Argo Group International Holdings, Ltd.

Hello, welcome to today's Argo Group third quarter 2022 earnings call. My name is Bailey and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to our host, Andrew Hurstam, Head of Investor Relations. Please go ahead.

Thank you and good morning. Welcome to Argo Group's conference call for the third quarter ended September 30th, 2022. After the market closed last night, we issued a press release on our earnings, which is available in the investor sections of our website, argogroup.com, and was filed with the SEC. Presenting on today's call is Tom Bradley, Argo Group Executive Chairman and Chief Executive Officer, and Scott Kirk, Chief Financial Officer. As the operator mentioned, this call is being recorded. During this conference call, ARGO management may make comments that reflect ARGO's intentions, beliefs, and expectations for the future. Such forward-looking statements are qualified by inherent risks and uncertainties surrounding future expectations generally, and may materially differ from actual future results involving any one or more of such statements. ARGO Group undertakes no obligation to publicly update forward-looking statements as a result of events or developments subsequent to the call. For a more detailed discussion of such risks and uncertainties, please see Argo Group's filings with the SEC. Also, note that we will be referencing certain non-GAAP financial information. More information regarding these non-GAAP financial measures is provided in our earnings release. I will now turn the call over to Tom.

Tom Schueler Thank you, Andrew, and thank you to everyone for joining us today. Over the past two years, we have transformed Argo, better positioning the company to advance our business strategies. In September, we announced the sale of our Lloyd's operation, which marks a significant milestone in Argo becoming a focused pure play U.S. specialty insurer. Importantly, this transaction further simplifies our corporate structure and enables greater focus on our diverse portfolio of profitable and scalable U.S. specialty businesses. In addition, the announced U.S. loss portfolio transfer with NSTAR will help provide protection against potential future reserve volatility, we believe these transactions will strengthen and de-risk our balance sheet and better position the company to evaluate additional strategic opportunities. We are fully committed to maximizing shareholder value and remain focused on our strategic review process for the benefit of all Argo shareholders. Turning to the third quarter, we reported operating earnings of 44 cents per common share, and an ex-CAT current accident year combined ratio of 93.4%. Our performance continues to benefit from earned premium growth in attractive business lines, lower expenses, and lower catastrophe losses despite Hurricane Ian. We also continue to be encouraged by the increasing investment income from our fixed income portfolio driven by higher reinvestment rates. Our U.S. operations generated a strong current accident year performance with a 1.9 percentage point improvement in the segment's current accident year loss ratio compared to a year ago. This improvement was driven by disciplined underwriting, lower cap losses, and positive rate continuing to earn through. While our thoughts are with those impacted by Hurricane Ian, we are pleased with the company's quarterly cap losses decreased year over year for the sixth straight quarter despite elevated industry cap losses. Our total CAT losses of 23.4 million in the quarter were down 14% from third quarter last year. Our U.S. operations accounted for just 4.2 million of these losses, which did not reach our U.S. CAT reinsurance retention levels. Our remaining CAT losses were in the international segment. In contrast to broader industry trends, Argo's CAT losses for the nine months of 2022 are nearly 60% lower than the same period last year, while these losses in our US operations were down over 70%. The success of our volatility reduction efforts through exiting businesses with property CAT exposure is evident in these results. We are also particularly pleased with the continued success of our ongoing cost reduction efforts. The expense ratio improved 0.9 percentage points from the prior year third quarter, or 1.5 percentage points after adjusting for the reinstatement premiums. Through nine months, we have lowered total expenses by over $35 million and reduced the expense ratio 1.7 percentage points to 35.6%. Our expense reduction efforts have successfully helped streamline our operations, and we remain confident there are opportunities to further reduce costs and improve the expense ratio in the future. We continue to feel good about the pricing gains we are seeing across our portfolio of businesses. We are achieving both rate and premium growth in many lines with particular strength in casualty, environmental, and inland marine. While there are some pockets of rate softness in the portfolio, most notably public company D&O, we remain disciplined in our underwriting approach. Consistent with the first half of the year, rates increased in the mid single digits across the vast majority of our businesses. Importantly, the average rates we're achieving continue to trend above lost cost expectations. We remain focused on executing our business strategies, building upon our performance through the first nine months of 2022, and further enhancing the company's position for 2023. As I have said, we are fully committed to the strategic review process, and we continue as a board, along with our financial and legal advisors, to actively consider a wide range of options for ARCO. I will now turn the call over to Scott to discuss third quarter results in more detail.