Senior Unsecured Fixed Rate Notes (Tables)

9 Months Ended

Sep. 30, 2018

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

At September 30, 2018 and December 31, 2017, the Notes consisted of the following:



(in millions)	September 30, 2018			December 31, 2017
Senior unsecured fixed rate notes
Principal	$	143.8		$	143.8
Less: unamortized debt issuance costs	(4.0		)	(4.2		)
Senior unsecured fixed rate notes, less unamortized debt issuance costs	$	139.8		$	139.6

Condensed Consolidating Balance Sheet

CONDENSED CONSOLIDATING BALANCE SHEET

SEPTEMBER 30, 2018

(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	$	0.4	$	3,205.9	$	1,658.4		$	—		$	4,864.7
Cash	1.7		34.0		82.8			—			118.5
Accrued investment income	—		18.6		7.7			—			26.3
Premiums receivable	—		239.6		469.3			—			708.9
Reinsurance recoverables	—		1,559.7		648.5			—			2,208.2
Goodwill and other intangible assets, net	42.2		124.0		105.7			—			271.9
Deferred acquisition costs, net	—		89.9		84.7			—			174.6
Ceded unearned premiums	—		236.0		279.6			—			515.6
Other assets	8.4		193.7		188.9			—			391.0
Intercompany note receivable	—		53.0		(53.0		)	—			—
Investments in subsidiaries	1,941.9		—		—			(1,941.9		)	—
Total assets	$	1,994.6	$	5,754.4	$	3,472.6		$	(1,941.9	)	$	9,279.7
Liabilities and Shareholders' Equity
Reserves for losses and loss adjustment expenses	$	—	$	2,645.3	$	1,646.4		$	—		$	4,291.7
Unearned premiums	—		794.2		593.3			—			1,387.5
Funds held and ceded reinsurance payable, net	—		745.2		179.0			—			924.2
Debt	153.4		284.7		142.5			—			580.6
Current income taxes payable, net	—		8.9		(0.8		)	—			8.1
Deferred tax liabilities, net	—		15.5		(1.5		)	—			14.0
Accrued underwriting expenses and other liabilities	13.1		94.6		147.8			—			255.5
Due to (from) affiliates	10.0		5.3		(5.3		)	(10.0		)	—
Intercompany note payable	—		18.9		(18.9		)	—			—
Total liabilities	176.5		4,612.6		2,682.5			(10.0		)	7,461.6
Total shareholders' equity	1,818.1		1,141.8		790.1			(1,931.9		)	1,818.1
Total liabilities and shareholders' equity	$	1,994.6	$	5,754.4	$	3,472.6		$	(1,941.9	)	$	9,279.7


⁽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, 2017

(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	$	0.4	$	3,079.0		$	1,663.5		$	—		$	4,742.9
Cash	0.9		47.8			127.9			—			176.6
Accrued investment income	—		18.0			5.5			—			23.5
Premiums receivable	—		216.5			382.1			—			598.6
Reinsurance recoverables	—		1,487.3			606.0			—			2,093.3
Goodwill and other intangible assets, net	43.2		124.9			90.1			—			258.2
Current income taxes receivable, net	—		2.4			(1.0		)	—			1.4
Deferred acquisition costs, net	—		80.7			79.7			—			160.4
Ceded unearned premiums	—		198.5			201.0			—			399.5
Other assets	9.2		171.5			128.9			—			309.6
Intercompany note receivable	—		50.9			(50.9		)	—			—
Investments in subsidiaries	1,940.0		—			—			(1,940.0		)	—
Total assets	$	1,993.7	$	5,477.5		$	3,232.8		$	(1,940.0	)	$	8,764.0
Liabilities and Shareholders' Equity
Reserves for losses and loss adjustment expenses	$	—	$	2,483.9		$	1,717.1		$	—		$	4,201.0
Unearned premiums	—		704.0			503.7			—			1,207.7
Funds held and ceded reinsurance payable, net	—		799.4			(22.7		)	—			776.7
Long-term debt	153.4		284.5			142.8			—			580.7
Deferred tax liabilities, net	—		32.5			(1.2		)	—			31.3
Accrued underwriting expenses and other liabilities	8.9		95.0			43.0			—			146.9
Due to (from) affiliates	11.7		(0.4		)	0.4			(11.7		)	—
Total liabilities	174.0		4,398.9			2,383.1			(11.7		)	6,944.3
Total shareholders' equity	1,819.7		1,078.6			849.7			(1,928.3		)	1,819.7
Total liabilities and shareholders' equity	$	1,993.7	$	5,477.5		$	3,232.8		$	(1,940.0	)	$	8,764.0


