16.	Information Provided in Connection with Outstanding Debt of Subsidiaries

The following tables present condensed consolidating financial information at March 31, 2015 and December 31, 2014 and for the three months ended March 31, 2015 and 2014, for Argo Group (the “Parent Guarantor”) and Argo Group US (the “Subsidiary Issuer”). The Subsidiary Issuer is an indirect 100 percent-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

MARCH 31, 2015

(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	$	7.2		$	2,851.4		$	1,205.8		$	—		$	4,064.4
Cash		—			54.8			34.3			—			89.1
Accrued investment income		—			17.1			3.8			—			20.9
Premiums receivable		—			160.0			211.7			—			371.7
Reinsurance recoverables		—			1,152.0			(164.7	)		—			987.3
Goodwill and other intangible assets, net		—			132.7			98.3			—			231.0
Current income taxes receivable, net		—			—			4.2			—			4.2
Deferred acquisition costs, net		—			60.0			69.7			—			129.7
Ceded unearned premiums		—			112.2			144.4			—			256.6
Other assets		12.7			175.4			59.1			(25.0	)		222.2
Due from (to) affiliates		(16.0	)		(19.3	)		19.3			16.0			—
Intercompany note receivable		—			55.6			(55.6	)		—			—
Investments in subsidiaries		1,722.8			—			—			(1,722.8	)		—
Total assets	$	1,726.7		$	4,751.9		$	1,630.3		$	(1,731.8	)	$	6,377.1
Liabilities and Shareholders' Equity
Reserves for losses and loss adjustment expenses	$	—		$	2,138.8		$	896.3		$	—		$	3,035.1
Unearned premiums		—			458.8			367.6			—			826.4
Funds held and ceded reinsurance payable, net		—			662.8			(402.3	)		—			260.5
Long-term debt		49.0			288.7			56.9			(20.6	)		374.0
Current income taxes payable, net		—			0.5			(0.5	)		—			—
Deferred tax liabilities, net		—			44.7			9.1			—			53.8
Accrued underwriting expenses and other liabilities		14.9			91.7			57.9			—			164.5
Total liabilities		63.9			3,686.0			985.0			(20.6	)		4,714.3
Total shareholders' equity		1,662.8			1,065.9			645.3			(1,711.2	)		1,662.8
Total liabilities and shareholders' equity	$	1,726.7		$	4,751.9		$	1,630.3		$	(1,731.8	)	$	6,377.1

CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2014

(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	$	0.7	$	2,841.5		$	1,255.7		$	—		$	4,097.9
Cash		—		49.3			31.7			—			81.0
Accrued investment income		—		17.8			4.3			—			22.1
Premiums receivable		—		154.6			199.0			—			353.6
Reinsurance recoverables		—		1,173.6			(176.4	)		—			997.2
Goodwill and other intangible assets, net		—		131.7			99.1			—			230.8
Current income taxes receivable, net		—		10.1			4.8			—			14.9
Deferred acquisition costs, net		—		58.0			66.6			—			124.6
Ceded unearned premiums		—		98.5			109.1			—			207.6
Other assets		9.6		174.1			67.9			(25.0	)		226.6
Due from (to) affiliates		2.9		(19.8	)		19.8			(2.9	)		—
Intercompany note receivable		—		72.0			(72.0	)		—			—
Investments in subsidiaries		1,698.0		—			—			(1,698.0	)		—
Total assets	$	1,711.2	$	4,761.4		$	1,609.6		$	(1,725.9	)	$	6,356.3
Liabilities and Shareholders' Equity
Reserves for losses and loss adjustment expenses	$	—	$	2,136.4		$	906.0		$	—		$	3,042.4
Unearned premiums		—		448.9			368.3			—			817.2
Funds held and ceded reinsurance payable, net		—		675.1			(441.3	)		—			233.8
Long-term debt		49.0		288.7			61.4			(20.6	)		378.5
Deferred tax liabilities, net		—		41.2			11.8			—			53.0
Accrued underwriting expenses and other liabilities		15.5		104.2			65.0			—			184.7
Total liabilities		64.5		3,694.5			971.2			(20.6	)		4,709.6
Total shareholders' equity		1,646.7		1,066.9			638.4			(1,705.3	)		1,646.7
Total liabilities and shareholders' equity	$	1,711.2	$	4,761.4		$	1,609.6		$	(1,725.9	)	$	6,356.3

⁽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 MARCH 31, 2015

(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	$	—		$	135.1	$	199.5		$	—		$	334.6
Net investment (expense) income		(0.2	)		14.5		6.5			—			20.8
Net realized investment gains and other		—			15.9		0.1			—			16.0
Total revenue		(0.2	)		165.5		206.1			—			371.4
Expenses:
Losses and loss adjustment expenses		—			80.2		103.5			—			183.7
Underwriting, acquisition and insurance expenses		4.7			51.9		73.0			—			129.6
Interest expense		0.5			3.8		0.6			—			4.9
Fee expense (income), net		—			0.8		(0.4	)		—			0.4
Foreign currency exchange loss (gain)		—			0.8		(10.4	)		—			(9.6	)
Total expenses		5.2			137.5		166.3			—			309.0
Income before income taxes		(5.4	)		28.0		39.8			—			62.4
Provision for income taxes		—			5.8		(2.2	)		—			3.6
Net income before equity in earnings of subsidiaries		(5.4	)		22.2		42.0			—			58.8
Equity in undistributed earnings of subsidiaries		64.2			—		—			(64.2	)		—
Net income	$	58.8		$	22.2	$	42.0		$	(64.2	)	$	58.8

