Senior Unsecured Fixed Rate Notes (Tables)

6 Months Ended

Jun. 30, 2017

Schedule Of Unamortized Debt Issuance Costs Deducted From Carrying Value Of Debt Liability

At June 30, 2017 and December 31, 2016, the Notes consisted of the following:

(in millions)	June 30, 2017			December 31, 2016
Senior unsecured fixed rate notes
Principal	$	143.8		$	143.8
Less: unamortized debt issuance costs		(4.3	)		(4.3	)
Senior unsecured fixed rate notes, less unamortized debt issuance costs	$	139.5		$	139.5

Condensed Consolidating Balance Sheet

CONDENSED CONSOLIDATING BALANCE SHEET

June 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	$	1.2	$	2,893.8	$	1,729.1		$	—		$	4,624.1
Cash		—		46.2		168.3			—			214.5
Accrued investment income		—		17.2		5.8			—			23.0
Premiums receivable		—		214.0		458.6			—			672.6
Reinsurance recoverables		—		1,386.5		133.1			—			1,519.6
Goodwill and other intangible assets, net		43.5		126.1		91.5			—			261.1
Deferred acquisition costs, net		—		74.2		88.6			—			162.8
Ceded unearned premiums		—		182.0		254.6			—			436.6
Other assets		8.8		171.4		146.2			—			326.4
Intercompany note receivable		—		49.6		70.4			(120.0	)		—
Investments in subsidiaries		2,156.4		—		—			(2,156.4	)		—
Total assets	$	2,209.9	$	5,161.0	$	3,146.2		$	(2,276.4	)	$	8,240.7
Liabilities and Shareholders' Equity
Reserves for losses and loss adjustment expenses	$	—	$	2,354.7	$	1,278.1		$	—		$	3,632.8
Unearned premiums		—		618.4		557.8			—			1,176.2
Funds held and ceded reinsurance payable, net		—		736.3		8.6			—			744.9
Long-term debt		153.4		284.4		140.6			—			578.4
Current income taxes payable, net		—		11.5		1.9			—			13.4
Deferred tax liabilities, net		—		29.8		8.4			—			38.2
Accrued underwriting expenses and other liabilities		11.0		80.5		74.0			—			165.5
Due to affiliates		34.2		5.1		(5.1	)		(34.2	)		—
Intercompany note payable		120.0		—		—			(120.0	)		—
Total liabilities		318.6		4,120.7		2,064.3			(154.2	)		6,349.4
Total shareholders' equity		1,891.3		1,040.3		1,081.9			(2,122.2	)		1,891.3
Total liabilities and shareholders' equity	$	2,209.9	$	5,161.0	$	3,146.2		$	(2,276.4	)	$	8,240.7

⁽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 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 Income

CONDENSED CONSOLIDATING STATEMENT OF INCOME

FOR THE THREE MONTHS ENDED JUNE 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	$	—		$	135.5		$	263.6		$	—		$	399.1
Net investment (expense) income		(0.4	)		29.3			14.7			—			43.6
Fee and other income		—			2.9			0.9			—			3.8
Net realized investment and other gains (losses)		—			5.2			(0.7	)		—			4.5
Total revenue		(0.4	)		172.9			278.5			—			451.0
Expenses:
Losses and loss adjustment expenses		—			72.5			158.1			—			230.6
Underwriting, acquisition and insurance expenses		3.8			58.5			92.4			—			154.7
Interest expense		1.1			4.2			1.7			—			7.0
Fee and other expense		—			3.2			0.1			—			3.3
Foreign currency exchange (gains) loss		—			(0.1	)		4.7			—			4.6
Total expenses		4.9			138.3			257.0			—			400.2
(Loss) Income before income taxes		(5.3	)		34.6			21.5			—			50.8
Provision for income taxes		—			8.1			(3.3	)		—			4.8
Net (loss) income before equity in earnings of subsidiaries		(5.3	)		26.5			24.8			—			46.0
Equity in undistributed earnings of subsidiaries		51.3			—			—			(51.3	)		—
Net income	$	46.0		$	26.5		$	24.8		$	(51.3	)	$	46.0

CONDENSED CONSOLIDATING STATEMENT OF INCOME

FOR THE THREE MONTHS ENDED JUNE 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	$	—		$	120.2		$	224.7		$	—		$	344.9
Net investment (expense) income		(0.5	)		27.5			8.7			—			35.7
Fee and other income		—			4.2			1.6			—			5.8
Net realized investment and other gains (losses)		0.2			1.9			(4.2	)		—			(2.1	)
Total revenue		(0.3	)		153.8			230.8			—			384.3
Expenses:
Losses and loss adjustment expenses		—			69.1			127.5			—			196.6
Underwriting, acquisition and insurance expenses		1.1			49.0			82.9			—			133.0
Interest expense		0.4			3.9			0.6			—			4.9
Fee and other expense		—			5.0			0.7			—			5.7
Foreign currency exchange (gains) loss		—			(0.1	)		4.6			—			4.5
Total expenses		1.5			126.9			216.3			—			344.7
(Loss) Income before income taxes		(1.8	)		26.9			14.5			—			39.6
Provision for income taxes		—			8.3			0.4			—			8.7
Net (loss) income before equity in earnings of subsidiaries		(1.8	)		18.6			14.1			—			30.9
Equity in undistributed earnings of subsidiaries		32.7			—			—			(32.7	)		—
Net income	$	30.9		$	18.6		$	14.1		$	(32.7	)	$	30.9