⁽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 SEPTEMBER 30, 2018

(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	$	—		$	222.9	$	224.0		$	—		$	446.9
Net investment (expense) income	(0.6		)	21.1		14.0			—			34.5
Fee and other income	—			2.2		1.1			—			3.3
Net realized investment (losses) gains	(0.3		)	16.2		(1.7		)	—			14.2
Total revenue	(0.9		)	262.4		237.4			—			498.9
Expenses:
Losses and loss adjustment expenses	—			136.9		140.6			—			277.5
Underwriting, acquisition and insurance expenses	3.3			85.0		79.7			—			168.0
Interest expense	1.6			4.6		1.7			—			7.9
Fee and other expense	—			1.2		0.7			—			1.9
Foreign currency exchange losses (gains)	—			—		(1.7		)	—			(1.7		)
Total expenses	4.9			227.7		221.0			—			453.6
(Loss) income before income taxes	(5.8		)	34.7		16.4			—			45.3
Provision for income taxes	—			4.7		—			—			4.7
Net (loss) income before equity in earnings of subsidiaries	(5.8		)	30.0		16.4			—			40.6
Equity in undistributed earnings of subsidiaries	46.4			—		—			(46.4		)	—
Net income	$	40.6		$	30.0	$	16.4		$	(46.4	)	$	40.6


⁽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 INCOME

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 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) losses	—			(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 (benefit) for income taxes	—			(0.6		)	(4.0		)	—		(4.6		)
Net (loss) income before equity in earnings of subsidiaries	(8.3		)	—			(53.0		)	—		(61.3		)
Equity in undistributed earnings of subsidiaries	(53.0		)	—			—			53.0		—
Net income	$	(61.3	)	$	—		$	(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 NINE MONTHS ENDED SEPTEMBER 30, 2018

(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	$	—		$	646.8	$	632.5		$	—		$	1,279.3
Net investment (expense) income	(2.0		)	62.2		43.5			—			103.7
Fee and other income	—			3.7		3.5			—			7.2
Net realized investment (losses) gains	(0.2		)	15.3		(6.1		)	—			9.0
Total revenue	(2.2		)	728.0		673.4			—			1,399.2
Expenses:
Losses and loss adjustment expenses	—			346.7		413.5			—			760.2
Underwriting, acquisition and insurance expenses	11.5			250.2		223.3			—			485.0
Interest expense	4.5			13.4		5.5			—			23.4
Fee and other expense	—			3.7		1.8			—			5.5
Foreign currency exchange losses (gains)	—			0.2		(2.5		)	—			(2.3		)
Total expenses	16.0			614.2		641.6			—			1,271.8
(Loss) income before income taxes	(18.2		)	113.8		31.8			—			127.4
Provision for income taxes	—			17.9		2.3			—			20.2
Net (loss) income before equity in earnings of subsidiaries	(18.2		)	95.9		29.5			—			107.2
Equity in undistributed earnings of subsidiaries	125.4			—		—			(125.4		)	—
Net income	$	107.2		$	95.9	$	29.5		$	(125.4	)	$	107.2


⁽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 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 losses	—			(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 (benefit) 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 Cash Flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018

(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	$	57.7		$	151.3		$	22.0		$	—	$	231.0
Cash flows from investing activities:
Proceeds from sales of investments	—			963.2			454.0			—		1,417.2
Maturities and mandatory calls of fixed maturity investments	—			302.5			72.6			—		375.1
Purchases of investments	—			(1,346.8		)	(630.4		)	—		(1,977.2		)
Change in short-term investments and foreign regulatory deposits	—			(65.0		)	31.2			—		(33.8		)
Settlements of foreign currency exchange forward contracts	0.2			0.5			1.3			—		2.0
Cash included in acquisition of Ariscom	—			—			15.6			—		15.6
Purchases of fixed assets and other, net	(0.1		)	(38.5		)	6.4			—		(32.2		)
Cash used in investing activities	0.1			(184.1		)	(49.3		)	—		(233.3		)
Cash flows from financing activities:
Borrowing under the intercompany note	—			19.0			(19.0		)	—		—
Activity under stock incentive plans	1.0			—			—			—		1.0
Repurchase of Company's common shares	(30.0		)	—			—			—		(30.0		)
Payment of cash dividend to common shareholders	(28.0		)	—			—			—		(28.0		)
Cash used in financing activities	(57.0		)	19.0			(19.0		)	—		(57.0		)
Effect of exchange rate changes on cash	—			—			1.2			—		1.2
Change in cash	0.8			(13.8		)	(45.1		)	—		(58.1		)
Cash, beginning of year	0.9			47.8			127.9			—		176.6
Cash, end of period	$	1.7		$	34.0		$	82.8		$	—	$	118.5


⁽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 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 Maybrooke, net of cash and cash equivalents acquired	(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.