ~~$17.7~~$34.5 million for the three months ended ~~September 30, 2016 consisted~~March 31, 2022 included a loss of ~~$24.9~~$28.5 million ~~in realized gains from~~relating to realizing historical foreign currency translation losses on the sale of ~~fixed maturity and equity securities and $0.4 million from other invested assets. Partially offsetting these realized gains was $5.2 million of~~our Brazilian operations, Argo Seguros Brasil S.A., which closed in February 2022. The foreign currency translation losses ~~primarily~~were previously recognized in accumulated other comprehensive income, resulting in no impact to total shareholders’ equity from the sale of fixed maturities. Additionally, for the three months ended September 30, 2016, we recognized $2.4 million in other-than-temporary impairment losses within our fixed maturity and equity portfolios. Consolidatedthis reclassification. In addition, net realized investment and other gains and losses includes a $6.7 million increase in the fair value of ~~$25.1~~equity securities, $1.0 million ~~for~~increase in credit losses on fixed maturities and $11.7 million of net realized investment losses related to the ~~nine months ended September 30, 2017 consisted of $44.6 million in realized gains from the sale~~sales of fixed maturity and equity ~~securities~~securities.

Loss and $0.5 million from other invested assets, primarily options. Partially offsetting these realized gains was $18.3 million of realized foreign currency exchange losses, including $10.4 million on our foreign currency forward

Loss Adjustment Expenses

contracts and $7.9 million on our fixed maturity and equity securities portfolios. Additionally, for the nine months ended September 30, 2017, we recognized $1.7 million in other-than-temporary impairment losses primarily within our equity portfolio. Consolidated net realized investment and other gains of $12.8 million for the nine months ended September 30, 2016 consisted of $48.3 million in realized gains from the sale of fixed maturity and equity securities and $0.2 million from other invested assets. Partially offsetting these realized gains was $26.7 million in realized foreign currency exchange losses, including $11.7 million in foreign currency forward contracts and $15.0 million in our fixed maturity portfolio. Additionally, for the nine months ended September 30, 2016 we recognized other-than-temporary impairment losses on our equity securities and fixed maturity portfolios of $7.3 million and $1.7 million, respectively.

The increase in the loss ratios for the three and nine months ended September 30, 2017 as compared to the same periods in 2016 was primarily attributable to the significant catastrophe losses that occurred in the third quarter of 2017, as well as increased non-catastrophe losses within the current accident year recorded in our Lloyd’s Syndicate 1200.

Consolidated losses and loss adjustment expenses ~~were $326.4~~decreased $24.0 million, ~~and $207.8 million~~or 7.8%, for the three months ended ~~September 30, 2017 and 2016, respectively. Losses and~~March 31, 2022 as compared to the three months ended March 31, 2021. The consolidated loss ~~adjustment expenses include $49.1 million for Ariel Re~~ratio for the three months ended ~~September 30, 2017.~~March 31, 2022 was 59.0%, 7.0 percentage points lower than 66.0% for the same period in 2021, driven by lower catastrophe losses including losses related to COVID-19 (8.4 percentage point decrease), partially offset by a higher current accident year non-catastrophe loss ratio (0.9 percentage point increase), and an increase in net unfavorable prior-year reserve development in 2022 as compared to 2021 (0.5 percentage points). Catastrophe losses ~~net of reinsurance,~~ for the ~~third quarter~~three months ended March 31, 2022 of ~~2017 totaled $90.0~~$8.7 million are primarily attributable to ~~Hurricanes Harvey, Irma~~losses associated with the Ukraine-Russia conflict and Maria and the Mexican earthquakes, as compared to $13.0 million for the third quarter of 2016, primarily due to the Louisiana floods and other U.S. storm activity. The third quarter of 2017 also included $15.0 million of non-catastropheweather related losses in the ~~current accident year, driven primarily~~U.S.

The unfavorable prior-year reserve development was due to $5.0 million from our U.S. Operations and $1.4 million in Run-off lines partially offset by ~~higher than anticipated attritional losses on property business underwritten by our Lloyd’s Syndicate 1200. Included~~$3.0 million of favorable prior-year reserve development in International Operations. Our losses and loss adjustment expenses, ~~for~~including the ~~three months ended September 30, 2017 was $1.3 million of net favorable~~prior-year loss reserve development ~~on prior accident years compared to $2.9 million of net favorable loss reserve development on prior accident years for~~shown in the ~~same period ended 2016.~~

~~Consolidated losses and loss adjustment expenses were $779.5 million and $596.0 million for~~following table, are further discussed by reporting segment under the nine months ended September 30, 2017 and 2016, respectively. Losses and loss adjustment expenses include $81.6 million for Ariel Re from the date of acquisition through September 30, 2017. Included in losses and loss adjustment expenses for the nine months ended September 30, 2017 and 2016 was $96.4 million and $40.5 million, respectively, in catastrophe losses, net of reinsurance. Included in losses and loss adjustment expenses for the nine months ended September 30, 2017 was $4.4 million of net unfavorable loss reserve development on prior accident years compared to $18.8 million of net favorable loss reserve development on prior accident years for the same period ended 2016.

heading “Segment Results” below. The following table summarizes the above referenced prior-year loss reserve development for the three months ended March 31, 2022 with respect to ~~prior year~~net loss reserves by line of business as of December 31, 2021.


(in millions)	Net Reserves 2021		Net Reserve Development (Favorable)/ Unfavorable		Percent of 2021 Net Reserves
General liability	$	1,834.1	$	12.4	0.7	%
Workers compensation	280.5		(2.2)		(0.8)	%
Syndicate and U.S. special property	181.8		(8.5)		(4.7)	%
Syndicate liability	121.4		—		—	%
Reinsurance - nonproportional assumed property	111.1		—		—	%
Commercial multi-peril	208.8		—		—	%
Syndicate marine and energy	77.9		—		—	%
Commercial auto liability	98.4		6.3		6.4	%
Syndicate specialty	41.1		—		—	%
Fidelity/Surety	25.0		(7.3)		(29.2)	%
All other lines	143.1		2.7		1.9	%
Total	$	3,123.2	$	3.4	0.1	%

In determining appropriate reserve levels for the ~~nine~~three months ended ~~September 30, 2017.~~

March 31, 2022, we maintained the same general processes and disciplines that were used to set reserves at prior reporting dates. No significant changes in methodologies were made to estimate the reserves since the last reporting date; however, at each reporting date we reassess the actuarial estimate of the reserve for loss and loss adjustment expenses and record our best estimate. Consistent with prior reserve valuations, as claims data becomes more mature for prior accident years, actuarial estimates were refined to weigh certain actuarial methods more heavily in order to respond to any emerging trends in the paid and reported loss data. Pricing, reinsurance costs, legal environment, general economic conditions including changes in inflation and many other factors impact our ultimate loss estimates.

(in millions)

2016
Net Reserves

Net Reserve
Development
(Favorable)/
Unfavorable

Percent of
2016 Net
Reserves

General and professional liability

$
1,028.9

$
10.0

1.0
%
Workers compensation

312.9

(7.6
)

-2.4
%
Lloyd's liability

198.1

11.4

5.8
%
Commercial multi-peril

156.6

(2.6
)

-1.7
%
Commercial auto liability

113.6

(6.5
)

-5.7
%
Property

83.6

11.0

13.2
%
Reinsurance - nonproportional assumed property

65.6

(4.1
)

-6.3
%
Fidelity/Surety

38.4

(6.7
)

-17.4
%
All other lines

182.5

(0.5
)

-0.3
%
Total

$
2,180.2

$
4.4

0.2
%

Table of Contents

Consolidated gross reserves for losses and loss adjustment expenses were ~~$4,305.9~~$5,648.1 million (including ~~$273.3~~$114.3 million of reserves attributable to our ~~Lloyd’s~~ Syndicate ~~1200’s~~1200 and 1910 trade capital providers) and ~~$3,284.8~~$5,595.0 million (including ~~$142.7~~$134.6 million of reserves attributable to our ~~Lloyd’s~~ Syndicate ~~1200’s~~1200 and 1910 trade capital providers) as of ~~September 30, 2017~~March 31, 2022 and ~~2016,~~December 31, 2021, respectively. ~~Management~~Our management has recorded its best estimate of loss reserves at each date based on current known facts and circumstances. Due to the significant uncertainties inherent in the estimation of loss reserves, ~~there can be no assurance~~it is possible that future loss development, favorable or unfavorable, ~~loss development, which~~ may ~~be material, will not~~ occur.

Underwriting, Acquisition and Insurance Expenses

Consolidated underwriting, acquisition and insurance ~~and acquisition expenses were $166.1~~expense decreased $3.5 million, ~~and $474.4 million~~or 2.0%, for the three ~~and nine~~ months ended September 30, 2017, respectively compared to $137.4 million and $403.0 million for the same periods ended 2016. Ariel Re contributed $8.3 million and $24.5 million in underwriting expenses for the three and nine months ended September 30, 2017, respectively. The expense ratio for the three and nine months ended September 30, 2017March 31, 2022 as compared to the ~~same periods~~three months ended ~~2016~~March 31, 2021. The consolidated expense ratio was ~~negatively impacted~~36.0% in the first quarter of 2022 compared to 37.8% for the three months ended March 31, 2021. The expense ratio improved by 2.2% in U.S. Operations and 3.3% in International Operations. The acquisition expense ratio was 17.2% and general and administrative expense ratio was 18.8% in the ~~aforementioned third~~first quarter ~~2017 reductions~~of 2022 as compared to ~~earned premiums~~17.0% and 20.8%, respectively, for ~~catastrophe-related reinsurance premium adjustments and additional reinsurance contracts purchased in connection with risk management activities related to the acquisition of Ariel Re. During~~ the three months ended ~~September 30, 2017, we also recorded a one-time acquisition expense of $3.5 million relating to the final resolution of a premium tax dispute in our U.S. Operations.~~March 31, 2021. The ~~remaining increase~~improvement in the general and administrative expense ratio reflects continued execution of our expense reduction initiatives, primarily driven by a $6.9 million decrease in general and administrative expenses in addition to growth in net earned premium for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 compared to the three months ended March 31, 2021.

Our underwriting, acquisition and insurance expenses are further discussed below by reporting segment under the heading “Segment Results.”

Non-Operating Expenses

Non-operating expenses increased $5.5 million, or 289.5%, for the three months ended March 31, 2022 as compared to the ~~same periods~~three months ended ~~2016 included higher acquisition~~March 31, 2021. The expenses incurred for the three months ended March 31, 2022 primarily relate to advisory fees, severance expenses and retention bonuses, and asset impairments.

These non-recurring costs driven by declines in ceding commissions and fronting fees earned, and writing more binder business, which has higher acquisition rates, in our International Operations. Non-acquisition expenses were negatively impacted by increased information technology and marketing costs, as well as increased personnel expenses in our strategic growth units. Additionally,are included in ~~non-acquisition~~the line item Non-operating expenses in the Company’s Condensed Consolidated Statements of Income (Loss), and have been excluded from the calculation of our expense ~~for the nine months ended September 30, 2017 was $2.5 million in transaction costs related to the Ariel Re acquisition.~~

ratio.

Interest Expense

Consolidated interest expense ~~was $7.5~~increased $0.7 million, ~~and $20.4 million for the three and nine months ended September 30, 2017, respectively, compared~~or 13.7%, to $4.9 million and $14.6 million for the same periods ended 2016. Included in consolidated interest expense was $1.2 million and $3.0 million from the operations of Ariel Re for the three and nine months ended September 30, 2017, respectively. The remaining increase was primarily attributable to interest expense on a $125.0 million term loan entered into to fund a portion of the acquisition price of Ariel Re and to a lesser extent, an increase in short-term LIBOR rates.