CONDENSED CONSOLIDATING STATEMENT OF INCOME

FOR THE SIX MONTHS ENDED JUNE 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	$	—		$	266.4	$	512.1		$	—		$	778.5
Net investment (expense) income		(2.1	)		48.2		28.0			—			74.1
Fee and other income		—			5.7		1.7			—			7.4
Net realized investment and other gains (losses)		0.5			19.0		(0.4	)		—			19.1
Total revenue		(1.6	)		339.3		541.4			—			879.1
Expenses:
Losses and loss adjustment expenses		—			148.6		304.5			—			453.1
Underwriting, acquisition and insurance expenses		12.2			116.7		179.4			—			308.3
Interest expense		1.4			8.5		3.0			—			12.9
Fee and other expense		—			6.6		0.8			—			7.4
Foreign currency exchange loss		—			—		3.9			—			3.9
Total expenses		13.6			280.4		491.6			—			785.6
(Loss) Income before income taxes		(15.2	)		58.9		49.8			—			93.5
Provision for income taxes		—			14.5		(3.7	)		—			10.8
Net (loss) income before equity in earnings of subsidiaries		(15.2	)		44.4		53.5			—			82.7
Equity in undistributed earnings of subsidiaries		97.9			—		—			(97.9	)		—
Net income	$	82.7		$	44.4	$	53.5		$	(97.9	)	$	82.7

⁽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 INCOME

FOR THE SIX MONTHS ENDED JUNE 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	$	—		$	240.1		$	449.7		$	—		$	689.8
Net investment (expense) income		(1.1	)		40.1			17.9			—			56.9
Fee and other income		—			9.4			3.2			—			12.6
Net realized investment and other gains (losses)		0.2			13.1			(18.2	)		—			(4.9	)
Total revenue		(0.9	)		302.7			452.6			—			754.4
Expenses:
Losses and loss adjustment expenses		—			137.4			250.8			—			388.2
Underwriting, acquisition and insurance expenses		6.3			96.6			162.7			—			265.6
Interest expense		0.7			7.8			1.2			—			9.7
Fee and other expense		—			11.2			1.0			—			12.2
Foreign currency exchange (gains) loss		—			(0.1	)		6.1			—			6.0
Total expenses		7.0			252.9			421.8			—			681.7
(Loss) Income before income taxes		(7.9	)		49.8			30.8			—			72.7
Provision for income taxes		—			13.7			0.4			—			14.1
Net (loss) income before equity in earnings of subsidiaries		(7.9	)		36.1			30.4			—			58.6
Equity in undistributed earnings of subsidiaries		66.5			—			—			(66.5	)		—
Net income	$	58.6		$	36.1		$	30.4		$	(66.5	)	$	58.6

⁽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 SIX MONTHS ENDED JUNE 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 (used in) operating activities	$	5.3		$	(8.0	)	$	40.0		$	—		$	37.3
Cash flows from investing activities:
Proceeds from sales of investments		—			514.4			444.0			—			958.4
Maturities and mandatory calls of fixed maturity investments		—			240.6			94.5			—			335.1
Purchases of investments		—			(811.0	)		(655.0	)		—			(1,466.0	)
Change in short-term investments and foreign regulatory deposits		0.4			72.0			228.0			—			300.4
Settlements of foreign currency exchange forward contracts		0.8			—			(0.3	)		—			0.5
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	)		(12.7	)		(24.9	)		—			(37.7	)
Cash (used in) provided by investing activities		(234.2	)		3.3			96.4			120.0			(14.5	)
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		0.5			—			—			—			0.5
Repurchase of Company's common shares		—			(2.8	)		—			—			(2.8	)
Payment of cash dividend to common shareholders		(16.6	)		—			—			—			(16.6	)
Cash provided by (used in) financing activities		228.9			(2.8	)		—			(120.0	)		106.1
Effect of exchange rate changes on cash		—			—			(0.4	)		—			(0.4	)
Change in cash		—			(7.5	)		136.0			—			128.5
Cash, beginning of year		—			53.7			32.3			—			86.0
Cash, end of period	$	—		$	46.2		$	168.3		$	—		$	214.5

⁽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 SIX MONTHS ENDED JUNE 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	$	14.7		$	(9.2	)	$	26.1		$	—	$	31.6
Cash flows from investing activities:
Proceeds from sales of investments		—			490.0			140.5			—		630.5
Maturities and mandatory calls of fixed maturity investments		—			296.9			376.4			—		673.3
Purchases of investments		—			(720.1	)		(535.6	)		—		(1,255.7	)
Change in short-term investments and foreign regulatory deposits		(1.8	)		(12.3	)		3.1			—		(11.0	)
Settlements of foreign currency exchange forward contracts		—			—			6.8			—		6.8
Purchases of fixed assets and other, net		—			(11.2	)		(12.4	)		—		(23.6	)
Cash (used in) provided by investing activities		(1.8	)		43.3			(21.2	)		—		20.3
Cash flows from financing activities:
Activity under stock incentive plans		0.2			—			—			—		0.2
Repurchase of Company's common shares		—			(40.0	)		—			—		(40.0	)
Payment of cash dividend to common shareholders		(13.1	)		—			—			—		(13.1	)
Cash used in financing activities		(12.9	)		(40.0	)		—			—		(52.9	)
Effect of exchange rate changes on cash		—			—			(0.1	)		—		(0.1	)
Change in cash		—			(5.9	)		4.8			—		(1.1	)
Cash, beginning of year		—			88.8			32.9			—		121.7
Cash, end of period	$	—		$	82.9		$	37.7		$	—	$	120.6

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

⁽²⁾	Includes all Argo Group parent company eliminations.