⁽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

FOR THE THREE MONTHS ENDED MARCH 31, 2014

(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	$	—		$	112.0		$	213.7		$	—		$	325.7
Net investment (expense) income		(0.1	)		15.0			8.4			—			23.3
Net realized investment and other gains (loss)		—			11.5			(0.4	)		—			11.1
Total revenue		(0.1	)		138.5			221.7			—			360.1
Expenses:
Losses and loss adjustment expenses		—			72.5			110.0			—			182.5
Underwriting, acquisition and insurance expenses		6.0			46.3			76.4			—			128.7
Interest expense		0.6			3.8			0.7			(0.1	)		5.0
Fee expense, net		—			1.3			0.1			—			1.4
Foreign currency exchange (gain) loss		—			(0.1	)		(0.1	)		—			(0.2	)
Total expenses		6.6			123.8			187.1			(0.1	)		317.4
Income (loss) before income taxes		(6.7	)		14.7			34.6			0.1			42.7
Provision (benefit) for income taxes		—			3.0			(0.5	)		—			2.5
Net income (loss) before equity in earnings of subsidiaries		(6.7	)		11.7			35.1			0.1			40.2
Equity in undistributed earnings of subsidiaries		46.9			—			—			(46.9	)		—
Net income (loss)	$	40.2		$	11.7		$	35.1		$	(46.8	)	$	40.2

⁽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 CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2015

(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	$	2.9		$	43.6		$	(18.9	)	$	—	$	27.6
Cash flows from investing activities:
Proceeds from sales of investments		—			340.1			82.9			—		423.0
Maturities and mandatory calls of fixed maturity investments		—			114.5			27.5			—		142.0
Purchases of investments		—			(471.4	)		(85.8	)		—		(557.2	)
Change in short-term investments and foreign regulatory deposits		1.1			7.0			(3.3	)		—		4.8
Settlements of foreign currency exchange forward contracts		0.7			—			(2.9	)		—		(2.2	)
Issuance of intercompany note, net		—			—			—			—		—
Purchases of fixed assets and other, net		0.1			(11.3	)		2.9			—		(8.3	)
Cash (used) provided by investing activities		1.9			(21.1	)		21.3			—		2.1
Cash flows from financing activities:
Borrowings under intercompany note, net		—			—			—			—		—
Activity under stock incentive plans		0.9			—			—			—		0.9
Repurchase of Company's common shares		—			(17.0	)		—			—		(17.0	)
Excess tax expense from share-based payment arrangements		—			—			—			—		—
Payment of cash dividend to common shareholders		(5.7	)		—			—			—		(5.7	)
Cash (used) provided by financing activities		(4.8	)		(17.0	)		—			—		(21.8	)
Effect of exchange rate changes on cash		—			—			0.2			—		0.2
Change in cash		—			5.5			2.6			—		8.1
Cash, beginning of the period		—			49.3			31.7			—		81.0
Cash, end of period	$	—		$	54.8		$	34.3		$	—	$	89.1

⁽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 THREE MONTHS ENDED MARCH 31, 2014

(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	$	(9.4	)	$	(11.2	)	$	64.2		$	—		$	43.6
Cash flows from investing activities:
Proceeds from sales of investments		—			163.3			100.0			—			263.3
Maturities and mandatory calls of fixed maturity investments		—			51.3			27.1			—			78.4
Purchases of investments		—			(178.6	)		(128.7	)		—			(307.3	)
Change in short-term investments and foreign regulatory deposits		(0.9	)		(29.8	)		(23.2	)		—			(53.9	)
Settlements of foreign currency exchange forward contracts		0.9			—			(2.3	)		—			(1.4	)
Issuance of intercompany note, net		—			—			(12.5	)		12.5			—
Purchases of fixed assets and other, net		0.1			(5.1	)		(19.1	)		—			(24.1	)
Cash (used) provided by investing activities		0.1			1.1			(58.7	)		12.5			(45.0	)
Cash flows from financing activities:
Borrowings under intercompany note, net		12.5			—			—			(12.5	)		—
Activity under stock incentive plans		0.8			—			—			—			0.8
Repurchase of Company's common shares		—			(3.7	)		—			—			(3.7	)
Excess tax expense from share-based payment arrangements		—			0.1			—			—			0.1
Payment of cash dividend to common shareholders		(4.0	)		—			—			—			(4.0	)
Cash (used) provided by financing activities		9.3			(3.6	)		—			(12.5	)		(6.8	)
Effect of exchange rate changes on cash		—			—			0.3			—			0.3
Change in cash		—			(13.7	)		5.8			—			(7.9	)
Cash, beginning of period		—			132.1			25.3			—			157.4
Cash, end of period	$	—		$	118.4		$	31.1		$	—		$	149.5

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

⁽²⁾	Includes all Argo Group parent company eliminations.