~~Consolidated foreign currency exchange loss was $0.1~~$5.8 million for the three months ended ~~September 30, 2017,~~March 31, 2022 as compared to ~~a $1.5 million~~the three months ended March 31, 2021. The year-over-year increase was primarily attributable to higher short-term rates in 2022.

Foreign Currency Exchange Gains/Losses

Consolidated foreign currency exchange ~~gain~~losses increased $1.6 million for the three months ended ~~September 30, 2016. Consolidated foreign currency exchange loss was $4.0 million and $4.5 million for~~March 31, 2022, as compared to the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2021. The changes in the foreign currency exchange ~~gains/~~losses were due to fluctuations of the U.S. Dollar, on a weighted average basis, against the ~~currencies in which we transact our business. For the three months ended September 30, 2017, the U.S.~~Canadian Dollar, ~~weakened against~~Euro and the British Pound, the Euro, the Canadian Dollar and the Australian Dollar. For the nine months ended September 30, 2017, the U.S. Dollar weakened against all major currencies. For the three and nine months ended September 30, 2016, the U.S. Dollar weakened against all major currencies, except for the British Pound.

Income Tax Provision

The consolidated income tax provision represents the income tax expense or benefit associated with our operations based on the tax laws of the jurisdictions in which we operate. Therefore, the consolidated provision for income taxes represents taxes on ~~the~~ net income ~~or loss~~ for our ~~Belgium,~~ Brazil, Ireland, ~~Luxembourg,~~Italy, Malta, Switzerland, United Kingdom, and ~~United States~~U.S. operations. The consolidated income tax benefit was $4.6 million for the three months ended September 30, 2017 compared to income tax expense of $7.0 million for the same period ended 2016. The effective tax rate declined to 7.0% for the three months ended September 30, 2017 from 11.3% for the same period ended 2016. The decline in the effective tax rate was due to approximately 37.4% of our consolidated loss before income taxes for the third quarter of 2017 being attributable to the United States and United Kingdom operations, our primary taxing jurisdictions, as compared to 40.8% of our consolidated income before income taxes being from the same jurisdictions in the third quarter of 2016. The majority of the remaining earnings for the comparative periods were attributable to our Bermuda operations, a zero-taxation jurisdiction. The consolidated provision for income taxes was ~~$6.2 million and $21.1~~$13.0 million for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~ March 31, 2022, compared to the consolidated income tax provision of $1.4 million for the same period ended 2021.

The consolidated effective tax rate was ~~22.3% and 15.7%~~109.7% for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2022 compared to the consolidated effective tax rate of 4.3% for the same period ended 2021. The ~~increase~~change in the effective tax rate was primarily attributable to the change in the income tax provision for our United Kingdom operations, coupled with the impact of the weakening U.S. Dollar against the British Pound. Included in the provision for income taxes for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 was ~~$2.6 million and $0.4 million~~due to the jurisdictional mix of ~~tax benefit for Ariel Re~~taxable income compared to the respective periods in 2021. The primary driver for the ~~three and nine months ended September 30, 2017, respectively.~~

~~Segment Results~~

~~As discussed in Note 1 “Basis of Presentation” and Note 17 “Segment Information,” during~~increased effective tax rate is the ~~first quarter of 2017, we evaluated and modified the presentation~~sale of our ~~reportable segments~~Brazil operations in February 2022 for which the realized foreign exchange loss was excluded from tax calculations, and the tax benefits related to ~~reflect our new operating framework~~the capital loss in Ireland were offset by a valuation allowance. Excluding the sale of Brazil and ~~management structure. As a result, we~~other non-recurring items, the effective tax rate for the period ending March 31, 2022 was more aligned with statutory tax rates.

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Segment Results

We are primarily engaged in writing property and casualty insurance. We have ~~organized our business into~~ two ongoing reporting segments: U.S. Operations and ~~the~~ International Operations. The U.S. Operations includes the former Excess & Surplus and Commercial Specialty reportable segments. The International Operations includes the former Syndicate 1200 and International Specialty reportable segments, and the recently acquired Ariel Re business. Consistent with prior periods, theAdditionally, we have Run-off Lines for products that we no longer underwrite.

We consider many factors, including the nature of each segment’s insurance products, production sources, distribution strategies and ~~Corporate segments include all other activity of Argo Group and are included~~regulatory environment, in our consolidated financial results. It is the business unit that produces the risk and not the location of the underlying exposure that is the primary characteristic in distinguishing U.S Operations from International Operations. For example, a U.S. property exposure underwritten through our Syndicate platform would be included in our International Operations.

determining how to aggregate reporting segments.

Our reportable segments include four primary insurance ~~and reinsurance~~ services and offerings as follows:

•Property includes both property insurance and reinsurance products. Insurance products cover commercial properties primarily in North America with some ~~residential and~~ international covers. Reinsurance covers underlying exposures ~~that are~~ located throughout the world, including the United States. These offerings include coverages for man-made and natural disasters.

•Liability includes a broad range of primary and excess casualty products primarily underwritten as insurance and, to a lesser extent reinsurance, for risks on both an admitted and non-admitted basis in the United States. Internationally, Argo Group underwrites ~~worldwide~~non-U.S. casualty risks primarily exposed in the United Kingdom, Canada and Australia.

•Professional includes various professional lines products including ~~Errors~~errors and ~~Omissions, Management Liability~~omissions and management liability coverages (including ~~Directors~~directors and ~~Officers) and Cyber coverages.~~

officers).

•Specialtyincludes niche insurance coverages ~~including Marine & Energy, Accident & Health~~such as marine and ~~Surety~~energy, accident and health and surety product offerings.

~~The results of operations for prior periods have been reclassified to conform to the current presentation.~~

In evaluating the operating performance of our segments, we focus on core underwriting and investing results before consideration of realized gains or losses from the sales of investments. ~~Intersegment transactions are allocated to the segment that initiated the transaction.~~ Realized investment gains and losses are reported as a component of the Corporate and Other segment, as decisions regarding the acquisition and disposal of securities reside with the corporate investment function and are not under the control of the individual business segments.

Since we generally manage and monitor the investment portfolio on an aggregate basis, the overall performance of the investment portfolio, and related net investment income, is discussed above on a ~~consolidated~~combined basis under consolidated net investment income rather than within or by segment.

U.S. Operations

The following table summarizes the results of operations for U.S. Operations:


	For the Three Months Ended March 31,
(in millions)		2022			2021
Gross written premiums		$	475.2		$	489.4
Earned premiums		$	336.4		$	314.4
Losses and loss adjustment expenses		206.2			195.6
Underwriting, acquisition and insurance expenses		107.7			107.5
Underwriting income (loss)		22.5			11.3
Net investment income		25.6			28.8
Interest expense		(3.9)			(3.6)
Fee and other income (expense), net		—			0.1
Non-operating expenses		(0.3)			—
Income before income taxes		$	43.9		$	36.6
GAAP Ratios:
Loss ratio		61.3		%	62.2		%
Expense ratio		32.0		%	34.2		%
Combined ratio		93.3		%	96.4		%

The table above includes underwriting income (loss) which is an internal performance measure that we use to measure our insurance profitability. We believe underwriting income (loss) enhances an investor’s understanding of insurance operations profitability. Underwriting income (loss) is calculated as earned premiums less losses and loss adjustment expenses less underwriting, acquisition and insurance expense. Although underwriting income (loss) does not replace net income (loss) computed in accordance with GAAP

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as a measure of profitability, management uses underwriting income (loss) to focus our reporting segments on generating operating income.

The following table contains a reconciliation of certain non-GAAP financial measures, specifically the current accident year non-catastrophe losses, current accident year non-catastrophe loss ratio and current accident year non-catastrophe combined ratio, to their most directly comparable GAAP measures for our U.S. ~~Operations segment:~~

Operations.

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in millions)

2017

2016

2017

2016

Gross written premiums

$
428.9

$
360.8

$
1,128.9

$
970.2

Earned premiums

$
242.6

$
216.3

$
692.9

$
629.7

Losses and loss adjustment expenses

148.4

117.5

394.2

348.1

Underwriting, acquisition and insurance expenses

88.6

71.3

243.0

202.7

Underwriting income

5.6

27.5

55.7

78.9

Net investment income

18.8

20.3

66.0

55.8

Interest expense

(3.8
)

(2.2
)

(10.3
)

(6.8
)
Fee and other income

11.6

5.1

16.0

13.1

Fee and other expense

(3.5
)

(4.8
)

(8.5
)

(14.8
)
Income before income taxes

$
28.7

$
45.9

$
118.9

$
126.2

Loss ratio

61.2
%

54.3
%

56.8
%

55.3
%
Expense ratio

36.5
%

33.0
%

35.1
%

32.2
%
Combined ratio

97.7
%

87.3
%

91.9
%

87.5
%


	For the Three Months Ended March 31,
	2022				2021
(in millions)	Amount		Ratio		Amount		Ratio
Earned premiums	$	336.4			$	314.4




Losses and loss adjustment expenses, as reported	206.2		61.3	%	195.6		62.2	%
Less:
Favorable (unfavorable) prior accident year loss development	(5.0)		(1.5)	%	0.4		0.1	%
Catastrophe losses, including COVID-19	(4.0)		(1.2)	%	(20.9)		(6.6)	%
Current accident year non-catastrophe losses (non-GAAP)	$	197.2	58.6	%	$	175.1	55.7	%
Expense ratio			32.0	%			34.2	%
Current accident year non-catastrophe combined ratio (non-GAAP)			90.6	%			89.9	%

Gross Written and Earned Premiums

Gross written and earned premiums by our four primary insurance lines were as follows:

For the Three Months Ended September 30,

2017

2016

(in millions)
Gross Written

Net Earned

Gross Written

Net Earned

Property
$
68.1

$
26.8

$
69.2

$
28.6

Liability

277.2

160.2

226.7

146.3

Professional

46.2

30.8

35.3

21.3

Specialty

37.4

24.8

29.6

20.1

Total
$
428.9

$
242.6

$
360.8

$
216.3

	For the Nine Months Ended September 30,
	2017				2016					For the Three Months Ended March 31,
(in millions)	Gross Written		Net Earned		Gross Written		Net Earned
										2022				2021
										Gross Written		Net Earned		Gross Written		Net Earned
Property	$	193.4	$	85.8	$	188.6	$	93.7	Property	$	44.4	$	40.5	$	56.9	$	42.5
Liability		715.4		454.8		613.2		429.1	Liability	270.6		170.4		266.5		165.7
Professional		119.9		85.5		98.9		56.8	Professional	101.3		84.5		112.0		71.7
Specialty		100.2		66.8		69.5		50.1	Specialty	58.9		41.0		54.0		34.5
Total	$	1,128.9	$	692.9	$	970.2	$	629.7	Total	$	475.2	$	336.4	$	489.4	$	314.4

Property

~~The decline in gross~~

Gross written ~~and earned~~ premiums for property decreased $12.5 million, or 22.0%, for the three months ended ~~September 30, 2017~~March 31, 2022 as compared to the three months ended March 31, 2021 due to the sale of our contract binding and excess and surplus (“E&S”) property business units. New business growth from the garage and inland marine business units partially offset this decrease. Net earned premium decreased for the three months ended March 31, 2022 compared to the same period in 2021 due to the sale of our contract binding and E&S property business.

