Argo Group International Holdings, Ltd. (NYSE:ARGO) Q3 2019 Earnings Conference Call - Final Transcript

Nov 08, 2019 • 11:00 am ET

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Argo Group International Holdings, Ltd. (NYSE:ARGO) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions]. Our first question today comes from Greg Peters from Raymond James. Please go ahead with your question.

Analyst
Greg Peters

All right. Great. I have a couple of questions. I just want to go back to the commentary around the international business and unpack -- you provided a lot of information, so I'm going to have to go back and read the transcript. But there is a number of businesses that you said that you were exiting or have exited in the third quarter, and I was wondering if you could size up the total premium volume of those businesses that have been exited and may be not only in the third quarter, but on the year-to-date basis.

Executive
Jay S. Bullock

Yeah, Greg, this is Jay. I think the ones that were mentioned was Marine Hull, which was which is in London, the exiting of certain cover holder business in Europe. I'm trying to remember if we've seen any others. I think those were the two most significant. Marine Hull was less than a GBP 30 million line at Lloyd's. And we've been in it for a while, and just weren't getting the returns. The cover holders that were exited, I don't have their precise numbers handy, but my guess -- my estimate would be approximately $70 million of premium that we've gotten off of as a result of exiting those. So those are the two that come to mind. I can perhaps work into more detail, but that's what I've got for memory.

Analyst
Greg Peters

So is there specific expenses associated with those businesses that is unusual and is going to go away that's going to help improve the efficiency?

Executive
Jay S. Bullock

Well, the -- probably less specific expense. Of course, there's always acquisition costs, right? But that's not really the question. The question is the non-acquisition cost. There -- so less expense reductions specifically related to the exiting the cover holder business. That said, simplification of that business unit is one of those objectives. And so, of course, that can lead to -- that simplification can lead to expense reduction in the future and all the functional areas that support it, whether it's finance or claims or whatever is required to support it. As it relates to the exit of our Asian platform, there were a few million dollars in the international numbers related, as I mentioned, to severance costs that were part of the exit of that business.

Analyst
Greg Peters

Okay. Getting in to the reserve charge, the second quarter in a row, I know you guys are frustrated with it. But clearly, the numbers are large. And in our experience, usually, it takes more than just a couple of bites at the apple to fix the problem, especially if you're going to be closing other lines of business. So I was wondering if you could provide us from a very big picture perspective, maybe with the actuarial range on the reserve charge to see how the actuaries were looking at it. Is there another bite at the