Information Provided in Connection with Outstanding Debt of Subsidiaries (Tables)

9 Months Ended

Sep. 30, 2012

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2012

(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	$	3.0	$	2,925.7	$	1,416.2		$	0.0		$	4,344.9
Cash		0.1		127.8		14.8			0.0			142.7
Premiums receivable		0.0		153.2		249.7			0.0			402.9
Reinsurance recoverables		0.0		1,143.3		(126.8	)		0.0			1,016.5
Goodwill and other intangible assets		0.0		136.1		106.1			0.0			242.2
Current income taxes receivable, net		0.0		7.1		14.2			0.0			21.3
Deferred acquisition costs, net		0.0		57.3		50.4			0.0			107.7
Ceded unearned premiums		0.0		88.9		124.1			0.0			213.0
Other assets		4.4		106.2		48.0			0.0			158.6
Due from affiliates		0.0		0.7		(0.7	)		0.0			0.0
Intercompany note receivable		0.0		102.9		(102.9	)		0.0			0.0
Investment in subsidiaries		1,640.2		0.0		0.0			(1,640.2	)		0.0

Total assets	$	1,647.7	$	4,849.2	$	1,793.1		$	(1,640.2	)	$	6,649.8

Liabilities and Shareholders’ Equity
Reserves for losses and loss adjustment expenses	$	0.0	$	2,238.4	$	989.5		$	0.0		$	3,227.9
Unearned premiums		0.0		432.0		355.0			0.0			787.0
Funds held and ceded reinsurance payable, net		0.0		579.8		(182.1	)		0.0			397.7
Long-term debt		64.4		391.6		63.8			0.0			519.8
Deferred tax liabilities, net		0.0		42.8		6.9			0.0			49.7
Accrued underwriting expenses and other liabilities		10.6		81.0		34.2			0.0			125.8
Due to affiliates		3.6		0.0		0.0			(3.6	)		0.0
Intercompany note payable		27.2		25.0		(25.0	)		(27.2	)		0.0

Total liabilities		105.8		3,790.6		1,242.3			(30.8	)		5,107.9

Total shareholders’ equity		1,541.9		1,058.6		550.8			(1,609.4	)		1,541.9

Total liabilities and shareholders’ equity	$	1,647.7	$	4,849.2	$	1,793.1		$	(1,640.2	)	$	6,649.8

⁽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 BALANCE SHEET

December 31, 2011

(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	$	(0.8	)	$	2,778.5	$	1,369.8		$	0.0			4,147.5
Cash		0.0			85.1		15.8			0.0			100.9
Premiums receivable		0.0			151.2		157.8			0.0			309.0
Reinsurance recoverables		0.0			1,140.5		3.6			0.0			1,144.1
Goodwill and other intangible assets		0.0			137.2		109.6			0.0			246.8
Current income taxes receivable, net		0.0			0.0		11.2			0.0			11.2
Deferred acquisition costs, net		0.0			55.8		45.7			0.0			101.5
Ceded unearned premiums		0.0			77.2		102.2			0.0			179.4
Other assets		6.8			88.5		42.6			0.0			137.9
Due from affiliates		0.0			0.0		0.3			(0.3	)		0.0
Intercompany note receivable		0.0			90.8		(90.8	)		0.0			0.0
Investment in subsidiaries		1,530.6			0.0		0.0			(1,530.6	)		0.0

Total assets	$	1,536.6		$	4,604.8	$	1,767.8		$	(1,530.9	)	$	6,378.3

Liabilities and Shareholders’ Equity
Reserves for losses and loss adjustment expenses	$	0.0		$	2,291.2	$	999.9		$	0.0		$	3,291.1
Unearned premiums		0.0			397.8		260.4			0.0			658.2
Funds held and ceded reinsurance payable, net		0.0			562.8		(102.5	)		0.0			460.3
Long-term debt		64.4			247.9		64.7			0.0			377.0
Current income taxes payable, net		0.0			1.8		(1.8	)		0.0			0.0
Deferred tax liabilities, net		0.0			13.4		5.1			0.0			18.5
Accrued underwriting expenses and other liabilities		8.9			81.7		19.6			0.0			110.2
Due to affiliates		0.3			0.6		(0.6	)		(0.3	)		0.0

Total liabilities		73.6			3,597.2		1,244.8			(0.3	)		4,915.3

Total shareholders’ equity		1,463.0			1,007.6		523.0			(1,530.6	)		1,463.0

Total liabilities and shareholders’ equity	$	1,536.6		$	4,604.8	$	1,767.8		$	(1,530.9	)	$	6,378.3

⁽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 (Loss) Income

CONDENSED CONSOLIDATING STATEMENT OF INCOME (LOSS)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2012

(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
Premiums and other revenue:
Earned premiums	$	0.0		$	108.1		$	196.2		$	0.0		$	304.3
Net investment income		0.0			21.2			7.8			(0.1	)		28.9
Fee income, net		0.0			2.4			0.6			0.0			3.0
Net realized investment (losses) gains		(0.5	)		4.2			4.6			0.0			8.3