Liability

Gross written premiums for liability increased $4.1 million, or 1.5%, for the three months ended ~~2016~~March 31, 2022 as compared to the three months ended March 31, 2021. The increase was primarily ~~attributable to planned reductions due to increased competition~~driven from the business units that write general liability, environmental and workers compensation lines. This was partially offset by the ~~pressure on rates. Additionally,~~sale of the third quarter 2017 catastrophe-related reinsurance premium adjustments and additional reinsurance contracts purchased in connection with risk management activities related to the acquisition of Ariel Re reduced net earned premiums in U.S. Operations by $5.2 million.Contract Binding P&C business unit. The increase in ~~gross written premiums for property~~net earned premium for the ~~nine~~three months ended ~~September 30, 2017 as~~March 31, 2022 compared to the same period ~~ended 2016~~in 2021 was ~~primarily attributable to growth~~also a result of the increased production in ~~our fronting programs,~~general liability, environmental and workers compensation lines partially offset reductions from the Contract Binding P&C business unit and the grocery and retail business unit which ~~do not impact earned premiums, but result~~was put into run off in ~~a ceding commissions received. The decline in earned~~the fourth quarter of 2020.

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Professional

Gross written premiums for ~~property~~professional decreased $10.7 million, or 9.6%, for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 as compared to the three months ended March 31, 2021. The decrease was driven by the ongoing remediation initiatives for certain errors and omission lines and by underwriting actions and structure changes for programs business. The increase in net earned premium for the three months ended March 31, 2022 compared to the same period ~~ended 2016~~in 2021 was ~~primarily attributable the previously mentioned third quarter 2017 catastrophe-related reinsurance premium adjustments~~driven by underlying growth across all products except for certain errors and ~~catastrophe and risk management reinsurance contracts, as well as reduced gross~~omission lines which are undergoing remediation.

Specialty

Gross written premiums ~~for the non-fronting programs which were primarily driven by~~ increased ~~competition and pressure on rates.~~

~~Liability~~

~~The increase in gross written and earned premiums for liability~~$4.9 million or 9.1%, for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 as compared to the ~~same periods ended 2016 was primarily attributable to capitalizing on targeted growth initiatives in the specialty and general casualty lines, growth in writings~~March 31, 2021 due to ~~the upturn~~growth achieved primarily in ~~the coal market~~surety.

Loss and ~~the introduction of new products in our programs division.~~

~~Professional~~

~~The increase in gross written~~Loss Adjustment Expenses

Loss and ~~earned premiums within professional~~loss adjustment expenses were $206.2 million and $195.6 million for the three ~~and nine~~ months ended ~~September 30, 2017 as compared to the same periods ended 2016 was primarily attributable to new business within our management liability~~March 31, 2022 and ~~errors and omissions lines.~~

~~Specialty~~

2021, respectively. The ~~increase in gross written and earned premiums for specialty~~loss ratios for the three ~~and nine~~ months ended ~~September 30, 2017 as compared to~~March 31, 2022 and 2021 were 61.3% and 62.2%, respectively. The lower loss ratio in the ~~same periods ended 2016~~first three months of 2022 was driven by ~~growth from new business~~a decrease in ~~our surety lines and new products within our programs division.~~

~~The~~catastrophe losses (5.4 percentage point decrease), offset by an increase in the current accident year non-catastrophe loss ratio of 2.9 percentage points and unfavorable prior-year reserve development in 2022 versus small favorable prior-year reserve development in 2021 (1.6 percentage point increase).

The current accident year non-catastrophe loss ratios for the three months ended March 31, 2022 and 2021 were 58.6% and 55.7%, respectively. The current accident year non-catastrophe loss ratio for the three months ended ~~September 30, 2017 as compared~~March 31, 2022 was impacted by increased inflation and higher claims frequency due to the ~~same period in 2016 was driven by third quarter of 2017 catastrophe losses, as well as lower net favorable loss~~recovering economy.

Net unfavorable prior-year reserve development on prior accident years. Catastrophe losses for the third quarter of 2017 totaled $17.2 million, primarily from Hurricanes Harvey and Irma, as compared to $4.5 million for the third quarter of 2016, mainly attributable to the Louisiana floods. Included in losses and loss adjustment expenses for the three months ended ~~September 30, 2017~~March 31, 2022 was ~~$10.7 million of~~$5.0 million. The net ~~favorable loss~~unfavorable prior year reserve development on prior accident years primarily attributable to net favorable development for the general and products liability, surety and commercial automobile lines. Net favorable loss reserve development on prior accident years for the three months ended ~~September 30, 2016 was $13.7 million concentrated in~~March 31, 2022 primarily related to liability lines, including the ~~surety, commercial automobile, commercial multiple peril and workers compensation lines.~~

~~The increase in the loss ratio for the nine months ended September 30, 2017 as compared to the same period in 2016 was primarily attributable to the previously mentioned third quarter~~impact of ~~2017 catastrophe~~large losses, partially offset by increased net favorable loss reserve development on prior accident years. Catastrophe losses during the first nine months of 2017 totaled $22.1 million, primarily from Hurricanes Harvey and Irma, as compared to $11.5 million for the same period ended 2016, which were mainly attributable to the Louisiana floods and other U.S. storms. Included in losses and loss adjustment expenses for the nine months ended September 30, 2017 was $28.7 million of net favorable loss reserve development on prior accident years primarily attributable to net favorable development ~~for the workers compensation, surety and commercial automobile~~in specialty lines. Net favorable ~~loss~~prior-year reserve development ~~on prior accident years for the nine months ended September 30, 2016 was $25.6 million concentrated in the commercial automobile, surety, workers compensation and property lines.~~

~~The increase in the expense ratio~~ for the three months ended ~~September 30, 2017~~March 31, 2021 was $0.4 million and primarily related to favorable development in specialty lines, partially offset by unfavorable development in professional, liability and property lines.

Catastrophe losses for the three months ended March 31, 2022 and 2021 were $4.0 million and $20.9 million, respectively. Catastrophe losses for the three months ended March 31, 2022 were driven by U.S. storms. Catastrophe losses for the three months ended March 31, 2021 were driven by Winter Storm Uri.

Underwriting, Acquisition and Insurance Expenses

Underwriting, acquisition and insurance expenses were $107.7 million for the three months ended March 31, 2022 as compared to $107.5 million for the three months ended March 31, 2021. The expense ratio decreased to 32.0% for the three months ended March 31, 2022 as compared to 34.2% for the same period ~~in 2016~~2021. The decrease was primarily concentrated by a reduction in our general and administrative expense ratio driven by changes in certain reinsurance agreements and programs that resulted in declines in ceding commissions and fronting fees earned, a one-time expense of $3.5 million relating to the final resolution of a premium tax dispute, as well as increased non-acquisition costs. Thecost savings, partially offset by an increase in ~~non-acquisition expense was primarily driven by increased personnel expenses in~~ our ~~strategic growth units and increased information technology costs.~~

The increase in the expense ratio for the nine months ended September 30, 2017 as compared to the same period ended 2016 was primarily attributable to increased non-acquisition costs. The increase in non-acquisition expenses was primarily attributable to increased personnel expenses, information technology costs, outside services and occupancy costs. The acquisition expense ratio was slightly higher for the nine months ended September 30, 2017 as compared to the same period ended 2016, due to declines in fronting fees and ceding commissions earned and the previously mentioned premium tax charge incurred in the third quarterratio.

Table of ~~2017.~~

Fee and other income, and the associated fee and other expense, increased for the three and nine months ended September 30, 2017 as compared to the same periods in 2016 primarily due to closing a transaction in the third quarter of 2017 related to transferring to a third party the distribution rights and operations of certain business managed on behalf of unaffiliated insurance companies.

Contents

International Operations

The following table summarizes the results of operations for International Operations:


	For the Three Months Ended March 31,
(in millions)		2022			2021
Gross written premiums		$	245.4		$	266.9
Earned premiums		$	144.2		$	151.5
Losses and loss adjustment expenses		76.0			110.6
Underwriting, acquisition and insurance expenses		54.9			62.7
Underwriting income (loss)		13.3			(21.8)
Net investment income		11.4			12.0
Interest expense		(1.7)			(1.4)
Fee and other (expense) income, net		0.8			(0.4)
Non-operating expenses		(1.1)			(0.2)
Income (loss) before income taxes		$	22.7		$	(11.8)
GAAP Ratios:
Loss ratio		52.7		%	73.0		%
Expense ratio		38.1		%	41.4		%
Combined ratio		90.8		%	114.4		%

Operations.

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in millions)

2017

2016

2017

2016

Gross written premiums

$
376.3

$
224.5

$
962.0

$
695.3

Earned premiums

$
146.8

$
142.3

$
474.9

$
418.5

Losses and loss adjustment expenses

166.0

78.9

369.2

230.3

Underwriting, acquisition and insurance
expenses

63.5

50.9

183.8

157.6

Underwriting (loss) income

(82.7
)

12.5

(78.1
)

30.6

Net investment income

7.7

7.5

24.4

22.7

Interest expense

(2.8
)

(1.4
)

(7.1
)

(4.0
)
Fee and other income

0.8

2.0

2.3

5.3

Fee and other expense

(0.5
)

(0.5
)

(1.6
)

(1.5
)
(Loss) income before income taxes

$
(77.5
)

$
20.1

$
(60.1
)

$
53.1

Loss ratio

113.0
%

55.4
%

77.7
%

55.0
%
Expense ratio

43.3
%

35.8
%

38.7
%

37.7
%
Combined ratio

156.3
%

91.2
%

116.4
%

92.7
%


	For the Three Months Ended March 31,
	2022				2021
(in millions)	Amount		Ratio		Amount		Ratio
Earned premiums	$	144.2			$	151.5




Losses and loss adjustment expenses, as reported	76.0		52.7	%	110.6		73.0	%
Less:
Favorable prior accident year loss development	3.0		2.1	%	—		—	%
Catastrophe losses, including COVID-19	(4.7)		(3.3)	%	(26.6)		(17.6)	%
Current accident year non-catastrophe losses (non-GAAP)	$	74.3	51.5	%	$	84.0	55.4	%
Expense ratio			38.1	%			41.4	%
Current accident year non-catastrophe combined ratio (non-GAAP)			89.6	%			96.8	%

Table of Contents

Gross Written and Earned Premiums

Gross written and earned premiums by our four primary insurance lines were as follows:

For the Three Months Ended September 30,

2017

2016

(in millions)
Gross Written

Net Earned

Gross Written

Net Earned

Property
$
177.1

$
48.8

$
76.6

$
53.2

Liability

56.3

22.6

40.5

24.3

Professional

42.8

22.7

39.7

22.3

Specialty

100.1

52.7

67.7

42.5

Total
$
376.3

$
146.8

$
224.5

$
142.3

For the Nine Months Ended September 30,

2017

2016

(in millions)
Gross Written

Net Earned

Gross Written

Net Earned

Property
$
390.3

$
168.9

$
273.1

$
153.8

Liability

126.6

60.1

109.9

65.8

Professional

120.4

70.4

111.2

71.8

Specialty

324.7

175.5

201.1

127.1

Total
$
962.0

$
474.9

$
695.3

$
418.5

~~Ariel Re contributed $136.0~~


	For the Three Months Ended March 31,
	2022				2021
(in millions)	Gross Written		Net Earned		Gross Written		Net Earned
Property	$	52.1	$	29.4	$	79.4	$	42.1
Liability	49.4		35.6		57.3		30.2
Professional	48.1		31.8		53.1		33.2
Specialty	95.8		47.4		77.1		46.0
Total	$	245.4	$	144.2	$	266.9	$	151.5

Property

Gross written premiums for property decreased $27.3 million, ofor 34.4%, for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. The decrease in gross written premiums was primarily due to the sale of Ariel Re and ~~$26.0~~a reduction in business produced by our European operations where we have stopped writing business. Net earned premiums for property decreased $12.7 million offor the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 driven by the aforementioned reasons.

