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| | Lone Star Carrier’s Numbers ‘Argonaut’ Bad
By Robert Warne - August 7, 2002Argonaut Group Inc. shareholders must be chilling with a couple of Texas iced teas after learning that they would be receiving a respectable second quarter dividend check. A closer look at this national provider of specialty insurance product’s numbers reveals that the company has stepped up its financial game since 2001.
The net income after tax of $6.1 million for the second quarter dwarfed last year’s $1.9 million for the same quarter. Combined with the first quarters’ results the company is left with $13.6 million in net income on the books. That’s a cool $11.4 million over the first half of 2001’s purse.
Talk about doubling your money, Argonaut’s total revenue including sales of investments for the second quarter went from $55.7 million in 2001 to $103.7 million in 2002. The same goes for the six-month period. In 2001 total revenue was $101.1 million vs. $209.7 million for 2002.
“We are encouraged by our second-quarter performance, which demonstrates measurable progress in each of our business segments on a sequential and year-over-year basis,” said Mark E. Watson III, Argonaut Group president and chief executive officer. “Of particular note is the growth of our specialty excess and surplus (E&S) operations, which in the short span of three quarters have become a major contributor to our bottom line. Adding to this trend is our recent Fulcrum acquisition, which now provides Argonaut Group with an established Western U.S. presence operated by tested and proven management. By year end, E&S operations are likely to account for as much as 40 percent of our total written premiums.”
Argonaut’s numbers could have even been better if its workers’ compensation results would not have been so red. At least for the six months ending June 30, 2002 it only suffered a $9 million loss rather than the same period last year’s $12.3 million loss.
The company reported in its 10-Q filing that although this segment has implemented rate increases in 2001 and 2002, losses and loss adjustment expenses were accrued at levels consistent with 2001 due to the instability of workers' compensation underwriting results, particularly in California.
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