Total revenue		(0.5	)		135.9			209.2			(0.1	)		344.5

Expenses:
Losses and loss adjustment expenses		0.0			78.0			108.3			0.0			186.3
Other reinsurance-related expenses		0.0			0.0			7.0			0.0			7.0
Underwriting, acquisition and insurance expenses		10.1			41.8			66.1			0.0			118.0
Interest expense		0.1			4.1			1.7			(0.1	)		5.8
Foreign currency exchange (gain) loss		0.0			(0.1	)		9.8			0.0			9.7

Total expenses		10.2			123.8			192.9			(0.1	)		326.8

(Loss) income before income taxes		(10.7	)		12.1			16.3			0.0			17.7
Provision for income taxes		0.0			2.5			1.8			0.0			4.3

Net (loss) income before equity in earnings of subsidiaries		(10.7	)		9.6			14.5			0.0			13.4
Equity in undistributed earnings of subsidiaries		24.1			0.0			0.0			(24.1	)		0.0

Net income (loss)	$	13.4		$	9.6		$	14.5		$	(24.1	)	$	13.4


⁽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 (LOSS) INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011 (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
Premiums and other revenue:
Earned premiums	$	0.0		$	111.9		$	159.0		$	0.0		$	270.9
Net investment income		0.0			21.6			8.8			(0.4	)		30.0
Fee income, net		0.0			0.9			0.5			0.0			1.4
Net realized investment gains		0.0			2.2			1.7			0.0			3.9

Total revenue		0.0			136.6			170.0			(0.4	)		306.2

Expenses:
Losses and loss adjustment expenses		0.0			77.7			121.9			0.0			199.6
Other reinsurance-related expenses		0.0			0.0			2.7			0.0			2.7
Underwriting, acquisition and insurance expenses		4.7			38.0			61.5			0.0			104.2
Interest expense		1.3			3.8			0.9			(0.4	)		5.6
Foreign currency exchange gain		0.0			0.0			(1.9	)		0.0			(1.9	)

Total expenses		6.0			119.5			185.1			(0.4	)		310.2

(Loss) income before income taxes		(6.0	)		17.1			(15.1	)		0.0			(4.0	)
Provision for income taxes		0.0			6.3			0.5			0.0			6.8

Net (loss) income before equity in losses of subsidiaries		(6.0	)		10.8			(15.6	)		0.0			(10.8	)
Equity in undistributed losses of subsidiaries		(4.8	)		0.0			0.0			4.8			0.0

Net (loss) income	$	(10.8	)	$	10.8		$	(15.6	)	$	4.8		$	(10.8	)

⁽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 INCOME (LOSS)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012

(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
Premiums and other revenue:
Earned premiums	$	0.0		$	327.0		$	544.8		$	0.0		$	871.8
Net investment income		0.1			65.3			25.1			(0.2	)		90.3
Fee income, net		0.0			2.4			2.4			0.0			4.8
Net realized investment (losses) gains		(0.5	)		11.8			7.4			0.0			18.7

Total revenue		(0.4	)		406.5			579.7			(0.2	)		985.6

Expenses:
Losses and loss adjustment expenses		0.0			220.9			307.0			0.0			527.9
Other reinsurance-related expense		0.0			0.0			20.8			0.0			20.8
Underwriting, acquisition and insurance expenses		21.4			127.9			197.0			0.0			346.3
Interest expense		2.9			11.8			2.5			(0.2	)		17.0
Foreign currency exchange loss		0.0			0.1			2.7			0.0			2.8

Total expenses		24.3			360.7			530.0			(0.2	)		914.8

(Loss) income before income taxes		(24.7	)		45.8			49.7			0.0			70.8
Provision for income taxes		0.0			10.4			3.4			0.0			13.8

Net (loss) income before equity in earnings of subsidiaries		(24.7	)		35.4			46.3			0.0			57.0
Equity in undistributed earnings of subsidiaries		81.7			0.0			0.0			(81.7	)		0.0

Net income (loss)	$	57.0		$	35.4		$	46.3		$	(81.7	)	$	57.0


⁽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) INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 (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
Premiums and other revenue:
Earned premiums	$	0.0		$	330.0		$	474.0		$	0.0		$	804.0
Net investment income		0.1			67.3			30.2			(1.3	)		96.3
Fee income, net		0.0			0.4			1.4			0.0			1.8
Net realized investment gains		0.0			25.7			12.0			0.0			37.7

Total revenue		0.1			423.4			517.6			(1.3	)		939.8

Expenses:
Losses and loss adjustment expenses		0.0			223.5			440.9			0.0			664.4
Other reinsurance-related expense		0.0			0.0			3.1			0.0			3.1
Underwriting, acquisition and insurance expenses		16.0			123.6			175.1			0.0			314.7
Interest expense		4.1			11.6			2.1			(1.3	)		16.5
Foreign currency exchange (gain) loss		0.0			(0.5	)		11.6			0.0			11.1