Liability

Gross written premiums for liability decreased $7.9 million, or 13.8%, for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. The reduction in gross written premiums was primarily due to lower premiums from our European operations where we have stopped writing business. Net earned premiums increased for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 driven by increased premium activity in Syndicate 1200 from the General Liability and Transactional Liability classes. This was partially offset by lower net earned premiums from our European operations.

Professional

Gross written premiums for professional lines decreased $5.0 million, or 9.4%, for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. The decrease in gross written premiums was driven by lower premium from our Brazilian business which was sold during the quarter. This was partially offset by growth in Syndicate 1200 Professional Indemnity class. The decrease in net earned premiums for the three months ended ~~September 30, 2017, and $255.5 million of gross~~March 31, 2022 as compared to the three months ended March 31, 2021 was mainly due to a decline in earned premiums from our Brazilian business which was sold during the quarter.

Specialty

Gross written premiums ~~and $90.9~~increased $18.7 million, ~~of earned premiums for the nine months ended September 30, 2017.~~

~~Property~~

The previously mentioned third quarter 2017 catastrophe-related reinsurance premium adjustments and additional reinsurance contracts purchased in connection with risk management activities related to the acquisition of Ariel Re reduced net earned premiums in International Operations by $17.4 million. Excluding the impact of these transactions, gross written and earned premiums for property increasedor 24.3%, for the three months ended ~~September 30, 2017 due~~March 31, 2022 as compared to ~~premiums written by Ariel Re and Argo Re, partially offset by reduced premiums for Syndicate 1200. For~~ the three months ended ~~September 30, 2017 Ariel Re contributed property lines gross written premiums~~March 31, 2021 primarily driven by growth in Syndicate 1200, arising from marine and energy and the political violence and war classes of ~~$103.3 million and $11.1 million~~business. The increase in net earned premiums ~~respectively. Partially offsetting these increases were reduced gross written and earned premiums~~ for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was driven by Syndicate 1200 due to ~~continued competition, rate reductions and a reduction in our ownership percentage for Syndicate 1200, from 53.5% for 2016 to 46.0% for 2017.~~

~~Excluding the impact of~~ the aforementioned ~~transactions in the third quarter~~premium growth and decreased use of ~~2017, gross written~~third-party capital at Lloyd’s.

Loss and earned premiums also increased for the nine months ended September 30, 2017 as compared to the same period in 2016 due to premiums written by Ariel Re, partially offset by reduced premiums in our Lloyd’s Syndicate 1200Loss Adjustment Expenses

Loss and ~~to a lesser extent, Argo Re. For the nine months ended September 30, 2017 Ariel Re contributed gross written premiums of $147.5~~loss adjustment expenses were $76.0 million and ~~$43.5~~$110.6 million ~~in earned premiums, respectively.~~

~~Liability~~

~~The increase in gross written premiums~~ for liability for the three and nine months ended September 30, 2017 as compared to the same periods in 2016 was primarily attributable to growth in our Bermuda casualty business due to the introduction of new products and a rate increase on a large policy that renewed during the third quarter of 2017. The decline in earned premiums for liability for the three and nine months ended September 30, 2017 as compared to the same periods in 2016 was primarily attributable to a combination of changes to the reinsurance structure in 2017 and slightly lower premiums written in prior quarters.

~~Professional~~

The increase in gross written premiums for professional lines for the three and nine months ended September 30, 2017 as compared to the same periods in 2016 was primarily attributable to growth in our Bermuda, Brazil and European professional lines, directors and officers and cyber lines, partially offset by a decline in professional indemnity. Earned premiums for professional lines for the third quarter of 2017 were relatively flat compared to the same period in 2016, while earned premiums were slightly lower for nine months ended September 30, 2017 as compared to the same period in 2016 primarily due to changes in our reinsurance programs.

~~Specialty~~

The increase in gross written and earned premiums for specialty lines for the three and nine months ended September 30, 2017 as compared to the same periods ended 2016 was primarily attributable to premiums written by Ariel Re. For the three months ended ~~September 30, 2017 Ariel Re contributed specialty lines gross written premiums~~March 31, 2022 and 2021, respectively. The loss ratio for the first quarter of ~~$32.6 million and earned premiums~~2022 was 52.7% compared to 73.0% for the first quarter of $15.1 million, respectively. For the nine months ended September 30, 2017 Ariel Re contributed specialty lines gross written premiums of $106.1 million and earned premiums of $47.1 million, respectively. Additionally, gross written and earned premiums were favorably impacted by increases within the surety and marine liability lines. Partially offsetting these increases were reductions2021. The decrease in the ~~aerospace division due to planned reductions to these exposures, as well as offshore energy due to continuing soft market conditions.~~

~~The increase~~loss ratio was driven by a decrease in catastrophe losses (14.3 percentage point decrease), a decrease in the current accident year non-catastrophe loss ratio (3.9 percentage point decrease), and net favorable prior-year reserve development in 2022 versus no prior-year development in 2021 (2.1 percentage point decrease).

Table of Contents

The current accident year non-catastrophe loss ratios for the three ~~and nine~~ months ended ~~September 30, 2017 as compared~~March 31, 2022 and 2021 were 51.5% and 55.4%, respectively. The improvement in 2022 primarily related to the ~~same periods~~results of re-underwriting actions across multiple divisions in ~~2016~~Syndicate 1200. The current accident year non-catastrophe loss ratio also benefited from rate increases earning through premiums. In addition, 2021 included a 2.3 percentage point impact from large losses.

Net favorable prior-year reserve development was $3.0 million for the first quarter of 2022, primarily ~~attributable~~related to ~~the significant~~favorable movements in catastrophe losses ~~that occurred~~and Europe liability losses partially offset by unfavorable development in liability and professional losses in Argo Insurance Bermuda. There was no net prior-year reserve development for the ~~third~~first quarter of ~~2017, as well as increased non-catastrophe~~2021 primarily due to favorable development in property lines offset by unfavorable development in professional lines driven by an individual large claim.

Catastrophe losses ~~within the current accident year.~~

~~Included in losses~~including from COVID-19, were $4.7 million and ~~loss adjustment expenses~~$26.6 million, for the three months ended ~~September 30, 2017 was $49.1 million for Ariel Re. Net catastrophe~~March 31, 2022 and 2021, respectively. Catastrophe losses for the third quarter of 2017 totaled $72.8 million, attributable to Hurricanes Harvey, Irma and Maria and the Mexican earthquakes, as compared to $8.5 million for the third quarter of 2016, primarily due to the Louisiana floods and other U.S. storm activity. The third quarter of 2017 also included $15.0 million of non-catastrophe losses in the current accident year, driven primarily by higher than anticipated attritional losses on property business underwritten by our Lloyd’s Syndicate 1200. Included in losses and loss adjustment expenses for the three months ended ~~September 30, 2017 was $2.6 million of net favorable loss reserve development on prior accident years primarily attributable~~March 31, 2022 were due to ~~net favorable development for specialty lines, partially offset by net unfavorable development within~~ the ~~liability and property lines. Net favorable loss reserve development on prior accident years~~Ukraine-Russia conflict. Catastrophe losses for the three months ended ~~September 30, 2016 was $0.6 million.~~

~~Included in losses~~March 31, 2021 included $22.2 million from Winter Storm Uri and ~~loss adjustment~~$4.4 million associated with COVID-19, primarily resulting from contingency exposures.

Underwriting, Acquisition and Insurance Expenses

Underwriting, acquisition and insurance expenses ~~for the nine months ended September 30, 2017 was $81.6~~were $54.9 million for Ariel Re. The increase in the loss ratio for the nine months ended September 30, 2017 as compared to the same period in 2016 was primarily attributable to the previously mentioned third quarter 2017 net catastrophe losses, higher than anticipated non-catastrophe current accident year property claims of $26.5 million, as well as net unfavorable loss reserve development on prior accident years of $17.0 million. Catastrophe losses during the first nine months of 2017 totaled $74.3 million, primarily from Hurricanes Harvey, Irma, and Maria and the Mexican earthquakes, as compared to $29.0 million for the same period ended 2016, which were mainly attributable to the Alberta wildfire, Louisiana floods and other U.S. storms. The $17.0 million of net unfavorable loss reserve development on prior accident years for the nine months ended September 30, 2017 was concentrated in the property and liability lines, primarily due to the first quarter 2017 Ogden rate change and claims from Hurricane Matthew. Net favorable loss reserve development on prior accident years for the nine months ended September 30, 2016 was $10.8 million concentrated in property lines and our Brazil unit.

The expense ratio for the three and nine months ended September 30, 2017 as compared to the same periods ended 2016 was negatively impacted by the aforementioned third quarter 2017 reductions to net earned premiums for catastrophe-related reinsurance premium adjustments and additional reinsurance contracts purchased in connection with risk management activities related to the acquisition of Ariel Re. These adjustments increased the expense ratio by 4.6 percentage points and 1.4 percentage points for the three and nine months ended September 30, 2017, respectively. Conversely, Ariel Re’s earned premiums relative to the associated underwriting expenses favorably impacted our expense ratio for both the third quarter and first nine months of 2017. Ariel Re contributed $8.3 million and $24.5 million in underwriting expenses for the three and nine months ended September 30, 2017, respectively. Excluding the results of operations for Ariel Re and the $17.4 of earned premium adjustments recorded in the third quarter of 2017, the adjusted expense ratio for the three months ended September 30, 2017 was 39.9%. The adjusted expense ratio for the nine months ended September 30, 2017 was 39.7%. The increase in the adjusted expense ratio for both the third quarter 2017 and first nine months of 2017March 31, 2022 as compared to $62.7 million the three months ended March 31, 2021. The expense ratio decreased to 38.1% for the three months ended March 31, 2022 as compared to 41.4% for the same ~~periods in 2016 was primarily~~period 2021. The acquisition expenses decreased due to ~~writing more binder~~our mix of business and an increase in ~~Syndicate 1200, which has higher acquisition rates,~~ceding commissions. In addition, our general and administrative expense ratio decreased as ~~well as increased personnel expenses, outside services~~a result of cost savings.

Fee and ~~depreciation charges.~~

Other Income/Expense

Fee ~~income~~ and other ~~income~~income/expense represent ~~fees~~amounts we receive, and ~~profit commission derived from~~costs we incur, in connection with the management of ~~third party~~third-party capital for our underwriting ~~syndicate~~Syndicates at Lloyd’s. ~~The decline in fee~~Fee and other income was $0.8 million for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 as compared to $0.4 million of expense for the same ~~periods~~period in ~~2016 was primarily due to reduced profitability of our Lloyd’s syndicate. Fee and other expenses were comparable for the periods presented.~~

2021.

Run-off Lines

The following table summarizes the results of operations for ~~the~~ Run-off Lines:


	For the Three Months Ended March 31,
(in millions)		2022		2021
Earned premiums		$	—	$	0.2
Losses and loss adjustment expenses		1.4		1.4
Underwriting, acquisition and insurance expenses		0.1		0.3
Underwriting loss		(1.5)		(1.5)
Net investment income		0.7		0.8
Interest expense		(0.2)		(0.1)

Loss before income taxes		$	(1.0)	$	(0.8)

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Run-off Lines ~~segment:~~

include liabilities associated with other liability policies that were issued in the 1960s, 1970s and into the 1980s, as well as the former risk-management business and other business no longer underwritten. Through our subsidiary Argonaut Insurance Company (“Argonaut”), we are exposed to asbestos liability at the primary level through claims filed against our direct insureds, as well as through its position as a reinsurer of other primary carriers. Argonaut has direct liability arising primarily from policies issued from the 1960s to the early 1980s, which pre-dated policy contract wording that excluded asbestos exposure. The majority of the direct policies were issued on behalf of small contractors or construction companies. We believe that the frequency and severity of asbestos claims for such insureds is typically less than that experienced for large, industrial manufacturing and distribution concerns.

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in millions)

2017

2016

2017

2016

Earned premiums

$
(0.1
)

$
0.1

$
—

$
0.3

Losses and loss adjustment expenses

12.0

11.4

16.1

17.6

Underwriting, acquisition and insurance
expenses

2.2

1.5

6.2

5.0

Underwriting loss

(14.3
)

(12.8
)

(22.3
)

(22.3
)
Net investment income

2.0

3.2

7.0

8.8

Interest expense

(0.4
)

(0.4
)

(1.1
)

(1.1
)
Loss before income taxes

$
(12.7
)

$
(10.0
)

$
(16.4
)

$
(14.6
)
Argonaut also assumed risk as a reinsurer, primarily for the period from 1970 to 1975, a portion of which was assumed from the London market. Argonaut also reinsured risks on policies written by domestic carriers. Such reinsurance typically provided coverage for limits attaching at a relatively high level, which are payable only after other layers of reinsurance are exhausted. Some of the claims now being filed on policies reinsured by Argonaut are on behalf of claimants who may have been exposed at some time to asbestos incorporated into buildings they occupied, but have no apparent medical problems resulting from such exposure. Additionally, lawsuits are being brought against businesses that were not directly involved in the manufacture or installation of materials containing asbestos. We believe that a significant portion of claims generated out of this population of claimants may result in incurred losses generally lower than the asbestos claims filed over the past decade and could be below the attachment level of Argonaut.

Losses and Loss Adjustment Expenses

Losses and loss adjustment expenses for the three months ended ~~September 30, 2017 was~~March 31, 2022 and the three months ended March 31, 2021 were primarily the result of ~~net~~ unfavorable loss reserve development on prior accident years driven by $13.6 million for our asbestos exposure due to increasing defense costs and increase in the time claims remain open and $3.0 million in the other run-off lines, partially offset by net favorable loss reserve development on prior accident years of $4.6 million for the run-off risk management lines. Loss and loss adjustment expenses for the three months ended September 30, 2016 included net unfavorable loss reserve development on prior accident years of $5.7 million for our asbestos exposure due to greater than expected defense costs on our primary exposures, $3.7 million development in our risk management lines and $2.0 million in our other run-off lines.

Losses and loss adjustment expenses for the nine months ended September 30, 2017 was the result of net unfavorable loss reserve development on prior accident years driven by $13.6 million for our asbestos exposure due to increasing defense costs and increase in the time claims remain open and $5.2 million in other run-off lines, partially offset by net favorable loss reserve development on prior accident years of $2.7 million for the run-off risk management lines. Losses and loss adjustment expenses for the nine months ended September 30, 2016 included net unfavorable loss reserve development on prior accident years of $9.0 million for our asbestos exposure due to increased defense costs and a final settlement agreement with a large primary insured, $6.0 million in our risk management lines and $2.6 million in other run-off lines.

The following table represents a ~~reconciliation~~rollforward of total gross and net reserves for the asbestos and environmental exposures in our Run-off Lines, along with the ending balances of all other reserves within Run-off Lines. Amounts in the net column are reduced by reinsurance ~~recoverable.~~

recoverables.

Nine Months Ended September 30,

2017

2016

(in millions)

Gross

Net

Gross

Net

Asbestos and environmental:

Loss reserves, beginning of the year

$
48.4

$
40.6

$
46.4

$
43.5

Incurred losses

12.5

15.2

15.6

10.5

Losses paid

(1.6
)

(5.2
)

(10.0
)

(10.0
)
Loss reserves - asbestos and environmental, end of
year

59.3

50.6

52.0

44.0

Risk management reserves

222.1

138.6

241.4

151.4

Run-off reinsurance reserves

1.8

1.8

2.2

2.2

Other run-off lines

4.9

4.9

4.2

4.2

Total loss reserves - Run-off Lines

$
288.1

$
195.9

$
299.8

$
201.8


	For the Three Months Ended March 31,
	2022				2021
(in millions)	Gross		Net		Gross		Net
Asbestos and environmental:
Loss reserves, beginning of the year	$	63.8	$	54.5	$	59.2	$	50.6
Incurred losses	0.3		0.3		0.6		0.6
Losses paid	(2.3)		(1.7)		(3.1)		(2.7)
Loss reserves - asbestos and environmental, end of period	61.8		53.1		56.7		48.5
Risk-management reserves	160.8		98.1		160.7		93.9
Run-off reinsurance reserves	0.4		0.4		—		—
Other run-off lines	33.7		23.9		13.6		7.6
Total loss reserves - Run-off Lines	$	256.7	$	175.5	$	231.0	$	150.0

Underwriting, Acquisition and Insurance Expenses

Underwriting, acquisition and insurance expenses for the Run-off Lines ~~segment~~ consists primarily of administrative expenses. The ~~increase~~decrease in ~~underwriting expense~~insurance expenses for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 as compared to the same ~~periods ended 2016~~period in 2021 was primarily attributable to increased overhead expenses and decreased policyholder dividends. In addition, underwriting expenses for the three and nine months ended September 30, 2016 were favorably impacted a $0.2 million and $0.5 million, respectively, primarily from the reduction in bad debt expenses due to the ~~collection~~Company’s expense reduction initiative.

Table of ~~a premiums receivable balance that was previously written off.~~

Contents

Liquidity and Capital Resources

Cash Flows

The primary sources of our cash flows are premiums, reinsurance recoveries, proceeds from sales and redemptions of investments and investment income. The primary cash outflows are claim payments, loss adjustment expenses, reinsurance costs, underwriting, acquisition and ~~operating expenses. Additional cash outflow occurs through payments~~overhead expenses, purchases of ~~underwriting~~investments, payment of common and ~~acquisition costs such as commissions, taxes, payroll~~preferred dividends and ~~general overhead expenses.~~income taxes. Management believes that cash receipts from premiums, proceeds from investment sales and redemptions and investment income are sufficient to cover cash outflows in the foreseeable future. ~~Should the need for additional cash arise, we~~We believe we have access to additional sources of ~~liquidity.~~

liquidity should the need for additional cash arise.

Our liquidity and capital resources were not materially impacted by COVID-19 and related economic conditions during 2021 and we do not anticipate that the pandemic will have a material impact on our liquidity and capital resources in the next twelve months based on current assumptions. However, there can be no assurance that the pandemic will not cause further disruption to our business or the global economy in that time period.

Cash provided by operating activities can fluctuate due to a timing ~~difference~~differences in the collection of premiums and reinsurance recoveries and the payment of losses and expenses. For the ~~nine~~three months ended ~~September 30, 2017, net~~March 31, 2022 and 2021, cash ~~provided by~~used in operating activities was ~~$252.4~~$27.9 million as compared to ~~net~~ cash provided by operating activities of ~~$150.8~~$70.2 million, ~~for the nine months ended September 30, 2016.~~respectively. The increase in cash flows ~~from~~used in operating activities in ~~2017 from 2016 is~~2022 compared to 2021 was attributable to various fluctuations within our operating activities, and primarily ~~driven by~~related to the timing of reinsurance ~~premium~~ payments ~~reinsurance~~and recoveries, claim payments and premium cash receipts in the respective periods.

~~Net~~

For the three months ended March 31, 2022 net cash ~~used in~~provided by investing activities was ~~$166.0~~$50.0 million ~~for the nine months ended September 30, 2017, as~~ compared to net cash used in investing activities of ~~$83.4~~$50.0 million for the ~~nine months ended September 30, 2016. Included~~same period in ~~the $82.6 million net~~2021. The increase in cash ~~used in investing activities was the $235.3 million cash outflow related to the purchase of Maybrooke, net of $130.1 million of cash acquired. The remaining increase in cash used in~~provided by investing was mainly the result of the increase in the proceeds from sale of fixed maturities and short-term investments, partially offset by a decrease in cash used to purchase fixed ~~maturity investments, partially offset by~~maturities and an increase in the proceeds from ~~sales,~~ maturities ~~and calls~~ of fixed ~~maturities and short-term investments.~~maturities. Additionally, we received $22.7 million in net cash from the sale of Argo Seguros. As of ~~September 30, 2017, $386.0~~March 31, 2022, $421.1 million of the investment portfolio ~~was~~were invested in short-term investments.

For ~~nine~~the three months ended ~~September 30, 2017, net cash provided by financing activities was $64.4 million, as compared to~~March 31, 2022 and 2021, net cash used in financing activities ~~of $64.5~~was $14.5 million ~~for~~and $13.1 million, respectively. During 2022 and 2021, we did not repurchase any common shares. We paid dividends to our common shareholders totaling $10.8 million during the ~~nine~~three months ended September 30, 2016. During the nine months ended September 30, 2017, we borrowed $125.0 million as a term loan under our credit facility to help fund the acquisition of Maybrooke. During the nine months ended September 30, 2017March 31, 2022 and ~~2016, we repurchased 565,534 and 815,196 shares of our common stock for a total cost of $36.6 million and $45.3 million,~~2021, respectively. We paid cash dividends to our preferred shareholders totaling ~~$24.9 million and $19.8~~$2.6 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, respectively.

~~Effective February 6, 2017, we completed the acquisition of Maybrooke Holdings, S.A. for $235.3 million. We drew $125.0 million under our~~

Revolving Credit ~~Agreement~~ ~~in order to help fund the acquisition~~Facility and paid the remaining $110.3 million with available cash on hand. In addition to the cash needs related to this acquisition, we will have continuing cash needs for administrative expenses, the payment of principal and interest on borrowings, shareholder dividends and taxes. Funds to meet these obligations will come primarily from parent company cash, dividends and other payments from our insurance company subsidiaries and from our line of credit.

Term Loan

On ~~March 3, 2017,~~November 2, 2018, each of Argo Group, Argo Group US, Inc., Argo International Holdings Limited, and Argo Underwriting Agency Limited (the “Borrowers”) entered into a $325 million credit agreement ~~(“Credit~~(the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent. The Credit Agreement ~~replaced and terminated the original $175 credit agreement. The Credit Agreement provides~~includes a one time borrowing of $125 million for a ~~$200.0~~term loan (the “Term Loan”), and a $200 million revolving credit ~~facility with a maturity date of March 3, 2022 unless extended in accordance with the terms~~facility. The Company used most of the ~~Credit Agreement. In addition,~~net proceeds from the ~~Credit Agreement includes a $125 million term loan borrowing, which~~Preferred Stock Offering (as defined in Note 11, “Shareholders’ Equity” of Argo ~~Group used~~Group’s 2021 Form 10-K) to pay off the Term Loan in ~~its entirety the $125.0 million borrowing drawn on January 31, 2017 under the prior credit agreement to help fund the acquisition of Maybrooke. At~~ September 30, 2017, the $125.0 million drawn on this term loan remained outstanding, with a maturity date of March 3, 2019. The term loan bears interest based on a variable rate, which resets and is payable based on reset options we select pursuant to the terms of the Credit Agreement. ~~As of September 30, 2017, the interest rate on this debt was equal to the two-month LIBOR (1.30% at September 30, 2017) plus 150 basis points, or 2.80%.~~

2020.