Total expenses		20.1			358.2			632.8			(1.3	)		1,009.8

(Loss) income before income taxes		(20.0	)		65.2			(115.2	)		0.0			(70.0	)
Provision (benefit) for income taxes		0.0			18.0			(4.7	)		0.0			13.3

Net (loss) income before equity in losses of subsidiaries		(20.0	)		47.2			(110.5	)		0.0			(83.3	)
Equity in undistributed losses of subsidiaries		(63.3	)		0.0			0.0			63.3			0.0

Net (loss) income	$	(83.3	)	$	47.2		$	(110.5	)	$	63.3		$	(83.3	)

⁽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 Cash Flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012

(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
Net cash flows from operating activities	$	(17.9	)	$	13.7		$	40.4		$	27.3		$	63.5

Cash flows from investing activities:
Proceeds from sales of investments		0.0			458.9			439.6			0.0			898.5
Proceeds from maturities and mandatory calls of investments		0.0			253.9			111.0			0.0			364.9
Purchases of investments		0.0			(712.1	)		(539.3	)		0.0			(1,251.4	)
Change in short-term investments and foreign regulatory deposits		(0.1	)		(64.3	)		(34.6	)		0.0			(99.0	)
Settlements of foreign currency exchange forward contracts		(0.6	)		0.0			0.0			0.0			(0.6	)
Acquisitions		0.0			(1.4	)		0.0			0.0			(1.4	)
Issuance of intercompany note		0.0			(10.0	)		10.0			0.0			0.0
Other, net		0.0			(21.6	)		(2.6	)		0.0			(24.2	)

Cash provided (used) by investing activities		(0.7	)		(96.6	)		(15.9	)		0.0			(113.2	)

Cash flows from financing activities:
Borrowings under intercompany note		27.3			25.0			(25.0	)		(27.3	)		0.0
Proceeds from issuance of senior unsecured fixed rate notes		0.0			139.2			0.0			0.0			139.2
Activity under stock incentive plans		0.7			0.0			0.0			0.0			0.7
Repurchase of Company’s common shares		0.0			(38.6	)		0.0			0.0			(38.6	)
Excess tax expense from share-based payment arrangements		0.0			0.0			0.0			0.0			0.0
Payment of cash dividend to common shareholders		(9.3	)		0.0			0.0			0.0			(9.3	)

Cash used by financing activities		18.7			125.6			(25.0	)		(27.3	)		92.0

Effect of exchange rate changes on cash		0.0			0.0			(0.5	)		0.0			(0.5	)

Change in cash		0.1			42.7			(1.0	)		0.0			41.8
Cash, beginning of period		0.0			85.1			15.8			0.0			100.9

Cash, end of period	$	0.1		$	127.8		$	14.8		$	0.0		$	142.7


⁽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, 2011 (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
Net cash flows from operating activities	$	(20.4	)	$	14.7		$	34.8		$	27.1		$	56.2

Cash flows from investing activities:

Proceeds from sales of investments		0.0			705.2			348.0			0.0			1,053.2
Proceeds from maturities and mandatory calls of investments		0.0			190.5			106.2			0.0			296.7
Purchases of investments		0.0			(893.3	)		(433.2	)		0.0			(1,326.5	)
Change in short-term investments and foreign regulatory deposits		(0.1	)		37.8			(29.9	)		0.0			7.8
Settlements of foreign currency exchange forward contracts		2.6			0.0			6.4			0.0			9.0
Issuance of intercompany note		0.0			(3.5	)		3.5			0.0			0.0
Acquisition		0.0			(0.5	)		0.0			0.0			(0.5	)
Other, net		(0.1	)		(7.4	)		(2.1	)		0.0			(9.6	)

Cash provided (used) by investing activities		2.4			28.8			(1.1	)		0.0			30.1

Cash flows from financing activities:
Borrowings under intercompany note		27.1			10.0			(10.0	)		(27.1	)		0.0
Activity under stock incentive plans		0.9			0.0			0.0			0.0			0.9
Repurchase of Company’s common shares		0.0			(35.9	)		0.0			0.0			(35.9	)
Excess tax expense from share-based payment arrangements		0.0			(0.1	)		0.0			0.0			(0.1	)
Payment of cash dividend to common shareholders		(10.0	)		0.0			0.0			0.0			(10.0	)

Cash used by financing activities		18.0			(26.0	)		(10.0	)		(27.1	)		(45.1	)

Effect of exchange rate changes on cash		0.0			0.0			(4.9	)		0.0			(4.9	)

Change in cash		0.0			17.5			18.8			0.0			36.3
Cash, beginning of period		0.0			61.6			21.9			0.0			83.5

Cash, end of period	$	0.0		$	79.1		$	40.7		$	0.0		$	119.8

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

⁽²⁾	Includes all Argo Group parent company eliminations