Borrowings under the Credit Agreement may be used for general corporate purposes, including working capital and permitted acquisitions, and each of the Borrowers has agreed to be jointly and severally liable for the obligations of the other Borrowers under the Credit Agreement.

The Credit Agreement contains customary events of default. If an event of default occurs and is continuing, the Borrowers could be required to repay all amounts outstanding under the Credit Agreement. Lenders holding at least a majority of the loans and commitments under the Credit Agreement could elect to accelerate the maturity of the loans and/or terminate the commitments under the Credit Agreement upon the occurrence and during the continuation of an event of default. No defaults or events of defaults have occurred as of the date of this filing.

~~Included in~~

On March 2, 2022, the parties to the Credit Agreement ~~is a provision~~entered into Amendment No. 1 to the Credit Agreement, which replaced LIBOR with the Euro Interbank Offered Rate (“EURIBOR”) and the Sterling Overnight Index Average (“SONIA”) as the interest rate benchmark for borrowings denominated in Euros and in Sterling, respectively. This amendment also sets forth provisions for fallback rates in the event that ~~allows up to $200.0 million~~EURIBOR and SONIA are not available. The USD LIBOR benchmark interest rate was not replaced or affected by this amendment as USD LIBOR remains effective until June 2023.

Table of the revolving credit facility to be used for letters of credit (“LOCs”), subject to availability. As of September 30, 2017, there were no borrowings outstanding and $0.5 million in LOCs against the revolving credit facility.

Contents

Preferred Stock Dividends

On ~~November 7, 2017,~~May 5, 2022, our Board of Directors declared a quarterly cash dividend in the amount of ~~$0.27~~$437.50 per share on our Series A Preference Shares. Holders of Depositary Shares each representing a 1/1,000th interest in a share of Series A Preferred Stock will receive $0.43750 per Depositary Share. The dividend will be paid on June 15, 2022 to our shareholders of record on May 31, 2022.

Argo Group Common Shares and Dividends

On May 5, 2022, the Board declared a quarterly cash dividend in the amount of $0.31 on each share of common stock outstanding. The dividend will be paid on ~~December~~June 15, ~~2017~~2022 to our common shareholders of record ~~at the close of business~~ on ~~December 1, 2017.~~

May 31, 2022.

On May 3, 2016, ~~our~~the Board authorized the repurchase of up to $150.0 million of our common shares (“2016 Repurchase Authorization”). The 2016 Repurchase Authorization supersedes all the previous repurchase authorizations. ~~Shares purchased are being held as treasury shares in accordance with the provisions of the Bermuda Companies Act 1981.~~ As of ~~September 30, 2017,~~December 31, 2021, availability under the 2016 Repurchase Authorization for future repurchases of our common shares was ~~$93.7~~$53.3 million.

~~Refer~~

Senior Notes

In September 2012, Argo Group International Holdings, Ltd. (the “Parent Guarantor”), through its subsidiary Argo Group U.S. (the “Subsidiary Issuer”), issued $143.8 million aggregate principal amount of the Subsidiary Issuer’s 6.5% Senior Notes due September 15, 2042 (the “Notes”). The Notes are unsecured and unsubordinated obligations of the Subsidiary Issuer and rank equally in right of payment with all of the Subsidiary Issuer’s other unsecured and unsubordinated debt. The Notes are guaranteed on a full and unconditional senior unsecured basis by the Parent Guarantor. The Notes may be redeemed, for cash, in whole or in part at the Subsidiary Issuer’s option, at any time and from time to ~~Part II, Item 7 – “Management’s Discussion and Analysis~~time, prior to maturity at a redemption price equal to 100% of ~~Financial Condition and Results~~the principal amount of ~~Operations – Liquidity and Capital Resources”~~the Notes to be redeemed, plus accrued but unpaid interest on the principal amount being redeemed to, but not including, the redemption date.

In accordance with Article 10 of SEC Regulation S-X, we have elected to present condensed consolidating financial information in ~~Argo Group’s Annual Report on Form 10-K~~lieu of separate financial statements for the ~~year~~Subsidiary Issuer. The following tables present condensed consolidating financial information as of and for the three months ended ~~December~~March 31, ~~2016 that~~2022, of the Parent Guarantor and the Subsidiary Issuer. The Subsidiary Issuer is an indirect wholly-owned subsidiary of the Parent Guarantor. Investments in subsidiaries are accounted for by the Parent Guarantor under the equity method for purposes of the supplemental consolidating presentation. Earnings of subsidiaries are reflected in the Parent Guarantor’s investment accounts and earnings.

The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer. Condensed consolidating financial information of the Subsidiary Issuer is presented on a consolidated basis and consists principally of the net assets and results of operations of operating insurance company subsidiaries.

Table of Contents

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF MARCH 31, 2022

(in millions)

(Unaudited)


	Argo Group International Holdings, Ltd. (Parent Guarantor)		Argo Group US, Inc. and Subsidiaries (Subsidiary Issuer)		Other Subsidiaries and Eliminations (1)		Consolidating Adjustments (2)		Total
Assets
Investments	$	36.0	$	3,752.6	$	1,282.9	$	—	$	5,071.5
Cash	2.4		40.6		111.0		—		154.0
Accrued investment income	—		18.1		4.0		—		22.1
Premiums receivable	—		262.9		386.4		—		649.3
Reinsurance recoverables	—		1,919.6		938.3		—		2,857.9
Goodwill	—		118.5		28.8		—		147.3
Intangible assets, net	—		—		17.3		—		17.3
Current income taxes receivable, net	—		(10.9)		10.9		—		—
Deferred tax assets, net	—		67.7		31.5		—		99.2
Deferred acquisition costs, net	—		101.2		73.4		—		174.6
Ceded unearned premiums	—		322.6		172.3		—		494.9
Operating lease right-of-use assets	5.1		54.1		1.6		—		60.8
Other assets	7.0		108.8		116.3		—		232.1

Intercompany notes receivable	—		61.2		(61.2)		—		—
Investments in subsidiaries	1,623.4		—		—		(1,623.4)		—
Total assets	$	1,673.9	$	6,817.0	$	3,113.5	$	(1,623.4)	$	9,981.0
Liabilities and Shareholders' Equity
Reserves for losses and loss adjustment expenses	$	—	$	3,807.1	$	1,841.0	$	—	$	5,648.1
Unearned premiums	—		931.2		454.8		—		1,386.0
Funds held	—		281.9		(216.1)		—		65.8
Ceded reinsurance payable, net	—		152.2		425.7		—		577.9
Debt	28.4		284.7		142.9		—		456.0


Accrued underwriting expenses and other liabilities	6.2		87.7		73.5		—		167.4
Operating lease liabilities	5.3		62.1		1.6		—		69.0
Due to (from) affiliates	23.2		(1.6)		1.6		(23.2)		—
Intercompany note payable	—		—		—		—		—
Total liabilities	63.1		5,605.3		2,725.0		(23.2)		8,370.2
Total shareholders' equity	1,610.8		1,211.7		388.5		(1,600.2)		1,610.8
Total liabilities and shareholders' equity	$	1,673.9	$	6,817.0	$	3,113.5	$	(1,623.4)	$	9,981.0

(1)Includes all other subsidiaries of Argo Group ~~filed with the SEC on February 24, 2017 for further discussion on~~International Holdings, Ltd. and all intercompany eliminations.

(2)Includes all Argo ~~Group’s liquidity.~~

Group International Holdings, Ltd. parent company eliminations.

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2022

(in millions)

(Unaudited)


	Argo Group International Holdings, Ltd (Parent Guarantor)		Argo Group US, Inc. and Subsidiaries (Subsidiary Issuer)		Other Subsidiaries and Eliminations (1)		Consolidating Adjustments (2)		Total
Premiums and other revenue:
Earned premiums	$	—	$	333.2	$	147.4	$	—	$	480.6
Net investment income	—		33.6		4.1		—		37.7

Net realized investment (losses) gains	—		(0.7)		(33.8)		—		(34.5)
Total revenue	—		366.1		117.7		—		483.8
Expenses:
Losses and loss adjustment expenses	—		203.8		79.8		—		283.6
Underwriting, acquisition and insurance expenses	1.8		113.6		57.5		—		172.9
Non-operating expenses	0.3		6.0		1.1		—		7.4
Interest expense	0.3		3.9		1.6		—		5.8
Fee and other expense (income), net	—		0.1		(0.9)		—		(0.8)
Foreign currency exchange losses	—		—		2.9		—		2.9
Total expenses	2.4		327.4		142.0		—		471.8
(Loss) income before income taxes	(2.4)		38.7		(24.3)		—		12.0
Provision (benefit) for income taxes	—		8.5		4.5		—		13.0
Net (loss) income before equity in earnings of subsidiaries	(2.4)		30.2		(28.8)		—		(1.0)
Equity in undistributed earnings of subsidiaries	1.4		—		—		(1.4)		—
Net income (loss)	$	(1.0)	$	30.2	$	(28.8)	$	(1.4)	$	(1.0)
Dividends on preferred shares	$	2.6	$	—	$	—	$	—	$	2.6
Net income (loss) attributable to common shareholders	$	(3.6)	$	30.2	$	(28.8)	$	(1.4)	$	(3.6)

(1)Includes all other subsidiaries of Argo Group International Holdings, Ltd. and all intercompany eliminations.

(2)Includes all Argo Group International Holdings, Ltd. parent company eliminations.

Recent Accounting Standards and Critical Accounting Estimates

New Accounting Standards

The discussion of the adoption and pending adoption of recently issued accounting policies is included in Note 2, “Recently Issued Accounting ~~Standards,~~Pronouncements,” in the Notes to the Consolidated Financial Statements, included in Part I, Item 1 - “Consolidated Financial Statements (unaudited).”

Critical Accounting Estimates

Refer to “Critical Accounting Estimates” in the Company’s ~~Annual Report on~~2021 Form 10-K ~~for the year ended December 31, 2016 that we filed with the SEC on February 24, 2017~~ for information on accounting policies that we consider critical in preparing our consolidated financial statements. These policies include significant estimates made by management using information available at the time the estimates were made. However, these estimates could change materially if different information or assumptions were used.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

We believe that we are principally exposed to four types of market risk: interest rate risk, credit risk, equity price risk and foreign currency risk.

Interest Rate Risk

Our primary market risk exposure is the exposure of our fixed maturity investment portfolio to interest rate risk and the changes in interest rates. Fluctuations in interest rates have a direct impact on the fair ~~valuation~~value of these securities. As interest rates rise, the fair value of our fixed maturity portfolio falls and the converse is also true. We manage interest rate risk through an active portfolio management strategy that involves the selection of investments with appropriate characteristics such as duration, yield, currency and liquidity that are tailored to the anticipated cash outflow characteristics of our liabilities. A significant portion of our investment portfolio matures each year, allowing for reinvestment at current market rates. The model duration of the assets comprising our fixed maturity investment portfolio was ~~2.52~~3.06 years and ~~2.58~~2.81 years at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, respectively.

Credit Risk

We have exposure to credit risk on losses recoverable from reinsurers and receivables from insureds. Our controls to mitigate this risk include limiting our exposure to any one counterparty, evaluating the financial strength of our reinsurers, generally requiring minimum credit ratings and in certain cases receiving collateral from our reinsurers and insureds.

We also have exposure to credit risk in our investment holdings. Our risk management strategy and investment policy attempts to mitigate this risk by primarily investing in debt instruments of high credit quality issuers, limiting credit concentration, monitoring the credit quality of issuers and counterparties and diversifying issuers. The weighted average rating of our fixed maturity investments was A+ with ~~88.4%~~90.3% and ~~87.1%~~89.4% rated investment grade or better (BBB- or higher) at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, respectively.

We review our investments to identify and evaluate those that may have credit impairments on a quarterly basis, considering the historical performance of the security, available market information, and credit ratings, among other things. For fixed maturity securities, the review includes consideration of current ratings and actions of major rating agencies (Standard & Poor's, Moody's and Fitch). If a security has two ratings, the lower rating is used. If a security has three ratings, the middle rating is used. The following table reflects the credit quality of our fixed maturity portfolio at March 31, 2022:

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Other Fixed Maturities	Book Value		Fair Value
AAA	$	679.5	$	660.7
AA	277.5		269.9
A	813.7		786.7
BBB	778.8		741.9
BB/B	194.9		189.2
CCC and Below	25.6		19.8
Unrated	116.3		115.7
Other Fixed Maturities	$	2,886.3	$	2,783.9

Structured Securities	Book Value		Fair Value
AAA	$	1,047.6	$	1,002.2
AA	105		100.6
A	124.4		121.2
BBB	58.9		56.9
BB/B	10.5		10.4
CCC and Below	0.4		0.5
Unrated	69.6		68.2
Structured Securities	$	1,416.4	$	1,360.0

Total Fixed Maturities	Book Value		Fair Value
AAA	$	1,727.1	$	1,662.9
AA	382.5		370.5
A	938.1		907.9
BBB	837.7		798.8
BB/B	205.4		199.6
CCC and Below	26		20.3
Unrated	185.9		183.9
Total Fixed Maturities	$	4,302.7	$	4,143.9

Our portfolio also includes alternative investments with a carrying value at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 of ~~$562.6~~$452.5 million and ~~$539.0~~$387.2 million ~~(11.7%~~(8.9% and ~~12.5%~~7.3% of total invested assets), respectively. We may invest in both long and short equities, corporate debt securities, currencies, real estate, commodities and derivatives. We attempt to mitigate our risk by selecting managers with extensive experience, proven track records and robust controls and processes. We also attempt to mitigate our risk by diversifying through multiple managers and different types of assets and asset classes.

Equity Price Risk

We hold a diversified portfolio of equity securities with a fair value of ~~$480.5~~$54.0 million and ~~$447.4~~$56.3 million ~~(10.0%~~(1.1% and ~~10.3%~~1.1% of total invested assets) at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, respectively. Our equity securities are exposed to equity price risk which is defined as the potential for loss in fair value due to a decline in equity prices. We believe the diversification of our equity securities among various industries, market segments and issuers, as well as the use of multiple outside investment managers, mitigates our exposure to equity price risk.

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Foreign Currency Risk

We have exposure to foreign currency risk in our insurance contracts, invested assets and to a lesser extent, a portion of our debt. We attempt to manage our foreign currency risk by seeking to match our liabilities under insurance and reinsurance contracts that are payable in currencies other than the U.S. Dollar with cash and investments that are denominated in such currencies. We also use foreign exchange forward contracts to attempt to mitigate this risk. We recognized ~~$0.1~~gains in the investment portfolio of $1.6 million ~~and $12.0 million in losses~~for the three months ended March 31, 2022 from movements in foreign currency ~~rates~~rates. We recognized gains in the investment portfolio of $1.3 million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively. We recognized $3.3 million and $19.3 million in losses~~March 31, 2021 from movements in foreign currency ~~rates~~rates. We recognized losses of $6.4 million for the three ~~and nine~~ months ended ~~September 30, 2016, respectively. We recognized $4.8 million and $10.4 million in losses~~March 31, 2022 on our foreign currency forward ~~contacts~~contracts. We recognized losses of $3.3 million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively. We recognized $0.3 million in gains and $11.5 million in losses~~March 31, 2021 on our foreign currency forward ~~contacts for the three and nine months ended September 30, 2016, respectively.~~

contracts.

Item 4. Controls and Procedures

Argo Group, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of our ~~“disclosure~~disclosure controls and ~~procedures” (as defined in Rules~~procedures as of the end of the period covered by this report. Rule 13a-15(e) ~~and 15d-15(e)~~ under the Securities Exchange Act of 1934, as amended (“Exchange Act”)), defines “disclosure controls and procedures” as ~~of the end of the period covered by this report. In designing and evaluating these disclosure~~ controls and procedures ~~Argo Group and its management recognize~~“designed to ensure that ~~any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was~~information required to ~~apply its judgment~~be disclosed by the issuer in ~~evaluating~~the reports it files or submits under the Exchange Act is recorded, processed, summarized and ~~implementing possible controls~~reported, within the time periods specified in the Commission’s rules and ~~procedures.~~forms.” Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of March 31, 2022, at the reasonable assurance level to ensure that information required to be disclosed by Argo Group in the reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There were no changes in ~~the~~ internal control over financial reporting made during the quarter ended ~~September 30, 2017~~March 31, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We review our disclosure controls and procedures, which may include internal controls over financial reporting, on an ongoing basis. From time to time, management makes changes to enhance the effectiveness of these controls and ensure that they continue to meet the needs of our business activities over time.

PART II. OTHER INFORMATION

Throughout this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to “Argo Group,” “we,” “us,” “our” or the “Company” mean Argo Group International Holdings, Ltd. and all of its subsidiaries, taken together as a whole.

Item 1. Legal Proceedings

~~Our~~

Other

We and our subsidiaries are parties to legal actions from time to time, generally incidental to our and their business. ~~Based on the opinion~~While any litigation or arbitration proceedings include an element of ~~counsel,~~uncertainty, management believes that the resolution of these matters will not materially affect our financial condition or results of operations.

Item 1A. Risk Factors

~~See “Risk~~

In addition to the other information set forth in this report, readers should carefully consider the factors discussed in “Part I, Item 1A—Risk Factors” ~~in the~~of Argo ~~Group~~Group’s Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, ~~2016~~2021 (collectively, “2021 Form 10-K”), and ~~as updated for the Maybrooke acquisition~~ in the ~~Argo Group Quarterly Report on Form 10-Q for~~Company’s other filings with the ~~three months ended March 31, 2017, for a detailed discussion of~~SEC, which could materially affect the ~~additional~~Company’s business, financial condition, cash flows or future results. There have been no material changes from the risk factors ~~affecting us.~~

previously disclosed in in “Part I, Item 1A—Risk Factors” in the 2021 Form 10-K.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchase of Equity Securities

repurchase authorizations.

From January 1, ~~2017~~2022 through ~~September 30, 2017,~~March 31, 2022, we ~~have repurchased a total~~did not repurchase any of ~~612,034 shares for a total cost of $36.6 million.~~our common shares. Since the inception of the repurchase authorizations (including those purchased under the 2016 Repurchase Authorization) through ~~September 30, 2017,~~March 31, 2022, we have repurchased ~~10,640,789 shares~~11,315,889 of our common ~~stock~~shares at an average price of ~~$38.98~~$40.22 for a total cost of ~~$414.8~~$455.1 million. These shares are being held as treasury shares in accordance with the provisions of the Bermuda Companies Act 1981. As of ~~September 30, 2017,~~March 31, 2022, availability under the 2016 Repurchase Authorization for future repurchases of our common shares was ~~$93.7~~$53.3 million.

~~The following table provides information with respect to shares of our common stock that were repurchased or surrendered during the three months ended September 30, 2017:~~

Period

Total
Number
of Shares
Purchased (a)

Average
Price Paid
per Share (b)

Total
Number of
Shares
Purchased
as Part of
Publically
Announced
Plan
or Program (c)

Approximate
Dollar
Value of
Shares
That May
Yet Be
Purchased
Under the
Plan or
Program (d)

July 1 through July 31, 2017

26,604

$
59.73

25,732

$
125,928,881

August 1 through August 31, 2017

352,307

$
60.06

332,820

$
110,967,483

September 1 through September 30, 2017

208,456

$
59.37

206,982

$
93,662,284

Total

587,367

565,534

Employees are allowed to surrender shares to settle the tax liability incurred upon the vesting or exercise of shares under our various employee equity compensation plans. For the three months ended ~~September 30, 2017,~~March 31, 2022, we received ~~21,833~~30,176 common shares, ~~of our common stock,~~ with an average price paid per share of ~~$60.54~~$41.52 that were surrendered by employees in payment for the minimum required withholding taxes. The following table provides information with respect to our common shares that were surrendered during the three months ended March 31, 2022. In the ~~above~~below table, these shares are included in columns (a) and (b), but excluded from columns (c) and (d). These shares do not reduce the number of shares that may yet be purchased under the repurchase plan.


Period	Total Number of Shares Surrendered (a)	Average Price Paid per Share (b)		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program (c)	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan or Program (d)
January 1 through January 31, 2022	846	$	57.67	—	$	53,281,805
February 1 through February 28, 2022	175	$	42.06	—	$	53,281,805
March 1 through March 31, 2022	29,155	$	41.05	—	$	53,281,805
Total	30,176			—

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~None.~~

2022 Annual General Meeting of Shareholders

On April 26, 2022, the Board of Directors approved the postponement of the 2022 annual general meeting of shareholders of the Company (the “2022 Annual General Meeting”) until the second half of 2022, as the Board of Directors believes it is in the best interests of all shareholders for the Company to conduct a strategic review process prior to holding the 2022 Annual General Meeting. As a result of such postponement, the Company anticipates that the 2022 Annual General Meeting will be held more than 30 days following the anniversary of the date of the Company’s 2021 annual general meeting of shareholders. The exact date, time and location of the 2022 Annual General Meeting will be set forth in the notice to shareholders in the Company’s proxy materials that will be filed in connection with the 2022 Annual General Meeting.

Pursuant to the Company’s Amended and Restated Bye-Laws, shareholder director nominations or other proposals for consideration at the 2022 Annual General Meeting that are not submitted for inclusion in the Company’s proxy materials pursuant to Rule 14a-8 under the Exchange Act must be submitted to the Company no later than 60 days prior to the date of the 2022 Annual General Meeting. If a shareholder wishes to submit a proposal for inclusion in the Company’s proxy statement for the 2022 Annual General Meeting pursuant to Rule 14a-8 under the Exchange Act, such proposal must be submitted a reasonable amount of time before the Company begins to print and send its proxy materials for the 2022 Annual General Meeting. The Company will announce the deadline for submitting shareholder proposals pursuant to Rule 14a-8 at a future time once a date for the 2022 Annual General Meeting has been set.

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Extension of Scott Kirk’s Service Agreement

Pursuant to the Retention Letter and Extension of Service Agreement with Argo Management Services Limited and Mr. Scott Kirk dated May 5, 2022 (the “Retention and Service Letter”), the parties agreed to amend Mr. Kirk’s Service Agreement with Argo Management Services Limited, dated February 5, 2021 (“Service Agreement”), to extend the term of the Service Agreement until such time it is terminated by either party by providing the other with a one month’s prior written notice of such termination (unless terminated earlier in accordance with the remaining terms of the Service Agreement). All the other terms of the Service Agreement remain in full force and effect. The foregoing is subject to and qualified in its entirety by the terms and conditions of the Retention and Service Letter, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.

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Item 6. Exhibits

A list of exhibits required to be filed as part of this report is set forth in the below Exhibit ~~Index of this Form 10-Q, which immediately precedes such exhibits, and is incorporated herein by reference.~~

Index.

EXHIBIT INDEX

Exhibit Number	~~Description~~
Exhibit Number		Description
~~12.1~~ 10.1		~~Statements of Computation of Ratios of Earnings to Fixed Charges~~Argo Group International Holdings, Ltd. Executive Service Plan, effective January 1, 2021, amended and ~~Earnings to Combined Fixed Charges and Preferred Share Dividends~~restated April 26, 2022†
~~31.1~~ 10.2		Retention Letter and Extension of Service Agreement, dated May 5, 2022, by and between Scott Kirk and Argo Management Services Limited†
10.3		Form of U.S. Named Executive Officer Retention Award Agreement †
10.4		Argonaut Supplemental Executive Retirement Plan and subsequent amendments thereto dated each of September 2009, April 2010, and September 2010 †
31.1		Rule 13a – 14(a)/15d – 14(a) Certification of the Chief Executive Officer
31.2		Rule 13a – 14(a)/15d – 14(a) Certification of the Chief Financial Officer
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

† A management contract or compensatory plan required to be filed herewith.

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SIGNATURES

Pursuant to the requirements ~~of the Section 13 or 15(d)~~ of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	ARGO GROUP INTERNATIONAL HOLDINGS, LTD.

~~November 7, 2017~~ May 6, 2022	By	/s/ ~~Mark E. Watson III~~ Thomas A. Bradley
		~~Mark E. Watson III~~ Thomas A. Bradley
		~~President and~~Interim Chief Executive Officer and Director

~~November 7, 2017~~ May 6, 2022	By	/s/ ~~Jay S. Bullock~~ Scott Kirk
		~~Jay S. Bullock~~ Scott Kirk
		~~Executive Vice President and~~ Chief Financial Officer

	September 30,			December 31,
	2017			2016 *
	(Unaudited)
Assets
Investments:
Fixed maturities available-for-sale, at fair value (cost: 2017 - $3,339.7; 2016 - $2,938.8)	$	3,378.4		$	2,932.4
Equity securities available-for-sale, at fair value (cost: 2017 - $347.6; 2016 - $335.2)		480.5			447.4
Other investments (cost: 2017 - $553.1; 2016 - $531.6)		562.6			539.0
Short-term investments, at fair value (cost: 2017 - $386.0; 2016 - $405.5)		386.0			405.5
Total investments		4,807.5			4,324.3
Cash		235.8			86.0
Accrued investment income		23.6			20.7
Premiums receivable		678.8			463.8
Reinsurance recoverables		2,101.9			1,385.6
Goodwill		152.2			152.2
Intangible assets, net of accumulated amortization		108.3			67.7
Deferred acquisition costs, net		168.8			139.1
Ceded unearned premiums		461.4			302.8
Other assets		319.7			262.8
Total assets	$	9,058.0		$	7,205.0
Liabilities and Shareholders' Equity
Reserves for losses and loss adjustment expenses	$	4,305.9		$	3,350.8
Unearned premiums		1,286.0			970.0
Accrued underwriting expenses		97.5			115.0
Ceded reinsurance payable, net		822.6			466.6
Funds held		45.0			77.1
Senior unsecured fixed rate notes		139.6			139.5
Other indebtedness		184.7			55.4
Junior subordinated debentures		256.5			172.7
Current income taxes payable, net		11.0			8.1
Deferred tax liabilities, net		41.5			24.1
Other liabilities		59.7			33.0
Total liabilities		7,250.0			5,412.3
Commitments and contingencies (Note 16)
Shareholders' equity:
Common shares - $1.00 par, 500,000,000 shares authorized; 40,300,433 and 40,042,330 shares issued at September 30, 2017 and December 31, 2016, respectively		40.3			40.0
Additional paid-in capital		1,129.1			1,123.3
Treasury shares (10,640,789 and 10,028,755 shares at September 30, 2017 and December 31, 2016, respectively)		(414.8	)		(378.2	)
Retained earnings		956.4			959.9
Accumulated other comprehensive income, net of taxes		97.0			47.7
Total shareholders' equity		1,808.0			1,792.7
Total liabilities and shareholders' equity	$	9,058.0		$	7,205.0

(in millions)
Assets:
Investments	$	340.7
Cash		130.1
Accrued investment income		0.2
Premiums receivable		157.6
Reinsurance recoverables		80.2
Current income taxes receivable		0.6
Deferred acquisition costs, net		9.8
Ceded unearned premiums		92.6
Other assets		24.9
Total assets		836.7
Liabilities:
Reserves for losses and loss adjustment expenses		197.0
Unearned premiums		152.5
Accrued underwriting expenses		28.8
Ceded reinsurance payable, net		144.2
Junior subordinated debentures		83.6
Deferred tax liabilities		9.0
Other liabilities		30.7
Total liabilities		645.8

Net assets acquired		190.9
Initial purchase price		235.3
Intangible assets	$	44.4

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
(in millions, except per share data)	2017			2016		2017		2016
Pro forma revenues	$	439.2		$	466.0	$	1,332.4	$	1,340.5
Pro forma net (loss) income		(63.4	)		56.2		29.8		132.9
Pro forma net (loss) income per share - basic		(2.11	)		1.87		0.99		4.40
Pro forma net (loss) income per share - diluted		(2.11	)		1.83		0.96		4.30

(in millions)
Debt Type	September 30, 2017		December 31, 2016
Floating rate loan stock	$	59.1	$	54.8
Term loan		125.0		—
Other debt		0.6		0.6
Total other indebtedness	$	184.7	$	55.4

Repurchase Type	Date Trading Plan Initiated	2017 Purchase Period	Number of Shares Repurchased		Average Price of Shares Repurchased		Total Cost (in millions)		Repurchase Authorization Year
10b5-1 Trading Plan	6/14/2017	06/20/2017-08/10/2017		156,570	$	59.53	$	9.4	2016
10b5-1 Trading Plan	9/15/2017	09/18/2017-09/28/2017		33,488	$	60.85	$	2.0	2016
Open Market	N/A	08/11/2017-09/15/2017		421,976	$	59.75		25.2	2016
Total				612,034	$	59.75	$	36.6

(in millions)	Foreign Currency Translation Adjustments			Unrealized Holding Gains on Securities			Defined Benefit Pension Plans			Total
Balance at January 1, 2017	$	(17.6	)	$	72.4		$	(7.1	)	$	47.7
Other comprehensive (loss) income before reclassifications		(0.2	)		74.1			—			73.9
Amounts reclassified from accumulated other comprehensive (loss) income		—			(24.6	)		—			(24.6	)
Net current-period other comprehensive (loss) income		(0.2	)		49.5			—			49.3
Balance at September 30, 2017	$	(17.8	)	$	121.9		$	(7.1	)	$	97.0

	Shares			Weighted-Average Exercise Price
Outstanding at January 1, 2017		1,982,695		$	34.80
Exercised		(396,355	)	$	31.52
Expired or forfeited		(105,024	)	$	40.62
Outstanding at September 30, 2017		1,481,316		$	35.26

	Argo Group International Holdings, Ltd (Parent Guarantor)			Argo Group US, Inc. and Subsidiaries (Subsidiary Issuer)		Other Subsidiaries and Eliminations ⁽¹⁾			Consolidating Adjustments ⁽²⁾			Total
Assets
Investments	$	(1.6	)	$	3,039.1	$	1,770.0		$	—		$	4,807.5
Cash		—			73.5		162.3			—			235.8
Accrued investment income		—			16.8		6.8			—			23.6
Premiums receivable		—			227.3		451.5			—			678.8
Reinsurance recoverables		—			1,450.3		651.6			—			2,101.9
Goodwill and other intangible assets, net		44.4			125.2		90.9			—			260.5
Deferred acquisition costs, net		—			82.3		86.5			—			168.8
Ceded unearned premiums		—			194.9		266.5			—			461.4
Other assets		8.3			173.7		137.7			—			319.7
Intercompany note receivable		—			50.2		69.8			(120.0	)		—
Investments in subsidiaries		2,086.7			—		—			(2,086.7	)		—
Total assets	$	2,137.8		$	5,433.3	$	3,693.6		$	(2,206.7	)	$	9,058.0
Liabilities and Shareholders' Equity
Reserves for losses and loss adjustment expenses	$	—		$	2,452.6	$	1,853.3		$	—		$	4,305.9
Unearned premiums		—			694.5		591.5			—			1,286.0
Funds held and ceded reinsurance payable, net		—			790.1		77.5			—			867.6
Long-term debt		153.4			284.6		142.8			—			580.8
Current income taxes payable, net		—			7.9		3.1			—			11.0
Deferred tax liabilities, net		—			37.3		4.2			—			41.5
Accrued underwriting expenses and other liabilities		12.1			103.2		41.9			—			157.2
Due to affiliates		44.3			6.9		(6.9	)		(44.3	)		—
Intercompany note payable		120.0			40.1		(40.1	)		(120.0	)		—
Total liabilities		329.8			4,417.2		2,667.3			(164.3	)		7,250.0
Total shareholders' equity		1,808.0			1,016.1		1,026.3			(2,042.4	)		1,808.0
Total liabilities and shareholders' equity	$	2,137.8		$	5,433.3	$	3,693.6		$	(2,206.7	)	$	9,058.0

(in millions)	2016 Net Reserves		Net Reserve Development (Favorable)/ Unfavorable			Percent of 2016 Net Reserves
General and professional liability	$	1,028.9	$	10.0			1.0	%
Workers compensation		312.9		(7.6	)		-2.4	%
Lloyd's liability		198.1		11.4			5.8	%
Commercial multi-peril		156.6		(2.6	)		-1.7	%
Commercial auto liability		113.6		(6.5	)		-5.7	%
Property		83.6		11.0			13.2	%
Reinsurance - nonproportional assumed property		65.6		(4.1	)		-6.3	%
Fidelity/Surety		38.4		(6.7	)		-17.4	%
All other lines		182.5		(0.5	)		-0.3	%
Total	$	2,180.2	$	4.4			0.2	%

	Nine Months Ended September 30,
	2017						2016
(in millions)	Gross			Net			Gross			Net
Asbestos and environmental:
Loss reserves, beginning of the year	$	48.4		$	40.6		$	46.4		$	43.5
Incurred losses		12.5			15.2			15.6			10.5
Losses paid		(1.6	)		(5.2	)		(10.0	)		(10.0	)
Loss reserves - asbestos and environmental, end of year		59.3			50.6			52.0			44.0
Risk management reserves		222.1			138.6			241.4			151.4
Run-off reinsurance reserves		1.8			1.8			2.2			2.2
Other run-off lines		4.9			4.9			4.2			4.2
Total loss reserves - Run-off Lines	$	288.1		$	195.9		$	299.8		$	201.8

Period	Total Number of Shares Purchased (a)		Average Price Paid per Share (b)		Total Number of Shares Purchased as Part of Publically Announced Plan or Program (c)		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan or Program (d)
July 1 through July 31, 2017		26,604	$	59.73		25,732	$	125,928,881
August 1 through August 31, 2017		352,307	$	60.06		332,820	$	110,967,483
September 1 through September 30, 2017		208,456	$	59.37		206,982	$	93,662,284
Total		587,367				565,534